-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DTuiV+VNKbeH5m9MwWMpmB1Opsk5/ItKy6jeaX9842r/O0/QjpuJNZIZol0gFv7o 3sgdwWRJ32IZkRa0VUDA+Q== 0000912057-96-012560.txt : 19960619 0000912057-96-012560.hdr.sgml : 19960619 ACCESSION NUMBER: 0000912057-96-012560 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 19960618 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANC ONE ABS CORP CENTRAL INDEX KEY: 0001013866 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-03457 FILM NUMBER: 96582300 BUSINESS ADDRESS: STREET 1: 100 EAST BROAD ST CITY: COLUMBUS STATE: OH ZIP: 43271-0133 BUSINESS PHONE: 6142486347 MAIL ADDRESS: STREET 1: 100 EAST BROAD ST CITY: COLUMBUS STATE: OH ZIP: 43271-0133 S-3/A 1 S-3/A AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 18, 1996 REGISTRATION STATEMENT NO. 333-3457 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------- AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ BANC ONE AUTO GRANTOR TRUST 1996-B (Issuer with respect to the Certificates) BANC ONE ABS CORPORATION (Exact name of registrant as specified in its charter) OHIO NOT AVAILABLE (State or other jurisdiction (IRS Employer of incorporation or Identification organization) Number)
100 EAST BROAD STREET COLUMBUS, OHIO 43271-0158 (614) 248-5700 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) -------------------------- STEVEN ALAN BENNETT, ESQ. BANC ONE CORPORATION 100 EAST BROAD STREET COLUMBUS, OHIO 43271-0158 (614) 248-5700 (Name, address, including zip code, and telephone number, including area code, of agent for service) -------------------------- COPIES TO: KIM L. SWANSON, ESQ. KENNETH L. WAGNER, ESQ. REED D. AUERBACH, ESQ. SQUIRE, SANDERS & DEMPSEY BANC ONE CORPORATION STROOCK & STROOCK & LAVAN 1300 HUNTINGTON CENTER 100 EAST BROAD STREET SEVEN HANOVER SQUARE 41 SOUTH HIGH STREET COLUMBUS, OHIO 43271-0158 NEW YORK, NEW YORK 10004 COLUMBUS, OHIO 43215
-------------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE. -------------------------- If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / / If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. /X/ If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. / / -------------------------- CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF SECURITIES TO BE REGISTERED BE REGISTERED (1) PER UNIT (1) OFFERING PRICE (1) REGISTRATION FEE Class A Asset Backed Certificates...... $293,459,000.00(2) 100% $293,459,000.00 $101,193 Class B Asset Backed Certificates...... $12,227,731.53(2) 100% $12,227,731.53 $4,217 TOTAL.................................. $305,686,731.53(2) 100% $305,686,731.53 $105,410(3)
(1) Estimated solely for the purpose of calculating the registration fee. (2) Includes an indeterminate amount of Certificates as may be offered or sold in connection with market making activities by an affiliate of the Registrant. (3) A fee of $344.84 has previously been paid. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EXPLANATORY NOTE This Registration Statement contains a Prospectus relating to a public offering by Banc One Auto Grantor Trust 1996-B of $305,686,731.53 aggregate principal balance of Asset Backed Certificates (the "Certificates"). The Prospectus may be used in connection with offers and sales relating to market-making transactions in the Certificates by an affiliate of the Registrant. INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED JUNE 18, 1996 $305,686,731.53 BANC ONE AUTO GRANTOR TRUST 1996-B $293,459,000.00 CLASS A % ASSET BACKED CERTIFICATES $12,227,731.53 CLASS B % ASSET BACKED CERTIFICATES BANC ONE ABS CORPORATION SELLER --------------------- BANK ONE, ARIZONA, NA SERVICER --------------------- Banc One Auto Grantor Trust 1996-B (the "Trust") will be formed pursuant to a Pooling and Servicing Agreement dated as of June 1, 1996, between Banc One ABS Corporation, an Ohio corporation, as seller, Bank One, Arizona, NA, a national banking association, as servicer, and Bankers Trust Company, as trustee, and will issue $293,459,000.00 aggregate principal balance of % Class A Asset Backed Certificates (the "Class A Certificates") and $12,227,731.53 aggregate principal balance of % Class B Asset Backed Certificates (the "Class B Certificates" and, together with the Class A Certificates, the "Certificates"). The assets of the Trust will include a pool of motor vehicle retail installment sale contracts (the "Receivables") secured by new or used automobiles, vans or light duty trucks, certain payments made thereunder on or after June 1, 1996 (the "Cutoff Date"), security interests in the vehicles financed thereby, and the proceeds thereof. The Trust may also draw on funds on deposit in the Reserve Fund, to the extent described herein, to meet shortfalls in amounts due to Certificateholders on any Distribution Date. The Class A Certificates will evidence in the aggregate an undivided ownership interest in approximately 96% of the Trust. The Class B Certificates will evidence in the aggregate an undivided ownership interest in approximately 4% of the Trust. Principal and interest at the applicable Class A or Class B Pass-Through Rate will be distributed to Certificateholders on or about the fifteenth day of each month, commencing July 15, 1996. The rights of the holders of the Class B Certificates to receive distributions are subordinated to the rights of holders of the Class A Certificates to the extent described herein. The outstanding principal balance, if any, of the Certificates will be due and payable on the February 2003 Distribution Date (the "Final Scheduled Distribution Date"). -------------------------- FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE CERTIFICATES, SEE "RISK FACTORS" BEGINNING ON PAGE 10. THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN BANK ONE, ARIZONA, NA, BANC ONE ABS CORPORATION OR ANY OF THEIR AFFILIATES. NONE OF THE CERTIFICATES OR THE RECEIVABLES ARE INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PRICE TO UNDERWRITING PROCEEDS TO PUBLIC DISCOUNTS THE SELLER(1) ---------- --------------- ------------- Per Class A Certificate...................................... % % % Per Class B Certificate...................................... % % % Total........................................................ $ $ $
- -------------------------- (1) Before deducting expenses, estimated to be $533,000. -------------------------- The Certificates are offered by the Underwriters when, as and if issued by the Trust, delivered and accepted by the Underwriters and subject to their right to reject orders in whole or in part. It is expected that delivery of the Certificates in book-entry form will be made through the facilities of The Depository Trust Company on the Same Day Funds Settlement System and Cedel Bank, societe anonyme ("Cedel"), and the Euroclear System ("Euroclear") on or about June , 1996. After the initial distribution of the Certificates by the Underwriters, this Prospectus may be used by Banc One Capital Corporation, an affiliate of the Seller, in connection with offers and sales relating to market making transactions in the Certificates. Banc One Capital Corporation may act as principal or agent in such transactions. Such sales will be made at prices related to prevailing market prices at the time of sale. Certain information in this Prospectus will be updated from time to time as described in "Incorporation of Certain Documents by Reference." BANC ONE CAPITAL CORPORATION SALOMON BROTHERS INC The date of this Prospectus is June , 1996 IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. REPORTS TO CERTIFICATEHOLDERS Unless and until Definitive Certificates are issued, monthly and annual unaudited reports containing information concerning the Receivables will be prepared by the Servicer and sent on behalf of the Trust only to Cede & Co. ("Cede"), as nominee of The Depository Trust Company ("DTC") and registered holder of the Certificates. Certificateholders may elect to hold their securities through any of DTC (in the United States) or Cedel or Euroclear (in Europe). DTC will forward such reports to Participants, Cedel Participants and Euroclear Participants. See "The Certificates--Book-Entry Registration" and "--Statements to Certificateholders." Such reports will not constitute financial statements prepared in accordance with generally accepted accounting principles. The Servicer, on behalf of the Trust, will file with the Securities and Exchange Commission (the "Commission") such periodic reports as are required under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations of the Commission thereunder. AVAILABLE INFORMATION The Seller has filed with the Commission a Registration Statement (together with all amendments and exhibits thereto, referred to herein as the "Registration Statement") under the Securities Act of 1933, as amended (the "Securities Act"), with respect to the Certificates offered pursuant to this Prospectus. For further information, reference is made to the Registration Statement which may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549; and at the Commission's regional offices at the Northwestern Atrium Building, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and at Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of the Registration Statement may be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington. D.C. 20549, at prescribed rates. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE All reports and other documents filed by the Servicer, on behalf of the Trust, pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering of the Certificates offered hereby shall be deemed incorporated by reference into this Prospectus and to be a part hereof. After the initial distribution of the Certificates by the Underwriters and in connection with market making transactions by Banc One Capital Corporation, this Prospectus will be distributed together with, and should be read in conjunction with an accompanying supplement to the Prospectus. Such supplement will contain the reports described above and generally will include the information contained in the monthly statements furnished to Certificateholders. See "The Certificates--Statements to Certificateholders." Any statement contained herein or in a document deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained in any other subsequently filed document which also is deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as modified or superseded, to constitute part of this Prospectus. The Servicer will provide without charge to each person, including any beneficial owner of Certificates, to whom a copy of this Prospectus is delivered, on the written or oral request of any such person, a copy of any or all the documents incorporated herein by reference (other than exhibits to such documents). Written requests for such copies should be directed to BANC ONE CORPORATION, 100 East Broad Street, Columbus, Ohio 43271-0133, Attention: Structured Finance. Telephone requests for such copies should be directed to BANC ONE CORPORATION at (614) 248-6347. 2 SUMMARY OF TERMS THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. CERTAIN CAPITALIZED TERMS USED IN THIS SUMMARY ARE DEFINED ELSEWHERE IN THIS PROSPECTUS ON THE PAGES INDICATED IN THE INDEX OF PRINCIPAL TERMS. Issuer............................ Banc One Auto Grantor Trust 1996-B (the "Trust" or the "Issuer"). Seller............................ Banc One ABS Corporation (the "Seller"), an affiliate of the Servicer and the Subservicer. See "The Seller." Servicer.......................... Bank One, Arizona, NA (the "Servicer" or the "Bank"). A portion of the Receivables will be serviced by Valley National Financial Services Company (the "Subservicer" or "Valley National"), a wholly-owned subsidiary of Bank One, Arizona, NA See "The Servicer and the Subservicer." Trustee and Collateral Agent...... Bankers Trust Company, a New York banking corporation, not in its individual capacity, but solely as trustee for the Trust (the "Trustee") and as collateral agent with respect to the Reserve Fund (the "Collateral Agent"). Securities Offered................ Banc One Auto Grantor Trust 1996-B will issue two classes of Certificates (each, a "Class") with one class of senior certificates (the "Class A Certificates") and one class of subordinated certificates (the "Class B Certificates" and, together with the Class A Certificates, the "Certificates") pursuant to a Pooling and Servicing Agreement dated as of June 1, 1996 (the "Agreement") among the Seller, the Servicer and the Trustee. Each Certificate will represent a fractional undivided interest in the assets of the Trust. The Class A Certificates will be issued in an initial aggregate principal amount of $293,459,000.00 (the "Original Class A Principal Balance") and will evidence in the aggregate an undivided ownership interest in approximately 96% of the Trust (the "Class A Percentage"). The Class B Certificates will be issued in an initial aggregate principal amount of $12,227,731.53 (the "Original Class B Principal Balance") and will evidence in the aggregate an undivided ownership interest in approximately 4% of the Trust (the "Class B Percentage"). The Class B Certificates will be subordinated to the Class A Certificates to the extent described herein. See "Risk Factors--Subordination of the Class B Certificates" and "The Certificates--Subordination of the Class B Certificates." Registration of the The Certificates will be available for purchase in Certificates..................... denominations of $1,000 and integral multiples thereof in book-entry form only. See "The Certificates--General." Certificateholders will not be entitled to receive a Definitive Certificate, except in the event that Definitive Certificates are issued in the limited circumstances described herein. Persons acquiring beneficial interests in the Certificates will hold their interests through DTC in the United States or Cedel or Euroclear in Europe. See "The Certificates--Definitive Certificates."
3 Trust Property.................... The property of the Trust (the "Trust Property") will include (i) the Receivables; (ii) all monies received under the Receivables on and after June 1, 1996 (the "Cutoff Date"); (iii) certain bank accounts established and maintained by the Trustee; (iv) security interests in the Financed Vehicles; (v) the rights to proceeds from certain insurance policies covering the Financed Vehicles or the retail purchasers of, or other persons owing payments on, the Financed Vehicles (the "Obligors"); (vi) the rights of the Trustee for the benefit of the Certificateholders under the Agreement; (vii) the rights to certain payments from the Reserve Fund; and (viii) all proceeds (within the meaning of the UCC) of the foregoing. The Reserve Fund will be maintained for the benefit of the Certificateholders, but will not be part of the Trust. The Receivables................... The Receivables will consist of motor vehicle retail installment sale contracts secured by new or used automobiles, vans or light duty trucks, including rights to receive certain payments made with respect to such Receivables on and after the Cutoff Date, security interests in the vehicles financed thereby (the "Financed Vehicles"), and the proceeds thereof. On the date of the issuance of the Certificates (the "Closing Date"), the Trustee will purchase from the Seller pursuant to the Agreement simple interest motor vehicle retail installment sale contracts (the "Receivables") having an aggregate principal balance of $305,686,731.53 as of the Cutoff Date. See "The Certificates--Sale and Assignment of the Receivables." The Receivables will consist of loans either presently owned by the Bank or acquired by the Bank pursuant to a loan purchase and servicing agreement (the "Loan Purchase and Servicing Agreement") dated as of the Cutoff Date from Valley National. On or prior to the Closing Date, the Bank will sell the Receivables to the Seller pursuant to a Loan Sale Agreement dated as of the Cutoff Date among the Bank and the Seller (the "Loan Sale Agreement"). The Receivables have been selected based on the criteria specified in the Agreement and described herein. As of the Cutoff Date, the weighted average annual percentage rate (the "APR") of the Receivables was approximately 12.15%, the weighted average remaining maturity of the Receivables was approximately 45.97 months and the weighted average original maturity of the Receivables was approximately 60.12 months. As of the Cutoff Date, no Receivable has a scheduled maturity later than June 2002 (the "Final Scheduled Maturity Date"). Approximately 45.02% of the aggregate principal balance of the Receivables as of the Cutoff Date represents financing of new vehicles; the remainder represents financing of used vehicles. As of the Cutoff Date, approximately 34.46%, 12.15% and 10.89% of the aggregate principal balance of the Receivables have Obligors with billing addresses in the State of Arizona, Nevada and Georgia, respectively. See "The Receivables Pool" and "Risk Factors--Regional Economic Conditions." Class A Pass-Through Rate......... % per annum, calculated on the basis of a 360-day year consisting of twelve 30-day months (the "Class A Pass-Through Rate").
4 Class B Pass-Through Rate......... % per annum, calculated on the basis of a 360-day year consisting of twelve 30-day months (the "Class B Pass-Through Rate"). Distribution Date................. Distributions of principal and interest will be made on the 15th day of each month (or, if such 15th day is not a Business Day, the next succeeding Business Day) (each, a "Distribution Date"), commencing in July 1996. The final scheduled Distribution Date is the February 2003 Distribution Date (the "Final Scheduled Distribution Date"). A "Business Day" is a day other than a Saturday, a Sunday or a day on which banking institutions or trust companies in New York, New York or Phoenix, Arizona are authorized by law, regulation, executive order or governmental decree to be closed. Interest.......................... On each Distribution Date, the Trustee will distribute, to the extent of funds available therefor, first (i) pro rata to the holders of the Class A Certificates (the "Class A Certificateholders") as of the last day of the immediately preceding calendar month (each such date, a "Record Date"), interest in an amount equal to one-twelfth (or, in the case of the first Distribution Date, a fraction, the numerator of which is and the denominator of which is 360) of the product of the Class A Pass-Through Rate and the Class A Principal Balance after giving effect to distributions of principal made on the preceding Distribution Date or, in the case of the first Distribution Date, the Original Class A Principal Balance (the "Class A Monthly Interest") plus any unpaid Class A Monthly Interest from any preceding Distribution Date that remains unpaid and interest on such amount to the extent permitted by law at the Class A Pass-Through Rate and then (ii) pro rata to the holders of record of the Class B Certificates (the "Class B Certificateholders" and, together with the Class A Certificateholders, the "Certificateholders") as of the Record Date, interest in an amount equal to one-twelfth (or, in the case of the first Distribution Date, a fraction, the numerator of which is and the denominator of which is 360) of the product of the Class B Pass-Through Rate and the Class B Principal Balance after giving effect to all payments of principal made on the preceding Distribution Date, or, in the case of the first Distribution Date, the Original Class B Principal Balance (the "Class B Monthly Interest") plus any unpaid Class B Monthly Interest from any preceding Distribution Date that remains unpaid and interest on such amount to the extent permitted by law at the Class B Pass-Through Rate. The "Class A Principal Balance" on any date of determination shall equal the Original Class A Principal Balance reduced by all distributions actually made to the Class A Certificateholders and allocable to principal. The "Class B Principal Balance" on any date of determination shall equal the Original Class B Principal Balance reduced by all distributions actually made to the Class B Certificateholders and allocable to principal.
5 Principal......................... On each Distribution Date, the Trustee will distribute, to the extent of funds available therefor, first (i) pro rata to Class A Certificateholders of record as of the related Record Date an amount equal to the sum of (x) the Class A Percentage of all payments received by the Servicer during the preceding Collection Period allocable to principal on or in respect of the Receivables as described under "The Certificates--Distributions on Certificates" ("Principal Collections"), (y) the Class A Percentage of Realized Losses with respect to Receivables which became Liquidated Receivables during the related Collection Period (the sum of (x) and (y), the "Class A Monthly Principal") and (z) any unpaid Class A Monthly Principal with respect to any preceding Distribution Date and then (ii) pro rata to Class B Certificateholders of record as of the related Record Date an amount equal to the sum of (x) the Class B Percentage of Principal Collections, (y) the Class B Percentage of Realized Losses with respect to Receivables which became Liquidated Receivables during the related Collection Period (the sum of (x) and (y), the "Class B Monthly Principal") and (z) any unpaid Class B Monthly Principal with respect to any preceding Distribution Date. A "Collection Period" means, with respect to any Distribution Date the calendar month immediately preceding the calendar month in which such Distribution Date occurs. Subordination of the Class B Certificates..................... The rights of the Class B Certificateholders to receive distributions to which they would otherwise be entitled with respect to the assets of the Trust will be subordinated to the rights of the Class A Certificateholders, as more fully described under "Risk Factors--Subordination of the Class B Certificates" and "The Certificates--Subordination of the Class B Certificates." This subordination is intended to enhance the likelihood of timely receipt by Class A Certificateholders of the full amount of interest and principal required to be paid to them, and to afford such Class A Certificateholders limited protection against losses in respect of the Receivables. The protection afforded to the Class A Certificateholders by the subordination feature described above will be effected both by the preferential right of the Class A Certificateholders to receive, to the extent described below, current distributions from collections on or in respect of the Receivables and by the establishment of a segregated trust account held by the Collateral Agent for the benefit of the Certificateholders (the "Reserve Fund"). Amounts on deposit in the Reserve Fund will also be generally available to cover shortfalls in required distributions to the Class B Certificateholders, in respect of interest, after payment of interest on the Class A Certificates and, in respect of principal, after payment of interest and principal of the Class A Certificates and interest on the Class B Certificates. The Reserve Fund will be maintained for the benefit of the Certificateholders, but will not be part of the Trust.
6 No interest distribution will be made to the Class B Certificateholders on any Distribution Date until the full amount of interest on the Class A Certificates payable on such Distribution Date has been distributed to the Class A Certificateholders. No principal distribution will be made to the Class B Certificateholders on any Distribution Date until the full amount of interest on and principal of the Class A Certificates and interest on the Class B Certificates payable on such Distribution Date has been distributed to the Class A Certificateholders and Class B Certificateholders, respectively. Distributions of interest on the Class B Certificates, to the extent of collections on or in respect of the Receivables allocable to interest and certain available amounts on deposit in the Reserve Fund, will not be subordinated to the payment of principal on the Class A Certificates. Reserve Fund...................... The Reserve Fund will be created with an initial deposit by the Seller of cash or Eligible Investments having a value of $4,585,300.97, or 1.50% of the Pool Balance as of the Cutoff Date (the "Original Pool Balance"). The amount initially deposited in the Reserve Fund will be augmented on each Distribution Date by the deposit in the Reserve Fund of amounts remaining after distribution of the Servicing Fee and amounts to be paid to Class A Certificateholders and Class B Certificateholders. Amounts in the Reserve Fund on any Distribution Date (after giving effect to all distributions to be made on such Distribution Date) in excess of the Specified Reserve Balance for such Distribution Date will be released to the Seller, on such Distribution Date and upon such release, the Certificateholders will have no further rights in, or claims to, such amounts. The "Specified Reserve Balance" with respect to any Distribution Date generally will be equal to the greater of (a) 3.25% of the sum of the Class A Principal Balance and the Class B Principal Balance (after giving effect to all distributions on the Certificates on such Distribution Date) or (b) 1.00% of the sum of the Original Class A Principal Balance and the Original Class B Principal Balance. Funds will be withdrawn, to the extent available, from the Reserve Fund for distribution first to Class A Certificateholders to the extent of shortfalls in the amounts available to make required distributions of interest on the Class A Certificates and then to Class B Certificateholders to the extent of shortfalls in the amounts available to make required distributions of interest on the Class B Certificates. Thereafter, funds will be withdrawn from the Reserve Fund for distribution first to Class A Certificateholders to the extent of shortfalls in the amounts available to make required distributions of principal on the Class A Certificates and then to Class B Certificateholders to the extent of shortfalls in the amounts available to make required distributions of principal on the Class B Certificates. The "Pool Balance" at any time will represent the aggregate principal balance of the Receivables at the end of the preceding Collection Period, after giving effect to all payments received from Obligors and Purchase Amounts to be remitted by the
7 Servicer, the Seller or the Bank, as the case may be, all for such Collection Period, and all losses realized on Receivables liquidated during such Collection Period. Servicing Fee..................... The Servicer will receive a monthly fee (the "Servicing Fee"), payable on each Distribution Date, equal to one-twelfth of the product of 1.00% (the "Servicing Fee Rate") and the Pool Balance as of the first day of the related Collection Period. In addition, the Servicer will be entitled to certain nonsufficient funds charges and other administrative fees or similar charges. The Servicer will, and the Trust will not, be responsible for paying any compensation to the Subservicer. See "The Certificates-- Servicing Compensation." Optional Purchase................. The Seller may purchase all the Receivables on any Distribution Date as of which the Pool Balance is 5% or less of the Original Pool Balance at a purchase price determined as described under "The Certificates--Termination." Prepayment Considerations......... All the Receivables are prepayable at any time. The rate of prepayments on the Receivables may be influenced by a variety of economic, social and other factors, including changes in interest rates and the fact that an Obligor generally may not sell or transfer the Financed Vehicle securing a Receivable without the consent of the secured party, which generally results in the repayment of the remaining principal balance of the Receivable. In addition, under certain circumstances, the Seller will be obligated to repurchase (or to cause the Bank to repurchase) or the Servicer will be obligated to purchase Receivables from the Trust pursuant to the Agreement as a result of breaches of their respective representations, warranties or covenants. Accordingly, under certain circumstances it is likely that the Certificates will be repaid before the Final Scheduled Distribution Date. Any reinvestment risk (which will vary from investor to investor, but which may include the risk that principal payments will have to be reinvested at a lower yield) resulting from the rate of prepayments in full of the Receivables and the distribution of such prepayments to Certificateholders will be borne entirely by the Certificateholders. Tax Status........................ In the opinion of special tax counsel, the Trust will be classified for Federal income tax purposes as a grantor trust and not as an association taxable as a corporation. Certificateholders must report their respective allocable shares of income earned on Trust assets (excluding certain amounts retained by the Seller as described herein) and, subject to certain limitations applicable to individuals, estates and trusts, may deduct their respective allocable shares of reasonable servicing and other fees. See "Federal Income Tax Consequences." Investors should consult their own tax advisors regarding state and local tax consequences. See "State and Local Tax Consequences." Rating............................ It is a condition to the issuance of the Certificates that the Class A Certificates be rated in the highest investment rating category by at least two nationally recognized rating agencies (each, a "Rating Agency") and the Class B Certificates be rated at least "A" or its
8 equivalent by each such Rating Agency. The ratings of the Certificates are based primarily on the quality of the Receivables and the availability of the Reserve Fund and, in the case of the Class A Certificates, on the subordination provided by the Class B Certificates. A security rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn at any time by the assigning Rating Agency. See "Risk Factors--Ratings of the Certificates; Possibility of Withdrawal or Downgrading." ERISA Considerations.............. The Class A Certificates may be purchased by or on behalf of an employee benefit plan or other retirement arrangement that is subject to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), as well as any entity whose source of funds for the purchase of Class A Certificates includes plan assets by reason of a plan or account investing in such entity (each, a "Plan"), subject to the considerations described herein. Because the Class B Certificates are subordinated to the Class A Certificates, no Class B Certificate may be purchased by or on behalf of a Plan other than an "insurance company general account" as defined in, and which complies with the provisions of, Prohibited Transaction Exemption 95-60 which may be deemed to be holding Plan assets. See "ERISA Considerations."
9 RISK FACTORS IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, PROSPECTIVE PURCHASERS OF THE CERTIFICATES SHOULD READ AND CAREFULLY CONSIDER THE RISK FACTORS SET FORTH BELOW PRIOR TO MAKING AN INVESTMENT IN THE CERTIFICATES. CERTAIN LEGAL ASPECTS The Seller will cause financing statements to be filed with the appropriate governmental authorities to perfect the interest of the Trustee on behalf of the Certificateholders in its purchase of the Receivables in accordance with the requirements of the Uniform Commercial Code in effect in the States of Ohio (the "Ohio UCC") and Arizona (the "Arizona UCC," and together with the Ohio UCC, the "UCC"), and the Servicer will hold the Receivables, either directly or through the Subservicer, as custodian for the Trustee following the sale and assignment of the Receivables to the Trustee on behalf of the Certificateholders. The Receivables will not be segregated, stamped or otherwise marked to indicate that they have been sold to the Trustee on behalf of the Certificateholders. If, through inadvertence or otherwise, another party purchases (or takes a security interest in) the Receivables for new value in the ordinary course of business and takes possession of the Receivables without actual knowledge of the Trust's interest, the purchaser (or secured party) will acquire an interest in the Receivables superior to the interest of the Trust. Valley National will assign its security interests in any Financed Vehicles along with the sale and assignment of the related Receivables to the Bank and the Bank will assign its security interests in the Financed Vehicles along with the sale and assignment of the Receivables to the Seller. The Seller will assign its security interests in the Financed Vehicles along with the sale and assignment of the Receivables to the Trust, and the Servicer will hold the certificates of title or ownership or other documents evidencing the notation of Valley National's or the Bank's lien on the certificates of title or ownership relating to the Financed Vehicles, either directly or through the Subservicer, as custodian for the Trustee following the sale and assignment of the Receivables to the Trust. The certificates of title or ownership will not be endorsed or otherwise amended to identify the Trust as the new secured party. In Arizona and most other states, in the absence of fraud or forgery by the vehicle owner or of fraud, forgery, negligence or error by Valley National, the Bank or the Seller or administrative error by state or local agencies, the notation of Valley National's or the Bank's lien on the certificates of title or ownership and/or possession of such certificates with such notation will be sufficient to protect the Trust against the rights of subsequent purchasers of a Financed Vehicle or subsequent lenders who take a security interest in a Financed Vehicle. There exists a risk, however, in not identifying the Trust or the Trustee as the new secured party on the certificate of title that the security interest of the Trust or the Trustee may not be enforceable. In the event the Trust has failed to obtain or maintain a perfected security interest in a Financed Vehicle, its security interest would be subordinate to, among others, a bankruptcy trustee of the Obligor, a subsequent purchaser of the Financed Vehicle or a holder of a perfected security interest in the Financed Vehicle. The Seller intends that the transfer of the Receivables by it to the Trustee on behalf of the Trust under the Agreement constitutes a valid sale and assignment of such Receivables. Notwithstanding the foregoing, if the Seller were to become a debtor in a bankruptcy case and a creditor or trustee-in-bankruptcy of the Seller or the Seller itself were to take the position that the sale of the Receivables by the Seller to the Trust should instead be treated as a pledge of Receivables to secure a borrowing of the Seller, delays in payments or collections of Receivables could occur or (should the court rule in favor of any such trustee, debtor or creditor) reductions in the amounts of such payments could result. If the transfer of Receivables by the Seller to the Trust is treated as a pledge instead of a sale, a tax or government lien on the property of the Seller arising before the transfer of the Receivables to the Trust may have priority over the Trust's interest in such Receivables. REGIONAL ECONOMIC CONDITIONS Economic conditions in the states where Obligors reside may affect the delinquency, loan loss and repossession experience of the Trust with respect to the Receivables. As of the Cutoff Date, the billing addresses of the Obligors with respect to approximately 34.46%, 12.15% and 10.89% by principal balance of the Receivables were located in Arizona, Nevada and Georgia, respectively. Arizona, Nevada and Georgia 10 have experienced economic downturns from time to time and no predictions can be made regarding future economic conditions in Arizona, Nevada, Georgia or in any of the other states where the Obligors are located. See "The Receivables Pool." LIMITED OBLIGATIONS OF THE SELLER AND SERVICER Neither the Seller nor the Servicer is obligated to make any payments in respect of the Certificates or the Receivables. In addition, if the Bank were to cease acting as Servicer, if Valley National were to cease acting as Subservicer or during the period that the collection activities of the Bank and Valley National are consolidated with certain of their affiliates, delays in processing payments on the Receivables and information in respect thereof could occur and result in delays in payments to the Certificateholders. See "The Portfolio of Motor Vehicle Loans--Collection and Charge-Off Policies." In connection with the sale of Receivables by the Seller to the Trustee for the benefit of the Certificateholders, the Seller makes representations and warranties with respect to the characteristics of such Receivables. In certain circumstances, the Seller is required to repurchase (or require the Bank to repurchase) Receivables with respect to which such representations and warranties have been breached. If the Servicer fails to cure certain breaches of the covenants made by it in the Agreement with respect to a Receivable, the Servicer may be required to purchase the affected Receivable. Because the Servicer is initially the Bank and the Seller and the Servicer are affiliates, certain conflicts of interest may arise with respect to such obligations. For example, the Servicer may discover a breach of one of the representations that would cause the Seller (or itself) to have to repurchase a Receivable. Since both the Seller and the Servicer are obligated to give notices of any breaches of representations to the Trustee, failure by the Servicer to give such notice could give rise to an Event of Servicing Termination. Neither the Seller nor the Servicer is otherwise obligated with respect to the Receivables or the Certificates. See "The Certificates--Sale and Assignment of the Receivables" and "--Servicing Procedures." MATURITY AND PREPAYMENT ASSUMPTIONS All the Receivables are prepayable at any time. For this purpose the term "prepayments" includes prepayments by the Obligors in full or in part, certain partial prepayments related to liquidations due to default, including rebates of extended warranty contract costs and insurance premiums, as well as receipts of proceeds from physical damage, credit life, theft and disability insurance policies and certain other Receivables purchased or repurchased pursuant to the terms of the Agreement. The rate of prepayments on the Receivables may be influenced by a variety of economic, social and other factors. In addition, under certain circumstances, the Seller is obligated to repurchase (or require the Bank to repurchase), and the Servicer is obligated to purchase, Receivables pursuant to the Agreement as a result of certain uncured breaches of representations and warranties in the case of the Seller (and the Bank) and certain uncured breaches of covenants in the case of the Servicer made by them in the Agreement. See "The Certificates--Sale and Assignment of the Receivables" and "--Servicing Procedures." See also "The Certificates--Termination" regarding the Seller's option to purchase the Receivables. Accordingly, under certain circumstances, it is likely that the Certificates will be repaid before the Final Scheduled Distribution Date. Any reinvestment risk (which will vary from investor to investor, but which may include the risk that principal payments will have to be reinvested at a lower yield) resulting from the rate of prepayments of the Receivables and the distribution of such prepayments to Certificateholders will be borne entirely by the related Certificateholders. See "Maturity and Prepayment Assumptions." LIMITED ASSETS The Trust does not have, nor is it permitted or expected to have, any significant assets or sources of funds other than the Receivables and the right to receive payments under certain circumstances from the Reserve Fund. The Certificates represent interests solely in the Trust and neither the Class A Certificates nor the Class B Certificates will be insured or guaranteed by the Seller, the Servicer, the Subservicer, the Trustee or any other person or entity. Consequently, holders of the Certificates must rely for payment upon payments on the Receivables and, if and to the extent available, amounts on deposit in the Reserve Fund. Amounts to be deposited in the Reserve Fund are limited in amount and will be reduced as the Pool Balance declines. 11 SUBORDINATION OF THE CLASS B CERTIFICATES Amounts on deposit in the Reserve Fund will be available on any Distribution Date first to cover shortfalls in distributions of interest on the Class A Certificates and then to cover shortfalls in distributions of interest on the Class B Certificates. As a result, shortfalls in distributions of interest on the Class B Certificates will be covered (to the extent of amounts available in the Reserve Fund after the payment of interest on the Class A Certificates) prior to the use of the Reserve Fund to cover shortfalls of principal on the Class A Certificates. After distributions of interest on both the Class A Certificates and the Class B Certificates have been made, amounts on deposit in the Reserve Fund will be available first to cover shortfalls in distributions of principal on the Class A Certificates and then to cover shortfalls in distributions of principal on the Class B Certificates. If the Reserve Fund is exhausted, the Trust will depend solely on current payments on the Receivables to make distributions on the Certificates. The Class B Certificateholders will not receive any distributions of interest with respect to a Collection Period until the full amount of interest on the Class A Certificates relating to such Collection Period has been deposited in the Class A Distribution Account. Class B Certificateholders will not receive any distributions of principal with respect to such Collection Period until the full amount of interest on and principal of the Class A Certificates relating to such Collection Period has been deposited in the Class A Distribution Account. However, distributions of interest on the Class B Certificates, to the extent of collections on the Receivables allocable to interest and the amount on deposit in the Reserve Fund available after the payment of interest on the Class A Certificates has been made, will not be subordinated to the payment of principal on the Class A Certificates. See "The Certificates--Distributions on Certificates." FEDERAL INCOME TAXATION It is expected that, for Federal income tax purposes, amounts otherwise payable to the Class B Certificate Owners that are paid to the Class A Certificate Owners pursuant to the subordination provisions described above under "--Subordination of the Class B Certificates" will be deemed to have been received by the Class B Certificate Owners and then paid by them to the Class A Certificate Owners pursuant to a guaranty. See "Federal Income Tax Consequences--Class B Certificate Owners--Effect of Subordination." RATINGS OF THE CERTIFICATES; POSSIBILITY OF WITHDRAWAL OR DOWNGRADING It is a condition to the issuance of the Certificates that the Class A Certificates be rated in the highest rating category by at least two nationally recognized rating agencies (each a "Rating Agency"). It is a condition to the issuance of the Class B Certificates that they be rated at least "A" or its equivalent by each such Rating Agency. A rating is not a recommendation to purchase, hold or sell the Certificates, inasmuch as such rating does not comment as to market price or suitability for a particular investor. The ratings of the Certificates are based primarily on the quality of the Receivables and the availability of the Reserve Fund and, in the case of the Class A Certificates, on the subordination provided by the Class B Certificates. The ratings of the Certificates address the likelihood of the receipt of distributions due on the Certificates pursuant to their terms. There can be no assurance that a rating will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by a Rating Agency if in its judgment circumstances so warrant. In the event that a rating is subsequently lowered or withdrawn, no person or entity will be required to provide any additional credit enhancement. There can be no assurance as to whether any additional rating agency will rate the Certificates or, if one does, what rating would be assigned to either class of Certificates by such rating agency. LIMITED LIQUIDITY There is currently no secondary market for the Certificates. The Underwriters currently intend to make a market in the Certificates, but are under no obligation to do so. There can be no assurance that a secondary market will develop or, if a secondary market does develop, that it will provide the Certificateholders with liquidity of investment or that it will continue for the life of the Certificates. FORMATION OF THE TRUST The Seller will establish the Trust by selling and assigning the Receivables and certain other Trust Property to the Trust in exchange for the Certificates. All references herein to sales, assignments and 12 transfers to the Trust refer to sales, assignments and transfers to the Trustee on behalf of the Trust for the benefit of the Certificateholders. Prior to such sale and assignment, the Trust will have no assets or obligations or any operating history. Upon formation, the Trust will not engage in any business activities other than acquiring and holding the Receivables, issuing the Certificates and distributing payments thereon. To facilitate servicing and to minimize administrative burden and expense, it is anticipated that as of the Closing Date, the Servicer will appoint the Subservicer as custodian of the Receivables being serviced by the Subservicer. The Servicer will be paid the Servicing Fee out of collections from the Receivables, prior to distributions to Certificateholders. See "The Portfolio of Motor Vehicle Loans--Motor Vehicle Lending," "The Certificates--Servicing Procedures," "--Servicing Compensation" and "--Distributions on Certificates." The Servicer will, directly or through the Subservicer, hold the Receivables and the certificates of title or ownership or other documents evidencing the notation of Valley National's or the Bank's lien on the certificates of title or ownership relating to the Financed Vehicles as custodian for the Trustee. However, the Receivables will not be marked or stamped to indicate that they have been sold to the Trust, and the certificates of title for the Financed Vehicles will not be endorsed or otherwise amended to identify the Trustee as the new secured party. Under the foregoing circumstances and in certain jurisdictions, the Trust's interest in the Receivables and the Financed Vehicles may be defeated. See "Certain Legal Aspects of the Receivables." The Trust will not acquire any contracts or assets other than the Trust Property, and it is not anticipated that the Trust will have any need for additional capital resources. Because the Trust will have no operating history upon its establishment and will not engage in any business activity other than acquiring and holding the Trust Property, issuing the Certificates and distributing payments thereon, no historical or PRO FORMA financial statements or ratios of earnings to fixed charges with respect to the Trust have been included herein. THE TRUST PROPERTY Each Certificate represents a fractional undivided interest in the Trust. The Trust Property will include the Receivables, which were originated either by the Bank or Valley National. See "The Portfolio of Motor Vehicle Loans." The Receivables will continue to be serviced by the Servicer or the Subservicer, as the case may be, and evidence indirect financing made available by the Bank and Valley National, respectively, to the Obligors. On the Closing Date, the Seller will sell the Receivables to the Trustee for the benefit of the Certificateholders. The Trust Property also includes (i) all monies received under the Receivables on and after the Cutoff Date, (ii) such amounts as from time to time may be held in one or more accounts established and maintained by the Trustee pursuant to the Agreement as described below, (iii) security interests in the Financed Vehicles, (iv) the Seller's rights (if any) to receive proceeds from claims on credit life, disability, theft and physical damage insurance policies covering the Financed Vehicles or the Obligors, (v) the rights of the Trustee on behalf of the Certificateholders under the Agreement, (vi) the rights to certain payments from the Reserve Fund and (vii) all proceeds (within the meaning of the UCC) of the foregoing. The Reserve Fund will be maintained for the benefit of the Certificateholders, but will not be part of the Trust. THE PORTFOLIO OF MOTOR VEHICLE LOANS MOTOR VEHICLE LENDING The Receivables will consist of loans either presently owned by the Bank or acquired by the Bank from its wholly-owned subsidiary, Valley National (together the "Originators") pursuant to the Loan Purchase and Servicing Agreement dated as of the Cutoff Date. On or prior to the Closing Date, the Bank will sell the 13 Receivables to the Seller pursuant to the Loan Sale Agreement. As of the Cutoff Date, approximately 64.94% of the Receivables by aggregate principal balance of the Receivables represents Receivables originated by Valley National. The Originators purchase from motor vehicle dealers (the "Dealers") motor vehicle retail installment sale contracts which are secured by a new or used automobile, van or light-duty truck ("Motor Vehicle Loans"). The Originators enter into agreements (the "Dealer Agreements") primarily with Dealers that are franchised to sell new motor vehicles and with certain Dealers that sell used motor vehicles, based upon a limited financial review of the Dealer or, in some cases, the reputation and prior experience of the Originators with such Dealers and their key management. The Bank's motor vehicle lending operations are centrally managed through two regional dealer centers located in Phoenix and Tucson, Arizona. Valley National's motor vehicle lending operations are locally managed through 17 sites in 12 states. In addition to purchasing Motor Vehicle Loans from such Dealers, the Originators also extend loans and lines of credit to certain Dealers for, among other things, inventories and other commercial purposes. Such loans and lines of credit are not included in the Receivables purchased by the Trust. Each Motor Vehicle Loan was purchased by the Originators after a review by the Originators in accordance with their established underwriting procedures described below. These procedures are intended to assess the ability of an applicant for a proposed Motor Vehicle Loan to repay a proposed Motor Vehicle Loan and the adequacy of the motor vehicle as collateral. The Dealers require an applicant to complete an application which generally includes such information as the applicant's income, deposit accounts, liabilities, credit and employment history and other personal information. The application is reviewed for completeness and compliance with each Originator's guidelines. The Originators analyze all applications using a combination of empirical and judgmental systems. Upon receipt of an application, a credit bureau report on the applicant is ordered. The application, along with the credit bureau data and pertinent information on the applicant's proposed purchase is then judgmentally evaluated. Applications are generally approved on the strength of the applicant's credit and employment background and ability to repay the new debt. The Originators also give favorable consideration to an applicant's down payment, loan-to-value ratio and, in some instances, will accept weaker credit profiles in cases of applicant stability, ability to repay, lower loan-to-value ratios and/or additional rate. Each proposed loan is also evaluated utilizing a "pricing model" which assigns operating costs and loan losses to new production based on credit quality and loan-to-value ratios. Loan approvals are generally made to requests which appear reasonable to the underwriter as well as profitable on the pricing model. Under the Originators' normal underwriting standards, the amount advanced under a Motor Vehicle Loan generally will not exceed (i) in the case of new motor vehicles, 125% of the Dealer's cost, plus sales tax, license fee, title fee, service and warranty contracts, plus any premium for credit life and credit accident and health insurance obtained in connection with such Motor Vehicle Loan, or (ii) in the case of used motor vehicles, 125% of the wholesale price reported in the most recent edition of the Kelly Blue Book, NADA or Blackbook guide (varies by local market), plus sales tax, license fee, title fee, service and warranty contracts, plus any premium for credit life and credit accident and health insurance obtained in connection with such Motor Vehicle Loan. The Originators' guidelines are intended to provide a basis for the lending decision, but are not meant to supercede the credit judgment of the lending officer. As a result, certain Motor Vehicle Loans may not comply with all of the Originators' guidelines. The Originators review each of the Motor Vehicle Loans to ensure compliance with its established policies and procedures. DEALER AGREEMENTS Each Dealer that originates Motor Vehicle Loans and assigns them to either of the Originators has made representations and warranties to such Originator with respect to each Motor Vehicle Loan and the security interest in the motor vehicle relating thereto, including that (a) the Motor Vehicle Loan and underlying purchase transaction comply with all applicable laws and regulations, (b) the contract is a bona fide sale that arose from the sale of the vehicle described therein, the Obligor's signature thereon is genuine and the Obligor is of full age and has the capacity to contract, (c) the cash down payment and/or trade-in 14 allowance were actually received and were in the amounts specified in the documents delivered to such Originator, (d) all statements of fact in the contract are true to the best of the Dealer's knowledge, (e) there are no warranties, express or implied, that exist outside the written contract and (f) the Dealer has no knowledge of any fact impairing the validity or value of the contract. None of these representations and warranties relate to the creditworthiness of the Obligor or the collectability of the Motor Vehicle Loans. Upon breach of any representation or warranty made by such Dealer with respect to a Motor Vehicle Loan and an Originator, such Originator has a right to require the Dealer to repurchase such loan. CONTRACT MODIFICATIONS The Originators follow specific procedures with respect to contract extensions and modifications. Extensions may be granted to a current or delinquent customer to cure a short term cash flow problem. Extensions are granted on an individual basis and are reported and monitored closely. Generally, the extension policy includes: (i) at least six monthly payments must be made before an account is eligible for extension, (ii) one extension is allowed for every 12 month period, (iii) extensions will not be granted if the loan is deemed to be uncollectible, and (iv) extensions will not be granted if an account is more than 90 days past due unless approval by the Credit Unit Manager is obtained. Approval by a collection supervisor must be obtained before an extension is granted. The Originators may also change a payment date once during the term of the contract as an accommodation to the Obligor if the new payment date is within 20 days of the original scheduled payment date. Such change of payment date is not deemed to be an extension and no extension fee is charged. The Originators will not make modifications to the Receivables that (i) reduce the original rates of interest on the Receivables, (ii) reduce the amount of the regularly scheduled payments on the Receivables or (iii) extend the final payment dates on such Receivables beyond the Collection Period relating to the Final Scheduled Distribution Date. INSURANCE Pursuant to the Originators' customary policies, each Motor Vehicle Loan requires the Obligor to obtain fire, theft and collision insurance or comprehensive and collision insurance with respect to the Financed Vehicle. While verified at the funding of each Receivable, insurance coverage on the Financed Vehicles will not be monitored by or on behalf of the Servicer on an ongoing basis. The Servicer, on behalf of the Trust, is not obligated, and does not intend, to purchase required insurance on any Financed Vehicle and charge the Obligor for the cost of such insurance if the Obligor fails to do so. COLLECTION AND CHARGE-OFF POLICIES The Bank's collection activities are currently centralized in Phoenix and Tucson, Arizona. Valley National's collection activities are currently locally managed through 17 sites in 12 states. As part of its ongoing consolidation and standardization efforts, BANC ONE CORPORATION intends to consolidate the Bank's and Valley National's collection activities with respect to the Receivables into a single collection center in Phoenix, Arizona. It is currently estimated that this consolidation effort will be completed by the third quarter of 1997. Certain of the collection procedures discussed below may be modified in connection with the consolidation and standardization efforts of BANC ONE CORPORATION. The Originators consider Motor Vehicle Loans to be past due when payments are not received by the due date. Using behavior scoring and other variables, the Bank assesses Motor Vehicle Loans in terms of odds of becoming "bad." Bad is defined as the probability of the loan going three or more payments (60 days) delinquent. High risk loans are collected more aggressively than medium and low risk loans. Depending on risk level, delinquent loan collection efforts can begin as early as five days past due or as late as 13 days past due. Obligors on first payment default loans (highest risk) are called at 5 days by a late stage seasoned collector. Obligors on high risk non-first payment default loans are called via autodialer technology beginning at 10 days past due. Obligors on medium risk loans are called at 12 days past due. Obligors on low risk loans are sent a reminder letter at 13 days past due and typically called at 20 days past due. Collection accounts remain on the autodialer where efforts are made to contract for payment arrangements or until 15 determined to be worthy of accelerated collection techniques. If a loan ages past 45 days, it is automatically considered high risk and transferred to a manual calling environment. Repossession evaluations are typically conducted at 60 days past due. Valley National's collection efforts generally begin on the tenth day of delinquency via telephone. Collection personnel within each office, with the assistance of the collection and/or branch manager, prioritize accounts on the basis of perceived risk after the tenth day of delinquency. Repossession procedures generally begin by the 45th day of delinquency. Repossessions are carried out by contractors who have met the Originators' eligibility requirements. Collateral is liquidated at weekly auctions, subject to minimum bid requirements, no later than 45 days after repossession. The Originators' policy is to charge off Motor Vehicle Loans at the time of repossession or at the point the loan becomes 120 days delinquent, whichever comes first. If collateral has been repossessed, the full principal balance plus accrued interest is charged off. Subsequent repossession sale proceeds are applied as gross loss reductions if received within 45 days of charge off, otherwise, credits are applied as recoveries. Deficiency balances are generally pursued if deemed collectible. Prior to the first quarter of 1996, each of the Originator's procedure was to charge off less than 100% of the principal balance plus accrued interest of Motor Vehicle Loans at the time of repossession. The net losses for each of the Originators for the three months ended March 31, 1996 in the tables below reflect such change. DELINQUENCY AND NET LOSS EXPERIENCE OF THE BANK Set forth below is certain information concerning the historical experience of the portfolio owned or serviced by the Bank pertaining to retail (new or used) automobile, van or light duty truck Receivables originated indirectly by the Bank through Dealers. There can be no assurance that the delinquency and net loss experience on the Receivables will be comparable to that set forth below. DELINQUENCY EXPERIENCE
AT MARCH 31, ------------------------------------------------- 1996 1995 ----------------------- ----------------------- NUMBER OF NUMBER OF CONTRACTS AMOUNT CONTRACTS AMOUNT --------- ------------ --------- ------------ Portfolio at Period End....... 50,010 $472,358,212 49,816 $433,521,970 Delinquency: 30-59 days.................. 476 $ 4,109,434 411 $ 3,230,137 60-89 days.................. 81 $ 650,581 39 $ 300,287 90 days or more............. 34 $ 318,138 14 $ 85,719 Total Delinquencies as a Percentage of the Portfolio.................... 1.18 % 1.08% 0.93 % 0.83% AT DECEMBER 31, --------------------------------------------------------------------------- 1995 1994 1993 ----------------------- ----------------------- ----------------------- NUMBER OF NUMBER OF NUMBER OF CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT --------- ------------ --------- ------------ --------- ------------ Portfolio at Period End....... 47,845 $432,159,919 51,935 $459,919,212 56,840 $514,433,322 Delinquency: 30-59 days.................. 579 $ 4,685,050 561 $ 4,136,178 559 $ 3,600,321 60-89 days.................. 96 $ 723,220 115 $ 920,306 88 $ 502,998 90 days or more............. 21 $ 138,255 13 $ 98,657 17 $ 100,920 Total Delinquencies as a Percentage of the Portfolio.................... 1.45 % 1.28% 1.33 % 1.12% 1.17 % 0.82%
HISTORICAL NET LOSS EXPERIENCE
FOR THREE MONTHS ENDED MARCH 31, FOR YEAR ENDED DECEMBER 31, ---------------------------------------- ---------------------------------------------- 1996 (1) 1995 (1) 1995 1994 1993 ------------------- ------------------- -------------- -------------- -------------- Principal Amount Outstanding.......... $ 472,358,212 $ 433,521,970 $432,159,919 $459,919,212 $514,433,322 Average Principal Amount Outstanding.......................... $ 449,852,213 $ 446,638,416 $424,055,377 $495,350,326 $468,400,193 Number of Loans Outstanding........... 50,010 49,816 47,845 51,935 56,840 Average Number of Loans Outstanding... 49,314 50,652 48,570 54,884 55,488 Net Losses............................ $ 677,763 $ 629,339 $ 1,728,951 $ 733,306 $ 820,765 Net Losses as a Percent of Principal Amount Outstanding................... 0.57% 0.58% 0.40% 0.16% 0.16% Net Losses as a Percent of Average Principal Amount Outstanding......... 0.60% 0.56% 0.41% 0.15% 0.18%
- ---------------------------------------- (1) Percentages are computed on an annualized basis. Delinquencies and net charge-offs are affected by a number of social, economic and other factors, and there can be no assurance as to the level of future total delinquencies or the severity of future net charge-offs. As a result, the delinquency and net charge-off experience of the Receivables may differ from those shown in the tables. 16 DELINQUENCY AND NET LOSS EXPERIENCE OF VALLEY NATIONAL Set forth below is certain information concerning the historical experience of the portfolio owned or serviced by Valley National pertaining to retail (new and used) automobile, van and light duty truck Receivables originated indirectly by the Valley National through Dealers. There can be no assurance that the delinquency and net loss experience on the Receivables will be comparable to that set forth below. DELINQUENCY EXPERIENCE
AT MARCH 31, ------------------------------------------------- 1996 1995 ----------------------- ----------------------- NUMBER OF NUMBER OF CONTRACTS AMOUNT CONTRACTS AMOUNT --------- ------------ --------- ------------ Portfolio at Period End....... 57,615 $481,980,813 75,028 $680,700,832 Delinquency: 30-59 days.................. 338 $ 2,999,444 321 $ 2,910,280 60-89 days.................. 53 $ 482,534 41 $ 403,771 90 days or more............. 31 $ 270,541 14 $ 146,535 Total Delinquencies as a Percentage of the Portfolio.................... 0.73 % 0.78% 0.50 % 0.51% AT DECEMBER 31, --------------------------------------------------------------------------- 1995 1994 1993 ----------------------- ----------------------- ----------------------- NUMBER OF NUMBER OF NUMBER OF CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT --------- ------------ --------- ------------ --------- ------------ Portfolio at Period End....... 60,118 $499,872,817 79,093 $738,210,863 81,030 $767,066,037 Delinquency: 30-59 days.................. 503 $ 4,375,988 364 $ 3,367,531 486 $ 3,997,134 60-89 days.................. 73 $ 691,106 43 $ 404,326 29 $ 255,539 90 days or more............. 44 $ 437,131 14 $ 102,886 6 $ 29,018 Total Delinquencies as a Percentage of the Portfolio.................... 1.03 % 1.10% 0.53 % 0.52% 0.64 % 0.56%
HISTORICAL NET LOSS EXPERIENCE
FOR THREE MONTHS ENDED MARCH 31, FOR YEAR ENDED DECEMBER 31, ------------------------------ ---------------------------------------------- 1996 (1)(2) 1995 (1) 1995 1994 1993 -------------- -------------- -------------- -------------- -------------- Principal Amount Outstanding.......... $481,980,813 $680,700,832 $499,872,817 $738,210,863 $767,066,037 Average Principal Amount Outstanding.......................... $485,613,955 $711,966,618 $612,606,526 $788,399,898 $698,730,738 Number of Loans Outstanding........... 57,615 75,028 60,118 79,093 81,030 Average Number of Loans Outstanding... 58,319 76,584 68,830 82,753 77,566 Net Losses............................ $ 164,853 $ 698,566 $ 3,834,679 $ 1,731,872 $ 1,672,978 Net Losses as a Percent of Principal Amount Outstanding................... 0.14% 0.41% 0.77% 0.23% 0.22% Net Losses as a Percent of Average Principal Amount Outstanding......... 0.14% 0.39% 0.63% 0.22% 0.24%
- ---------------------------------------- (1) Percentages are computed on an annualized basis. (2) Net loss numbers reflect an atypically high level of recoveries. Delinquencies and net charge-offs are affected by a number of social, economic and other factors, and there can be no assurance as to the level of future total delinquencies or the severity of future net charge-offs. As a result, the delinquency and net charge-off experience of the Receivables may differ from those shown in the tables. THE RECEIVABLES POOL GENERAL The Receivables were selected by several criteria, including, as of the Cutoff Date, the following: each Receivable has a scheduled maturity of not later than the Final Scheduled Maturity Date; each Receivable provides for level monthly payments which fully amortize the amount financed (except for the last payment, which may be different from the level payment); each Receivable is not more than 90 days contractually past due (a scheduled payment has not been received by the third subsequent calendar month's scheduled payment date) and is not more than six months paid ahead; each Receivable has a principal balance between $250 and $50,000; and each Receivable is a fixed rate, simple interest receivable (a "Simple Interest Receivable") having an APR of no less than 9%, in the case of Receivables originated by Valley National and 11%, in the case of Receivables originated by the Bank. As of the Cutoff Date, no Obligor on any Receivable was noted in the related records of the Servicer as being the subject of a bankruptcy proceeding. No selection procedures believed by the Seller to be adverse to Certificateholders were used in selecting the Receivables. The composition, distribution by remaining principal, distribution by APR, distribution by remaining term and geographic distribution of the Receivables as of the Cutoff Date are set forth in the following tables. COMPOSITION OF THE RECEIVABLES AS OF THE CUTOFF DATE
WEIGHTED AVERAGE APR OF AGGREGATE PRINCIPAL NUMBER OF WEIGHTED AVERAGE WEIGHTED AVERAGE AVERAGE PRINCIPAL RECEIVABLES BALANCE RECEIVABLES REMAINING TERM ORIGINAL TERM BALANCE - ----------------- ----------------------- ----------- -------------------- -------------------- ----------------- 12.15% $ 305,686,731.53 31,595 45.97 months 60.12 months $ 9,675.16
17 DISTRIBUTION BY REMAINING PRINCIPAL OF THE RECEIVABLES AS OF THE CUTOFF DATE
REMAINING PRINCIPAL NUMBER OF AGGREGATE PRINCIPAL RANGE OF BALANCE RECEIVABLES BALANCE (1) - ------------------------------------------------------------------------------------------ ----------- ------------------- $ 250 to $ 2,499......................................................................... 1,077 $ 2,115,568 $ 2,500 to $ 4,999........................................................................ 5,608 21,460,032 $ 5,000 to $ 7,499........................................................................ 6,235 38,949,385 $ 7,500 to $ 9,999........................................................................ 5,632 49,071,066 $10,000 to $12,499........................................................................ 4,691 52,564,253 $12,500 to $14,999........................................................................ 3,304 45,124,007 $15,000 to $17,499........................................................................ 2,178 35,213,426 $17,500 to $19,999........................................................................ 1,291 24,036,749 $20,000 to $22,499........................................................................ 766 16,192,066 $22,500 to $24,999........................................................................ 421 9,944,592 $25,000 to $27,499........................................................................ 205 5,351,939 $27,500 to $29,999........................................................................ 119 3,408,897 $30,000 to $39,999........................................................................ 65 2,121,325 $40,000 to $49,999........................................................................ 3 133,425 ----------- ------------------- Total..................................................................................... 31,595 $ 305,686,732 ----------- ------------------- ----------- ------------------- PERCENTAGE OF REMAINING PRINCIPAL AGGREGATE PRINCIPAL RANGE OF BALANCE BALANCE (2) - ------------------------------------------------------------------------------------------ --------------------- $ 250 to $ 2,499......................................................................... 0.69% $ 2,500 to $ 4,999........................................................................ 7.02 $ 5,000 to $ 7,499........................................................................ 12.74 $ 7,500 to $ 9,999........................................................................ 16.05 $10,000 to $12,499........................................................................ 17.20 $12,500 to $14,999........................................................................ 14.76 $15,000 to $17,499........................................................................ 11.52 $17,500 to $19,999........................................................................ 7.86 $20,000 to $22,499........................................................................ 5.30 $22,500 to $24,999........................................................................ 3.25 $25,000 to $27,499........................................................................ 1.75 $27,500 to $29,999........................................................................ 1.12 $30,000 to $39,999........................................................................ 0.69 $40,000 to $49,999........................................................................ 0.04 ------ Total..................................................................................... 100.00% ------ ------
- -------------------------- (1) Dollar amounts may not add to $305,686,732 because of rounding. (2) Percentages may not add to 100.00% because of rounding. DISTRIBUTION BY ANNUAL PERCENTAGE RATE OF THE RECEIVABLES AS OF THE CUTOFF DATE
ANNUAL PERCENTAGE NUMBER OF AGGREGATE PRINCIPAL RATE RANGE RECEIVABLES BALANCE (1) - ------------------------------------------------------------------------------------------ ----------- ------------------- 9.00% to 9.99%.......................................................................... 6,456 $ 62,159,280 10.00% to 10.99%.......................................................................... 4,173 40,862,152 11.00% to 11.99%.......................................................................... 6,443 69,242,320 12.00% to 12.99%.......................................................................... 5,255 51,620,688 13.00% to 13.99%.......................................................................... 2,726 26,480,454 14.00% to 14.99%.......................................................................... 1,989 17,673,233 15.00% and above.......................................................................... 4,553 37,648,604 ----------- ------------------- Total..................................................................................... 31,595 $ 305,686,732 ----------- ------------------- ----------- ------------------- PERCENTAGE OF ANNUAL PERCENTAGE AGGREGATE PRINCIPAL RATE RANGE BALANCE - ------------------------------------------------------------------------------------------ --------------------- 9.00% to 9.99%.......................................................................... 20.33% 10.00% to 10.99%.......................................................................... 13.37 11.00% to 11.99%.......................................................................... 22.65 12.00% to 12.99%.......................................................................... 16.89 13.00% to 13.99%.......................................................................... 8.66 14.00% to 14.99%.......................................................................... 5.78 15.00% and above.......................................................................... 12.32 ------ Total..................................................................................... 100.00% ------ ------
- -------------------------- (1) Dollar amounts may not add to $305,686,732 because of rounding. DISTRIBUTION BY REMAINING TERM OF THE RECEIVABLES AS OF THE CUTOFF DATE
NUMBER OF AGGREGATE PRINCIPAL RANGE OF REMAINING TERMS RECEIVABLES BALANCE - -------------------------------------------------------------------------------------------- ----------- ------------------- 12 to 17 months............................................................................. 3,710 $ 13,512,987 18 to 23 months............................................................................. 3,253 16,181,933 24 to 29 months............................................................................. 3,434 22,171,388 30 to 35 months............................................................................. 3,617 28,404,990 36 to 41 months............................................................................. 3,875 36,642,396 42 to 47 months............................................................................. 3,524 38,428,800 48 to 53 months............................................................................. 2,933 36,572,468 54 to 59 months............................................................................. 3,578 50,738,146 60 to 65 months............................................................................. 1,828 29,464,301 66 to 71 months............................................................................. 1,613 29,191,449 72 months................................................................................... 230 4,377,874 ----------- ------------------- Total....................................................................................... 31,595 $ 305,686,732 ----------- ------------------- ----------- ------------------- PERCENTAGE OF AGGREGATE PRINCIPAL RANGE OF REMAINING TERMS BALANCE (1) - -------------------------------------------------------------------------------------------- ------------------- 12 to 17 months............................................................................. 4.42% 18 to 23 months............................................................................. 5.29 24 to 29 months............................................................................. 7.25 30 to 35 months............................................................................. 9.29 36 to 41 months............................................................................. 11.99 42 to 47 months............................................................................. 12.57 48 to 53 months............................................................................. 11.96 54 to 59 months............................................................................. 16.60 60 to 65 months............................................................................. 9.64 66 to 71 months............................................................................. 9.55 72 months................................................................................... 1.43 ------ Total....................................................................................... 100.00% ------ ------
- -------------------------- (1) Percentages may not add to 100.00% because of rounding. 18 GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES AS OF THE CUTOFF DATE (1)
NUMBER OF AGGREGATE PRINCIPAL STATE (1) RECEIVABLES BALANCE - ------------------------------------------------------------------------------------------ ----------- ------------------- Arizona................................................................................... 10,612 $ 105,333,837 California................................................................................ 506 5,554,738 Colorado.................................................................................. 765 6,304,885 Florida................................................................................... 1,589 14,636,674 Georgia................................................................................... 3,541 33,304,423 Nevada.................................................................................... 3,318 37,139,371 New Mexico................................................................................ 3,089 30,214,021 North Carolina............................................................................ 1,033 8,397,304 Oklahoma.................................................................................. 2,261 24,453,130 South Carolina............................................................................ 919 8,962,327 Tennessee................................................................................. 912 9,999,926 Texas..................................................................................... 1,825 10,989,802 Other..................................................................................... 1,225 10,396,294 ----------- ------------------- Total..................................................................................... 31,595 $ 305,686,732 ----------- ------------------- ----------- ------------------- PERCENTAGE OF AGGREGATE PRINCIPAL STATE (1) BALANCE - ------------------------------------------------------------------------------------------ --------------------- Arizona................................................................................... 34.46% California................................................................................ 1.82 Colorado.................................................................................. 2.06 Florida................................................................................... 4.79 Georgia................................................................................... 10.89 Nevada.................................................................................... 12.15 New Mexico................................................................................ 9.88 North Carolina............................................................................ 2.75 Oklahoma.................................................................................. 8.00 South Carolina............................................................................ 2.93 Tennessee................................................................................. 3.27 Texas..................................................................................... 3.60 Other..................................................................................... 3.40 ------ Total..................................................................................... 100.00% ------ ------
- ------------------------ (1) Based on billing addresses of the Obligors. Approximately 45.02% of the aggregate principal balance of the Receivables, constituting 37.02% of the number of Receivables, as of the Cutoff Date, represents financing of new vehicles; the remainder represents financing of used vehicles. As of the Cutoff Date, 0.65% of the aggregate principal balance of the Receivables, constituting 0.68% of the number of Receivables, were more than 30 days contractually past due. A Receivable is 30 days contractually past due if a scheduled payment has not been received by the subsequent calendar month's scheduled payment date. All of the Receivables are Simple Interest Receivables. A Simple Interest Receivable provides for the amortization of the amount financed under the receivable over a series of fixed level monthly payments. Each monthly payment includes an installment of interest which is calculated on the basis of the outstanding principal balance of the receivable multiplied by the stated APR and further multiplied by the period elapsed (as a fraction of a calendar year) since the preceding payment of interest was made. As payments are received under a Simple Interest Receivable, the amount received is applied first to interest accrued to the date of payment and the balance is applied to reduce the unpaid principal balance. Accordingly, if an Obligor pays a fixed monthly installment before its scheduled due date, the portion of the payment allocable to interest for the period since the preceding payment was made will be less than it would have been had the payment been made as scheduled, and the portion of the payment applied to reduce the unpaid principal balance will be correspondingly greater. Conversely, if an Obligor pays a fixed monthly installment after its scheduled due date, the portion of the payment allocable to interest for the period since the preceding payment was made will be greater than it would have been had the payment been made as scheduled, and the portion of the payment applied to reduce the unpaid principal balance will be correspondingly less. In either case, the Obligor pays a fixed monthly installment until the final scheduled payment date, at which time the amount of the final installment is increased or decreased as necessary to repay the then outstanding principal balance. The Bank or Valley National, as the case may be, may accede to an Obligor's request to pay scheduled payments in advance, in which event the Obligor will not be required to make another regularly scheduled payment until the time a scheduled payment not paid in advance is due. The amount of any payment made in advance will be treated as a principal prepayment and will be distributed as part of the Principal Collections in the month following the Collection Period in which the prepayment was made. See "Maturity and Prepayment Assumptions." 19 MATURITY AND PREPAYMENT ASSUMPTIONS All the Receivables are prepayable at any time. For this purpose the term "prepayments" includes prepayments by Obligors in full or in part, certain partial prepayments related to liquidations due to default, including rebates of extended warranty contract costs and insurance premiums, as well as receipts of proceeds from physical damage, credit life, theft and disability insurance policies and certain other Receivables, purchased or repurchased pursuant to the terms of the Agreement. The rate of prepayments on the Receivables may be influenced by a variety of economic, social and other factors, including changes in interest rates and the fact that an Obligor generally may not sell or transfer the Financed Vehicle securing a Receivable without the consent of the secured party, which generally results in the repayment of the remaining principal balance of the Receivable. In addition, under certain circumstances, the Seller is obligated to repurchase (or require the Bank to repurchase), and the Servicer is obligated to purchase, Receivables pursuant to the Agreement as a result of certain uncured breaches of representations and warranties in the case of the Seller (and the Bank) and certain uncured breaches of covenants in the case of the Servicer. See "The Certificates--Sale and Assignment of the Receivables" and "--Servicing Procedures." See also "The Certificates--Termination" regarding the Seller's option to purchase the Receivables when the aggregate principal balance thereof is 5% or less of the Original Pool Balance, at a purchase price equal to the sum of the Class A Principal Balance and the Class B Principal Balance plus accrued and unpaid interest thereon. Accordingly, under certain circumstances it is likely that the Certificates will be repaid before the Final Scheduled Distribution Date. Any reinvestment risk (which will vary from investor to investor, but which may include the risk that principal payments will have to be reinvested at a lower yield) resulting from the rate of prepayments in full of the Receivables and the distribution of such prepayments to Certificateholders will be borne entirely by the Certificateholders. If an Obligor pays more than one scheduled payment at a time, the entire amount of the additional payment will be treated as a principal prepayment and distributed as part of the Principal Collections in the month following the month of receipt and the Bank and Valley National do not generally require the Obligor to make any scheduled payment in respect of such Receivable (a "Paid-Ahead Receivable") for the number of due dates corresponding to the number of such additional scheduled payments (the "Paid-Ahead Period"). Although the terms of the retail installment contract require the Obligor to make its next scheduled payments, the Obligor's Receivable is not considered delinquent for purposes of the Agreement during the Paid-Ahead Period and, interest will continue to accrue on the principal balance of the Receivable, as reduced by the application of the early payment. When the Obligor pays the next required payment, although such payment may be insufficient to cover the interest that has accrued since the last payment by the Obligor, the Obligor's Receivable would be considered to be current. This situation will continue until the installments are once again sufficient to cover all accrued interest and to reduce the principal balance of the Receivable. Depending on the principal balance and the APR of the related Receivable and on the number of installments that were paid early, there may be extended periods of time during which Receivables that are current are not amortizing. During such periods, no distributions in respect of principal will be made to the Certificateholders with respect to such Receivables. Paid-Ahead Receivables will affect the weighted average life of the Certificates. The distribution of the paid-ahead amount on the Distribution Date following the Collection Period in which such amount was received will generally shorten the weighted average life of the Certificates. However, depending on the length of time during which a Paid-Ahead Receivable is not amortizing as described above, the weighted average life of the Certificates may be extended. The Bank's and Valley National's portfolio of motor vehicle installment sale contracts has historically included contracts which have been paid-ahead by one or more scheduled monthly payments. There can be no assurance as to the number of Receivables which may become Paid-Ahead Receivables or the number or the principal amount of the scheduled payments which may be paid-ahead. 20 YIELD CONSIDERATIONS Interest on the Certificates will accrue at the Class A Pass-Through Rate and the Class B Pass-Through Rate with respect to each Collection Period on the Class A Principal Balance and the Class B Principal Balance, respectively, as of the Distribution Date occurring in such Collection Period (after giving effect to any payments made on such Distribution Date) or, in the case of the first Distribution Date, on the Original Class A Principal Balance and the Original Class B Principal Balance, respectively. In the event of a principal prepayment on a Receivable during a Collection Period, Class A Certificateholders and Class B Certificateholders will receive their pro rata share of interest for the full Collection Period with respect to the unpaid principal balance of such Receivable as of the first day of such Collection Period to the extent that amounts on deposit in the Collection Account and in the Reserve Fund are available for such purpose. If the Reserve Fund is exhausted, the amount of interest distributed to the Class B Certificateholders and, in certain limited circumstances, the Class A Certificateholders may be less than that described above. See "The Certificates-- Distributions on Certificates." Although the Receivables have different APRs, each Receivable's APR exceeds the sum of (a) the weighted average of the Class A Pass-Through Rate and the Class B Pass-Through Rate and (b) the Servicing Fee Rate. Therefore, disproportionate rates of prepayments between Receivables with higher and lower APRs will generally not affect the yield to Certificateholders. However, higher rates of prepayments of Receivables with higher APRs will decrease the amount available to cover delinquencies and defaults on the Receivables and may decrease the amount available to the Reserve Fund. See "The Certificates--Distributions on Certificates" and "--Reserve Fund." POOL FACTORS AND TRADING INFORMATION The "Class A Pool Factor" and the "Class B Pool Factor" will each be a seven-digit decimal which the Servicer will compute each month indicating the remaining Class A Principal Balance and Class B Principal Balance, respectively, as of the close of business on the Distribution Date, as a fraction of the respective initial outstanding principal balance of the Class A Certificates and the Class B Certificates. The Class A Pool Factor and the Class B Pool Factor will each be 1.0000000 as of the Closing Date, and thereafter will decline to reflect reductions in the outstanding principal balance of the Class A Certificates and the Class B Certificates, respectively. A Class A Certificateholder's portion of the aggregate outstanding principal balance of the Class A Certificates is the product of (i) the original denomination of the holder's Class A Certificate and (ii) the Class A Pool Factor. A Class B Certificateholder's portion of the aggregate outstanding principal balance of the Class B Certificates is the product of (i) the original denomination of the holder's Class B Certificate and (ii) the Class B Pool Factor. Pursuant to the Agreement, the Trustee will forward Certificateholders a copy of the Servicer's monthly reports concerning the payments received on the Receivables, the Pool Balance, the Class A Pool Factor, the Class B Pool Factor and various other items of information. Certificateholders during each calendar year will be furnished information for tax reporting purposes not later than the latest date permitted by law. See "The Certificates--Statements to Certificateholders." USE OF PROCEEDS The Seller will use the net proceeds from the sale of the Certificates to purchase the Receivables from the Bank and to make the initial Reserve Fund deposit in the amount of $4,585,300.97. THE SELLER The Seller is a wholly-owned subsidiary of BANC ONE CORPORATION ("BANC ONE"), an Ohio corporation. The Seller was incorporated in the State of Ohio on May 7, 1996. The principal executive offices of the Seller are located at 100 East Broad Street, Columbus, Ohio 43271-0158 and its telephone number is (614) 248-5700. 21 The Seller has taken steps in structuring the transactions described herein that are intended to ensure that the voluntary or involuntary application for relief by BANC ONE under the United States Bankruptcy Code or similar applicable state laws ("Insolvency Laws") will not result in consolidation of the assets and liabilities of the Seller with those of BANC ONE. These steps include the creation of the Seller as a separate, limited-purpose subsidiary pursuant to articles of incorporation containing certain limitations (including restrictions on the nature of the Seller's business and a restriction on the Seller's ability to commence a voluntary case or proceeding under any Insolvency Law without the prior unanimous affirmative vote of all of its directors). However, there can be no assurance that the activities of the Seller would not result in a court's concluding that the assets and liabilities of the Seller should be consolidated with those of BANC ONE in a proceeding under any Insolvency Law. See "Risk Factors--Certain Legal Aspects." In addition, the Trustee, and all Certificateholders will covenant that they will not at any time institute against the Seller any bankruptcy, reorganization or other proceeding under any Federal or state bankruptcy or similar law. The Seller will warrant to the Trust in the Agreement that the sale of the Receivables by the Seller to the Trustee on behalf of the Trust is a valid sale of such Receivables. In addition, the Seller, the Trustee and the Trust will treat the conveyance by the Seller of the Receivables as a sale of the Receivables by the Seller to the Trustee on behalf of the Trust and the Seller will take or cause to be taken all actions that are required to perfect the Trustee's ownership in such Receivables. If the Seller were to become a debtor in a bankruptcy case and a creditor or trustee in bankruptcy of the Seller or the Seller itself were to take the position that the sale of Receivables by the Seller to the Trust should instead be treated as a pledge of the Receivables to secure a borrowing of the Seller, then delays in payments of collections of the Receivables could occur or (should the court rule in favor of any such trustee, debtor or creditor) reductions in the amount of such payments could result. If the transfer of the Receivables by the Seller to the Trustee on behalf of the Trust is treated as a pledge instead of a sale, a tax or government lien on the property of the Seller arising before the transfer of the Receivables to the Trustee on behalf of the Trust may have priority over such Trustee's interest in the Receivables. If the conveyance by the Seller of the Receivables is treated as a sale, the Receivables would not be part of the Seller's bankruptcy estate and would not be available to the Seller's creditors. THE SERVICER AND THE SUBSERVICER Bank One, Arizona, NA, a national banking association, is an indirect wholly owned subsidiary of BANC ONE CORPORATION, a multi-bank holding company incorporated under the laws of the State of Ohio. The following unaudited financial information regarding the Bank was calculated on the basis of regulatory accounting principles and not on the basis of generally accepted accounting principles, is based on the Bank's Consolidated Report of Condition as of March 31, 1996 (the "Call Report") and is qualified in its entirety by detailed information included in such Call Report. As of March 31, 1996, the Bank had total assets of approximately $13.8 billion, total deposits of approximately $10.9 billion and total equity capital of approximately $.9 billion. The Servicer will be responsible for servicing the Receivables in accordance with the terms set forth in the Agreement. The Servicer intends to perform some of its servicing obligations under the Agreement through the Loan Purchase and Servicing Agreement with Valley National with respect to the Receivables sold by Valley National to the Bank then sold by the Bank to the Seller and finally sold by the Seller to the Trust. As of the Cutoff Date, approximately 64.94% of the Receivables by aggregate principal balance of the Receivables as of the Cutoff Date will be serviced by Valley National. The principal executive offices of the Bank are located at 201 North Central Avenue, Phoenix, AZ 85004, and its telephone number is (602) 221-2900. The principal executive offices of Valley National are located at 1600 East Northern Avenue, Phoenix, AZ 85020, and its telephone number is (602) 221-2900. 22 THE CERTIFICATES The Certificates will be issued pursuant to the Agreement, substantially in the form filed as an exhibit to the Registration Statement of which this Prospectus forms a part. Copies of the Agreement may be obtained by the Certificateholders upon written request to the Servicer. The following information summarizes all material provisions of the Certificates and the Agreement. The summary is subject to, and qualified in its entirety by reference to, the Agreement. GENERAL The Certificates will evidence fractional undivided interests in the assets of the Trust to be created pursuant to the Agreement. The Class A Certificates will evidence in the aggregate an undivided ownership interest of 96% of the Trust and the Class B Certificates will evidence in the aggregate an undivided ownership interest of 4% of the Trust. The Certificates will be offered for purchase in denominations of $1,000 and integral multiples of $1,000 thereof in book-entry form. Each Class of Certificates will initially be represented by a certificate registered in the name of Cede, the nominee of DTC. No beneficial owner of a Certificate (a "Certificate Owner") will be entitled to receive a definitive certificate representing such person's interest in the Trust except as set forth below under "--Definitive Certificates." Unless and until Certificates of a Class are issued in fully-registered certificated form ("Definitive Certificates") under certain limited circumstances described below, all references to actions by Certificateholders shall refer to actions taken by DTC upon instructions from its Direct Participants (as defined herein) and all references to distributions, notices, reports and statements to Certificateholders shall refer to distributions, notices, reports and statements to DTC or Cede, as the case may be, for the benefit of the Certificate Owners in accordance with DTC procedures. See "--Book-Entry Registration" and "--Definitive Certificates." BOOK-ENTRY REGISTRATION Persons acquiring beneficial ownership interests in the Certificates may hold their interests through DTC in the United States or Cedel or Euroclear in Europe. Each Class of Certificates will be registered in the name of Cede as nominee for DTC. Cedel and Euroclear will hold omnibus positions with respect to the Certificates on behalf of Cedel Participants and Euroclear Participants, respectively, through customers' securities accounts in Cedel's and Euroclear's name on the books of their respective depositories (collectively, the "Depositories") which in turn will hold such positions in customers' securities accounts in the Depositories' names on the books of DTC. For additional information regarding clearance and settlement procedures see Annex I hereto. DTC is a limited purpose trust company organized under the laws of the State of New York, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to Section 17A of the Exchange Act. DTC was created to hold securities for its participating members ("Participants") and to facilitate the clearance and settlement of securities transactions between Participants through electronic book-entry changes in Participants' accounts, thereby eliminating the need for physical movement of certificates. "Direct Participants" include securities brokers and dealers, banks, trust companies and clearing corporations. Indirect access to the DTC system is also available to others such as banks, brokers, dealers, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). The rules applicable to DTC and its Participants are on file with the Commission. Certificate Owners that are not Direct Participants or Indirect Participants but desire to purchase, sell or otherwise transfer ownership of, or other interests in, Certificates may do so only through Direct Participants or Indirect Participants. In addition, Certificate Owners will receive all distributions of principal and interest from the Trustee through Direct Participants. Under a book-entry format, Certificate Owners may experience some delay in their receipt of payments, since such payments will be forwarded by the Trustee to Cede, as nominee for DTC. DTC will forward such payments to its Direct Participants, which thereafter will forward them to Indirect Participants or Certificate Owners. It is anticipated that the only 23 "Certificateholder" will be Cede, as nominee for DTC. Certificate Owners will not be recognized by the Trustee as Certificateholders, as such term is used in the Agreement, and Certificate Owners will only be permitted to exercise the rights of Certificateholders indirectly through DTC and its Participants. Transfers between Participants will occur in accordance with DTC Rules. Transfers between Cedel Participants and Euroclear Participants will occur in accordance with their respective rules and operating procedures. Because of time zone differences, credits of securities received in Cedel or Euroclear as a result of a transaction with a Participant will be made during subsequent securities settlement processing and dated the business day following the DTC settlement date, and any such credits or any transactions in such securities settled during such processing will be reported to the relevant Euroclear or Cedel Participants on such business day. Cash received in Cedel or Euroclear as a result of sales of Certificates by or through a Cedel Participant or Euroclear Participant to a DTC Participant will be received with value on the DTC settlement date but will be available in the relevant Cedel or Euroclear cash account only as of the business day following settlement in DTC. Cross-market transfers between persons directly holding Certificates or indirectly through DTC, on the one hand, and directly or indirectly through Cedel Participants or Euroclear Participants, on the other, will be effected in DTC in accordance with DTC Rules on behalf of the relevant European international clearing system by its Depository; however, such cross-market transactions will require delivery of instructions to the relevant European international clearing system by the counterparty in such system in accordance with its rules and procedures and within its established deadline (European time). The relevant European international clearing system will, if the transaction meets its settlement requirements, deliver instructions to its Depository to take action to effect final settlement on its behalf by delivering or receiving securities in DTC, and making or receiving payment in accordance with normal procedures for same day funds settlement applicable to DTC. Cedel Participants and Euroclear Participants may not deliver instructions to the Depositories. Under the rules, regulations and procedures creating and affecting DTC and its operations (the "Rules"), DTC is required to make book-entry transfers of Certificates among Direct Participants on whose behalf it acts with respect to the Certificates and to receive and transmit distributions of principal of, and interest on, the Certificates. Direct Participants and Indirect Participants with which Certificate Owners have accounts with respect to the Certificates similarly are required to make book-entry transfers and receive and transmit such payments on behalf of their respective Certificate Owners. Accordingly, although Certificate Owners will not possess Certificates, the Rules provide a mechanism by which Certificate Owners will receive payments and will be able to transfer their interests. Because DTC can only act on behalf of Direct Participants, who in turn act on behalf of Indirect Participants and certain banks, the ability of a Certificate Owner to pledge Certificates to persons or entities that do not participate in the DTC system, or to otherwise act with respect to such Certificates, may be limited due to the lack of a physical certificate for such Certificates. Cedel is incorporated under the laws of Luxembourg as a professional depository. Cedel holds securities for its participating organizations ("Cedel Participants") and facilitates the clearance and settlement of securities transactions between Cedel Participants through electronic book-entry changes in accounts of Cedel Participants, thereby eliminating the need for physical movement of certificates. Transactions may be settled in Cedel in any of 28 currencies, including United States dollars. Cedel provides to its Cedel Participants, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Cedel interfaces with domestic markets in several countries. As a professional depository, Cedel is subject to regulation by the Luxembourg Monetary Institute. Cedel Participants are recognized financial institutions around the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. Indirect access to Cedel is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Cedel Participant, either directly or indirectly. 24 Euroclear was created in 1968 to hold securities for its participants ("Euroclear Participants") and to clear and settle transactions between Euroclear Participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of securities and cash. Transactions may be settled in any of 32 currencies, including United States dollars. Euroclear includes various other services, including securities lending and borrowing and interfaces with domestic markets in several countries generally similar to the arrangements for cross-market transfers with DTC described above. Euroclear is operated by the Brussels, Belgium office of Morgan Guaranty Trust Company of New York (the "Euroclear Operator"), under contract with Euroclear Clearance Systems, S.C., a Belgian cooperative corporation (the "Cooperative"). All operations are conducted by the Euroclear Operator, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear Operator, not the Cooperative. The Cooperative establishes policy for Euroclear on behalf of Euroclear Participants. Euroclear Participants include banks (including central banks), securities brokers and dealers and other professional financial intermediaries. Indirect access to Euroclear is also available to other firms that clear through, or maintain a custodial relationship with a Euroclear Participant, either directly or indirectly. The Euroclear Operator is the Belgian branch of a New York banking corporation which is a member bank of the Federal Reserve System. As such, it is regulated and examined by the Board of Governors of the Federal Reserve System and the New York State Banking Department, as well as the Belgian Banking Commission. Securities clearance accounts and cash accounts with the Euroclear Operator are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of Euroclear, and applicable Belgian law (collectively, the "Terms and Conditions"). The Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear and receipts of payments with respect to securities in Euroclear. All securities in Euroclear are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts. The Euroclear Operator acts under the Terms and Conditions only on behalf of Euroclear Participants and has no record of or relationship with persons holding through Euroclear Participants. Distributions with respect to Certificates held through Cedel or Euroclear will be credited to the cash accounts of Cedel Participants or Euroclear Participants in accordance with the relevant system's rules and procedures, to the extent received by its Depository. Such distributions will be subject to tax reporting in accordance with relevant United States tax laws and regulations. Cedel or the Euroclear Operator, as the case may be, will take any other action permitted to be taken by a beneficial holder of Certificates under the Agreement on behalf of a Cedel Participant or Euroclear Participant only in accordance with its relevant rules and procedures and subject to its Depository's ability to effect such actions on its behalf through DTC. DTC has advised the Seller that it will take any action permitted to be taken by a Certificateholder under the Agreement only at the direction of one or more Direct Participants to whose accounts with DTC the applicable Certificates are credited. DTC may take conflicting actions with respect to other undivided interests to the extent that such actions are taken on behalf of Direct Participants whose holdings include such undivided interests. Although DTC, Cedel and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of interests in the Certificates among Direct Participants of DTC, Cedel and Euroclear, they are under no obligation to perform or continue to perform such procedures and such procedures may be discontinued at any time. NEITHER THE TRUST, THE SELLER, THE SERVICER, THE SUBSERVICER, THE TRUSTEE NOR ANY OF THE UNDERWRITERS WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO ANY PARTICIPANTS, CEDEL PARTICIPANTS OR EUROCLEAR PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS NOMINEES WITH RESPECT TO (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC, CEDEL, EUROCLEAR OR ANY PARTICIPANT, (2) THE PAYMENT BY DTC, CEDEL, EUROCLEAR OR ANY PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL BALANCE OF, OR INTEREST ON, THE 25 CERTIFICATES, (3) THE DELIVERY BY ANY PARTICIPANT, CEDEL PARTICIPANT OR EUROCLEAR PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE AGREEMENT TO BE GIVEN TO CERTIFICATEHOLDERS OR (4) ANY OTHER ACTION TAKEN BY DTC OR ITS NOMINEE AS THE CERTIFICATEHOLDER. DEFINITIVE CERTIFICATES The Certificates will be issued in fully registered, certificated form ("Definitive Certificates") to Certificate Owners, rather than to DTC or its nominee, only if (i) the Seller advises the Trustee in writing that DTC is no longer willing or able to discharge properly its responsibilities as depository with respect to the Certificates and the Servicer is unable to locate a qualified successor, (ii) the Seller, at its option, elects to terminate the book-entry system through DTC or (iii) after the occurrence of an Event of Servicing Termination, holders of Certificates evidencing not less than a majority of the aggregate outstanding principal balance of the Class A Certificates and the Class B Certificates taken together as a single Class, advise the Trustee and DTC through Direct Participants in writing, and DTC shall so notify the Trustee, that the continuation of a book-entry system through DTC (or a successor thereto) is no longer in the Certificate Owners' best interests. Upon the occurrence of any event described in the immediately preceding paragraph, the Trustee is required to notify all Certificate Owners, through DTC and its Participants, of the availability of Definitive Certificates. Upon surrender by DTC of the definitive certificates representing the Certificates and receipt by the Trustee of instructions for re-registration, the Trustee will reissue the Certificates as Definitive Certificates, and thereafter the Trustee will recognize the holders of such Definitive Certificates as Certificateholders under the Agreement ("Holders"). Distributions of principal of, and interest on, the Definitive Certificates will be made by the Trustee directly to Holders in accordance with the procedures set forth herein and in the Agreement. Distributions of principal and interest on each Distribution Date will be made to Holders in whose names the Definitive Certificates were registered at the close of business on the applicable Record Date specified for such Certificates. Such distributions will be made by check mailed to the address of such Holder as it appears on the register maintained by the Trustee. The final payment on any Definitive Certificate, however, will be made only upon presentation and surrender of such Definitive Certificate at the office or agency specified in the notice of final distribution mailed to Certificateholders. Definitive Certificates will be transferable and exchangeable at the offices of the Trustee or of a registrar named in a notice delivered to Holders. No service charge will be imposed for any registration of transfer or exchange, but the Trustee may require payment of a sum sufficient to cover any tax or other governmental charge imposed in connection therewith. SALE AND ASSIGNMENT OF THE RECEIVABLES On or prior to the Closing Date, Valley National will sell and assign to the Bank, without recourse, its entire interest in the Receivables sold by it to the Bank pursuant to the Loan Purchase and Servicing Agreement, including its security interests in the related Financed Vehicles and all Collections received and to be received with respect thereto for the period on or after the Cutoff Date and the Bank will sell and assign to the Seller, without recourse, its entire interest in the Receivables and all Collections received and to be received with respect thereto for the period on or after the Cutoff Date. On the Closing Date, the Seller will sell and assign to the Trust, without recourse, its entire interest in the Receivables, including its security interests in the related Financed Vehicles, pursuant to the Agreement. Each Receivable will be identified in a schedule appearing as an exhibit to the Agreement. The Trustee will, concurrently with such sale and assignment and at the written direction of the Seller, execute, authenticate and deliver the Certificates. In the Agreement, the Seller will represent and warrant to the Trustee (and will have assigned to the Trust such representations and warranties made by the Bank in the Loan Sale Agreement), among other things, that (i) the information provided in a schedule to the Agreement is correct in all material respects and the computer tape supplied to the Trustee describing certain characteristics of the Receivables is correct 26 in all material respects as of the Cutoff Date; (ii) the Obligor on each Receivable is required to maintain physical damage insurance covering the Financed Vehicle; (iii) at the Cutoff Date the Seller has not received notice that any right of rescission, setoff, counterclaim or defense has been asserted or threatened with respect to any Receivable; (iv) at the Closing Date each of the Receivables is secured by a validly perfected first priority security interest in the Financed Vehicle in favor of the Bank or Valley National, as the case may be or appropriate action has been taken to obtain the same; (v) each Receivable, at the time it was originated, complied and, at the Closing Date, complies in all material respects with applicable Federal and state laws, including, without limitation, consumer credit, truth in lending, equal credit opportunity and disclosure laws; and (vi) the Seller has not received notice of any liens or claims, including liens for work, labor, materials or unpaid state or federal taxes relating to any Financed Vehicle securing the related Receivable that are or may be prior to or equal to the lien granted by such Receivable. Pursuant to the Agreement, the Seller, the Servicer or the Trustee must promptly advise the others in writing upon a discovery of a breach of any of the Seller's representations and warranties with respect to the Receivables. Unless any such breach shall have been cured within 60 days following the discovery of such breach by the Trustee or receipt by the Trustee of written notice from the Seller or the Servicer of such breach, the Seller will repurchase (or cause the Bank to repurchase) any Receivable from the Trust in which the interests of the Certificateholders are materially and adversely affected by such breach as of the first day succeeding the end of such 60 day period that is the last day of a Collection Period (or, at the Seller's option, the last day of the first Collection Period following the discovery) at a price equal to the unpaid principal balance owed by the Obligor plus interest thereon at the respective APR to the last day of the month of repurchase (the "Purchase Amount"). The repurchase obligation will constitute the sole remedy available to the Trustee or the Certificateholders for any such uncured breach. The Loan Sale Agreement will contain similar representations, warranties and obligations pursuant to which the Bank will be obligated to take the actions required of the Seller as described above. The Trustee will have the ability to enforce such obligations directly against the Bank in the event that the Seller fails to do so. To assure uniform quality in servicing the Receivables and to reduce administrative costs, the Trustee will appoint the Servicer as custodian of the Receivables. The Servicer, in its capacity as custodian, will hold the Receivables and all electronic entries, documents, instruments and writings relating thereto (each, a "Receivable File"), either directly or through the Subservicer, on behalf of the Trustee for the benefit of Certificateholders. The Receivables will not be stamped or otherwise marked to reflect the sale and assignment of the Receivables to the Trust and will not be segregated from other receivables held by the Servicer or the Subservicer. The Seller will cause the accounting records and computer systems used by the Seller as a master record of the Receivables conveyed by it to the Trust to be marked to reflect the sale and assignment of the Receivables to the Trust, and will file UCC financing statements reflecting such sale and assignment, the sale and assignment of Receivables from Valley National to the Bank and the sale and assignment of the Receivables from the Bank to the Seller with appropriate governmental authorities. The Obligors under the Receivables will not be notified of the sale and assignment of the Receivables to the Trust. See "Formation of the Trust" and "Certain Legal Aspects of the Receivables." ACCOUNTS The Trustee will establish one or more segregated accounts (the "Collection Account"), in the name of the Trustee on behalf of the Trust and the Certificateholders, into which all payments made on or with respect to the Receivables will be deposited. The Trustee will also establish a segregated account (the "Class A Distribution Account"), in the name of the Trustee on behalf of the Trust and the Class A Certificateholders, and a segregated account (the "Class B Distribution Account"), in the name of the Trustee on behalf of the Trust and the Class B Certificateholders, from which all distributions with respect to the Class A Certificates and the Class B Certificates, respectively, will be made. The Servicer will establish the Reserve Fund as a segregated account with Bankers Trust Company, as collateral agent on behalf of the Certificateholders (the "Collateral Agent"). The Collection Account, the Class A Distribution Account, the 27 Class B Distribution Account and the Reserve Fund are collectively referred to as the "Accounts." The Reserve Fund will be maintained for the benefit of the Certificateholders, but will not be an asset of the Trust. The Accounts will be maintained as Eligible Deposit Accounts. "Eligible Deposit Account" means either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution (other than the Seller or any affiliate of the Seller) organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any domestic branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the securities of such depository institution have a credit rating from each Rating Agency in one of its generic rating categories which signifies investment grade (an "Eligible Trust Company"). "Eligible Institution" means a depository institution (other than the Seller or any affiliate of the Seller) organized under the laws of the United States of America or any one of the states thereof or the District of Columbia (or any domestic branch of a foreign bank) (i) which has either (A) a long-term senior unsecured debt rating acceptable to the Rating Agencies or (B) a short-term senior unsecured debt rating or certificate of deposit rating acceptable to the Rating Agencies and (ii) whose deposits are insured by the FDIC. The Accounts will be established initially with the trust department of the Trustee or, in the case of the Reserve Fund, with the Collateral Agent. In the event that the Trustee ceases to be an Eligible Institution, the Trustee or, in the case of the Reserve Fund, the Collateral Agent shall transfer the Accounts to an Eligible Institution or Eligible Trust Company. Funds in the Accounts will be invested as provided in the Agreement in Eligible Investments at the direction of the Servicer. "Eligible Investments" are generally limited to investments acceptable to the Rating Agencies as being consistent with the ratings of the Certificates. Eligible Investments may include securities or other obligations issued by the Bank or its affiliates or trusts originated by the Bank or its affiliates. Eligible Investments are limited to obligations or securities that mature not later than the Business Day before the date on which the funds invested in such Eligible Investments are required to be withdrawn from the Accounts. Any earnings (net of losses and investment expenses) on amounts on deposit in the Accounts (other than the Reserve Fund) will be paid to the Servicer and will not be available to Certificateholders. SERVICING PROCEDURES The Servicer will make reasonable efforts to collect all payments due with respect to the Receivables and, in a manner consistent with the Agreement, will continue such collection procedures as it follows with respect to automotive retail installment sale contracts it services. Consistent with its normal procedures, the Servicer may, in its discretion, arrange with the Obligor on a Receivable to extend or modify the payment schedule, subject to certain limitations contained in the Agreement. Pursuant to the Agreement, the Servicer or the Trustee shall inform the other party in writing promptly upon the discovery of the breach by the Servicer of certain covenants made by it. If the Servicer fails to cure the breaches with respect to a Receivable within 60 days following the discovery of the breach or the receipt by the Trustee of notice of such breach, the Servicer is required to purchase for the Purchase Amount any Receivable in which the interests of the Certificateholders are materially and adversely affected by the breach as of the first day succeeding the end of such 60 day period that is the last day of a Collection Period (or, at the Servicer's option, the last day of the first Collection Period following the discovery). Pursuant to the Agreement, the Bank, as Servicer, has the right to delegate any of its responsibilities and obligations as Servicer to any of its affiliates and to certain third-party service providers that agree to conduct such duties in accordance with the Agreement. No such delegation will relieve the Bank of any of its obligations as Servicer under the Agreement and the Servicer shall be responsible for such functions as if it alone were performing such functions with respect to the Receivables. Pursuant to the Loan Purchase and Servicing Agreement, the Bank has delegated its responsibilities and obligations as Servicer to Valley National, with respect to all of the Receivables that the Bank has acquired from Valley National and conveyed to the Seller. 28 PAYMENTS ON RECEIVABLES The Servicer will deposit all payments, other than any nonsufficient funds charges and other administrative fees and similar charges retained by the Servicer as part of its compensation, on Receivables (from whatever source) and all proceeds of Receivables collected during each Collection Period into the Collection Account within two Business Days of receipt thereof. For purposes of the Agreement, the Servicer will be deemed to have received any amounts with respect to the Receivables that are received by the Subservicer, regardless of whether such amounts are received by the Subservicer. However, in the event that the Servicer satisfies certain requirements for monthly remittances and neither of the Rating Agencies, after 10 days prior notice, shall have notified the Seller, the Servicer or the Trustee in writing that monthly deposits by the Servicer in and of itself will result in a reduction or withdrawal of the then-current ratings of the Certificates, then so long as the Bank is the Servicer and provided that (i) there exists no Event of Servicing Termination (as described below) and (ii) each other condition to making monthly deposits as may be specified by the Rating Agencies is satisfied, the Servicer will not be required to deposit such amounts into the Collection Account until on or before the Business Day preceding the Distribution Date. It is anticipated that the Bank, as Servicer, will satisfy such requirements on the Closing Date. In such event, the Servicer will also deposit the aggregate Purchase Amount of Receivables repurchased by the Seller (or the Bank) or purchased by the Servicer into the Collection Account on or before the Business Day preceding the Distribution Date. Pending deposit into the Collection Account, Collections may be invested by the Servicer at its own risk and for its own benefit, and will not be segregated from funds of the Servicer. SERVICING COMPENSATION The Servicer will be entitled to receive on each Distribution Date, out of interest collected on or in respect of the Receivables, the Servicing Fee for the related Collection Period equal to one-twelfth of the product of 1.00% (the "Servicing Fee Rate") and the Pool Balance as of the first day of such Collection Period. The Servicing Fee will be calculated and paid based upon a 360-day year consisting of twelve 30-day months. The Servicing Fee will be paid out of Interest Collections from the Receivables, prior to distributions to Certificateholders. The Servicer will also collect and retain any nonsufficient funds charges and other administrative fees or similar charges allowed by applicable law with respect to the Receivables, and will be entitled to reimbursement from the Trust for certain expenses. Payments by or on behalf of Obligors will be allocated to scheduled payments and late fees and other charges in accordance with the Servicer's normal practices and procedures. In addition, the Servicer will be entitled to any earnings (net of losses and investment expenses) on amounts on deposit in the Accounts (other than the Reserve Fund). The Servicing Fee will compensate the Servicer for performing the functions of a third party servicer of automotive receivables as an agent for their beneficial owner, including collecting and posting all payments, responding to inquiries of Obligors on the Receivables, investigating delinquencies, sending payment coupons to Obligors, paying costs of disposition of defaults and policing the collateral. The Servicing Fee also will compensate the Servicer for administering the Receivables, accounting for Collections and furnishing monthly and annual statements to the Trustee with respect to distributions and generating Federal income tax information. The Servicing Fee also will reimburse the Servicer for certain taxes, accounting fees, outside auditor fees, data processing costs and other costs incurred in connection with administering the Receivables. The Servicer will, and the Trust will not, be responsible for paying any compensation to the Subservicer. DISTRIBUTIONS ON CERTIFICATES DEPOSITS TO COLLECTION ACCOUNT. On the later of the eighth Business Day and the eleventh calendar day of each month in which a Distribution Date occurs (the "Determination Date"), the Servicer will provide the Trustee with certain information with respect to the preceding Collection Period, including the amount of aggregate Collections on the Receivables, the aggregate amount of Liquidated Receivables and the aggregate Purchase Amount of Receivables to be repurchased by the Seller or to be purchased by the Servicer. 29 No later than the Business Day preceding each Distribution Date, the Servicer will cause Collections to be deposited into the Collection Account. See "--Payments on Receivables." "Collections" for any Distribution Date will equal the sum of Interest Collections and Principal Collections for the related Distribution Date. "Interest Collections" for any Distribution Date will equal the sum of the following amounts with respect to the preceding Collection Period: (i) that portion of all collections on the Receivables allocable to interest in respect of such Collection Period; (ii) all proceeds (other than any proceeds from any Dealer reserve) of the liquidation of defaulted Receivables ("Liquidated Receivables"), net of expenses incurred by the Servicer in connection with such liquidation and any amounts required by law to be remitted to the Obligor on such Liquidated Receivables ("Liquidation Proceeds"), to the extent attributable to interest due thereon, which became Liquidated Receivables during such Collection Period in accordance with the Servicer's customary servicing procedures, to the extent not included in clause (i) above; (iii) the Purchase Amount of each Receivable that was repurchased by the Seller (or the Bank) or purchased by the Servicer during such Collection Period, to the extent attributable to accrued interest thereon; and (iv) all monies collected, from whatever source (other than any proceeds from any Dealer reserve), in respect of Liquidated Receivables during any Collection Period following the Collection Period in which such Receivable was written off, net of the sum of any amounts expended by the Servicer for the account of the Obligor and any amounts required by law to be remitted to the Obligor ("Recoveries"), to the extent received during such Collection Period. "Principal Collections" for any Distribution Date will equal the sum of the following amounts with respect to the preceding Collection Period: (i) that portion of all collections on the Receivables allocable to principal in respect of such Collection Period; (ii) all Liquidation Proceeds attributable to the principal amount of Receivables which became Liquidated Receivables during such Collection Period in accordance with the Servicer's customary servicing procedures, to the extent not included in clause (i) above; (iii) the Purchase Amount of each Receivable repurchased by the Seller (or the Bank) or purchased by the Servicer during such Collection Period to the extent attributable to principal; and (iv) partial prepayments on Receivables in respect of such Collection Period relating to refunds of extended warranty contract costs or of credit life or disability insurance policy premiums, but only if such costs or premiums were financed by the respective Obligor and only to the extent not included in clause (i) above. Interest Collections and Principal Collections on any Distribution Date shall exclude all payments and proceeds (including Liquidation Proceeds) of any Receivables the Purchase Amount of which has been included in Collections in a prior Collection Period. DEPOSITS TO THE DISTRIBUTION ACCOUNTS. On each Distribution Date, the Servicer shall instruct the Trustee to make the following deposits and distributions, to the extent of Interest Collections (and, in the case of shortfalls occurring under clause (ii) below in the Class A Interest Distribution, the Class B Percentage of Principal Collections to the extent of such shortfalls): (i) to the Servicer, the Servicing Fee and all unpaid Servicing Fees from prior Collection Periods (to the extent not retained by the Servicer as described under "-Net Deposits" below); (ii) to the Class A Distribution Account, after the application of clause (i), the Class A Interest Distribution; and (iii) to the Class B Distribution Account, after the application of clauses (i) and (ii), the Class B Interest Distribution. On each Distribution Date, the Servicer shall instruct the Trustee to make the following deposits and distributions, to the extent of Principal Collections and Interest Collections remaining after the application of clauses (i), (ii) and (iii) above: (iv) to the Class A Distribution Account, the Class A Principal Distribution; (v) to the Class B Distribution Account, after the application of clause (iv), the Class B Principal Distribution; and 30 (vi) to the Reserve Fund, any amounts remaining after the application of clauses (i) through (v). To the extent necessary to satisfy the distributions described above, the Servicer shall instruct the Trustee to withdraw from the Reserve Fund and deposit in the Class A Distribution Account or the Class B Distribution Account as described below in the following order of priority on each Distribution Date: (i) an amount equal to the excess of the Class A Interest Distribution over the sum of Interest Collections and the Class B Percentage of Principal Collections will be deposited into the Class A Distribution Account; (ii) an amount equal to the excess of the Class B Interest Distribution over the portion of Interest Collections remaining after the distribution of the Class A Interest Distribution will be deposited into the Class B Distribution Account; (iii) an amount equal to the excess of the Class A Principal Distribution over the portion of Principal Collections and Interest Collections remaining after the distribution of the Class A Interest Distribution and the Class B Interest Distribution will be deposited into the Class A Distribution Account; and (iv) an amount equal to the excess of the Class B Principal Distribution over the portion of Principal Collections and Interest Collections remaining after the distribution of the Class A Interest Distribution, the Class B Interest Distribution and the Class A Principal Distribution will be deposited into the Class B Distribution Account. On each Distribution Date, all amounts on deposit in the Class A Distribution Account will be distributed to the Class A Certificateholders and all amounts on deposit in the Class B Distribution Account will be distributed to the Class B Certificateholders. "Class A Interest Carryover Shortfall" means, with respect to any Distribution Date, the excess of Class A Monthly Interest for the preceding Distribution Date and any outstanding Class A Interest Carryover Shortfall on such preceding Distribution Date, over the amount in respect of interest that is actually deposited in the Class A Distribution Account on such preceding Distribution Date, plus 30 days of interest on such excess, to the extent permitted by law, at the Class A Pass-Through Rate. "Class A Interest Distribution" means, with respect to any Distribution Date, the sum of Class A Monthly Interest for such Distribution Date and the Class A Interest Carryover Shortfall for such Distribution Date. "Class A Monthly Interest" means, with respect to any Distribution Date, one-twelfth (or, in the case of the first Distribution Date a fraction, the numerator of which is equal to and the denominator of which is 360) of the product of the Class A Pass-Through Rate and the Class A Principal Balance as of the Distribution Date occurring in the preceding Collection Period (after giving effect to any payments made on such Distribution Date) or, in the case of the first Distribution Date, the Original Class A Principal Balance. "Class A Monthly Principal" means, with respect to any Distribution Date, the Class A Percentage of Principal Collections for such Distribution Date plus the Class A Percentage of Realized Losses with respect to Receivables which became Liquidated Receivables during the related Collection Period. "Class A Principal Balance" equals the Original Class A Principal Balance, as reduced by all amounts allocable to principal on the Class A Certificates previously distributed to Class A Certificateholders. "Class A Principal Carryover Shortfall" means, with respect to any Distribution Date, the excess of Class A Monthly Principal for the preceding Distribution Date and any outstanding Class A Principal Carryover Shortfall on such preceding Distribution Date over the amount in respect of principal that is actually deposited in the Class A Distribution Account on such preceding Distribution Date. 31 "Class A Principal Distribution" means, with respect to any Distribution Date, the sum of Class A Monthly Principal for such Distribution Date and the Class A Principal Carryover Shortfall for such Distribution Date; provided, however, that the Class A Principal Distribution shall not exceed the Class A Principal Balance immediately prior to such Distribution Date. In addition, on the Final Scheduled Distribution Date, the principal required to be deposited in the Class A Distribution Account will include the lesser of (a) any principal due and remaining unpaid on each Receivable in the Trust as of the Final Scheduled Maturity Date or (b) the portion of the amount required to be deposited under clause (a) above that is necessary (after giving effect to the other amounts to be deposited in the Class A Distribution Account on such Distribution Date and allocable to principal) to reduce the Class A Principal Balance to zero. "Class B Interest Carryover Shortfall" means, with respect to any Distribution Date, the excess of Class B Monthly Interest for the preceding Distribution Date and any outstanding Class B Interest Carryover Shortfall on such preceding Distribution Date, over the amount in respect of interest that is actually deposited in the Class B Distribution Account on such preceding Distribution Date, plus 30 days of interest on such excess, to the extent permitted by law, at the Class B Pass-Through Rate. "Class B Interest Distribution" means, with respect to any Distribution Date, the sum of Class B Monthly Interest for such Distribution Date and the Class B Interest Carryover Shortfall for such Distribution Date. "Class B Monthly Interest" means, with respect to any Distribution Date, one-twelfth (or, in the case of the first Distribution Date a fraction, the numerator of which is equal to and the denominator of which is 360) of the product of the Class B Pass-Through Rate and the Class B Principal Balance as of the Distribution Date occurring in the preceding Collection Period (after giving effect to any payments made on such Distribution Date) or, in the case of the first Distribution Date, the Original Class B Principal Balance. "Class B Monthly Principal" means, with respect to any Distribution Date, the Class B Percentage of Principal Collections for such Distribution Date plus the Class B Percentage of Realized Losses with respect to Receivables which became Liquidated Receivables during the related Collection Period. "Class B Principal Balance" equals the Original Class B Principal Balance, as reduced by all amounts allocable to principal on the Class B Certificates previously distributed to Class B Certificateholders. "Class B Principal Carryover Shortfall" means, with respect to any Distribution Date, the excess of Class B Monthly Principal for the preceding Distribution Date and any outstanding Class B Principal Carryover Shortfall on such preceding Distribution Date over the amount in respect of principal that is actually deposited in the Class B Distribution Account on such preceding Distribution Date. "Class B Principal Distribution" means, with respect to any Distribution Date, the sum of Class B Monthly Principal for such Distribution Date and the Class B Principal Carryover Shortfall for such Distribution Date; PROVIDED, HOWEVER, that the Class B Principal Distribution shall not exceed the Class B Principal Balance immediately prior to such Distribution Date. In addition, on the Final Scheduled Distribution Date, the principal required to be distributed to Class B Certificateholders will include the lesser of (a) any principal due and remaining unpaid on each Receivable in the Trust as of the Final Scheduled Maturity Date or (b) the portion of the amount required to be deposited under clause (a) above that is necessary (after giving effect to the other amounts to be deposited in the Class B Distribution Account on such Distribution Date and allocable to principal) to reduce the Class B Principal Balance to zero, and, in the case of clauses (a) and (b), remaining after any required distribution of the amount described in clause (a) to the Class A Distribution Account. "Realized Losses" means, for any period, the excess of the principal balance of any Liquidated Receivable over Liquidation Proceeds to the extent allocable to principal. 32 SUBORDINATION OF THE CLASS B CERTIFICATES The rights of the Class B Certificateholders to receive distributions with respect to the Receivables will be subordinated to the rights of the Class A Certificateholders to the extent described below. This subordination is intended to enhance the likelihood of timely receipt by Class A Certificateholders of the full amount of interest and principal required to be paid to them, and to afford such Class A Certificateholders limited protection against losses in respect of the Receivables. No interest distribution will be made to the Class B Certificateholders on any Distribution Date in respect of interest until the full amount of interest on the Class A Certificates payable on such Distribution Date has been distributed to the Class A Certificateholders. No principal distribution will be made to the Class B Certificateholders on any Distribution Date in respect of principal until the full amount of interest on and principal of the Class A Certificates and interest on the Class B Certificates payable on such Distribution Date has been distributed to the Class A Certificateholders and the Class B Certificateholders, respectively. Distributions of interest on the Class B Certificates, however, to the extent of collections on or in respect of the Receivables allocable to interest and certain available amounts on deposit in the Reserve Fund, will not be subordinated to the payment of principal of the Class A Certificates. RESERVE FUND In the event of delinquencies or losses on the Receivables, the protection afforded to the Class A Certificateholders will be effected both by the preferential right of the Class A Certificateholders to receive current distributions with respect to the Receivables, to the extent described above under "--Subordination of the Class B Certificates," prior to any distribution being made on a Distribution Date to the Class B Certificateholders, and to receive amounts on deposit in the Reserve Fund. Amounts on deposit in the Reserve Fund will also be generally available to cover shortfalls in required distributions to the Class B Certificateholders, in respect of interest, after payment of interest on the Class A Certificates and, in respect of principal, after payment of interest on and principal of the Class A Certificates and interest on the Class B Certificates. The Reserve Fund will not be a part of or otherwise includible in the Trust and will be a segregated trust account held by the Collateral Agent for the benefit of the Certificateholders. The Reserve Fund will be created with an initial deposit by the Seller on the Closing Date of an amount equal to 1.50% of the Original Pool Balance, and will be augmented on each Distribution Date by deposit therein of Collections remaining after distribution of the Servicing Fee and amounts to be paid to Class A Certificateholders and Class B Certificateholders as described above under "--Distributions on Certificates." Amounts on deposit in the Reserve Fund will be released to the Seller on each Distribution Date to the extent that the amount on deposit in the Reserve Fund exceeds the Specified Reserve Balance. Upon any such release to the Seller of amounts from the Reserve Fund, neither the Class A Certificateholders nor the Class B Certificateholders will have any further rights in, or claims to, such amounts. "Specified Reserve Balance" with respect to any Distribution Date means the greater of (a) 3.25% of the sum of the Class A Principal Balance and Class B Principal Balance on such Distribution Date (after giving effect to all distributions with respect to the Certificates to be made on such Distribution Date), except that, if on any Distribution Date (x) the average of the Charge-off Rates for the three preceding Collection Periods exceeds 1.75% or (y) the average of the Delinquency Percentages for the three preceding Collection Periods exceeds 1.75%, then the Specified Reserve Balance shall be an amount equal to the greater of 8.00% of the sum of the Class A Principal Balance and the Class B Principal Balance on such Distribution Date (after giving effect to all distributions with respect to the Certificates to be made on such Distribution Date) and the amount specified in clause (b) below or (b) 1.00% of the sum of the Original Class A Principal Balance and Original Class B Principal Balance. In no circumstances will the Seller be required to deposit any amounts in the Reserve Fund other than the initial Reserve Fund deposit to be made on the Closing Date. The "Charge-off Rate" with respect to a Collection Period will equal the Aggregate Net Losses with respect to the Receivables expressed, on an annualized basis, as a percentage of the average of (x) the Pool Balance on the last day of the immediately preceding Collection Period and (y) the Pool Balance on the last day in such Collection Period. The "Aggregate Net Losses" with respect to a Collection Period will equal the 33 aggregate principal balance of all Receivables newly designated during such Collection Period as Liquidated Receivables minus Liquidation Proceeds collected during such Collection Period with respect to all Liquidated Receivables and any Recoveries collected during such Collection Period. The "Delinquency Percentage" with respect to a Collection Period will equal the ratio of (a) the outstanding principal balance of the Receivables 60 days or more delinquent (which amount shall include Receivables in respect of Financed Vehicles that have been repossessed but not yet sold or otherwise liquidated) as of the last day of such Collection Period, determined in accordance with the Servicer's normal practices, divided by (b) the outstanding principal balance of all Receivables on the last day of such Collection Period. Amounts held from time to time in the Reserve Fund will continue to be held for the benefit of the Certificateholders and may be invested in Eligible Investments. Any loss on such investment will be charged to the Reserve Fund. Any investment earnings (net of losses) will be paid to the Seller. The time necessary for the Reserve Fund to reach and maintain the Specified Reserve Balance at any time after the date of issuance of the Certificates will be affected by the delinquency, credit loss and repossession and prepayment experience of the Receivables and, therefore, cannot be accurately predicted. If on any Distribution Date the protection afforded the Class A Certificates by the Class B Certificates and by the Reserve Fund is exhausted, the Class A Certificateholders will directly bear the risks associated with ownership of the Receivables. If on any Distribution Date amounts on deposit in the Reserve Fund have been depleted, the protection afforded the Class B Certificates by the Reserve Fund will be exhausted and the Class B Certificateholders will directly bear the risks associated with ownership of the Receivables. None of the Class B Certificateholders, the Trustee, the Servicer, the Subservicer or the Seller will be required to refund any amounts properly distributed or paid to them, whether or not there are sufficient funds on any subsequent Distribution Date to make full distributions to the Class A Certificateholders. NET DEPOSITS As an administrative convenience, unless the Servicer is required to remit Collections within two Business Days of receipt thereof, the Servicer will be permitted to make the deposit of Collections and Purchase Amounts for or with respect to the Collection Period net of distributions to be made to the Servicer with respect to the Collection Period. The Servicer, however, will account to the Trustee and the Certificateholders as if all deposits, distributions and transfers were made individually. STATEMENTS TO CERTIFICATEHOLDERS On each Distribution Date, the Trustee will include with each distribution to each Class A Certificateholder and Class B Certificateholder as of the close of business on the related Record Date (which shall be Cede as the nominee for DTC unless Definitive Certificates are issued under the limited circumstances described herein) a statement prepared by the Servicer (the "Distribution Date Statement"), setting forth with respect to the related Collection Period, among other things, the following information: (i) the amount of the distribution allocable to principal of the Class A Certificates and the Class B Certificates; (ii) the amount of the distribution allocable to interest on the Class A Certificates and the Class B Certificates; (iii) the Pool Balance as of the close of business on the last day of such Collection Period; (iv) the amount of the Servicing Fee paid to the Servicer with respect to such Collection Period and the Class A Percentage and Class B Percentage of the Servicing Fee paid to the Servicer with respect to such Collection Period; (v) the amount of any Class A Interest Carryover Shortfall, Class A Principal Carryover Shortfall, Class B Interest Carryover Shortfall and Class B Principal Carryover Shortfall on the Distribution Date immediately following such Collection Period and the change in such amounts from those with respect to the immediately preceding Distribution Date; 34 (vi) the Class A Pool Factor and the Class B Pool Factor as of such Distribution Date, after giving effect to payments allocated to principal reported under clause (i) above; (vii) the amount of the aggregate Realized Losses, if any, for such Collection Period; (viii) the aggregate principal balance of all Receivables which were more than 60 days delinquent as of the close of business on the last day of such Collection Period; (ix) the amount on deposit in the Reserve Fund on such Distribution Date, after giving effect to distributions made on such Distribution Date; (x) the Class A Principal Balance and the Class B Principal Balance as of such Distribution Date, after giving effect to payments allocated to principal reported under clause (i) above; (xi) the amount otherwise distributable to the Class B Certificateholders that is being distributed to the Class A Certificateholders on such Distribution Date; and (xii) the aggregate Purchase Amount of Receivables repurchased by the Seller or purchased by the Servicer with respect to such Collection Period. Each amount set forth pursuant to clauses (i), (ii), (iv) and (v) above shall be expressed in the aggregate and as a dollar amount per $1,000 of original denomination of a Certificate. Copies of such statements may be obtained by Certificateholders by a request in writing addressed to the Trustee. In addition, within the prescribed period of time for tax reporting purposes after the end of each calendar year during the term of the Agreement, the Trustee will mail to each person who at any time during such calendar year shall have been a Certificateholder a statement containing the sum of the amounts described in clauses (i), (ii), (iv) and (v) above for the purposes of such Certificateholder's preparation of federal income tax returns. See "Federal Income Tax Consequences--Information Reporting and Backup Withholding." EVIDENCE AS TO COMPLIANCE The Agreement will provide that a firm of independent public accountants will furnish to the Trustee one or more reports expressing a summary of findings regarding the Servicer's compliance with the Agreement during the preceding calendar year (or, in the case of the first such report, the period from the Closing Date to December 31, 1996). The Agreement will also provide for delivery to the Trustee concurrently with the delivery of the reports referred to above of a certificate signed by an officer of the Servicer stating that the Servicer has fulfilled its obligations under the Agreement throughout the preceding twelve months ended December 31 (or in the case of the first such certificate, the period from the Closing Date to December 31, 1996) or, if there has been a default in the fulfillment of any such obligation, describing each such default. The Servicer has agreed to give the Trustee notice of certain Events of Servicing Termination under the Agreement. Copies of such statements and certificates may be obtained by Certificateholders by a request in writing addressed to the Trustee. See "The Certificates--The Trustee." CERTAIN MATTERS REGARDING THE SERVICER The Agreement will provide that the Servicer may not resign from its obligations and duties as Servicer thereunder, except upon a determination that the Servicer's performance of such duties is no longer permissible under applicable law or if such resignation is required by regulatory authorities. Such resignation will become effective on the earlier of the date the Servicer is required by regulatory authorities to resign or the date on which the Trustee or a successor servicer has assumed the Servicer's servicing obligations and duties under the Agreement. The Agreement will further provide that neither the Servicer nor any of its directors, officers, employees, and agents shall be under any liability to the Trust or the Certificateholders for taking any action or for refraining from taking any action pursuant to the Agreement, or for errors in judgment; provided, however, that neither the Servicer nor any such person will be protected against any liability that would otherwise be imposed by reason of willful misfeasance, bad faith or negligence in the performance of its duties or by 35 reason of reckless disregard of its obligations and duties thereunder. In addition, the Agreement will provide that the Servicer is under no obligation to appear in, prosecute or defend any legal action that is incidental to its servicing responsibilities under the Agreement and that, in its opinion, may cause it to incur any expense or liability. Under the circumstances specified in the Agreement, any entity into which the Servicer may be merged or consolidated, or any entity resulting from any merger or consolidation to which the Servicer is a party, or any entity succeeding to the business of the Servicer, which corporation or other entity in each of the foregoing cases assumes the obligations of the Servicer, will be the successor to the Servicer under the Agreement. The Servicer may appoint a subservicer to perform all or any portion of its obligations under the Agreement; however, the Servicer shall remain obligated and be liable to the Trust, the Trustee and the Certificateholders for the servicing and administering of the Receivables as if the Servicer alone were servicing and administering the Receivables. EVENTS OF SERVICING TERMINATION "Events of Servicing Termination" under the Agreement will consist of (i) any failure by the Servicer to deliver to the Trustee for deposit in any of the Accounts any required payment or to direct the Trustee or the Collateral Agent, as applicable, to make any required distributions therefrom, that shall continue unremedied for five Business Days after written notice of such failure is received by the Servicer from the Trustee or the Collateral Agent, as applicable, or after discovery of such failure by the Servicer; (ii) any failure by the Servicer duly to observe or perform in any material respect any other covenant or agreement in the Agreement which failure materially and adversely affects the rights of Certificateholders and which continues unremedied for 60 days after the giving of written notice of such failure (1) to the Servicer by the Trustee or (2) to the Servicer and to the Trustee by holders of Certificates, evidencing not less than 25% aggregate outstanding principal balance of the Class A Certificates and Class B Certificates taken together as a single Class (or such longer period, not in excess of 120 days, as may be reasonably necessary to remedy such default; provided that such default is capable of remedy within 120 days and the Servicer delivers an officer's certificate to the Trustee to such effect and to the effect that the Servicer has commenced, or will promptly commence, and diligently pursue all reasonable efforts to remedy such default); and (iii) certain events of insolvency, receivership, readjustment of debt, marshalling of assets and liabilities or similar proceedings with respect to the Servicer and certain actions by the Servicer indicating its insolvency, reorganization pursuant to bankruptcy, receivership or similar proceedings, or inability to pay its obligations. If an Event of Servicing Termination occurs, the Trustee will have no obligation to notify Certificateholders of such event prior to the end of any cure period described above. RIGHTS UPON AN EVENT OF SERVICING TERMINATION As long as an Event of Servicing Termination remains unremedied, the Trustee or the holders of Certificates evidencing not less than a majority of the aggregate outstanding principal balance of the Class A Certificates and the Class B Certificates taken together as a single Class may terminate substantially all of the Servicer's rights and obligations under the Agreement, whereupon the Trustee or a successor Servicer appointed by the Trustee will succeed to all the responsibilities, duties and liabilities of the Servicer under the Agreement. Thereafter, the successor Servicer will be entitled to the compensation otherwise payable to the Servicer. If, however, a conservator or receiver has been appointed for the Servicer, and no Event of Servicing Termination other than such appointment has occurred, such conservator or receiver may have the power to prevent the Trustee or the Certificateholders from terminating substantially all of the Servicer's rights and obligations under the Agreement. In the event that the Trustee is unwilling or legally unable so to act, the Trustee may appoint, or petition a court of competent jurisdiction for the appointment of a successor with a net worth of at least $50,000,000 and whose regular business includes the servicing of automobile receivables. In no event may the servicing compensation to be paid to such successor be greater than the servicing compensation payable to the Servicer under the Agreement. 36 WAIVER OF PAST DEFAULTS The holders of Certificates evidencing not less than a majority of the aggregate outstanding principal balance of the Class A Certificates and Class B Certificates taken together as a single Class, in the case of any default which does not adversely affect the Trustee may, on behalf of all Certificateholders, waive any default by the Servicer in the performance of its obligations under the Agreement and its consequences, except a default in making any required deposits to or payments from any of the Accounts in accordance with the Agreement. No such waiver shall impair the Certificateholders' rights with respect to subsequent defaults. AMENDMENT The Agreement may be amended by the Seller, the Servicer and the Trustee, without the consent of any of the Certificateholders, to cure any ambiguity or defect, to correct or supplement any provision therein or for the purpose of adding any provision to or changing in any manner or eliminating any of the provisions of the Agreement, or of modifying in any manner the rights of Certificateholders; provided, that such action will not, in the opinion of counsel reasonably satisfactory to the Trustee, materially and adversely affect the interest of any Certificateholder. The Agreement also may be amended by the Seller, the Servicer and the Trustee, with the consent of the holders of Certificates evidencing not less than a majority of the aggregate outstanding principal balance of the Class A Certificates and the Class B Certificates taken together as a single Class, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Agreement or of modifying in any manner the rights of the Certificateholders; provided, however, that no such amendment may (i) increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments on Receivables or distributions that are required to be made on any Certificate, without the consent of all adversely affected Certificateholders or (ii) reduce the percentage of the aggregate outstanding principal balance of the Certificates, the holders of which are required to consent to any such amendment, without the consent of all Certificateholders affected thereby. LIST OF CERTIFICATEHOLDERS Upon written request of the Servicer, the Trustee will provide to the Servicer within 15 days after receipt of such request a list of names and addresses of all Certificateholders of record as of the most recent Record Date. Upon written request by holders of Certificates of either Class evidencing not less that 25% of the voting interests thereof, and upon compliance by such Certificateholders with certain provisions of the Agreement, the Trustee will afford such Certificateholders access during business hours to the most current list of Certificateholders for purposes of communicating with other Certificateholders with respect to their rights under the Agreement. The Agreement will not provide for holding any annual or other meetings of Certificateholders. TERMINATION The obligations of the Seller, the Servicer and the Trustee under the Agreement will, except with respect to certain reporting requirements, terminate upon the earliest of (i) the Distribution Date next succeeding the Seller's purchase of the Receivables, as described below, (ii) payment to Certificateholders of all amounts required to be paid to them pursuant to the Agreement and (iii) the Distribution Date next succeeding the month which is six months after the maturity or other liquidation of the last Receivable and the disposition of any amounts received upon liquidation of any property remaining in the Trust (including any Liquidated Receivables) in accordance with the terms and priorities set forth in the Agreement. The Seller will be permitted, at its option, in the event that the Pool Balance as of the first day of a Collection Period has declined to 5% or less of the Original Pool Balance, to purchase from the Trust, on any Distribution Date occurring in a subsequent Collection Period, all remaining Receivables in the Trust at a purchase price equal to the sum of the Class A Principal Balance and the Class B Principal Balance plus accrued and unpaid interest thereon. The exercise of this right will effect an early retirement of the Certificates. 37 The Trustee will give written notice of termination of the Trust to each Certificateholder of record. The final distribution to any Certificateholder will be made only upon surrender and cancellation of such Certificateholder's Certificate (whether a Definitive Certificate or the physical certificate representing the Certificates) at the office or agency of the Trustee specified in the notice of termination. Any funds remaining in the Trust, after the Trustee has taken certain measures to locate a Certificateholder and such measures have failed, will be distributed to the Seller or as otherwise provided in the Agreement. DUTIES OF THE TRUSTEE The Trustee will make no representations as to the validity or sufficiency of the Agreement, the Certificates (other than the execution and authentication of the Certificates), the Receivables or any related documents, and will not be accountable for the use or application by the Seller or the Servicer of any funds paid to the Seller or the Servicer in respect of the Certificates or the Receivables, or the investment of any monies by the Servicer before such monies are deposited into the Collection Account. The Trustee will not independently verify the Receivables. If no Event of Servicing Termination has occurred and is continuing, the Trustee will be required to perform only those duties specifically required of it under the Agreement. Generally, those duties are limited to the receipt of the various certificates, reports or other instruments required to be furnished to the Trustee under the Agreement, in which case it will only be required to examine them to determine whether they conform to the requirements of the Agreement. The Trustee will not be charged with knowledge of a failure by the Servicer to perform its duties under the Agreement which failure constitutes an Event of Servicing Termination unless a responsible officer of the Trustee obtains actual knowledge of such failure as specified in the Agreement. The Trustee will be under no obligation to exercise any of the rights or powers vested in it by the Agreement or to make any investigation of matters arising thereunder or to institute, conduct or defend any litigation thereunder or in relation thereto at the request, order or direction of any of the Certificateholders, unless such Certificateholders have offered the Trustee reasonable security or indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred therein or thereby. No Class A Certificateholder or Class B Certificateholder will have any right under the Agreement to institute any proceeding with respect to the Agreement, unless such holder has given the Trustee written notice of default and unless, with respect to the Class A Certificates, the holders of Class A Certificates evidencing not less than a majority of the aggregate outstanding principal balance of the Class A Certificates or, with respect to the Class B Certificates, the holders of Class B Certificates evidencing not less than a majority of the aggregate outstanding principal balance of the Class B Certificates, have made a written request to the Trustee to institute such proceeding in its own name as Trustee thereunder and have offered to the Trustee reasonable indemnity, and the Trustee for 30 days has neglected or refused to institute any such proceedings. THE TRUSTEE Bankers Trust Company, a New York banking corporation, will act as Trustee under the Agreement. The Trustee, in its individual capacity or otherwise, and any of its affiliates, may hold Certificates in their own names or as pledgee. In addition, for the purpose of meeting the legal requirements of certain jurisdictions, the Servicer and the Trustee, acting jointly (or in some instances, the Trustee, acting alone), will have the power to appoint co-trustees or separate trustees of all or any part of the Trust. In the event of such appointment, all rights, powers, duties and obligations conferred or imposed upon the Trustee by the Agreement will be conferred or imposed upon the Trustee and such co-trustee or separate trustee jointly, or, in any jurisdiction where the Trustee is incompetent or unqualified to perform certain acts, singly upon such co-trustee or separate trustee who shall exercise and perform such rights, powers, duties and obligations solely at the direction of the Trustee. The Trustee may resign at any time, in which event the Servicer will be obligated to appoint a successor trustee. The Servicer may also remove the Trustee if the Trustee ceases to be eligible to serve, becomes legally unable to act, is adjudged insolvent or is placed in receivership or similar proceedings. In such circumstances, the Servicer will be obligated to appoint a successor trustee. However, any such resignation or removal of the Trustee and appointment of a successor trustee will not become effective until acceptance of the appointment by the successor trustee. 38 The Agreement will provide that the Servicer will pay the Trustee's fees. The Agreement will also provide that the Trustee will be entitled to indemnification by the Seller for, and will be held harmless against, any loss, liability or expense incurred by the Trustee not resulting from the Trustee's own willful misfeasance, bad faith or negligence. Indemnification will be unavailable to the Trustee to the extent that any such loss, liability or expense results from a breach of any of the Trustee's representations or warranties set forth in the Agreement, and for any tax, other than those for which the Seller or the Servicer is required to indemnify the Trustee. The Trustee's Corporate Trust Office is located at 4 Albany Street, New York, New York 10006. The Seller, the Servicer, the Subservicer and their respective affiliates may have other banking relationships with the Trustee and its affiliates in the ordinary course of their business. CERTAIN LEGAL ASPECTS OF THE RECEIVABLES RIGHTS IN THE RECEIVABLES The Receivables are "chattel paper" as defined in the Ohio UCC and the Arizona UCC. Pursuant to the UCC, for most purposes, a sale of chattel paper is treated in a manner similar to a transaction creating a security interest in chattel paper. The Seller will cause appropriate financing statements to be filed with the appropriate governmental authorities in the States of Ohio and Arizona to perfect the interest of the Trustee in its purchase of the Receivables from the Seller, in the Seller's purchase of the Receivables from the Bank and the Bank's purchase of Receivables from Valley National. Pursuant to the Agreement, the Servicer will hold the Receivables, either directly or through the Subservicer, as custodian for the Trustee following the sale and assignment of the Receivables to the Trust. The Seller will take such action as is required to perfect the rights of the Trustee in the Receivables. The Receivables will not be segregated, stamped or otherwise marked to indicate that they have been sold to the Trust. If, through inadvertence or otherwise, another party purchases (or takes a security interest in) the Receivables for new value in the ordinary course of business and takes possession of the Receivables without actual knowledge of the Trust's interest, the purchaser (or secured party) will acquire an interest in the Receivables superior to the interest of the Trust. Under the Agreement, the Servicer will be obligated from time to time to take such actions as are necessary to protect and perfect the Trust's interest in the Receivables and their proceeds. SECURITY INTERESTS IN THE FINANCED VEHICLES Generally, retail motor vehicle loans such as the Receivables evidence loans to obligors to finance the purchase of such motor vehicles. The loans also constitute personal property security agreements and include grants of security interests in the vehicles under the UCC. Perfection of security interests in motor vehicles is generally governed by the motor vehicle registration laws of the state in which the vehicle is located. In Arizona and most other states, a security interest in the vehicle is perfected by notation of the secured party's lien on the vehicle's certificate of title. The Bank's and Valley National's practice is to take such action as is required in order to perfect their security interest in a Financed Vehicle under the laws of the jurisdiction in which the Financed Vehicle is registered. If the Bank or Valley National, because of clerical error or otherwise, has failed to take such action with respect to a Financed Vehicle, it will not have a perfected security interest in the Financed Vehicle and its security interest may be subordinate to the interests of, among others, subsequent purchasers of the Financed Vehicle that give value without notice of the Bank's and Valley National's security interest and to whom a certificate of ownership is issued in such purchaser's name, holders of perfected security interests in the Financed Vehicle, and the trustee in bankruptcy of the Obligor. The Bank's or Valley National's security interest may also be subordinate to such third parties in the event of fraud or forgery by the Obligor or administrative error by state recording officials or in the circumstances noted below. As described more fully below, the Seller will warrant in the Agreement (and will have assigned to the Trust such warranty made by the Bank in the Loan Sale Agreement) that an enforceable first priority perfected security 39 interest with respect to each Financed Vehicle on the Closing Date has been created in favor of either the Bank or Valley National and the Seller or the Bank will be required to repurchase the related Receivable in the event of an uncured breach of such warranty. Pursuant to the Loan Purchase and Servicing Agreement, Valley National will assign its security interest in any Financed Vehicles, along with the sale and assignment of the related Receivables to the Bank and pursuant to the Loan Purchase Agreement, the Bank will assign its security interest in the Financed Vehicles, along with the sale and assignment of the related Receivables to the Seller. Pursuant to the Agreement, the Seller will assign its security interests in the Financed Vehicles, along with the sale and assignment of the related Receivables, to the Trust, and the Servicer will hold the certificates of title or ownership or other documents evidencing the notation of Valley National's or the Bank's lien on the certificate of title or ownership relating to the Financed Vehicles, either directly or through the Subservicer, as custodian for the Trustee following such sale and assignment. The certificates of title will not be endorsed or otherwise amended to identify the Trust or Trustee as the new secured party, however, because of the administrative burden and expense involved. In Arizona and most other states, an assignment of a security interest in a Financed Vehicle along with the applicable Receivable is effective without amendment of any lien noted on a vehicle's certificate of title or ownership, and the assignee succeeds thereby to the assignor's rights as secured party. In Arizona and most other states, in the absence of fraud or forgery by the vehicle owner or of fraud, forgery, negligence or error by Valley National, the Bank or the Seller or administrative error by state or local agencies, the notation of Valley National's or the Bank's lien on the certificates of title or ownership and/or possession of such certificates with such notation will be sufficient to protect the Trust against the rights of subsequent purchasers of a Financed Vehicle or subsequent lenders who take a security interest in a Financed Vehicle. There exists a risk, however, in not identifying the Trust or Trustee as the new secured party on the certificate of title that the security interest of the Trust or the Trustee may not be enforceable. In the event the Trust has failed to obtain or maintain a perfected security interest in a Financed Vehicle, its security interest would be subordinate to, among others, a bankruptcy trustee of the Obligor, a subsequent purchaser of the Financed Vehicle or a holder of a perfected security interest. The Seller will warrant in the Agreement as to each Receivable conveyed by it to the Trust that, on the Closing Date, the Bank or Valley National has a valid, subsisting and enforceable first priority perfected security interest in the Financed Vehicle securing the Receivable (subject to administrative delays and clerical errors on the part of the applicable government agency and to any statutory or other lien arising by operation of law after the Closing Date which is prior to such security interest) and such security interest has been assigned to the Seller and will be assigned by the Seller to the Trustee for the benefit of the Certificateholders. In the event of an uncured breach of such warranty, the Seller will be required to repurchase (or cause the Bank to repurchase) such Receivable for its Purchase Amount. This repurchase obligation will constitute the sole remedy available to the Trust, the Trustee and the Certificateholders for such breach. The Seller's warranties with respect to perfection and enforceability of a security interest in a Financed Vehicle will not cover statutory or other liens arising after the Closing Date by operation of law which have priority over such security interest. Accordingly, any such lien would not by itself give rise to a repurchase obligation on the part of the Seller (or the Bank). In the event that an Obligor moves to a state other than the state in which the Financed Vehicle is registered, under the laws of Arizona and most states, a perfected security interest in a motor vehicle continues for four months after such relocation and thereafter, in most instances, until the Obligor re- registers the motor vehicle in the new state, but in any event not beyond the surrender of the certificate. A majority of states require surrender of a certificate of title to re-register a motor vehicle and require that notice of such surrender be given to each secured party noted on the certificate of title. In those states that require a secured party take possession of a certificate of title to perfect a security interest, the secured party would learn of the re-registration through the request from the Obligor to surrender possession of the certificate of title. In those states that require a secured party to note its lien on a certificate of title to perfect a security interest but do not require possession of the certificate of title, the secured party would learn of the 40 re-registration through notification from the applicable state department of motor vehicles that the certificate of title had been surrendered. The requirements that a certificate of title be surrendered and that notices of such surrender be given to each secured party also apply to re-registrations effected following a sale of a motor vehicle. The Bank or Valley National would therefore have the opportunity to re-perfect its security interest in a Financed Vehicle in the state of re-registration following relocation of the Obligor and would be able to require satisfaction of the related Receivable following a sale of the Financed Vehicle. In states that do not require a certificate of title for registration of a motor vehicle, re-registration could defeat perfection. In the ordinary course of servicing motor vehicle loans, the Servicer takes steps to effect re-perfection upon receipt of notice of re-registration or information from the Obligor as to relocation. However, there is a risk that an Obligor could relocate without notification to the Servicer, then file a false affidavit with the new state to cause a new certificate of title to be issued without notation of the Bank's or Valley National's lien. Under the laws of Arizona and many other states, certain possessory liens for repairs performed on or storage of a motor vehicle and liens for unpaid taxes as well as certain rights arising from the use of a motor vehicle in connection with illegal activities, may take priority over a perfected security interest in the motor vehicle. The Seller will warrant in the Agreement that, as of the Closing Date, the Seller has not received notice that any such liens are pending. In the event of a breach of such warranty which has a material and adverse effect on the interests of the Trust, the Trustee and the Certificateholders, the Seller will be required to repurchase (or cause the Bank to repurchase) the Receivable secured by the Financed Vehicle involved. This repurchase obligation will constitute the sole remedy available to the Trust, the Trustee and the Certificateholders for such breach. Any liens for repairs or taxes arising at any time after the Closing Date during the term of a Receivable would not give rise to a repurchase obligation on the part of the Seller (or the Bank). REPOSSESSION In the event of a default by an Obligor, the holder of a Receivable has all the remedies of a secured party under the Arizona UCC, except where specifically limited by other state laws or by contract. The remedies of a secured party under the Arizona UCC include the right to repossession by means of self-help, unless such means would constitute a breach of the peace. Self-help repossession is the method employed by the Bank and Valley National in most cases, and is accomplished simply by taking possession of the motor vehicle. Generally, where the obligor objects or raises a defense to repossession, a court order must be obtained from the appropriate state court and the motor vehicle must then be repossessed in accordance with that order. In the event of a default by an obligor, Arizona and many jurisdictions require that, absent a waiver, the obligor be notified of the default and be given a time period within which he may cure the default prior to repossession except such notice need not be given in emergency situations pursuant to an order from the appropriate state court. NOTICE OF SALE; REDEMPTION RIGHTS The Arizona UCC and other state laws require the secured party to provide an obligor with reasonable notice of the date, time and place of any public sale and/or the date after which any private sale of the collateral may be held. The obligor generally has the right to redeem the collateral prior to actual sale by paying the secured party the unpaid principal balance of the obligation plus, in most cases, reasonable expenses for repossessing, holding and preparing the collateral for disposition and arranging for its sale plus, in some jurisdictions, reasonable attorneys' fees. In some states, the obligor has the right, prior to actual sale, to reinstatement of the original loan terms and to return of the collateral by payment of delinquent installments of the unpaid balance. DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS The proceeds of resale of Financed Vehicles generally will be applied first to the expenses of repossession and resale and then to the satisfaction of the indebtedness on the related Receivable. While some states impose prohibitions or limitations on deficiency judgments if the net proceeds from resale do not cover the full amount of the indebtedness, a deficiency judgment can be sought in Arizona and those states that do not prohibit or limit such judgments. Any such deficiency judgment would be a personal judgment against the 41 Obligor for the shortfall, however, a defaulting Obligor may have very little capital or sources of income available following repossession. Other statutory provisions, including state and federal bankruptcy laws, may interfere with a lender's ability to enforce a deficiency judgment or to collect a debt owed or realize upon collateral. Therefore, in many cases, it may not be useful to seek a deficiency judgment or, if one is obtained, it may be settled at a significant discount or not paid at all. Occasionally, after resale of a repossessed motor vehicle and payment of all expenses and indebtedness, there is a surplus of funds. In that case, the Arizona UCC requires the secured party to remit the surplus to any other holder of a lien with respect to the motor vehicle or, if no such lienholder exists or funds remain after paying such other lienholder, to the Obligor. CONSUMER PROTECTION LAWS Numerous Federal and state consumer protection laws and related regulations impose substantial requirements upon lenders and servicers involved in consumer finance. These laws include the Truth In Lending Act, the Equal Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B, Z and AA, and other similar acts and regulations, state adoptions of the Uniform Consumer Credit Code and other similar laws, including the Arizona Consumer Fraud Act, Title 6 of the Arizona Revised Statutes and state usury laws. Also, state laws impose other restrictions on consumer transactions, may require contract disclosures in addition to those required under Federal law and may limit the remedies available in the event of default by an Obligor. These requirements impose specific statutory liabilities upon creditors who fail to comply with their provisions where applicable. In most cases, this liability could affect the ability of an assignee, such as the Trust, to enforce secured loans such as the Receivables. The FTC's holder-in-due-course rule (the "FTC Rule") has the effect of subjecting a seller of motor vehicles (and certain related lenders and their assignees) in a consumer credit transaction and any assignee of the seller to all claims and defenses which the purchaser could assert against the seller. Liability under the FTC Rule is limited to the amounts paid by the purchaser under the contract, and the holder of the contract may also be unable to collect any balance remaining due thereunder from the purchaser. The FTC Rule may be duplicated by state statutes or the common law in certain states. Although none of Valley National, the Bank or the Seller is a seller of motor vehicles and they are not subject to the jurisdiction of the FTC, the loan agreements evidencing the Receivables contain provisions which contractually apply the FTC Rule. Accordingly, Valley National, the Bank, the Seller and the Trustee as holder of the Receivables, may be subject to claims or defenses, if any, that the purchaser of a Financed Vehicle may assert against the seller of such vehicle. Under the motor vehicle dealer licensing laws of Arizona and most states, sellers of motor vehicles are required to be licensed to sell such vehicles at retail sale. In addition, with respect to used motor vehicles, the FTC's Rule on Sale of Used Vehicles requires that all sellers of used motor vehicles prepare, complete and display a "Buyer's Guide" which explains the warranty coverage for such vehicles. Federal Odometer Regulations promulgated under the Motor Vehicle Information and Cost Savings Act require that all sellers of used motor vehicles furnish a written statement signed by the seller certifying the accuracy of the odometer reading. If a seller is not properly licensed or if either a Buyer's Guide or Odometer Disclosure Statement was not properly provided to the purchaser of a Financed Vehicle, such purchaser may be able to assert a claim against the seller of such vehicle. Although none of Valley National, the Bank or the Seller is a seller of motor vehicles and they are not subject to these laws, a violation thereof may form the basis for a claim or defense against Valley National, the Bank, the Seller or the Trustee as holder of the Receivables. Courts have applied general equitable principles to secured parties pursuing repossession or litigation involving deficiency balances. These equitable principles may have the effect of relieving an Obligor from some or all of the legal consequences of a default. The Seller will warrant in the Agreement as to each Receivable conveyed by it to the Trust that such Receivable complied at the time it was originated and as of the Closing Date in all material respects with all 42 requirements of applicable law. If, as of the Cutoff Date, an Obligor had a claim against the Trust for violation of any law and such claim materially and adversely affected the Trust's interest in a Receivable, such violation would create an obligation of the Seller to repurchase (or cause the Bank to repurchase) the Receivable unless the breach were cured. This repurchase obligation will constitute the sole remedy of the Trust, the Trustee and the Certificateholders against the Seller in respect of any such uncured breach. See "The Certificates--Sale and Assignment of the Receivables." OTHER LIMITATIONS In addition to the laws limiting or prohibiting deficiency judgments, numerous other statutory provisions, including Federal bankruptcy laws and related state laws, may interfere with or affect the ability of a lender to realize upon collateral or enforce a deficiency judgment. For example, in a Chapter 13 proceeding under the Bankruptcy Code, a court may prevent a lender from repossessing a motor vehicle and, as part of the rehabilitation plan, reduce the amount of the secured indebtedness to the market value of such vehicle at the time of bankruptcy (as determined by the court), leaving the party providing financing as a general unsecured creditor for the remainder of the indebtedness. A bankruptcy court may also reduce the monthly payments due under a contract or change the rate of interest and time of repayment of the indebtedness. The Seller intends that the transfer of the Receivables by it to the Trustee on behalf of the Trust under the Agreement constitutes a valid sale and assignment of such Receivables. Notwithstanding the foregoing, if the Seller were to become a debtor in a bankruptcy case and a creditor or trustee-in-bankruptcy of the Seller or the Seller itself were to take the position that the sale of the Receivables by the Seller to the Trust should instead be treated as a pledge of Receivables to secure a borrowing of the Seller, delays in payments or collections of Receivables could occur or (should the court rule in favor of any such trustee, debtor or creditor) reductions in the amounts of such payments could result. If the transfer of Receivables by the Seller to the Trust is treated as a pledge instead of a sale, a tax or government lien on the property of the Seller arising before the transfer of the Receivables to the Trust may have priority over the Trust's interest in such Receivables. As an insured depository institution, the Bank and its subsidiaries and persons owned or controlled by the Bank or its subsidiaries are subject to the examination, regulation and supervision of the Office of the Comptroller of the Currency (the "OCC"). The OCC has broad regulatory powers to prevent or remedy unsafe or unsound practices or other violations of applicable regulations, agreements or policies. The OCC may issue a cease-and-desist order or require affirmative action to correct any conditions resulting from any violation or practice with respect to which such order is issued including requiring such entity, among other things, to make restitution or provide reimbursement, to dispose of any loan or asset involved, to rescind agreements or contracts and to take such other action as the OCC determines to be appropriate. The Bank believes that the transactions contemplated by the Prospectus do not constitute unsafe or unsound practices and do not violate any applicable OCC regulations, agreements or policies. FEDERAL INCOME TAX CONSEQUENCES The following is a summary of the material anticipated Federal income tax consequences of the purchase, ownership and disposition of Certificates. This summary is based upon laws, regulations, rulings and decisions currently in effect, all of which are subject to change. The discussion does not deal with all Federal tax consequences applicable to all categories of investors, some of which may be subject to special rules. In addition, this summary is generally limited to investors who will hold the Certificates as "capital assets" (generally, property held for investment) within the meaning of Section 1221 of the Code. Consequences to individual investors of investment in the Certificates will vary according to circumstances; accordingly, investors should consult their own tax advisors to determine the Federal, state, local, and other tax consequences of the purchase, ownership and disposition of the Certificates. Prospective investors should note that no rulings have been or will be sought from the Internal Revenue Service (the "IRS") with respect to any of the Federal income tax consequences discussed below, and no assurance can be given that the IRS will not take contrary positions. 43 TAX STATUS OF THE TRUST In the opinion of Squire, Sanders & Dempsey, special tax counsel, the Trust will be classified as a grantor trust and not as an association taxable as a corporation for Federal income tax purposes. Accordingly, each Certificate Owner will be subject to Federal income taxation as if it owned directly its interest in each asset owned by the Trust and paid directly its share of reasonable expenses paid by the Trust. IN GENERAL. For purposes of Federal income tax, the Bank will be deemed to have retained a fixed portion of the interest due on each Receivable (the "Retained Yield") equal to the difference between (x) the APR of such Receivable and (y)(i) with respect to the Class A Percentage of such Receivable, the sum of the Class A Pass-Through Rate and the Servicing Fee Rate, and (ii) with respect to the Class B Percentage of such Receivable, the sum of the Class B Pass-Through Rate and the Servicing Fee Rate. The Retained Yield will be treated as "stripped coupons" within the meaning of Section 1286 of the Code. In addition, if the Class B Pass-Through Rate exceeds the Class A Pass-Through Rate, a portion of the interest accrued on each Receivable could be treated as a "stripped coupon" purchased by the Class B Certificate Owners or as an amount received as consideration for a guaranty. Accordingly, each Class A Certificate Owner will be treated as owning its pro rata percentage interest in the principal of, and interest payable on, each Receivable (minus the portion of the interest payable on such Receivable that is treated as Retained Yield and less any amount treated as a stripped coupon purchased by the Class B Certificate Owners or received as consideration for a guaranty), and such interest in each Receivable will be treated as a "stripped bond" within the meaning of Section 1286 of the Code. Similarly, each Class B Certificate Owner will be treated as owning its pro rata percentage interest in the principal of each Receivable, plus a disproportionate share of the interest payable on each Receivable or any amount treated as consideration for a guaranty. CLASS A CERTIFICATE OWNERS Because Class A Certificates represent stripped bonds, they will be subject to the original issue discount ("OID") rules of the Code. Accordingly, the tax treatment of a Class A Certificate Owner will depend upon whether the amount of OID on a Class A Certificate is less than a statutorily defined de minimis amount. In general, under regulations issued under Section 1286 of the Code, the amount of OID on a Receivable treated as a "stripped bond" will be de minimis if it is less than one quarter of one percent of the stated redemption price at maturity, as defined in Section 1273(a)(2) of the Code, for each full year remaining after the purchase date until the maturity of the Receivable. The maturity date is based on the weighted average maturity date (and a reasonable prepayment assumption may have to be taken into account in determining weighted average maturity). Under the regulations, it appears that the portion of the interest on each Receivable payable to the Class A Certificate Owners will be treated as "qualified stated interest." As a result, the amount of OID on a Receivable will equal the amount by which the price at which a Certificate Owner is deemed to have acquired an interest in a Receivable (the "Purchase Price") is less than the portion of the remaining principal balance of the Receivable allocable to the interest acquired. Although the matter is not free from doubt, the Trust intends to take the positions (i) that the amount of OID on the Receivables will be determined by aggregating all payments on the Receivables allocable to the Class A Certificate Owners (not including the Retained Yield), and treating the portion of all payments on the Receivables allocable to the Class A Certificate Owners as a single obligation on an aggregate basis, rather than being determined separately with respect to each Receivable, and (ii) that no separate allocation of consideration must be made to accrued interest or to amounts held in the Collection Account. Based on these positions, it is anticipated that the Certificates will not be issued initially with OID (or that any OID present will be DE MINIMIS). The IRS could require, instead, that the computation be performed on a Receivable-by-Receivable basis. In the preamble to the regulations under Section 1286 of the Code, the IRS requests comment on appropriate aggregation rules. Any such recalculation could adversely affect the timing and character of a Class A Certificate Owner's income. The IRS might also require that a portion of the purchase price of a Certificate be allocated to accrued interest on each Receivable and to amounts held in the Collection Account pending distribution to Certificate Owners at the 44 time of purchase as though such accrued interest and collections on the Receivables were separate assets purchased by the Certificate Owner. Any such allocation would reduce the Purchase Price and thus increase the discount (or decrease the premium) on the Receivables. If the amount of OID is DE MINIMIS under the rule set forth above, the Class A Certificates would not be treated as having OID. Each Class A Certificate Owner would be required to report on its Federal income tax return its share of the gross income of the Trust, including interest and certain other charges accrued on the Receivables and any gain upon collection or disposition of the Receivables (but not including any portion of the Retained Yield). Such gross income attributable to interest on the Receivables would exceed the Class A Certificate Rate by an amount equal to the Class A Certificate Owner's share of the expenses of the Trust for the period during which it owns a Class A Certificate. The Class A Certificate Owner would be entitled to deduct its share of expenses of the Trust to the extent described below. Any amounts received by a Class A Certificate Owner from the Reserve Fund or from the subordination of the Class B Certificates will be treated for Federal income tax purposes as having the same characteristics as the payments they replace. A Class A Certificate Owner would report its share of the income of the Trust under its usual method of accounting. Accordingly, interest would be includible in a Certificate Owner's gross income when it accrues on the Receivables, or, in the case of Certificate Owners who are cash basis taxpayers, when received by the Servicer on behalf of Certificate Owners. Because (i) interest accrues on the Receivables over differing monthly periods and is paid in arrears and (ii) interest collected on a Receivable generally is paid to Certificateholders in the following month, the amount of interest accruing to a Certificate Owner during any calendar month will not equal the interest distributed in that month. The actual amount of discount on a Receivable would be includible in income as principal payments are received on the Receivables. If the OID on a Receivable is not treated as being de minimis, in addition to the amounts described above, a Class A Certificate Owner will be required to include in income any OID as it accrues on a daily basis, regardless of when cash payments are received, using a method reflecting a constant yield on the Receivables. It is possible that the IRS could require use of a prepayment assumption in computing the yield of a Receivable. If a Receivable is deemed to be acquired by a Certificate Owner at a significant discount, such treatment could accelerate the accrual of income by a Certificate Owner. The Servicer intends to account for OID, if any, reportable by holders of Class A Certificates by reference to the price paid for a Class A Certificate by an initial purchaser, although the amount of OID will differ for subsequent purchasers. Such subsequent purchasers should consult their tax advisors regarding the proper calculation of OID on the interest in Receivables represented by a Class A Certificate. In the event that a Receivable is treated as purchased at a premium (i.e., its Purchase Price exceeds the portion of the remaining principal balance of such Receivable allocable to the Certificate Owner), such premium will be amortizable by the Certificate Owner as an offset to interest income (with a corresponding reduction in the Certificate Owner's basis) under a constant yield method over the term of the Receivable if an election under Section 171 of the Code is made with respect to the interests in the Receivables represented by the Certificates or was previously in effect. Any such election will also apply to all debt instruments held by the Certificate Owner during the year in which the election is made and all debt instruments acquired thereafter. A Certificate Owner will be entitled to deduct, consistent with its method of accounting, its pro rata share of reasonable servicing fees and other fees paid or incurred by the Trust as provided in Section 162 or 212 of the Code. If a Certificate Owner is an individual, estate or trust, the deduction for such holder's share of such fees will be allowed only to the extent that all of such holder's miscellaneous itemized deductions, including such holder's share of such fees, exceed 2% of such holder's adjusted gross income. In addition, in the case of Certificate Owners who are individuals, certain otherwise allowable itemized deductions will be reduced, but not by more than 80%, by an amount equal to 3% of such Certificate Owner's adjusted gross income in excess of a statutorily defined threshold. 45 CLASS B CERTIFICATE OWNERS IN GENERAL. Except as described below, it is believed that the Class B Certificate Owners will be subject to tax in the same manner as Class A Certificate Owners. However, no Federal income tax authorities address the precise method of taxation of an instrument such as the Class B Certificates. In the absence of applicable authorities, the Servicer intends to report income to Class B Certificate Owners in the manner described below. Each Class B Certificate Owner will be treated as owning (i) the Class B Percentage of the principal on each Receivable plus (ii) a disproportionate portion of the interest on each Receivable (not including the Retained Yield). Income will be reported to a Class B Certificate Owner based on the assumption that all amounts payable to the Class B Certificate Owners are taxable under the coupon stripping provisions of the Code and treated as a single obligation. In applying those provisions, the Servicer will take the position that a Class B Certificate Owner's entire share of the interest on a Receivable will qualify as "qualified stated interest". Thus, except to the extent modified by the effects of subordination of the Class B Certificates, as described below, income will be reported to Class B Certificate Owners in the manner described above for holders of the Class A Certificates. EFFECT OF SUBORDINATION. If the Class B Certificate Owners receive distributions of less than their share of the Trust's receipts of principal or interest (the "Shortfall Amount") because of the subordination of the Class B Certificates, holders of Class B Certificates would probably be treated for Federal income tax purposes as if they had (1) received as distributions their full share of such receipts, (2) paid over to the Class A Certificate Owners an amount equal to such Shortfall Amount, and (3) retained the right to reimbursement of such amounts to the extent of future collections otherwise available for deposit in the Reserve Fund. Under this analysis, (1) Class B Certificate Owners would be required to accrue as current income any interest or OID income of the Trust that was a component of the Shortfall Amount, even though such amount was in fact paid to the Class A Certificate Owners, (2) a loss would only be allowed to the Class B Certificate Owners when their right to receive reimbursement of such Shortfall Amount became worthless (i.e., when it becomes clear that the amount will not be available from any source to reimburse such loss), and (3) reimbursement of such Shortfall Amount prior to such a claim of worthlessness would not be taxable income to Class B Certificate Owners because such amount was previously included in income. Those results should not significantly affect the inclusion of income for Class B Certificate Owners on the accrual method of accounting, but could accelerate inclusion of income to Class B Certificate Owners on the cash method of accounting by, in effect, placing them on the accrual method. Moreover, the character and timing of loss deductions is unclear. SALES OF CERTIFICATES A Certificate Owner that sells a Certificate will recognize gain or loss equal to the difference between the amount realized on the sale and its adjusted basis in the Certificate. In general, such adjusted basis will equal the Certificate Owner's cost for the Certificate, increased by the amount of any income previously reported with respect to the Certificate, and decreased by the amount of any losses previously reported with respect to the Certificate and the amount of any distributions received thereon. Any such gain or loss generally will be capital gain or loss if the assets underlying the Certificate were held as capital assets, except that, in the case of a Certificate that was acquired with more than a de minimis amount of market discount, such gain will be treated as ordinary interest income to the extent of the portion of such discount that accrued during the period in which the seller held the Certificate and that was not previously included in income. FOREIGN CERTIFICATE OWNERS Interest attributable to Receivables which is payable to a foreign Certificate Owner will generally not be subject to the normal 30% withholding tax imposed with respect to such payments, provided that such Certificate Owner is not engaged in a trade or business in the United States and that such Certificate Owner fulfills certain certification requirements. Under such certification requirements, the Certificate Owner 46 must certify, under penalties of perjury, that it is not a "United States person" and it is the beneficial owner of the Certificates, and must provide its name and address. For this purpose, "United States person" means a citizen or resident of the United States, a corporation, partnership, or other entity created or organized in or under the laws of the United States or any political subdivision thereof, or an estate or trust the income of which is includible in gross income for United States Federal income tax purposes, regardless of its source. INFORMATION REPORTING AND BACKUP WITHHOLDING The Trustee will furnish or make available, within the prescribed period of time for tax reporting purposes after the end of each calendar year, to each Certificate Owner or each person holding a Certificate on behalf of a Certificate Owner at any time during such year, such information as the Trustee deems necessary or desirable to assist Certificate Owners in preparing their federal income tax returns. Payments made on the Certificates and proceeds from the sale of Certificates will not be subject to a "backup" withholding tax of 31% unless, in general, the Certificate Owner fails to comply with certain reporting procedures and is not an exempt recipient under applicable provisions of the Code. STATE AND LOCAL TAX CONSEQUENCES The discussion above does not address the tax consequences of purchase, ownership or disposition of the Certificates under any state or local tax law. Investors should consult their own tax advisors regarding state and local tax consequences. ERISA CONSIDERATIONS A fiduciary of a pension, profit-sharing, retirement or other employee benefit plan subject to Title I of ERISA, should consider the fiduciary standards under ERISA in the context of the plan's particular circumstances before authorizing an investment of a portion of such plan's assets in the Certificates. Accordingly, pursuant to Section 404 of ERISA, such fiduciary should consider among other factors: (i) whether the investment is for the exclusive benefit of plan participants and their beneficiaries; (ii) whether the investment satisfies the applicable diversification requirements; (iii) whether the investment is in accordance with the documents and instruments governing the plan; and (iv) whether the investment is prudent, considering the nature of the investment. Fiduciaries of plans also should consider ERISA's prohibition on improper delegation of control over, or responsibility for, plan assets. In addition, benefit plans subject to ERISA, as well as individual retirement accounts or certain types of Keogh plans not subject to ERISA but subject to Section 4975 of the Code and any entity whose source of funds for the purchase of Certificates includes plan assets by reason of a plan or account investing in such entity (each, a "Plan"), are prohibited from engaging in a broad range of transactions involving Plan assets and persons having certain specified relationships to a Plan ("parties in interest" and "disqualified persons"). Such transactions are treated as "prohibited transactions" under Sections 406 and 407 of ERISA and excise taxes are imposed upon such persons by Section 4975 of the Code. An investment in Certificates by a Plan might result in the assets of the Trust being deemed to constitute Plan assets, which in turn might mean that certain aspects of such investment, including the operation of the Trust, might be prohibited transactions under ERISA and the Code. Neither ERISA nor the Code defines the term "plan assets." Under Section 2510.3-101 of the United States Department of Labor ("DOL") regulations (the "Regulation"), a Plan's assets may include an interest in the underlying assets of an entity (such as a trust) for certain purposes, including the prohibited transaction provisions of ERISA and the Code, if the Plan acquires an "equity interest" in such entity, unless certain exceptions apply. The Seller believes that the Certificates will give Certificateholders an equity interest in the Trust for purposes of the Regulation and can give no assurance that the Certificates will qualify for any of the exceptions under the Regulation. As a result, the assets of the Trust may be considered the assets of any Plan which acquires a Certificate. 47 The DOL has issued individual exemptions, Prohibited Transaction Exemption ("PTE") 95-89, Exemption Application No. D-10046, 60 Fed. Reg. 49011 (1995), to Banc One Capital Corporation, and PTE 89-89, as amended, Exemption Application No. D-6446, 54 Fed. Reg. 42,589 (1989), to Salomon Brothers Inc (collectively, the "Exemption"). The Exemption generally exempts from the application of the prohibited transaction provisions of Section 406 of ERISA and the excise taxes imposed on such prohibited transactions pursuant to Section 4975(a) and (b) of the Code and Section 502(i) of ERISA certain transactions relating to the initial purchase, holding and subsequent resale by Plans of certificates in pass-through trusts that consist of certain receivables, loans and other obligations that meet the conditions and requirements set forth in the Exemption. The receivables covered by the Exemption include motor vehicle installment obligations such as the Receivables. The Seller believes that the Exemption will apply to the acquisition, holding and resale of the Class A Certificates by a Plan and that all conditions of the Exemption other than those within the control of the investors have been or will be met. The Exemption sets forth six general conditions that must be satisfied for a transaction involving the acquisition of the Class A Certificates by a Plan to be eligible for the exemptive relief thereunder: (1) the acquisition of the Class A Certificates by a Plan is on terms (including the price for the Class A Certificates) that are at least as favorable to the Plan as they would be in an arm's-length transaction with an unrelated party; (2) the rights and interests evidenced by the Class A Certificates acquired by a Plan are not subordinated to the rights and interest evidenced by other certificates of the Trust; (3) the Class A Certificates acquired by the Plan have received a rating at the time of such acquisition that is in one of the three highest generic rating categories from any one of four rating entities; (4) the Trustee is not an affiliate of any other member of the "Restricted Group", which consists of the Underwriters, the Seller, the Trustee, the Servicer, each subservicer, each insurer and any Obligor with respect to the Receivables included in the Trust constituting more than 5% of the aggregate unamortized principal balance of the assets of the Trust as of the date of initial issuance of the Class A Certificates, and any affiliate of such parties. (5) the sum of all payments made to and retained by the Underwriters in connection with the offering of the Class A Certificates represents not more than reasonable compensation for placing the Class A Certificates. The sum of all payments made to and retained by the Servicer represents not more than the reasonable compensation for the Servicer's services under the Agreement and reimbursement of the Servicer's reasonable expenses in connection therewith; and (6) the Plan investing in the Class A Certificates must be an "accredited investor" as defined in Rule 501(a)(1) of Regulation D of the Commission under the Securities Act. Because the rights and interests evidenced by the Class A Certificates acquired by a Plan are not subordinated to the rights and interests evidenced by other certificates of the Trust, the second general condition set forth above is satisfied. It is a condition of the issuance of the Class A Certificates that they be rated in the highest rating category by a nationally recognized rating agency and thus the third general condition should be satisfied. The Seller and the Servicer expect that the fourth general condition set forth above will be satisfied with respect to the Class A Certificates. A fiduciary of a Plan contemplating purchasing a Class A certificate must make its own determination that the first, fifth and sixth general conditions set forth above will be satisfied with respect to the Class A Certificates. If the general conditions of the Exemption are satisfied, the Exemption may provide relief from the restrictions imposed by Sections 406(a) and 407(a) of ERISA as well as the excise taxes imposed by Section 4975(a) and (b) of the Code by reason of Section 4975(c)(1)(A) through (D) of the Code, in connection with the direct or indirect sale, exchange, transfer or holding of the Class A Certificates by a Plan. However, no exemption is provided from the restrictions of Sections 406(a)(1)(E), 406(a)(2) and 407 of ERISA for the acquisition or holding of a Class A Certificate on behalf of an "Excluded Plan" by any person who has 48 discretionary authority or renders investment advice with respect to the assets of such Excluded Plan. For purposes of the Class A Certificates an Excluded Plan is a Plan sponsored by any member of the Restricted Group. If certain specific conditions of the Exemption are also satisfied, the Exemption may provide relief from the restrictions imposed by Sections 406(b)(1) and (b)(2) and 407(a) of ERISA and the taxes imposed by Section 4975(a) and (b) of the Code by reason of Section 4975(c)(1)(E) of the Code in connection with the direct or indirect sale, exchange, transfer or holding of Class A Certificates in the initial issuance of Class A Certificates between the Seller or the Underwriters and a Plan other than an Excluded Plan when the person who has discretionary authority or renders investment advice with respect to the investment of Plan assets in the Class A Certificates is (a) an Obligor with respect to 5% or less of the fair market value of the Receivables or (b) an affiliate of such person. The Exemption also may provide relief from the restriction imposed by Sections 406(a) and 407(a) of ERISA and the taxes imposed by Section 4975(c)(1)(A) through (D) of the Code if such restrictions are deemed to otherwise apply merely because a person is deemed to be a party in interest or a disqualified person with respect to an investing Plan by virtue of providing services to a Plan (or by virtue of having certain specified relationships to such a person) solely as a result of such Plan's ownership of Class A Certificates. Before purchasing a Class A Certificate, a fiduciary of a Plan should itself confirm (a) that the Class A Certificates constitute "certificates" for purposes of the Exemption and (b) that the specific conditions set forth in Section II of the Exemption and the other requirements set forth in the Exemption will be satisfied. Any Plan fiduciary considering whether to purchase a Class A Certificate on behalf of a Plan should consult with its counsel regarding the applicability of the fiduciary responsibility and prohibited transaction provisions of ERISA and the Code to such investment. Because the Class B Certificates are subordinate interests, the Exemption will not be available for Class B Certificates. Accordingly, no Class B Certificate may be purchased by or otherwise transferred to a Plan other than an "insurance company general account" as defined in, and which complies with the provisions of, PTE 95-60 which may be deemed to be holding Plan assets. Furthermore, each purchaser of Class B Certificates will be deemed to have represented that it is not acquiring Class B Certificates, directly or indirectly, for or on behalf of a Plan other than an "insurance company general account" as defined in, and which complies with the provisions of, PTE 95-60. If Definitive Certificates are issued, each transferee of a Class B Certificate will be required to deliver to the Trustee a certificate to such effect. Any purchaser whose source of funds for the purchase of Class B Certificates includes such assets of an insurance company general account should itself confirm that all applicable requirements set forth in PTE 95-60 will be satisfied, particularly the requirement (set forth in Section IV(c) of PTE 95-60) that neither the insurance company nor an affiliate thereof will be a party in interest or disqualified person in connection with the purchase and holding of Class B Certificates or the servicing, management and operation of the Trust. 49 UNDERWRITING Subject to the terms and conditions set forth in the underwriting agreement relating to the Certificates (the "Underwriting Agreement"), the Seller has agreed to sell to each of the Underwriters named below (collectively, the "Underwriters"), and each of the Underwriters has severally agreed to purchase, the principal balance of each Class of Certificates set forth opposite its name below:
PRINCIPAL PRINCIPAL BALANCE BALANCE OF CLASS A OF CLASS B UNDERWRITERS CERTIFICATES CERTIFICATES - --------------------------------------------------------- ---------------- ---------------- Banc One Capital Corporation............................. $ 146,729,500 $ 6,113,865.77 Salomon Brothers Inc..................................... $ 146,729,500 $ 6,113,865.76 ---------------- ---------------- Total.............................................. $ 293,459,000 $ 12,227,731.53 ---------------- ---------------- ---------------- ----------------
The Seller has been advised by the Underwriters that they propose to offer the Certificates to the public initially at the public offering prices set forth on the cover page of this Prospectus, and to certain dealers at such prices less a concession of 0. % per Class A Certificate and 0. % per Class B Certificate; that the Underwriters and such dealers may allow a discount of 0. % per Class A Certificate and 0. % per Class B Certificate on the sale to certain other dealers; and that after the initial public offering of the Certificates, the public offering prices and the concessions and discounts to dealers may be changed by the Underwriters. The Seller has agreed to indemnify the several Underwriters against certain liabilities, including civil liabilities under the Securities Act, or contribute to payments which the Underwriters may be required to make in respect thereof. The Trustee or the Collateral Agent, as applicable, may, from time to time, invest the funds in the Accounts in Eligible Investments acquired from the Underwriters. After the initial distribution of the Certificates by the Underwriters, this Prospectus may be used by Banc One Capital Corporation, an affiliate of the Seller, the Servicer and the Subservicer, in connection with offers and sales relating to market making transactions in the Certificates. Banc One Capital Corporation may act as principal or agent in such transactions. Such sales will be made at prices related to prevailing market prices at the time of sale. NOTICE TO CANADIAN RESIDENTS RESALE RESTRICTIONS The distribution of the Certificates in Canada is being made only on a private placement basis exempt from the requirement that the Trust prepare and file a prospectus with the securities regulatory authorities in each province where trades of the Certificates are effected. Accordingly, any resale of the Certificates in Canada must be made in accordance with applicable securities laws which will vary depending on the relevant jurisdiction, and which may require resales to be made in accordance with available statutory exemptions or pursuant to a discretionary exemption granted by the applicable Canadian securities regulatory authority. Purchasers are advised to seek legal advice prior to any resale of the Certificates. REPRESENTATIONS OF PURCHASERS Each purchaser of Certificates in Canada who receives a purchase confirmation will be deemed to represent to the Seller, the Trust and the dealer from whom such purchase confirmation is received that (i) such purchaser is entitled under applicable provincial securities laws to purchase such Certificates without the benefit of a prospectus qualified under such securities laws, (ii) where required by law, that such purchaser is purchasing as principal and not as agent, and (iii) such purchaser has reviewed the text above under "Resale Restrictions." RIGHTS OF ACTION AND ENFORCEMENT The securities being offered are those of a foreign issuer and Ontario purchasers will not receive the contractual right of action prescribed by section 32 of the Regulation under the SECURITIES ACT (Ontario). As a 50 result, Ontario purchasers must rely on other remedies that may be available, including common law rights of action for damages or rescission or rights of action under the civil liability provisions of the U.S. federal securities laws. The Trust, the Seller, the Servicer and the Trustee and their respective directors and officers, if any, as well as the experts named herein, may be located outside of Canada and, as a result, it may not be possible for Ontario purchasers to effect service of process within Canada upon the Issuer or such persons. All or a substantial portion of the assets of the Issuer and such persons may be located outside of Canada and, as a result, it may not be possible to satisfy a judgment against the Issuer or such persons in Canada or to enforce a judgment obtained in Canadian courts against such Issuer or persons outside of Canada. NOTICE TO BRITISH COLUMBIA RESIDENTS A purchaser of the Certificates to whom the SECURITIES ACT (British Columbia) applies is advised that such purchaser is required to file with the British Columbia Securities Commission a report within ten days of the sale of any of the Certificates acquired by such purchaser pursuant to this offering. Such report must be in the form attached to British Columbia Securities Commission Blanket Order BOR #88/5. Only one such report must be filed in respect of the Certificates acquired on the same date and under the same prospectus exemption. LEGAL MATTERS The validity of the Certificates will be passed upon for the Seller by Squire, Sanders & Dempsey, Columbus, Ohio, and for the Underwriters by Stroock & Stroock & Lavan, New York, New York. Certain Federal income tax matters will be passed upon for the Seller by Squire, Sanders & Dempsey. 51 ANNEX I GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES Except in certain limited circumstances, the globally offered Certificates of Banc One Auto Grantor Trust 1996-B (the "Global Securities") will be available only in book-entry form. Investors in the Global Securities may hold such Global Securities through any of DTC, Cedel or Euroclear. The Global Securities will be tradeable as home market instruments in both the European and U.S. domestic markets. Initial settlement and all secondary trades will settle in same-day funds. Secondary market trading between investors holding Global Securities through Cedel and Euroclear will be conducted in the ordinary way in accordance with their normal rules and operating procedures and in accordance with conventional eurobond practice (i.e., seven calendar day settlement). Secondary market trading between investors holding Global Securities through DTC will be conducted according to the rules and procedures applicable to U.S. corporate debt obligations. Secondary cross-market trading between Cedel or Euroclear and DTC Participants holding Certificates will be effected on a delivery-against-payment basis through the respective Depositories of Cedel and Euroclear (in such capacity) and as DTC Participants. Non-U.S. holders (as described below) of Global Securities will be subject to U.S. withholding taxes unless such holders meet certain requirements and deliver appropriate U.S. tax documents to the securities clearing organizations or their Participants. INITIAL SETTLEMENT All Global Securities will be held in book-entry form by DTC in the name of Cede as nominee of DTC. Investors' interests in the Global Securities will be represented through financial institutions acting on their behalf as direct and indirect Participants in DTC. As a result, Cedel and Euroclear will hold positions on behalf of their Participants through their respective Depositories, which in turn will hold such positions in accounts as DTC Participants. Investors electing to hold their Global Securities through DTC will follow the settlement practices specified by the Underwriters. Investor securities custody accounts will be credited with their holdings against payment in same-day funds on the settlement date. Investors electing to hold their Global Securities through Cedel or Euroclear accounts will follow the settlement procedures applicable to conventional eurobonds, except that there will be no temporary global securities and no "lock-up" or restricted period. Global Securities will be credited to the securities custody accounts on the settlement date against payment in same-day funds. SECONDARY MARKET TRADING Since the purchaser determines the place of delivery, it is important to establish at the time of the trade where both the purchaser's and seller's accounts are located to insure that settlement can be made on the desired value date. TRADING BETWEEN DTC PARTICIPANTS. Secondary market trading between DTC Participants will be settled in same-day funds. TRADING BETWEEN CEDEL AND/OR EUROCLEAR PARTICIPANTS. Secondary market trading between Cedel Participants or Euroclear Participants will be settled using the procedures applicable to conventional eurobonds in same-day funds. TRADING BETWEEN DTC SELLER AND CEDEL OR EUROCLEAR PURCHASER. When Global Securities are to be transferred from the account of a DTC Participant to the account of a Cedel Participant or a Euroclear Participant, the purchaser will send instructions to Cedel or Euroclear through a Cedel Participant or Euroclear Participant at least one business day prior to settlement. Cedel or Euroclear will instruct the respective Depository, as the case may be, to receive the Global Securities against payment. Payment will include interest accrued on the Global Securities from and including the last coupon payment date to and excluding the settlement date, on the basis of the actual number of days in such accrual period and year 52 assumed to consist of 360 days. For transactions settling on the 31st of the month, payment will include interest accrued to and excluding the first day of the following month. Payment will then be made by the respective Depository of the DTC Participant's account against delivery of the Global Securities. After settlement has been completed, the Global Securities will be credited to the respective clearing system and by the clearing system, in accordance with its usual procedures, to the Cedel Participant's or Euroclear Participant's account. The securities credit will appear the next day (European time) and the cash debt will be back-valued to, and the interest on the Global Securities will accrue from, the value date (which would be the preceding day when settlement occurred in New York). If settlement is not completed on the intended value date (i.e., the trade fails), the Cedel or Euroclear cash debt will be valued instead as of the actual settlement date. Cedel Participants and Euroclear Participants will need to make available to the respective clearing systems the funds necessary to process same-day funds settlement. The most direct means of doing so is to preposition funds for settlement, either from cash on hand or existing lines of credit, as they would for any settlement occurring within Cedel or Euroclear. Under this approach, they may take on credit exposure to Cedel or Euroclear until the Global Securities are credited to their accounts one day later. As an alternative, if Cedel or Euroclear has extended a line of credit to them, Cedel Participants or Euroclear Participants can elect not to preposition funds and allow that credit line to be drawn upon to finance the settlement. Under this procedure, Cedel Participants or Euroclear Participants purchasing Global Securities would incur overdraft charges for one day, assuming they cleared the overdraft when the Global Securities were credited to their accounts. However, interest on the Global Securities would accrue from the value date. Therefore, in many cases the investment income on the Global Securities earned during that one-day period may substantially reduce or offset the amount of such overdraft charges, although this result will depend on each Cedel Participant's or Euroclear Participant's particular cost of funds. Since the settlement is taking place during New York business hours, DTC Participants can employ their usual procedures for sending Global Securities to the respective European Depository for the benefit of Cedel Participants or Euroclear Participants. The sale proceeds will be available to the DTC seller on the settlement date. Thus, to the DTC Participants a cross-market transaction will settle no differently than a trade between two DTC Participants. TRADING BETWEEN CEDEL OR EUROCLEAR SELLER AND DTC PURCHASER. Due to time zone differences in their favor, Cedel Participants and Euroclear Participants may employ their customary procedures for transactions in which Global Securities are to be transferred by the respective clearing system, through the respective Depository, to a DTC Participant. The seller will send instructions to Cedel or Euroclear through a Cedel Participant or Euroclear Participant at least one business day prior to settlement. In these cases Cedel or Euroclear will instruct the respective Depository, as appropriate, to deliver the Global Securities to the DTC Participant's account against payment. Payment will include interest accrued on the Global Securities from and including the last interest payment to and excluding the settlement date on the basis of the actual number of days in such accrual period and a year assumed to consist of 360 days. For transactions settling on the 31st of the month, payment will include interest accrued to and excluding the first day of the following month. The payment will then be reflected in the account of the Cedel Participant or Euroclear Participant the following day, and receipt of the cash proceeds in the Cedel Participant's or Euroclear Participant's account would be back-valued to the value date (which would be the preceding day, when settlement occurred in New York). Should the Cedel Participant or Euroclear Participant have a line of credit with its respective clearing system and elect to be in debt in anticipation of receipt of the sale proceeds in its account, the back-valuation will extinguish any overdraft incurred over that one-day period. If settlement is not completed on the intended value date (i.e., the trade fails), receipt of the cash proceeds in the Cedel Participant's or Euroclear Participant's account would instead be valued as of the actual settlement date. Finally, day traders that use Cedel or Euroclear and that purchase Global Securities from DTC Participants for delivery to Cedel Participants or Euroclear Participants should note that these trades would automatically fail on the sale side unless affirmative action were taken. At least three techniques should be readily available to eliminate this potential problem: 53 (a) borrowing through Cedel or Euroclear for one day (until the purchase side of the day trade is reflected in their Cedel or Euroclear accounts) in accordance with the clearing system's customary procedures; (b) borrowing the Global Securities in the U.S. from a DTC Participant no later than one day prior to settlement, which would give the Global Securities sufficient time to be reflected in their Cedel or Euroclear account in order to settle the sale side of the trade; or (c) staggering the value dates for the buy and sell sides of the trade so that the value date for the purchase from the DTC Participant is at least one day prior to the value date for the sale to the Cedel Participant or Euroclear Participant. CERTAIN U.S. FEDERAL WITHHOLDING TAXES AND DOCUMENTATION REQUIREMENTS A beneficial owner of Global Securities through Cedel or Euroclear (or through DTC if the holder has an address outside the U.S.) will be subject to 30% U.S. withholding tax that generally applies to payments of interest (including original issue discount) on registered debt issued by U.S. Persons, unless (i) each clearing system, bank or other financial institution that holds customers' securities in the ordinary course of its trade or business in the chain of intermediaries between such beneficial owner and the U.S. entity required to withhold tax complies with applicable certification requirements and (ii) such beneficial owners take one of the following steps to obtain an exemption or reduced tax rate: EXEMPTION FOR NON-U.S. PERSONS (FORM W-8). Beneficial owners of Global Securities that are non-U.S. Persons can obtain a complete exemption from the withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If the information shown on Form W-8 changes, a new Form W-8 must be filed within 30 days of such change. EXEMPTION FOR NON-U.S. PERSONS WITH EFFECTIVELY CONNECTED INCOME (FORM 4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S. branch, for which the interest income is effectively connected with its conduct of a trade or business in the United States, can obtain an exemption from the withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income Effectively Connected with the Conduct of a Trade or Business in the United States). EXEMPTION OR REDUCED RATE FOR NON-U.S. PERSONS RESIDENT IN TREATY COUNTRIES (FORM 1001). Non-U.S. Persons that are beneficial owners of Global Securities residing in a country that has a tax treaty with the United States can obtain an exemption or reduced tax rate (depending on the treaty terms) by filing Form 1001 (Ownership, Exemption or Reduced Rate Certificate). If the treaty provides for a reduced rate, withholding tax will be imposed at that rate unless the filer alternatively files Form W-8. Form 1001 may be filed by the Certificateholder or his agent. EXEMPTION FOR U.S. PERSONS (FORM W-9). U.S. Persons can obtain a complete exemption from the withholding tax by filing Form W-9 (Payer's Request for Taxpayer Identification Number and Certification). U.S. FEDERAL INCOME TAX REPORTING PROCEDURE. The holder of a Global Securities or, in the case of a Form 1001 or a Form 4224 filer, his agent, files by submitting the appropriate form to the person through whom it holds (the clearing agency, in the case of persons holding directly on the books of the clearing agency). Form W-8 and Form 1001 are effective for three calendar years and Form 4224 is effective for one calendar year. The term "U.S. Person" means (i) a citizen or resident of the United States, (ii) a corporation or partnership organized in or under the laws of the United States or any political subdivision thereof or (iii) an estate or trust the income of which is includible in gross income for United States tax purposes, regardless of its source. This summary of documentation requirements does not deal with all aspects of U.S. Federal income tax withholding that may be relevant to foreign holders of the Global Securities. Investors are advised to consult their own tax advisors for specific tax advice concerning their holding and disposing of the Global Securities. 54 INDEX OF PRINCIPAL TERMS
PAGE ----- Accounts................................................................................................... 28 Aggregate Net Losses....................................................................................... 33 Agreement.................................................................................................. 3 Arizona UCC................................................................................................ 10 APR........................................................................................................ 4 Bank....................................................................................................... 3 BANC ONE................................................................................................... 21 Business Day............................................................................................... 5 Call Report................................................................................................ 22 Cede....................................................................................................... 2 Cedel...................................................................................................... 1 Cedel Participants......................................................................................... 24 Closing Date............................................................................................... 10 Collection Account......................................................................................... 27 Collection Period.......................................................................................... 6 Certificate Owner.......................................................................................... 23 Certificateholders......................................................................................... 5 Certificates............................................................................................... 1 Charge-off Rate............................................................................................ 33 Class...................................................................................................... 3 Class A Certificateholders................................................................................. 5 Class A Certificates....................................................................................... 1 Class A Distribution Account............................................................................... 27 Class A Interest Carryover Shortfall....................................................................... 31 Class A Interest Distribution.............................................................................. 31 Class A Monthly Interest................................................................................... 5 Class A Monthly Principal.................................................................................. 6 Class A Pass-Through Rate.................................................................................. 4 Class A Percentage......................................................................................... 3 Class A Pool Factor........................................................................................ 21 Class A Principal Balance.................................................................................. 5 Class A Principal Carryover Shortfall...................................................................... 31 Class A Principal Distribution............................................................................. 32 Class B Certificateholders................................................................................. 5 Class B Certificates....................................................................................... 1 Class B Distribution Account............................................................................... 27 Class B Interest Carryover Shortfall....................................................................... 32 Class B Interest Distribution.............................................................................. 31 Class B Monthly Interest................................................................................... 5 Class B Monthly Principal.................................................................................. 6 Class B Pass-Through Rate.................................................................................. 5 Class B Percentage......................................................................................... 3 Class B Pool Factor........................................................................................ 21 Class B Principal Balance.................................................................................. 32 Class B Principal Carryover Shortfall...................................................................... 32 Class B Principal Distribution............................................................................. 32 Closing Date............................................................................................... 4 Code....................................................................................................... 9 Collateral Agent........................................................................................... 3 Collection Account......................................................................................... 27
55
PAGE ----- Collection Period.......................................................................................... 6 Collections................................................................................................ 30 Commission................................................................................................. 2 Cooperative................................................................................................ 25 Cutoff Date................................................................................................ 1 Dealer Agreements.......................................................................................... 14 Dealers.................................................................................................... 14 Definitive Certificates.................................................................................... 23 Delinquency Percentage..................................................................................... 34 Depositories............................................................................................... 23 Determination Date......................................................................................... 29 Direct Participants........................................................................................ 23 Distribution Date.......................................................................................... 5 Distribution Date Statement................................................................................ 34 DOL........................................................................................................ 47 DTC........................................................................................................ 2 Eligible Deposit Account................................................................................... 28 Eligible Institution....................................................................................... 28 Eligible Investments....................................................................................... 28 Eligible Trust Company..................................................................................... 28 ERISA...................................................................................................... 9 Euroclear.................................................................................................. 1 Euroclear Operator......................................................................................... 25 Euroclear Participants..................................................................................... 25 Events of Servicing Termination............................................................................ 36 Exchange Act............................................................................................... 2 Excluded Plan.............................................................................................. 48 Exemption.................................................................................................. 48 Final Scheduled Distribution Date.......................................................................... 1 Final Scheduled Maturity Date.............................................................................. 4 Financed Vehicles.......................................................................................... 4 FTC Rule................................................................................................... 42 Global Securities.......................................................................................... 52 Holders.................................................................................................... 26 Indirect Participants...................................................................................... 23 Insolvency Laws............................................................................................ 22 Interest Collections....................................................................................... 30 Issuer..................................................................................................... 3 IRS........................................................................................................ 43 Liquidated Receivables..................................................................................... 30 Liquidation Proceeds....................................................................................... 30 Loan Purchase and Servicing Agreement...................................................................... 4 Loan Sale Agreement........................................................................................ 4 Motor Vehicle Loans........................................................................................ 14 Obligors................................................................................................... 4 OCC........................................................................................................ 43 Ohio UCC................................................................................................... 10 OID........................................................................................................ 44 Original Class A Principal Balance......................................................................... 3 Original Class B Principal Balance......................................................................... 3 Original Pool Balance...................................................................................... 7 Originators................................................................................................ 13
56
PAGE ----- Paid-Ahead Period.......................................................................................... 20 Paid-Ahead Receivable...................................................................................... 20 Participants............................................................................................... 23 Plan....................................................................................................... 9 Pool Balance............................................................................................... 7 Principal Collections...................................................................................... 6 PTE........................................................................................................ 48 Purchase Amount............................................................................................ 27 Purchase Price............................................................................................. 44 Rating Agency.............................................................................................. 8 Realized Losses............................................................................................ 32 Receivable File............................................................................................ 27 Receivables................................................................................................ 1 Record Date................................................................................................ 5 Recoveries................................................................................................. 30 Registration Statement..................................................................................... 2 Regulation................................................................................................. 47 Reserve Fund............................................................................................... 6 Restricted Group........................................................................................... 48 Retained Yield............................................................................................. 44 Rules...................................................................................................... 24 Securities Act............................................................................................. 2 Seller..................................................................................................... 3 Servicer................................................................................................... 3 Servicing Fee.............................................................................................. 8 Servicing Fee Rate......................................................................................... 8 Shortfall Amount........................................................................................... 46 Simple Interest Receivable................................................................................. 17 Specified Reserve Balance.................................................................................. 7 Subservicer................................................................................................ 3 Terms and Conditions....................................................................................... 25 Trust...................................................................................................... 3 Trustee.................................................................................................... 3 Trust Property............................................................................................. 4 UCC........................................................................................................ 10 Underwriters............................................................................................... 50 Underwriting Agreement..................................................................................... 50 U.S. Person................................................................................................ 54 Valley National............................................................................................ 3
57 - -------------------------------------------- -------------------------------------------- - -------------------------------------------- -------------------------------------------- NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE SELLER, THE SERVICER OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. ------------------------ TABLE OF CONTENTS
PAGE ----- Reports to Certificateholders.................... 2 Available Information............................ 2 Incorporation of Certain Documents by Reference....................................... 2 Summary of Terms................................. 3 Risk Factors..................................... 10 Formation of the Trust........................... 12 The Trust Property............................... 13 The Portfolio of Motor Vehicle Loans............. 13 The Receivables Pool............................. 17 Maturity and Prepayment Assumptions.............. 20 Yield Considerations............................. 21 Pool Factors and Trading Information............. 21 Use of Proceeds.................................. 21 The Seller....................................... 21 The Servicer and the Subservicer................. 22 The Certificates................................. 23 Certain Legal Aspects of the Receivables......... 39 Federal Income Tax Consequences.................. 43 State and Local Tax Consequences................. 47 ERISA Considerations............................. 47 Underwriting..................................... 50 Notice to Canadian Residents..................... 50 Legal Matters.................................... 51 Annex I.......................................... 52 Index of Principal Terms......................... 55
------------------------ UNTIL SEPTEMBER , 1996 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. $305,686,731.53 BANC ONE AUTO GRANTOR TRUST 1996-B $293,459,000.00 CLASS A % ASSET BACKED CERTIFICATES $12,227,731.53 CLASS B % ASSET BACKED CERTIFICATES BANC ONE ABS CORPORATION SELLER BANK ONE, ARIZONA, NA SERVICER --------------------- PROSPECTUS JUNE , 1996 --------------------- BANC ONE CAPITAL CORPORATION SALOMON BROTHERS INC - -------------------------------------------- -------------------------------------------- - -------------------------------------------- -------------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following is an itemized list of the estimated expenses to be incurred in connection with the offering of the securities being offered hereunder other than underwriting discounts and commissions. SEC Registration Fee...................................................... $ 105,410 Printing and Engraving.................................................... $ 45,000 Trustee's Fees............................................................ $ 4,000 Legal Fees and Expenses................................................... $ 100,000 Blue Sky Fees and Expenses................................................ $ 30,000 Accountant's Fees and Expenses............................................ $ 50,000 Rating Agency Fees........................................................ $ 193,542 Miscellaneous Fees and Expenses........................................... $ 5,048 --------- Total Expenses........................................................ $ 533,000 --------- ---------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 1701.13(E) of the Ohio General Corporation Law sets forth provisions which define the extent which a corporation may indemnify directors, officers and employees. Those provisions have been adopted by the Registrant in Article VI of Registrant's Code of Regulations, which provides as follows: The Corporation may indemnify any director or officer, any former director or officer of the Corporation and any person who is or has served at the request of the Corporation as a director, officer or trustee of any other corporation, partnership, joint venture, trust or other enterprise (and his heirs, executors and administrators) against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement, actually and reasonably incurred by him by reason of the fact that he is or was such director, officer or trustee in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, to the full extent and according to the procedures and requirements set forth in the Ohio General Corporation Law as the same may be in effect from time to time. The indemnification provided for herein shall not be deemed to restrict the right of the Corporation to (i) indemnify employees, agents and others permitted by such Law, (ii) purchase and maintain insurance or provide similar protection on behalf of directors, officers or such other persons against liabilities asserted against them or expenses incurred by them arising out of their service to the Corporation as contemplated herein, and (iii) enter into agreements with such directors, officers, employees, agents or others indemnifying them against any and all liabilities (or such lesser indemnification as may be provided in such agreement) asserted against them or incurred by them arising out of their service to the Corporation as contemplated herein. The Registrant's parent, BANC ONE CORPORATION, has entered into indemnification agreements with certain directors and executive officers of the Registrant that provide for indemnification unless the indemnitee's conduct is finally adjudged by a court to be knowingly fraudulent, deliberately dishonest or willful misconduct. The Underwriting Agreement filed as Exhibit 1.1 hereto provides for indemnification by the Underwriters of the Registrant and its directors, officers and controlling persons for certain liabilities arising under the Securities Act of 1933 or otherwise. II-1 ITEM 16. EXHIBITS 1.1 Form of Underwriting Agreement 3.1 Articles of Incorporation of Banc One ABS Corporation 3.2 Code of Regulations of Banc One ABS Corporation 4.1 Form of Pooling and Servicing Agreement 4.2 Form of Certificate (included as part of Exhibit 4.1) 5.1 Opinion of Squire, Sanders & Dempsey with respect to legality Opinion of Squire, Sanders & Dempsey with respect to federal income tax 8.1 matters 10.1 Form of Loan Sale Agreement Consent of Squire, Sanders & Dempsey (contained in Exhibit 5.1 and Exhibit 23.1 8.1) 24.1 Powers of Attorney (included as part of signature page)*
- ------------------------ *Previously filed. ITEM 17. UNDERTAKINGS The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933, as amended (the "Securities Act"), the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. (3) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. (4) For purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (5) To provide to the Underwriters at the closing specified in the Underwriting Agreement certificates in such denominations and registered in such names as required by the Underwriters to permit prompt delivery to each purchaser. (6) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement; (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; II-2 (ii) To reflect in the Prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. (7) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof. (8) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, Banc One ABS Corporation certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Columbus and State of Ohio on June 17, 1996. BANC ONE ABS CORPORATION By: /s/ STEVEN R. BLUHM ----------------------------------- Steven R. Bluhm President Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated. SIGNATURE TITLE DATE - ----------------------------------- ------------------------- ---------------- President and Director /s/ STEVEN R. BLUHM (principal executive, - ----------------------------------- financial and accounting June 17, 1996 Steven R. Bluhm officer) /s/ JEFFREY B. UPPERMAN - ----------------------------------- Vice President and June 17, 1996 Jeffrey B. Upperman Director II-4 INDEX TO EXHIBITS
EXHIBIT NUMBER EXHIBIT PAGE - ----------- ------------------------------------------------------------------------------------------------- --------- 1.1 Form of Underwriting Agreement 3.1 Articles of Incorporation of Banc One ABS Corporation 3.2 Code of Regulations of Banc One ABS Corporation 4.1 Form of Pooling and Servicing Agreement 4.2 Form of Certificate (included as part of Exhibit 4.1) 5.1 Opinion of Squire, Sanders & Dempsey with respect to legality 8.1 Opinion of Squire, Sanders & Dempsey with respect to federal income tax matters 10.1 Form of Loan Sale Agreement 23.1 Consent of Squire, Sanders & Dempsey (contained in Exhibit 5.1 and Exhibit 8.1) 24.1 Powers of Attorney (included as part of signature page)*
- ------------------------ * Previously filed. EX-1.1 2 EXHIBIT 1.1 EXHIBIT 1.1 BANC ONE AUTO GRANTOR TRUST 1996-B $______________ CLASS A ____% ASSET BACKED CERTIFICATES $_____________ CLASS B ____% ASSET BACKED CERTIFICATES BANK ONE, ARIZONA, NA (SELLER) FORM OF UNDERWRITING AGREEMENT June __, 1996 BANC ONE CAPITAL CORPORATION 90 North High Street Columbus, OH 43215 SALOMON BROTHERS INC 7 World Trade Center 32nd Floor New York, NY 10048 Ladies and Gentlemen: 1. INTRODUCTORY. Banc One ABS Corporation, an Ohio Corporation (the "Seller"), proposes to cause BANC ONE AUTO GRANTOR TRUST 1996-B (the "Trust") to issue $______________ principal amount of its Class A ____% Asset Backed Certificates (the "Class A Certificates") and $_____________ principal amount of its Class B % Asset Backed Certificates (the "Class B Certificates" and, together with the Class A Certificates, the "Certificates") and the Seller proposes to sell the Certificates to the several underwriters named in Schedule I attached hereto (the "Underwriters"). The assets of the Trust include, among other things, a pool of retail receivables generated from time to time pursuant to motor vehicle retail installment sale contracts (the "Receivables") secured by new or used automobiles, vans or light-duty trucks financed thereby (the "Financed Vehicles"), and certain monies received thereunder on or after June 1, 1996 (the "Cutoff Date"), and the other property and the proceeds thereof to be conveyed to the Trustee pursuant to the Pooling and Servicing Agreement to be dated as of June 1, 1996 (the "Pooling and Servicing Agreement") among the Seller, as seller and Bank One, Arizona, NA, a national banking association, as servicer (the "Bank" or the "Servicer") and Bankers Trust Company, a New York banking corporation, as trustee (the "Trustee"). Pursuant to the Pooling and Servicing Agreement, the Seller will sell the Receivables to the Trustee, acting on behalf of Trust and the Servicer will service the Receivables on behalf of the Trust. In addition, pursuant to the Pooling and Servicing Agreement, the Servicer will agree to perform certain administrative tasks. The Certificates will be issued pursuant to the Pooling and Servicing Agreement. Certain of the Receivables were originated by Valley National Financial Services Company ("Valley National" or the "Subservicer"), a wholly- owned subsidiary of the Bank will be sold to the Bank pursuant to the terms of the Loan Purchase and Servicing Agreement (the "Loan Purchase and Servicing Agreement") dated as of June 1, 1996 between the Bank and Valley National. The Bank will sell the Receivables to the Seller pursuant to the terms of the Loan Sale Agreement dated as of June 1, 1996 (the "Loan Sale Agreement") between the Bank and the Seller. Capitalized terms used and not otherwise defined herein shall have the meanings given them in the Pooling and Servicing Agreement. 2. REPRESENTATIONS AND WARRANTIES OF THE SELLER. (a) The Seller represents and warrants to and agrees with the Underwriters that: (i) A registration statement (No. 333-3457), including a form of prospectus, on Form S-3 relating to the Certificates has been filed with the Securities and Exchange Commission (the "Commission") and either (A) has been declared effective under the Securities Act of 1933, as amended (the "Act"), and is not proposed to be amended or (B) is proposed to be amended by amendment or post-effective amendment. If the Seller does not propose to amend such registration statement and if any post-effective amendment to such registration statement has been filed with the Commission prior to the execution and delivery of the Underwriting Agreement, the most recent such amendment has been declared effective by the Commission. For purposes of the Underwriting Agreement, "Effective Time" means (x) if the Seller has advised the Underwriters that it does not propose to amend such registration statement, the date and time as of which such registration statement, or the most recent post-effective amendment thereto (if any) filed prior to the execution and delivery of the Underwriting Agreement, was declared effective by the Commission, or (y) if the Seller has advised the Underwriters that it proposes to file an amendment or post-effective amendment to such registration statement, the date and time as of which such registration statement, as amended by such amendment or post-effective -2- amendment, as the case may be, is declared effective by the Commission. "Effective Date" means the date of the Effective Time. Such registration statement, as amended at the Effective Time, including all information (if any) deemed to be a part of such registration statement as of the Effective Time pursuant to Rule 430A(b) under the Act, and including the exhibits thereto and any material incorporated by reference therein, is hereinafter referred to as the "Registration Statement," and the form of prospectus relating to the Certificates, as first filed with the Commission pursuant to and in accordance with Rule 424(b) ("Rule 424(b)") under the Act or, if no such filing is required, as included in the Registration Statement at the Effective Date, is hereinafter referred to as the "Prospectus." (ii) If the Effective Time is prior to the execution and delivery of the Underwriting Agreement: (A) on the Effective Date, the Registration Statement conformed in all material respects to the requirements of the Act and the rules and regulations of the Commission under the Act (the "Rules and Regulations"), (B) on the date of the Underwriting Agreement, the Registration Statement conforms, and at the time of filing of the Prospectus pursuant to Rule 424(b), the Registration Statement and the Prospectus will conform, in all material respects to the requirements of the Act and the Rules and Regulations, (C) on the Effective Date, the Registration Statement did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading and (D) on the Effective Date, the Prospectus, if not filed pursuant to Rule 424(b), did not, and on the date of any filing pursuant to Rule 424(b) and on the Closing Date the Prospectus will not, include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. If the Effective Time is subsequent to the execution and delivery of the Underwriting Agreement: (1) on the Effective Date, the Registration Statement and the Prospectus will conform in all material respects to the requirements of the Act and the Rules and Regulations, (2) on the Effective Date, the Registration Statement will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading and (3) on the Effective Date, at the time of filing of the Prospectus pursuant to Rule 424(b) and at the Closing Date, the Prospectus will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to -3- make the statements therein, in the light of the circumstances under which they were made, not misleading. The two preceding sentences do not apply to statements in or omissions from the Registration Statement or Prospectus based upon written information furnished to the Seller by any Underwriter through the Underwriters specifically for use therein and the Seller acknowledges that the only such information is the Underwriters' Information as defined in Section 2(b) hereof. (iii) The Underwriting Agreement has been duly authorized, executed and delivered by the Seller. The execution, delivery and performance of the Underwriting Agreement and the issuance and sale of the Certificates and compliance with the terms and provisions hereof will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any agreement or instrument to which the Seller is a party or by which the Seller is bound or to which any of the properties of the Seller is subject which could reasonably be expected to have a material adverse effect on the transactions contemplated herein. The Seller has full corporate power and authority to (i) authorize the Trustee to execute and deliver the Certificates to the Seller and (ii) sell the Certificates to the Underwriters, all as contemplated by the Underwriting Agreement. (iv) Other than as contemplated by the Underwriting Agreement or as disclosed in the Prospectus, there is no broker, finder or other party that is entitled to receive from the Seller any brokerage or finder's fee or other fee or commission as a result of any of the transactions contemplated by the Underwriting Agreement. (v) All legal or governmental proceedings, contracts or documents of a character required to be described in the Registration Statement or the Prospectus or to be filed as an exhibit to the Registration Statement have been so described or filed as required. (vi) As of the Closing Date (as defined below), the representations and warranties of (i) the Seller and the Bank under the Pooling and Servicing Agreement will be true and correct in all material respects and each such representation and warranty is so incorporated herein by this reference; (ii) the Bank under the Loan Sale Agreement, (iii) Valley National under the Loan Purchase and Servicing Agreement and (iv) the Seller herein shall be true and correct in all material respects. (vii) The Seller's assignment and delivery of the Receivables to the Trustee, on behalf of the Trust, on the -4- Closing Date will vest in the Trustee, on behalf of the Trust, all the Seller's right, title and interest therein, or will result in a first priority perfected security interest therein, in either case subject to no prior Lien. (viii) The Certificates, when duly and validly executed and authenticated by the Trustee, in accordance with the Pooling and Servicing Agreement, and delivered and paid for pursuant hereto will be validly issued and outstanding and entitled to the benefits of the Pooling and Servicing Agreement. (ix) Neither the transfer from the Seller to the Trustee, acting on behalf of the Trust, of the Receivables and other Trust Property conveyed by it to the Trust pursuant to the Pooling and Servicing Agreement, nor the assignment of the security interest of the Seller in the Financed Vehicles or the other Trust Property to the Trustee, acting on behalf of the Trust, pursuant to the Pooling and Servicing Agreement, nor the issuance, sale and delivery of the Certificates, nor the fulfillment of the terms of the Certificates, will conflict with, or result in a breach, violation or acceleration of, or constitute a default under, any term or provision of the organizational documents of the Seller or any material indenture or other material agreement or instrument to which the Seller is a party or by which it or its properties is bound or result in a violation of or contravene the terms of any statute, order or regulation applicable to the Seller of any court, regulatory body, administrative agency, governmental body or arbitrator having jurisdiction over the Seller or will result in the creation of any Lien upon any material property or assets of the Seller. (x) The Seller has caused the Servicer to deliver to the Underwriters or to counsel for the Underwriters complete and correct copies of publicly available portions of the Consolidated Report of Condition of the Servicer for the period ended March 31, 1996, as submitted to the Governors of the Federal Reserve System; except as set forth in or contemplated in the Registration Statement and the Prospectus, there has been no material adverse change in the financial condition or results of operations of the Servicer since March 31, 1996. (xi) Any taxes, fees and other governmental charges in connection with the execution, delivery and performance by the Seller of the Underwriting Agreement, the Pooling and Servicing Agreement and the Certificates shall have been paid or will be paid by or on behalf of the Seller at or prior to the Closing Date to the extent then due. -5- (b) The Seller hereby agrees with the Underwriters that, for all purposes of the Underwriting Agreement, the only information furnished to the Seller by the Underwriters specifically for use in the Registration Statement, the Prospectus, or any amendment or supplement thereto, or any related preliminary prospectus, are the statements with respect to stabilization on the second page of, and the statements under the caption "Underwriting" in, the preliminary prospectus and the Prospectus (collectively, the "Underwriters' Information"). 3. PURCHASE, SALE AND DELIVERY OF THE CERTIFICATES. On the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein set forth, the Seller agrees to sell to the Underwriters, and the Underwriters agree, severally and not jointly, to purchase from the Seller, the principal amount of the Class A Certificates set forth opposite the name of such Underwriter in Schedule I hereto at a purchase price of __________% of the principal amount thereof and the principal amount of the Class B Certificates set forth opposite the name of such Underwriter in Schedule I hereto at a purchase price of __________% of the principal amount thereof. The Seller will deliver the Certificates to the Underwriters, for the account of the Underwriters, against payment of the purchase price to or upon the order of the Seller by wire transfer or check in Federal (same day) Funds, at the office of Stroock & Stroock & Lavan, Seven Hanover Square, New York, New York 10004, at 10:00 a.m., New York time on June , 1996, or at such other time not later than seven full business days thereafter as the Underwriters and the Seller determine, such time being herein referred to as the "Closing Date." The Certificates to be so delivered will be initially represented by one or more Class A Certificates and one or more Class B Certificates registered in the name of Cede & Co., the nominee of The Depository Trust Company ("DTC"). The interests of beneficial owners of the Certificates will be represented by book entries on the records of DTC and participating members thereof. Definitive Certificates will be available only under the limited circumstances specified in the Pooling and Servicing Agreement. 4. OFFERING. It is understood that, after the Registration Statement becomes effective, the Underwriters propose to offer the Certificates for sale to the public (which may include selected dealers), on the terms set forth in the Prospectus. 5. COVENANTS OF THE SELLER. The Seller covenants and agrees with the several Underwriters that: -6- (a) If the Effective Time is prior to the execution and delivery of the Underwriting Agreement, the Seller will file the Prospectus, properly completed, with the Commission pursuant to and in accordance with subparagraph (1) (or, if applicable and if consented to by the Underwriters, subparagraph (4)) of Rule 424(b) not later than the earlier of (i) the second business day following the execution and delivery of the Underwriting Agreement and (ii) the fifth business day after the Effective Date. The Seller will advise the Underwriters promptly of any such filing pursuant to Rule 424(b). (b) The Seller will advise the Underwriters promptly of any proposal to amend or supplement the registration statement as filed or the related prospectus or the Registration Statement or the Prospectus and will not effect such amendment or supplementation without the consent of the Underwriters, which consent shall not be unreasonably withheld or delayed; the Seller will also advise the Underwriters promptly of any request by the Commission for any amendment of or supplement to the Registration Statement or the Prospectus or for any additional information; and the Seller will also advise the Underwriters promptly of the effectiveness of the Registration Statement (if the Effective Time is subsequent to the execution of the Underwriting Agreement) and of any amendment or supplement to the Registration Statement or the Prospectus and of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threat of any proceeding for that purpose and the Seller will use its reasonable best efforts to prevent the issuance of any such stop order and to obtain as soon as possible the lifting of any issued stop order. (c) If, at any time when a prospectus relating to the Certificates is required to be delivered under the Act, any event occurs as a result of which the Prospectus as then amended or supplemented would contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend or supplement the Prospectus to comply with the Act, the Seller promptly will prepare and file with the Commission an amendment or supplement which will correct such statement or omission, or an amendment or supplement which will effect such compliance. Neither the consent of the Underwriters to, nor the delivery by the Underwriters of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 6. (d) The Seller will timely prepare and file all periodic reports, on behalf of the Trust, with the Commission referred to in its No-Action Letter to the Commission dated -7- August 11, 1995 until no longer required to do so as permitted by Section 15(d) of the Exchange Act. (e) The Seller will furnish to each of the Underwriters copies of the Registration Statement (two of which will be signed and will include all exhibits), each related preliminary prospectus, the Prospectus and all amendments and supplements to such documents, in each case as soon as available and in such quantities as the Underwriters reasonably request. (f) The Seller will take all actions which are reasonably necessary to arrange for the qualification of the Certificates for sale under the laws of such jurisdictions as the Underwriters designate and will continue such qualifications in effect so long as required for the distribution; PROVIDED, HOWEVER, that in no event shall the Seller be obligated to qualify as a foreign corporation or to execute a general or unlimited consent to service of process in any such jurisdiction. (g) For a period from the date of the Underwriting Agreement until the retirement of the Certificates, or until such time as the Underwriters shall cease to maintain a secondary market in the Certificates, whichever occurs first, the Seller will deliver to the Underwriters the annual statements of compliance and the annual independent certified public accountants' reports furnished to the Trustee pursuant to the Pooling and Servicing Agreement, as soon as such statements and reports are furnished to the Trustee. (h) So long as any of the Certificates are outstanding, the Seller will furnish to the Underwriters (i) as soon as practicable after the end of the fiscal year all documents required to be distributed to Certificateholders or filed with the Commission on behalf of the Trust pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any order of the Commission thereunder and (ii) from time to time, any other information concerning the Seller as the Underwriters may reasonably request only insofar as such information reasonably relates to the Registration Statement or the transactions contemplated by the Pooling and Servicing Agreement. (i) On or before the Closing Date, the Seller shall mark its accounting and computer records relating to the Receivables and shall cause the Bank and Valley National to mark its respective computer records relating to the Receivables to show the absolute ownership by the Trustee on behalf of the Trust of the Receivables, and from and after the Closing Date none of the Seller, the Bank or Valley National shall take any action inconsistent with the ownership by the Trustee on behalf -8- of the Trust of such Receivables, other than as permitted by the Pooling and Servicing Agreement. (j) To the extent, if any, that any of the ratings provided with respect to the Certificates by the rating agency or agencies that initially rate any of the Certificates are conditional upon the furnishing of documents or the taking of any other actions by the Seller on or prior to the Closing Date, the Seller shall furnish such documents and take any such other actions. A copy of any such document shall be provided to the Underwriters at the time it is delivered to the rating agencies. (k) For the period beginning on the date of the Underwriting Agreement and ending on the Closing Date, neither the Seller nor any Affiliate or trust originated, directly or indirectly, by the Seller or any Affiliate (or any trust, partnership or other entity sponsored by the Seller or any Affiliate or in which the Seller or any Affiliate is a partner or a stockholder) will, without the prior written consent of the Underwriters, offer to issue or issue notes collateralized by, or certificates (other than the Certificates) evidencing an ownership interest in, motor vehicle installment sale contracts, PROVIDED, HOWEVER, that except as otherwise provided by the Pooling and Servicing Agreement, this shall not be construed to prevent (i) the sale of Receivables by any Affiliate of the Seller to any person or (ii) any sales or grants of participations in and to Receivables by one or more Affiliates of the Seller to one or more other Affiliates of the Seller. (l) The Seller will apply the net proceeds of the sale of the Certificates that it receives in the manner set forth in the Prospectus under the caption "Use of Proceeds." (m) The Seller will pay all expenses incident to the performance of its obligations under the Underwriting Agreement, including (i) the printing and filing of the documents (including the Registration Statement and Prospectus), (ii) the preparation, issuance and delivery of the Certificates to the Underwriters, (iii) the fees and disbursements of the Seller's counsel and accountants, (iv) the qualification of the Certificates under securities laws in accordance with the provisions of Section 6(f), including filing fees and the fees and disbursements of counsel for the Underwriters in connection therewith and in connection with the preparation of any blue sky or legal investment survey, if any is requested, (v) the printing and delivery to the Underwriters of copies of the Registration Statement as originally filed and of each amendment thereto, (vi) the printing and delivery to the Underwriters of copies of any blue sky or legal investment survey prepared in connection with the Certificates, (vii) any fees charged by rating agencies for the rating of the Certificates, (viii) the fees and expenses, if any, incurred with respect to any filing -9- with the National Association of Securities Dealers, Inc. and (ix) the fees and expenses of Squire Sanders & Dempsey, Arizona. 6. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The obligations of the several Underwriters to purchase and pay for the Certificates will be subject to the accuracy, as of the date hereof and as of the Closing Date, of the representations and warranties on the part of the Seller herein, to the accuracy of the written statements of officers of the Seller made pursuant to the provisions of this Section, to the performance by the Seller of its obligations hereunder and to the following additional conditions precedent: (a) If the Effective Time is not prior to the execution and delivery of the Underwriting Agreement, the Effective Time shall have occurred not later than 6:00 p.m. New York City time on the date of the Underwriting Agreement or such later time or date as shall have been consented to by the Underwriters. (b) If the Effective Time is prior to the execution and delivery of the Underwriting Agreement, the Prospectus and any supplements thereto shall have been filed with the Commission in accordance with the Rules and Regulations and Section 5(a) hereof. Prior to the Closing Date, no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or, to the knowledge of the Seller or the Underwriters, shall be contemplated by the Commission. (c) The Underwriters shall have received a letter, dated the date of delivery thereof (which, if the Effective Time is prior to the execution and delivery of the Underwriting Agreement, shall be on or prior to the date of the Underwriting Agreement or, if the Effective Time is subsequent to the execution and delivery of the Underwriting Agreement, shall be prior to the filing of the amendment or post-effective amendment to the Registration Statement to be filed shortly prior to the Effective Time), of Deloitte & Touche L.L.P. with respect to certain agreed-upon procedures, confirming that such accountants are independent public accountants within the meaning of the Act and the Rules and Regulations, and substantially in the form of the draft to which the Underwriters have previously agreed and otherwise in form and substance reasonably satisfactory to the Underwriters and counsel for the Underwriters. (d) Subsequent to the execution and delivery of the Underwriting Agreement, there shall not have occurred (i) any change, or any development involving a prospective change materially and adversely affecting (A) the Trust Property taken as a whole or (B) the business or properties of the Seller, the Bank, Valley National or BANC ONE CORPORATION which, in the -10- reasonable judgment of the Underwriters in the case of either (A) or (B) makes it impractical or inadvisable to market the Certificates on the terms and in the manner contemplated in the Prospectus; (ii) any downgrading in the rating of any debt securities of BANC ONE CORPORATION or any of its Affiliates by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act), or any public announcement that any such organization has under surveillance or review its rating of any such debt securities (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating); (iii) any suspension or limitation of trading in securities generally on the New York Stock Exchange, or any setting of minimum prices for trading on such exchange; (iv) any suspension of trading of any securities of BANC ONE CORPORATION on any exchange or in the over-the-counter market; (v) any banking moratorium declared by Federal or New York authorities; or (vi) any outbreak or escalation of major hostilities in which the United States is involved, any declaration of war by Congress, or any other substantial national or international calamity or emergency if, in the judgment of a majority in interest of the Underwriters (including the Underwriters), the effect of any such outbreak, escalation, declaration, calamity or emergency makes it impractical or inadvisable to proceed with completion of the sale of and payment for the Certificates. (e) The Underwriters shall have received an opinion of Squire, Sanders & Dempsey, special counsel to the Seller, the Bank and Valley National or from such other counsel reasonably satisfactory to the Underwriters and counsel for the Underwriters, dated the Closing Date, satisfactory in form and substance to the Underwriters and counsel for the Underwriters, to the effect that: (i) The Seller has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Ohio, with the corporate power and authority to own its properties and to conduct its business as such properties are currently owned and such business is currently conducted, and to enter into and perform its obligations under the Underwriting Agreement and the Pooling and Servicing Agreement. (ii) The Seller has duly authorized, executed and delivered the written order to the Trustee to execute and deliver the Certificates. When the Certificates have been duly executed, delivered and authenticated in accordance with the Pooling and Servicing Agreement and delivered and paid for pursuant to the Underwriting Agreement, the Certificates will be validly issued, outstanding and entitled to the benefits of the Pooling and Servicing -11- Agreement, subject as to enforceability to the effects of applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and similar laws now or hereafter in effect relating to creditors' rights generally and subject to general principles of equity (whether in a proceeding at law or in equity). (iii) The Seller has duly authorized, executed and delivered the Underwriting Agreement, the Loan Sale Agreement and the Pooling and Servicing Agreement, and each of the Loan Sale Agreement and the Pooling and Servicing Agreement is the legal, valid and binding obligation of the Seller, enforceable against the Seller in accordance with its terms, subject as to enforceability to the effects of applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium and similar laws now or hereafter in effect relating to creditors' rights generally and subject to general principles of equity (whether applied in a proceeding at law or in equity) (iv) Neither the transfer of the Trust Property by the Seller to the Trustee on behalf of the Trust, nor the execution and delivery by the Seller of the Underwriting Agreement, the Loan Sale Agreement or the Pooling and Servicing Agreement, nor the consummation by the Seller of the transactions contemplated by the Underwriting Agreement, the Loan Sale Agreement or the Pooling and Servicing Agreement nor the performance by the Seller of its obligations thereunder will (i) violate the articles of incorporation or the code of regulations, each as amended, of the Seller or (ii) violate or contravene the terms of applicable provisions of statutory law or regulation. (v) To such counsel's knowledge, there are no actions, proceedings or investigations pending against the Seller or threatened against the Seller before any court, administrative agency or tribunal (i) asserting the invalidity of the Trust, the Underwriting Agreement, the Loan Sale Agreement or the Pooling and Servicing Agreement, (ii) seeking to prevent the consummation of any of the transactions contemplated by the Underwriting Agreement, the Loan Sale Agreement or the Pooling and Servicing Agreement or the execution and delivery thereof or (iii) that could reasonably be expected to materially and adversely affect the enforceability of the Underwriting Agreement, the Loan Sale Agreement or the Pooling and Servicing Agreement against the Seller or the ability of the Seller to perform its obligations thereunder. (vi) No consent, license, approval, authorization or order of, or filing with, any court or governmental agency or body is required of the Seller for the consummation by -12- the Seller of the transactions contemplated in the Underwriting Agreement, the Loan Sale Agreement or the Pooling and Servicing Agreement, except such consents, licenses, approvals, authorizations or orders as have been obtained or such filings as have been made and except where the failure to obtain the same would not have a material adverse effect upon the rights of the Certificateholders. (vii) To such counsel's knowledge, there are no legal or governmental proceedings pending or threatened against the Seller that are required to be disclosed in the Registration Statement, other than those disclosed therein. (viii) The Seller is not, and will not as a result of the offer and sale of the Certificates as contemplated in the Prospectus and the Underwriting Agreement become, an "investment company" as defined in the Investment Company Act of 1940, as amended (the "Investment Company Act"), or a company "controlled by" an "investment company" within the meaning of the Investment Company Act. (ix) All actions required, if any, to be taken and all filings required to be made by the Seller or the Trust under the Act and the Exchange Act prior to the sale of the Certificates have been duly taken or made. (x) The Pooling and Servicing Agreement need not be qualified under the Trust Indenture Act and the Trust is not required to register under the Investment Company Act. (xi) Such counsel has been advised by the Commission's staff that the Registration Statement has become effective under the Act; any required filing of the Prospectus pursuant to Rule 424(b) promulgated under the Act has been made in the manner and within the time period required under such rule; and to such counsel's knowledge no stop order suspending the effectiveness of the Registration Statement or any part thereof has been issued and no proceedings for that purpose are pending or threatened by the Commission. (xii) The statements in the Prospectus under the headings "Summary of Terms -- Tax Status," "Federal Income Tax Consequences," "Summary of Terms--ERISA Considerations," and "ERISA Considerations," to the extent that they constitute statements of matters of law or legal conclusions with respect thereto, have been reviewed by such counsel and accurately describe the material consequences to holders of the Certificates under the Code and ERISA. -13- (xiii) The Trust will not be classified as an association taxable as a corporation for federal income tax purposes and, instead, under subpart E, part I of subchapter J of the Internal Revenue Code of 1986, as amended, the Trust will be treated as a grantor trust and, except with respect to amounts received with respect to the Receivables which are payable by the Trust to the Seller or to the Collateral Agent for deposit in the Reserve Fund and certain amounts payable by the Trust to the Servicer, each Certificateholder will be treated as the owner of an undivided pro rata interest in the income and corpus attributable to the Trust. (xiv) To such counsel's knowledge, there are no contracts, indentures, mortgages, loan agreements, notes, leases or other instruments to which the Seller is a party that are required to be filed as exhibits to the Registration Statement other than those described or referred to therein or filed or incorporated by reference as exhibits thereto. (xv) Such counsel shall state that they have participated in the preparation of the Registration Statement and no facts have come to their attention which may cause them to believe that the Registration Statement, as of the Effective Time, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading or that the Prospectus, as of its date or the Closing Date, contains any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that such counsel need not express any view with respect to the financial, statistical or computational material included in the Registration Statement or the Prospectus. (xvi) Each of the Loan Purchase and Servicing Agreement, the Loan Sale Agreement, the Pooling and Servicing Agreement and the Bank Agreement meets each of the requirements of Section 13(e) of the Federal Deposit Insurance Act, as amended (the "FDIA"), and neither Section 11(d)(9) nor Section 11(n)(4)(I) of the FDIA would prevent the Pooling and Servicing Agreement from forming the basis of a claim against the FDIC as conservator or receiver or in its corporate capacity, or against any bridge bank chartered pursuant to Section 11(n) of the FDIA. For purposes of this paragraph (xiv), such counsel may assume that from the time of its execution each of the Loan Purchase and Servicing Agreement, the Loan Sale Agreement, the Pooling and Servicing Agreement and the Bank Agreement -14- has been and will be an official record (as such term is used in Sections 11(n)(4)(I)(iv) and 13(e)(4) of the FDIA) of the Bank. (xvii) The Bank has been duly organized and is validly existing as a national banking association in good standing under the laws of the United States of America, with corporate power and authority to own its properties, to conduct its business as now conducted and as proposed to be conducted by it and to enter into and perform its obligations under the agreement in the form attached hereto as Exhibit A (the "Bank Agreement") the Pooling and Servicing Agreement, the Loan Purchase and Servicing Agreement and the Loan Sale Agreement (collectively, the "Bank Documents"). (xviii) The Bank has duly authorized, executed and delivered each of the Bank Documents, and each of the Bank Documents is the legal, valid and binding obligations of the Bank, enforceable against the Bank in accordance with the respective terms thereof, subject as to enforceability, to the effects of applicable insolvency, receivership, conservatorship and other similar laws affecting the rights of creditors' generally or the rights of creditors of institutions the deposits in which are insured by the FDIC and subject to general principles of equity (whether applied in a proceeding at law or in equity). (xix) Neither the execution and delivery by the Bank of any Bank Document nor the consummation by the Bank of the transactions contemplated therein nor the fulfillment of the terms thereof by the Bank will conflict with, result in a breach, violation or acceleration of, or constitute a default under, any term or provision of the articles of association or by-laws of the Bank or result in a violation of or contravene the terms of any statute, order or regulation applicable to the Bank of any court, regulatory body, administrative agency or governmental body having jurisdiction over it. (xx) To such counsel's knowledge, there are no actions, proceedings or investigations pending or threatened against the Bank before or by any governmental authority that could reasonably be expected to materially and adversely affect the performance by the Bank of its obligations under, or the validity or enforceability of, any Bank Document. (xxi) Valley National has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Arizona with corporate power and authority to own its properties, to conduct it business as -15- now conducted and as proposed to be conducted by it and to enter into and perform its obligations under the Loan Purchase and Servicing Agreement. (xxii) Valley National has duly authorized, executed and delivered the Loan Purchase and Servicing Agreement and the Loan Purchase and Servicing Agreement is the legal, valid and binding obligation of Valley National, enforceable against Valley National in accordance with its terms, subject as to enforceability, to the effects of applicable bankruptcy, insolvency, receivership, moratorium, fraudulent conveyance, reorganization, conservatorship and other similar laws affecting the rights of creditors' generally or the rights of creditors of institutions the deposits and subject to general principles of equity (whether applied in a proceeding at law or in equity). (xxiii) Neither the execution and delivery by Valley National of the Loan Purchase and Servicing Agreement nor the consummation by Valley National of the transactions contemplated therein nor the fulfillment of the terms thereof by Valley National will conflict with, result in a breach, violation or acceleration of, or constitute a default under, any term or provision of the [articles of association or by-laws] of Valley National, or result in a violation of or contravene the terms of any statute, order or regulation applicable to Valley National of any court, regulatory body, administrative agency or governmental body having jurisdiction over Valley National. (xxiv) To such counsel's knowledge, there are no actions, proceedings or investigations pending or threatened against Valley National before or by any governmental authority that could reasonably be expected to materially and adversely affect the performance by Valley National of its obligations under, or the validity or enforceability of the Loan Purchase and Servicing Agreement. Such opinion may contain such assumptions, qualifications and limitations as are customary in opinions of this type and are reasonably acceptable to counsel to the Underwriters. In rendering such opinion, such counsel may state that they express no opinion as to the laws of any jurisdiction other than the federal law of the United States of America and the laws of the States of Ohio, Arizona and New York. (f) The Underwriters shall have received the opinion of Squire, Sanders & Dempsey, special counsel to the Seller, dated the Closing Date, satisfactory in form and substance to the Underwriters and counsel for the Underwriters, regarding the -16- creation, attachment and perfection of a first priority security interest in the Receivables, the Financed Vehicles located in the State of Arizona and the property held in the Reserve Fund in favor of the Trustee on behalf of the Certificateholders. Such opinion may contain such assumptions, qualifications and limitations as are customary in opinions of this type and are reasonably acceptable to counsel to the Underwriters. In rendering such opinion, such counsel may state that they express no opinion as to the laws of any jurisdiction other than the federal law of the United States of America and the laws of the States of Ohio, Arizona and New York. (g) The Underwriters shall have received the opinion of in-house counsel to the Bank, or such other counsel acceptable to the Underwriters and counsel for the Underwriters, dated the Closing Date, satisfactory in form and substance to the Underwriters and counsel for the Underwriters to the effect that: (i) Neither the execution and delivery by the Bank of any Bank Documents nor the consummation by the Bank of the transactions contemplated therein nor the fulfillment of the terms thereof by the Bank will (a) violate the articles of association or by-laws of the Bank, (b) result in a breach, violation or acceleration of, or constitute a default under, any term or provision of any material indenture or other material agreement or instrument of which such counsel has knowledge after due inquiry to which the Bank is a party or by which it is bound or (c) result in a violation of or contravene the terms of any Federal or Arizona statute or, to such counsel's knowledge, any order or regulation applicable to the Bank of any Federal or Arizona court, regulatory body, administrative agency or governmental body having jurisdiction over the Bank. (ii) Such counsel has been advised of the Bank's standard operating procedures relating to the Bank's acquisition of a perfected first priority security interest in the vehicles financed by the Bank pursuant to the retail automobile, van or light duty truck installment sale contracts in the ordinary course of the Bank's business. Assuming that the Bank's standard procedures are followed with respect to the perfection of security interests in the Financed Vehicles (such counsel having no reason to believe that the Bank has not or will not continue to follow its standard procedures in connection with the perfection of security interests in the Financed Vehicles), the Bank has acquired or will acquire a perfected first priority security interest in the Financed Vehicles. Such opinion may contain such assumptions, qualifications and limitations as are customary in opinions of -17- this type and are reasonably acceptable to counsel to the Underwriters. In rendering such opinion, such counsel may state that they express no opinion as to the laws of any jurisdiction other than the federal law of the United States of America and the laws of the State of Arizona. (h) The Underwriters shall have received the opinion of in-house counsel to Valley National, or such other counsel acceptable to the Underwriters and counsel for the Underwriters, dated the Closing Date, satisfactory in form and substance to the Underwriters and counsel for the Underwriters to the effect that: (i) Neither the execution and delivery by Valley National of the Loan Purchase and Servicing Agreement nor the consummation by Valley National of the transactions contemplated therein nor the fulfillment of the terms thereof by Valley national will (a) violate the [articles of association or by-laws] of Valley National, (b) result in a breach, violation or acceleration of, or constitute a default under, any term or provision of any material indenture or other material agreement or instrument of which such counsel has knowledge after due inquiry to which Valley National is a party or by which it is bound or (c) result in a violation of or contravene the terms of any Federal or Arizona statute or, to such counsel's knowledge, any order or regulation applicable to Valley National of any Federal or Arizona court, regulatory body, administrative agency or governmental body having jurisdiction over Valley National. (ii) Such counsel has been advised of Valley National's standard operating procedures relating to Valley National's acquisition of a perfected first priority security interest in the vehicles financed by Valley National pursuant to the retail automobile, van or light duty truck installment sale contracts in the ordinary course of Valley National's business. Assuming that Valley National's standard procedures are followed with respect to the perfection of security interests in the Financed Vehicles (such counsel having no reason to believe that Valley National has not or will not continue to follow its standard procedures in connection with the perfection of security interests in the Financed Vehicles securing the Receivables sold by Valley National to the Bank pursuant to the Loan Purchase and Servicing Agreement), Valley National has acquired or will acquire a perfected first priority security interest in the Financed Vehicles securing the Receivables sold by Valley National to the Bank pursuant to the Loan Purchase and Servicing Agreement. -18- Such opinion may contain such assumptions, qualifications and limitations as are customary in opinions of this type and are reasonably acceptable to counsel to the Underwriters. In rendering such opinion, such counsel may state that they express no opinion as to the laws of any jurisdiction other than the federal law of the United States of America and the laws of the State of Arizona. (i) The Underwriters shall have received an opinion addressed to it of Stroock & Stroock & Lavan, in its capacity as counsel to the Underwriters, dated the Closing Date, with respect to the validity of the Certificates and such other related matters as the Underwriters shall reasonably require and the Seller shall have furnished or caused to be furnished to such counsel such documents as they may reasonably request for the purpose of enabling them to pass upon such matters. (j) The Underwriters shall have received an opinion of counsel to the Trustee, dated the Closing Date and satisfactory in form and substance to the Underwriters and counsel for the Underwriters, to the effect that: (i) The Trustee is a banking corporation validly existing and in good standing under the laws of the State of New York. (ii) The Trustee has the requisite power and authority to execute, deliver and perform its obligations under the Pooling and Servicing Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of the Pooling and Servicing Agreement. (iii) The Pooling and Servicing Agreement has been duly executed and delivered by the Trustee and constitutes a legal, valid and binding obligation of the Trustee, enforceable against the Trustee in accordance with its respective terms, except that such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, liquidation, or other similar laws applicable to banking corporations affecting the enforcement of creditors' rights generally, and by general principles of equity, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing (regardless of whether such enforceability is considered in a proceeding in equity or at law). (iv) The Certificates have been duly authenticated by the Trustee in accordance with the terms of the Pooling and Servicing Agreement. (k) The Underwriters shall have received copies of each opinion of counsel delivered to either rating agency, -19- together with a letter addressed to the Underwriters, dated the Closing Date, to the effect that each Underwriter may rely on each such opinion to the same extent as though such opinion was addressed to each as of its date. (l) The Underwriters shall have received certificates dated the Closing Date of each of the Seller, the Bank and Valley National, executed by any two of the Chairman of the Board, the President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer, any Assistant Treasurer, the Secretary, the principal financial officer or the principal accounting officer of each of the Seller, the Bank and Valley National, in which such officer of the Seller, the Bank or Valley National, as the case may be, shall state that, to the best of its knowledge after reasonable investigation, (i) the representations and warranties of the Seller contained in the Underwriting Agreement and the Pooling and Servicing Agreement, the Bank in each of the Bank Documents or Valley National in the Loan Purchase and Servicing Agreement, as applicable, are true and correct in all material respects, (ii) that Seller, the Bank, or Valley National, as the case may be, has complied with all agreements and satisfied all conditions on its respective part to be performed or satisfied under such agreements at or prior to the Closing Date, (iii) in the case of the certificate from the Seller only, that no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or are contemplated by the Commission, and (iv) since March 31, 1996, except as may be disclosed in the Prospectus or in such certificate, no material adverse change, or any development involving a prospective material adverse change, in or affecting particularly the business or properties of the Bank or Valley National, as applicable, has occurred. (m) The Underwriters shall have received evidence satisfactory to it that, on or before the Closing Date, UCC-1 financing statements have been or are being filed in the appropriate filing offices reflecting the transfer of the interest in the Receivables and the proceeds thereof from Valley National to the Bank, from the Bank to the Seller and from the Seller to the Trustee on behalf of the Trust. (n) The Class A Certificates shall be rated "AAA" or its equivalent, and the Class B Certificates shall be rated at least "A" or its equivalent, in each case by Moody's and S&P and neither corporation shall have placed either the Class A Certificates or the Class B Certificates under surveillance or review with possible negative implications. (o) The issuance of the Certificates shall not have resulted in a reduction or withdrawal by any Rating Agency of -20- the current rating of any outstanding securities issued or originated by the Seller. (p) The Underwriters shall have received, upon execution hereof, the duly executed agreement of the Bank in the form attached as Exhibit A. The Seller will provide or cause to be provided to the Underwriters such conformed copies of such of the foregoing opinions, certificates, letters and documents as the Underwriters shall reasonably request. 7. INDEMNIFICATION AND CONTRIBUTION. (a) The Seller will indemnify and hold each Underwriter harmless against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus or any amendment or supplement thereto or any related preliminary prospectus, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred; PROVIDED, HOWEVER, that the Seller will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance upon the Underwriters' Information; PROVIDED, FURTHER, that the Seller shall not be liable to any Underwriter to the extent that any such loss, claim, damage or liability of such Underwriter arises as a result of a misstatement or omission or alleged misstatement or omission in any related preliminary prospectus that was corrected in the Prospectus (and copies of which Prospectus were furnished to the Underwriters) and such Underwriter, if required by law, failed to give or send to the purchaser, at or prior to the written confirmation of sale, a copy of the Prospectus. (b) Each Underwriter, severally and not jointly, agrees to indemnify and hold harmless the Seller against any losses, claims, damages or liabilities to which the Seller may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the Registration Statement, the Prospectus or any amendment or -21- supplement thereto or any related preliminary prospectus, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Seller by such Underwriter through the Underwriters specifically for use therein, and will reimburse the Seller for any legal or other expenses reasonably incurred by the Seller in connection with investigating or defending any such loss, claim, damage, liability or action as such expenses are incurred. (c) Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under subsection (a) or (b) above, notify the indemnifying party of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof and approval by the indemnified party of the counsel appointed by the indemnifying party, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement includes an unconditional release of such indemnified party from all liability from any claims that are the subject matter of such action. (d) If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnifying party as a result of the losses, -22- claims, damages or liabilities referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Seller on the one hand and the Underwriters on the other from the offering of the Certificates or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Seller on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Seller on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Seller bear to the total underwriting discounts and commissions received by the Underwriters. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Seller or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Certificates underwritten by it were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (e) The obligations of the Seller under this Section shall be in addition to any liability which the Seller may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Act; and the obligations of the Underwriters under this Section shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each director of the Seller, to each officer of the Seller who has signed the Registration Statement and to each person, if any, who controls the Seller within the meaning of the Act. -23- 8. SURVIVAL OF REPRESENTATIONS AND OBLIGATIONS. The respective indemnities, agreements, representations, warranties and other statements of the Seller or its officers and of the Underwriters set forth in or made pursuant to the Underwriting Agreement or contained in certificates of officers of the Seller submitted pursuant hereto shall remain operative and in full force and effect, regardless of any investigation or statement as to the results thereof, made by or on behalf of any Underwriter, the Seller or any of their respective representatives, officers or directors or any controlling person, and will survive delivery of and payment for the Certificates. If for any reason the purchase of the Certificates by the Underwriters is not consummated, the Seller shall remain responsible for the expenses to be paid or reimbursed by the Seller pursuant to Section 5(m) and the respective obligations of the Seller and the Underwriters pursuant to Section 7 shall remain in effect. If for any reason the purchase of the Certificates by the Underwriters is not consummated (other than because of a failure to satisfy the conditions set forth in items (iii), (v) and (vi) of Section 6(d)), the Seller will reimburse the Underwriters for all out-of-pocket expenses (including reasonable fees and disbursements of counsel) reasonably incurred by them in connection with the offering of the Certificates. 9. FAILURE TO PURCHASE THE CERTIFICATES. If any Underwriter or Underwriters default in its obligations to purchase its portion of Class A and/or Class B Certificates hereunder, and the aggregate principal amount that such defaulting Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of the total principal amount of the Certificates, the Underwriters may make arrangements satisfactory to the Seller for the purchase of such Certificates by other persons, including any of the Underwriters, but if no such arrangements are made by the Closing Date, the nondefaulting Underwriters shall be obligated severally, in proportion to their respective commitments hereunder, to purchase the Certificates that such defaulting Underwriters agreed but failed to purchase. If any Underwriter or Underwriters so default and the aggregate principal amount of the Certificates with respect to such default or defaults exceeds 10% of the total principal amount of the Certificates, and arrangements satisfactory to the Underwriters are not made by the Seller for the purchase of such Certificates by other persons within 48 hours after such default, the Underwriting Agreement will terminate without liability on the part of any nondefaulting Underwriter or the Seller, except as provided in Section 8. As used in the Underwriting Agreement, the term "Underwriter" includes any person substituted for an Underwriter under this Section. Nothing herein will relieve a defaulting Underwriter or Underwriters from liability for its default. -24- 10. NOTICES. Any written request, demand, authorization, direction, notice, consent or waiver shall be personally delivered or mailed certified mail, return receipt requested (or in the form of telex or facsimile notice, followed by written notice as aforesaid) and shall be deemed to have been duly given upon receipt, if sent to the Underwriters, when delivered to Banc One Capital Corporation, 90 North High Street, Columbus, Ohio 43215, Attention: Asset Backed Securities Department (fax # (614) 221-2441) and Salomon Brothers Inc, 7 World Trade Center, New York, New York 10048, Attention: Asset Backed Securities Department (fax # (212) 783-3848), and if sent to the Seller, when delivered to Banc One ABS Corporation, 100 East Broad Street, Columbus, Ohio 43271, Attention: Jeffrey B. Upperman (fax # (614) 248-5099). 11. SUCCESSORS. The Underwriting Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 7, and no other person will have any right or obligations hereunder. 12. COUNTERPARTS. The Underwriting Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. 13. APPLICABLE LAW. The Underwriting Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without regard to the choice of law provisions thereof. -25- If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to us one of the counterparts hereof, whereupon it will become a binding agreement between the Seller and the Underwriters in accordance with its terms. Very truly yours, BANC ONE ABS CORPORATION By: -------------------------------- Name: Title: The foregoing Underwriting Agreement is hereby confirmed and accepted as of the date first written above. BANC ONE CAPITAL CORPORATION By: --------------------------- Name: Title: SALOMON BROTHERS INC By: --------------------------- Name: Title: -26- SCHEDULE I INITIAL PRINCIPAL UNDERWRITER CLASS AMOUNT OF CERTIFICATES - ----------- ----- ---------------------- Banc One Capital Corporation A $ Salomon Brothers Inc A $ Banc One Capital Corporation B $ Salomon Brothers Inc B $ EXHIBIT A June __, 1996 BANC ONE CAPITAL CORPORATION 90 North High Street Columbus, OH 43215 SALOMON BROTHERS INC 7 World Trade Center 32nd Floor New York, NY 10048 Re: Underwriting Agreement dated June __, 1996 (the "Underwriting Agreement") among Banc One ABS Corporation (the "Company"), Banc One Capital Corporation and Salomon Brothers Inc (TOGETHER, THE "UNDERWRITERS") --------------------------------------------------------- Ladies and Gentlemen: Pursuant to the Underwriting Agreement, the Company has undertaken certain financial obligations to the Underwriters. Any financial obligations of the Company (including all fees to be paid) under the Underwriting Agreement, whether or not specifically enumerated in this paragraph, are hereinafter referred to as the "Joint and Several Obligations"; PROVIDED, HOWEVER, that "Joint and Several Obligations" shall mean only the financial obligations of the Company under the Underwriting Agreement (including without limitation the payment of money damages for a breach of any of the Company's representations, warranties or obligations, whether financial or otherwise). As a condition of its execution of the Underwriting Agreement, the Underwriters have required the undersigned to acknowledge its joint-and-several liability with the Company for the payment of the Joint and Several Obligations under the Underwriting Agreement. Now, therefore, the Underwriters and Bank One, Arizona, NA, do hereby agree that: (i) Bank One, Arizona, NA hereby agrees to be absolutely and unconditionally jointly and severally liable with the Company to the Underwriters for the payment of the Joint and Several Obligations. A-1 (ii) Bank One, Arizona, NA may honor its obligations hereunder either by direct payment of any Joint and Several Obligations or by causing any Joint and Several Obligations to be paid to the Underwriters by the Company or another affiliate of Bank One, Arizona, NA (iii) This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York without regard to the choice of law provisions thereof. (iv) This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. (v) This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 7 of the Underwriting Agreement, and no other person will have any right or obligations hereunder. (vi) Any written request, demand, authorization, direction, notice, consent or waiver shall be personally delivered or mailed certified mail, return receipt requested (or in the form of telex or facsimile notice, followed by written notice as aforesaid) and shall be deemed to have been duly given upon receipt, if sent to the Underwriters, when delivered to Banc One Capital Corporation, 90 North High Street, Columbus, Ohio 43215, Attention: Asset Backed Securities Department (fax # (614) 221-2441) and Salomon Brothers Inc, 7 World Trade Center, New York, New York 10048, Attention: Asset Backed Securities Department (fax # (212) 783- 3848); and if sent to the Seller, when delivered to 100 East Broad Street, Columbus, Ohio 43271, Attention: Jeffrey B. Upperman (fax # (614) 248-5099). A-2 Capitalized terms used herein and not defined herein shall have their respective meanings as set forth in the Underwriting Agreement. Very truly yours, BANK ONE, ARIZONA, NA By: ---------------------------------------- Name: Title: Acknowledged and Agreed: BANC ONE CAPITAL CORPORATION By: ------------------------------- Name: Title: SALOMON BROTHERS INC By: ------------------------------- Name: Title: A-3 EX-3.1 3 EXHIBIT 3.1 AMENDED AND RESTATED ARTICLES OF INCORPORATION OF BANC ONE ABS CORPORATION ------------------------ FIRST. The name of said corporation (hereinafter called the "Corporation") - ------ shall be BANC ONE ABS CORPORATION. SECOND. The place in Ohio where its principal office is to be located is - ------- Columbus, Franklin County, Ohio. THIRD. The nature of the business or purposes to be conducted or promoted by - ----- the Corporation is to engage in any of the following acts or activities: (a) to authorize, issue, sell, deliver, purchase and invest in (and enter into agreements in connection with), and/or to engage in the establishment of one or more trusts (each, a "Trust") which will issue and sell bonds, notes, debt or equity securities, obligations, and other securities and instruments (in one or more series, each of which series may consist of one or more classes) ("Securities"), which Securities will be collateralized or otherwise secured or backed by, or otherwise represent interests in, among other things, one or more pools of Receivables (as defined in Article Third (b) below) or other collateral (the Receivables and other collateral pledged as security for or otherwise supporting the Securities and the proceeds thereof are collectively referred to herein as the "Collateral"); in each case the Securities of a series which are distributed through one or more public offerings (with the exception of the Subordinated Securities (as defined in Article Third (c) below), which may or may not be rated) shall, when issued, be rated in one of the four highest rating categories by any one or more nationally recognized rating agencies; (b) in connection with the issuance and sale of the Securities or otherwise, to purchase or otherwise acquire, own, hold, transfer, convey, pledge, assign, sell (or otherwise dispose of), service, finance, refinance or otherwise deal in or with the Receivables (and any assets to which such Receivables relate) and related Collateral and to enter into contractual arrangements, transactions and agreements with respect to the Receivables and with the providers or obligors respecting such Collateral, including agreements with originators of Receivables, sellers or servicers of Receivables or dealers in any assets to which the Receivables relate; for purposes of these Articles of Incorporation, the term "Receivables" means the right to payment hereunder, and other rights of a holder with respect to, various promissory notes, leases, loan agreements, installment sales contracts, drafts (including bank and commercial drafts), trade documents, certificates of participation, accounts receivable, accounts, account balances, certificates of beneficial ownership, bankers' acceptances and other agreements and instruments evidencing indebtedness or payment obligations, any or all of which may be secured or unsecured, that arise in connection with one or more of the following: (i) the sale or lease of automobiles, trucks or other motor vehicles, equipment, merchandise and other personal property and financings or re- financings secured thereby, (ii) credit card purchases or cash advances, (iii) the sale, licensing or other commercial provision of services, rights, intellectual properties and other intangibles, (iv) trade financing, with or without whole or partial guarantees of payment by the Export-Import Bank of the United States or any comparable domestic, foreign or international authority, (v) loans secured by first or junior mortgages on real estate, (vi) loans to employee stock ownership plans and (vii) any and all other commercial transactions and commercial, sovereign, student and consumer loans and indebtedness; (c) to arrange or otherwise provide for support for any series of Securities to be issued by the Corporation or any Trust by various forms of credit enhancement including collections and/or distributions on the Receivables which are to be remitted to certain accounts to be established under the indenture or participation, pooling or other similar agreements relating to such series, cash deposits, insurance policies, guaranteed investment contracts, investment agreements, guaranteed rate agreements, interest rate cap or swap agreements, currency exchange agreements, tax protection agreements, maturity liquidity facilities, letters of credit, minimum payment agreements, guarantees and other forms of credit enhancement including arrangements whereby for a given series, payments on one or more classes of Securities ("Subordinated Securities") are subordinated to, and constitute additional security for, payments due on one or more other classes of Securities in such series; (d) to invest certain proceeds from Receivables and related Collateral as determined by the Corporation's Board of Directors; and (e) to engage in any lawful act or activity and to exercise any powers permitted to corporations organized under the General Corporation Law of Ohio that are incidental to and necessary or convenient for the accomplishment of the above mentioned business and purposes. FOURTH The number of shares which the Corporation is authorized to have - ------ outstanding is five hundred (500) shares of common stock, all of which shall be without par value. FIFTH. The amount of stated capital with which the Corporation shall begin - ----- business is Five -2- Hundred Dollars ($500.00). SIXTH. (a) The affairs of the Corporation shall be managed by a board of - ----- directors consisting of three members. At all times on and after the date of issuance of Securities by any Trust, there shall be at least one director of the Corporation (the "Outside Director") who is not a director, officer or employee of, or direct or indirect beneficial owner of 10% or more of the voting securities of, or member of the immediate family of any such director, officer, employee or beneficial owner of the Corporation's parent, BANC ONE CORPORATION ("BANC ONE"), or any corporate affiliate of BANC ONE. Notwithstanding the foregoing, the Outside Director may be a director of one other corporation that is an affiliate of BANC ONE, provided such corporation is formed with purposes limited to those similar to the purposes of the Corporation. For the purposes of the foregoing, the "affiliate" of an entity is an entity controlling, controlled by or under common control with such entity. Should any Outside Director resign, die, become disabled or incapacitated, or be prevented from acting, the affairs of the Corporation shall and may be managed by the remaining directors, who shall promptly replace the aforementioned Outside Director with a person meeting the requirements set forth above. When voting on matters subject to the vote of the Corporation's Board of Directors, including those matters specified in this Article Sixth and in Article Seventh hereof, notwithstanding that the Corporation is not then insolvent, the Outside Director shall take into account the interests of the creditors of the Corporation as well as the interests of the Corporation. (b) The Corporation shall maintain a principal office through which its business shall be conducted, which office may be separately denoted space at the offices of BANC ONE. (c) The Corporation shall maintain corporate records and books of account and shall not commingle its corporate records and books of account with the corporate records and books of account of BANC ONE. (d) The Board of Directors of the Corporation shall hold appropriate meetings to authorize all of its corporate actions. Regular meetings of the Board of Directors shall be held not less frequently than three times per annum. (e) The funds and other assets of the Corporation shall not be commingled with those of any other corporation. (f) The Corporation shall pay its own expenses and shall not hold itself out as being liable for the debts of any other party. (g) The Corporation shall not form, or cause to be formed, any subsidiaries. -3- (h) The Corporation shall act solely in its corporate name and through its duly authorized officers or agents in the conduct of its business, and shall conduct its business so as not to mislead others as to the identity of the entity with which they are concerned. (i) Meetings of the shareholders of the Corporation shall be held not less frequently than one time per annum. (j) The Corporation shall operate in such a manner that it would not be substantively consolidated in the trust estate of any other entity. SEVENTH. Notwithstanding any other provision of these Articles of Incorporation - -------- and any provision of law that otherwise so empowers the Corporation, the Corporation shall not do any of the following: (a) dissolve or liquidate, in whole or in part; (b) merge or consolidate with any other corporation other than a corporation wholly owned, directly or indirectly, by any entity owning 100% of the stock of the Corporation and having articles of incorporation containing provisions identical to the provisions of Articles Third and Sixth and this Article Seventh; (c) without the approval of the Outside Director, institute proceedings to be adjudicated a bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against it, or file a petition or answer or consent seeking reorganization or relief under the Federal Bankruptcy laws, or consent to the filing of any such petition or to the appointment of a receiver, liquidator, assignee, trustee, conservator, sequestrator (or other similar official) of the Corporation or of any substantial part of the Corporation's property, or make an assignment for the benefit of creditors, or admit in writing its inability to pay its debts generally as they become due, or take corporate action in furtherance of any such action; or (d) amend these Articles of Incorporation to alter in any manner or delete Article Third or this Article Seventh or, without the consent of Moody's Investors Service, Inc. and Standard & Poor's, a Division of The McGraw-Hill Companies, or their respective successors, Article Sixth. EIGHTH. These Amended and Restated Articles of Incorporation take the place of - ------ and supersede the existing Articles of Incorporation as heretofore amended. -4- EX-3.2 4 EXHIBIT 3.2 CODE OF REGULATIONS OF BANC ONE ABS CORPORATION (HEREIN CALLED THE "CORPORATION) ARTICLE I SHAREHOLDERS SECTION 1.01. ANNUAL MEETING. The annual meeting of shareholders for the election of Directors and the transaction of such other business as may properly come before it shall be held on the fourth Tuesday of January of each year. The annual meeting shall be at such hour and place as shall be fixed by resolution of the Board of Directors and stated in the written notice of the meeting. If the annual meeting for election of Directors is not held on the date designated therefor, the Directors shall cause the meeting to be held as soon thereafter as convenient. SECTION 1.02. SPECIAL MEETINGS. Special meetings of the shareholders for any purpose(s), may be called at any time by the Chairman, the President, the Board of Directors or any two members thereof. Special meetings of shareholders shall be held on such date and at such hour and place as shall be fixed by the person(s) calling the meeting and stated in the notice of the meeting. No business may be transacted at any such meeting except that referred to in such notice or in a supplemental notice given in compliance with this Code of Regulations. SECTION 1.03. NOTICE OF MEETING. Whenever shareholders are required or permitted to take any action at a meeting, a written notice stating the place, date, hour and purpose(s) of the shareholders' meeting shall be given to the shareholders. Said notice shall be given by or under the direction of the Secretary of the Corporation or such other Officer of the Corporation as is designated by the Board of Directors. Such written notice of any meeting shall be given, personally or by mail, postage prepaid, not less than ten nor more than fifty days before the date of the meeting, to each shareholder entitled to vote at such meeting. If mailed, such notice shall be addressed to the shareholder at his address as it appears on the records of the Corporation. Any shareholder may waive any notice required to be given by law, the Articles of Incorporation, or this Code of Regulations. When a meeting is adjourned to another time or place, it shall not be necessary to give any notice of the adjourned meeting if the time and place to which the meeting is adjourned are announced at the meeting at which the adjournment is taken. Any business may be transacted at the adjourned meeting which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment the Board of Directors fixes a new record date for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting. SECTION 1.04. QUORUM. Except as otherwise required by law, the Articles of Incorporation or this Code of Regulations, the holders of record of a majority of the issued and outstanding shares of the Corporation entitled to vote shall constitute a quorum at a meeting of shareholders for the transaction of any business. When a quorum is once present to organize a meeting, it is not broken by the subsequent withdrawal of any shareholders. The shareholders present may adjourn the meeting despite the absence of a quorum. At any such adjourned meeting at which the requisite amount of voting stock shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed. SECTION 1.05. RECORD DATE. In order that the Corporation may determine the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date which shall not be more than sixty nor less than ten days before the date of such meeting nor more than sixty days prior to any other action. SECTION 1.06. PROXIES. Each shareholder entitled to vote at a shareholders' meeting, or to express consent or dissent to corporate action in writing without a meeting, may authorize another person or persons, including a partnership or corporation, to act for him by proxy. Each such proxy shall be dated and if not dated by the shareholder, shall be dated as of the date of receipt thereof. No such proxy shall be valid after the final adjournment of any meeting for which it shall have been given. Every proxy shall be revocable at the pleasure of the shareholder executing it in accordance with the provisions of the General Corporation Law of Ohio. SECTION 1.07. SELECTION AND DUTIES OF JUDGES. The Board of Directors, in advance of any shareholders' meeting, may appoint one or more judges to act at the meeting or any adjournment thereof. If judges are not so appointed, the person presiding at a shareholders' meeting may and on the request of any shareholder entitled to vote thereat, or his proxy, shall appoint one or more judges. In case any person appointed fails to appear or to act, the vacancy may be filled by appointment made by the Board in advance of the meeting or at the meeting by the person presiding thereat. If there are three or more judges, the decision, act or certificate of a majority of them shall be effective in all respects as the decision, act or certificate of all. The judge(s) shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the authenticity, validity and effect of proxies, receive votes, ballots, consents, waivers or releases; hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, consents, waivers and releases; determine and announce the result and do such acts as are proper to conduct the election or vote with fairness to all shareholders. On the request of the person presiding at the meeting or any shareholder entitled to vote thereat, the judge(s) shall make a report in writing of any challenge, question or matter determined and execute a certificate of any fact found. Any -2- report or certificate made shall be prima facie evidence of the facts stated therein and of the vote as certified by the judge(s). Unless appointed as above provided in this section, the judge(s) shall be dispensed with at all meetings of shareholders. SECTION 1.08. VOTE OF SHAREHOLDERS. Every shareholder of record, as of the record date fixed by the Board of Directors, shall, with respect to each matter submitted to vote at a shareholders' meeting, be entitled to one vote for every share of capital stock standing in his name on the record of shareholders. Directors shall be elected by a plurality of the votes cast by the holders of the outstanding shares of the Corporation which are represented at the meeting and entitled to vote in the election. Whenever any corporate action, other than the election of Directors, is to be taken by vote of the shareholders, such corporate action shall, except as otherwise required by law, the Articles of Incorporation or this Code of Regulations, be authorized by the affirmative votes of the holders of record of a majority of the votes cast at a meeting of shareholders by the holders of shares entitled to vote thereon. SECTION 1.09. PRESIDING OFFICER. Meetings of the shareholders shall be presided over by the Chairman of the Board, if any, or if not present or there is no one filling that office by the President of the Corporation, or such other member of the Board as is designated by the Board. The Chairman, if any, and the President of the Corporation shall be members of the Board of Directors. The Secretary or such other officer or director as is designated by the Board of the Corporation shall record all the proceedings of the meetings of the shareholders and he shall act as Secretary of all meetings of the shareholders. In the absence of the Secretary or such other officer or director so designated, the presiding officer shall appoint another officer or a shareholder of the Corporation to act as Secretary of the meeting. ARTICLE II DIRECTORS SECTION 2.01. MANAGEMENT OF CORPORATION. The business of the Corporation shall be managed by its Board of Directors, each member of which shall have the qualifications prescribed by law, and shall have such further qualifications relating to age, business affiliation and employment by the Corporation as are from time to time adopted by the Board of Directors. SECTION 2.02. NUMBER AND ELECTION. Unless otherwise fixed by the Articles of Incorporation, the number of members of the Board of Directors shall be determined from time to time by the vote of the holders of a majority of the shares entitled to vote thereon at any annual meeting or special meeting called for the purpose of electing directors and, when so fixed, such number shall continue to be the authorized number of members of the Board of Directors until changed by the shareholders by vote as aforesaid. If the annual meeting for election of Directors is not held on the date designated therefor, the Directors shall cause the meeting to be held as soon thereafter as convenient. -3- SECTION 2.03. TERM OF OFFICE. Directors shall hold office until the annual meeting next following their election and until their respective successors are elected and qualified or until their earlier resignation or removal from office. SECTION 2.04. VACANCIES. Vacancies and newly-created directorships resulting from any increase in the authorized number of Directors may be filled by a majority of the members of the Board of Directors then in office, although such majority is less than a quorum, or by a sole remaining Director. SECTION 2.05. QUORUM. A majority of the total authorized number of Directors shall constitute a quorum for the transaction of business at a meeting of the Directors. The act of a majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board except as otherwise provided by law, the Articles of Incorporation or this Code of Regulations. A majority of the Directors present, whether or not a quorum is present, may adjourn a meeting of the Directors to another time and place. Notice of any adjournment need not be given if such time and place are announced at the meeting. SECTION 2.06. ANNUAL MEETING. Immediately following the adjournment of the annual meeting of shareholders, the newly-elected Board of Directors, if a quorum thereof be present, shall meet for the purpose of organization, the election of officers and the transaction of any other business. Notice of such meeting need not be given. If for any reason such organizational meeting is not held at such time, a special meeting for such purpose shall be held at such other time and place as is determined by the Board and notice thereof shall not be necessary. SECTION 2.07. REGULAR MEETINGS. Regular meetings of the Board of Directors shall be held, without notice, on such date and at such hour and place as shall from time to time be fixed by the Board and no notice thereof shall be necessary. When the date fixed is a legal holiday, the regular meeting shall be held on the next succeeding business day or on such other day as the Board specifically designates at the next preceding Board meeting. SECTION 2.08. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called at any time by the Chairman, the President or by a majority of the Board of Directors. Special meetings shall be held on such date and at such hour and place as shall be fixed by the person(s) calling the meeting and stated in the notice or waiver of notice of the meeting. Unless waived, notice of each special meeting of the Directors, stating the date, hour and place of the meeting, shall be given to each Director, by personal communication either over the telephone or otherwise, not later than the second day prior to the meeting, or by mailed letter deposited in the United States mail with postage thereon prepaid not later than the seventh day prior to the meeting. Notices of special meetings of the Board of Directors and waivers thereof need not state the purpose or purposes of the meeting. Any business within the powers of the Board of Directors may be transacted at any meeting, whether or not stated in the notice. -4- SECTION 2.09. WAIVER OF NOTICE. Any Director may waive any notice required to be given by law or this Code of Regulations. SECTION 2.10. COMPENSATION. Directors shall receive such compensation and expense reimbursement for attendance at each meeting of the Board of Directors or of any committee thereof and/or such salary as may be determined from time to time by the Board of Directors. Nothing herein contained shall be construed to preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. SECTION 2.11. COMMITTEES. The Board of Directors, by resolution adopted by a majority of the Board, may designate from among its members an Executive Committee and other committees, both standing and special, each consisting of two or more Directors. Each such committee, to the extent provided in the Board's resolution creating the committee, and consistent with such limitations as are contained in the Articles of Incorporation and the General Corporation Law of Ohio, shall have and may exercise the powers of the Board of Directors in the management of the business and affairs of the Corporation. ARTICLE III OFFICERS SECTION 3.01. ELECTION. The officers of the Corporation shall include a Chairman, a President, a Secretary, a Treasurer and such number of Vice Presidents (which may include one or more Executive Vice Presidents and/or Senior Vice Presidents), Assistant Vice Presidents, Assistant Secretaries, Assistant Treasurers and other officers as are, in the judgment of the Board, required to transact the business of the Corporation. All officers of the Corporation may be elected and the compensation of all such officers may be fixed by the Board provided, however, that the President may appoint the Secretary, the Treasurer, and Vice Presidents of the Corporation and fix their salaries subject to approval of the Board. Any two or more offices may be held by the same person. Any officer may, but no officers except the President must be chosen from among the Board of Directors. The officers of the Corporation shall have the authority, perform the duties and exercise the powers in the management of the Corporation usually incident to the offices held by them respectively, and/or such other authority, duties and powers as may be assigned to them from time to time by the President. SECTION 3.02. TERM. The officers of the Corporation shall be elected or appointed to hold office until the meeting of the Board of Directors following the next annual or special meeting at which officers are elected or for such shorter periods as may be designated by the Board of Directors. Any officer may be removed at any time, with or without cause, by the Board of Directors. A vacancy in any office, however created, may be filled by the Board of Directors at any regular or special meeting. -5- SECTION 3.03. VOTING SECURITIES OWNED BY THE CORPORATION. Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the Chairman, the President or by such other officer or agent of the Corporation so authorized by the President or the Board of Directors. Any such person may, in the name of and on behalf of the Corporation, take all such action as he may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which this Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and powers incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time, confer like powers upon any other person or persons. ARTICLE IV CAPITAL STOCK SECTION 4.01. STOCK CERTIFICATES. The shares of stock of the Corporation shall be represented by certificates signed by the Chairman or the President and the Secretary, an Assistant Secretary or such other officer of the Corporation appointed by the Board of Directors for that purpose, to be known as an authorized officer. Such certificates may be sealed with the seal of the Corporation or a facsimile thereof. The signatures of the officers of the Corporation upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent or by a registrar other than the Corporation itself or its employee. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of issue. Each certificate shall set forth additional material as is requested by law. SECTION 4.02. TRANSFERS. The shares of stock of the Corporation shall be transferable in the manner prescribed by the laws of the State of Ohio. Transfers of stock shall be made on the share transfer books of the Corporation only by the person named in the certificate or by attorney lawfully constituted in writing and upon the surrender of the certificate therefor, which shall be canceled when the new certificate shall be issued. SECTION 4.03. REGISTERED HOLDERS. The Corporation shall be entitled to treat and shall be protected in treating persons in whose names shares or any warrants, rights or options stand on the records of shareholders, warrant holders, right holders or option holders, as the case may be, as the owners thereof for all purposes and shall not be bound to recognize any equitable or other claim to, or interest in, any such share, warrant, right or option on the part of any other person, whether or not the Corporation shall have notice hereof. SECTION 4.04. NEW CERTIFICATES. The Corporation may issue a new certificate of stock in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, -6- or his legal representative, to give the Corporation a bond sufficient to indemnify the Corporation and any transfer agent and/or registrar against any claim that may be made against it or them on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate. A new certificate may be issued without requiring any bond when it is proper to do so. ARTICLE V MISCELLANEOUS SECTION 5.01. OFFICES. The principal office of the Corporation shall be in the City of Columbus, State of Ohio. The Corporation may have offices within and/or without the State of Ohio. SECTION 5.02. SEAL. The corporate seal shall be circular in form. The name of the Corporation and the year 1996 shall be engraved around the margin. The word "Seal" shall be engraved across the center. The Chairman, President, Secretary, Treasurer and such other officers so designated by the President shall have authority to affix the corporate seal to any document requiring such seal and to attest the same. SECTION 5.03. EXECUTION OF INSTRUMENTS. Agreements, indentures, mortgages, deeds, conveyances, transfers, certificates, declarations, receipts, discharges, releases, satisfactions, settlements, petitions, schedules, accounts, affidavits, bonds, undertakings, proxies and other instruments or documents may be signed, executed, acknowledged, verified, delivered or accepted on behalf of the Corporation by the Chairman, President, Secretary, Treasurer, and such other officers as may be specifically authorized by the President or the Board of Directors. Employees of the Corporation may execute instruments and documents including but not limited to checks, notes and bills of exchange, on behalf of the Corporation to the extent specifically authorized by the President or the Board of Directors. SECTION 5.04. FISCAL YEAR. The fiscal year of the Corporation shall begin the first day of January in each year, and shall end on the thirty-first day of December of such year. SECTION 5.05. BOOKS AND RECORDS. The Corporation shall keep correct and complete books and records of accounts and of its transactions. It shall also keep minutes of the proceedings of its incorporators, shareholders, directors and committees of the Directors. The Corporation shall keep its share transfer books and other books and records in accordance with the requirements of law and prudent retention schedules. SECTION 5.06. AMENDMENT. This Code of Regulations may be added to, amended or repealed at any annual meeting of shareholders or at any special meeting called for that purpose by the affirmative votes of the holders of record of a majority of the shares entitled to vote on such proposal in person or by proxy, or without a meeting by the two-thirds of the voting power on such proposal. If the Regulations are amended or new regulations are adopted by such written -7- consent, the Corporation shall mail a copy of the amendment or the new regulations to each shareholder entitled to vote thereon who did not participate in the adoption thereof. ARTICLE VI INDEMNIFICATION OF DIRECTORS AND OFFICERS SECTION 6.01. INDEMNIFICATION. The Corporation may indemnify any director or officer, any former director or officer of the Corporation and any person who is or has served at the request of the Corporation as a director, officer or trustee of another corporation, partnership, joint venture, trust or other enterprise (and his heirs, executors and administrators) against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement, actually and reasonably incurred by him by reason of the fact that he is or was such director, officer or trustee in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, to the full extent and according to the procedures and requirements set forth in the Ohio General Corporation Law as the same may be in effect from time to time. The indemnification provided for herein shall not be deemed to restrict the right of the Corporation to (i) indemnify employees, agents and others as permitted by such Law, (ii) purchase and maintain insurance or provide similar protection on behalf of directors, officers or such other persons against liabilities asserted against them or expenses incurred by them out of their service to the Corporation as contemplated herein, and (iii) enter into agreements with such directors, officers, employees, agents or others indemnifying them against any and all liabilities (or such lesser indemnification as may be provided in such agreements) asserted against them or incurred by them arising out of their service to the Corporation as contemplated herein. -8- EX-4.1 5 EXHIBIT 4.1 - ----------------------------------------------------------------------------- FORM OF POOLING AND SERVICING AGREEMENT between BANC ONE ABS CORPORATION, as Seller BANK ONE, ARIZONA, NA, as Servicer and BANKERS TRUST COMPANY, as Trustee, On behalf of the Certificateholders, and as Collateral Agent Dated as of June 1, 1996 Banc One Auto Grantor Trust 1996-B $______________ Class A ____% Asset Backed Certificates $_____________ Class B ____% Asset Backed Certificates - ----------------------------------------------------------------------------- ARTICLE I Definitions SECTION 1.1. Definitions.. . . . . . . . . . . . . . . . 1 SECTION 1.2. Usage of Terms. . . . . . . . . . . . . . . 19 SECTION 1.3. Calculations. . . . . . . . . . . . . . . . 20 SECTION 1.4. References. . . . . . . . . . . . . . . . . 20 SECTION 1.5. References to the Trust. . . . . . . . . . 20 SECTION 1.6. Action by or Consent of Certificateholders.. . . . . . . . . . . . 20 ARTICLE II The Trust Property SECTION 2.1. Conveyance of Trust Property. . . . . . . . 20 SECTION 2.2. Representations and Warranties as to Each Receivable.. . . . . . . . . . . . . . . . 20 SECTION 2.3. Repurchase upon Breach. . . . . . . . . . . 24 SECTION 2.4. Custody of Receivable Files.. . . . . . . . 25 SECTION 2.5. Duties of Servicer as Custodian.. . . . . . 25 SECTION 2.6. Instructions; Authority To Act. . . . . . . 26 SECTION 2.7. Custodian's Indemnification.. . . . . . . . 26 SECTION 2.8. Effective Period and Termination. . . . . . 27 ARTICLE III Administration and Servicing of the Trust Property SECTION 3.1. Duties of Servicer. . . . . . . . . . . . . 28 SECTION 3.2. Collection and Allocation of Receivable Payments . . . . . . . . . . . . . . . . . 28 SECTION 3.3. Realization upon Receivables. . . . . . . . 29 SECTION 3.4. Physical Damage Insurance.. . . . . . . . . 29 SECTION 3.5. Maintenance of Security Interests in Financed Vehicles. . . . . . . . . . . . . 30 SECTION 3.6. Covenants of Servicer. . . . . . . . . . . 30 SECTION 3.7. Purchase of Receivables upon Breach.. . . . 30 SECTION 3.8. Servicing Fee.. . . . . . . . . . . . . . . 31 SECTION 3.9. Servicer's Certificate. . . . . . . . . . . 31 SECTION 3.10. Annual Statement as to Compliance; Notice of Default . . . . . . . . . . . . . . . . 31 SECTION 3.11. Annual Independent Certified Public Accountants' Report. . . . . . . . . . . . 32 SECTION 3.12. Access to Certain Documentation and Information Regarding Receivables. . . . . 32 SECTION 3.13. Servicer Expenses . . . . . . . . . . . . . 32 SECTION 3.14. Appointment of Subservicers . . . . . . . . 33 -i- ARTICLE IV Distributions; Reserve Fund; Statements to Certificateholders SECTION 4.1. Establishment of Accounts.. . . . . . . . . 33 SECTION 4.2. Collections. . . . . . . . . . . . . . . . 36 SECTION 4.3. Additional Deposits.. . . . . . . . . . . . 36 SECTION 4.4. Net Deposits. . . . . . . . . . . . . . . . 37 SECTION 4.5. Distributions. . . . . . . . . . . . . . . 37 SECTION 4.6. Reserve Fund. . . . . . . . . . . . . . . . 39 SECTION 4.7. Statements to Certificateholders. . . . . . 40 ARTICLE V [Intentionally Omitted] ARTICLE VI The Certificates SECTION 6.1. The Certificates. . . . . . . . . . . . . . 42 SECTION 6.2. Authentication and Delivery of Certificates . . . . . . . . . . . . . . . 43 SECTION 6.3. Registration of Transfer and Exchange of Certificates . . . . . . . . . . . . . . .43 SECTION 6.4. Reserved. . . . . . . . . . . . . . . . . . 44 SECTION 6.5. Reserved. . . . . . . . . . . . . . . . . . 44 SECTION 6.6. Mutilated, Destroyed, Lost or Stolen Certificates . . . . . . . . . . . . . . . 44 SECTION 6.7. Persons Deemed Owners . . . . . . . . . . . 45 SECTION 6.8. Access to List of Certificateholders' Names and Addresses. . . . . . . . . . . . 45 SECTION 6.9. Maintenance of Office or Agency.. . . . . . 45 SECTION 6.10. Book-Entry Certificates. . . . . . . . . . 46 SECTION 6.11. Notices to Clearing Agency. . . . . . . . . 47 SECTION 6.12. Definitive Certificates.. . . . . . . . . . 47 ARTICLE VII The Seller SECTION 7.1. Representations of Seller. . . . . . . . . 48 SECTION 7.2. Special Purpose Entity. . . . . . . . . . . 50 SECTION 7.3. Liability of Seller; Indemnities. . . . . . 50 SECTION 7.4. Merger or Consolidation of, or Assumption of the Obligations of, Seller. . . . . . . 52 SECTION 7.5. Limitation on Liability of Seller and Others . . . . . . . . . . . . . . . . . . 52 SECTION 7.6. Seller May Own Certificates.. . . . . . . . 53 -ii- ARTICLE VIII The Servicer SECTION 8.1. Representations of Servicer.. . . . . . . . 53 SECTION 8.2. Indemnities of Servicer.. . . . . . . . . . 55 SECTION 8.3. Merger or Consolidation of, or Assumption of the Obligations of, Servicer. . . . . . 56 SECTION 8.4. Limitation on Liability of Servicer and Others . . . . . . . . . . . . . . . . . . 56 SECTION 8.5. Bank One, Arizona, NA Not To Resign as Servicer . . . . . . . . . . . . . . . . . 57 SECTION 8.6. Existence. . . . . . . . . . . . . . . . . 57 SECTION 8.7. Tax Accounting. . . . . . . . . . . . . . . 57 ARTICLE IX Servicing Termination SECTION 9.1. Events of Servicing Termination.. . . . . . 58 SECTION 9.2. Appointment of Successor. . . . . . . . . . 60 SECTION 9.3. Payment of Servicing Fee. . . . . . . . . . 60 SECTION 9.4. Notification to Certificateholders. . . . . 61 SECTION 9.5. Waiver of Past Events of Servicing Termination. . . . . . . . . . . . . . . . 61 ARTICLE X The Trustee SECTION 10.1. Acceptance by Trustee. . . . . . . . . . . 61 SECTION 10.2. Duties of Trustee. . . . . . . . . . . . . 61 SECTION 10.3. Trustee's Certificate. . . . . . . . . . . 63 SECTION 10.4. Trustee's Assignment of Purchased Receivables . . . . . . . . . . . . . . . 63 SECTION 10.5. Certain Matters Affecting the Trustee. . . 64 SECTION 10.6. Trustee Not Liable for Certificates or Receivables . . . . . . . . . . . . . . . 65 SECTION 10.7. Trustee May Own Certificates.. . . . . . . 67 SECTION 10.8. Trustee's Fees and Expenses. . . . . . . . 67 SECTION 10.9. Eligibility Requirements for Trustee. . . 67 SECTION 10.10. Resignation or Removal of Trustee. . . . . 68 SECTION 10.11. Successor Trustee. . . . . . . . . . . . . 68 SECTION 10.12. Merger or Consolidation of Trustee . . . . 69 SECTION 10.13. Appointment of Co-Trustee or Separate Trustee . . . . . . . . . . . . . . . . . 69 SECTION 10.14. Representations and Warranties of Trustee . . . . . . . . . . . . . . . . . 71 SECTION 10.15. Reports by Trustee.. . . . . . . . . . . . 72 SECTION 10.16. Tax Accounting . . . . . . . . . . . . . . 72 SECTION 10.17. Trustee May Enforce Claims Without Possession of Certificates. . . . . . . . 72 -iii- ARTICLE XI Termination SECTION 11.1. Termination of the Trust.. . . . . . . . . 72 SECTION 11.2. Optional Purchase of All Receivables.. . . 74 ARTICLE XII Miscellaneous Provisions SECTION 12.1. Amendment. . . . . . . . . . . . . . . . . 74 SECTION 12.2. Protection of Title to Trust . . . . . . . 75 SECTION 12.3. Limitation on Rights of Certificateholders. . . . . . . . . . . . 77 SECTION 12.4. Governing Law. . . . . . . . . . . . . . . 78 SECTION 12.5. Notices. . . . . . . . . . . . . . . . . . 78 SECTION 12.6. Severability of Provisions.. . . . . . . . 78 SECTION 12.7. Assignment.. . . . . . . . . . . . . . . . 79 SECTION 12.8. Certificates Nonassessable and Fully Paid . . . . . . . . . . . . . . . . . . 79 SECTION 12.9. Intention of Parties.. . . . . . . . . . . 79 SECTION 12.10. Counterparts.. . . . . . . . . . . . . . . 79 SECTION 12.11. Collateral Agent Protection. . . . . . . . 80 SECTION 12.12. Limitation of Liability of Trustee and Collateral Agent . . . . . . . . . . . . 80 -iv- SCHEDULES Schedule A - Schedule of Receivables Schedule B - Location of Receivable EXHIBITS Exhibit A - Form of Class A Certificate Exhibit B - Form of Class B Certificate Exhibit C - Form of Servicer's Certificate Exhibit D - Form of Monthly Statement to Certificateholders Exhibit E - Form of Benefit Plan Affidavit -v- POOLING AND SERVICING AGREEMENT dated as of June 1, 1996 (the "Agreement"), among Banc One ABS Corporation, an Ohio corporation (the "Seller"), Bank One, Arizona, NA, a national banking association (the "Servicer"), and Bankers Trust Company, a New York banking corporation, as trustee hereunder (the "Trustee") and as collateral agent with respect to the Reserve Fund (the "Collateral Agent"). In consideration of the premises and of the mutual agreements herein contained, and other good and valuable consideration, the receipt of which is acknowledged, the parties hereto, intending to be legally bound, agree as follows: ARTICLE I DEFINITIONS SECTION 1.1. DEFINITIONS. Whenever used in this Agreement, the following words and phrases, unless the context otherwise requires, whenever capitalized shall have the following meanings: "ACCOUNTS" has the meaning specified in Section 4.1(a)(ii). "ACCOUNT PROPERTY" means all amounts and investments held from time to time in any Account or the Reserve Fund, as the case may be (whether in the form of deposit accounts, Physical Property, book-entry securities, uncertificated securities or otherwise), and all proceeds of the foregoing. "AFFILIATE" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with such specified Person. For purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "AGREEMENT" means, this Pooling and Servicing Agreement, as the same may be amended and supplemented from time to time. "AMOUNT FINANCED" means, with respect to any Receivable, the amount advanced under such Receivable toward the purchase price of the related Financed Vehicle and any related -1- costs and shown as such in the Contract evidencing such Receivable. "APR" or "ANNUAL PERCENTAGE RATE" of a Receivable means the annual rate of finance charges stated in the related Contract expressed as a percentage. "AUTHORIZED OFFICER" means (i) with respect to the Trustee, any officer within the Corporate Trust Office of the Trustee, including any vice president, assistant vice president, second vice president, secretary, assistant secretary or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer's knowledge of and familiarity with the particular subject and (ii) with respect to the Servicer, any officer of the Servicer who is authorized to act for the Servicer in matters relating to the Trust and who is identified on the list of Authorized Officers delivered by the Servicer to the Trustee on the Closing Date (as such list may be modified or supplemented from time to time thereafter). "BANK" means Bank One, Arizona, NA "BANK RECEIVABLES" means the motor vehicle retail installment sales contracts identified in Schedule A to the Loan Sale Agreement that are not Valley National Receivables. "BOOK-ENTRY CERTIFICATES" mean beneficial interests in the definitive Certificates described in Section 6.10, the ownership of which shall be evidenced, and transfers of which shall be made, through book entries by a Clearing Agency as described in Section 6.10. "BUSINESS DAY" means a day other than a Saturday, a Sunday or a day on which banking institutions or trust companies in New York, New York or Phoenix, Arizona or the city in which the Corporate Trust Office is located are authorized by law, regulation, executive order or governmental decree to be closed. "CERTIFICATE" means any Class A Certificate or Class B Certificate. "CERTIFICATE OWNER" means, with respect to a Book-Entry Certificate, the Person who is the owner of such Book-Entry Certificate, as reflected on the books of the Clearing Agency, or on the books of a Person maintaining an account with such Clearing Agency (directly or as an indirect participant, in accordance with the rules, regulations and procedures of such Clearing Agency). -2- "CERTIFICATE REGISTER" means the register maintained by the Trustee for the registration of Certificates and of transfers and exchanges of Certificates as provided in Section 6.3. "CERTIFICATEHOLDER" or "HOLDER" means the Person in whose name a Certificate shall be registered in the Certificate Register, except that, solely for the purpose of giving any consent, request or waiver pursuant to this Agreement, the interest evidenced by any Certificate registered in the name of the Seller, the Servicer or any Person actually known to an Authorized Officer of the Trustee to be an Affiliate of the Seller or the Servicer, shall not be taken into account in determining whether the requisite percentage necessary to effect any such consent, request or waiver shall have been obtained. "CLASS A CERTIFICATE" means a certificate executed by the Trustee on behalf of the Trust and authenticated by the Trustee, substantially in the form of Exhibit A hereto. "CLASS A CERTIFICATEHOLDER" or "CLASS A HOLDER" means the Person in whose name a Class A Certificate shall be registered in the Certificate Register, EXCEPT THAT, solely for the purpose of giving any consent, request or waiver pursuant to this Agreement, the interest evidenced by any Class A Certificate registered in the name of the Seller, the Servicer or any Person actually known to an Authorized Officer of the Trustee to be an Affiliate of the Seller or the Servicer, shall not be taken into account in determining whether the requisite percentage necessary to effect any such consent, request or waiver shall have been obtained. "CLASS A DISTRIBUTION ACCOUNT" means the account established and maintained as such pursuant to Section 4.1. "CLASS A INTEREST CARRYOVER SHORTFALL" means, with respect to any Distribution Date, the excess of Class A Monthly Interest for the preceding Distribution Date and any outstanding Class A Interest Carryover Shortfall on such preceding Distribution Date, over the amount in respect of interest that is actually deposited in the Class A Distribution Account on such preceding Distribution Date, plus 30 days of interest on such excess, to the extent permitted by law, at the Class A Pass-Through Rate. "CLASS A INTEREST DISTRIBUTION" means, with respect to any Distribution Date, the sum of Class A Monthly Interest for such Distribution Date and the Class A Interest Carryover Shortfall for such Distribution Date. "CLASS A MONTHLY INTEREST" means, with respect to any Distribution Date, one-twelfth (or, in the case of the first Distribution Date, a fraction, the numerator of which is ___ and -3- the denominator of which is 360) of the product of the Class A Pass-Through Rate and the Class A Principal Balance as of the Distribution Date occurring in the preceding Collection Period (after giving effect to any payments made on such Distribution Date) or, in the case of the first Distribution Date, the Original Class A Principal Balance. "CLASS A MONTHLY PRINCIPAL" means, with respect to any Distribution Date, the Class A Percentage of Principal Collections for such Distribution Date plus the Class A Percentage of Realized Losses with respect to Receivables which became Liquidated Receivables during the related Collection Period. "CLASS A PASS-THROUGH RATE" means ____% per annum, calculated on the basis of a 360-day year consisting of twelve 30-day months. "CLASS A PERCENTAGE" means ____%. "CLASS A POOL FACTOR" as of the close of business on a Distribution Date means a seven-digit decimal figure equal to the Class A Principal Balance (after giving effect to any distributions made on such Distribution Date) divided by the Original Class A Principal Balance. "CLASS A PRINCIPAL BALANCE" equals the Original Class A Principal Balance, as reduced by all amounts allocable to principal on the Class A Certificates previously distributed to Class A Certificateholders. "CLASS A PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any Distribution Date, the excess of Class A Monthly Principal for the preceding Distribution Date and any outstanding Class A Principal Carryover Shortfall on such preceding Distribution Date over the amount in respect of principal that is actually deposited in the Class A Distribution Account on such preceding Distribution Date. "CLASS A PRINCIPAL DISTRIBUTION" means, with respect to any Distribution Date (including the Final Scheduled Distribution Date), the sum of Class A Monthly Principal for such Distribution Date and the Class A Principal Carryover Shortfall for such Distribution Date; PROVIDED, HOWEVER, that the Class A Principal Distribution shall not exceed the Class A Principal Balance immediately prior to such Distribution Date. In addition, on the Final Scheduled Distribution Date, the principal required to be deposited in the Class A Distribution Account will include the lesser of (a) any principal due and remaining unpaid on each Receivable in the Trust as of the Final Scheduled Maturity Date or (b) the portion of the amount required to be deposited under clause (a) above that is necessary (after giving effect to the -4- other amounts to be deposited in the Class A Distribution Account on such Distribution Date and allocable to principal) to reduce the Class A Principal Balance to zero. "CLASS B CERTIFICATE" means a certificate executed by the Trustee on behalf of the Trust and authenticated by the Trustee, substantially in the form of Exhibit B hereto. "CLASS B CERTIFICATEHOLDER" or "CLASS B HOLDER" means the Person in whose name a Class B Certificate shall be registered in the Certificate Register, EXCEPT THAT, solely for the purpose of giving any consent, request or waiver pursuant to this Agreement, the interest evidenced by any Class B Certificate registered in the name of the Seller, the Servicer or any Person actually known to an Authorized Officer of the Trustee to be an Affiliate of the Seller or the Servicer, shall not be taken into account in determining whether the requisite percentage necessary to effect any such consent, request or waiver shall have been obtained. "CLASS B DISTRIBUTION ACCOUNT" means the account established and maintained as such pursuant to Section 4.1. "CLASS B INTEREST CARRYOVER SHORTFALL" means, with respect to any Distribution Date, the excess of Class B Monthly Interest for the preceding Distribution Date and any outstanding Class B Interest Carryover Shortfall on such preceding Distribution Date, over the amount in respect of interest that is actually deposited in the Class B Distribution Account on such preceding Distribution Date, plus 30 days of interest on such excess, to the extent permitted by law, at the Class B Pass-Through Rate. "CLASS B INTEREST DISTRIBUTION" means, with respect to any Distribution Date, the sum of Class B Monthly Interest for such Distribution Date and the Class B Interest Carryover Shortfall for such Distribution Date. "CLASS B MONTHLY INTEREST" means, with respect to any Distribution Date, one-twelfth (or, in the case of the first Distribution Date, a fraction, the numerator of which is ___ and the denominator of which is 360) of the product of the Class B Pass-Through Rate and the Class B Principal Balance as of the Distribution Date occurring in the preceding Collection Period (after giving effect to any payments made on such Distribution Date) or, in the case of the first Distribution Date, the Original Class B Principal Balance. "CLASS B MONTHLY PRINCIPAL" means, with respect to any Distribution Date, the Class B Percentage of Principal Collections for such Distribution Date plus the Class B Percentage of Realized Losses with respect to Receivables which -5- became Liquidated Receivables during the related Collection Period. "CLASS B PASS-THROUGH RATE" means ____% per annum, calculated on the basis of a 360-day year consisting of twelve 30-day months. "CLASS B PERCENTAGE" means ___%. "CLASS B POOL FACTOR" as of the close of business on a Distribution Date means a seven-digit decimal figure equal to the Class B Principal Balance (after giving effect to any distributions made on such Distribution Date) divided by the Original Class B Principal Balance. "CLASS B PRINCIPAL BALANCE" equals the Original Class B Principal Balance, as reduced by all amounts allocable to principal on the Class B Certificates previously distributed to Class B Certificateholders. "CLASS B PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any Distribution Date, the excess of Class B Monthly Principal for the preceding Distribution Date and any outstanding Class B Principal Carryover Shortfall on such preceding Distribution Date over the amount in respect of principal that is actually deposited in the Class B Distribution Account on such preceding Distribution Date. "CLASS B PRINCIPAL DISTRIBUTION" means, with respect to any Distribution Date (including the Final Scheduled Distribution Date), the sum of Class B Monthly Principal for such Distribution Date and the Class B Principal Carryover Shortfall for such Distribution Date; PROVIDED, HOWEVER, that the Class B Principal Distribution shall not exceed the Class B Principal Balance immediately prior to such Distribution Date. In addition, on the Final Scheduled Distribution Date, the principal required to be distributed to Class B Certificate- holders will include the lesser of (a) any principal due and remaining unpaid on each Receivable in the Trust as of the Final Scheduled Maturity Date or (b) the portion of the amount required to be deposited under clause (a) above that is necessary (after giving effect to the other amounts to be deposited in the Class B Distribution Account on such Distribution Date and allocable to principal) to reduce the Class B Principal Balance to zero, and, in the case of clauses (a) and (b), remaining after any required distribution of the amount described in clause (a) to the Class A Distribution Account. "CLEARING AGENCY" means an organization registered as a "clearing agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as amended. The initial Clearing Agency shall be DTC. -6- "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 June __, 1996. "CODE" means the Internal Revenue Code of 1986, as amended. "COLLATERAL AGENT" means Bankers Trust Company, a New York banking corporation, in its capacity as collateral agent with respect to the Reserve Fund for the Certificateholders. "COLLECTION ACCOUNT" means the account or accounts established and maintained as such pursuant to Section 4.1. "COLLECTION PERIOD" means, with respect to any Distribution Date, the calendar month immediately preceding the calendar month in which such Distribution Date occurs. "COLLECTIONS" mean, for a Distribution Date, the sum of the Interest Collections and Principal Collections for such Distribution Date. "COMPUTER TAPE" means the computer tape furnished to the Trustee describing certain characteristics of the Receivables as of the Cutoff Date. "CONTRACT" means a motor vehicle retail installment sale contract. "CORPORATE TRUST OFFICE" means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of execution of this Agreement is located at 4 Albany Street, New York, New York 10006, or at such other address as the Trustee may designate from time to time by notice to the Certificateholders, the Seller and the Servicer, or the principal corporate trust office of any successor Trustee (the address of which the successor Trustee will notify the Certificateholders, the Seller and the Servicer). "CUTOFF DATE" means June 1, 1996. "CUTOFF DATE PRINCIPAL BALANCE" means, with respect to a Receivable, the Amount Financed minus the sum of (i) that portion of all payments (including prepayments) made by or on behalf of the related Obligor prior to the Cutoff Date and allocable to principal using the Simple Interest Method, (ii) any portion of extended warranty contract costs or of physical damage, theft, credit life or disability insurance premiums -7- included in the Amount Financed that was refunded prior to the Cutoff Date and (iii) any prepayment in full or any partial prepayments applied to reduce the principal balance of the Receivable, but only to the extent not included in clause (i). "DEALER" means a dealer who sold a Financed Vehicle and who originated and assigned the Receivable for such Financed Vehicle to the Seller under a Dealer Agreement. "DEALER AGREEMENT" means any agreement between the Seller and a Dealer relating to the acquisition of Receivables by the Seller from a Dealer. "DEFINITIVE CERTIFICATES" shall have the meaning specified in Section 6.10. "DELIVERY" when used with respect to Account Property means: (a) with respect to bankers' acceptances, commercial paper, negotiable certificates of deposit and other obligations that constitute "instruments" within the meaning of Section 9-105(1)(i) of the UCC and are susceptible of physical delivery, transfer thereof to the Trustee or Collateral Agent (all references to the Collateral Agent in this definition relate to the Reserve Fund), as applicable, or their respective nominee, agent or custodian by physical delivery to the Trustee or Collateral Agent, as applicable, or its nominee, agent or custodian endorsed to, or registered in the name of, the Trustee or Collateral Agent, as applicable, or their respective nominee, agent or custodian or endorsed in blank, and, with respect to a certificated security (as defined in Section 8-102 of the UCC) transfer thereof (i) by delivery of such certificated security endorsed to, or registered in the name of, the Trustee or Collateral Agent, as applicable, or their respective nominee, agent or custodian or endorsed in blank to a financial intermediary (as defined in Section 8-313 of the UCC) and the making by such financial intermediary of entries on its books and records identifying such certificated securities as belonging to the Trustee or Collateral Agent, as applicable, or their respective nominee, agent or custodian and the sending by such financial intermediary of a confirmation of the purchase of such certificated security by the Trustee or Collateral Agent, as applicable, or their respective nominee, agent or custodian, or (ii) by delivery thereof to a "clearing corporation" (as defined in Section 8-102(3) of the UCC) and the making by such clearing corporation of appropriate entries on its books reducing the appropriate securities account of the transferor and increasing the appropriate securities account of a financial intermediary by the amount -8- of such certificated security, the identification by the clearing corporation of the certificated securities for the sole and exclusive account of the financial intermediary, the maintenance of such certificated securities by such clearing corporation or a "custodian bank" (as defined in Section 8-102(4) of the UCC) or the nominee of either subject to the clearing corporation's exclusive control, the sending of a confirmation by the financial intermediary of the purchase by the Trustee or Collateral Agent, as applicable, or their respective nominee, agent or custodian of such securities and the making by such financial intermediary of entries on its books and records identifying such certificated securities as belonging to the Trustee or Collateral Agent, as applicable, or their respective nominee, agent or custodian (all of the foregoing, "Physical Property"), and, in any event, any such Physical Property in registered form shall be in the name of the Trustee or Collateral Agent, as applicable, or their respective nominee, agent or custodian; and such additional or alternative procedures as may hereafter become appropriate to effect the complete transfer of ownership of any such Account Property to the Trustee or Collateral Agent, as applicable, or their respective nominee, agent or custodian, consistent with changes in applicable law or regulations or the interpretation thereof; (b) with respect to any securities issued by the U.S. Treasury, the Federal Home Loan Mortgage Corporation or by the Federal National Mortgage Association that is a book-entry security held through the Federal Reserve System pursuant to Federal book-entry regulations, the following procedures, all in accordance with applicable law, including applicable Federal regulations and Articles 8 and 9 of the UCC: book-entry registration of such Account Property to an appropriate book-entry account maintained with a Federal Reserve Bank by a financial intermediary which is also a "depository" pursuant to applicable Federal regulations and issuance by such financial intermediary of a deposit advice or other written confirmation of such book-entry registration to the Trustee or Collateral Agent, as applicable, or its nominee, agent or custodian of the purchase by the Trustee or Collateral Agent, as applicable, or its nominee, agent or custodian of such book-entry securities; the making by such financial intermediary of entries in its books and records identifying such book-entry security held through the Federal Reserve System pursuant to Federal book-entry regulations as belonging to the Trustee or Collateral Agent, as applicable, or its nominee, agent or custodian and indicating that such custodian holds such Account Property solely as agent for the Trustee or Collateral Agent, as applicable, or its nominee, agent or custodian; and such additional or alternative procedures as -9- may hereafter become appropriate to effect complete transfer of ownership of any such Account Property to the Trustee or Collateral Agent, as applicable, or its nominee, agent or custodian, consistent with changes in applicable law or regulations or the interpretation thereof; and (c) with respect to any item of Account Property that is an uncertificated security under Article 8 of the UCC and that is not governed by clause (b) above, registration on the books and records of the issuer thereof in the name of the financial intermediary, the sending of a confirmation by the financial intermediary of the purchase by the Trustee or Collateral Agent, as applicable, or its nominee, agent or custodian of such uncertificated security and the making by such financial intermediary of entries on its books and records identifying such uncertificated certificates as belonging to the Trustee or Collateral Agent, as applicable, or its nominee, agent or custodian. "DEPOSITORY AGREEMENT" means the agreement among the Seller, the Trustee and DTC, dated June , 1996. "DETERMINATION DATE" with respect to any Distribution Date, means the later of the eighth Business Day and the eleventh calendar day of the calendar month in which such Distribution Date occurs. "DISTRIBUTION DATE" means, with respect to each Collection Period, the 15th day of the following month (or, if such 15th day is not a Business Day, the next following Business Day), commencing July 15, 1996. "DISTRIBUTION DATE STATEMENT" means, the statement described in Section 4.7 "DTC" means The Depository Trust Company. "ELIGIBLE DEPOSIT ACCOUNT" means either (a) a segregated account with an Eligible Institution or (b) a segregated trust account with the corporate trust department of a depository institution (other than the Seller or any affiliate of the Seller) organized under the laws of the United States of America or any one of the States thereof or the District of Columbia (or any domestic branch of a foreign bank), having corporate trust powers and acting as trustee for funds deposited in such account, so long as any of the securities of such depository institution shall have a credit rating from each Rating Agency in one of its generic rating categories which signifies investment grade. "ELIGIBLE INSTITUTION" means any depository institution (other than the Seller or any affiliate of the Seller) organized -10- under the laws of the United States of America or any one of the States thereof or the District of Columbia (or any domestic branch of a foreign bank), which (i) has (A) either a long-term senior unsecured debt rating of AAA or a short-term senior unsecured debt or certificate of deposit rating of A-1+ or better by Standard & Poor's and (B)(1) a long-term senior unsecured debt rating of A-1 or better and (2) a short-term senior unsecured debt rating of P-1 or better by Moody's, or any other long-term, short-term or certificate of deposit rating acceptable to the Rating Agencies and (ii) whose deposits are insured by the FDIC. If so qualified, the Trustee and Collateral Agent may be considered an Eligible Institution. "ELIGIBLE INVESTMENTS" mean book-entry securities, negotiable instruments or securities represented by instruments in bearer or registered form which evidence: (a) direct obligations of, and obligations fully guaranteed as to timely payment by, the United States of America; (b) demand deposits, time deposits or certificates of deposit of any depository institution (including the Seller or any Affiliate of the Seller) or trust company incorporated under the laws of the United States of America or any State thereof or the District of Columbia (or any domestic branch of a foreign bank) and subject to supervision and examination by Federal or State banking or depository institution authorities (including depository receipts issued by any such institution or trust company as custodian with respect to any obligation referred to in clause (a) above or portion of such obligation for the benefit of the holders of such depository receipts); PROVIDED, HOWEVER, that at the time of the investment or contractual commitment to invest therein (which shall be deemed to be made again each time funds are reinvested following each Distribution Date), the commercial paper or other short-term senior unsecured debt obligations (other than such obligations the rating of which is based on the credit of a Person other than such depository institution or trust company) of such depository institution or trust company shall have a credit rating from S&P of A-1+ and from Moody's of P-1; (c) commercial paper (including commercial paper of the Seller or any Affiliate of the Seller) having, at the time of the investment or contractual commitment to invest therein, a rating from S&P of A-1+ and from Moody's of P-1; (d) investments in money market funds (including funds for which the Seller or the Trustee or any of their respective Affiliates is investment manager or advisor) -11- having a rating from S&P of AAA-m or AAAm-G and from Moody's of Aaa; (e) bankers' acceptances issued by any depository institution or trust company referred to in clause (b) above; (f) repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the United States of America or any agency or instrumentality thereof the obligations of which are backed by the full faith and credit of the United States of America, in either case entered into with a depository institution or trust company (acting as principal) referred to in clause (b) above; and (g) any other investment which would not cause either Rating Agency to downgrade or withdraw its then current rating of either the Class A Certificates or the Class B Certificates, as directed in writing by either Rating Agency to the Trustee. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "ERISA ENTITY" means (i) an employee benefit plan, retirement arrangement, individual retirement account or Keogh subject to either Title I of ERISA or Section 4975 of the Code, or (ii) an entity whose source of funds to be used for the purchase of a Class B Certificate includes the assets of any such plan, arrangement or account. "EVENT OF SERVICING TERMINATION" means an event specified in Section 9.1. "FDIC" means the Federal Deposit Insurance Corporation. "FINAL SCHEDULED DISTRIBUTION DATE" means the _______ ____ Distribution Date. "FINAL SCHEDULED MATURITY DATE" means February 2002. "FINANCED VEHICLE" means a new or used automobile, van or light duty truck, together with all accessions thereto, securing an Obligor's indebtedness under the respective Receivable. "INDEPENDENT COUNSEL" means, when used with respect to any specified Person, that the Person (a) is in fact independent of the Servicer, the Trust, the Seller and any Affiliate of any of the foregoing Persons and (b) is not an officer or employee of -12- the Servicer, the Trust, the Seller or any Affiliate of any of the foregoing Persons. "INSOLVENCY EVENT" means, with respect to a specified Person, (a) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of such Person or any substantial part of its property in an involuntary case under any applicable Federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver (including any receiver appointed under the Financial Institutions Reform, Recovery and Enforcement Act of 1989, as amended), liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or ordering the winding-up or liquidation of such Person's affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (b) the commencement by such Person of a voluntary case under any applicable Federal or State bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by such Person to the entry of an order for relief in an involuntary case under any such law, or the consent by such Person to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or the making by such Person of any general assignment for the benefit of creditors, or the failure by such Person generally to pay its debts as such debts become due, or the taking of action by such Person in furtherance of any of the foregoing. "INSURANCE" has the meaning specified in Section 3.4. "INTEREST COLLECTIONS" for a Distribution Date shall be the sum of the following amounts with respect to the preceding Collection Period: (i) that portion of all collections on the Receivables allocable to interest in respect of such Collection Period; (ii) Liquidation Proceeds attributable to interest on the Receivables which became Liquidated Receivables during such Collection Period in accordance with the Servicer's customary servicing procedures, to the extent not included in clause (i) above; (iii) the Purchase Amount of each Receivable that became a Purchased Receivable during such Collection Period to the extent attributable to accrued interest on such Receivable; and (iv) Recoveries received during such Collection Period. Interest Collections for any Distribution Date shall exclude all payments and proceeds (including Liquidation Proceeds) of any Receivable, the Purchase Amount of which has been included in Collections in a prior Collection Period. "LIEN" means a security interest, lien, charge, pledge, or encumbrance of any kind, other than tax liens, mechanics' liens and any liens that may attach to a Financed Vehicle or -13- Receivable by operation of law as a result of any act or omission by the related Obligor. "LIQUIDATED RECEIVABLE" means any defaulted Receivable liquidated by the Servicer through the sale of a Financed Vehicle or otherwise or which the Servicer has, after using all reasonable efforts to realize upon such Receivable, charged-off. "LIQUIDATION PROCEEDS" means, with respect to any Liquidated Receivable, the moneys collected in respect thereof, from whatever source (other than any proceeds from any Dealer reserve) on a Liquidated Receivable during the Collection Period in which such Receivable became a Liquidated Receivable, net of the sum of any amounts expended by the Servicer in connection with such liquidation and any amounts required by law to be remitted to the Obligor on such Liquidated Receivable. "LOAN PURCHASE AND SERVICING AGREEMENT" means the agreement by and between the Bank and Valley National, as such agreement may be amended from time to time, pursuant to which the Bank shall purchase the Valley National Receivables from Valley National. "LOAN SALE AGREEMENT" means the agreement by and between the Seller and the Bank, as such agreement may be amended from time to time, pursuant to which the Seller shall purchase the Receivables from the Bank. "MOODY'S" means Moody's Investors Service, Inc., or its successors in interest. "OBLIGOR" on a Receivable means the purchaser or the co-purchasers of the Financed Vehicle and any other Person who is obligated for the indebtedness arising from such Receivable. "OFFICERS' CERTIFICATE" means a certificate signed by the chairman of the board, the president, the vice chairman of the board, any executive vice president, any senior vice president or any vice president. "OPINION OF COUNSEL" means one or more written opinions of counsel who may, except as otherwise expressly provided in this Agreement, be employees of or counsel to the Seller or the Servicer and who shall be reasonably satisfactory to the Trustee, and which opinion or opinions shall be addressed to the Trustee as Trustee, and shall be in form and substance satisfactory to the Trustee; provided, however, that any opinion regarding the status of the Trust as a grantor trust for federal income tax purposes shall be delivered by Independent Counsel. "ORIGINAL CLASS A PRINCIPAL BALANCE" means $______________. -14- "ORIGINAL CLASS B PRINCIPAL BALANCE" means $_____________. "ORIGINAL POOL BALANCE" means the aggregate Cutoff Date Principal Balance of the Receivables, which is $305,686,731.53. "ORIGINAL PRINCIPAL BALANCE" means the sum of the Original Class A Principal Balance and the Original Class B Principal Balance. "PERSON" means any individual, corporation, estate, partnership, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or government or any agency or political subdivision thereof. "PHYSICAL PROPERTY" has the meaning assigned to such term in the definition of "Delivery" above. "PLAN" has the meaning specified in Section 6.3. "POOL BALANCE" as of the close of business on the last day of a Collection Period means the aggregate Principal Balance of the Receivables (excluding Purchased Receivables and Liquidated Receivables). "PRINCIPAL BALANCE" of a Receivable, as of the close of business on the last day of a Collection Period, means the Amount Financed minus the sum of (i) that portion of all payments made by or on behalf of the related Obligor on or prior to such day and allocable to principal using the Simple Interest Method, (ii) any refunded portion of extended warranty contract costs or of physical damage, theft, credit life or disability insurance premiums included in the Amount Financed, (iii) any payment of the Purchase Amount with respect to the Receivable allocable to principal and (iv) any prepayment in full or any partial prepayments applied to reduce the principal balance of the Receivable, but only to the extent not included in clause (i). "PRINCIPAL COLLECTIONS" for a Distribution Date shall be the sum of the following amounts with respect to the preceding Collection Period: (i) that portion of all collections on the Receivables allocable to principal in respect of such Collection Period; (ii) all Liquidation Proceeds attributable to the principal amount of Receivables which became Liquidated Receivables during such Collection Period in accordance with the Servicer's customary servicing procedures, only to the extent not included in clause (i) above; (iii) the Purchase Amount of each Receivable repurchased by the Seller or purchased by the Servicer during such Collection Period, to the extent attributable to principal; and (iv) partial prepayments on Receivables in respect of such Collection Period relating to refunds of extended -15- warranty contract costs or of credit life or disability insurance policy premiums, but only if such costs or premiums were financed by the respective Obligor and only to the extent not included in clause (i) above. Principal Collections on any Distribution Date shall exclude all payments and proceeds (including Liquidation Proceeds) of any Receivable, the Purchase Amount of which has been included in Collections in a prior Collection Period. "PURCHASE AMOUNT" means the amount, as of the close of business on the last day of a Collection Period, required to prepay in full a Receivable under the terms thereof including interest at the APR to the end of the month of purchase. "PURCHASED RECEIVABLE" means, on any date of determination, a Receivable as to which payment of the Purchase Amount has been made by the Seller or the Servicer pursuant to this Agreement or by the Bank pursuant to the Loan Sale Agreement. "RATING AGENCY" means either S&P or Moody's. If no such organization or successor is any longer in existence, "Rating Agency" shall be a nationally recognized statistical rating organization or other comparable Person designated by the Seller, notice of which designation shall be given to the Trustee, the Collateral Agent and the Servicer. "RATING AGENCY CONDITION" means, with respect to any action, that each Rating Agency shall have been given 10 days' prior notice thereof (or such shorter period as shall be acceptable to the Rating Agencies) and that neither of the Rating Agencies shall have notified the Seller, the Servicer or the Trustee in writing prior to the expiration of such 10-day period that such action will, in and of itself, result in a reduction or withdrawal of the then current rating of either class of Certificates. With respect to Section 4.2, the Rating Agency Condition shall be deemed to be satisfied on the Closing Date after receipt of a letter from each Rating Agency dated such date stating that the Class A Certificates are rated in the highest investment rating category and the Class B Certificates are rated at least "A" or its equivalent. "REALIZED LOSSES" means, for any period, the excess of the Principal Balance of any Liquidated Receivable over Liquidation Proceeds to the extent allocable to principal. "RECEIVABLE" means any Contract listed on Schedule A (which Schedule may be in the form of microfiche), but excluding Liquidated Receivables and Purchased Receivables. "RECEIVABLE FILE" means, with respect to a Receivable, the documents, specified in Section 2.4. -16- "RECORD DATE" means, in respect of each Collection Period and the related Distribution Date, the last day of the calendar month immediately preceding such Distribution Date. "RECOVERIES" with respect to any Collection Period, means all monies received by the Servicer with respect to any Liquidated Receivable during any Collection Period following the Collection Period in which such Receivable became a Liquidated Receivable, net of the sum of (i) any expenses incurred by the Servicer in connection with the collection of such Receivable and the disposition of the Financed Vehicle (to the extent not previously reimbursed) and (ii) any payments required by law to be remitted to the Obligor, but, in any event, not less than zero. "RELATED FINANCED VEHICLE" means (i) with respect to Valley National, a new or used automobile, van or light duty truck, together with all accessions thereto securing the obligor's indebtedness under a Valley National Receivable and (ii) with respect to the Bank, a new or used automobile, van or light duty truck, together with all accessions thereto securing the obligor's indebtedness under a Bank Receivable. "RELATED RECEIVABLE" means (i) with respect to Valley National, a Valley National Receivable and (ii) with respect to the Bank, a Bank Receivable. "RELATED RECEIVABLE FILES" has the meaning specified in Section 2.5(a). "RESERVE FUND" means the fund established and maintained as such pursuant to Section 4.1(b). "RESERVE FUND DEPOSIT" means, with respect to the Closing Date, $____________. "S&P" or "STANDARD & POOR'S" means Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies, Inc., or its successors in interest. "SCHEDULE OF RECEIVABLES" means each list attached hereto as Schedule A identifying the Receivables conveyed by the Seller, which list may be in the form of microfiche, or computer readable tape or diskette. "SELLER" means Banc One ABS Corporation, as the seller of the Receivables, and each successor to Banc One ABS Corporation, (in the same capacity) pursuant to Section 7.4. "SERVICER" means Bank One, Arizona, NA, the servicer of the Receivables, and each successor to Bank One, Arizona, NA (in -17- the same capacity) pursuant to Section 8.3, and each successor Servicer appointed and acting pursuant to Section 9.2. "SERVICER'S CERTIFICATE" has the meaning specified in Section 3.9. "SERVICING FEE" means, with respect to any Distribution Date, the fee payable to the Servicer for services rendered during such Collection Period, determined pursuant to Section 3.8. "SERVICING FEE RATE" shall be ___% per annum, calculated on the basis of a 360-day year consisting of twelve 30-day months. "SIMPLE INTEREST METHOD" means the method of allocating a fixed level payment to principal and interest, pursuant to which the portion of such payment that is allocated to interest is equal to the product of the APR multiplied by the unpaid principal balance multiplied by the period of time elapsed since the preceding payment of interest was made and the remainder of such payment is allocable to principal. "SPECIFIED RESERVE BALANCE" means, with respect to any Distribution Date, the greater of (a) ____% of the sum of the Class A Principal Balance and the Class B Principal Balance on such Distribution Date (after giving effect to all distributions with respect to the Certificates to be made on such Distribution Date) or (b) ____% of the sum of the Original Class A Principal Balance and the Original Class B Principal Balance. In no circumstances will the Seller be required to deposit any amounts in the Reserve Fund other than the Reserve Fund Deposit. "STAMP" has the meaning specified in Section 6.3. "STATE" means any state in the United States of America. "SUBSERVICER" means Valley National Financial Services Company, the subservicer of the Valley National Receivables pursuant to the Loan Purchase and Servicing Agreement, and each successor to Valley National. "TRANSFER DATE" means, with respect to any Distribution Date, the Business Day preceding such Distribution Date. "TRUST" means the Banc One Auto Grantor Trust 1996-B created by this Agreement. "TRUSTEE" means Bankers Trust Company, a New York banking corporation, as Trustee under this Agreement, or any -18- successor, and any successor Trustee appointed and acting pursuant to Sections 10.10 and 10.11. "TRUST PROPERTY" means the (i) Receivables; (ii) all monies received under the Receivables on and after the Cutoff Date; (iii) such amounts as from time to time may be held in the Collection Account, the Class A Distribution Account and the Class B Distribution Account (including the Account Property related thereto); (iv) security interests in the Financed Vehicles; (v) the Seller's rights, if any, to receive proceeds from claims on physical damage, credit life, theft and disability insurance policies covering the Financed Vehicles or the Obligors; (vi) the rights of the Trustee for the benefit of the Certificateholders under this Agreement; (vii) the rights to receive payments under the circumstances specified herein from the Reserve Fund; (viii) all of the Seller's right, title and interest in its rights and benefits, but none of its obligations or burdens, under the Loan Sale Agreement, including the delivery requirements, representations and warranties and the cure and repurchase obligations of the Bank under the Loan Sale Agreement; and (ix)all proceeds (within the meaning of Section 9-306 of the UCC) of the foregoing. "UCC" means the Uniform Commercial Code as in effect in the relevant jurisdiction. "VALLEY NATIONAL" means Valley National Financial Services Company, an Arizona corporation and a wholly-owned subsidiary of the Bank. "VALLEY NATIONAL RECEIVABLE" means a motor vehicle retail installment sale contract identified on Schedule A to the Loan Purchase and Servicing Agreement. SECTION 1.2. USAGE OF TERMS. (a) All terms defined in this Agreement shall have the defined meanings when used in any instrument governed hereby and in any certificate or other document made or delivered pursuant hereto unless otherwise defined therein. (b) As used in this Agreement, in any instrument governed hereby and in any certificate or other document made or delivered pursuant hereto or thereto, accounting terms not defined in this Agreement or in any such instrument, certificate or other document, and accounting terms partly defined in this Agreement or in any such instrument, certificate or other document to the extent not defined, shall have the respective meanings given to them under generally accepted accounting principles as in effect on the date of this Agreement or any such instrument, certificate or other document, as applicable. To the extent that the definitions of accounting terms in this Agreement -19- or in any such instrument, certificate or other document are inconsistent with the meanings of such terms under generally accepted accounting principles, the definitions contained in this Agreement or in any such instrument, certificate or other document shall control. (c) The words "hereof," "herein," "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; Article, Section, Schedule and Exhibit references contained in this Agreement are references to Articles, Sections, Schedules and Exhibits in or to this Agreement unless otherwise specified; and the term "including" shall mean "including without limitation." (d) The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine as well as to the feminine and neuter genders of such terms. SECTION 1.3. CALCULATIONS. Except as otherwise specifically provided herein, all calculations of the amount of interest accrued on the Certificates during any Collection Period and all calculations of the amount of the Servicing Fee payable with respect to a Collection Period shall be made on the basis of a 360-day year consisting of twelve 30-day months. SECTION 1.4. REFERENCES. All references to the first day of a Collection Period shall refer to the opening of business on such day. All references to the last day of a Collection Period shall refer to the close of business on such day. SECTION 1.5. REFERENCES TO THE TRUST. Whenever any provision of this Agreement refers to actions to be taken by the Trust, matters to be consented to by the Trust, or deliveries or notices to the Trust, such provision shall be deemed to refer to actions to be taken by the Trustee, matters to be consented to by the Trustee, or deliveries or notices to the Trustee. SECTION 1.6. ACTION BY OR CONSENT OF CERTIFICATEHOLDERS. Whenever any provision of this Agreement refers to action to be taken or consented to by Certificateholders, such provision shall be deemed to refer to Certificateholders of record as of the Record Date immediately preceding the date on which such action is to be taken, or consented to by Certificateholders. -20- ARTICLE II THE TRUST PROPERTY SECTION 2.1. CONVEYANCE OF TRUST PROPERTY. In consideration of the Trustee's delivery to, or upon the written order of, the Seller of authenticated Certificates, in authorized denominations, in an aggregate amount equal to the Original Principal Balance, the Seller does hereby sell, transfer, assign and convey to the Trustee, upon the terms and conditions hereof, the Trust Property to the Trustee, without recourse. SECTION 2.2. REPRESENTATIONS AND WARRANTIES AS TO EACH RECEIVABLE. The Seller makes the following representations and warranties as to each Receivable conveyed by the Seller to the Trustee hereunder on which the Trustee shall rely in accepting the Trust Property in trust and authenticating the Certificates. Unless otherwise indicated, such representations and warranties are being made as of the execution and delivery of the Agreement, but shall survive the sale, transfer and assignment of the Receivables and the other Trust Property to the Trustee. (a) TITLE. It is the intention of the Seller that the transfer and assignment herein contemplated constitute a sale of the Receivables from the Seller to the Trustee and that the beneficial interest in and title to such Receivables not be part of the debtor's estate in the event of the filing of a petition for bankruptcy or insolvency by or against the Seller. No Receivable has been sold, transferred, assigned or pledged by the Seller to any Person other than the Trustee. Immediately prior to the transfer and assignment herein contemplated, the Seller had good and marketable title to each Receivable, free and clear of all Liens and, immediately upon the transfer thereof, the Trustee shall have good and marketable title to each such Receivable, free and clear of all Liens; and the transfer of the Receivables to the Trustee has been perfected under the UCC. (b) ALL FILINGS MADE. All filings (including UCC filings) necessary in any jurisdiction to give the Trustee a first priority perfected ownership interest in the Receivables, and to give the Trustee a first priority perfected security interest therein, shall have been made. (c) CHARACTERISTICS OF RECEIVABLES. (i) Each Valley National Receivable (A) has been originated either by a Dealer in the regular course of such Dealer's business and purchased from such Dealer by Valley National in the ordinary course of Valley National's business or originated or acquired by Valley National in the ordinary course of Valley National's business, and each Obligor was approved in accordance with Valley National's standard underwriting procedures in effect at the time such Receivable was originated, acquired or purchased and (B) has -21- created or shall create a valid, subsisting and enforceable first priority security interest in favor of Valley National in the Related Financed Vehicle, which security interest is assignable by Valley National to the Bank, by the Bank to the Seller and by the Seller to the Trustee; (ii) each Bank Receivable (A) has been originated either by a Dealer in the regular course of such Dealer's business and purchased from such Dealer by the Bank in the ordinary course of the Bank's business or originated or acquired by the Bank in the ordinary course of the Bank's business, and each Obligor was approved in accordance with the Bank's standard Underwriting procedures in effect at the time such Bank Receivable was originated, acquired or purchased and (B) has created or shall create a valid, subsisting and enforceable security interest in favor of the Bank in the Related Financed Vehicle, which security interest is assignable by the Bank to the Seller and by the Seller to the Trustee; and (iii) each Receivable (A) contains customary and enforceable provisions under the laws of the State governing such Receivables such that the rights and remedies of the holder thereof are adequate for realization against the collateral of the benefits of the security; and (B) provides for equal monthly payments at a fixed rate of interest calculated based on the Simple Interest Method that fully amortizes the Amount Financed by maturity and yields interest at the Annual Percentage Rate assuming payments are made on the due date thereof. (d) SCHEDULE OF RECEIVABLES. The information set forth in Schedule A to this Agreement is true and correct in all material respects as of the opening of business on the Cutoff Date and no selection procedures adverse to the Certificateholders were utilized in selecting the Receivables. The Computer Tape regarding the Receivables is true and correct in all material respects as of the Cutoff Date. (e) COMPLIANCE WITH LAW. Each Receivable complied at the time it was originated or made and at the Closing Date complies in all material respects with all requirements of applicable Federal, State and local laws and regulations thereunder, including usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B, Z and AA, State adaptations of the Uniform Consumer Code, the Arizona Consumer Fraud Act, Title 6 of the Arizona Revised Statute and other consumer credit laws and equal credit opportunity and disclosure laws. (f) BINDING OBLIGATION. As of the Cutoff Date, each Receivable represents the legal, valid and binding payment obligation in writing of the Obligor thereunder, enforceable by the holder thereof in accordance with its terms except as such enforceability may be limited by applicable bankruptcy, -22- insolvency, moratorium, fraudulent conveyance, reorganization and similar laws now or hereafter in effect related to or affecting creditors' rights generally and subject to general principles of equity (whether applied in a proceeding at law or in equity). (g) NO GOVERNMENT OBLIGOR. As of the Cutoff Date, none of the Receivables is due from the United States of America or any State or from any agency, department or instrumentality of the United States of America or any State. (h) SECURITY INTEREST IN FINANCED VEHICLE. Immediately prior to the sale, assignment and transfer thereof, each Receivable shall be secured by a validly perfected first priority security interest in the Related Financed Vehicle in favor of the Bank, in the case of a Bank Receivable, or Valley National, in the case of a Valley National Receivable, as secured party or all necessary and appropriate actions have been commenced that would result in the valid perfection of a first security interest in the Related Financed Vehicle in favor of the Bank, in the case of a Bank Receivable, or Valley National, in the case of a Valley National Receivable, as secured party. (i) RECEIVABLES IN FORCE. As of the Cutoff Date, no Receivable has been satisfied, subordinated or rescinded, nor has any Financed Vehicle been released from the Lien granted by the related Receivable in whole or in part unless another vehicle has been substituted as collateral securing the Receivable without any other modification to such Receivable. (j) NO WAIVER. As of the Cutoff Date, no provision of a Receivable has been waived except as reflected in the Receivable File relating to such Receivable. (k) NO DEFENSES. As of the Cutoff Date, none of the Seller, the Bank or Valley National has received notice that any right of rescission, setoff, counterclaim or defense has been asserted or threatened with respect to any Receivable. (l) NO LIENS. None of the Seller, the Bank or Valley National has received notice of any Liens or claims, including Liens for work, labor, materials or unpaid State or Federal taxes relating to any Financed Vehicle securing the related Receivable, that are or may be prior to or equal to the Lien granted by such Receivable. (m) NO DEFAULT. No Receivable has a payment that is more than 90 days overdue as of the Cutoff Date and, except as permitted in this paragraph, no default, breach, violation or event (in any such case) permitting acceleration under the terms of any Receivable has occurred; and no continuing condition that with notice or the lapse of time would constitute a default, -23- breach, violation or event (in any such case) permitting acceleration under the terms of any Receivable has arisen as of the Cutoff Date; and the Seller has not waived and shall not waive any of the foregoing. (n) MATURITY OF RECEIVABLES. The weighted average original maturity of the Receivables is 60.12 months as of the Cutoff Date; the weighted average remaining term of the Receivables is 45.97 months as of the Cutoff Date; and the latest scheduled maturity of any Receivable shall be no later than the Final Scheduled Maturity Date. (o) NO BANKRUPTCIES. No Obligor on any Receivable was noted in the related Receivable File as having filed for bankruptcy in a proceeding which remained undischarged as of the Cutoff Date. (p) NO REPOSSESSIONS. As of the Cutoff Date, no Financed Vehicle securing any Receivable is in repossession status. (q) CHATTEL PAPER. Each Receivable constitutes "chattel paper" as defined in the UCC. (r) APR. The weighted average APR of the Receivables as of the Cutoff Date is approximately 12.15%. (s) PAID AHEAD. As of the Cutoff Date, no Receivable is more than six months paid ahead. (t) PRINCIPAL BALANCE. The average principal balance of the Receivables as of the Cutoff Date is $9,675.16. The aggregate Cutoff Date Principal Balance of the Receivables is $305,686,731.53. As of the Cutoff Date, each Receivable has a principal balance between $282 and $45,682. (u) FINANCING. Approximately 45.02% of the aggregate Cutoff Date Principal Balance of the Receivables, constituting approximately 37.02% of the number of Receivables as of the Cutoff Date, represents financing of new vehicles; the remainder of the Receivables represents financing of used vehicles. (v) INSURANCE. The Bank or Valley National, as the case may be, in accordance with their respective customary procedures, has determined that the Obligor, at the time the Related Receivable was originated, obtained, applied for or made arrangements to obtain physical damage insurance covering the Related Financed Vehicle and under the terms of the Related Receivable the Obligor is required to maintain such insurance. -24- (w) LAWFUL ASSIGNMENT. No Receivable has been originated in, or as of the Cutoff Date is subject to the laws of, any jurisdiction under which the sale, transfer and assignment of such Receivable or this Agreement, the Loan Purchase and Servicing Agreement or the Loan Sale Agreement is unlawful, void or voidable. (x) NO INSURANCE PREMIUMS. As of the Cutoff Date, no portion of the Amount Financed of any Receivable included amounts attributable to the payment of any physical damage or theft insurance premium. (y) ONE ORIGINAL. There is only one original executed copy of each Receivable. (z) LOCATION OF RECEIVABLE FILES. The Receivable Files are kept at one or more of the locations listed in Schedule B. (aa) COMPUTER RECORDS. As of the Closing Date, the accounting and computer records of Valley National, relating to the Valley National Receivables and the Bank and the Seller relating to the Receivables, have been marked to show the absolute ownership by the Trustee of the Receivables. SECTION 2.3. REPURCHASE UPON BREACH. (a) The Seller, the Servicer or the Trustee, as the case may be, shall inform the other parties to this Agreement promptly, in writing, upon the discovery of any breach of the Seller's representations and warranties made pursuant to Section 2.2. Unless any such breach shall have been cured within 60 days following the discovery thereof by the Trustee or receipt by the Trustee of written notice from the Seller or the Servicer of such breach, the Seller shall be obligated to repurchase any Receivable in which the interests of the Certificateholders are materially and adversely affected by any such breach as of the first day succeeding the end of such 60 day period that is the last day of a Collection Period (or, at the Seller's option, the last day of the first Collection Period following the discovery). In consideration of and simultaneously with the repurchase of the Receivable, the Seller shall remit to the Collection Account the Purchase Amount in the manner specified in Section 4.3 and the Trustee shall execute such assignments and other documents reasonably requested by the Seller in order to effect such repurchase. (b) Pursuant to Sections 2.1, the Seller has conveyed to the Trustee all of the Seller's right, title and interest in its rights and benefits, but none of its obligations or burdens, under the Loan Sale Agreement, including the delivery requirements, representations and warranties and the cure or repurchase obligations of the Bank under the Loan Sale Agreement. The Seller hereby represents and warrants to the Trustee that -25- such assignment is valid, enforceable and effective to permit the Trustee to enforce such obligations of the Bank under the Loan Sale Agreement. (c) The sole remedy of the Trust, the Trustee or the Certificateholders with respect to a breach of representations and warranties pursuant to Section 2.2 and the agreement contained in this Section shall be to require the Seller (or the Bank) to repurchase Receivables pursuant to this Section, subject to the conditions contained herein. The Trustee shall not have any duty to conduct any affirmative investigation as to the occurrence of any conditions requiring the repurchase of any Receivable pursuant to this Section. SECTION 2.4. CUSTODY OF RECEIVABLE FILES. To assure uniform quality in servicing the Receivables and to reduce administrative costs, the Trustee hereby revocably appoints the Servicer, and the Servicer hereby accepts such appointment, to act as the agent of the Trustee as custodian of the following documents or instruments (the "Receivable File") with respect to each Receivable: (i) the original executed copy of the Receivable; (ii) a record of the information supplied by the Obligor in the original credit application; (iii) the original certificate of title or such documents that the Servicer shall keep on file, in accordance with its customary procedures, evidencing the security interest of the Seller in the Financed Vehicle (it being understood that the original certificates of title generally are not delivered to the Seller for 90 days but that promptly upon delivery they shall be delivered to the Servicer as custodian hereunder); and (iv) any and all other documents that the Servicer shall keep on file, in accordance with its customary procedures, relating to a Receivable, an Obligor or a Financed Vehicle. SECTION 2.5. DUTIES OF SERVICER AS CUSTODIAN. (a) SAFEKEEPING. The Servicer shall hold, subject to the following sentence, the Receivable Files on behalf of the Trustee for the benefit of all present and future Certificateholders and maintain such accurate and complete accounts, records and computer systems pertaining to each Receivable File as shall enable the Servicer and the Trustee to comply with this Agreement. To assure uniform quality in servicing the Receivables and to reduce administrative costs, the Trustee acknowledges that, the Servicer may appoint Valley National to -26- act as a subcustodian of the Receivable Files of the Valley National Receivables being serviced by Valley National (the "Related Receivable Files") pursuant to the terms of the Loan Purchase and Servicing Agreement. Any such appointment shall not relieve the Servicer from its obligations as custodian of all the Receivable Files hereunder. 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 automotive receivables that the Servicer services for itself or others, except that the Servicer shall not be obligated, and does not intend, to (i) pay any premium for force-placed insurance concerning any Financed Vehicle or (ii) monitor any Obligor's maintenance of Insurance. The Servicer shall conduct, or cause to be conducted, periodic audits of the Receivable Files 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 in the event the Trustee is required to do so pursuant to the terms of this Agreement. The Servicer shall promptly report to the Trustee any failure to hold the Receivable Files and maintain the accounts, records and computer systems as herein provided and promptly take appropriate action to remedy any such failure. (b) MAINTENANCE OF AND ACCESS TO RECORDS. The Servicer shall maintain each Receivable File at one of the offices specified in Schedule B to this Agreement or at such other office of it or any permitted subservicer as shall be specified to the Trustee by written notice not later than 90 days after any change in location. Upon reasonable prior 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 and the related records and computer systems and permit access to such Receivable Files at such times during normal business hours as the Trustee shall require. (c) RELEASE OF DOCUMENTS. Upon written instruction from the Trustee, the Servicer shall release or shall cause to be released any 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 and upon the release and delivery of any such document in accordance with the instructions of the Trustee, the Servicer shall be released from any further liability and responsibilities under this Section 2.5 with respect to such documents unless and until such time as such document may be returned to the Servicer. SECTION 2.6. INSTRUCTIONS; AUTHORITY TO ACT. The Servicer shall be deemed to have received proper instructions -27- with respect to the Receivable Files upon its receipt of written instructions signed by an Authorized Officer of the Trustee. SECTION 2.7. CUSTODIAN'S INDEMNIFICATION. The Servicer as custodian shall indemnify and hold harmless the Trustee and its officers, directors, employees and agents for any and all liabilities, obligations, losses, compensatory damages, payments, costs or expenses (including reasonable attorneys' fees and expenses) that may be imposed on, incurred by or asserted against the Trustee or any of its officers, directors, employees and agents as the result of any improper act or omission in any way relating to the maintenance and custody by the Servicer, as custodian of the Receivable Files where the final determination that any such improper act or omission by the Servicer, which resulted in such liability, obligation, loss, damage, payment, cost or expense is established by a court of law, by an arbitrator or by way of settlement agreed to by the Servicer; 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 provision shall not be considered to limit the Servicer's or any other party's rights, obligations, liabilities, claims or defenses which arise as a matter of law or pursuant to any other provision of this Agreement. SECTION 2.8. EFFECTIVE PERIOD AND TERMINATION. (a) 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. If Bank One, Arizona, NA shall resign as Servicer in accordance with the provisions of this Agreement or if all of the rights and obligations of any Servicer shall have been terminated under Section 9.1, the appointment of such Servicer as custodian shall be terminated by the Trustee or by Holders of Certificates evidencing not less than a majority of the aggregate outstanding principal balance of the Class A Certificates and the Class B Certificates taken together as a single class, in the same manner as the Trustee or such Holders may terminate the rights and obligations of the Servicer under Section 9.1. The Trustee may terminate the Servicer's appointment as custodian, with cause, at any time upon written notification to the Servicer, and without cause upon 30 days' prior written notification to the Servicer and the Rating Agencies. As soon as practicable after any termination of such appointment, the Servicer shall deliver, or cause to be delivered, at its expense the Receivable Files to the Trustee or the Trustee's agent at such place or places as the Trustee may reasonably designate in writing. If the Servicer shall be terminated as custodian hereunder for any reason but shall continue to serve as Servicer, the Trustee shall, or shall cause its agent to, make the Receivable Files available to the Servicer (or, if designated by the Servicer, a permitted subservicer) during normal business hours upon reasonable notice so as to -28- permit the Servicer to perform its obligations as Servicer hereunder. ARTICLE III ADMINISTRATION AND SERVICING OF THE TRUST PROPERTY SECTION 3.1. DUTIES OF SERVICER. The Servicer, on behalf of the Trustee (to the extent provided herein), shall manage, service, administer and make collections on the Receivables (other than Purchased Receivables) with reasonable care, using that degree of skill and attention that the Servicer exercises with respect to all comparable automotive receivables that it services for itself or others, except that the Servicer shall not be obligated, and does not intend, to (i) pay any premium for force-placed insurance concerning any Financed Vehicle or (ii) monitor any Obligor's maintenance of Insurance. The Servicer's duties shall include collection and posting of all payments, responding to inquiries of Obligors on such Receivables, investigating delinquencies, sending payment coupons to Obligors, reporting tax information to Obligors, accounting for collections and furnishing monthly and annual statements to the Trustee with respect to distributions. Subject to the provisions of Section 3.2, 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 to execute and deliver, on behalf of itself, the Trust, the Trustee and the Certificateholders 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, the Trustee (in the case of a Receivable other than a Purchased Receivable) shall thereupon be deemed to have automatically assigned, solely for the purpose of collection, such Receivable to the Servicer. 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 such Receivable the Trustee shall, at the Servicer's expense and direction, take steps to enforce such Receivable, including bringing suit in its name or the name of the Trustee or the Certificateholders. The Trustee shall upon the written request of the Servicer execute any powers of attorney and other documents reasonably necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties hereunder. SECTION 3.2. COLLECTION AND ALLOCATION OF RECEIVABLE PAYMENTS. (a) The Servicer shall make reasonable efforts to -29- collect all payments called for under the terms and provisions of the Receivables as and when the same shall become due and shall follow such collection procedures as it follows with respect to all comparable automotive receivables that it services for itself or others. The Servicer shall allocate collections between principal and interest in accordance with the customary servicing procedures it follows with respect to all comparable automotive receivables that it services for itself or others. (b) The Servicer may not grant extensions or modify the original due dates of a Receivable; PROVIDED, HOWEVER, that the Servicer may grant one extension with respect to a Receivable of one month in any rolling twelve month period and may change the original due date once during the term of a Receivable to a new due date within 20 days of the original scheduled due date of such Receivable, provided that the Servicer may not extend the date for final payment by the Obligor of any Receivable beyond _______________. The Servicer may in its discretion waive any late payment charge or any other fees that may be collected in the ordinary course of servicing a Receivable. The Servicer shall not voluntarily agree to any reduction of (i) the original interest rate, (ii) the amount of the original regular scheduled payment or (iii) the Principal Balance, of any Receivable. The Servicer shall not advance any funds to any Person as a result of actions taken by it pursuant to this Section 3.2(b). SECTION 3.3. REALIZATION UPON RECEIVABLES. 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 eventual payment in full is unlikely. From time to time, as appropriate for servicing or foreclosing upon any Receivable, the Trustee shall, upon written request of the Servicer, execute such documents as shall be necessary to prosecute any such proceedings. 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 proceeds from Receivables repurchased by a Dealer, pursuant to a Dealer Agreement, as a result of a breach of a representation or warranty in the related Dealer Agreement or a default by an Obligor resulting in the repossession of the Financed Vehicle under such Dealer Agreement. 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 reasonable discretion that such repair and/or repossession will increase the Liquidation Proceeds by an amount greater than the amount of such expenses. -30- SECTION 3.4. PHYSICAL DAMAGE INSURANCE. The Servicer shall (or shall cause the Subservicer to), in accordance with its customary servicing procedures, require that each Obligor shall have obtained and shall maintain fire, theft and collision insurance or comprehensive and collision insurance covering the Financed Vehicle ("Insurance") as of the execution of the Receivable. The Servicer shall enforce the rights under the Receivables to require the Obligors to maintain Insurance, in accordance with the Servicer's customary practices and procedures with respect to comparable new or used motor vehicle receivables that it services for itself or others, except that the Servicer shall not be obligated, and does not intend, to (i) pay any premium for force-placed insurance concerning any Financed Vehicle or (ii) monitor any Obligor's maintenance of Insurance. SECTION 3.5. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES. The Servicer shall, in accordance with its customary servicing procedures, take such steps as are necessary to maintain perfection of the security interest created by each Receivable in the related Financed Vehicle in favor of the Bank, in the case of the Bank Receivables, or Valley National, in the case of the Valley National Receivables. The Servicer is hereby authorized to take such steps as are necessary to re-perfect such security interest on behalf of the Trustee in the event of the relocation of a Financed Vehicle or for any other reason. SECTION 3.6. COVENANTS OF SERVICER. The Servicer shall not release the Financed Vehicle secur 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 or except as may be required by an insurer in order to receive proceeds from insurance covering such Financed Vehicle, nor shall the Servicer impair the rights of the Trustee or the Certificateholders in such Receivables (it being understood that no action of the Servicer taken in compliance with the terms of this Agreement shall be deemed to impair such rights), nor shall the Servicer increase the number of scheduled payments due under a Receivable. SECTION 3.7. PURCHASE OF RECEIVABLES UPON BREACH. The Servicer or the Trustee shall inform the other party and the Seller promptly, in writing, upon the discovery of any breach pursuant to Section 3.2(b), 3.5 or 3.6. Unless the breach shall have been cured within 60 days following such discovery thereof by the Trustee or the receipt by the Trustee of notice of such breach, the Servicer shall be obligated to purchase any Receivable in which the interests of the Certificateholders are materially and adversely affected by such breach as of the first day succeeding the end of such 60 day period that is the last day of a Collection Period (or, at the Servicer's option, the last day of the first Collection Period following the discovery). In consideration of the purchase of any such Receivable pursuant to -31- the preceding sentence, the Servicer shall remit the Purchase Amount in the manner specified in Section 4.3. The sole remedy of the Trustee or the Certificateholders with respect to a breach pursuant to Section 3.2(b), 3.5 or 3.6 shall be to require the Servicer to purchase Receivables pursuant to this Section. The Trustee shall have no duty to conduct any affirmative investigation as to the occurrence of any condition requiring the purchase of any Receivable pursuant to this Section. SECTION 3.8. SERVICING FEE. The servicing fee payable to the Servicer for each Distribution Date shall equal the product of (i) one-twelfth, (ii) the Servicing Fee Rate and (iii) the Pool Balance as of the first day of the related Collection Period (the "Servicing Fee"). As additional servicing compensation, the Servicer shall also be entitled to retain certain non-sufficient funds charges and other administrative fees or similar charges allowed by applicable law with respect to the Receivables as well as investment earnings (net of losses) on the Accounts. Any fee of the Subservicer shall be the sole responsibility of the Servicer. SECTION 3.9. SERVICER'S CERTIFICATE. On each Determination Date, the Servicer shall deliver to the Trustee and the Seller, with a copy to the Rating Agencies, a Servicer's Certificate (the "Servicer's Certificate") containing all information necessary to make the distributions pursuant to Sections 4.5 and 4.6 for the Collection Period preceding the date of such Servicer's Certificate. Receivables to be purchased by the Servicer or to be repurchased by the Seller shall be identified by the Servicer by account number with respect to such Receivable (as specified in Schedule A). SECTION 3.10. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT. (a) The Servicer shall deliver to the Trustee, on or before April 30 of each year beginning April 30, 1997, 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 first such report, during the period from the Closing Date to December 31, 1996) and of its performance under this Agreement has been made under such officers' supervision and (ii) to the best of such officers' 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 officers and the nature and status thereof. The Trustee shall send a copy of such certificate and the report referred to in Section 3.11 to the Rating Agencies. A copy of such certificate and the report referred to in Section 3.11 may be obtained by any Certificateholder by a request in writing to the Trustee addressed to the Corporate Trust Office. -32- (b) The Servicer shall deliver to the Trustee and the Rating Agencies, promptly after having obtained knowledge thereof, but in no event later than five (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 Servicing Termination under Section 9.1(a) or (b). SECTION 3.11. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORT. The Servicer shall cause a firm of independent certified public accountants, which may also render other services to the Servicer or the Seller, to deliver to the Seller and the Trustee on or before April 30 of each year beginning April 30, 1997: [(a) a report expressing a summary of findings based upon a comparison of the mathematical calculations of certain amounts set forth in the Distribution Date Statement during the preceding calendar year (or, in the case of the first such report, the period from the Closing Date to December 31, 1996) with the Servicer's computer reports that were the source of such amounts and a report with regard to the assertions by the Servicer's management about the Servicer's compliance with the Agreement during the preceding calendar year (or, in the case of the first such report, the period from the Closing Date to December 31, 1996) and (b) a report addressed to the Servicer, the Seller, the Trustee and each Rating Agency to the effect that (i) such accountants have examined the assertions by the Servicer's management about the Servicer's compliance with this Agreement during the preceding calendar year (or, in the case of the first such report, during the period from the Closing Date to December 31, 1996) and (ii) in such accountants' opinion, such assertions are fairly stated in all material respects, except for such exceptions as such firm shall believe to be immaterial and such other exceptions as shall be set forth in such report.] Such 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. SECTION 3.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING RECEIVABLES. The Servicer shall provide to the Certificateholders access to the Receivable Files in such cases where the Certificateholders shall be required by applicable statutes or regulations to review such documentation as demonstrated by evidence satisfactory to the Servicer in its reasonable judgment. Access shall be afforded without charge, but only upon reasonable request and during normal business hours at the offices of the Servicer or the Subservicer, as the case may be, where the Receivable Files are held. Nothing in this Section shall affect the obligation of the Servicer or the Subservicer, as the case may be, to observe any applicable law prohibiting disclosure of information regarding the Obligors and -33- the failure of either of them to provide access to information as a result of such obligation shall not constitute a breach of this Section. SECTION 3.13. 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 the Trustee or its agent and independent accountants, taxes imposed on the Servicer and expenses incurred in connection with distributions and reports to Certificateholders. SECTION 3.14. APPOINTMENT OF SUBSERVICERS. (a) The Servicer may at any time appoint a subservicer to perform all or any portion of its obligations as Servicer and/or custodian hereunder; PROVIDED, HOWEVER, that if such subservicer is a Person other than Valley National, the Rating Agency Condition shall have been satisfied in connection therewith; PROVIDED FURTHER that the Servicer shall remain obligated and be liable to the Trust, the Trustee and the Certificateholders for the servicing and administering of the Receivables in accordance with the provisions hereof without diminution of such obligation and liability by virtue of the appointment of such subservicer and to the same extent and under the same terms and conditions as if the Servicer alone were servicing and administering the Receivables. For purposes of this Agreement, the Servicer shall be deemed to have received all amounts received in respect of the Receivables by any subservicer at the time of receipt of such amounts by such subservicer. The fees and expenses of the subservicer shall be as agreed between the Servicer and its subservicer from time to time and none of the Trust, the Trustee or the Certificateholders shall have any responsibility therefor. (b) In connection with the foregoing, the Servicer shall initially appoint Valley National as a subservicer of the Valley National Receivables and as subcustodian of the Receivables Files relating to such Valley National Receivables pursuant to the Loan Purchase and Servicing Agreement. Following the occurrence of any Event of Servicing Termination, the Trustee or any other successor Servicer hereunder shall have the right to either assume the rights and the obligations of the Bank under the Loan Purchase and Servicing Agreement or terminate the Loan Purchase and Servicing Agreement. Any costs associated with the termination of such Loan Purchase and Servicing Agreement shall be for the account of the Servicer. In the event the Servicer is terminated as custodian but not as Servicer, the Trustee may elect, with the consent of the Servicer, not to terminate Valley National as subcustodian of the Related Receivable Files and, in such event, the Servicer shall continue to be responsible for the fees and expenses of the Valley National. -34- ARTICLE IV DISTRIBUTIONS; RESERVE FUND; STATEMENTS TO CERTIFICATEHOLDERS SECTION 4.1. ESTABLISHMENT OF ACCOUNTS. (a) (i) The Trustee shall establish and maintain in the name of the Trustee one or more Eligible Deposit Accounts (the "Collection Account"), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Certificateholders. The Trustee shall establish and maintain in the name of the Trustee an Eligible Deposit Account (the "Class A Distribution Account"), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Class A Certificateholders. The Trustee shall establish and maintain in the name of the Trustee an Eligible Deposit Account (the "Class B Distribution Account"), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Class B Certificateholders. The Collection Account, the Class A Distribution Account and the Class B Distribution Account shall not be held in the State of Arizona. (ii) Funds on deposit in the Collection Account, the Class A Distribution Account and the Class B Distribution Account (collectively, the "Accounts") shall be invested by the Trustee in Eligible Investments selected in writing by the Servicer; PROVIDED, HOWEVER, it is understood and agreed that the Trustee shall not be liable for any loss arising from such investment in Eligible Investments. All such Eligible Investments shall be held by the Trustee for the benefit of the beneficiaries of the applicable Account; PROVIDED, that on each Distribution Date all interest and other investment income (net of losses and investment expenses) on funds on deposit therein shall be withdrawn from the Accounts at the written direction of the Servicer and shall be paid to the Servicer. Funds on deposit in the Accounts shall be invested in Eligible Investments that will mature so that such funds will be available at the close of business on the Transfer Date preceding the following Distribution Date. Funds deposited in an Account on a Transfer Date which immediately precedes a Distribution Date or upon the maturity of any Eligible Investments are not required to be (but may be) invested overnight. Neither the Servicer nor the Trustee shall be liable for any investment losses. (iii) The Trustee shall possess all right, title and interest in all funds on deposit from time to time in the Accounts and in all proceeds thereof (including all income thereon) and all such funds, investments, proceeds and income shall be part of the Trust Property. Except as expressly provided herein, the Accounts shall be under the sole dominion and control of the Trustee. If, at any time, any of the Accounts ceases to be an Eligible Deposit Account, the Trustee shall -35- within 10 Business Days (or such longer period, as to which each Rating Agency may consent) establish a new Account as an Eligible Deposit Account and shall transfer any cash and/or any investments to such new Account. In connection with the foregoing, the Servicer agrees that, in the event that any of the Accounts are not accounts with the Trustee, the Servicer shall notify the Trustee in writing promptly upon any of such Accounts ceasing to be an Eligible Deposit Account. (iv) The Servicer shall have the power, revocable by the Trustee, to instruct the Trustee to make withdrawals and payments from the Accounts for the purpose of permitting the Servicer to carry out its duties hereunder or permitting the Trustee to carry out its duties. (b) (i) The Servicer, for the benefit of the Trust and the Certificateholders, shall establish and maintain in the name of Bankers Trust Company. as Collateral Agent an Eligible Deposit Account (the "Reserve Fund"). The Reserve Fund shall not be property of the Trust. [The Reserve Fund shall not be held in the State of Arizona.] (ii) Funds on deposit in the Reserve Fund shall be invested by the Collateral Agent in Eligible Investments selected in writing by the Servicer; PROVIDED, HOWEVER, it is understood and agreed that the Collateral Agent shall not be liable for any loss arising from such investment in Eligible Investments. All such Eligible Investments shall be held by the Collateral Agent for the benefit of the beneficiaries of the Reserve Fund; PROVIDED, that on each Distribution Date all interest and other investment income (net of losses and investment expenses) on funds on deposit therein shall be withdrawn from the Reserve Fund at the written direction of the Servicer and shall be paid to the Servicer for distribution to the Seller. Funds on deposit in the Reserve Fund shall be invested in Eligible Investments that will mature so that such funds will be available at the close of business on the Transfer Date preceding the following Distribution Date. Funds deposited in the Reserve Fund on a Transfer Date which immediately precedes a Distribution Date or upon the maturity of any Eligible Investments are not required to be (but may be) invested overnight. Neither the Servicer nor the Trustee shall be liable for any investment losses. The Seller will treat these funds, Eligible Investments and other assets in the Reserve Fund as its own for Federal, State and local income tax and franchise tax purposes and will report on its tax returns all income, gain and loss from the Reserve Fund. (iii) The Reserve Fund shall be under the sole dominion and control of the Collateral Agent. If, at any time, the Reserve Fund ceases to be an Eligible Deposit Account, the Servicer shall within 10 Business Days (or such longer period, as to which each Rating Agency may consent) establish a new Reserve -36- Fund as an Eligible Deposit Account and shall transfer any cash and/or any investments to such new Reserve Fund. In connection with the foregoing, the Servicer agrees that, in the event that the Reserve Fund is not an account with the Trustee, the Servicer shall notify the Trustee in writing promptly upon the Reserve Fund ceasing to be an Eligible Deposit Account. (iv) With respect to the Account Property in respect of the Reserve Fund, the Collateral Agent agrees that: (A) any Account Property that is held in deposit accounts shall be held solely in an Eligible Deposit Account subject to the penultimate sentence of Section 4.1(b)(iii); and, except as otherwise provided herein, each such Eligible Deposit Account shall be subject to the exclusive custody and control of the Collateral Agent, and the Collateral Agent shall have sole signature authority with respect thereto; (B) any Account Property that constitutes Physical Property shall be delivered to the Collateral Agent in accordance with paragraph (a) of the definition of "Delivery" and shall be held, pending maturity or disposition, solely by the Collateral Agent or a financial intermediary (as such term is defined in Section 8-313(4) of the UCC) acting solely for the Collateral Agent; (C) any Account Property that is a book-entry security held through the Federal Reserve System pursuant to Federal book-entry regulations shall be delivered in accordance with paragraph (b) of the definition of "Delivery" and shall be maintained by the Collateral Agent, pending maturity or disposition, through continued book-entry registration of such Account Property as described in such paragraph; and (D) any Account Property that is an "uncertificated security" under Article 8 of the UCC and that is not governed by clause (C) above shall be delivered to the Collateral Agent in accordance with paragraph (c) of the definition of "Delivery" and shall be maintained by the Collateral Agent, pending maturity or disposition, through continued registration of the Collateral Agent's (or its nominee's) ownership of such security. (v) The Servicer shall have the power, revocable by the Trustee, to instruct the Collateral Agent to make withdrawals and payments from the Reserve Fund for the purpose of permitting the Servicer to carry out its duties hereunder or permitting the Collateral Agent to carry out its duties. SECTION 4.2. COLLECTIONS. (a) The Servicer shall remit within two Business Days of receipt thereof to the -37- Collection Account all payments by or on behalf of the Obligors with respect to the Receivables (other than certain nonsufficient funds charges and other administrative fees or similar charges that may be retained by the Servicer as part of its servicing compensation in accordance with Section 3.8), and all Liquidation Proceeds and Recoveries, both as collected during the Collection Period. Notwithstanding the foregoing, for so long as (i) no Event of Servicing Termination shall have occurred and be continuing and (ii) the Rating Agency Condition shall have been satisfied (and any conditions or limitations imposed by the Rating Agencies in connection therewith are complied with), the Servicer shall remit such collections to the Collection Account on the related Transfer Date. For purposes of this Article IV the phrase "payments by or on behalf of Obligors" shall mean payments made with respect to the Receivables by Persons other than the Servicer or the Seller. (b) All collections for the Collection Period shall be applied by the Servicer as follows: with respect to each Receivable (other than a Purchased Receivable), payments by or on behalf of the Obligor shall be applied to interest and principal in accordance with the Simple Interest Method, as applied by the Servicer. Any excess shall be applied to prepay the Receivable. (c) All Liquidation Proceeds shall be applied to the related Receivable in accordance with the Servicer's customary servicing procedures. SECTION 4.3. ADDITIONAL DEPOSITS. The Servicer and the Seller shall deposit or cause to be deposited in the Collection Account the aggregate Purchase Amount with respect to Purchased Receivables and the Seller shall deposit therein all amounts to be paid under Section 11.2. The Servicer will deposit the aggregate Purchase Amount with respect to Purchased Receivables within two Business Days after such obligations become due, unless the Servicer shall not be required to make deposits within two Business Days of receipt pursuant to Section 4.2(a) (in which case such deposit will be made by the related Transfer Date). All such other deposits shall be made on the Transfer Date following the end of the related Collection Period. SECTION 4.4. NET DEPOSITS. As an administrative convenience, unless the Servicer is required to remit collections within two Business Days of receipt thereof, the Servicer will be permitted to make the deposit of collections on the Receivables and Purchase Amounts for or with respect to the Collection Period net of distributions to be made to the Servicer with respect to the Collection Period. The Servicer, however, will account to the Trustee and the Certificateholders as if all deposits, distributions and transfers were made individually. -38- SECTION 4.5. DISTRIBUTIONS. (a) On each Determination Date, the Servicer shall calculate all amounts required to determine the amounts to be deposited in the Class A Distribution Account and the Class B Distribution Account. (b) Subject to the last paragraph of this Section 4.5(b), on each Distribution Date, the Servicer shall instruct the Trustee (based on the information contained in the Servicer's Certificate delivered on the related Determination Date pursuant to Section 3.9) to make the following deposits and distributions for receipt by the Servicer or deposit in the applicable Account by 12:00 P.M. (New York City time): (i) to the extent of Interest Collections for such Distribution Date (and, in the case of shortfalls occurring under clause (B) below in the Class A Interest Distribution, the Class B Percentage of Principal Collections for such Distribution Date to the extent of such shortfalls): (A) to the Servicer, the Servicing Fee for such Distribution Date and all unpaid Servicing Fees from prior Collection Periods (to the extent such amounts have not been retained pursuant to Section 4.4); (B) to the Class A Distribution Account, after the application of clause (A), the Class A Interest Distribution for such Distribution Date; and (C) to the Class B Distribution Account, after the application of clauses (A) and (B), the Class B Interest Distribution for such Distribution Date; and (ii) to the extent of the portion of Principal Collections and Interest Collections for such Distribution Date remaining after the application of clauses (i)(A), (B) and (C) above: (A) to the Class A Distribution Account, the Class A Principal Distribution for such Distribution Date; (B) to the Class B Distribution Account, after the application of clause (A), the Class B Principal Distribution for such Distribution Date; and (C) to the Reserve Fund, any amounts remaining after the application of clauses (i)(A) through (C) and (ii) (A) and (B). In the event that the Collection Account is maintained with an institution other than the Trustee, the Servicer shall instruct and cause such institution to make all deposits and distributions pursuant to this Section 4.5(b) on the related Transfer Date. -39- The Trustee shall be entitled to conclusively rely on the Servicer's instructions and any Servicer's Certificate without investigation. (c) On each Distribution Date, all amounts on deposit in the Class A Distribution Account, after application of Section 4.6 below, will be distributed to the Class A Certificateholders by the Trustee and all amounts on deposit in the Class B Distribution Account, after application of Section 4.6 below, will be distributed to the Class B Certificateholders by the Trustee. Payments under this Section 4.5(c) shall be made to the Certificateholders either by wire transfer, in immediately available funds, to the account of such Holder at a bank or other entity having appropriate facilities therefor, if such Certificateholder shall have provided to the Certificate Registrar appropriate written instructions at least seven Business Days prior to such Distribution Date and such Holder's Certificates in the aggregate evidence a denomination of not less than $1,000,000 or by check mailed by the Trustee to each Holder's respective address of record (or, in the case of Certificates registered in the name of a Clearing Agency, or its nominee, by wire transfer of immediately available funds). To the extent that the Trustee is required to wire funds to the Certificateholders or the Servicer from the Class A Distribution Account or the Class B Distribution Account, as applicable, it shall request the institution maintaining the Class A Distribution Account or the Class B Distribution Account, as applicable, to make a wire transfer of the amount to be distributed and the institution maintaining the Class A Distribution Account or the Class B Distribution Account, as applicable, shall promptly deliver to the Trustee a confirmation of such wire transfer. To the extent that the Trustee is required to make payments to Certificateholders by check hereunder, it shall request the institution maintaining the Class A Distribution Account or the Class B Distribution Account, as applicable, to provide it with a supply of checks to make such payments. The institution shall, if a request is made by the Trustee for a wire transfer in accordance with this Section 4.5(c), wire such funds, in accordance with such instructions by 12:00 P.M. (New York City time) on such Distribution Date, and it will otherwise act in compliance with the provisions of this paragraph and the other provisions of this Agreement applicable to it as the institution maintaining the Class A Distribution Account or the Class B Distribution Account, as applicable. The Servicer shall take all necessary action (including requiring an agreement to such effect) to ensure that any institution maintaining the Class A Distribution Account or the Class B Distribution Account, as applicable, agrees to comply, and complies, with the provisions of this paragraph and the other provisions of this Agreement applicable to it as the institution maintaining the Class A Distribution Account or the Class B -40- Distribution Account, as applicable. Initially the institution shall be the Trustee. SECTION 4.6. RESERVE FUND. (a) On the Closing Date, the Reserve Fund Deposit shall be deposited into the Reserve Fund [from the net proceeds from the sale of the Certificates.] The Seller hereby grants to the Collateral Agent a security interest in and to the Reserve Fund and any and all property credited thereto from time to time, including but not limited to Eligible Investments, to secure payment of the Certificates according to their terms. Amounts held from time to time in the Reserve Fund will continue to be held by the Collateral Agent for the benefit of Class A Certificateholders and the Class B Certificateholders but the Reserve Fund shall not be an asset of the Trust. By acceptance of their Certificates, Certificateholders shall be deemed to have appointed Bankers Trust Company as Collateral Agent. Bankers Trust Company hereby accepts such appointment as Collateral Agent. (b) On each Distribution Date, the Servicer shall instruct the Collateral Agent (based on the information contained in the Servicer's Certificate delivered on the related Determination Date pursuant to Section 3.9) to withdraw from the Reserve Fund on such Distribution Date, to the extent of funds available therein, the amounts specified below, in the order of priority specified below, and deposit such amounts in the Class A Distribution Account or the Class B Distribution Account, as specified below, on such Distribution Date: (i) an amount equal to the excess, if any, of the Class A Interest Distribution for such Distribution Date over the sum of Interest Collections for such Distribution Date and the Class B Percentage of Principal Collections for such Distribution Date will be deposited into the Class A Distribution Account; (ii) an amount equal to the excess, if any, of the Class B Interest Distribution for such Distribution Date over the portion of Interest Collections for such Distribution Date remaining after the distribution of the Class A Interest Distribution for such Distribution Date will be deposited into the Class B Distribution Account; (iii) an amount equal to the excess, if any, of the Class A Principal Distribution for such Distribution Date over the portion of Principal Collections and Interest Collections for such Distribution Date remaining after the distribution of the Class A Interest Distribution and the Class B Interest Distribution for such Distribution Date will be deposited into the Class A Distribution Account; and -41- (iv) an amount equal to the excess, if any, of the Class B Principal Distribution for such Distribution Date over the portion of Principal Collections and Interest Collections for such Distribution Date remaining after the distribution of the Class A Interest Distribution, the Class B Interest Distribution and the Class A Principal Distribution for such Distribution Date will be deposited into the Class B Distribution Account. The Collateral Agent shall be entitled to conclusively rely on the Servicer's instruction and the Servicer's Certificate without investigation. (c) If the amount on deposit in the Reserve Fund on any Distribution Date (after giving effect to all other deposits thereto and withdrawals therefrom to be made on such Distribution Date) is greater than the Specified Reserve Balance for such Distribution Date, the Servicer shall instruct the Collateral Agent in writing to distribute the amount of the excess to the Seller on such Distribution Date. On the date on which the Trust terminates, any funds remaining in the Reserve Fund (after all other distributions to be made from the Reserve Fund pursuant to this Section 4.6 have been made) shall be distributed to the Seller. Amounts properly distributed to the Servicer for distribution to the Seller pursuant to Section 4.1(b)(ii) or this Section 4.6(c) shall not be available under any circumstances to the Trust, the Trustee or the Certificateholders and the Seller shall in no event thereafter be required to refund any such distributed amounts. SECTION 4.7. STATEMENTS TO CERTIFICATEHOLDERS. (a) On each Determination Date, the Servicer shall provide to the Trustee (with a copy to the Rating Agencies) for the Trustee to forward to each Certificateholder of record a statement (each a "Distribution Date Statement") setting forth with respect to the related Collection Period at least the following information as to the Certificates to the extent applicable: (i) the amount of the distribution allocable to principal of the Class A Certificates and the Class B Certificates; (ii) the amount of the distribution allocable to interest on the Class A Certificates and the Class B Certificates; (iii) the Pool Balance as of the close of business on the last day of such Collection Period; (iv) the amount of the Servicing Fee paid to the Servicer with respect to such Collection Period and the Class A Percentage and Class B Percentage of the Servicing Fee paid to the Servicer with respect to such Collection Period; -42- (v) the amount of any Class A Interest Carryover Shortfall, Class A Principal Carryover Shortfall, Class B Interest Carryover Shortfall and Class B Principal Carryover Shortfall on the Distribution Date immediately following such Collection Period and the change in such amounts from those with respect to the immediately preceding Distribution Date; (vi) the Class A Pool Factor and the Class B Pool Factor as of such Distribution Date, after giving effect to payments allocated to principal reported under clause (i) above; (vii) the amount of the aggregate Realized Losses, if any, for such Collection Period; (viii) the aggregate Principal Balance of all Receivables which were more than 60 days delinquent as of the close of business on the last day of such Collection Period; (ix) the amount on deposit in the Reserve Fund on such Distribution Date, after giving effect to distributions made on such Distribution Date; (x) the Class A Principal Balance and the Class B Principal Balance as of such Distribution Date, after giving effect to payments allocated to principal reported under clause (i) above; (xi) the amount otherwise distributable to the Class B Certificateholders that is being distributed to the Class A Certificateholders on such Distribution Date; and (xii) the aggregate Purchase Amount of Receivables repurchased by the Seller or purchased by the Servicer with respect to such Collection Period. Each amount set forth pursuant to clauses (i), (ii), (iv) and (v) above shall be expressed in the aggregate and as a dollar amount per $1,000 of original denomination of a Certificate. Copies of such statements may be obtained by Certificate Owners by a request in writing addressed to the Trustee. (b) Within a reasonable period of time after the end of each calendar year, but not later than the latest date permitted by law, the Trustee shall mail, to each Person who at any time during such calendar year shall have been a Certificateholder, a statement containing the sum of the amounts described in clauses (i), (ii), (iv) and (v) above for such -43- calendar year or, in the event such Person shall have been a Certificateholder during a portion of such calendar year, for the applicable portion of such year, for the purposes of such Certificateholder's preparation of Federal income tax returns. In addition, the Servicer shall furnish to the Trustee for distribution to such Person at such time any other information necessary under applicable law for the preparation of such income tax returns. (c) The Servicer, at its own expense, shall cause a firm of nationally recognized accountants to prepare any State tax returns required to be filed by the Trust, and the Trustee shall execute and file such returns if requested to do so by the Servicer. The Trustee, upon request, will promptly furnish the Servicer with all such information known to the Trustee as may be reasonably required in connection with the preparation of any state tax returns of the Trust. ARTICLE V [Intentionally Omitted] ARTICLE VI THE CERTIFICATES SECTION 6.1. THE CERTIFICATES. The Certificates shall be issued as Class A Certificates and Class B Certificates, substantially in the form of Exhibits A and B hereto, respectively. The Certificates shall be issued in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof; PROVIDED, HOWEVER, that one Class A Certificate and one Class B Certificate may be issued in a denomination that represents any remaining portion of the Original Class A Principal Balance and the Original Class B Principal Balance, as the case may be. The Certificates shall be executed by the Trustee on behalf of the Trust by manual or facsimile signature of an Authorized Officer of the Trustee. Certificates bearing the manual or facsimile signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign on behalf of the Trustee, shall be valid and binding obligations of the Trust, notwithstanding that such individuals shall have ceased to be so authorized prior to the authentication and delivery of such Certificates or did not hold such offices at the date of such Certificates. SECTION 6.2. AUTHENTICATION AND DELIVERY OF CERTIFICATES. The Trustee shall cause to be authenticated and delivered to or upon the written order of the Seller, in exchange for the Receivables and other Trust Property, simultaneously with -44- the sale, assignment and transfer to the Trustee of the Receivables, and the constructive delivery to the Trustee of the Receivables Files and the other components of the Trust existing as of the Closing Date, Certificates duly authenticated by the Trustee in authorized denominations equalling in the aggregate the sum of the Original Class A Principal Balance and the Original Class B Principal Balance, and evidencing the entire ownership of the Trust. No Certificate shall entitle the Holder thereof to any benefit under this Agreement, or shall be valid for any purpose, unless there shall appear on such Certificate a certificate of authentication, substantially in the form set forth in the form of Certificates attached hereto as Exhibit A and Exhibit B respectively, executed by the Trustee by manual signature. Such authentication shall constitute conclusive evidence, and the only evidence, that such Certificate has been duly authenticated and delivered hereunder. All Certificates issued on the Closing Date shall be dated the Closing Date. Any Certificates issued thereafter shall be dated the date of their authentication. SECTION 6.3. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES. The Trustee shall maintain, or cause to be maintained, at the office or agency to be maintained by it in accordance with Section 6.9, a Certificate Register in which, subject to such reasonable regulations as it may prescribe, the Trustee shall provide for the registration of Certificates and of transfers and exchanges of Certificates as herein provided. Upon surrender for registration of transfer of any Class A Certificate or Class B Certificate at such office or agency, the Trustee shall execute, authenticate and deliver, in the name of the designated transferee or transferees, one or more new Class A Certificates or Class B Certificates, as the case may be, in authorized denominations of a like aggregate amount. At the option of a Certificateholder, Class A Certificates or Class B Certificates may be exchanged for other Class A Certificates or Class B Certificates, as the case may be, of authorized denominations of a like aggregate amount at the office or agency maintained by the Trustee in accordance with Section 6.9. Every Certificate presented or surrendered for registration of transfer or exchange shall be accompanied by a written instrument of transfer duly executed by the Holder and in a form satisfactory to the Trustee. No service charge shall be made for any registration of transfer or exchange of Certificates, but the Trustee may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Certificates. All Certificates surrendered for registration of transfer or exchange shall be canceled and disposed of in a commercially reasonable manner approved by the Trustee. A Class B Certificate may not be directly or indirectly sold or transferred to, or purchased or acquired by, or on behalf -45- of (1) any employee benefit plan, retirement arrangement, individual retirement account or keogh plan which is subject to either Title I of ERISA, or Section 4975 of the Code (each, a "Plan"), or (2) any entity whose source of funds to be used for the purchase of such Class B Certificate includes the assets of any such Plan, other than an "Insurance Company General Account" as defined in, and which complies with the provisions of, Prohibited Transaction Exemption 95-60 issued by the United States Department of Labor. Every transferee of a Class B Certificate represented by a Book-Entry Certificate shall be deemed to have represented and warranted to the Seller and the Trustee that it is not an entity described in either clause (1) or (2) above. Each transferee of a Definitive Certificate shall deliver a Benefit Plan Affidavit to the Seller and the Trustee in the form of Exhibit E. Neither the Servicer nor the Trustee will incur any liability for any transfers made in accordance with this Section 6.3. 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 duly executed by the Certificateholder or his attorney duly authorized in writing, with such signature guaranteed by an "eligible guarantor institution" meeting the requirements of the Trustee, which requirements include membership or participation in the Securities Transfer Agent's Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Trustee in addition to, or in substitution for, STAMP, all in accordance with the Exchange Act. SECTION 6.4. RESERVED. SECTION 6.5. RESERVED. SECTION 6.6. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If (a) any mutilated Class A Certificate or Class B Certificate shall be surrendered to the Trustee, or if the Trustee shall receive evidence to its satisfaction of the destruction, loss or theft of any Class A Certificate or Class B Certificate and (b) there shall be delivered to the Trustee such security or indemnity as may be required to save the Trustee harmless, then in the absence of notice that such Class A Certificate or Class B Certificate shall have been acquired by a bona fide purchaser, the Trustee shall execute, authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Class A Certificate or Class B Certificate, a new Class A Certificate or Class B Certificate of like tenor and denomination. In connection with the issuance of any new Certificate under this Section 6.6, the Trustee may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Any replacement Certificate issued pursuant to this Section 6.6 -46- shall constitute conclusive evidence of ownership in the Trust, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time. SECTION 6.7. PERSONS DEEMED OWNERS. Prior to due presentation of a Certificate for registration of transfer, the Trustee may treat the Person in whose name any Certificate shall be registered as the owner of such Certificate for the purpose of receiving distributions pursuant to Section 4.5 and for all other purposes, and the Trustee shall not be bound by any notice to the contrary. SECTION 6.8. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES. The Trustee shall furnish or cause to be furnished to the Servicer, within 15 days after receipt by the Trustee of a request therefor from the Servicer in writing, in such form as the Servicer may reasonably require, a list of the names and addresses of the Certificateholders as of the most recent Record Date. If Definitive Certificates have been issued, the Trustee, upon written request by holders of Class A Certificates or Class B Certificates evidencing not less than 25% of the aggregate outstanding principal balance of either the Class A Certificates or the Class B Certificates, as the case may be, will, within fifteen days after the receipt of such request, afford such Class A Certificateholders or Class B Certificateholders access during normal business hours to the most current list of Certificateholders for purposes of communicating with other Certificateholders with respect to their rights under the Agreement. Each Certificateholder, by receiving and holding a Certificate, shall be deemed to have agreed that none of the Seller, the Servicer or the Trustee is accountable by reason of the disclosure of its name and address, regardless of the source from which such information was derived. SECTION 6.9. MAINTENANCE OF OFFICE OR AGENCY. The Trustee shall maintain, or cause to be maintained, at its expense, in the Borough of Manhattan, The City of New York, an office or agency where Certificates may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Trustee in respect of the Certificates and this Agreement may be served. The Trustee initially designates 4 Albany Street, New York, New York 10006 or by mail to the Corporate Trust Office as its office for such purposes. The Trustee shall give prompt written notice to the Servicer and to Certificateholders of any change in the location of any such office or agency. SECTION 6.10. BOOK-ENTRY CERTIFICATES. Upon original issuance, the Class A Certificates and the Class B Certificates shall be issued in the form of one or more typewritten Certificates representing the Book-Entry Certificates, to be delivered to DTC or its custodian, by, or on behalf of, the -47- Seller. Such Certificates shall initially be registered on the Certificate Register in the name of Cede & Co., the nominee of DTC, and no Certificate Owner will receive a definitive certificate representing such Certificate Owner's interest in the Class A Certificates or the Class B Certificates, as the case may be, except as provided in Section 6.12. Unless and until definitive, fully-registered Certificates ("Definitive Certificates") have been issued to Class A Certificateholders or Class B Certificateholders, as the case may be, pursuant to Section 6.12: (i) the provisions of this Section 6.10 shall be in full force and effect; (ii) the Seller, the Servicer and the Trustee may deal with the Clearing Agency for all purposes (including the making of distributions on the Certificates and the taking of actions by the Certificateholders) as the authorized representative of the Certificate Owners; (iii) to the extent that the provisions of this Section 6.10 conflict with any other provisions of this Agreement, the provisions of this Section 6.10 shall control; (iv) the rights of Certificate Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law, the rules, regulations and procedures of the Clearing Agency and agreements between such Certificate Owners and the Clearing Agency and all references in this Agreement to actions by Certificateholders shall refer to actions taken by the Clearing Agency upon instructions from the Clearing Agency Participants, and all references in this Agreement to distributions, notices, reports and statements to Certificateholders shall refer to distributions, notices, reports and statements to the Clearing Agency or its nominee, as registered holder of the Certificates, as the case may be, for distribution to Certificate Owners in accordance with the rules, regulations and procedures of the Clearing Agency; (v) pursuant to the Depository Agreement, DTC will make book-entry transfers among the Clearing Agency Participants and receive and transmit distributions of principal and interest on the Certificates to the Clearing Agency Participants, for distribution by such Clearing Agency Participants to the Certificate Owners or their nominees; and (vi) Certificate Owners may own beneficial interest in Certificates representing original denominations of $1,000 and integral multiples of $1,000 in excess thereof except -48- for any residual amount of Original Class A Principal Balance or Original Class B Principal Balance. For purposes of any provision of this Agreement requiring or permitting actions with the consent of, or at the direction of, Holders of Certificates evidencing specified percentages of the aggregate outstanding principal balance of such Certificates, such direction or consent may be given by Certificate Owners having interests in the requisite percentage, acting through the Clearing Agency. SECTION 6.11. NOTICES TO CLEARING AGENCY. Whenever notice or other communication to the Certificateholders is required under this Agreement unless and until Definitive Certificates shall have been issued to Certificate Owners pursuant to Section 6.12, the Trustee shall give all such notices and communications specified herein to be given to Certificateholders to the Clearing Agency. SECTION 6.12. DEFINITIVE CERTIFICATES. If (i) (A) the Seller advises the Trustee in writing that the Clearing Agency is no longer willing or able properly to discharge its responsibilities under the Depository Agreement and (B) the Trustee or the Servicer is unable to locate a qualified successor, (ii) the Seller, at its option, advises the Trustee in writing that it elects to terminate the book-entry system through the Clearing Agency or (iii) after the occurrence of an Event of Servicing Termination, Holders of Certificates evidencing not less than a majority of the aggregate outstanding principal balance of the Class A Certificates and the Class B Certificates, taken together as a single Class, advise the Trustee and the Clearing Agency through the Clearing Agency Participants in writing, and the Clearing Agency shall so notify the Trustee, that the continuation of a book-entry system through the Clearing Agency is no longer in their best interests, the Trustee shall notify the Clearing Agency which shall be responsible to notify the Certificate Owners 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 by the Clearing Agency of the Certificates registered in the name of the nominee of the Clearing Agency, accompanied by re-registration instructions from the Clearing Agency for registration, the Trustee shall execute, on behalf of the Trust, authenticate and deliver Definitive Certificates in accordance with such instructions. The Servicer shall arrange for, and will bear all costs of, the printing and issuance of such Definitive Certificates. Neither the Seller, the Servicer nor the Trustee shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. Upon the issuance of Definitive Certificates, the Trustee shall recognize the Holders of the Definitive Certificates as Certificateholders hereunder. -49- Definitive Certificates shall be printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Trustee, as evidenced by its execution thereof. Neither the Trust, the Seller, the Servicer nor the Trustee will have any responsibility or obligation to any Clearing Agency Participants or the Persons for whom they act as nominees with respect to (1) the accuracy of any records maintained by DTC or any Clearing Agency Participants, (2) the payment by DTC or any Clearing Agency Participant of any amount due to any beneficial owner in respect of the Principal Balance of, or interest on, the Certificates, (3) the delivery by any Clearing Agency Participant of any notice to any Certificate Owner which is required or permitted hereunder to be given to Certificateholders or (4) any other action taken by DTC or its nominee as the Certificateholder. ARTICLE VII THE SELLER SECTION 7.1. REPRESENTATIONS OF SELLER. The Seller makes the following representations on which the Trustee is deemed to have relied in accepting the Receivables and other Trust Property in trust and in executing and authenticating the Certificates. The representations are being made as of the execution and delivery of this Agreement and shall survive the sale and assignment of the Receivables and other Trust Property to the Trustee. (a) ORGANIZATION AND GOOD STANDING. The Seller is duly organized and validly existing as a corporation in the State of Ohio with the corporate power and authority to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted, and had at all relevant times, and has, the power, authority and legal right to acquire and own the Receivables. (b) POWER AND AUTHORITY OF THE SELLER. The Seller has the corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder; the Seller has full corporate power and authority to sell and assign the property to be sold and assigned to and deposited with the Trustee and the Seller has duly authorized such sale and assignment to the Trustee by all necessary corporate action; and the execution, delivery and performance of this Agreement been duly authorized by the Seller by all necessary corporate action. (c) BINDING OBLIGATION. This Agreement constitutes a legal, valid and binding obligation of the Seller, -50- enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization and similar laws now or hereafter in effect relating to creditors' rights generally and subject to general principles of equity (whether applied in a proceeding at law or in equity). (d) NO VIOLATION. The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof do not result in any breach of any of the terms and provisions of, nor constitute (with or without notice or lapse of time or both) a default under, the articles of incorporation or code of regulations of the Seller, or any indenture, agreement or other instrument to which the Seller 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 pursuant to this Agreement); nor violate any law or, to the best of its knowledge, any order, rule or regulation applicable to the Seller of any court or of any Federal or State regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Seller or its properties. (e) NO PROCEEDINGS. There are no proceedings or investigations pending against the Seller or, to its best knowledge, threatened against the Seller, before any court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Seller or its properties: (i) asserting the invalidity of this Agreement or the Certificates, (ii) seeking to prevent the issuance of the Certificates or the consummation of any of the transactions contemplated by this Agreement, (iii) seeking any determination or ruling that could reasonably be expected to have a material and adverse effect on the performance by the Seller of its obligations under, or the validity or enforceability of this Agreement or the Certificates or (iv) seeking to affect adversely the Federal or State income tax or ERISA attributes of the Trust or the Certificates. (f) ALL CONSENTS. All authorizations, consents, orders or approvals of or registrations or declarations with any court, regulatory body, administrative agency or other government instrumentality required to be obtained, effected or given by the Seller in connection with the execution and delivery by the Seller of this Agreement and the performance by the Seller of the transactions contemplated by this Agreement have been duly obtained, effected or given and are in full force and effect, except where failure to obtain the -51- same would not have a material adverse effect upon the rights of the Trust or the Certificateholders. SECTION 7.2. SPECIAL PURPOSE ENTITY. The Seller has been formed as a special purpose entity whose business shall be limited to those activities specified in its articles of incorporation. The Seller agrees that it shall not, under any circumstances, seek the protection of federal bankruptcy laws or any similar state or local laws providing for the relief of debtors. SECTION 7.3. LIABILITY OF SELLER; INDEMNITIES. The Seller shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Seller under this Agreement. (a) The Seller shall indemnify, defend and hold harmless the Trust and the Trustee and the Trustee's officers, directors, employees and agents from and against any taxes that may at any time be asserted against any such Person with respect to the transactions contemplated in this Agreement (except any income taxes arising out of fees paid to the Trustee and except any taxes to which the Trustee may otherwise be subject to not related to this Agreement), including any sales, gross receipts, general corporation, tangible 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 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 or in connection with any application relating to the Certificates under any State securities laws. (b) The Seller shall indemnify, defend and hold harmless the Trust, the Trustee and the Certificateholders and the officers, directors, employees and agents of the Trustee from and against any and all costs, expenses, losses, claims, damages and liabilities to the extent arising out of, or imposed upon such Person through (i) the Seller'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 (ii) the Seller's or the Trust's violation of Federal or State securities laws in connection with the offering and sale of the Certificates or in connection with any application relating to the Certificates under any State securities laws. (c) The Seller shall be liable as primary obligor for, and shall indemnify, defend and hold harmless the -52- Trustee and its officers, directors, employees and agents from and against any and all costs, expenses, losses, claims, damages and liabilities (including reasonable attorneys' fees and expenses) arising out of, or incurred in connection with, this Agreement, the Trust Property, the acceptance or performance of the trusts and duties set forth herein or the action or the inaction of the Trustee hereunder (including the Trustee's execution of any Arizona tax return pursuant to Section 4.7(c)) except to the extent that such cost, expense, loss, claim, damage or liability: (i) shall be due to the willful misfeasance, bad faith or negligence of the Trustee or (ii) shall arise from any breach by the Trustee of its covenants, representations or warranties under this Agreement. Such liability shall survive the termination of the Trust. (d) The Seller shall pay any and all taxes levied or assessed upon all or any part of the Trust Property (other than those taxes expressly excluded from the Seller's responsibilities pursuant to the parentheticals in paragraph (a) above). Indemnification under this Section shall survive the resignation or removal of the Trustee and the termination of this Agreement and shall include reasonable fees and expenses of counsel and other expenses of litigation. If the Seller shall have made any indemnity payments pursuant to this Section and the Person to or on behalf of whom such payments are made thereafter shall collect any of such amounts from others, such Person shall promptly repay such amounts to the Seller, without interest. SECTION 7.4. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF, SELLER. Any Person (a) into which the Seller may be merged or consolidated, (b) which may result from any merger or consolidation to which the Seller shall be a party or (c) which may succeed to the properties and assets of the Seller substantially as a whole, shall be the successor to the Seller without the execution or filing of any document or any further act by any of the parties to this Agreement; PROVIDED, HOWEVER, that the Seller hereby covenants that it will not consummate any of the foregoing transactions except upon satisfaction of the following: (i) the surviving Seller if other than Banc One ABS Corporation, either (a) executes an agreement of assumption to perform every obligation of the Seller under this Agreement or (b) delivers to the Trustee an Opinion of Counsel stating that the surviving Seller is obligated to perform every obligation of the Seller under this Agreement without the execution of an agreement of assumption or any other action not previously taken by the surviving Seller, (ii) immediately after giving effect to such transaction, no representation or warranty made pursuant to Section 2.2 or 7.1 shall have been breached, (iii) the Seller shall have delivered to the Trustee an Officers' -53- Certificate and an Opinion of Counsel each stating that such consolidation, merger or succession and such agreement of assumption, if any, comply with this Section and that all conditions precedent, if any, provided for in this Agreement relating to such transaction have been complied with, and that the Rating Agency Condition shall have been satisfied with respect to such transaction, (iv) such transaction will not result in a material adverse Federal or State tax consequence to the Trust or the Certificateholders and (v) unless Banc One ABS Corporation is the surviving entity, the Seller shall have delivered to the Trustee 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 interests. SECTION 7.5. LIMITATION ON LIABILITY OF SELLER AND OTHERS. The Seller and any director or officer or employee or agent of the Seller may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any Person respecting any matters arising under this Agreement (provided that such reliance shall not limit in any way the Seller's obligations under Section 2.2). The Seller 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 except this shall not relieve the Seller from its obligations to indemnify pursuant to Section 7.3. SECTION 7.6. SELLER MAY OWN CERTIFICATES. The Seller and any Affiliate thereof may in its individual or any other capacity become the owner or pledgee of Certificates with the same rights as it would have if it were not the Seller or an Affiliate thereof, except as expressly provided herein. ARTICLE VIII THE SERVICER SECTION 8.1. REPRESENTATIONS OF SERVICER. The Servicer makes the following representations on which the Trustee is deemed to have relied in accepting the Receivables and other Trust Property in trust and in authenticating the Certificates. The representations are being made as of the execution and delivery of this Agreement and shall survive the sale and assignment of the Receivables and other Trust Property to the Trustee. -54- (a) ORGANIZATION AND GOOD STANDING. The Servicer is duly organized and validly existing as a national banking association with the corporate power and authority to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted, and had at all relevant times, and has, the power, authority and legal right to service the Receivables. (b) DUE QUALIFICATION. The Servicer is duly qualified to do business and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business (including the servicing of the Receivables as required by this Agreement) shall require such qualifications. (c) POWER AND AUTHORITY OF THE SERVICER. The Servicer has the corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder, and the execution, delivery and performance of this Agreement have been duly authorized by the Servicer by all necessary corporate action. All authorizations, consents, orders or approvals of or registrations or declarations with any court, regulatory body, administrative agency or other government instrumentality required to be obtained, effected or given by the Servicer in connection with the execution and delivery by the Servicer of this Agreement and the performance by the Servicer of the transactions contemplated by this Agreement have been duly obtained, effected or given and are in full force and effect, except where failure to obtain the same would not have a material adverse effect upon the rights of the Trust or the Certificateholders. (d) BINDING OBLIGATION. This Agreement constitutes a legal, valid and binding obligation of the Servicer, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization and similar laws now or hereafter in effect relating to creditors' rights generally or the rights of creditors of banks the deposit accounts of which are insured by the FDIC, and subject to general principles of equity (whether applied in a proceeding of law or in equity). (e) NO VIOLATION. The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof do not result in any breach of any of the terms and provisions of, nor constitute (with or without notice or lapse of time or both) a default under the articles of association or by-laws of the Servicer, or any material 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 -55- the terms of any such indenture, agreement or other instrument (other than pursuant to this Agreement); nor violate any law or, to the best of its 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. (f) NO PROCEEDINGS. There are no proceedings or investigations pending against the Servicer, or, to its best knowledge, threatened against the Servicer, before any court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Servicer or its properties: (i) asserting the invalidity of this Agreement or the Certificates, (ii) seeking to prevent the issuance of the Certificates or the consummation of any of the transactions contemplated by this Agreement, (iii) seeking any determination or ruling that could reasonably be expected to have a material and adverse effect on the performance by the Servicer of its obligations under, or the validity or enforceability of this Agreement or the Certificates or (iv) seeking to affect adversely the Federal or State income tax or ERISA attributes of the Trust or the Certificates. (g) NO AMENDMENT OR WAIVER. No provision of any Receivable has been waived, altered or modified in any respect, except pursuant to a document, instrument or writing included in the relevant Receivable File, and no such amendment, waiver, alteration or modification causes such Receivable not to conform to the other warranties contained in this Section or those of the Seller contained in Section 2.2. (h) LOCATION OF RECEIVABLE FILES. The Receivable Files are kept in the offices of the Servicer, specified in Schedule B, or at such other office specified in accordance with Section 2.4. SECTION 8.2. 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. The Servicer shall indemnify, defend and hold harmless the Trust, the Trustee, the Seller and the Certificateholders and any of the officers, directors, employees and agents of the Trustee or the Seller from any and all costs, expenses, losses, claims, damages and liabilities (including reasonable attorneys' fees and expenses) to the extent arising out of, or imposed upon any such Person through, the negligence, willful misfeasance or bad faith of the Servicer in the performance of its obligations and duties under this Agreement, the performance of the obligations and duties of Valley National under the Loan Purchase -56- and Servicing Agreement or in the performance of the obligations and duties of any other subservicer under any other subservicing agreement or by reason of the reckless disregard of its obligations and duties under this Agreement or by reason of the reckless disregard of the obligations of Valley National under the Loan Purchase and Servicing Agreement or any other subservicer under any other subservicing agreement, where the final other determination that any such cost, expense, loss, claim, damage or liability arose out of, or was imposed upon any such Person through, any such negligence, willful misfeasance, bad faith or recklessness on the part of the Servicer, Valley National or any other subservicer, is established by a court of law, by an arbitrator or by way of settlement agreed to by the Servicer. Notwithstanding the foregoing, if the Servicer is rendered unable, in whole or in part, by virtue of an act of God, act of war, fires, earthquake or other natural disasters, to satisfy its obligations under this Agreement, the Loan Purchase and Servicing Agreement or any subservicing agreement, the Servicer shall not be deemed to have breached any such obligation upon the sending of written notice of such event to the other parties hereto, for so long as the Servicer remains unable to perform such obligation as a result of such event. This provision shall not be construed to limit the Servicer's, Valley National's, any subservicer's or any other party's rights, obligations, liabilities, claims or defenses which arise as a matter of law or pursuant to any other provision of this Agreement, the Loan Purchase and Servicing Agreement or any subservicing agreement. The Servicer shall indemnify, defend and hold harmless the Trust, the Trustee, the Seller, the Certificateholders or any of the officers, directors, employees and agents of the Trustee or the Seller from any and all costs, expenses, losses, claims, damages and liabilities (including reasonable attorneys' fees and expenses) to the extent arising out of or imposed upon any such Person as a result of any compensation payable to any subcustodian or subservicer (including any fees payable in connection with the release of any Receivable File from the custody of such subservicer or in connection with the termination of the servicing activities of such subservicer with respect to any Receivable) whether pursuant to the terms of any subservicing agreement or otherwise. SECTION 8.3. 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 or (c) which may succeed to the properties and assets of the Servicer, substantially as a whole, shall be the successor to the Servicer without the execution or filing of any document or any further act by any of the parties to this Agreement; PROVIDED, HOWEVER, that the Servicer hereby covenants that it -57- will not consummate any of the foregoing transactions except upon satisfaction of the following: (i) the surviving Servicer if other than Bank One, Arizona, NA, either (a) executes an agreement of assumption to perform every obligation of the Servicer under this Agreement or (b) delivers to the Trustee an Opinion of Counsel stating that the surviving Servicer is obligated to perform every obligation of the Servicer under this Agreement without the execution of an agreement of assumption or other action not previously taken by the surviving Servicer, (ii) immediately after giving effect to such transaction, no representation or warranty made pursuant to Section 8.1 shall have been breached and no Event of Servicing Termination, and no event that, after notice or lapse of time, or both, would become an Event of Servicing Termination shall have occurred and be continuing, (iii) 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, if any, comply with this Section and that all conditions precedent, if any, provided for in this Agreement relating to such transaction have been complied with, and that the Rating Agency Condition shall have been satisfied with respect to such transaction, and (iv) such transaction will not result in a material adverse Federal or State tax consequence to the Trust or the Certificateholders. SECTION 8.4. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. Neither the Servicer nor any of its directors, officers, employees or agents 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 in good faith by the Servicer or any subservicer pursuant to this Agreement or for errors in judgment; 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, Valley National or any other subservicer and any of their respective directors, officers, employees or agents 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 otherwise provided in this Agreement the Servicer shall not be under any obligation to appear in, prosecute or defend any legal action that shall be incidental to its duties to service the Receivables in accordance with this Agreement, and that in its opinion may involve it in any expense or liability; PROVIDED, HOWEVER, that the Servicer, may (but shall not be required to) undertake any reasonable action that it may deem necessary or desirable in respect of this Agreement to -58- protect the interests of the Certificateholders under this Agreement. SECTION 8.5. BANK ONE, ARIZONA, NA NOT TO RESIGN AS SERVICER. Subject to the provisions of Section 8.3, Bank One, Arizona, NA, hereby agrees not to resign from the obligations and duties hereby imposed on it as Servicer under this Agreement except upon determination that the performance of its duties hereunder shall no longer be permissible under applicable law or if such resignation is required by regulatory authorities. Notice of any such determination permitting the resignation of Bank One, Arizona, NA, as Servicer shall be communicated to the Trustee at the earliest practicable time (and, if such communication is not in writing, shall be confirmed in writing at the earliest practicable time) and any such determination shall be evidenced by an Opinion of Counsel to such effect delivered to the Trustee concurrently with or promptly after such notice. No such resignation shall become effective until the earlier of the Trustee or a successor Servicer having assumed the responsibilities and obligations of the resigning Servicer in accordance with Section 9.2 or the date upon which any regulatory authority requires such resignation. SECTION 8.6. EXISTENCE. Subject to the provisions of Sections 7.4 and 8.3, during the term of this Agreement, Bank One, Arizona, NA, will keep in full force and effect its existence, rights and franchises as a national banking association under the laws of the United States and will obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Agreement and each other instrument or agreement necessary or appropriate to the proper administration of this Agreement and the transactions contemplated hereby. SECTION 8.7. TAX ACCOUNTING. The Servicer shall prepare any Federal tax returns of the Trust in accordance with the Code and any regulations (including, to the extent applicable by their terms, proposed regulations) thereunder. To the extent not inconsistent with any such regulations, such returns shall be prepared in a manner consistent with the following rules: (a) The Class A Certificateholders shall be treated as owning the Class A Percentage of Interest Collections (but limited to the Class A Certificate Rate plus the Servicing Fee Rate) and Principal Collections and the Class B Certificateholders shall be treated as owning the Class B Percentage of Interest Collections (but limited to the Class B Certificate Rate plus the Servicing Fee Rate) and Principal Collections. The Seller shall be treated as having retained the stripped coupons on the Class A Percentage and the Class B Percentage of each Receivable equal to the difference between the -59- APR of such Receivable and the portion owned by the Class A and Class B Certificateholders, respectively, pursuant to this paragraph. (b) To the extent that as a result of the subordination provisions of this Agreement, actual cash distributions to the Class B Certificateholders are less than the amount set forth in subsection (a), the Class B Certificateholders shall be deemed to have (i) received the amount set forth in subsection (a), (ii) paid such difference to the Class A Certificateholders pursuant to a guaranty of the Class A Certificates, and (iii) become subrogated to the rights of the Class A Certificateholders to recovery of the amounts so paid. ARTICLE IX SERVICING TERMINATION SECTION 9.1. EVENTS OF SERVICING TERMINATION. If any one of the following events ("Events of Servicing Termination") shall occur and be continuing: (a) any failure by the Servicer to deliver to the Trustee for deposit in any of the Accounts or the Reserve Fund any required payment or to direct the Trustee or the Collateral Agent, as applicable, to make any required distributions therefrom that shall continue unremedied for a period of five Business Days after written notice of such failure is received by the Servicer from the Trustee or the Collateral Agent, as applicable, or after discovery of such failure by an Authorized Officer of the Servicer; or (b) any failure by the Servicer duly to observe or to perform in any material respect any other covenants or agreements of the Servicer set forth in this Agreement, which failure shall (i) materially and adversely affect the rights of either the Class A Certificateholders or the Class B Certificateholders and (ii) 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 (A) to the Servicer by the Trustee or (B) to the Servicer and to the Trustee by Holders of Certificates evidencing not less than 25% of the aggregate outstanding principal balance of the Class A Certificates and Class B Certificates taken together as a single class (or for such longer period, not in excess of 120 days, as may be reasonably necessary to remedy such default; provided that such default is capable of remedy within 120 days and the Servicer delivers an Officers' Certificate to the Trustee to such effect and to the effect that the Servicer has -60- commenced or will promptly commence, and will diligently pursue, all reasonable efforts to remedy such default); or (c) an Insolvency Event occurs with respect to the Servicer or any successor; then, and in each and every case, so long as the Event of Servicing Termination shall not have been remedied within any applicable cure period, either the Trustee, or the Holders of Certificates evidencing not less than a majority of the aggregate outstanding principal balance of the Class A Certificates and the Class B Certificates taken together as a single class, by notice then given in writing to the Servicer and the Trustee may terminate all the rights and obligations (other than the obligations set forth in Section 8.2) of the Servicer under this Agreement. On or after the receipt by the Servicer of such written notice, all authority and power of the Servicer under this Agreement, whether with respect to the Certificates or the Receivables or otherwise, shall, without further action, pass to and be vested in the Trustee or such successor Servicer as may be appointed under Section 9.2; 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 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 by it 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 shall be paid by the predecessor Servicer upon presentation of reasonable documentation of such costs and expenses. Upon receipt of notice of the occurrence of an Event of Servicing Termination, the Trustee shall give notice thereof to the Rating Agencies. SECTION 9.2. APPOINTMENT OF SUCCESSOR. (a) Upon the Servicer's receipt of notice of termination, pursuant to Section 9.1 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 -61- resignation, until the earlier 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 termination hereunder, the Trustee shall appoint a successor Servicer, and the successor Servicer shall accept its 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, the Trustee without further action shall automatically be appointed the successor Servicer and the Trustee shall be entitled to the Servicing Fee. Notwithstanding the above, the Trustee shall, if it shall be unwilling or unable so to act, appoint or petition a court of competent jurisdiction to appoint, any established 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. (b) Upon appointment, the successor Servicer (including the Trustee acting as successor servicer) shall be the successor in all respects to the predecessor Servicer and shall be subject to all the responsibilities, duties and liabilities of the Servicer arising thereafter and shall be entitled to the Servicing Fee and all the rights granted to the Servicer by the terms and provisions of this Agreement. No successor Servicer shall be liable for any acts or omissions of any predecessor Servicer. (c) The Servicer may not resign unless it is prohibited from serving as such by law or by requirement of any regulatory authority. SECTION 9.3. PAYMENT OF SERVICING FEE. If the Servicer shall change, the predecessor Servicer shall be entitled to receive any accrued and unpaid Servicing Fees through the date of the successor Servicer's acceptance hereunder in accordance with Section 3.8. SECTION 9.4. NOTIFICATION TO CERTIFICATEHOLDERS. Upon any termination of, or appointment of a successor to, the Servicer pursuant to this Article IX, the Trustee shall give prompt written notice thereof to Certificateholders and the Rating Agencies. SECTION 9.5. WAIVER OF PAST EVENTS OF SERVICING TERMINATION. The Holders of Certificates evidencing not less than a majority of the aggregate outstanding principal balance of the Class A Certificates and the Class B Certificates taken -62- together as a single class, may, on behalf of all Certificateholders, waive in writing 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 any of the Accounts or the Reserve Fund in accordance with this Agreement. Upon any such waiver of a past default, such default shall cease to exist, and any Events of Servicing Termination 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 thereto. ARTICLE X THE TRUSTEE SECTION 10.1. ACCEPTANCE BY TRUSTEE. The Trustee, by its execution of this Agreement, accepts all consideration conveyed by the Seller pursuant to Section 2.1 and the Trust created hereunder and declares that it shall hold such consideration in trust upon the terms hereof set forth for the benefit of the Certificateholders. SECTION 10.2. DUTIES OF TRUSTEE. (a) The Trustee, both prior to and after the curing of an Event of Servicing Termination, undertakes to perform only such duties as are specifically set forth in this Agreement and no implied covenants or obligations shall be read into this Agreement against the Trustee. If an Event of Servicing Termination shall have occurred and shall not have been cured (the appointment of a successor Servicer (including the Trustee) to constitute a cure for the purposes of this Article), the Trustee shall exercise such of the rights and powers vested in it by this Agreement, and shall use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs; PROVIDED, HOWEVER, that if the Trustee assumes the duties of the Servicer pursuant to Section 9.2, the Trustee in performing such duties shall use the degree of skill and attention required by Section 3.1. (b) The Trustee, upon receipt of all resolutions, certificates, statements, opinions, reports, documents, orders or other instruments furnished to the Trustee that are required specifically to be furnished pursuant to any provision of this Agreement, shall examine them to determine whether they conform to the requirements of this Agreement. (c) No provision of this Agreement shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, its own bad faith or its own willful misconduct; PROVIDED, HOWEVER, that: -63- (i) Prior to the occurrence of an Event of Servicing Termination, and after the curing of all such Events of Servicing Termination that may have occurred, the duties and obligations of the Trustee shall be determined solely by the express provisions of this Agreement, the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Agreement, no implied covenants or obligations shall be read into this Agreement against the Trustee, the permissible right of the Trustee (solely in its capacity as such) to do things enumerated in this Agreement shall not be construed as a duty and, in the absence of bad faith on the part of the Trustee, or manifest error, the Trustee (solely in its capacity as such) may conclusively rely on the truth of the statements and the correctness of the opinions expressed upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Agreement; (ii) The Trustee shall not be liable for an error of judgment made in good faith by an officer of the Trustee, unless it shall be proved that the Trustee shall have been negligent in ascertaining the pertinent facts; and (iii) The Trustee shall not be liable with respect to any action taken, suffered, or omitted to be taken in good faith in accordance with the direction of the Holders of Certificates evidencing not less than a majority of the aggregate outstanding principal balance of the Class A Certificates and the Class B Certificates taken together as a single class, as set forth in Section 9.1, relating to the time, method and place of conducting any proceeding or any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Agreement. (d) The Trustee (solely in its capacity as such) shall not be required to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that the repayment of such funds or adequate indemnity reasonably satisfactory to it 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. (e) Except for actions expressly authorized by this Agreement, the Trustee shall take no action reasonably likely to impair the security interests created or existing under any -64- Receivable or Financed Vehicle or to impair the value of any Receivable or Financed Vehicle. (f) The Trustee shall have no power to vary the corpus of the Trust including (i) accepting any substitute obligation for a Receivable initially assigned to the Trustee under this Agreement, (ii) adding any other investment, obligation or security except for investments of moneys in the Accounts as permitted in this Agreement, or (iii) withdrawing any Receivable, except for a withdrawal permitted under this Agreement. SECTION 10.3. TRUSTEE'S CERTIFICATE. As soon as practicable after each Transfer Date on which Receivables shall be assigned to the Seller pursuant to Section 2.3 or 11.2, as applicable, or to the Servicer pursuant to Section 3.7, the Trustee shall execute a certificate, prepared by the Servicer, including its date and the date of the Agreement, and accompanied by a copy of the Servicer's Certificate for the related Collection Period. The Trustee's certificate shall operate, as of such Transfer Date, as an assignment pursuant to Section 10.4. SECTION 10.4. TRUSTEE'S ASSIGNMENT OF PURCHASED RECEIVABLES. With respect to all Receivables repurchased by the Seller or the Bank pursuant to Section 2.3 or 11.2, or purchased by the Servicer pursuant to Section 3.7, the Trustee shall assign, without recourse, representation or warranty, to the Seller, the Bank or to 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 and all other Trust Property conveyed pursuant to Section 2.1 with respect to such Receivables. Such assignment shall be a sale and assignment outright, and not for security. If, in any enforcement suit or legal proceeding, it is held that the Seller, the Bank or the Servicer, as the case may be, may not enforce any such Receivable on the ground that it shall not be a real party in interest or a holder entitled to enforce the Receivable, the Trustee shall, at the expense of the Seller or the Servicer, as the case may be, take such steps as the Seller or the Servicer, as the case may be, deems necessary to enforce the Receivable, including bringing suit in the Trustee's name or the names of the Certificateholders. SECTION 10.5. CERTAIN MATTERS AFFECTING THE TRUSTEE. Except as otherwise provided in Section 10.2: (i) The Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate of auditors or accountants or any other certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, appraisal, bond, note or other paper or document believed by it to be genuine and to -65- have been signed or presented by the proper party or parties. (ii) The Trustee may consult with counsel and any Opinion of Counsel or any advice of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted by it under this Agreement in good faith and in accordance with such Opinion of Counsel or any advice of such counsel. (iii) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement, or to institute, conduct or defend any litigation under this Agreement or in relation to this Agreement, at the request, order or direction of any of the Certificateholders pursuant to the provisions of this Agreement, unless such Certificateholders shall have offered to the Trustee reasonable security or indemnity satisfactory to it against the costs, expenses, and liabilities that may be incurred therein or thereby. (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, rights or powers conferred upon it by this Agreement; PROVIDED, HOWEVER, that the Trustee's conduct does not constitute willful misfeasance, negligence or bad faith. (v) Prior to the occurrence of an Event of Servicing Termination and after the curing of all Events of Servicing Termination that may have occurred, the Trustee shall not be bound to make any investigation into the facts of any matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, direction, order, approval, bond, note or other paper or document, unless requested in writing so to do by Holders of Certificates evidencing not less than a majority of the aggregate outstanding principal balance of the Class A Certificates and the Class B Certificates taken together as a single class; PROVIDED, HOWEVER, that if the payment within a reasonable time to the Trustee of the costs, expenses, or liabilities likely to be incurred by it in the making of an investigation requested by the Certificateholders is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Agreement, the Trustee may require reasonable indemnity satisfactory to it against such cost, expense, or liability as a condition to so proceeding. The reasonable expense of every such examination shall be paid by the Servicer, or, if paid by the Trustee, shall be reimbursed by the Servicer upon demand. Nothing in this clause (v) shall affect the obligation of the Servicer to -66- observe any applicable law prohibiting disclosure of information regarding the Obligors; PROVIDED, FURTHER, that the Trustee shall be entitled to make such further inquiry or investigation into such facts or matter as it may reasonably see fit, and if the Trustee shall determine to make such further inquiry or investigation it shall be entitled to examine the books and records of the Servicer or the Seller, personally or by agent or attorney, at the sole cost and expense of the Servicer or Seller, as the case may be. (vi) The Trustee may execute any of the trusts or powers hereunder or perform any duties under this Agreement either directly or by or through agents, attorneys, nominees or a custodian, and shall not be liable for the acts of such agents, attorneys, nominees or custodians provided that they have been appointed with due care. (vii) The Trustee shall not be required to make any initial or periodic examination of any documents or records related to the Receivables or Financed Vehicles for the purpose of establishing the presence or absence of defects, the compliance by the Seller with their representations and warranties or for any other purpose. SECTION 10.6. TRUSTEE NOT LIABLE FOR CERTIFICATES OR RECEIVABLES. The Trustee assumes no responsibility for the correctness of the recitals contained herein and in the Certificates (other than the Trustee's execution of, and the certificate of authentication on, the Certificates). Except as expressly provided herein, the Trustee makes no representations as to the validity or sufficiency of this Agreement or of the Certificates (other than the Trustee's execution of, and the certificate of authentication on, the Certificates), or of any Receivable or related document, or for the validity of the execution by the Seller and the Servicer of this Agreement or of any supplements hereto or instruments of further assurance, or for the sufficiency of the Trust Property hereunder, and the Trustee shall not be bound to ascertain or inquire as to the performance or observance of any covenants, conditions or agreements on the part of the Seller or the Servicer under this Agreement except as herein set forth; but the Trustee may require the Seller or the Servicer to provide full information and advice as to the performance of the aforesaid covenants, conditions and agreements. The Trustee (solely in its capacity as such) shall have no obligation to perform any of the duties of the Seller or the Servicer, except as explicitly set forth in this Agreement. The Trustee shall have no liability in connection with compliance of the Servicer or the Seller with statutory or regulatory requirements related to the Receivables. The Trustee shall not make or be deemed to have made any representations or warranties with respect to the Receivables or the validity or sufficiency of -67- any assignment of the Receivables to the Trust or the Trustee. The Trustee (solely in its capacity as such) shall at no time have any responsibility or liability for, or with respect to, the legality, validity or enforceability of any security interest in any Financed Vehicle or (prior to the time, if any, that the Servicer is terminated as custodian hereunder) any Receivable, or the perfection and priority of such a security interest or the maintenance of any such perfection and priority, the efficacy of the Trust or its ability to generate funds sufficient to provide for the payments to be distributed to Certificateholders under this Agreement, the existence, condition, location and ownership of any Financed Vehicle, the existence and contents of any Receivable or any computer or other record thereof, the validity of the assignment of any Receivable to the Trust or of any intervening assignment, the completeness of any Receivable, the performance or enforcement of any Receivable, the compliance by the Seller with any warranty or representation made under this Agreement or in any related document and the accuracy of any such warranty or representation, prior to the Trustee's receipt of notice or other discovery of any noncompliance therewith or any breach thereof, any investment of monies by the Servicer or any loss resulting therefrom (it being understood that the Trustee shall remain responsible for any Trust Property that it may hold), the acts or omissions of the Seller, the Servicer, or any Obligor, any action of the Servicer taken in the name of the Trustee, or any action by the Trustee taken at the instruction of the Servicer (PROVIDED that such instruction is not in express violation of the terms and provisions of this Agreement); PROVIDED, HOWEVER, that the foregoing shall not relieve the Trustee of its obligation to perform its duties under this Agreement. Except with respect to a claim based on the failure of the Trustee to perform its duties under this Agreement (whether in its capacity as Trustee or as successor Servicer) or based on the Trustee's willful misfeasance, negligence or bad faith, or based on the Trustee's breach of a representation and warranty contained in Section 10.14, no recourse shall be had to the Trustee (whether in its individual capacity or as Trustee) for any claim based on any provision of this Agreement, the Certificates or any Receivable or assignment thereof against the Trustee in its individual capacity; the Trustee shall not have any personal obligation, liability, or duty whatsoever to any Certificateholder or any other Person with respect to any such claim. The Trustee shall not be accountable for the use or application by the Seller of the proceeds of such Certificates, or for the use or application of any funds paid to the Servicer in respect of the Receivables prior to the time such amounts are deposited in the Collection Account (whether or not the Collection Account is maintained with the Trustee). The Trustee shall have no liability for any losses from the investment or reinvestment in Eligible Investments made in accordance with Section 4.1. -68- SECTION 10.7. 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 10.8. TRUSTEE'S FEES AND EXPENSES. The Servicer agrees to pay to the Trustee, and the Trustee shall be entitled to, reasonable compensation as is agreed upon in writing between the Trustee and the Servicer (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust) for all services rendered by it in the execution of the trusts created by this Agreement and in the exercise and performance of any of the powers and duties under this Agreement as Trustee, and the Servicer shall pay or reimburse the Trustee upon its request for all reasonable expenses (including, without limitation, expenses incurred in connection with notices or other communications to Certificateholders), disbursements and advances (including the reasonable compensation and the reasonable expenses and disbursements of its counsel and of all persons not regularly in its employ) incurred or made by the Trustee in accordance with any of the provisions of this Agreement (including the reasonable fees and expenses of its agents, any co-trustee and counsel) or in defense of any action brought against it in connection with this Agreement except any such expense, disbursement, or advance as may arise from its negligence, willful misfeasance or bad faith. The Servicer's covenant to pay the expenses, disbursements and advances provided for in the preceding sentence and the Servicer's indemnity pursuant to Section 8.2 shall survive the termination of this Agreement. SECTION 10.9. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The trustee shall be organized and doing business under the banking laws of such State or of the United States, shall be authorized under such laws to exercise corporate trust powers, shall have a combined capital and surplus of at least $50,000,000, shall have a credit rating of at least Baa3 from Moody's and shall be subject to supervision or examination by Federal or State banking authorities. If such corporation shall publish reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purpose of this Section 10.9, the consolidated net worth of such corporation shall be deemed to be its consolidated capital and surplus as set forth in its most recent consolidated report of condition so published. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 10.9, the Trustee shall resign immediately in the manner and with the effect specified in Section 10.10. -69- SECTION 10.10. RESIGNATION OR REMOVAL OF TRUSTEE. (a) The Trustee may at any time resign and be discharged from the trusts hereby created by giving 30 days' prior written notice thereof to the Servicer. Upon receiving such notice of resignation, the Servicer shall promptly appoint a successor Trustee, by written instrument, in duplicate, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor Trustee. If no successor Trustee shall have been so appointed and have accepted appointment within 30 days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (b) If at any time the Trustee shall cease to be eligible in accordance with the provisions of Section 10.9 and shall fail to resign after written request therefor by the Servicer, or if at any time the Trustee shall be legally unable to act, or shall be adjudged bankrupt or insolvent, or a receiver, conservator or liquidator of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then the Servicer may remove the Trustee. If the Trustee is removed under the authority of the immediately preceding sentence, the Servicer shall promptly appoint a successor trustee by written instrument, in duplicate, one copy of which instrument shall be delivered to the Trustee so removed, the successor Trustee, the Certificateholders at their respective addresses of record and the Rating Agencies. (c) Any resignation or removal of the Trustee and appointment of a successor Trustee pursuant to any of the provisions of this Section 10.10 shall not become effective until acceptance of appointment by the successor Trustee pursuant to Section 10.11. (d) The respective obligations of the Seller and the Servicer described in this Agreement shall survive the removal or resignation of the Trustee as provided in this Agreement. SECTION 10.11. SUCCESSOR TRUSTEE. (a) Any successor Trustee appointed pursuant to Section 10.10 shall execute, acknowledge, and deliver to the Servicer and to its predecessor Trustee an instrument accepting such appointment under this Agreement, and thereupon the resignation or removal of the predecessor Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become fully vested with all rights, powers, duties and obligations of its predecessor under this Agreement, with like effect as if originally named as Trustee. The predecessor Trustee shall deliver to the successor Trustee all documents and statements held by it under this Agreement, and the Servicer and -70- the predecessor Trustee shall execute and deliver such instruments and do such other things as may reasonably be required for fully and certainly vesting and confirming in the successor Trustee all such rights, powers, duties and obligations. (b) No successor Trustee shall accept appointment as provided in this Section 10.11 unless at the time of such acceptance such successor Trustee shall be eligible pursuant to Section 10.9. (c) Upon acceptance of appointment by a successor Trustee pursuant to this Section 10.11, the Servicer shall mail notice of such acceptance by the successor Trustee under this Agreement to all Certificateholders at their respective addresses of record and to the Rating Agencies. If the Servicer shall fail to mail such notice within ten 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 10.12. MERGER OR CONSOLIDATION OF TRUSTEE. Any corporation or banking association which is eligible to be a successor Trustee under Section 10.9 (i) into which the Trustee may be merged or consolidated, (ii) that may result from any merger, conversion, or consolidation to which the Trustee shall be a party, or (iii) that may succeed by purchase and assumption to the business of the Trustee, where the Trustee is not the surviving entity, which corporation or banking association executes an agreement of assumption to perform every obligation of the Trustee under this Agreement, shall be the successor of the Trustee hereunder, without the execution or filing of any instrument or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. The Trustee shall promptly notify the Servicer and the Rating Agencies of any such merger, conversion, consolidation or purchase and assumption where the Trustee is not the surviving entity. SECTION 10.13. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE. (a) Notwithstanding any other provisions of this Agreement, at any time, for the purpose of meeting any legal requirements of any jurisdiction in which any part of the Trust Property or any Financed Vehicle may at the time be located, the Servicer and the Trustee acting jointly shall have the power and shall execute and deliver all instruments to appoint one or more Persons approved by the Trustee to act as co-trustee, jointly with the Trustee, or separate trustee or separate trustees, of all or any part of the Trust, and to vest in such Person, in such capacity and for the benefit of the Certificateholders, such title to the Trust, or any part thereof, and, subject to the other provisions of this Section 10.13, such powers, duties, obligations, rights and trusts as the Servicer and the Trustee -71- may consider necessary or desirable. If the Servicer shall not have joined in such appointment within 15 days after the receipt by it of a request so to do, or in case an Event of Servicing Termination shall have occurred and be continuing, the Trustee alone shall have the power to make such appointment. No co-trustee or separate trustee under this Agreement shall be required to meet the terms of eligibility as a successor trustee pursuant to Section 10.9 and no notice to Certificateholders of the appointment of any co-trustee or separate trustee shall be required pursuant to Section 10.11. Notwithstanding the appointment of a co-trustee or separate trustee hereunder, the Trustee shall not be relieved of any of its obligations under this Agreement. (b) Each separate trustee and co-trustee shall, to the extent permitted by law, be appointed and act subject to the following provisions and conditions: (i) All rights, powers, duties and obligations conferred or imposed upon the Trustee shall be conferred upon and exercised or performed by the Trustee and such separate trustee or co-trustee jointly (it being understood that such separate trustee or co-trustee, is not authorized to act separately without the Trustee joining in such act), except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed (whether as Trustee under this Agreement or as successor to the Servicer under this Agreement), the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations (including the holding of title to the Trust Property or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Trustee. (ii) No trustee under this Agreement shall be liable by reason of any act or omission of any other trustee under this Agreement. (iii) The Servicer and the Trustee acting jointly may at any time accept the resignation of or remove any separate trustee or co-trustee. (c) Any notice, request or other writing given to the Trustee shall be deemed to have been given to each of the then separate trustees and co-trustees, as effectively as if given to each of them. Every instrument appointing any separate trustee or co-trustee shall refer to this Agreement and in particular to the provisions of this Article. 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 -72- may be provided therein, subject to all the provisions of this Agreement, specifically including every provision of this Agreement relating to the conduct of, affecting the liability of, or affording protection to, the Trustee. Each such instrument shall be filed with the Trustee and a copy thereof given to the Servicer. (d) Any separate trustee or co-trustee may, at any time, appoint the Trustee its agent or attorney-in-fact with full power and authority, to the extent not prohibited by law, to do any lawful act under or in respect of this Agreement on its behalf and in its name. If any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all of its estates, properties, rights, remedies and trusts shall vest in and be exercised by the Trustee, to the extent permitted by law, without the appointment of a new or successor trustee. The Trustee shall promptly notify the Servicer and the Rating Agencies of any appointment made pursuant to this Section 10.13. SECTION 10.14. REPRESENTATIONS AND WARRANTIES OF TRUSTEE. The Trustee makes the following representations and warranties on which the Seller, the Servicer, and Certificateholders may rely: (i) ORGANIZATION AND GOOD STANDING. The Trustee is a corporation duly organized, validly existing, and in good standing under the laws of the State of New York; (ii) POWER AND AUTHORITY. The Trustee has full power, authority and legal right to execute, deliver, and perform this Agreement and has taken all necessary action to authorize the execution, delivery, and performance by it of this Agreement; and (iii) ENFORCEABILITY. This Agreement has been duly executed and delivered by the Trustee and this Agreement constitutes a legal, valid and binding obligation of the Trustee enforceable against the Trustee in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or hereafter in effect affecting the enforcement of creditors' rights in general and except as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity). SECTION 10.15. REPORTS BY TRUSTEE. The Trustee shall provide to any Certificateholder or Certificate Owner who so requests in writing (addressed to the Corporate Trust Office) a copy of any Servicer's Certificate, the annual statement described in Section 3.10, and the annual accountant's examination described in Section 3.11. The Trustee may require -73- any Certificateholder or Certificate Owner requesting such report to pay a reasonable sum to cover the cost of the Trustee's complying with such request. SECTION 10.16. TAX ACCOUNTING. The Servicer shall prepare any Federal tax returns of the Trust in accordance with the Code and any regulations (including, to the extent applicable by their terms, proposed regulations) thereunder. In no event shall the Trustee in its individual capacity be liable for any liabilities, costs or expenses of the Trust, the Certificateholders, the Seller or the Servicer arising under any tax law or regulation, including, without limitation, Federal, State or local income or excise taxes or any tax imposed on or measured by income (or any interest or penalty with respect thereto or arising from any failure to comply therewith). Notwithstanding the foregoing, in no event shall the Trustee be liable hereunder for any liabilities, costs or expenses incurred from any information furnished to it by the Servicer or failure to furnish information by the Servicer in a timely manner. SECTION 10.17. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF CERTIFICATES. All rights of action and claims under this Agreement or the Certificates may be prosecuted and enforced by the Trustee without the possession of any of the Certificates or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as Trustee. Any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Certificateholders in respect of which such judgment has been obtained. ARTICLE XI TERMINATION SECTION 11.1. TERMINATION OF THE TRUST. (a) The Trust, and the respective obligations and responsibilities of the Seller, the Servicer and the Trustee hereunder shall terminate (except as otherwise expressly provided herein) upon the earliest of: (i) the Distribution Date next succeeding the purchase by the Seller at its option, pursuant to Section 11.2, of the Receivables remaining in the Trust, (ii) the payment to Certificateholders of all amounts required to be paid to them pursuant to this Agreement or (iii) the Distribution Date next succeeding the month which is [ten] months after the maturity or the liquidation of the last Receivable held in the Trust and the disposition of any amounts received upon liquidation of any property remaining in the Trust; PROVIDED, HOWEVER, in no event shall the Trust created hereby continue beyond the expiration of -74- 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late Ambassador of the United States to the Court of St. James's, living on the date of this Agreement. The Servicer shall promptly notify the Trustee of any prospective termination pursuant to this Section 11.1. (b) Notice of any termination, specifying the Distribution Date upon which the Certificateholders may surrender the Certificates to the Trustee for payment of the final distribution and cancellation, shall be given promptly by the Trustee by letter to Certificateholders and the Rating Agencies mailed not earlier than the 15th day and not later than the 25th day of the month next preceding the specified Distribution Date stating the amount of any such final payment and that the Record Date otherwise applicable to such Distribution Date is not applicable, payments being made only upon presentation and surrender of the Certificates at the office of the Trustee therein specified. Upon presentation and surrender of the Certificates, the Trustee shall cause to be distributed to Certificateholders amounts distributable on such Distribution Date pursuant to Section 4.5. Amounts remaining after distribution, or providing for distribution, to the Certificateholders shall be distributed to the Seller. (c) In the event that all of the Certificateholders shall not surrender their Certificates for cancellation within six months after the date specified in the above-mentioned written notice, the Trustee shall give a second written notice to the remaining Certificateholders to surrender their Certificates for cancellation and receive the final distribution with respect thereto. The Trustee shall after giving such notice deliver or cause to be delivered to the Servicer the Certificate Register. If within one year after the second notice all the Certificates shall not have been surrendered for cancellation, the Servicer may take appropriate steps, or may appoint an agent to take appropriate steps, to contact the remaining Certificateholders concerning surrender of their Certificates, and the cost thereof shall be paid out of the funds and other assets that shall remain subject to this Agreement. Any such funds held pending such distribution shall be held uninvested. Any funds remaining in the Trust after exhaustion of such remedies shall be distributed by the Trustee to the Seller. SECTION 11.2. OPTIONAL PURCHASE OF ALL RECEIVABLES. In the event that the Pool Balance is 5% or less of the Original Pool Balance as of the first day of any Collection Period, the Seller shall have the option to purchase the corpus of the Trust on any Distribution Date occurring in a subsequent Collection Period. To exercise such option, the Seller shall deposit pursuant to Section 4.3 the sum of the Class A Principal Balance and the Class B Principal Balance plus accrued and unpaid interest thereon into the Collection Account for the Distribution -75- Date occurring in the month in which such repurchase is to be effected. The payment shall be made in the manner specified in Section 4.3, and shall be distributed pursuant to Section 4.5. Upon such payment the Seller shall succeed to and own all interests in and to the Trust and the Trust Property. ARTICLE XII MISCELLANEOUS PROVISIONS SECTION 12.1. AMENDMENT. (a) This Agreement may be amended by the Seller, the Servicer and the Trustee, without the consent of any of the Certificateholders, to cure any ambiguity or defect, to correct or supplement any provision in this Agreement or for the purpose of adding any provision to or changing in any manner or eliminating any of the provisions of this Agreement, or of modifying in any manner the rights of the Certificateholders; PROVIDED, that such action shall not, as evidenced by an Opinion of Counsel delivered to the Trustee, materially and adversely affect the interests of any Certificateholder; PROVIDED FURTHER, that any amendment within the scope of Section 12.1(b)(i) or (ii) shall be deemed to materially and adversely affect the interests of the Certificateholders. (b) This Agreement may also be amended from time to time by the Seller, the Servicer and the Trustee, with the consent of the Holders of Certificates evidencing not less than a majority of the aggregate outstanding principal balance of the Class A Certificates and the Class B Certificates taken together as a single class, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement, or of modifying in any manner the rights of the Certificateholders; PROVIDED, HOWEVER, that no such amendment shall (i) increase or reduce in any manner the amount of, or accelerate or delay the timing of, or change the allocation or priority of, collections of payments on Receivables or distributions that are required to be made on any Certificate, without the consent of all adversely affected Certificateholders or (ii) reduce the percentage of the aggregate outstanding principal balance of the Certificates, the holders of which are required to consent to any such amendment, without the consent of all Certificateholders. Promptly after the execution of any such amendment or consent, the Trustee shall furnish written notification of the substance of such amendment or consent to each Certificateholder. (c) It shall not be necessary for the consent of Certificateholders pursuant to Section 12.1(b) to approve the particular form of any proposed amendment or consent, but it -76- shall be sufficient if such consent shall approve the substance thereof. The manner of obtaining such consents and of evidencing the authorization of the execution thereof by Certificateholders shall be subject to such reasonable requirements as the Trustee may prescribe. (d) Notice of any amendment of this Agreement shall be sent by the Servicer to the Rating Agencies, at such address as the Rating Agencies may from time to time specify in writing. (e) The Trustee may, but shall not be obligated to, enter into any such amendment which affects the Trustee's own rights, duties or immunities under this Agreement or otherwise. (f) In connection with any amendment pursuant to this Section 12.1 the Trustee shall be entitled to receive an Opinion of Counsel to the effect that such amendment is authorized or permitted by the Agreement. SECTION 12.2. PROTECTION OF TITLE TO TRUST. (a) The Servicer shall cause to be executed and filed such financing statements and cause to be executed and filed such continuation statements, all in such manner and in such places as may be required by law fully to preserve, maintain and protect the interest of the Certificateholders and the Trustee under this Agreement in the Trust Property and in the proceeds thereof. The Servicer shall deliver (or cause to be delivered) to the Trustee file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing. In the event that the Servicer fails to perform its obligations under this subsection, the Trustee may (but shall not be obligated to) do so, at the expense of the Servicer. (b) Neither the Seller nor the Servicer shall (nor shall the Bank permit Valley National to) change its name, identity or corporate structure in any manner that would, could or might make any financing statement or continuation statement filed by the Servicer in accordance with paragraph (a) above seriously misleading within the meaning of Section 9-402(7) of the UCC, unless it shall have given the Trustee at least five days' prior written notice thereof and shall have promptly filed appropriate amendments to all previously filed financing statements or continuation statements. (c) Each of the Seller and the Servicer shall have an obligation to 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 applicable provisions of the UCC would require the filing of any amendment of any previously filed financing or continuation statement or of any new financing statement and shall promptly file any such amendment. The Servicer shall at all times maintain each office from which it -77- 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 Collection Account in respect of such Receivable. (e) The Servicer shall (and, with respect to the Valley National Receivables, shall cause Valley National to) 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 and Subservicer's respective master computer records (including any backup archives) that refer to a Receivable shall indicate clearly that such Receivable is owned by the Trust. Indication of the Trust's ownership of a Receivable shall be deleted from or modified on the Seller's and the Servicer's computer systems when, and only when, the Receivable shall be paid or shall become a Purchased Receivable. (f) If at any time the Seller or the Servicer shall propose to sell, grant a security interest in or otherwise transfer any interest in automobile receivables to any prospective purchaser, lender or other transferee, the Servicer, shall give or cause to be given to such prospective purchaser, lender or other transferee computer tapes, records or printouts (including any restored from backup archives) that, if they shall refer in any manner whatsoever to any Receivable, shall indicate clearly that such Receivable has been sold and is owned by the Trust. (g) 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 or any subservicer's records regarding any Receivable. (h) Upon request at any time the Trustee shall have reasonable grounds to believe that such request is necessary in connection with the performance of its duties under this Agreement, 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 promptly after the execution and delivery of this Agreement and of each -78- 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. (j) The Seller shall, to the extent required by applicable law, cause the Certificates to be registered with the Commission pursuant to Section 12(b) or Section 12(g) of the Exchange Act within the time periods specified in such sections. SECTION 12.3. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. (a) The death or incapacity of any Certificateholder shall not operate to terminate this Agreement or the Trust, or entitle the Certificateholder's legal representatives or heirs to claim an accounting or to take any action or commence any proceeding in any court for a partition or winding up of the Trust, or otherwise affect the rights, obligations and liabilities of the parties to this Agreement or any of them. (b) No Certificateholder shall have any right to vote (except as expressly provided herein) or in any manner otherwise control the operation and management of the Trust, or the obligations of the parties to this Agreement, nor shall anything set forth in this Agreement, or contained in the terms of the Certificates, be construed so as to constitute the Holders as partners or members of an association; nor shall any Certificateholder be under any liability to any third party by reason of any action taken pursuant to any provision of this Agreement. (c) No Certificateholder shall have any right by virtue or by availing itself of any provisions of this Agreement to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Agreement, unless such Holder previously shall have given to the Trustee a written notice of default and of the continuance thereof, as hereinbefore provided, and unless the Holders of the Certificates evidencing not less than a majority of the aggregate outstanding principal balance of the Class A Certificates and the Class B Certificates taken together as a single class shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee under the 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, -79- shall have neglected or refused to institute any such action, suit or proceeding; no one or more Holders of Certificates shall have any right in any manner whatever by virtue or by availing itself or themselves of any provisions of this Agreement to affect, disturb or prejudice the rights of the Holders of any other 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 Class A Certificateholders or Class B Certificateholders, as the case may be. For the protection and enforcement of the provisions of this Section 12.3, each Certificateholder and the Trustee shall be entitled to such relief as can be given either at law or in equity. SECTION 12.4. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. SECTION 12.5. NOTICES. All demands, notices and communications upon or to the Seller, the Servicer, the Trustee or the Rating Agencies under this Agreement shall be in writing, personally delivered, sent by overnight courier or mailed by certified mail, return receipt requested, (or in the form of telex or facsimile notice, followed by written notice delivered as aforesaid) and shall be deemed to have been duly given upon receipt (a) in the case of the Seller to Banc One ABS Corporation, 100 East Broad Street, Columbus, Ohio 43271-0158, (b) in the case of the Servicer, to Bank One, Arizona, NA, 241 N. Central Avenue, Phoenix, Arizona 85001, Attention: _______________________, facsimile ____________ (c) in the case of the Trustee, at the Corporate Trust Office, facsimile ____________ (d) in the case of Moody's, to Moody's Investors Service, Inc., to 99 Church Street, New York, New York 10004, Attention of Asset Backed Securities Group, facsimile 212-553-0573 and (e) in the case of Standard & Poor's, to Standard & Poor's Corporation, 26 Broadway (15th Floor), New York, New York 10004, Attention of Asset Backed Surveillance Department, facsimile 212-208-0098; or, as to each of the foregoing, at such other address as shall be designated by written notice to the other parties. SECTION 12.6. SEVERABILITY OF PROVISIONS. If any one or more of the covenants, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, provisions or terms shall be deemed severable from the remaining covenants, provisions or terms of this Agreement, and shall in no way affect the validity or enforceability of the other provisions of this Agreement or of the Certificates or the rights of the Holders thereof. -80- SECTION 12.7. ASSIGNMENT. Notwithstanding anything to the contrary contained herein, except as provided in Sections 7.4, 8.3 and 8.5, this Agreement may not be assigned by the Seller or the Servicer. This Agreement may not be assigned by the Trustee except as provided by Sections 10.10 through 10.13 hereof. SECTION 12.8. CERTIFICATES NONASSESSABLE AND FULLY PAID. The interests represented by the Certificates shall be nonassessable for any losses or expenses of the Trust or for any reason whatsoever, and, upon authentication thereof by the Trustee pursuant to Section 6.1, each Certificate shall be deemed fully paid. SECTION 12.9. INTENTION OF PARTIES. (a) The execution and delivery of this Agreement shall constitute an acknowledgment by the Seller and the Trustee, on behalf of the Certificateholders, that it is intended that the assignment and transfer herein contemplated constitute a sale and assignment outright, and not for security, of the Receivables and the other Trust Property, conveying good title thereto free and clear of any liens, from the Seller to the Trustee, and that the Receivables and the other Trust Property shall not be a part of the estate of the Seller in the event of the insolvency, receivership, conservatorship or the occurrence of another similar event, of, or with respect to, the Seller. In the event that such conveyance is determined to be made as security for a loan made by the Trustee or the Certificateholders to the Seller, the parties intend that the Seller shall have granted to the Trustee a security interest in all of the Seller's right, title and interest in and to the Trust Property conveyed to the Trustee pursuant to Section 2.1 in order to secure the obligations under the Certificates, and that this Agreement shall constitute a security agreement under applicable law. (b) The execution and delivery of this Agreement shall constitute an acknowledgment by the Seller and the Trustee on behalf of the Certificateholders that they intend that the Trust be classified (for Federal tax purposes) as a grantor trust under Subpart E, Part I of Subchapter J of the Code of which the Certificateholders are owners, rather than as an association taxable as a corporation. The powers granted and obligations undertaken in this Agreement shall be construed so as to further such intent. SECTION 12.10. COUNTERPARTS. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. -81- SECTION 12.11. COLLATERAL AGENT PROTECTION. Notwithstanding anything contained herein to the contrary, the Collateral Agent shall have the same rights and protection afforded to the Trustee hereunder. SECTION 12.12. LIMITATION OF LIABILITY OF TRUSTEE AND COLLATERAL AGENT. Notwithstanding anything contained herein to the contrary (i) this Agreement has been accepted by Bankers Trust Company not in its individual capacity but solely as Trustee and as Collateral Agent with respect to the Reserve Fund and in no event shall Bankers Trust Company have any liability for the representations, warranties, covenants, agreements or other obligations of the Seller hereunder or in any of the certificates, notices or agreements delivered pursuant hereto, as to all of which recourse shall be had solely to the assets of the Seller and (ii) under no circumstances shall Bankers Trust Company be liable for the payment of any indebtedness or expenses of the Trust; PROVIDED, HOWEVER, nothing contained herein shall relieve Bankers Trust Company of its obligations contained herein in its capacity as successor Servicer, as Trustee and as Collateral Agent. -82- IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written. BANC ONE ABS CORPORATION as Seller By:____________________________ Name: Title: BANK ONE, ARIZONA, NA as Servicer By:____________________________ Name: Title: BANKERS TRUST COMPANY, not in its individual capacity but solely as Trustee By:_______________________________ Name: Title: BANKERS TRUST COMPANY, not in its individual capacity but solely as Collateral Agent By:_______________________________ Name: Title: -83- SCHEDULE A SCHEDULE OF RECEIVABLES (delivered to the Trustee at Closing) SCHEDULE B LOCATION OF RECEIVABLES EXHIBIT A FORM OF CLASS A CERTIFICATE [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] DISTRIBUTIONS IN REDUCTION OF THE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN THE AMOUNT BALANCE ON THE FACE HEREOF. NUMBER A- $_______________ (of CUSIP NO. __________ $______________ issued) BANC ONE AUTO GRANTOR TRUST 1996-B CLASS A ____% ASSET BACKED CERTIFICATE evidencing a fractional undivided interest in the Trust, as defined below, the property of which includes a pool of motor vehicle retail installment sale contracts secured by new or used automobiles, vans or light duty trucks. (This Certificate does not represent an interest in or obligation of Banc One ABS Corporation, Bank One, Arizona NA, the Trustee or any of their respective affiliates, except to the extent described below.) A-1 THIS CERTIFIES THAT _________________ is the registered owner of a $____________________ nonassessable, fully-paid, fractional undivided interest in Banc One Auto Grantor Trust 1996-B (the "Trust") formed pursuant to the Pooling and Servicing Agreement (the "Agreement") dated as of June 1, 1996 among Banc One ABS Corporation, as seller (the "Seller") Bank One, Arizona, NA, as servicer (the "Servicer") and Bankers Trust Company, a New York banking corporation, as Trustee and Collateral Agent, a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates, designated as the Class A ____% Asset Backed Certificates (herein called the "Class A Certificates"), issued under the Agreement. Also issued under the Agreement are Certificates designated as the Class B ____% Asset Backed Certificates (the "Class B Certificates"). The Class A Certificates and the Class B Certificates are hereinafter collectively called the "Certificates." The aggregate beneficial ownership interests in the Trust evidenced by all Class A Certificates is ____%. This Class A Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement to which Agreement reference is hereby made for a statement of the respective rights and obligations thereunder of the Seller, the Servicer, the Trustee and Holders of the Class A Certificates. The property of the Trust includes a pool of simple interest motor vehicle retail installment sale contracts for new or used automobiles, vans or light duty trucks (collectively, the "Receivables"), all monies received under the Receivables on or after the related Cutoff Date, security interests in the vehicles financed thereby, certain bank accounts, the rights to proceeds from certain insurance proceeds, the rights of the Trust under the Agreement, the right to receive certain payments from funds deposited in the Reserve Fund and all proceeds of the foregoing. Under the Agreement, there will be distributed on the 15th day of each month or, if such 15th day is not a Business Day, the next Business Day (each, a "Distribution Date"), commencing on July 15, 1996, to the Person in whose name this Certificate is registered at the close of business on the last day of the calendar month preceding such Distribution Date (the "Record Date"), such Certificateholder's fractional undivided interest in the amount to be distributed to Certificateholders on such Distribution Date. It is the intent of the Seller, the Trustee and the Certificateholders that the Trust be classified (for Federal tax purposes) as a grantor trust under Subpart E, Part I of Subchapter J of the Code of which the Class A Certificateholders are owners, rather than as an association taxable as a corporation. The Seller, the Servicer, the Trustee and the Certificateholders, by A-2 acceptance of a Class A Certificate, agree to treat, and to take no action inconsistent with the treatment of, the Certificates for such tax purposes as interests in a grantor trust. Distributions on this Certificate will be made as provided in the Agreement by the Trustee by check mailed to the Certificateholder of record in the Certificate Register without the presentation or surrender of this Certificate or the making of any notation hereon, except that with respect to Certificates registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee. Except as otherwise provided in the Agreement and notwithstanding the above, the final distribution on this Certificate will be made after due notice by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency maintained for that purpose by the Trustee in the Borough of Manhattan, the City of New York. Reference is hereby made to the further provisions of this Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon shall have been executed by an authorized officer of the Trustee, by manual signature, this Certificate shall not entitle the Holder hereof to any benefit under the Agreement or be valid for any purpose. THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. A-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. Date: BANKERS TRUST COMPANY, not in its individual capacity but solely as Trustee By: ______________________________ Authorized Signatory CERTIFICATE OF AUTHENTICATION This is one of the Class A Certificates referred to in the within-mentioned Agreement. Date: BANKERS TRUST COMPANY, not in its individual capacity but solely as Trustee By: ______________________________ Authorized Signatory A-4 (REVERSE OF CLASS A CERTIFICATE) The Class A Certificates do not represent an obligation of, or an interest in, any of the Seller, the Servicer, the Trustee or any affiliates of any of them, and no recourse may be had against such parties or their assets except as expressly set forth or contemplated herein or in the Agreement. In addition, this Certificate is limited in right of payment to certain collections and recoveries with respect to the Receivables (and certain other amounts), all as more specifically set forth herein and in the Agreement. A copy of the Agreement may be examined by any Certificateholder upon written request during normal business hours at the principal office of the Seller and at such other places, if any, designated by the Seller. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Seller, the Servicer and the Trustee and the rights of the Certificateholders at any time by the Seller, the Servicer and the Trustee with the consent of the Holders of Certificates evidencing not less than a majority of the aggregate outstanding principal balance of the Class A Certificates and the Class B Certificates taken together as a single class. Any such consent by the Holder of this Certificate shall be conclusive and binding on such Holder and on all future Holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent is made upon this Certificate. The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Holders of any Certificates. As provided in the Agreement and subject to certain limitations therein set forth, the transfer of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in the Borough of Manhattan, The City of New York, accompanied by a written instrument of transfer in form satisfactory to the Trustee and duly executed by the Holder hereof or such Holder's attorney duly authorized in writing, and thereupon one or more new Class A Certificates of authorized denominations evidencing the same aggregate interest in the Trust will be issued to the designated transferee. Except as provided in the Agreement, the Class A Certificates are issuable only as registered certificates without coupons in minimum denominations of $1,000 and integral multiples thereof; PROVIDED, HOWEVER, that one Class A Certificate may be issued in a denomination that represents any remaining portion of the Original Class A Principal Balance. As provided in the Agreement and subject to certain limitations therein set forth, Class A Certificates are exchangeable for new Class A Certificates of A-5 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 charge payable in connection therewith. The Trustee and any agent of the Trustee may treat the Person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Trustee or any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Agreement and the Trust created thereby 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 by the Trust. The Seller of the Receivables may at its option purchase the corpus of the Trust at a price specified in the Agreement, and such purchase of the Receivables and other property of the Trust will effect early retirement of the Certificates; however, such right of purchase is exercisable only on a Distribution Date during a Collection Period subsequent to a Collection Period in which the Pool Balance is 5% or less of the Original Pool Balance as of the first day of such Collection Period. A-6 ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ________________________________________________________________________________ (Please print or type name and address, including postal zip code, of assignee) ________________________________________________________________________________ the within Class A Certificate, and all rights thereunder, hereby irrevocably constituting and appointing ____________________________ to transfer said Class A Certificate on the books of the Trustee, with full power of substitution in the premises. Dated: ___________________________________________*/ Medallion: ____________________________*/ _______________________ */ NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears upon the face of the within Class A Certificate in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Trustee, which requirements include membership or participation in STAMP or such other "signature guarantee program" as may be determined by the Trustee in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. A-7 EXHIBIT B FORM OF CLASS B CERTIFICATE [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] THIS CERTIFICATE MAY NOT BE DIRECTLY OR INDIRECTLY SOLD OR TRANSFERRED TO, OR PURCHASED OR ACQUIRED BY, OR ON BEHALF OF (1) ANY EMPLOYEE BENEFIT PLAN, RETIREMENT ARRANGEMENT, INDIVIDUAL RETIREMENT ACCOUNT OR KEOGH PLAN WHICH IS SUBJECT TO EITHER TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (EACH, A "PLAN"), OR (2) ANY ENTITY WHOSE SOURCE OF FUNDS TO BE USED FOR THE PURCHASE OF THIS CLASS B CERTIFICATE INCLUDES THE ASSETS OF ANY SUCH PLAN, OTHER THAN AN "INSURANCE COMPANY GENERAL ACCOUNT" AS DEFINED IN, AND WHICH COMPLIES WITH THE PROVISIONS OF, PROHIBITED TRANSACTION EXEMPTION 95-60. DISTRIBUTIONS IN REDUCTION OF THE PRINCIPAL BALANCE OF THIS CERTIFICATE WILL BE MADE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE AT ANY TIME MAY BE LESS THAN THE AMOUNT BALANCE ON THE FACE HEREOF. NUMBER B- $_______________ (of CUSIP NO. __________ $_____________ issued) BANC ONE AUTO GRANTOR TRUST 1996-B CLASS B ____% ASSET BACKED CERTIFICATE evidencing a fractional undivided interest in the Trust, as defined below, the property of which includes a pool of motor vehicle retail installment sale contracts secured by new or used automobiles, vans or light duty trucks. (This Certificate does not represent an interest in or obligation of Banc One ABS Corporation, Bank One, Arizona NA, the Trustee or any of their respective affiliates, except to the extent described below.) B-1 THIS CERTIFIES THAT _________________ is the registered owner of a $____________________ nonassessable, fully-paid, fractional undivided interest in Banc One Auto Grantor Trust 1996-B (the "Trust") formed pursuant to the Pooling and Servicing Agreement (the "Agreement") dated as of June 1, 1996 among Banc One ABS Corporation, as seller (the "Seller"), Bank One, Arizona, NA, as servicer (the "Servicer") and Bankers Trust Company, a New York banking corporation, as Trustee and Collateral Agent, a summary of certain of the pertinent provisions of which is set forth below. To the extent not otherwise defined herein, the capitalized terms used herein have the meanings assigned to them in the Agreement. This Certificate is one of the duly authorized Certificates, designated as the Class B ____% Asset Backed Certificates (herein called the "Class B Certificates"), issued under the Agreement. Also issued under the Agreement are Certificates designated as the Class A ____% Asset Backed Certificates (the "Class A Certificates"). The Class A Certificates and the Class B Certificates are hereinafter collectively called the "Certificates." The aggregate beneficial ownership interests in the Trust evidenced by all Class B Certificates is ___%. This Class B Certificate is issued under and is subject to the terms, provisions and conditions of the Agreement to which Agreement reference is hereby made for a statement of the respective rights and obligations thereunder of the Seller, the Servicer, the Trustee and Holders of the Class B Certificates. The property of the Trust includes a pool of simple interest motor vehicle retail installment sale contracts for new or used automobiles, vans or light duty trucks (collectively, the "Receivables"), all monies received under the Receivables on or after the Cutoff Date, security interests in the vehicles financed thereby, certain bank accounts, the rights to proceeds from certain insurance proceeds, the rights of the Trust under the Agreement, the right to receive certain payments from funds deposited in the Reserve Fund and all proceeds of the foregoing. Under the Agreement, there will be distributed on the 15th day of each month or, if such 15th day is not a Business Day, the next Business Day (each, a "Distribution Date"), commencing on July 15, 1996, to the Person in whose name this Certificate is registered at the close of business on the last day of the calendar month preceding such Distribution Date (the "Record Date"), such Certificateholder's fractional undivided interest in the amount to be distributed to Certificateholders on such Distribution Date. It is the intent of the Seller, the Trustee and the Certificateholders that the Trust be classified (for Federal tax purposes) as a grantor trust under Subpart E, Part I of Subchapter J of the Code of which the Class B Certificateholders are owners, rather than as an association taxable as a corporation. The Seller, the Servicer, the Trustee and the Certificateholders, by B-2 acceptance of a Class B Certificate, agree to treat, and to take no action inconsistent with the treatment of, the Certificates for such tax purposes as interests in a grantor trust. Distributions on this Certificate will be made as provided in the Agreement by the Trustee by check mailed to the Certificateholder of record in the Certificate Register without the presentation or surrender of this Certificate or the making of any notation hereon, except that with respect to Certificates registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payments will be made by wire transfer in immediately available funds to the account designated by such nominee. Except as otherwise provided in the Agreement and notwithstanding the above, the final distribution on this Certificate will be made after due notice by the Trustee of the pendency of such distribution and only upon presentation and surrender of this Certificate at the office or agency maintained for that purpose by the Trustee in the Borough of Manhattan, the City of New York. Reference is hereby made to the further provisions of this Certificate set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. Unless the certificate of authentication hereon shall have been executed by an authorized officer of the Trustee, by manual signature, this Certificate shall not entitle the Holder hereof to any benefit under the Agreement or be valid for any purpose. THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS. B-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. Date: BANKERS TRUST COMPANY, not in its individual capacity but solely as Trustee By: ______________________________ Authorized Signatory CERTIFICATE OF AUTHENTICATION This is one of the Class B Certificates referred to in the within-mentioned Agreement. Date: BANKERS TRUST COMPANY, not in its individual capacity but solely as Trustee By: ______________________________ Authorized Signatory B-4 (REVERSE OF CLASS B CERTIFICATE) The Class B Certificates do not represent an obligation of, or an interest in, any of the Seller, the Servicer, the Trustee or any affiliates of any of them, and no recourse may be had against such parties or their assets except as expressly set forth or contemplated herein or in the Agreement. In addition, this Certificate is limited in right of payment to certain collections and recoveries with respect to the Receivables (and certain other amounts), all as more specifically set forth herein and in the Agreement. A copy of the Agreement may be examined by any Certificateholder upon written request during normal business hours at the principal office of the Seller and at such other places, if any, designated by the Seller. The Agreement permits, with certain exceptions therein provided, the amendment thereof and the modification of the rights and obligations of the Seller, the Servicer and the Trustee and the rights of the Certificateholders at any time by the Seller, the Servicer and the Trustee with the consent of the Holders of Certificates evidencing not less than a majority of the aggregate outstanding principal balance of the Class A Certificates and the Class B Certificates taken together as a single class. Any such consent by the Holder of this Certificate shall be conclusive and binding on such Holder and on all future Holders of this Certificate and of any Certificate issued upon the transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent is made upon this Certificate. The Agreement also permits the amendment thereof, in certain limited circumstances, without the consent of the Holders of any Certificates. As provided in the Agreement and subject to certain limitations therein set forth, the transfer of this Certificate is registerable in the Certificate Register upon surrender of this Certificate for registration of transfer at the offices or agencies maintained by the Trustee in the Borough of Manhattan, The City of New York, accompanied by a written instrument of transfer in form satisfactory to the Trustee and duly executed by the Holder hereof or such Holder's attorney duly authorized in writing, and thereupon one or more new Class B Certificates of authorized denominations evidencing the same aggregate interest in the Trust will be issued to the designated transferee. Except as provided in the Agreement, the Class B Certificates are issuable only as registered certificates without coupons in minimum denominations of $1,000 and integral multiples thereof; PROVIDED, HOWEVER, that one Class B Certificate may be issued in a denomination that represents any remaining portion of the Original Class B Principal Balance. As provided in the Agreement and subject to certain limitations therein set forth, Class B Certificates are exchangeable for new Class B Certificates of B-5 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 charge payable in connection therewith. The Trustee and any agent of the Trustee may treat the Person in whose name this Certificate is registered as the owner hereof for all purposes, and none of the Trustee or any such agent shall be affected by any notice to the contrary. The obligations and responsibilities created by the Agreement and the Trust created thereby 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 by the Trust. The Seller of the Receivables may at its option purchase the corpus of the Trust at a price specified in the Agreement, and such purchase of the Receivables and other property of the Trust will effect early retirement of the Certificates; however, such right of purchase is exercisable only on a Distribution Date during a Collection Period subsequent to a Collection Period in which the Pool Balance is 5% or less of the Original Pool Balance as of the first day of such Collection Period. [By accepting and holding this Class B Certificate, the Holder hereof shall be deemed to have represented and warranted that it is it is not acquiring Class B Certificates, directly or indirectly, for or on behalf of an ERISA Entity other than an "insurance company general account" as defined in, and which complies with the provisions of, Prohibited Transaction Exemption 95-60.] [The transferee hereof of this Class B Definitive Certificate will represent that it is not either (1) an employee benefit plan, retirement arrangement, individual retirement account or keogh plan which is subject to either Title I of ERISA, or Section 4975 of the Code, or (2) any entity whose source of funds to be used for the purchase of the Class B Certificate includes the assets of any such Plan, other than an "Insurance Company General Account" as defined in, and which complies with the provisions of, Prohibited Transaction Exemption 95-60 issued by the United States Department of Labor.] B-6 ASSIGNMENT FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE ________________________________________________________________________________ (Please print or type name and address, including postal zip code, of assignee) ________________________________________________________________________________ the within Class B Certificate, and all rights thereunder, hereby irrevocably constituting and appointing ____________________________ to transfer said Class B Certificate on the books of the Trustee, with full power of substitution in the premises. Dated: ___________________________________________*/ Medallion: ____________________________*/ _______________________ */ NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears upon the face of the within Class B Certificate in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Trustee, which requirements include membership or participation in STAMP or such other "signature guarantee program" as may be determined by the Trustee in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. B-7 EXHIBIT E FORM OF BENEFIT PLAN AFFIDAVIT Bankers Trust Company 4 Albany Street New York, New York 10006 Bank One, Arizona, NA 201 N. Central Avenue Phoenix, Arizona 85001 STATE OF ___________) ss: COUNTY OF __________) Under penalties of perjury, I, the undersigned, declare that, to the best of my knowledge and belief, the following representations are true, correct, and complete. 1. That I am a duly authorized officer of _____________ (the "PURCHASER"), whose taxpayer identification number is _________, and on behalf of which I have the authority to make this affidavit. 2. That the Purchaser is acquiring a Class B Certificate (the "CERTIFICATE") representing an interest in the Trust. 3. That the Purchaser is not either (1) an employee benefit plan, retirement arrangement, individual retirement account or keogh plan which is subject to either Title I of ERISA, or Section 4975 of the Code, or (2) any entity whose source of funds to be used for the purchase of the Class B Certificate includes the assets of any such Plan, other than an "Insurance Company General Account" as defined in, and which complies with the provisions of, Prohibited Transaction Exemption 95-60 issued by the United States Department of Labor. Capitalized terms used in and not otherwise defined herein shall have the meaning assigned to them in the Pooling and Servicing Agreement dated as of June 1, 1996 among Banc One ABS Corporation, as seller, Bank One, Arizona, NA, as servicer and Bankers Trust Company, as trustee. E-1 IN WITNESS WHEREOF, the Purchaser has caused this instrument to be duly executed on its behalf, by its duly authorized officer this ____ day of ___________, 19__. ___________________________________ By:________________________________ Its:_______________________________ Personally appeared before me ____________, known or proved to me to be the same person who executed the foregoing instrument and to be a ________________ of the Purchaser, and acknowledged to me that he or she executed the same as his or her free act and deed and as the free act and deed of the Purchaser. Subscribed and sworn before me this ____ day of ____________, 19__ _________________________________________ Notary Public My commission expires the ____ day of ___________________, 19__. E-2 EX-5.1 6 EXHIBIT 5.1 EXHIBIT 5.1 June 17, 1996 Banc One ABS Corporation Subject: Banc One Auto Grantor Trust 1996-B Ladies and Gentlemen: We have acted as counsel to Banc One ABS Corporation, an Ohio corporation (the "Seller"), in connection with the negotiation, execution and delivery of (a) the Pooling and Servicing Agreement dated as of June 1, 1996 (the "Pooling and Servicing Agreement") by and among the Seller, Bank One, Arizona, NA, as servicer, and Bankers Trust Company, as trustee (the "Trustee"), (b) the Underwriting Agreement described in the Registration Statement and (c) the Registration Statement dated May 10, 1996 (Registration No. 333-3457), as amended (the "Registration Statement"). Pursuant to the Pooling and Servicing Agreement, the Seller is selling all of its right, title and interest in a pool of retail receivables generated from time to time pursuant to motor vehicle retail installment sale contracts (the "Receivables") to the Trustee for the benefit of the holders of the Certificates. Pursuant to the Underwriting Agreement, the Class A Certificates and Class B Certificates (collectively, the "Certificates") described in the Registration Statement are being sold in a public offering registered under the Securities Act of 1933, as amended (the "1933 Act"). We are familiar with the corporate proceedings taken by the Seller in connection with the foregoing agreement and the transactions contemplated thereby. In addition, we have examined such corporate records, certificates of corporate officers and governmental officials and other documents and such questions of law as we have considered necessary or appropriate for the purpose of this opinion. On the basis of such examination and subject to the foregoing we are of the opinion that assuming the due execution of the Pooling and Servicing Agreement in substantially the form Banc One ABS Corporation June 17, 1996 Page 2 presented to us, upon the issuance, authentication and delivery of the Certificates in accordance with the provisions of the Pooling and Servicing Agreement against payment therefor, the Certificates will be legally issued, fully paid and non-assessable and entitled to the benefits of the Pooling and Servicing Agreement, subject, as to enforceability to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or other laws affecting creditors' rights generally from time to time in effect and to general principles of equity. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name and the reference to our firm whenever it appears in such Registration Statement, including the Prospectus constituting a part thereof, as originally filed or as subsequently amended. Respectfully submitted, SQUIRE, SANDERS & DEMPSEY EX-8.1 7 EXHIBIT 8.1 EXHIBIT 8.1 June 17, 1996 Banc One ABS Corporation RE: BANC ONE AUTO GRANTOR TRUST 1996-B ---------------------------------- Ladies and Gentlemen: We have acted as special federal income tax counsel for Banc One ABS Corporation, an Ohio corporation (the "Seller"), in connection with the preparation and filing of a Registration Statement on Form S-3 (Registration No. 333-3457) (the "Registration Statement"), originally filed with the Securities and Exchange Commission (the "Commission") on May 10, 1996, as amended by Amendment No. 1 to the Registration Statement to be filed with the Commission ("Amendment No. 1"). The Registration Statement relates to the offering of Class A Asset Backed Certificates and Class B Asset Backed Certificates (the "Certificates"). The Certificates will be issued pursuant to the Pooling and Servicing Agreement (the "Pooling and Servicing Agreement") by and among the Seller, Bank One, Arizona, NA, as seller and Bankers Trust Company, as trustee. In that connection, we have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records and other instruments as we have deemed necessary or appropriate for the purposes of this opinion, including (a) a prospectus included in Amendment No. 1 relating to the Certificates (the "Prospectus"), (b) the form of the Pooling and Servicing Agreement filed as an exhibit to Amendment No. 1 and, (c) the form of the Certificates (included as exhibits to the Pooling and Servicing Agreement). Based upon the foregoing, we hereby confirm that the statements in the Prospectus under the heading "FEDERAL INCOME TAX CONSEQUENCES," to the extent they constitute matters of law or legal conclusions with respect thereto, are correct. Banc One ABS Corporation June 17, 1996 Page 2 We hereby consent to the use of our name in the Prospectus under the headings "FEDERAL INCOME TAX CONSEQUENCES" and "LEGAL MATTERS" and to the filing of this opinion as an exhibit to the Registration Statement. Respectfully submitted, SQUIRE, SANDERS & DEMPSEY EX-10.1 8 EXHIBIT 10.1 EXHIBIT 10-1 LOAN SALE AGREEMENT dated as of June 1, 1996 (this "Agreement") between BANK ONE, ARIZONA, NA, a national banking association, as seller (the "Seller") and BANC ONE ABS CORPORATION, an Ohio corporation, as purchaser (the "Purchaser"). WHEREAS, the Purchaser desires to purchase, and the Seller is willing to sell, the receivables evidencing the motor vehicle installment sales contracts identified on Schedule A to this Agreement and the Assignment (as hereinafter defined) (the "Receivables"); and WHEREAS, following such purchase the Purchaser intends to sell, transfer, assign, set over and otherwise convey the Receivables to Bankers Trust Company, as trustee (the "Trustee") on behalf of Banc One Auto Grantor Trust 1996-B (the "Trust") pursuant to that certain Pooling and Servicing Agreement dated as of June 1, 1996 among the Purchaser, as seller, the Seller as servicer, and the Trustee, as trustee (the "Pooling and Servicing Agreement"); NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the parties hereto agree as follows: ARTICLE I DEFINITIONS AND USAGE Capitalized terms used but not defined herein are defined in the Pooling and Servicing Agreement, which also contains rules as to usage and construction that shall be applicable herein. In addition, the following terms have the following meanings: "Agreement" is defined in the Preamble to this Agreement. "Assignment" is defined in Section 2.1(a). "Governmental Authority" means the United States of America, any state or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and having jurisdiction over the applicable Person. "Purchased Receivable" means any Receivable repurchased by the Seller pursuant to Section 2.5. "Purchaser" is defined in the Preamble to this Agreement. "Receivables" is defined in the first WHEREAS clause of this Agreement. "Receivable File" means the documents specified in Section 2.6. "Requirements of Law" with respect to any Person shall mean the certificate of incorporation or articles of association and bylaws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation, or determination of an arbitrator or Governmental Authority, in each case applicable to or binding upon such Person or to which such Person is subject, whether Federal, State or local (including usury laws, the Federal Truth in Lending Act and Regulation Z and Regulation B of the Board of Governors of the Federal Reserve System). "Sale Amount" is defined in Section 2.2. "Secured Obligations" is defined in Section 2.1(d). "Seller" is defined in the Preamble to this Agreement. "Trust" is defined in the second WHEREAS clause of this Agreement. "Trustee" is defined in the second WHEREAS clause of this Agreement. "UCC" means the Uniform Commercial Code in effect in the State of Arizona. ARTICLE II CONVEYANCE OF RECEIVABLES SECTION 2.1 CONVEYANCE OF RECEIVABLES. (a) Upon the terms and subject to the conditions set forth herein and in consideration of the Purchaser's delivery to or upon the order of the Seller of the Sale Amount described in Section 2.2, the Seller does hereby, as evidenced by a duly executed written assignment in the form of Exhibit A (the "Assignment"), sell, transfer, assign, set over and otherwise convey to the Purchaser, without recourse (subject to the obligations herein) all its right, title and interest in, to and under: (i) the Receivables existing on the Cutoff Date and listed on Schedule A to this Agreement and the Assignment and all monies due or to become due with respect thereto and the related computer file or microfiche list, and all proceeds (including "proceeds" as defined in the UCC, and Recoveries); (ii) all right, title and interest of the Seller in the security interests in the Financed Vehicles granted by Obligors pursuant to the Receivables and any other interest of the Seller in the Financed Vehicles; (iii) the interest of the Seller in any proceeds with respect to the Receivables from claims on any physical damage, theft, credit life or disability insurance policies covering Financed Vehicles or Obligors; (iv) the interest of the Seller in any proceeds from any Receivable repurchased by a Dealer, pursuant to a Dealer Agreement, as a result of a breach of representation or warranty in the related Dealer Agreement or a default by an Obligor resulting in the repossession of the Financed Vehicle under such Dealer Agreement; and (v) the proceeds of any and all of the foregoing. The foregoing does not constitute and is not intended to result in the creation or assumption by the Purchaser of any -2- obligation of the Seller or any other Person in connection with the Receivables or under any agreement or instrument relating thereto, including any obligation to Obligors or insurers. (b) In connection with the foregoing sale, the Seller agrees to record and file, from time to time, at its own expense, one or more financing statements with respect to the Receivables and the other property described in Section 2.1(a) sold by the Seller hereunder meeting the requirements of applicable state law in such manner and in such jurisdictions as are necessary to perfect and protect the interests of the Purchaser created hereby under the UCC against all creditors of and purchasers from the Seller, and to deliver a file-stamped copy of such financing statements or other evidence of such filings to the Purchaser promptly after the same has been filed. (c) In connection with the sale and conveyance hereunder, the Seller agrees, at its own expense, on or prior to the execution of this Agreement, to indicate or cause to be indicated clearly and unambiguously in its accounting and master data processing records that such Receivables and the other property described in Section 2.1(a) have been sold to the Purchaser pursuant to this Agreement as of the Cutoff Date. (d) It is the express intent of the Seller and the Purchaser that the conveyance of the Receivables by the Seller to the Purchaser pursuant to this Agreement be construed as a sale of such Receivables by the Seller to the Purchaser. It is, further, not the intention of the Seller and the Purchaser that such conveyance be deemed a grant of a security interest in the Receivables by the Seller to the Purchaser to secure a debt or other obligation of the Seller. However, in the event that, notwithstanding the intent of the parties, a court of competent jurisdiction determines that the Receivables continue to be property of the Seller, then (i) this Agreement also shall be deemed to be and hereby is a security agreement within the meaning of the UCC; and (ii) the conveyance by the Seller provided for in this Agreement shall be deemed to be and the Seller hereby grants to the Purchaser a security interest in and to all of the Seller's right, title and interest in (x) all Receivables outstanding on the Cutoff Date and all rights (but not the obligations) relating to such Receivables, (y) all monies due or to become due with respect thereto and (z) all proceeds of the foregoing, to secure the rights of the Purchaser to recover all Collections and other property or payments received from time to time in respect of the Receivables purported to be conveyed hereunder (the "Secured Obligations"). The Seller and the Purchaser shall, to the extent consistent with this Agreement, take such actions as may be necessary to ensure that, if this Agreement were deemed to create a security interest in the Receivables, such security interest would be deemed to be a perfected security interest of first priority in favor of the Purchaser under applicable law and will be maintained as such throughout the term of this Agreement. The Seller and the Purchaser may rely upon an Opinion of Counsel addressed to them as to what is required to provide the Purchaser with such security interest. SECTION 2.2 CONSIDERATION FOR CONVEYANCE OF RECEIVABLES. In consideration of the Seller's conveyance to the Purchaser of the Receivables, the Purchaser shall deliver to the Seller on or prior to the Closing Date the sale amount ("Sale Amount") for such Receivables as determined pursuant to Exhibit B hereto, which is hereby incorporated herein. -3- SECTION 2.3 REPRESENTATIONS AND WARRANTIES OF THE SELLER RELATING TO THE SELLER. The Seller hereby represents and warrants to the Purchaser as of the Closing Date that: (a) ORGANIZATION AND GOOD STANDING. The Seller is a national banking association validly existing under the laws of the United States and has, in all material respects, full power and authority to own its properties and conduct its consumer revolving lending business as such properties are presently owned and such business is presently conducted, and to execute, deliver and perform its obligations under this Agreement. (b) DUE QUALIFICATION. The Seller is duly qualified to do business and is in good standing as a foreign corporation (or is exempt from such requirements), and has obtained all necessary licenses and approvals, in each jurisdiction in which failure to so qualify or to obtain such licenses and approvals would render any agreement relating to any Receivable unenforceable by the Seller or the Purchaser, the Trustee or any Certificateholder or would have a material adverse effect on the interests of the Purchaser, the Trustee or any Certificateholder; PROVIDED, HOWEVER, that no representation or warranty is made with respect to any qualifications, licenses or approvals which the Trustee or the Purchaser has or may be required at any time to obtain, if any. (c) DUE AUTHORIZATION. The execution and delivery by the Seller of this Agreement have been duly authorized by all necessary corporate action on the part of the Seller. (d) BINDING OBLIGATION. This Agreement constitutes a legal, valid and binding obligation of the Seller, enforceable against the Seller in accordance with its terms, subject, as to enforceability, to applicable bankruptcy, insolvency, reorganization, receivership, liquidation and other similar laws affecting enforcement of the rights of creditors generally and to equitable limitations on the availability of specific remedies. (e) NO CONFLICT. The execution and delivery by the Seller of this Agreement, the performance by the Seller of the transactions contemplated by this Agreement and the fulfillment by the Seller of the terms hereof applicable to it will not violate the organizational documents of the Seller or result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time or both) a material default under, any material indenture, contract, agreement, mortgage, deed of trust or other instrument to which the Seller is a party or by which it or any of its properties are bound. (f) NO VIOLATION. The execution and delivery by the Seller of this Agreement, the performance by the Seller of the transactions contemplated by this Agreement and the fulfillment by the Seller of the terms hereof applicable to it will not violate in any material respect any Requirements of Law applicable to the Seller. (g) NO PROCEEDINGS. There are no proceedings or investigations pending or, to the best knowledge of the Seller, threatened against the Seller, before any Governmental Authority (i) asserting the invalidity of this Agreement, (ii) seeking to prevent the consummation by the Seller of any of the transactions contemplated by this Agreement, (iii) seeking any determination or ruling that, in the reasonable judgment of the Seller, would materially and adversely affect -4- the performance of its obligations under this Agreement or (iv) seeking any determination or ruling that would materially and adversely affect the validity or enforceability of this Agreement. (h) ALL CONSENTS REQUIRED. All authorizations, consents, orders or other actions of any Person or of any Governmental Authority required to be obtained by the Seller in connection with the execution and delivery by the Seller of this Agreement, the performance by the Seller of the transactions contemplated by this Agreement and the fulfillment by the Seller of the terms hereof, have been obtained. (i) INSOLVENCY. No Insolvency Event with respect to the Seller has occurred and the transfer of the Receivables by the Seller to the Purchaser has not been made in contemplation of the occurrence thereof. The representations and warranties set forth in this Section 2.3 shall survive the transfer and assignment of the Receivables to the Purchaser and the subsequent transfers and assignments of the Receivables to the Trustee, on behalf of the Trust. Upon discovery by a responsible officer of the Seller of a breach of any of the representations and warranties set forth in this Section 2.3, the Seller shall give prompt written notice to the Purchaser within three Business Days following such discovery. The Seller agrees to cooperate with the Purchaser in attempting to cure any such breach. SECTION 2.4 REPRESENTATIONS AND WARRANTIES OF THE SELLER RELATING TO THE RECEIVABLES. The Seller makes the following representations and warranties as to the Receivables on which the Purchaser is deemed to have relied in acquiring the Receivables. Unless otherwise indicated, such representations and warranties speak as of the execution and delivery of the Agreement, but shall survive the sale, transfer and assignment of the Receivables to the Purchaser and any subsequent assignment or assignments by the Purchaser to the Trustee, on behalf of the Trust. (a) TITLE. It is the intention of the Seller that the transfer and assignment herein contemplated constitute a sale of the Receivables from the Seller to the Purchaser and that the beneficial interest in and title to such Receivables not be part of the debtor's estate in the event of the filing of a petition for receivership by or against the Seller. No Receivable has been sold, transferred, assigned or pledged by the Seller to any Person other than the Purchaser. Immediately prior to the transfer and assignment herein contemplated, the Seller had good and marketable title to each Receivable, free and clear of all Liens and, immediately upon the transfer thereof, the Purchaser shall have good and marketable title to each such Receivable, free and clear of all Liens; and the transfer of the Receivables to the Purchaser has been perfected under the UCC. (b) ALL FILINGS MADE. All filings (including UCC filings) necessary in any jurisdiction to give the Purchaser a perfected ownership interest in the Receivables, and to give the Purchaser a first priority perfected security interest in the Receivables, shall have been made. (c) CHARACTERISTICS OF RECEIVABLES. Each Receivable (i) has been originated either by a Dealer in the regular course of such Dealer's business and purchased from such Dealer by -5- the Seller in the ordinary course of the Seller's business or originated by the Seller in the ordinary course of the Seller's business, and each Obligor was approved in accordance with the Seller's standard underwriting procedures in effect at the time such Receivable was originated, acquired or purchased, (ii) has created or shall create a valid, subsisting and enforceable first priority security interest in favor of the Seller in the Related Financed Vehicle, which security interest is assignable by the Seller to the Purchaser, (iii) contains customary and enforceable provisions under the laws of the State governing such Receivables such that the rights and remedies of the holder thereof are adequate for realization against the collateral of the benefits of the security, and (iv) provides for equal monthly payments at a fixed rate of interest that fully amortizes the Amount Financed by maturity and yields interest at the Annual Percentage Rate assuming payments are made on the due date thereof. (d) SCHEDULE OF RECEIVABLES. The information set forth in Schedule A to this Agreement and the Assignment is true and correct in all material respects as of the opening of business on the Cutoff Date and no selection procedures adverse to the Certificateholders were utilized in selecting the Receivables. The Computer Tape regarding the Receivables is true and correct in all material respects as of the Cutoff Date. (e) COMPLIANCE WITH LAW. Each Receivable complied at the time it was originated or made and at the Closing Date complies in all material respects with all requirements of applicable Federal, State and local laws and regulations thereunder, including usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B, Z and AA, State adaptations of the Uniform Consumer Code, the Arizona Consumer Fraud Act, Title 6 of the Arizona Revised Statutes and other applicable consumer credit laws and equal credit opportunity and disclosure laws. (f) BINDING OBLIGATION. As of the Cutoff Date, each Receivable represents the legal, valid and binding payment obligation in writing of the Obligor thereunder, enforceable by the holder thereof in accordance with its terms except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, fraudulent conveyance, reorganization and similar laws now or hereafter in effect related to or affecting creditors' rights generally and subject to general principles of equity (whether applied in a proceeding at law or in equity). (g) NO GOVERNMENT OBLIGOR. As of the Cutoff Date, none of the Receivables is due from the United States of America or any State or from any agency, department or instrumentality of the United States of America or any State. (h) SECURITY INTEREST IN FINANCED VEHICLE. Immediately prior to the sale, assignment and transfer thereof, each Receivable shall be secured by a validly perfected first priority security interest in the Related Financed Vehicle in favor of the Seller as secured party or all necessary and appropriate actions have been commenced that would result in the valid perfection of a first security interest in the Related Financed Vehicle in favor of the Seller as secured party. -6- (i) RECEIVABLES IN FORCE. As of the Cutoff Date, no Receivable has been satisfied, subordinated or rescinded, nor has any Financed Vehicle been released from the Lien granted by the related Receivable in whole or in part unless another vehicle has been substituted as collateral securing the Receivable without any other modification to such Receivable. (j) NO WAIVER. As of the Cutoff Date, no provision of a Receivable has been waived except as reflected in the Receivable File relating to such Receivable. (k) NO DEFENSES. As of the Cutoff Date, the Seller has not received notice that any right of rescission, setoff, counterclaim or defense has been asserted or threatened with respect to any Receivable. (l) NO LIENS. The Seller shall not have received notice of any Liens or claims, including Liens for work, labor, materials or unpaid State or Federal taxes relating to any Financed Vehicle securing the related Receivable, that are or may be prior to or equal to the Lien granted by such Receivable. (m) NO DEFAULT. No Receivable will have a payment that is more than [90] days overdue as of the Cutoff Date and, except as permitted in this paragraph, no default, breach, violation or event (in any such case) permitting acceleration under the terms of any Receivable has occurred; and no continuing condition that with notice or the lapse of time would constitute a default, breach, violation or event (in any such case) permitting acceleration under the terms of any Receivable has arisen as of the Cutoff Date; and the Seller has not waived and shall not waive any of the foregoing. (n) MATURITY OF RECEIVABLES. The weighted average original maturity of the Receivables is _______ months as of the Cutoff Date; the weighted average remaining term of the Receivables is _______ months as of the Cutoff Date; and the latest scheduled maturity of any Receivable shall be no later than the Final Scheduled Maturity Date. (o) NO BANKRUPTCIES. No Obligor on any Receivable was noted in the related Receivable File as having filed for bankruptcy in a proceeding which remained undischarged as of the Cutoff Date. (p) NO REPOSSESSIONS. As of the Cutoff Date, no Financed Vehicle securing any Receivable is in repossession status. (q) CHATTEL PAPER. Each Receivable constitutes "chattel paper" as defined in the UCC. (r) APR. The weighted average APR of the Receivables as of the Cutoff Date is approximately _____%. (s) PAID AHEAD. As of the Cutoff Date, no Receivable is more than six months paid ahead. -7- (t) PRINCIPAL BALANCE. The average principal balance of the Receivable as of the Cutoff Date is $_________. The aggregate Cutoff Date Principal Balance of the Receivables is $___________. As of the Cutoff Date, each Receivable has a principal balance between $__________ and $___________. (u) FINANCING. Approximately ____% of the Aggregate Cutoff Date Principal Balance of the Receivables, constituting approximately ____% of the number of Receivables as of the Cutoff Date, represents financing of new vehicles; the remainder of the Receivables represents financing of used vehicles. (v) INSURANCE. The Seller, in accordance with its customary procedures, has determined that the Obligor, at the time the Related Receivable was originated, obtained, applied for or made arrangements to obtain physical damage insurance covering the Related Financed Vehicle and under the terms of the Related Receivable the Obligor is required to maintain such insurance. (w) LAWFUL ASSIGNMENT. No Receivable has been originated in, or as of the Cutoff Date is subject to the laws of, any jurisdiction under which the sale, transfer and assignment of such Receivable or this Agreement is unlawful, void or voidable. (x) NO INSURANCE PREMIUMS. As of the Cutoff Date, no portion of the Amount Financed of any Receivable included amounts attributable to the payment of any physical damage or theft insurance premium. (y) ONE ORIGINAL. There is only one original executed copy of each Receivable. (z) LOCATION OF RECEIVABLE FILES. The Receivable Files are kept at one or more of the locations listed in Schedule B. (aa) COMPUTER RECORDS. As of the Closing Date, the accounting and computer records of the Seller relating to the Receivables have been marked to show the transfer of the Receivables to the Purchaser. SECTION 2.5 REPURCHASE UPON BREACH. The Seller shall inform the Purchaser upon the discovery of any breach of the Seller's representations and warranties made pursuant to Section 2.4. Unless any such breach shall have been cured within 60 days following the discovery thereof by the Purchaser or receipt by the Purchaser of written notice from the Seller of such breach, the Seller shall be obligated to repurchase any Receivable in which the interests of the Purchaser or the Certificateholders are materially and adversely affected by any such breach as of the first day succeeding the end of such 60 day period that is the last day of a Collection Period (or, at the Seller's option, the last day of the first Collection Period following the discovery). In consideration of and simultaneously with the repurchase of the Receivable, the Seller shall remit to the Purchaser the Purchase Amount in the manner specified in Section 4.3 of the Pooling and Servicing Agreement and the Purchaser shall execute such assignments and other documents reasonably requested by the Seller in order to effect such repurchase. The sole remedy of the Purchaser with respect to a breach of representations and warranties pursuant -8- to Section 2.4 and the agreement contained in this Section shall be to require the Seller to repurchase Receivables pursuant to this Section, subject to the conditions contained herein. SECTION 2.6 CUSTODY OF RECEIVABLE FILES. To assure uniform quality in servicing the Receivables and to reduce administrative costs, the Purchaser hereby revocably appoints the Seller, and the Seller hereby accepts such appointment, to act as the agent of the Purchaser as custodian of the following documents or instruments which are hereby constructively delivered to the Purchaser with respect to each Receivable: (a) the original executed copy of the Receivable; (b) a record of the information supplied by the Obligor in the original credit application; (c) the original certificate of title or such documents that the Seller shall keep on file, in accordance with its customary procedures, evidencing the security interest of the Seller in the Financed Vehicle (it being understood that the original certificates of title or other documents evidencing the Seller's security interest in the Financed Vehicle generally are not delivered to the Seller for [90 days] but that promptly upon delivery they shall be delivered to the Seller as custodian hereunder); and (d) any and all other documents that the Seller shall keep on file, in accordance with its customary procedures, relating to a Receivable, an Obligor or a Financed Vehicle. SECTION 2.7 DUTIES OF SELLER TO SERVE AS CUSTODIAN. (a) SAFEKEEPING. The Seller shall hold the Receivable Files on behalf of the Purchaser and maintain such accurate and complete accounts, records and computer systems pertaining to each Receivable File as shall enable the Seller to comply with this Agreement. In performing its duties as custodian the Seller shall act with reasonable care, using that degree of skill and attention that the Seller exercises with respect to all comparable automotive receivables that the Seller services for itself or others, except that the Seller shall not be obligated, and does not intend, to (i) pay any premium for force-placed insurance concerning any Financed Vehicle or (ii) monitor any Obligor's maintenance of insurance. The Seller 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 Purchaser to verify the accuracy of the Seller's record keeping. The Seller shall promptly report to the Purchaser any failure on its part to hold the Receivable Files and maintain its accounts, records and computer systems as herein provided and promptly take appropriate action to remedy any such failure. (b) MAINTENANCE OF AND ACCESS TO RECORDS. The Seller shall maintain each Receivable File at one of its offices specified in Schedule B or at such other office as shall be specified to the Purchaser by written notice not later than 90 days after any change in location. Upon reasonable prior notice, the Seller shall make available to the Purchaser or its respective duly authorized representatives, attorneys or auditors a list of locations of the Receivable Files -9- and records and computer systems maintained by the Seller at such times during normal business hours as the Purchaser shall instruct. (c) RELEASE OF DOCUMENTS. Upon written instruction from the Purchaser, the Seller shall release any Receivable File to the Purchaser or its designee, as the case may be, at such place or places as the Purchaser may designate, as soon as practicable and upon the release and delivery of any such document in accordance with the instructions of the Purchaser, the Seller shall be released from any further liability and responsibilities under this Section 2.7 with respect to such documents unless and until such time as such document may be returned to the Seller. SECTION 2.8 INSTRUCTIONS; AUTHORITY TO ACT. The Seller shall be deemed to have received proper instructions with respect to the Receivable Files upon its receipt of written instructions signed by an authorized officer of the Purchaser. SECTION 2.9 CUSTODIAN'S INDEMNIFICATION. The Seller as custodian shall indemnify and hold harmless the Purchaser, any assignee of the Purchaser and each of their officers, directors, employees and agents for any and all liabilities, obligations, losses, compensatory damages, payments, costs or expenses (including reasonable attorneys' fees and expenses) that may be imposed on, incurred by or asserted against the Purchaser, any assignee of the Purchaser or any of their respective officers, directors, employees and agents as the result of any improper act or omission in any way relating to the maintenance and custody by the Seller as custodian of the Receivable Files where the final determination that any such improper act or omission by the Seller which resulted in such liability, obligation, loss, damage, payment, cost or expense is established by a court of law, by an arbitrator or by way of settlement agreed to by the Seller; PROVIDED, HOWEVER, that the Seller shall not be liable to the Purchaser or any such assignee for any portion of any such amount resulting from the willful misfeasance, bad faith or negligence of the Purchaser or any assignee of the Purchaser, including the Trustee. This provision shall not be considered to limit the Seller's or any other party's rights, obligations, liabilities, claims or defenses which arise as a matter of law or pursuant to any other provision of this Agreement. SECTION 2.10 EFFECTIVE PERIOD AND TERMINATION. The Seller's appointment as custodian shall become effective as of the Cutoff Date and shall continue in full force and effect until terminated by the Purchaser pursuant to this Section 2.10. As soon as practicable after any termination of such appointment, the Seller shall deliver the Receivable Files with respect to which the Seller's appointment as custodian has been terminated to the Purchaser or to the Purchaser's agent at such place or places as the Purchaser may reasonably designate in writing. If the Seller shall be terminated as custodian hereunder for any reason but shall continue to serve as Servicer under the Pooling and Servicing Agreement, the Purchaser shall, or shall cause its agent to, make the Receivable Files with respect to which the Seller's appointment as custodian has been terminated available to the Servicer during normal business hours upon reasonable notice so as to permit the Servicer to perform its obligations as Servicer under the Pooling and Servicing Agreement. -10- ARTICLE III ADMINISTRATION AND SERVICING OF RECEIVABLES SECTION 3.1 DUTIES OF SERVICER. The Servicer shall service the Receivables pursuant to the terms, conditions and provisions of the Pooling and Servicing Agreement. ARTICLE IV OTHER MATTERS RELATING TO THE SELLER SECTION 4.1 LIABILITY OF THE SELLER. The Seller shall be liable in all respects for the obligations, covenants, representations and warranties of the Seller arising under or related to this Agreement. The Seller shall be liable only to the extent of the obligations specifically undertaken by it pursuant to this Agreement. SECTION 4.2 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF, THE SELLER. (a) The Seller shall not consolidate with or merge into any other corporation or convey or transfer its properties and assets substantially as an entirety to any Person unless the corporation formed by such consolidation or into which the Seller is merged or the Person which acquires by conveyance or transfer the properties and assets of the Seller substantially as an entirety shall be, if the Seller is not the surviving entity, a corporation, banking corporation or banking association organized and existing under the laws of the United States or any State and such corporation, banking corporation or banking association shall expressly assume, by an agreement supplemental hereto, executed and delivered to the Purchaser, in form reasonably satisfactory to the Purchaser, the performance of every covenant and obligation of the Seller hereunder. (b) The obligations of the Seller hereunder shall not be assignable nor shall any Person succeed to the obligations of the Seller hereunder except in each case in accordance with the provisions of the foregoing paragraph. SECTION 4.3 LIMITATIONS ON LIABILITY OF THE SELLER. Subject to Section 4.1, neither the Seller nor any of the directors, officers, employees or agents of the Seller shall be under any liability to the Purchaser, the Trust, the Trustee, the Certificateholder or any other Person for any action taken or for refraining from the taking of any action in good faith pursuant to this Agreement; PROVIDED, HOWEVER, that this provision shall not protect the Seller or any such Person against any liability which would otherwise be imposed by reason of wilful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of reckless disregard of obligations and duties hereunder. The Seller and any director, officer, employee or agent of the Seller may rely in good faith on any document of any kind prima facie properly executed and submitted by any Person (other than the Seller) respecting any matters arising hereunder. -11- ARTICLE V MISCELLANEOUS SECTION 5.1 AMENDMENT. This Agreement may only be amended by the parties hereto in writing. SECTION 5.2 NOTICES. All demands, notices and communications upon or to the Seller or the Purchaser under this Agreement shall be in writing and personally delivered or mailed by certified mail, return receipt requested (or in the form of telex or facsimile notice, followed by written notice delivered as aforesaid) and shall be deemed to have been duly given upon receipt: (a) in the case of the Purchaser, to Banc One ABS Corporation, ___________________________________________, Attention: Chief Financial Officer (telephone: (___) ________; facsimile: (___) ________); and (b) in the case of the Seller, to Bank One, Arizona, NA, ___________________________, __________, Arizona, ____, Attention: __________, (telephone: (___) ________; facsimile: (___) ________); or, as to each of the foregoing, at such other address as shall be designated by written notice to the other parties. SECTION 5.3 ASSIGNMENT. Notwithstanding anything to the contrary contained herein, this Agreement may be assigned by the Purchaser at any time without the consent of the Seller upon five (5) Business Days prior written notice to the Seller and Seller. Except as provided in Section 4.2, the obligations of the Seller hereunder may not be assigned without the prior written consent of the Purchaser. The Seller hereby acknowledges and consents to the assignment by the Purchaser of any or all of the Purchaser's rights and obligations under this Agreement to the Trustee for the benefit of the Trust and the Certificateholders. SECTION 5.4 LIMITATIONS ON RIGHTS OF OTHERS. Except as provided in Section 5.3, the provisions of this Agreement are solely for the benefit of the parties hereto and nothing in this Agreement, whether express or implied, shall be construed to give to any other Person any legal or equitable right, remedy or claim under or in respect of this Agreement or any covenants, conditions or provisions contained herein. SECTION 5.5 SEVERABILITY. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. SECTION 5.6 SEPARATE COUNTERPARTS. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 5.7 HEADINGS. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions -12- hereof. References to Articles, Sections, Exhibits or Schedules are references to Articles, Sections, Exhibits or Schedules in or to this Agreement unless otherwise specified. SECTION 5.8 MERGER AND INTEGRATION. Except as specifically stated otherwise herein, this Agreement sets forth the entire understanding of the parties relating to the subject matter hereof, and all prior understandings, written or oral, are superseded by this Agreement. This Agreement may not be modified except as provided herein. SECTION 5.9 GOVERNING LAW. This Agreement shall be construed in accordance with the laws of the State of Arizona, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective officers as of the day and year first above written. BANC ONE ABS CORPORATION, in its capacity as Purchaser By: ------------------------------------- Its: ------------------------------------ BANK ONE, ARIZONA, NA, in its capacity as Seller By: ------------------------------------- Its: ------------------------------------ -13- EXHIBIT A ASSIGNMENT For value received, in accordance with the Loan Sale Agreement (the "Agreement") dated as of June 1, 1996, between BANK ONE, ARIZONA, NA (the "Seller") and BANC ONE ABS CORPORATION (the "Purchaser"), the Seller does hereby sell, transfer, assign, set over and otherwise convey to the Purchaser, without recourse (subject to its obligations under the Agreement) all its right, title and interest in, to and under: (i) the Receivables existing on the Cutoff Date and listed on Schedule A hereto, and all moneys due or to become due with respect thereto and the related computer file or microfiche list, and all proceeds (including "proceeds" as defined in the UCC, and Recoveries thereon); (ii) all right, title and interest of the Seller in the security interests in the Financed Vehicles granted by Obligors pursuant to the Receivables and any other interest of the Seller in the Financed Vehicles; (iii) the interest of the Seller in any proceeds with respect to the Receivables from claims on any physical damage, theft, credit life or disability insurance policies covering Financed Vehicles or Obligors; (iv) the interest of the Seller in any proceeds from any Receivable repurchased by a Dealer, pursuant to a Dealer Agreement, as a result of a breach of representation or warranty in the related Dealer Agreement or a default by an Obligor resulting in the repossession of the Financed Vehicle under such Dealer Agreement; and (v) the proceeds of any and all of the foregoing. The foregoing sale does not constitute and is not intended to result in the creation or assumption by the Purchaser of any obligations of the Seller or any other Person in connection with the Receivables or under any agreement or instrument relating thereto, including any obligation to Obligors or insurers. This assignment is made pursuant to and upon the representations, warranties and agreements on the part of the undersigned contained in the Agreement and is to be governed by the Agreement. Capitalized terms used but not defined herein shall have the meaning assigned to them in the Agreement, which also contains rules as to usage that shall be applicable herein. IN WITNESS WHEREOF, the undersigned has caused this assignment to be duly executed as of June 1, 1996. BANK ONE, ARIZONA, NA, as Seller By: ------------------------------------- Its: ------------------------------------ SCHEDULE A DESCRIPTION OF RECEIVABLES [To be provided by Seller for Receivables to be transferred as of the Cutoff Date] SCHEDULE B LOCATION OF RECEIVABLE FILES [Complete address of each location where actual Receivable Files will be maintained, including title and telephone number of person responsible for the Receivable Files] EXHIBIT B [Calculation formula for determining amount to be paid by Banc One ABS Corporation to Bank One, Arizona, NA for purchase of Receivables] -----END PRIVACY-ENHANCED MESSAGE-----