REGISTRATION NO.___-____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________
NATIONSBANK, N.A.
NATIONSBANK, N.A. (SOUTH)
NATIONSBANK OF TEXAS, N.A.
(ORIGINATORS OF THE TRUST DESCRIBED HEREIN)
_______________
6090 United States of America 57-0236115, 58-0193243
(Primary Standard (State or other 75-2238693
Industrial jurisdiction of (IRS Employer
Classification Code incorporation or Identification Nos.)
No.) organization)
NationsBank, N.A. NationsBank, N.A. (South) NationsBank of Texas, N.A.
NationsBank Corporate 600 Peachtree Street, 901 Main Street
Center N.E.
100 North Tryon Street Atlanta, Georgia 30308 Dallas, Texas 75202
Charlotte, North Carolina (404) 581-2121 (214) 508-6262
28255
(704) 386-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
EACH REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
_______________
ROBERT W. LONG, JR., ESQ.
ASSISTANT GENERAL COUNSEL
NATIONSBANK CORPORATION
NATIONSBANK CORPORATE CENTER
100 NORTH TRYON STREET
NC1-007-20-01
CHARLOTTE, NORTH CAROLINA 28255
(704) 386-2400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
_______________
COPIES TO:
RICHARD S. FORTUNATO, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
_______________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box.(x )
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. ( )
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. ( )
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.( )
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Each Maximum Maximum
Class of Offering Aggregate Amount of
Securities to be Amount to be Price Offering Registration
Registered Registered Per Unit(2) Price(2) Fee
% Asset Backed $1,000,000 100% $344.83
Certificates
[(1) The Securities are also being registered for the purpose of
market-making.]
(2) Estimated solely for the purpose of calculating registration fee.
_______________
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.
INTRODUCTORY NOTE
This Registration Statement contains (i) a form of Prospectus relating
to the offering of series of Asset Backed Notes and/or Asset Backed
Certificates by various NationsBank Auto Trusts created from time to time
by NationsBank, N.A., NationsBank, N.A. (South) and NationsBank of Texas,
N.A. and (ii) two forms of Prospectus Supplement relating to the offering
by NationsBank Auto Trust 199 - of the particular series of Asset Backed
Certificates or of Asset Backed Notes and Asset Backed Certificates
described therein. Each form of Prospectus Supplement relates only to the
securities described therein and is a form which may be used, among others,
by the Originators to offer Asset Backed Notes and/or Asset Backed
Certificates under this Registration Statement.
SUBJECT TO COMPLETION, DATED _____ __, 1996
Prospectus
NationsBank Auto Trusts
Asset Backed Notes
Asset Backed Certificates
_________________
[NationsBank Logo]
_________________
NationsBank, N.A.
NationsBank, N.A. (South)
NationsBank of Texas, N.A.
Sellers
_________________
NationsBank, N.A.
Servicer
_________________
The Asset Backed Notes (the "Notes") and the Asset
Backed Certificates (the "Certificates" and, together
with the Notes, the "Securities") described herein may be
sold from time to time in one or more series, in amounts,
at prices and on terms to be determined at the time of
sale and to be set forth in a supplement to this
Prospectus (a "Prospectus Supplement"). Each series of
Securities, which may include one or more classes of
Notes and/or one or more classes of Certificates, will be
issued by a trust to be formed with respect to such
series (each, a "Trust"). Each Trust will be formed
pursuant to either a Trust Agreement to be entered into
between NationsBank, N.A., NationsBank, N.A. (South) and
NationsBank of Texas, N.A. as sellers (each, a "Seller"
and collectively, the "Sellers"), and the Trustee
specified in the related Prospectus Supplement (the
"Trustee") or a Pooling and Servicing Agreement to be
entered into among the Trustee, the Sellers and
NationsBank, N.A., as servicer (the "Servicer"). If a
series of Securities includes Notes, such Notes of a
series will be issued and secured pursuant to an
Indenture between the Trust and the Indenture Trustee
specified in the related Prospectus Supplement (the
"Indenture Trustee") and will represent indebtedness of
the related Trust. The Certificates of a series will
represent fractional undivided interests in the related
Trust. The related Prospectus Supplement will specify
which class or classes of Notes, if any, and which class
or classes of Certificates, if any, of the related series
are being offered thereby. The property of each Trust
will include a pool of retail motor vehicle installment
sales contracts indirectly originated by the Sellers and
secured by new or used automobiles and light trucks (the
"Receivables"), certain monies due or received thereunder
on and after the applicable Cut-Off Date set forth in the
related Prospectus Supplement, security interests in the
vehicles financed thereby and certain other property, all
as described herein and in the related Prospectus
Supplement. In addition, if so specified in the related
Prospectus Supplement, the property of the Trust will
include monies on deposit in a trust account (the
"Pre-Funding Account") to be established with the
Indenture Trustee or the applicable Trustee, as the case
may be, which will be used to purchase additional retail
motor vehicle installment sales contracts (the
"Subsequent Receivables") from the Sellers from time to
time during the Funding Period specified in the related
Prospectus Supplement.
Each class of Securities of any series will
represent the right to receive a specified amount of
payments of principal and interest on the related
Receivables, at the rates, on the dates and in the manner
described herein and in the related Prospectus
Supplement. If a series includes multiple classes of
Securities, the rights of one or more classes of
Securities to receive payments may be senior or
subordinate to the rights of one or more of the other
classes of such series. Distributions on Certificates of
a series may be subordinated in priority to payments due
on any related Notes to the extent described herein and
in the related Prospectus Supplement. A series may
include one or more classes of Notes and/or Certificates
which differ as to the timing and priority of payment,
interest rate or amount of distributions in respect of
principal or interest or both. A series may include one
or more classes of Notes or Certificates entitled to
distributions in respect of principal with
disproportionate, nominal or no interest distributions,
or to interest distributions, with disproportionate,
nominal or no distributions in respect of principal. The
rate of payment in respect of principal of any class of
Notes and distributions in respect of the Certificate
Balance of the Certificates of any class will depend on
the priority of payment of such class and the rate and
timing of payments (including prepayments, defaults,
liquidations and repurchases of Receivables) on the
related Receivables. A rate of payment lower or higher
than that anticipated may affect the weighted average
life of each class of Securities in the manner described
herein and in the related Prospectus Supplement.
Prospective investors should consider, among other
things, the information set forth in "Risk Factors" on
page __ herein.
______________________
ANY NOTES OF A SERIES REPRESENT OBLIGATIONS OF, AND THE
CERTIFICATES OF A SERIES REPRESENT BENEFICIAL INTERESTS
IN, THE RELATED TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN, AND ARE NOT GUARANTEED OR
INSURED BY, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
ANY GOVERNMENTAL AGENCY, ANY OF THE SELLERS, THE SERVICER
OR NATIONSBANK CORPORATION OR ANY OF THEIR RESPECTIVE
AFFILIATES.
______________________
THESE SECURITIES ARE SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED AND
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.
Retain this Prospectus for future reference. This
Prospectus may not be used to consummate sales of
Securities offered hereby unless accompanied by a
Prospectus Supplement.
______________________
The date of this Prospectus is _____ __, 1996.
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Securities are issued,
unaudited monthly and annual reports concerning the
Receivables and each Trust will be prepared by the
Servicer and sent by the Trustee, on behalf of each
Trust, only to the registered holders of the Certificates
(the "Certificateholders") pursuant to the applicable
Trust Agreement and the registered holders of the Notes
(the "Noteholders") pursuant to the applicable Indenture.
The registered holder of the Certificates and the Notes
is Cede & Co., as nominee of The Depository Trust Company
("DTC"). Such reports will not contain audited financial
statements with respect to the applicable Trust. Owners
of beneficial interests in the Certificates ("Certificate
Owners") may obtain these reports free of charge (except
for copying and postage costs) by a request in writing to
the Trustee at [Name:______]
[Address:___________________], Attention: _________.
Owners of beneficial interests in the Notes ("Note
Owners") may similarly obtain these reports free of
charge (except for copying and postage costs) by a
request in writing to the Indenture Trustee at
[Name:______] [Address:___________________], Attention:
_________. The Sellers do not intend to send any of
their consolidated reports of condition and income or
other information required to be furnished to the
Sellers' regulators to Certificateholders, Noteholders,
Certificate Owners or Note Owners. See "Certain
Information Regarding the Securities Book-Entry
Registration" and " Reports to Securityholders."
AVAILABLE INFORMATION
The Sellers, as the originators of each Trust, have
filed with the Securities and Exchange Commission (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 Notes and the Certificates offered pursuant to this
Prospectus. For further information, reference is made to
the Registration Statement, and the exhibits thereto,
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 Northwestern Atrium
Center, 500 West Madison Street, 14th Floor, Chicago,
Illinois 60661 and Seven World Trade Center, 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 documents filed by or on behalf of each Trust
pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, subsequent
to the date of this Prospectus and prior to the
termination of the offering of the Securities shall be
deemed to be incorporated by reference in this
Prospectus. Any statement contained herein or in a
document incorporated or 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 herein or in any subsequently
filed document which also is or 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 so modified or
superseded, to constitute a part of this Prospectus.
The Sellers will provide without charge to each
person, including any beneficial owner of Securities, 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 of the documents incorporated herein or in any
related Prospectus Supplement by reference, except the
exhibits to such documents (unless such exhibits are
specifically incorporated by reference in such
documents). Requests for such copies should be directed
to [Name:____________; Address:___________] (Telephone:
( ) __-___).
SUMMARY
The following summary is qualified in its entirety
by reference to the detailed information appearing
elsewhere in this Prospectus and by reference to the
information with respect to the Securities of any series
contained in the related Prospectus Supplement to be
prepared and delivered in connection with the offering of
such Securities. Certain capitalized terms used in this
summary are defined elsewhere in this Prospectus on the
pages indicated in the "Index of Terms."
ISSUER . . . . . With respect to each series of
Securities, the Trust to be formed
pursuant to either a Trust
Agreement (as amended and
supplemented from time to time, a
"Trust Agreement") among the
Sellers and the Trustee for such
Trust (the "Trust" or the "Issuer")
or a Pooling and Servicing
Agreement (as amended and
supplemented from time to time, the
"Pooling and Servicing Agreement")
among the Trustee, the Sellers and
the Servicer.
SELLERs . . . . . NationsBank, N.A., NationsBank, N.A.
(South) ("NationsBank South") and
NationsBank of Texas, N.A.
("NationsBank Texas") (each, in
such capacity, a "Seller" and a
"Bank" and, collectively, the
"Sellers" and the "Banks").
SERVICER . . . . NationsBank, N.A. in its capacity as
servicer (the "Servicer").
TRUSTEE . . . . . With respect to each series of
Securities, the Trustee specified
in the related Prospectus
Supplement.
INDENTURE TRUSTEE. With respect to any applicable series
of Securities, the Indenture
Trustee specified in the related
Prospectus Supplement.
THE TRUST
PROPERTY. . . . . The property of each Trust will
include a pool of retail motor
vehicle installment sales contracts
secured by new or used automobiles
or light trucks (the
"Receivables"), including rights to
receive certain payments made with
respect to such Receivables,
security interests in the vehicles
financed thereby (the "Financed
Vehicles"), certain accounts and
the proceeds thereof and any
proceeds from claims on certain
related insurance policies. On the
Closing Date specified in the
related Prospectus Supplement with
respect to a Trust (the "Closing
Date"), the Sellers will sell or
transfer Receivables (the "Initial
Receivables") having an aggregate
principal balance specified in the
related Prospectus Supplement as of
the date specified therein (the
"Initial Cut-Off Date") to such
Trust pursuant to either a Sale and
Servicing Agreement among the
Sellers, the Servicer and the Trust
(as amended and supplemented from
time to time, a "Sale and Servicing
Agreement") or, if the Trust is to
be treated as a grantor trust for
federal income tax purposes, the
related Pooling and Servicing
Agreement among the Sellers, the
Servicer and the Trustee. The
property of each Trust will also
include amounts on deposit in
certain trust accounts, including
the related Collection Account, any
Pre-Funding Account, any Yield
Supplement Account, any Reserve
Account and any other account
identified in the applicable
Prospectus Supplement.
To the extent provided in the related
Prospectus Supplement, the Sellers
will be obligated (subject only to
the availability thereof) to sell,
and the related Trust will be
obligated to purchase (subject to
the satisfaction of certain
conditions described in the
applicable Sale and Servicing
Agreement or Pooling and Servicing
Agreement), additional Receivables
(the "Subsequent Receivables") from
time to time (as frequently as
daily) during the Funding Period
specified in the related Prospectus
Supplement having an aggregate
principal balance approximately
equal to the amount on deposit in
the Pre-Funding Account (the
"Pre-Funded Amount") on the Closing
Date.
The Receivables for any given
Receivables Pool arise or will
arise from loans originated by
motor vehicle dealers (the
"Dealers") and purchased by the
Sellers pursuant to agreements with
the Dealers. The purchase price
for the Receivables purchased by
the Trust from the Sellers and by
the Seller or Sellers from a Dealer
may be more or less than the
aggregate principal balance
thereof.
[NB-SPC] . . . . Prior to the first issuance of a
series of Securities that includes
Notes, the parent of the Sellers
will form a wholly-owned limited
purpose subsidiary ("[NB-SPC]") for
the limited purpose of purchasing a
portion of the Certificates issued
by each Trust that issues Notes,
acting as the general partner of
each such Trust for federal income
tax purposes and engaging in
incidental activities.
THE NOTES . . . . A series of Securities may include
one or more classes of Notes, which
will be issued pursuant to an
Indenture between the Trust and the
Indenture Trustee (as amended and
supplemented from time to time, an
"Indenture"). The related
Prospectus Supplement will specify
which class or classes, if any, of
Notes of the related series are
being offered thereby.
Notes will be available for purchase
in the denominations specified in
the related Prospectus Supplement
and will be available in book-entry
form only. Noteholders will be
able to receive Definitive Notes
only in the limited circumstances
described herein or in the related
Prospectus Supplement. See "Certain
Information Regarding the
Securities Definitive Securities."
Each class of Notes may have a stated
principal amount and may bear
interest at a specified rate or
rates (with respect to each class
of Notes, the "Note Interest
Rate"). Each class of Notes may
have a different Note Interest
Rate, which may be a fixed,
variable or adjustable Note
Interest Rate, or any combination
of the foregoing. The related
Prospectus Supplement will specify
the stated principal amount and the
Note Interest Rate for each class
of Notes, or the method for
determining such Note Interest
Rate.
With respect to a series that
includes two or more classes of
Notes, each class may differ as to
the timing and priority of
payments, allocations of losses,
Note Interest Rate or amount of
payments of principal or interest,
or payments of principal or
interest in respect of any such
class or classes may or may not be
made upon the occurrence of
specified events or on the basis of
collections from designated
portions of the Receivables Pool.
In addition, a series may include
one or more classes of Notes
("Strip Notes") entitled to (i)
principal payments with
disproportionate, nominal or no
interest payments or (ii) interest
payments with disproportionate,
nominal or no principal payments.
If the Servicer exercises its option
to purchase the Receivables of a
Trust (or, if not, and if and to
the extent provided in the related
Prospectus Supplement, if
satisfactory bids for the purchase
of such Receivables are received),
in the manner and on the respective
terms and conditions described
under "Description of the Transfer
and Servicing Agreements Termination," the
outstanding Notes will be redeemed
as set forth in the related
Prospectus Supplement.
In addition, if the related
Prospectus Supplement provides that
the property of a Trust will
include a Pre-Funding Account (as
such term is defined in the related
Prospectus Supplement, the
"Pre-Funding Account"), one or more
classes of the outstanding Notes
will be subject to partial
redemption on or immediately
following the end of the Funding
Period (as such term is defined in
the related Prospectus Supplement,
the "Funding Period") in an amount
and manner specified in the related
Prospectus Supplement. In the event
of such partial redemption, the
Noteholders may be entitled to
receive a prepayment premium from
the Trust, in the amount and to the
extent provided in the related
Prospectus Supplement.
THE CERTIFICATES. . A series of Securities will include
one or more classes of Certificates
and may or may not include any
Notes. The related Prospectus
Supplement will specify which class
or classes, if any, of the
Certificates are being offered
thereby.
Certificates will be available for
purchase in the denominations
specified in the related Prospectus
Supplement and may be available in
book-entry form. If Certificates
are issued in book-entry form,
Certificateholders will be able to
receive Definitive Certificates
only in the limited circumstances
described herein or in the related
Prospectus Supplement. See "Certain
Information Regarding the
Securities Definitive Securities."
Each class of Certificates may have a
stated Certificate Balance (with
respect to each class of
Certificates, the "Certificate
Balance") and may accrue interest
on such Certificate Balance at a
specified rate (with respect to
each class of Certificates, the
"Certificate Rate"). Each class of
Certificates may have a different
Certificate Rate, which may be a
fixed, variable or adjustable
Certificate Rate, or any
combination of the foregoing. The
related Prospectus Supplement will
specify the Certificate Balance and
the Certificate Rate for each class
of Certificates or the method for
determining the Certificate Rate.
With respect to a series that
includes two or more classes of
Certificates, each class may differ
as to the timing and priority of
distributions, allocation of
losses, Certificate Rate or amount
of distributions in respect of
principal or interest, or
distributions in respect of
principal or interest in respect of
any such class or classes may or
may not be made upon the occurrence
of specified events or on the basis
of collections from designated
portions of the Receivables Pool.
In addition, a series may include
one or more classes of Certificates
("Strip Certificates") entitled to
(i) distributions in respect of
principal with disproportionate,
nominal or no interest
distributions or (ii) interest
distributions with
disproportionate, nominal or no
distributions in respect of
principal.
If a series of Securities includes
classes of Notes, distributions in
respect of the Certificates may be
subordinated in priority of payment
to payments on the Notes to the
extent specified in the related
Prospectus Supplement.
If the Servicer exercises its option
to purchase the Receivables of a
Trust (or, if not, and if and to
the extent provided in the related
Prospectus Supplement, satisfactory
bids for the purchase of such
Receivables are received), in the
manner and on the respective terms
and conditions described under
"Description of the Transfer and
Servicing Agreements Termination,"
Certificateholders will receive as
a prepayment an amount in respect
of the Certificates as specified in
the related Prospectus Supplement.
In addition, if the related
Prospectus Supplement provides that
the property of a Trust will
include a Pre-Funding Account,
Certificateholders may receive a
partial prepayment of principal on
or immediately following the end of
the Funding Period in an amount and
manner specified in the related
Prospectus Supplement. In the event
of such partial prepayment, the
Certificateholders may be entitled
to receive a prepayment premium
from the Trust, in the amount and
to the extent provided in the
related Prospectus Supplement.
BOOK-ENTRY
REGISTRATION . . Each class of Securities of a given
series may be initially represented
by one or more certificates
registered in the name of Cede & Co.
("Cede"), or any other nominee for
DTC set forth in the related
Prospectus Supplement (Cede, or such
other nominee, "DTC's Nominee"), and
for each such class, will not be
registered in the names of the
holders of the Securities of such
series or their nominees. Because of
this, unless and until Definitive
Securities for such series are
issued, holders of such Securities
will not be recognized by the Trustee
or any Indenture Trustee as
"Certificateholders," "Noteholders"
or "Securityholders," as the case may
be (as such terms are used herein or
in the related Pooling and Servicing
Agreement or the related Indenture
and Trust Agreement, as applicable).
Hence, until Definitive Securities
are issued, holders of such
Securities will be able to exercise
the rights of Securityholders only
indirectly through DTC and its
participating organizations. See
"Risk Factors Book-Entry
Registration; Owners of Securities
Not Recognized as "Securityholders""
and "Certain Information Regarding
the Securities Book-Entry
Registration,"and " Definitive
Securities."
CREDIT AND CASH FLOW
ENHANCEMENT . . If and to the extent specified in the
related Prospectus Supplement,
credit enhancement with respect to
a Trust or any class or classes of
Securities may include any one or
more of the following:
subordination of one or more other
classes of Securities, a Reserve
Account, over-collateralization,
letters of credit, credit or
liquidity facilities, surety bonds,
guaranteed investment contracts,
guaranteed rate agreements, swaps
or other interest rate protection
agreements, repurchase obligations,
yield supplement agreements, other
agreements with respect to third
party payments or other support,
cash deposits or other
arrangements. Any form of credit
enhancement may have certain
limitations and exclusions from
coverage thereunder, which will be
described in the related Prospectus
Supplement.
RESERVE ACCOUNT . If so specified in the related
Prospectus Supplement, a Reserve
Account may be created for the
related Trust with an initial
deposit by the Sellers of cash or
certain investments having a value
equal to the amount specified in
the related Prospectus Supplement.
To the extent specified in the
related Prospectus Supplement,
funds in the Reserve Account will
thereafter be supplemented by the
deposit of amounts remaining on any
Distribution Date after making all
other distributions required on
such date and any amounts deposited
from time to time from the
Pre-Funding Account in connection
with a purchase of Subsequent
Receivables. Amounts in the
Reserve Account will be available
to cover shortfalls in amounts due
to the holders of those classes of
Securities specified in the related
Prospectus Supplement in the manner
and under the circumstances
specified therein. The related
Prospectus Supplement will also
specify to whom and the manner and
circumstances under which amounts
on deposit in the Reserve Account
(after giving effect to all other
required distributions to be made
by the applicable Trust) in excess
of the Specified Reserve Account
Balance (as defined in the related
Prospectus Supplement) will be
distributed.
PRE-FUNDING ACCOUNT If so specified in the related
Prospectus Supplement, the property
of each Trust may include monies on
deposit in a Pre-Funding Account,
which monies will be used to
purchase or otherwise acquire
Subsequent Receivables from the
Sellers from time to time during
the Funding Period specified in the
related Prospectus Supplement. The
amount that may be initially
deposited into a Pre-Funding
Account may be up to 100% of the
net proceeds from the sale of the
Securities issued by a Trust and
the length of the Funding Period
may be up to one year. The amount
that may be initially deposited
into a Pre-Funding Account, and the
length of a Funding Period, will be
specified in the related Prospectus
Supplement.
YIELD SUPPLEMENT
ACCOUNT; YIELD
SUPPLEMENT
AGREEMENT. . . . . If so specified in the related
Prospectus Supplement, the Sellers
will establish a yield supplement
account with the related Indenture
Trustee or applicable Trustee for the
benefit of the holders of the related
Securities (as such term is defined
in the related Prospectus Supplement,
the "Yield Supplement Account").
Each Yield Supplement Account will be
designed solely to hold funds that
secure the obligation of a Seller or
other person to make payments under a
Yield Supplement Agreement, as the
case may be, to provide payments to
the Securityholders in respect of
Receivables the Contract Rate of
which is less than the Required Rate
(as such term is defined in the
related Prospectus Supplement, the
"Required Rate").
If so specified in the related
Prospectus Supplement, the Yield
Supplement Account will be created
with an initial deposit by the
Sellers (the "Yield Supplement
Initial Deposit") in an amount
equal to the net present value
(discounted at a per annum rate
specified in the related Sale and
Servicing Agreement or Pooling and
Servicing Agreement) of the
aggregate amount by which interest
on the principal balance of each
Initial Receivable for the period
commencing on the Initial Cut-Off
Date and ending with the scheduled
maturity of each Receivable,
assuming that payments on such
Receivables are made as scheduled
and no prepayments are made, at the
Required Rate exceeds interest on
such principal balances at the
Contract Rate of each such
Receivable (the "Yield Supplement
Amount" and, with respect to the
Initial Receivables, the "Required
Initial Yield Supplement Amount").
If a Yield Supplement Account and a
Pre-Funding Account are established
with respect to any Trust, the
Servicer, the Sellers and the
related Indenture Trustee or
applicable Trustee, as the case may
be, will enter into a Yield
Supplement Agreement (as amended
and supplemented from time to time,
a "Yield Supplement Agreement")
pursuant to which, on each
Subsequent Transfer Date, the
Sellers will deposit into the Yield
Supplement Account an amount (the
"Additional Yield Supplement
Amount") equal to the net present
value (discounted at a per annum
rate specified in the related Sale
and Servicing Agreement or Pooling
and Servicing Agreement) of the
aggregate Yield Supplement Amounts,
if any, in respect of Subsequent
Receivables for the periods
commencing with the related
Subsequent Cut-Off Date and ending
with the scheduled maturities of
the related Subsequent Receivables,
assuming that payments on such
Receivables are made as scheduled
and no prepayments are made. The
aggregate of the Additional Yield
Supplement Amounts in respect of
the Subsequent Receivables is
referred to herein as the "Required
Subsequent Yield Supplement Amount"
and, together with the Required
Initial Yield Supplement Amount,
the "Required Yield Supplement
Amount." See "Description of the
Transfer and Servicing
Agreements Credit and Cash Flow
Enhancement Yield Supplement
Account; Yield Supplement
Agreement."
TRANSFER AND SERVICING
AGREEMENTS . . With respect to each Trust, the
Sellers will sell the related
Receivables to such Trust pursuant
to a Sale and Servicing Agreement
or a Pooling and Servicing
Agreement. The rights and benefits
of any Trust under a Sale and
Servicing Agreement will be
assigned to the Indenture Trustee
as collateral for the Notes of the
related series. The Servicer will
agree with such Trust to be
responsible for servicing,
managing, maintaining custody of
and making collections on the
Receivables. The Servicer will
undertake certain administrative
duties under an Administration
Agreement with respect to any Trust
that has issued Notes.
To the extent provided in the related
Prospectus Supplement, with respect
to Simple Interest Receivables, the
Servicer may advance interest
shortfalls (an "Advance") and may
be entitled to reimbursement of
Advances from subsequent payments
on or with respect to the
Receivables. If the related
Prospectus Supplement does not
provide for the making of Advances,
such Prospectus Supplement may
provide that interest shortfalls
may be paid out of funds withdrawn
from the Reserve Account (each an
"Advance Reserve Withdrawal").
The Sellers will be obligated to
repurchase any Receivable if the
interest of the applicable Trust in
such Receivable is materially and
adversely affected by a breach of
any representation or warranty made
by the Sellers with respect to the
Receivable, if the breach has not
been cured following the discovery
by or notice to the Sellers of the
breach.
To the extent provided in the related
Prospectus Supplement, the Servicer
will be obligated to purchase any
Receivable if, among other things,
it extends the date for final
payment by the Obligor of such
Receivable beyond the applicable
Final Scheduled Maturity Date (as
defined in the related Prospectus
Supplement, the "Final Scheduled
Maturity Date"), changes the
Contract Rate or the total amount
or number of scheduled payments of
such Receivable or fails to
maintain a first priority perfected
security interest in the related
Financed Vehicle.
To the extent provided in the related
Prospectus Supplement, the Servicer
will be entitled to receive a fee
for servicing the Receivables of
each Trust equal to a specified
percentage of the aggregate
principal balance of the related
Receivables Pool, as set forth in
the related Prospectus Supplement,
plus certain late fees, prepayment
charges and other administrative
fees or similar charges, plus
reinvestment proceeds on any
payments received in respect of the
Receivables. See "Description of
the Transfer and Servicing
Agreements Servicing Compensation
and Expenses" herein and in the
related Prospectus Supplement.
CERTAIN LEGAL
ASPECTS OF THE
RECEIVABLES;
REPURCHASE
OBLIGATIONS. . . In connection with the sale of
Receivables to a Trust, security
interests in the Financed Vehicles
securing such Receivables will be
assigned by the Sellers to such
Trust. Due to administrative burden
and expense, the certificates of
title to the Financed Vehicles will
not be amended to reflect the
assignment to such Trust. In the
absence of such an amendment, such
Trust may not have a first priority
perfected security interest in the
Financed Vehicles securing the
Receivables in some states. The
Sellers will be obligated to
repurchase any Receivable sold to a
Trust as to which a first priority
perfected security interest in the
name of the related Seller in the
Financed Vehicle securing such
Receivable shall not exist as of the
date such Receivable is purchased by
such Trust, if such breach shall
materially and adversely affect the
interest of such Trust in such
Receivable and if such failure or
breach shall not have been cured by
the last day of the second (or, if
the related Seller elects, the first)
month following the discovery by or
notice to the Sellers of such breach.
If such Trust does not have a first
priority perfected security interest
in a Financed Vehicle, its ability to
realize on such Financed Vehicle in
the event of a default may be
adversely affected. To the extent
the security interest is perfected,
such Trust will have a prior claim
over subsequent purchasers of such
Financed Vehicles and holders of
subsequently perfected security
interests. However, as against
subsequent purchasers who were to
obtain physical possession of the
Receivables without knowledge of
their assignment to the Trust or
holders of liens for repairs of
Financed Vehicles or for taxes unpaid
by an Obligor under a Receivable, or
because of fraud or negligence, such
Trust could lose the priority of its
security interest or its security
interest in Financed Vehicles. None
of the Sellers nor the Servicer will
have any obligation to repurchase a
Receivable as to which any of the
aforementioned occurrences result in
a Trust's losing the priority of its
security interest or its security
interest in such Financed Vehicle
after the Closing Date with respect
to an Initial Receivable or after the
applicable Subsequent Transfer Date
with respect to a Subsequent
Receivable. See "Risk Factors
Certain Legal Aspects of the
Receivables - Potential for Superior
Interests in Receivables and Financed
Vehicles" and "Certain Legal Aspects
of the Receivables Security
Interests in Vehicles."
Federal and state consumer protection
laws impose requirements upon
creditors in connection with
extensions of credit and
collections of retail installment
loans, and certain of these laws
make an assignee of such a loan
liable to the obligor thereon for
any violation by the lender. The
applicable Seller will be obligated
to repurchase any Receivable which
fails to comply with such
requirements.
TAX STATUS . . . Unless the Prospectus Supplement
specifies that the related Trust
will be treated as a grantor trust,
upon the issuance of the related
series of Securities, Special Tax
Counsel to such Trust expects to
deliver an opinion to the effect
that, for federal income tax
purposes: (i) any Notes of such
series will be characterized as
debt and (ii) such Trust will not
be characterized as an association
(or a publicly traded partnership)
taxable as a corporation. In
respect of any such series, each
Noteholder, if any, by the
acceptance of a Note of such
series, will agree to treat such
Note as indebtedness, and each
Certificateholder, by the
acceptance of a Certificate of such
series, will agree to treat such
Trust as a partnership in which
such Certificateholder is a partner
for federal income tax purposes.
Alternative characterizations of
such Trust and such Certificates
are possible, but would not result
in materially adverse tax
consequences to Certificateholders.
If the Prospectus Supplement
specifies that the related Trust
will be treated as a grantor trust,
upon the issuance of the related
series of Certificates, Special Tax
Counsel to such Trust expects to
deliver an opinion to the effect
that such Trust will be treated as
a grantor trust for federal income
tax purposes and will not be
subject to federal income tax.
See "Certain Federal Income Tax
Consequences" herein and in the
related Prospectus Supplement for
additional information concerning
the application of federal tax
laws.
ERISA
CONSIDERATIONS. . A fiduciary of any employee benefit
plan or other retirement arrangement
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"), should
carefully review with its legal
advisors whether the purchase or
holding of Notes or Certificates of
any series could give rise to a
transaction prohibited or not
otherwise permissible under ERISA or
Section 4975 of the Code. See "ERISA
Considerations" herein and in the
related Prospectus Supplement.
RISK FACTORS
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES - POTENTIAL FOR
SUPERIOR INTERESTS IN RECEIVABLES AND FINANCED VEHICLES
Pursuant to each Sale and Servicing Agreement or
Pooling and Servicing Agreement,the Servicer will service
and administer the Receivables held by each Trust. The
Sellers will cause financing statements to be filed with
the appropriate governmental authorities to perfect the
interest of each Trust as against the Sellers in respect
of such Trust's purchase of the Receivables in accordance
with the requirements of the Uniform Commercial Code in
effect in the states of North Carolina, Georgia and Texas
(the "UCC"), and the Servicer will hold or appoint its
affiliate, NationsBanc Services, Inc. ("NSI"), an
indirect wholly-owned subsidiary of NationsBank
Corporation, to hold the Receivables and Receivable Files
(as defined below) as custodian for the Trustee following
the sale and assignment of the Receivables to the Trust.
Although the Receivable Files will not be segregated,
stamped or otherwise marked to so indicate, the Servicer
and NationsBank, N.A., NationsBank South and NationsBank
Texas will note in their computer records that the
Receivables 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. Such an acquisition of a
superior interest in the Receivables would deprive
Certificateholders of the benefits of the ownership of
the Receivables.
The Sellers will assign their security interests in
the Financed Vehicles along with the sale and assignment
of the Receivables to the Trustee. The certificates of
title or ownership will not be endorsed or otherwise
amended to identify the Trust as the new secured party.
In Texas, North Carolina, Florida, Georgia, and South
Carolina and most other states, in the absence of fraud
or forgery by the vehicle owner or of fraud, forgery,
negligence or error by a Bank or administrative error by
state or local agencies, the notation of such 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 or ownership that the first priority
perfected security interest of the Trust or Trustee may
not be enforceable. In the event the Trust has failed to
obtain or maintain a first priority 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 first priority
perfected security interest. As a result,
Certificateholders might not be able to obtain the
proceeds of the repossession and sale of an affected
Financed Vehicle.
As part of its normal operating procedures during
the period from at least 1979 until January 4, 1996,
after receiving Motor Vehicle Loan documents from Dealers
and after reviewing those documents, NationsBank, N.A.
microfilmed the manually signed original Motor Vehicle
Loan document and then destroyed the manually signed
original document; however, certificates of title were
not destroyed as part of these procedures. In the event
of a bankruptcy of a Dealer, a creditor of such Dealer or
the bankruptcy trustee of such Dealer could assert that
NationsBank, N.A., to the extent NationsBank, N.A. was
relying solely on possession as a means of perfecting a
first priority ownership interest in such an affected
Receivable, no longer had a perfected ownership interest
in such Receivable because it no longer had the manually
signed original Receivable document as a result of its
destruction of the manually signed original Receivable
document. In certain circumstances, NationsBank, N.A. has
filed financing statements against Dealers which may be
effective to perfect its interest in Receivables
purchased from such Dealers; however, no assurances can
be given as to the priority afforded to NationsBank,
N.A.'s interest as a result of such filings. See "Certain
Legal Aspects of the Receivables Security Interests in
Vehicles." If successful, such assertion would render
NationsBank, N.A. an unsecured creditor of the Dealer in
bankruptcy and as a result, the transfer by NationsBank,
N.A. to a Trust would be effective only to transfer such
unsecured claim rather than a first priority perfected
ownership interest in such Receivables. NationsBank, N.A.
has agreed that if, after the bankruptcy of a Dealer, the
bankruptcy trustee of the Dealer or any other creditor of
such Dealer asserts that NationsBank, N.A. did not have,
or that the Trust does not have, a first priority
perfected ownership interest in any such Receivable
acquired by NationsBank, N.A. from such Dealer and such
assertion is related to NationsBank, N.A.'s prior
practice of retaining original Motor Vehicle Loan
documents only in microfilm form, NationsBank, N.A. will
repurchase such Receivable from a Trust at the Purchase
Amount. Such repurchase obligation would be a general
unsecured obligation of NationsBank, N.A. In connection
with any such repurchase by NationsBank, N.A., the
Securities would be subject to prepayment to the extent
of the principal portion of any such payment made by
NationsBank, N.A.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES - POTENTIAL
DELAYS OR REDUCTIONS IN PAYMENTS AS A RESULT OF THE
INSOLVENCY OF A BANK
The Banks intend that the transfer of the
Receivables by them under the Agreement constitute a
sale. In the event that a Bank were to become insolvent,
the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA") sets forth certain
powers that the Federal Deposit Insurance Corporation
(the "FDIC") could exercise if it were appointed as
receiver of such Bank. Subject to clarification by FDIC
regulations or interpretations, it would appear from the
positions taken by the FDIC before and after the passage
of FIRREA that the FDIC, in its capacity as receiver for
such Bank, would not interfere with the timely transfer
to the Trust of payments collected on the Receivables. If
the transfer to a given Trust were to be characterized as
a loan secured by a pledge of Receivables, to the extent
that such Bank would be deemed to have granted a security
interest in the Receivables to such Trust, and that
interest had been validly perfected before such Bank's
insolvency and had not been taken in contemplation of
insolvency, that security interest should not be subject
to avoidance, and payments to such Trust with respect to
the Receivables should not be subject to recovery by the
FDIC as receiver of such Bank. If, however, the FDIC were
to assert a contrary position, such as by requiring the
Trustee to establish its right to those payments by
submitting to and completing the administrative claims
procedure established under FIRREA, delays in payments on
the Certificates and possible reductions in the amount of
those payments could occur. See "Certain Legal Aspects of
the Receivables."
TRUST'S RELATIONSHIP TO THE SELLERS, NATIONSBANK
CORPORATION AND THEIR AFFILIATES
None of the Sellers, the Servicer, NSI or
NationsBank Corporation or any of their affiliates is
generally obligated to make any payments in respect of
any Notes, the Certificates or the Receivables of a given
Trust.
However, in connection with the sale of Receivables
by the Sellers to a given Trust, the Sellers will make
representations and warranties with respect to the
characteristics of such Receivables and, in certain
circumstances, the applicable Seller may be required to
repurchase Receivables with respect to which such
representations and warranties have been breached. See
"Description of the Transfer and Servicing
Agreements Sale and Assignment of Receivables." In
addition, under certain circumstances, the Servicer may
be required to purchase Receivables. See "Description of
the Transfer and Servicing Agreements Servicing
Procedures." Moreover, if NationsBank, N.A. were to
cease acting as Servicer, delays in processing payments
on the Receivables and information in respect thereof
could occur and result in delays in payments to the
Securityholders.
The related Prospectus Supplement may set forth
certain additional information regarding a Seller, the
Servicer, NSI and NationsBank Corporation. In addition,
NationsBank Corporation is subject to the information
requirements of the Exchange Act and in accordance
therewith files reports and other information with the
Commission. For further information regarding
NationsBank Corporation reference is made to such reports
and other information, which are available as described
under "Available Information."
SUBORDINATION; LIMITED ASSETS
To the extent specified in the related Prospectus
Supplement, distributions of interest and principal on
one or more classes of Certificates or Notes of a series
may be subordinated in priority of payment to interest
and principal due on the Notes, if any, of such series or
one or more other classes of Certificates of such series.
Moreover, each Trust will not have, nor is it permitted
or expected to have, any significant assets or sources of
funds other than the Receivables and, to the extent
provided in the related Prospectus Supplement, a
Pre-Funding Account, a Yield Supplement Account, a
Reserve Account and any other credit or cash flow
enhancement. The Notes of any series will represent
obligations solely of, and the Certificates of any series
will represent interests solely in, the related Trust and
neither the Notes nor the Certificates of any series will
be insured or guaranteed by the Seller, the Servicer, the
applicable Trustee, any Indenture Trustee or any other
person or entity. Consequently, holders of the
Securities of any series must rely for repayment upon
payments on the related Receivables and, if and to the
extent available, amounts on deposit in the Pre-Funding
Account (if any), the Yield Supplement Account (if any),
the Reserve Account (if any) and any other credit or cash
flow enhancement, all as specified in the related
Prospectus Supplement. Amounts to be deposited in any
such Reserve Account with respect to any Trust will be
limited in amount, and the amount required to be on
deposit in such Reserve Account will be reduced as the
Pool Balance is reduced. In addition, funds in any such
Reserve Account will be available on each Distribution
Date to cover shortfalls in distributions of interest and
principal on the related Securities. If such Reserve
Account, or, to the extent provided in an applicable
Prospectus Supplement, any other credit or cash flow
enhancement is depleted, the related Trust will depend
solely on current payments on its Receivables to make
payments on the related Securities.
If so directed by the holders of the requisite
percentage of outstanding Notes of a series, following an
acceleration of the Notes upon an Event of Default the
applicable Indenture Trustee may sell the related
Receivables in certain limited circumstances as specified
in the related Indenture. See "Description of the
Notes The Indenture Events of Default; Rights upon Event
of Default" herein. However, there is no assurance that
the market value of such Receivables will at any time be
equal to or greater than the aggregate principal amount
of such outstanding Notes. Therefore, upon an Event of
Default with respect to the Notes of any series, there
can be no assurance that sufficient funds will be
available to repay the related Noteholders in full. In
addition, the amount of principal required to be paid to
Noteholders of such series under the related Indenture
will generally be limited to amounts available to be
deposited in the applicable Note Payment Account.
Therefore, unless otherwise specified in the related
Prospectus Supplement, the failure to pay principal on a
class of Notes generally will not result in the
occurrence of an Event of Default until the Final
Scheduled Distribution Date for such class of Notes.
MATURITY AND PREPAYMENT CONSIDERATIONS
All the Receivables are prepayable at any time.
(For this purpose the term "prepayments" includes
prepayments in full, partial prepayments (including those
related to rebates of extended warranty contract costs
and insurance premiums) and liquidations due to default,
as well as receipts of proceeds from physical damage,
credit life and credit disability insurance policies and
certain other Receivables repurchased for administrative
reasons.) The rate of prepayments on the Receivables may
be influenced by a variety of economic, social and other
factors, including the fact that an Obligor generally may
not sell or transfer the Financed Vehicle securing a
Receivable without the consent of the applicable Seller.
The rate of prepayment on the Receivables may also be
influenced by the structure of the loan. In addition,
under certain circumstances, the applicable Seller will
be obligated to repurchase Receivables pursuant to a Sale
and Servicing Agreement or Pooling and Servicing
Agreement as a result of breaches of representations and
warranties and, under certain circumstances, the Servicer
will be obligated to purchase Receivables pursuant to
such Sale and Servicing Agreement or Pooling and
Servicing Agreement as a result of breaches of certain
covenants. See "Description of the Transfer and
Servicing Agreements Sale and Assignment of Receivables."
Consistent with its normal servicing practices and
procedures, the Servicer may, in its discretion and on a
case-by-case basis, arrange with Obligors to extend or
modify the terms of the related Receivables. Some of
such arrangements (including any extension beyond the
Final Scheduled Maturity Date set forth in the related
Prospectus Supplement) will cause the Servicer to be
obligated to repurchase such Receivables, as described
above. Any reinvestment risks resulting from a faster or
slower incidence of prepayment of Receivables held by a
given Trust will be borne entirely by the Securityholders
of the related series of Securities. See also
"Description of the Transfer and Servicing
Agreements Termination" regarding the Servicer's option
to purchase the Receivables of a given Receivables Pool
and " Insolvency Event or Dissolution" regarding the sale
of the Receivables owned by a Trust that is not a grantor
trust if an Insolvency Event or a dissolution with
respect to [NB-SPC] occurs.
DELINQUENCIES AND REPOSSESSIONS
Delinquencies on the Receivables will result in
shortfalls in distributions to Securityholders unless
such shortfalls are covered by Advances (which will not
be made if the Servicer does not expect to recover the
amount advanced), withdrawals from a Reserve Account or
from the Yield Supplement Account, the Retained Yield (as
defined in the related Prospectus Supplement), [Advance
Reserve Withdrawals] or any other credit or yield
enhancement. The delinquency experience of the
Receivables may be affected by general or regional
economic conditions, the underwriting and servicing
expertise of the Servicer and other factors. If a
delinquency on a Receivable is not remedied, the Servicer
will generally cause the related Financed Vehicle to be
repossessed and resold. There can be no assurance that
the future delinquency, repossession and loss experience
of the Receivables will be similar to any set forth in a
related Prospectus Supplement for such Securities.
GEOGRAPHIC CONCENTRATION
Economic conditions in states where Obligors reside
may affect the delinquency, loan loss and repossession
experience of a Trust with respect to the related
Receivables. An applicable Prospectus Supplement will set
forth summary information derived from the Sellers'
records indicating the relative geographic concentration
by principal balance of the Receivables in any state
where a significant proportion of the mailing addresses
of the Obligors with respect to the related Receivables
are located. A disproportionate geographic concentration
could cause economic conditions in the such locations to
have a disproportionate impact on a Trust.
RISK OF COMMINGLING
With respect to each Trust, the Servicer will
deposit all payments on the related Receivables received
from Obligors and all proceeds of the related Receivables
collected during each Collection Period into the related
Collection Account not later than the business day after
receipt. However, so long as NationsBank, N.A. is the
servicer and provided that (i) there exists no Event of
Servicing Termination and (ii) each other condition to
making monthly deposits as may be required by the related
Sale and Servicing Agreement or Pooling and Servicing
Agreement is satisfied, the Servicer may retain such
amounts until the applicable Distribution Date. The
Servicer or the Seller, as the case may be, will remit
the aggregate Purchase Amount of any Receivables to be
purchased from a Trust to the related Collection Account
on the applicable Distribution Date. Pending deposit
into the Collection Account, collections may be employed
by the Servicer at its own risk and for its own benefit
and will not be segregated from its own funds. If the
Servicer were unable to remit such funds, the applicable
Securityholders might incur a loss. To the extent set
forth in the related Prospectus Supplement, the Servicer
may, in order to satisfy the requirements described
above, obtain a letter of credit or other security for
the benefit of the related Trust to secure timely
remittances of collections on the related Receivables and
payment of the aggregate Purchase Amount with respect to
Receivables purchased by the Servicer.
EVENT OF SERVICING TERMINATION
With respect to a series of Securities that includes
Notes, in the event that an Event of Servicing
Termination occurs, the Indenture Trustee or the
Noteholders with respect to such series, as described
under "Description of the Transfer and Servicing
Agreements Rights upon Event of Servicing Termination,"
may remove the Servicer without the consent of the
Trustee or any of the Certificateholders with respect to
such series. The Trustee or the Certificateholders with
respect to such series will not have the ability to
remove the Servicer if an Event of Servicing Termination
occurs. In addition, the Noteholders of such series have
the ability, with certain specified exceptions, to waive
defaults by the Servicer, including defaults that could
materially adversely affect the Certificateholders of
such series. See "Description of the Transfer and
Servicing Agreements Waiver of Past Events of Servicing
Termination."
BOOK-ENTRY REGISTRATION; OWNERS OF SECURITIES NOT
RECOGNIZED AS "SECURITYHOLDERS"
If so specified in the related Prospectus
Supplement, each class of Securities of a given series
will be initially represented by one or more certificates
registered in the name of DTC's Nominee, and will not be
registered in the names of the holders of the Securities
of such series or their nominees. Because of this,
unless and until Definitive Securities for such series
are issued, holders of such Securities will not be
recognized by the Trustee or any Indenture Trustee as
"Certificateholders," "Noteholders" or "Securityholders,"
as the case may be (as such terms are used herein or in
the related Pooling and Servicing Agreement or the
related Indenture and Trust Agreement, as applicable).
Hence, until Definitive Securities are issued, holders of
such Securities will be able to exercise the rights of
Securityholders only indirectly through DTC and its
participating organizations. See "Certain Information
Regarding the Securities Book-Entry Registration" and
" Definitive Securities."
THE TRUSTS
With respect to each series of Securities, the
Sellers will establish a separate Trust pursuant to the
respective Trust Agreement or Pooling and Servicing
Agreement, as applicable, for the transactions described
herein and in the related Prospectus Supplement. The
property of each Trust will include a pool (a
"Receivables Pool") of retail motor vehicle installment
sales contracts purchased by the Sellers from Dealers and
all payments received thereunder after the applicable
Cut-Off Date. The Receivables of each Receivables Pool
were or will be originated by the Dealers in accordance
with Sellers' requirements and purchased by the Sellers
pursuant to agreements with Dealers and any assignments
and other documents related thereto ("Dealer
Agreements"). Pursuant to the Dealer Agreements, the
Dealers are obligated to repurchase from the Sellers
Receivables which do not meet certain representations
made by the Dealers. The Receivables of each Receivables
Pool will continue to be serviced by the Servicer and
evidence indirect financing made available by the
applicable Seller to the obligors under the Receivables
(the "Obligors").
On the applicable Closing Date, after the issuance
of the Certificates and any Notes of a given series, the
Sellers will sell the Initial Receivables of the
applicable Receivables Pool to the Trust to the extent,
if any, specified in the related Prospectus Supplement.
To the extent so provided in the related Prospectus
Supplement, Subsequent Receivables will be conveyed to
the Trust as frequently as daily during the Funding
Period. Any Subsequent Receivables so conveyed will also
be assets of the applicable Trust, subject to the prior
rights of the related Trustee or, where applicable, the
Indenture Trustee and the Noteholders, if any, therein.
The property of each Trust will also include (i) such
amounts as from time to time may be held in separate
trust accounts established and maintained pursuant to the
related Sale and Servicing Agreement or Pooling and
Servicing Agreement and the proceeds of such accounts, as
described herein and in the related Prospectus
Supplement; (ii) security interests in the Financed
Vehicles and any accessions thereto; (iii) the rights to
proceeds from claims on certain physical damage, credit
life and credit disability insurance policies covering
the Financed Vehicles or the Obligors, as the case may
be; (iv) certain rights of the Trust to receive payments
from the Reserve Account, if any, and pursuant to any
applicable Yield Supplement Agreement; (v) any property
that shall have secured a Receivable and that shall have
been acquired by the applicable Trust; (vi) certain of
the rights of each of the Sellers relating to the
repurchase of Receivables under each Dealer Agreement and
under the documents and instruments contained in the
Receivable Files; (vii) certain rebates of premiums and
other amounts relating to certain insurance policies and
other items financed under the Receivables; (viii)
certain other rights of the applicable Trust under the
Sale and Servicing Agreement or the Pooling and Servicing
Agreement, as the case may be; and (ix) any and all
proceeds of the foregoing; provided that, with respect to
any series of Notes, the relevant rights and benefits
with respect to such property will be assigned by the
Sellers and the applicable Trustee to the entity acting
as the Indenture Trustee for the benefit of the related
Noteholders. Any Yield Supplement Account will be
maintained with the related Indenture Trustee or
applicable Trustee, as the case may be, for the benefit
of the related Securityholders. If so specified in the
related Prospectus Supplement, a Yield Supplement Account
may not be part of the property of the related Trust. To
the extent specified in the related Prospectus
Supplement, a Pre-Funding Account, a Reserve Account or
other form of credit enhancement may be a part of the
property of any given Trust or may be held by the entity
acting as the Trustee or an Indenture Trustee for the
benefit of holders of the related Securities.
Additionally, pursuant to contracts between the Servicer
and the Dealers, the Dealers have an obligation after
origination to repurchase Receivables as to which Dealers
have made certain misrepresentations.
The Servicer will continue to service the
Receivables held by each Trust and will receive fees for
such services. See "Description of the Transfer and
Servicing Agreements Servicing Compensation and Expenses"
herein and in the related Prospectus Supplement. To
facilitate servicing and to minimize administrative
burden and expense the Servicer will retain physical
possession of the Receivables held by each Trust and
documents relating thereto as custodian for each such
Trust. Due to the administrative burden and expense, the
certificates of title to the Financed Vehicles will not
be amended to reflect the assignment of the security
interest in the Financed Vehicles to each Trust. In the
absence of such amendment, any Trust may not have a first
priority perfected security interest in the Financed
Vehicles in all states. See "Certain Legal Aspects of
the Receivables Security Interests in Vehicles." Neither
the Trustee nor any Indenture Trustee will be responsible
for the legality, validity, or enforceability of any
security interest in any Financed Vehicle. See "Certain
Legal Aspects of the Receivables" and "Description of the
Transfer and Servicing Agreements Sale and Assignment of
Receivables."
If the protection provided to any Noteholders of a
given series by the subordination of the related
Certificates and by the Reserve Account, if any, or other
credit enhancement for such series or the protection
provided to Certificateholders by any such Reserve
Account or other credit enhancement is insufficient, such
Noteholders or Certificateholders, as the case may be,
would have to look principally to the Obligors on the
related Receivables, the proceeds from the repossession
and sale of Financed Vehicles which secure defaulted
Receivables and the proceeds from any recourse against
Dealers with respect to such Receivables. In such event,
certain factors, such as the applicable Trust's not
having first priority perfected security interests in the
Financed Vehicles in all states, may affect the
Servicer's ability to repossess and sell the collateral
securing the Receivables, and thus may reduce the
proceeds to be distributed to the holders of the
Securities of such series. See "Description of the
Transfer and Servicing Agreements Distributions,"
" Credit and Cash Flow Enhancement" and "Certain Legal
Aspects of the Receivables."
The principal offices of each Trust and the related
Trustee will be specified in the applicable Prospectus
Supplement.
THE TRUSTEE
The Trustee for each Trust will be specified in the
related Prospectus Supplement. The Trustee's liability
in connection with the issuance and sale of the related
Securities is limited solely to the express obligations
of such Trustee set forth in the related Trust Agreement
and the Sale and Servicing Agreement or the related
Pooling and Servicing Agreement, as applicable. A
Trustee may resign at any time, in which event the
Servicer, or its successor, will be obligated to appoint
a successor trustee. The Administrator in respect of a
Trust that is not a grantor trust and the Servicer in
respect of a Trust that is a grantor trust may also
remove the Trustee if the Trustee ceases to be eligible
to continue as Trustee under the related Trust Agreement
or Pooling and Servicing Agreement, as applicable, or if
the Trustee becomes insolvent. In such circumstances,
the Administrator will be obligated to appoint a
successor trustee. Any resignation or removal of a
Trustee and appointment of a successor trustee will not
become effective until acceptance of the appointment by
the successor trustee.
THE RECEIVABLES POOLS
GENERAL
The Sellers purchase fixed rate simple interest
retail motor vehicle installment sales contracts secured
by new and used automobiles, vans and light-duty trucks
("Motor Vehicle Loans") from Dealers in at least 15
states and the District of Columbia. These originations
occur through Dealer Financial Services Group ("DFSG"), a
functional group that includes personnel employed by the
Sellers and other affiliates of NationsBank Corporation.
All Motor Vehicle Loan applications are reviewed for
acceptance by DFSG in accordance with DFSG's established
underwriting policies, as described below, and are not
purchased by a Seller unless approved by DFSG.
DFSG establishes and maintains relationships with
the Dealers. DFSG selects each Dealer from whom the
Sellers purchase motor vehicle loans based upon the
Dealer's commercial reputation, the prior experience of
the Dealer or predecessor organization and, if needed, a
financial review of the Dealer. Generally, Dealer
portfolio performance is monitored monthly and, for the
largest Dealers, reviewed annually. All Dealers from
whom any of the Sellers purchase Motor Vehicle Loans must
execute a dealer agreement with each such Seller which
sets out, among other things, the guidelines and
procedures of the purchasing process. Such agreements
provide for the repurchase by the Dealer of any Motor
Vehicle Loan if any representations or warranties made by
the Dealer relating to the Motor Vehicle Loan are
breached.
The Receivables to be held by each Trust will be
selected from the Sellers' portfolio for inclusion in a
Receivables Pool by several criteria, including that each
Receivable (i) is secured by a new or used vehicle, (ii)
was originated in the United States, (iii) provides for
level monthly payments (except that, if so provided in
the related Prospectus Supplement, the last monthly
payment may, in the case of Balloon Receivables, be a
final scheduled payment that is more than minimally
different from the preceding level monthly payments)
that fully amortize the amount financed over its original
term to maturity, (iv) is a Simple Interest Receivable
and (v) satisfies the other criteria, if any, set forth
in the related Prospectus Supplement. No selection
procedures believed by the Sellers to be adverse to the
Noteholders or the Certificateholders of any series were
or will be used in selecting the related Receivables.
All terms of the retail motor vehicle installment sales
contracts constituting such Receivables which are
material to investors are described herein and in the
related Prospectus Supplement.
"Simple Interest Receivables" are receivables that
provide for the amortization of the amount financed under
the Receivable over a series of fixed level monthly
payments (except that the last such payment may be
different). 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 Contract Rate and further
multiplied by the period elapsed (as a fraction of a
calendar year) since the preceding payment of interest
was made. As payments are received under a Simple
Interest Receivable, the amount received is applied first
to late fees and other fees and charges, if any, second
to interest accrued and unpaid to the date of payment and
the balance is applied to reduce the unpaid principal
balance. Accordingly, if an obligor pays a fixed monthly
installment before its 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,
thereby having the effect of a prepayment. Conversely,
if an Obligor pays a fixed monthly installment after its
scheduled due date, the portion of the payment allocable
to interest for the period since the preceding payment
was made will be greater than it would have been had the
payment been made as scheduled, and the portion of the
payment applied to reduce the unpaid principal balance
will be correspondingly less. In either case, the
Receivables provide for the Obligor to pay 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.
"Balloon Receivables" are monthly payment
receivables secured by new or used automobiles or light
trucks with a final scheduled payment which is greater
than the scheduled monthly payments. A Balloon
Receivable provides for amortization of the loan over a
series of fixed level payment monthly installments like a
Simple Interest Receivable, but also requires a final
scheduled payment due after payment of such monthly
installments which differs by a more than a minimal
amount from the preceding fixed level monthly
installments.
Information with respect to each Receivables Pool
will be set forth in the related Prospectus Supplement,
including, to the extent appropriate, the composition,
the distribution by Contract Rate and by the states of
Obligor addresses, the portion of such Receivables Pool
not consisting of Simple Interest Receivables and the
portion of such Receivables Pool secured by new vehicles
and by used vehicles.
UNDERWRITING
The underwriting policies utilized by DFSG take into
account each prospective obligor's historical credit
performance, current ability to pay and overall
creditworthiness, as well as the asset value of the motor
vehicle that is to secure the Motor Vehicle Loan. Prior
to each loan origination, DFSG reviews the loan
application transmitted to it from the Dealer. Each
applicant for a Motor Vehicle Loan must complete and sign
a loan application, providing the applicant's name,
address, source and amount of monthly income, among other
information. For each loan application, DFSG relies on
the results of a customized credit scoring system, a
credit bureau score, its underwriting guidelines and,
typically, a credit analyst's subjective judgement to
assess an applicant's ability to repay the loan. In
addition, attention is paid to the current value and
expected depreciation of the related motor vehicle.
In evaluating an application, items such as the
interest rate charged on the loan, the term of the loan,
and the required down payment are structured by the
credit analyst based upon the perceived creditworthiness
of the applicant and other underwriting guidelines. DFSG
communicates the decision to approve or decline a loan to
the Dealer. Motor Vehicle Loans funded by the Dealers
based on a Seller's purchase commitment are typically
purchased by the applicable Seller within two business
days of such funding.
SERVICING AND COLLECTIONS
DFSG services all of the Motor Vehicle Loans. The
servicing functions include customer service, document
file keeping, Motor Vehicle Loan record keeping, vehicle
title processing and collections. DFSG's servicing
policies and practices may change from time to time in
accordance with the Sellers' and DFSG's business
judgment.
Servicing of Motor Vehicle Loans, including payment
processing, collateral monitoring, and maintenance of
computer systems is conducted by DFSG on a regional basis
from Dallas, Texas and Greensboro, North Carolina.
Collections are handled centrally from DFSG's
headquarters in Greensboro, North Carolina. All obligors
on Motor Vehicle Loans are given coupon books to remit
with their scheduled payments. The use of coupon books
aids in the efficient and timely processing of payments
through DFSG's operations and systems. Payments on the
Motor Vehicle Loans are generally received by DFSG
through lock box accounts, designated post office boxes,
direct debit to bank accounts, and customer service
centers.
If a Motor Vehicle Loan becomes delinquent, it is
interfaced from the consumer loan system to the
collection system, each operated by DFSG. The collection
system utilizes behavioral scoring methodology to assess
the risk of loss and to establish a collection strategy.
The strategy addresses the optimal timing and method for
written and verbal communications with the delinquent
obligor. Delinquent accounts may receive an initial
contact as early as four days or as late as 21 days
following delinquency. The lower risk collection
strategies use autodialers to contact the delinquent
obligor; higher risk collection strategies use direct
telephone contact and/or direct mail correspondence.
Generally, accounts that remain delinquent for 45 to
60 days, or are otherwise recognized by DFSG's
collections personnel as having an otherwise serious
delinquency problem, are considered for liquidation. To
minimize losses on liquidation, DFSG has a dedicated unit
established to manage the liquidation of collateral
effectively. This group principally contracts with
outside agencies to acquire the collateral and transport
it to a selected wholesale auction. DFSG controls the
auction selection process through evaluations that
include size, location and recent wholesale activity.
Vendor service is monitored closely on an individual
motor vehicle unit basis to ensure that an overall goal
of averaging 90% of a standardized wholesale market value
is attained and that motor vehicles remain in inventory
on average less than 45 days. These guidelines are
strictly monitored by the DFSG group with vendors not
meeting the guidelines being removed.
Deficiencies remaining after liquidation may be
pursued by DFSG on behalf of the applicable Seller in
various ways, including settlement and payment
arrangements, litigation, post-judgment initiatives and
collection agency referrals. Generally, if a motor
vehicle has been repossessed, the Motor Vehicle Loan is
charged off 90 days after repossession or when
repossession proceeds have been received, whichever is
earlier. If a motor vehicle has not been repossessed, the
Motor Vehicle Loan is generally charged off when the loan
is 120 days delinquent.
PHYSICAL DAMAGE INSURANCE
The Sellers and DFSG discontinued placing physical
damage insurance on uninsured accounts effective April 8,
1994. Although DFSG continues to confirm insurance on the
motor vehicle at the inception of each Motor Vehicle
Loan, it no longer tracks the maintenance of insurance
after that date.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Certain information concerning the Sellers'
experience with respect to their portfolio of Motor
Vehicle Loans (including previously sold contracts which
a Seller continues to service, but not including retail
motor vehicle installment sales contracts purchased by
any of the Sellers under certain special financing
programs) will be set forth in each Prospectus
Supplement. There can be no assurance that the
delinquency, repossession and net loss experience on any
Receivables Pool will be comparable to prior experience
or to such information.
MATURITY AND PREPAYMENT CONSIDERATIONS
The weighted average life of the Notes, if any, and
the Certificates of any series will generally be
influenced by the rate at which the principal balances of
the related Receivables are paid, which payment may be in
the form of scheduled amortization or prepayments. (For
this purpose, the term "prepayments" includes prepayments
in full, partial prepayments, liquidations due to
default, the receipt of monthly installments earlier than
the scheduled due dates for such installments, the
receipt of proceeds from credit life, credit disability,
theft or physical damage insurance, repurchases by the
Sellers as a result of certain uncured breaches of the
warranties made by them in the Transfer and Servicing
Agreement with respect to the Receivables, purchases by
the Servicer as a result of certain uncured breaches of
the covenants made by it in the Agreement with respect to
the Receivables, or the Servicer exercising its option to
purchase all of the remaining Receivables.) All of the
Receivables are prepayable at any time without penalty to
the Obligor. The rate of prepayment of automotive
receivables is influenced by a variety of economic,
social and other factors, including the fact that an
Obligor generally may not sell or transfer the Financed
Vehicle securing a Receivable without the consent of the
applicable Seller. The rate of prepayment on the
Receivables may also be influenced by the structure of
the loan. In addition, under certain circumstances, the
applicable Seller will be obligated to repurchase
Receivables from a given Trust pursuant to the related
Sale and Servicing Agreement or Pooling and Servicing
Agreement as a result of breaches of representations and
warranties and the Servicer will be obligated to purchase
Receivables from such Trust pursuant to such Sale and
Servicing Agreement or Pooling and Servicing Agreement as
a result of breaches of certain covenants. Consistent
with its normal servicing practices and procedures and,
to the extent permitted in the related Sale and Servicing
Agreement or Pooling and Servicing Agreement, the
Servicer may, in its discretion and on a case-by-case
basis, arrange with Obligors to extend or modify the
terms of the related Receivables. Some of such
arrangements (including any extension beyond the Final
Scheduled Maturity Date set forth in the related
Prospectus Supplement) will cause the Servicer to be
obligated to repurchase such Receivables, as described
above. See "Description of the Transfer and Servicing
Agreements Sale and Assignment of Receivables" and
" Servicing Procedures." See also "Description of the
Transfer and Servicing Agreements Termination" regarding
the Servicer's option to purchase the Receivables from a
given Trust and " Insolvency Event or Dissolution"
regarding the sale of the Receivables owned by a Trust
that is not a grantor trust if an Insolvency Event or a
dissolution with respect to the Seller occurs.
In light of the above considerations, there can be
no assurance as to the amount of principal payments to be
made on the Notes, if any, or the Certificates of a given
series on each Distribution Date, as applicable, since
such amount will depend, in part, on the amount of
principal collected on the related Receivables Pool
during the applicable Collection Period. Any
reinvestment risks resulting from a faster or slower
incidence of prepayment of Receivables will be borne
entirely by the Noteholders, if any, and the
Certificateholders of a given series. The related
Prospectus Supplement may set forth certain additional
information with respect to the maturity and prepayment
considerations applicable to the particular Receivables
Pool and the related series of Securities.
POOL FACTORS AND TRADING INFORMATION
The "Note Pool Factor" for each class of Notes will
be a seven-digit decimal which the Servicer will compute
prior to each distribution with respect to such class of
Notes indicating the remaining outstanding principal
balance of such class of Notes, as of the applicable
Distribution Date (after giving effect to payments to be
made on such Distribution Date), as a fraction of the
initial outstanding principal balance of such class of
Notes. The "Certificate Pool Factor" for each class of
Certificates will be a seven-digit decimal which the
Servicer will compute prior to each distribution with
respect to such class of Certificates indicating the
remaining Certificate Balance of such class of
Certificates, as of the applicable Distribution Date
(after giving effect to distributions to be made on such
Distribution Date), as a fraction of the initial
Certificate Balance of such class of Certificates. Each
Note Pool Factor and each Certificate Pool Factor will
initially be 1.0000000 and thereafter will decline to
reflect reductions in the outstanding principal balance
of the applicable class of Notes, or the reduction of the
Certificate Balance of the applicable class of
Certificates, as the case may be, as a result of
scheduled payments, prepayments and liquidations of the
Receivables (and also as a result of a prepayment arising
from the application of the Pre-Funding Account, if any).
The Note Pool Factor and the Certificate Pool Factor will
not change as a result of the addition of Subsequent
Receivables. A Noteholder's portion of the aggregate
outstanding principal balance of the related class of
Notes is the product of (i) the original denomination of
such Noteholder's Note and (ii) the applicable Note Pool
Factor. A Certificateholder's portion of the aggregate
outstanding Certificate Balance for the related class of
Certificates is the product of (i) the original
denomination of such Certificateholder's Certificate and
(ii) the applicable Certificate Pool Factor.
With respect to each Trust, the Noteholders, if any,
and the Certificateholders will receive reports on or
about each Distribution Date concerning payments received
on the Receivables during the Collection Period
immediately preceding such Distribution Date, the Pool
Balance (as such term is defined in the related
Prospectus Supplement, the "Pool Balance"), each
Certificate Pool Factor or Note Pool Factor, as
applicable, and various other items of information. In
addition, Securityholders of record during any calendar
year will be furnished information for tax reporting
purposes not later than the latest date permitted by law.
See "Certain Information Regarding the Securities Reports
to Securityholders."
USE OF PROCEEDS
The net proceeds from the sale of the Securities of
a given series will be applied by the applicable Trust
(i) to the purchase of the Receivables from the Sellers,
(ii) to the deposit of the Pre-Funded Amount into the
Pre-Funding Account, if any, and (iii) to make the
initial deposit into the Reserve Account, if any. The
net proceeds to be received by the Sellers from any such
Trust will be added to their general corporate funds and
will be used for general corporate purposes.
THE BANKS, NATIONSBANK CORPORATION AND [NB-SPC]
GENERAL
The Banks are wholly-owned subsidiaries of
NationsBank Corporation. NationsBank Corporation is a
bank holding company established as a North Carolina
corporation in 1968 and is registered under the Bank
Holding Company Act of 1956, as amended (the "BHCA"),
with its principal assets being the stock of its
subsidiaries. Through its banking subsidiaries and its
various non-banking subsidiaries, NationsBank Corporation
provides banking and banking related services primarily
throughout the Southeast and Mid-Atlantic states and
Texas. The principal executive offices of NationsBank
Corporation are located at NationsBank Corporate Center,
100 North Tryon Street, Charlotte, North Carolina 28255.
Its telephone number is (704) 386-5000.
OPERATIONS
NationsBank Corporation provides a diversified range
of banking and certain non-banking financial services and
products through its various subsidiaries. NationsBank
Corporation manages its business activities through three
major internal management groups or business units: the
General Bank, the Global Finance Unit and the Financial
Services Unit.
NationsBank, N.A. is a national banking association
headquartered in Charlotte, North Carolina. As of March
31, 1996, it had assets of $74.450 billion and
shareholder equity of $5.306 billion. The principal
executive offices of NationsBank, N.A. are located at
NationsBank Corporate Center, 100 North Tryon Street,
Charlotte, North Carolina 28255. Its telephone number is
(704) 386-5000. NationsBank, N.A. is also the Servicer.
See "The Servicer" and "The Receivables Pools General"
and " Servicing and Collections."
NationsBank Texas is a national banking association
headquartered in Dallas, Texas. As of March 31, 1996, it
had assets of $49.354 billion and shareholder equity of
$2.804 billion The principal executive offices of
NationsBank Texas are located at 901 Main Street, Dallas,
Texas 75202. Its telephone number is (214) 508-6262.
NationsBank South is a national banking association
headquartered in Atlanta, Georgia. As of March 31, 1996,
it had assets of $46.114 billion and shareholder equity
of $4.198 billion. The principal executive offices of
NationsBank South are located at 600 Peachtree Street,
N.E., Atlanta, Georgia 30308. Its telephone number is
(404) 581-2121.
Prior to issuing for the first time a Series of
Securities that includes Notes, NationsBank Corporation
will form a wholly-owned special purpose subsidiary ("NB-
SPC") for the limited purpose of purchasing a portion of
the Certificates issued by each Trust that issues Notes,
acting as the general partner of each such Trust for
federal income tax purposes and engaging in incidental
activities. NationsBank Corporation will take certain
steps to minimize the likelihood that an Insolvency Event
occurs with respect to [NB-SPC]. These steps include the
creation of [NB-SPC] as a separate, limited purpose
corporation pursuant to a certificate of incorporation
containing limitations (including restrictions on the
nature of [NB-SPC's] business and a restriction on [NB-
SPC's] ability to commence a voluntary case or proceeding
under any insolvency or bankruptcy law without the prior
unanimous vote of its directors). However, there can be
no assurance that an Insolvency Event will not occur with
respect to [NB-SPC].
THE SERVICER
NationsBank, N.A., through DFSG and units in
predecessor banks of NationsBank, N.A., has been
servicing indirect motor vehicle loan portfolios since
1970. The indirect motor vehicle loan portfolio serviced
either directly by NationsBank, N.A. or through its
affiliates was approximately $5.5 billion as of March 31,
1996. DFSG also services other indirect and direct
consumer loan portfolios totalling over $25.3 billion
(including the indirect motor vehicle loan portfolio) as
of March 31, 1996. Current information regarding the
indirect motor vehicle loan portfolios and the direct
consumer loan portfolios serviced by NationsBank, N.A.
and DFSG will be included in each applicable Prospectus
Supplement.
DESCRIPTION OF THE NOTES
GENERAL
With respect to each Trust that issues Notes, one or
more classes of Notes of the related series will be
issued pursuant to the terms of an Indenture which is
incorporated by reference in its entirety in each
applicable Prospectus Supplement. A form of the Indenture
has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The
following summary does not purport to be complete and is
subject to, and is qualified in its entirety by reference
to, all the provisions of the Notes and the Indenture.
Each class of Notes will initially be represented by
one or more Notes, in each case registered in the name of
the nominee of DTC (together with any successor
depository selected by the Trust, the "Depository")
except as set forth below. The Notes will be available
for purchase in the denominations specified in the
related Prospectus Supplement and in book-entry form
only. The Sellers have been informed by DTC that DTC's
nominee will be Cede, unless another nominee is specified
in the related Prospectus Supplement. Accordingly, such
nominee is expected to be the holder of record of the
Notes of each class. Unless and until Definitive Notes
are issued under the limited circumstances described
herein or in the related Prospectus Supplement, no
Noteholder will be entitled to receive a physical
certificate representing a Note. All references herein
and in the related Prospectus Supplement to actions by
Noteholders refer to actions taken by DTC upon
instructions from its participating organizations (the
"Participants") and all references herein and in the
related Prospectus Supplement to distributions, notices,
reports and statements to Noteholders refer to
distributions, notices, reports and statements to DTC or
its nominee, as the registered holder of the Notes, for
distribution to Noteholders in accordance with DTC's
procedures with respect thereto. See "Certain
Information Regarding the Securities Book-Entry
Registration" and " Definitive Securities."
PRINCIPAL AND INTEREST ON THE NOTES
The timing and priority of payment, allocation of
losses, Note Interest Rate and amount of or method of
determining payments of principal and interest on each
class of Notes of a given series will be described in the
related Prospectus Supplement. The right of holders of
any class of Notes to receive payments of principal and
interest may be senior or subordinate to the rights of
holders of any other class or classes of Notes of such
series, as described in the related Prospectus
Supplement. Payments of interest on the Notes of such
series may be made prior to payments of principal
thereon. The dates for payments of interest and
principal on the Notes of such series may be different
from the Distribution Dates for the Certificates of such
series. To the extent provided in the related Prospectus
Supplement, a series may include one or more classes of
Notes designated as money market classes, planned
amortization classes, targeted amortization classes or
companion classes, each as described in the related
Prospectus Supplement. To the extent provided in the
related Prospectus Supplement, a series may include one
or more classes of Strip Notes entitled to (i) principal
payments with disproportionate, nominal or no interest
payments or (ii) interest payments with disproportionate,
nominal or no principal payments. Each class of Notes
may have a different Note Interest Rate, which may be a
fixed, variable or adjustable Note Interest Rate (and
which may be zero for certain classes of Strip Notes), or
any combination of the foregoing. The related Prospectus
Supplement will specify the Note Interest Rate for each
class of Notes of a given series or the method for
determining such Note Interest Rate. See also "Certain
Information Regarding the Securities Fixed Rate
Securities" and " Floating Rate Securities." One or more
classes of Notes of a series may be redeemable in whole
or in part under the circumstances specified in the
related Prospectus Supplement, including at the end of
the Funding Period (if any) or as a result of the
Servicer's exercising its option to purchase the related
Receivables Pool. See "Description of the Transfer and
Servicing Agreements Termination."
To the extent specified in any Prospectus
Supplement, one or more classes of Notes of a given
series may have fixed principal payment schedules;
Noteholders of such Notes would be entitled to receive as
payments of principal on any given Distribution Date the
applicable amounts set forth on such schedule with
respect to such Notes, in the manner and to the extent
set forth in the related Prospectus Supplement.
If so specified in the related Prospectus
Supplement, payments to Noteholders of all classes within
a series in respect of interest will have the same
priority. Under certain circumstances, the amount
available for such payments could be less than the amount
of interest payable on the Notes on any of the dates
specified for payments in the related Prospectus
Supplement, in which case each class of Noteholders will
receive its ratable share (based upon the aggregate
amount of interest due to such class of Noteholders) of
the aggregate amount available to be distributed in
respect of interest on the Notes of such series. See
"Description of the Transfer and Servicing
Agreements Distributions" and " Credit and Cash Flow
Enhancement."
In the case of a series of Notes which includes two
or more classes of Notes, the sequential order and
priority of payment in respect of principal and interest,
and any schedule or formula or other provisions
applicable to the determination thereof, of each such
class will be set forth in the related Prospectus
Supplement. Payments in respect of principal and
interest of any class of Notes will be made on a pro rata
basis among all the Noteholders of such class.
THE INDENTURE
Modification of Indenture. With respect to each
Trust that has issued Notes pursuant to an Indenture, the
Trust and the Indenture Trustee may, with the consent of
the holders of a majority of the outstanding Notes of the
related series, execute a supplemental indenture to add
provisions to, change in any manner or eliminate any
provisions of, the related Indenture, or modify (except
as provided below) in any manner the rights of the
related Noteholders.
With respect to a series of Notes, without the
consent of the holder of each such outstanding Note
affected thereby, however, no supplemental indenture
will: (i) change the due date of any installment of
principal of or interest on any such Note or reduce the
principal amount thereof, the interest rate specified
thereon or the redemption price with respect thereto or
change any place of payment where or the coin or currency
in which any such Note or any interest thereon is
payable; (ii) impair the right to institute suit for the
enforcement of certain provisions of the related
Indenture regarding payment; (iii) reduce the percentage
of the aggregate amount of the outstanding Notes of such
series, the consent of the holders of which is required
for any such supplemental indenture or the consent of the
holders of which is required for any waiver of compliance
with certain provisions of the related Indenture or of
certain defaults thereunder and their consequences as
provided for in such Indenture; (iv) modify or alter the
provisions of the related Indenture regarding the voting
of Notes held by the applicable Trust, any other obligor
on such Notes, the Sellers or an affiliate of any of
them; (v) reduce the percentage of the aggregate
outstanding principal amount of such Notes, the consent
of the holders of which is required to direct the related
Indenture Trustee to sell or liquidate the Receivables if
the proceeds of such sale would be insufficient to pay
the principal amount and accrued but unpaid interest on
the outstanding Notes of such series; (vi) decrease the
percentage of the aggregate principal amount of such
Notes required to amend the sections of the related
Indenture which specify the applicable percentage of
aggregate principal amount of the Notes of such series
necessary to amend such Indenture or certain other
related agreements; or (vii) permit the creation of any
lien ranking prior to or on a parity with the lien of the
related Indenture with respect to any of the collateral
for such Notes or, except as otherwise permitted or
contemplated in such Indenture, terminate the lien of
such Indenture on any such collateral or deprive the
holder of any such Note of the security afforded by the
lien of such Indenture.
The Trust and the applicable Indenture Trustee may
also enter into supplemental indentures, without
obtaining the consent of the Noteholders of the related
series, for the purpose of, among other things, adding
any provisions to or changing in any manner or
eliminating any of the provisions of the related
Indenture or of modifying in any manner the rights of
such Noteholders; provided that such action will not
materially and adversely affect the interest of any such
Noteholder.
Events of Default; Rights upon Event of Default.
With respect to the Notes of a given series, "Events of
Default" under the related Indenture will consist of: (i)
a default for five days or more in the payment of any
interest on any such Note; (ii) a default in the payment
of the principal of or any installment of the principal
of any such Note when the same becomes due and payable;
(iii) a default in the observance or performance of any
material covenant or agreement of the applicable Trust
made in the related Indenture and the continuation of any
such default for a period of 30 days after notice thereof
is given to such Trust by the applicable Indenture
Trustee or to such Trust and such Indenture Trustee by
the holders of at least 25% in principal amount of such
Notes then outstanding; (iv) any representation or
warranty made by such Trust in the related Indenture or
in any certificate delivered pursuant thereto or in
connection therewith having been incorrect in a material
respect as of the time made, and such breach not having
been cured within 60 days after notice thereof is given
to such Trust by the applicable Indenture Trustee or to
such Trust and such Indenture Trustee by the holders of
at least 25% in principal amount of such Notes then
outstanding; (v) certain events of bankruptcy,
insolvency, receivership or liquidation of the applicable
Trust; or (vi) such other events, if any, set forth in
the related Prospectus Supplement. However, the amount
of principal required to be paid to Noteholders of such
series under the related Indenture will generally be
limited to amounts available to be deposited in the
applicable Note Payment Account. Therefore, the failure
to pay principal on a class of Notes generally will not
result in the occurrence of an Event of Default until the
Final Scheduled Distribution Date for such class of
Notes.
If an Event of Default should occur and be
continuing with respect to the Notes of any series, the
related Indenture Trustee or holders of a majority in
principal amount of such Notes then outstanding may
declare the principal of such Notes to be immediately due
and payable. Such declaration may, under certain
circumstances, be rescinded by the holders of a majority
in principal amount of such Notes then outstanding. Any
such rescission could be treated, for federal income tax
purposes, as a constructive exchange of such Notes by the
related Noteholders for deemed new Notes upon which gain
or loss would be recognized.
If the Notes of any series have been declared due
and payable following an Event of Default with respect
thereto, the related Indenture Trustee may institute
proceedings to collect amounts due or foreclose on Trust
property, exercise remedies as a secured party, sell the
related Receivables or elect to have the applicable Trust
maintain possession of such Receivables and continue to
apply collections on such Receivables as if there had
been no declaration of acceleration. However, such
Indenture Trustee is prohibited from selling the related
Receivables following an Event of Default, other than a
default in the payment of any principal of or a default
for five days or more in the payment of any interest on
any Note of such series, unless (i) the holders of all
outstanding Notes of such series consent to such sale,
(ii) the proceeds of such sale are sufficient to pay in
full the principal of and the accrued interest on the
outstanding Notes of such series at the date of such sale
or (iii) such Indenture Trustee determines that the
proceeds of Receivables would not be sufficient on an
ongoing basis to make all payments on the Notes of such
series as such payments would have become due if such
obligations had not been declared due and payable, and
such Indenture Trustee obtains the consent of the holders
of 66 2/3% of the aggregate outstanding principal amount
of the Notes of such series.
Subject to the provisions of the applicable
Indenture relating to the duties of the related Indenture
Trustee, if an Event of Default occurs and is continuing
with respect to a series of Notes, such Indenture Trustee
will be under no obligation to exercise any of the rights
or powers under such Indenture at the request or
direction of any of the holders of such Notes, if such
Indenture Trustee reasonably believes it will not be
adequately indemnified against the costs, expenses and
liabilities which might be incurred by it in complying
with such request. Subject to the provisions for
indemnification and certain limitations contained in the
related Indenture, the holders of a majority in principal
amount of the outstanding Notes of a given series will
have the right to direct the time, method and place of
conducting any proceeding or any remedy available to the
applicable Indenture Trustee, and the holders of a
majority in principal amount of such Notes then
outstanding may, in certain cases, waive any default with
respect thereto, except a default in the payment of
principal or interest or a default in respect of a
covenant or provision of such Indenture that cannot be
modified without the waiver or consent of all the holders
of such outstanding Notes. Any such waiver could be
treated, for federal income tax purposes, as a
constructive exchange of such Notes by the related
Noteholders for deemed new Notes upon which gain or loss
would be recognized.
No holder of a Note of any series will have the
right to institute any proceeding with respect to the
related Indenture, unless (i) such holder previously has
given to the applicable Indenture Trustee written notice
of a continuing Event of Default, (ii) the holders of not
less than 25% in principal amount of the outstanding
Notes of such series have made written request to such
Indenture Trustee to institute such proceeding in its own
name as Indenture Trustee, (iii) such holder or holders
have offered such Indenture Trustee reasonable indemnity,
(iv) such Indenture Trustee has for 60 days failed to
institute such proceeding and (v) no direction
inconsistent with such written request has been given to
such Indenture Trustee during such 60-day period by the
holders of a majority in principal amount of such
outstanding Notes.
In addition, each Indenture Trustee and the related
Noteholders, by accepting the related Notes, will
covenant that they will not at any time institute against
the applicable Trust any bankruptcy, reorganization or
other proceeding under any federal or state bankruptcy or
similar law.
With respect to any Trust, neither the related
Indenture Trustee nor the related Trustee in its
individual capacity, nor any holder of a Certificate
representing an ownership interest in such Trust nor any
of their respective owners, beneficiaries, agents,
officers, directors, employees, affiliates, successors or
assigns will, in the absence of an express agreement to
the contrary, be personally liable for the payment of the
principal of or interest on the related Notes or for the
agreements of such Trust contained in the applicable
Indenture.
Certain Covenants. Each Indenture will provide that
the related Trust may not consolidate with or merge into
any other entity, unless (i) the entity formed by or
surviving such consolidation or merger is organized under
the laws of the United States, any state or the District
of Columbia, (ii) such entity expressly assumes such
Trust's obligation to make due and punctual payments upon
the Notes of the related series and the performance or
observance of every agreement and covenant of such Trust
under the Indenture, (iii) no Event of Default shall have
occurred and be continuing immediately after such merger
or consolidation, (iv) such Trust has been advised that
the rating of the Notes or the Certificates of such
series then in effect would not be reduced or withdrawn
by the Rating Agencies (as such term is defined in the
related Prospectus Supplement, the "Rating Agencies") as
a result of such merger or consolidation, (v) such Trust
has received an opinion of counsel to the effect that
such consolidation or merger would have no material
adverse tax consequence to the Trust or to any related
Noteholder or Certificateholder, (vi) any action as is
necessary to maintain the lien and security interest
created by the related Indenture shall have been taken
and (vii) such Trust has received an opinion of counsel
and officer's certificate each stating that such
consolidation or merger satisfies all requirements under
the related Indenture.
Each Trust will not, among other things, (i) except
as expressly permitted by the applicable Indenture, the
applicable Transfer and Servicing Agreements or certain
related documents with respect to such Trust
(collectively, the "Basic Documents"), sell, transfer,
exchange or otherwise dispose of any of the assets of
such Trust, (ii) claim any credit on or make any
deduction from the principal and interest payable in
respect of the Notes of the related series (other than
amounts withheld under the Code or applicable state law)
or assert any claim against any present or former holder
of such Notes because of the payment of taxes levied or
assessed upon such Trust, (iii) dissolve or liquidate in
whole or in part, (iv) permit the validity or
effectiveness of the related Indenture to be impaired or
permit any person to be released from any covenants or
obligations with respect to such Notes under such
Indenture except as may be expressly permitted thereby or
(v) permit any lien, charge, excise, claim, security
interest, mortgage or other encumbrance to be created on
or extend to or otherwise arise upon or burden the assets
of such Trust or any part thereof, or any interest
therein or the proceeds thereof, except as may be created
by the terms of the related Indenture.
No Trust may engage in any activity other than as
specified under the section of the related Prospectus
Supplement entitled "The Trust." No Trust will incur,
assume or guarantee any indebtedness other than
indebtedness incurred pursuant to the related Notes and
the related Indenture, pursuant to any [Advances] made to
it by the Servicer or otherwise in accordance with the
Basic Documents.
List of Noteholders. With respect to the Notes of
any series, three or more holders of the Notes of such
series or one or more holders of such Notes evidencing
not less than 25% of the aggregate outstanding principal
balance of such Notes may, by written request to the
related Indenture Trustee, obtain access to the list of
all Noteholders maintained by such Indenture Trustee for
the purpose of communicating with other Noteholders with
respect to their rights under the related Indenture or
under such Notes. Such Indenture Trustee may elect not
to afford the requesting Noteholders access to the list
of Noteholders if it agrees to mail the desired
communication or proxy, on behalf of and at the expense
of the requesting Noteholders, to all Noteholders of such
series.
Annual Compliance Statement. Each Trust will be
required to file annually with the related Indenture
Trustee a written statement as to the fulfillment of its
obligations under the Indenture.
Indenture Trustee's Annual Report. The Indenture
Trustee for each Trust will be required to mail each year
to all related Noteholders a brief report relating to its
eligibility and qualification to continue as Indenture
Trustee under the related Indenture, any amounts advanced
by it under the Indenture, the amount, interest rate and
maturity date of certain indebtedness owing by such Trust
to the applicable Indenture Trustee in its individual
capacity, the property and funds physically held by such
Indenture Trustee as such and any action taken by it that
materially affects the related Notes and that has not
been previously reported.
Satisfaction and Discharge of Indenture. An
Indenture will be discharged with respect to the
collateral securing the related Notes upon the delivery
to the related Indenture Trustee for cancellation of all
such Notes or, with certain limitations, upon deposit
with such Indenture Trustee of funds sufficient for the
payment in full of all such Notes.
THE INDENTURE TRUSTEE
The Indenture Trustee for a series of Notes will be
specified in the related Prospectus Supplement. The
Indenture Trustee for any series may resign at any time,
in which event the Issuer will be obligated to appoint a
successor trustee for such series. The Issuer may also
remove any such Indenture Trustee if such Indenture
Trustee ceases to be eligible to continue as such under
the related Indenture or if such Indenture Trustee
becomes insolvent. In such circumstances, the Issuer
will be obligated to appoint a successor trustee for the
applicable series of Notes. Any resignation or removal
of the Indenture Trustee and appointment of a successor
trustee for any series of Notes does not become effective
until acceptance of the appointment by the successor
trustee for such series.
DESCRIPTION OF THE CERTIFICATES
GENERAL
With respect to each Trust, one or more classes of
Certificates of the related series will be issued
pursuant to the terms of a Trust Agreement or a Pooling
and Servicing Agreement, a form of each of which has been
filed as an exhibit to the Registration Statement of
which this Prospectus forms a part. The following
summary does not purport to be complete and is subject
to, and is qualified in its entirety by reference to, all
the provisions of the Certificates and the Trust
Agreement or Pooling and Servicing Agreement, as
applicable.
Except for the Certificates, if any, of a given
series retained by the Seller, each class of Certificates
may initially be represented by one or more Certificates
registered in the name of the Depository, except as set
forth below. Except for the Certificates, if any, of a
given series retained by the Seller, the Certificates
will be available for purchase in the denominations
specified in the related Prospectus Supplement and may be
available in book-entry form only. The Sellers have been
informed by DTC that DTC's nominee will be Cede, unless
another nominee is specified in the related Prospectus
Supplement. Accordingly, such nominee is expected to be
the holder of record of the Certificates of any series
issued in book-entry form that are not retained by the
Sellers. If the Certificates of a series are issued in
book-entry form, unless and until Definitive Certificates
are issued under the limited circumstances described
herein or in the related Prospectus Supplement, no
Certificateholder (other than the Seller) will be
entitled to receive a physical certificate representing a
Certificate. If the Certificates of a series are issued
in book-entry form, all references herein and in the
related Prospectus Supplement to actions by
Certificateholders refer to actions taken by DTC upon
instructions from the Participants and all references
herein and in the related Prospectus Supplement to
distributions, notices, reports and statements to
Certificateholders refer to distributions, notices,
reports and statements to DTC or its nominee, as the case
may be, as the registered holder of the Certificates, for
distribution to Certificateholders in accordance with
DTC's procedures with respect thereto. See "Certain
Information Regarding the Securities Book-Entry
Registration" and " Definitive Securities." Any
Certificates of a given series owned by any of the
Sellers or their affiliates will be entitled to equal and
proportionate benefits under the applicable Trust
Agreement, except that such Certificates will be deemed
not to be outstanding for the purpose of determining
whether the requisite percentage of Certificateholders
have given any request, demand, authorization, direction,
notice, consent or other action under the Basic Documents
(other than the commencement by the related Trust of a
voluntary proceeding in bankruptcy as described under
"Description of the Transfer and Servicing
Agreements Insolvency Event or Dissolution").
DISTRIBUTIONS OF PRINCIPAL AND INTEREST
The timing and priority of distributions, allocation
of losses, Certificate Rate and amount of or method of
determining distributions with respect to principal and
interest of each class of Certificates will be described
in the related Prospectus Supplement. Distributions of
interest on such Certificates will be made on the dates
specified in the related Prospectus Supplement (each, a
"Distribution Date") and will be made prior to
distributions with respect to principal of such
Certificates. To the extent provided in the related
Prospectus Supplement, a series may include one or more
classes of Strip Certificates entitled to (i)
distributions in respect of principal with
disproportionate, nominal or no interest distributions or
(ii) interest distributions with disproportionate,
nominal or no distributions in respect of principal.
Each class of Certificates may have a different
Certificate Rate, which may be a fixed, variable or
adjustable Certificate Rate (and which may be zero for
certain classes of Strip Certificates) or any combination
of the foregoing. The related Prospectus Supplement will
specify the Certificate Rate for each class of
Certificates of a given series or the method for
determining such Certificate Rate. See also "Certain
Information Regarding the Securities Fixed Rate
Securities" and " Floating Rate Securities."
Distributions in respect of the Certificates of a given
series that includes Notes may be subordinate to payments
in respect of the Notes of such series as more fully
described in the related Prospectus Supplement.
Distributions in respect of interest on and principal of
any class of Certificates will be made on a pro rata
basis among all the Certificateholders of such class.
In the case of a series of Certificates which
includes two or more classes of Certificates, the timing,
sequential order, priority of payment or amount of
distributions in respect of interest and principal, and
any schedule or formula or other provisions applicable to
the determination thereof, of each such class shall be as
set forth in the related Prospectus Supplement.
LIST OF CERTIFICATEHOLDERS
With respect to the Certificates of any series,
three or more holders of the Certificates of such series
or one or more holders of such Certificates evidencing
not less than 25% of the Certificate Balance of such
Certificates may, by written request to the related
Trustee, obtain access to the list of all
Certificateholders maintained by such Trustee for the
purpose of communicating with other Certificateholders
with respect to their rights under the related Trust
Agreement or Pooling and Servicing Agreement or under
such Certificates.
CERTAIN INFORMATION REGARDING THE SECURITIES
FIXED RATE SECURITIES
Each class of Securities (other than certain classes
of Strip Notes or Strip Certificates) may bear interest
at a fixed rate per annum ("Fixed Rate Securities") or at
a variable or adjustable rate per annum ("Floating Rate
Securities"), as more fully described below and in the
applicable Prospectus Supplement. Each class of Fixed
Rate Securities will bear interest at the applicable per
annum Note Interest Rate or Certificate Rate, as the case
may be, specified in the applicable Prospectus
Supplement. Interest on each class of Fixed Rate
Securities will be computed on the basis of a 360-day
year of twelve 30-day months or on such other day and
month count basis as is specified in the applicable
Prospectus Supplement. See "Description of the
Notes Principal and Interest on the Notes" and
"Description of the Certificates Distributions of
Principal and Interest."
FLOATING RATE SECURITIES
Each class of Floating Rate Securities will bear
interest for each applicable Interest Reset Period (as
such term is defined in the related Prospectus Supplement
with respect to a class of Floating Rate Securities, the
"Interest Reset Period") at a rate per annum determined
by reference to an interest rate basis (the "Base Rate"),
plus or minus the Spread, if any, or multiplied by the
Spread Multiplier, if any, in each case as specified in
the related Prospectus Supplement. The "Spread" is the
number of basis points (one basis point equals one
one-hundredth of a percentage point) that may be
specified in the applicable Prospectus Supplement as
being applicable to such class, and the "Spread
Multiplier" is the percentage that may be specified in
the applicable Prospectus Supplement as being applicable
to such class.
The applicable Prospectus Supplement will designate
one of the following Base Rates as applicable to a given
Floating Rate Security: (i) the CD Rate (a "CD Rate
Security"), (ii) the Commercial Paper Rate (a "Commercial
Paper Rate Security"), (iii) the Federal Funds Rate (a
"Federal Funds Rate Security"), (iv) LIBOR (a "LIBOR
Security"), (v) the Treasury Rate (a "Treasury Rate
Security") or (vi) such other Base Rate as is set forth
in such Prospectus Supplement. The "Index Maturity" for
any class of Floating Rate Securities is the period of
maturity of the instrument or obligation from which the
Base Rate is calculated. "H.15(519)" means the
publication entitled "Statistical Release H.15(519),
Selected Interest Rates," or any successor publication,
published by the Board of Governors of the Federal
Reserve System. "Composite Quotations" means the daily
statistical release entitled "Composite 3:30 p.m.
Quotations for U.S. Government Securities" published by
the Federal Reserve Bank of New York. "Interest Reset
Date" will be the first day of the applicable Interest
Reset Period, or such other day as may be specified in
the related Prospectus Supplement with respect to a class
of Floating Rate Securities.
As specified in the applicable Prospectus
Supplement, Floating Rate Securities of a given class may
also have either or both of the following (in each case
expressed as a rate per annum): (i) a maximum limitation,
or ceiling, on the rate at which interest may accrue
during any interest period and (ii) a minimum limitation,
or floor, on the rate at which interest may accrue during
any interest period. In addition to any maximum interest
rate that may be applicable to any class of Floating Rate
Securities, the interest rate applicable to any class of
Floating Rate Securities will in no event be higher than
the maximum rate permitted by applicable law, as the same
may be modified by United States law of general
application.
Each Trust with respect to which a class of Floating
Rate Securities will be issued will appoint, and enter
into agreements with, a calculation agent (each, a
"Calculation Agent") to calculate interest rates on each
such class of Floating Rate Securities issued with
respect thereto. The applicable Prospectus Supplement
will set forth the identity of the Calculation Agent for
each such class of Floating Rate Securities of a given
series, which may be either the related Trustee or
Indenture Trustee with respect to such series. All
determinations of interest by the Calculation Agent
shall, in the absence of manifest error, be conclusive
for all purposes and binding on the holders of Floating
Rate Securities of a given class. All percentages
resulting from any calculation of the rate of interest on
a Floating Rate Security will be rounded, if necessary,
to the nearest 1/100,000 of 1% (.0000001), with five
one-millionths of a percentage point rounded upward.
CD Rate Securities. Each CD Rate Security will bear
interest for each Interest Reset Period at the interest
rate calculated with reference to the CD Rate and the
Spread or Spread Multiplier, if any, specified in such
Security and in the applicable Prospectus Supplement.
The "CD Rate" for each Interest Reset Period shall
be the rate as of the second business day prior to the
Interest Reset Date for such Interest Reset Period (a "CD
Rate Determination Date") for negotiable certificates of
deposit having the Index Maturity designated in the
applicable Prospectus Supplement as subsequently
published in H.15(519) under the heading "CDs (Secondary
Market)." In the event that such rate is not published
prior to 3:00 p.m., New York City time, on the
Calculation Date (as defined below) pertaining to such CD
Rate Determination Date, then the "CD Rate" for such
Interest Reset Period will be the rate on such CD Rate
Determination Date for negotiable certificates of deposit
of the Index Maturity designated in the applicable
Prospectus Supplement as published in Composite
Quotations under the heading "Certificates of Deposit."
If by 3:00 p.m., New York City time, on such Calculation
Date such rate is not yet published in either H.15(519)
or Composite Quotations, then the "CD Rate" for such
Interest Reset Period will be calculated by the
Calculation Agent for such CD Rate Security and will be
the arithmetic mean of the secondary market offered rates
as of 10:00 a.m., New York City time, on such CD Rate
Determination Date, of three leading nonbank dealers in
negotiable U.S. dollar certificates of deposit in The
City of New York selected by the Calculation Agent for
such CD Rate Security for negotiable certificates of
deposit of major United States money center banks of the
highest credit standing (in the market for negotiable
certificates of deposit) with a remaining maturity
closest to the Index Maturity designated in the related
Prospectus Supplement in a denomination of $5,000,000;
provided, however, that if the dealers selected as
aforesaid by such Calculation Agent are not quoting
offered rates as mentioned in this sentence, the "CD
Rate" for such Interest Reset Period will be the same as
the CD Rate for the immediately preceding Interest Reset
Period.
The "Calculation Date" pertaining to any CD Rate
Determination Date shall be the first to occur of (a) the
tenth calendar day after such CD Rate Determination Date
or, if such day is not a business day, the next
succeeding business day or (b) the second business day
preceding the date any payment is required to be made for
any period following the applicable Interest Reset Date.
Commercial Paper Rate Securities. Each Commercial
Paper Rate Security will bear interest for each Interest
Reset Period at the interest rate calculated with
reference to the Commercial Paper Rate and the Spread or
Spread Multiplier, if any, specified in such security and
in the applicable Prospectus Supplement.
The "Commercial Paper Rate" for each Interest Reset
Period will be determined by the Calculation Agent for
such Commercial Paper Rate Security as of the second
business day prior to the Interest Reset Date for such
Interest Reset Period (a "Commercial Paper Rate
Determination Date") and shall be the Money Market Yield
(as defined below) on such Commercial Paper Rate
Determination Date of the rate for commercial paper
having the Index Maturity specified in the applicable
Prospectus Supplement, as such rate shall be published in
H.15(519) under the heading "Commercial Paper." In the
event that such rate is not published prior to 3:00 p.m.,
New York City time, on the Calculation Date (as defined
below) pertaining to such Commercial Paper Rate
Determination Date, then the "Commercial Paper Rate" for
such Interest Reset Period shall be the Money Market
Yield on such Commercial Paper Rate Determination Date of
the rate for commercial paper of the specified Index
Maturity as published in Composite Quotations under the
heading "Commercial Paper." If by 3:00 p.m., New York
City time, on such Calculation Date such rate is not yet
published in either H.15(519) or Composite Quotations,
then the "Commercial Paper Rate" for such Interest Reset
Period shall be the Money Market Yield of the arithmetic
mean of the offered rates, as of 11:00 a.m., New York
City time, on such Commercial Paper Rate Determination
date of three leading dealers of commercial paper in The
City of New York selected by the Calculation Agent for
such Commercial Paper Rate Security for commercial paper
of the specified Index Maturity placed for an industrial
issuer whose bonds are rated "AA" or the equivalent by a
nationally recognized rating agency; provided, however,
that if the dealers selected as aforesaid by such
Calculation Agent are not quoting offered rates as
mentioned in this sentence, the "Commercial Paper Rate"
for such Interest Reset Period will be the same as the
Commercial Paper Rate for the immediately preceding
Interest Reset Period.
"Money Market Yield" shall be a yield calculated in
accordance with the following formula:
D x 360
Money Market Yield = ____________ x 100
360 - (D x M)
where "D" refers to the applicable per annum rate for
commercial paper quoted on a bank discount basis and
expressed as a decimal, and "M" refers to the actual
number of days in the specified Index Maturity.
The "Calculation Date" pertaining to any Commercial
Paper Rate Determination Date shall be the first to occur
of (a) the tenth calendar day after such Commercial Paper
Rate Determination Date or, if such day is not a
business day, the next succeeding business day or (b) the
second business day preceding the date any payment is
required to be made for any period following the
applicable Interest Reset Date.
Federal Funds Rate Securities. Each Federal Funds
Rate Security will bear interest for each Interest Reset
Period at the interest rate calculated with reference to
the Federal Funds Rate and the Spread or Spread
Multiplier, if any, specified in such Security and in the
applicable Prospectus Supplement.
The "Federal Funds Rate" for each Interest Reset
Period shall be the effective rate on the Interest Reset
Date for such Interest Reset Period (a "Federal Funds
Rate Determination Date") for Federal Funds as published
in H.15(519) under the heading "Federal Funds
(Effective)." In the event that such rate is not
published prior to 3:00 p.m., New York City time, on the
Calculation Date (as defined below) pertaining to such
Federal Funds Rate Determination Date, the "Federal Funds
Rate" for such Interest Reset Period shall be the rate on
such Federal Funds Rate Determination Date as published
in Composite Quotations under the heading "Federal
Funds/Effective Rate." If by 3:00 p.m., New York City
time, on such Calculation Date such rate is not yet
published in either H.15(519) or Composite Quotations,
then the "Federal Funds Rate" for such Interest Reset
Period shall be the rate on such Federal Funds Rate
Determination Date made publicly available by the Federal
Reserve Bank of New York which is equivalent to the rate
which appears in H.15(519) under the heading "Federal
Funds (Effective)"; provided, however, that if such rate
is not made publicly available by the Federal Reserve
Bank of New York by 3:00 p.m., New York City time, on
such Calculation Date, the "Federal Funds Rate" for such
Interest Reset Period will be the same as the Federal
Funds Rate in effect for the immediately preceding
Interest Reset Period. In the case of a Federal Funds
Rate Security that resets daily, the interest rate on
such Security for the period from and including a Monday
to but excluding the succeeding Monday will be reset by
the Calculation Agent for such Federal Funds Rate
Security on such second Monday (or, if not a business
day, on the next succeeding business day) to a rate equal
to the average of the Federal Funds Rates in effect with
respect to each such day in such week.
The "Calculation Date" pertaining to any Federal
Funds Rate Determination Date shall be the next
succeeding business day.
LIBOR Securities. Each LIBOR Security will bear
interest for each Interest Reset Period at the interest
rate calculated with reference to LIBOR and the Spread or
Spread Multiplier, if any, specified in such Security and
in the applicable Prospectus Supplement.
With respect to LIBOR indexed to the offered rates
for U.S. dollar deposits, "LIBOR" for each Interest Reset
Period will be determined by the Calculation Agent for
any LIBOR Security as follows:
(i) On the second London Banking Day prior to
the Interest Reset Date for such Interest Reset
Period (a "LIBOR Determination Date"), the
Calculation Agent for such LIBOR Security will
determine the arithmetic mean of the offered rates
for deposits in U.S. dollars for the period of the
Index Maturity specified in the applicable
Prospectus Supplement, commencing on such Interest
Reset Date, which appear on the Reuters Screen LIBO
Page at approximately 11:00 a.m., London time, on
such LIBOR Determination Date. For purposes of
calculating LIBOR, "London Banking Day" means any
business day on which dealings in deposits in United
States dollars are transacted in the London
interbank market and "Reuters Screen LIBO Page"
means the display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other
page as may replace the LIBO page on that service
for the purpose of displaying London interbank
offered rates of major banks). If at least two such
offered rates appear on the Reuters Screen LIBO
Page, "LIBOR" for such Interest Reset Period will be
the arithmetic mean of such offered rates as
determined by the Calculation Agent for such LIBOR
Security.
(ii) If fewer than two offered rates appear on
the Reuters Screen LIBO Page on such LIBOR
Determination Date, the Calculation Agent for such
LIBOR Security will request the principal London
offices of each of four major banks in the London
interbank market selected by such Calculation Agent
to provide such Calculation Agent with its offered
quotations for deposits in U.S. dollars for the
period of the specified Index Maturity, commencing
on such Interest Reset Date, to prime banks in the
London interbank market at approximately 11:00 a.m.,
London time, on such LIBOR Determination Date and in
a principal amount equal to an amount of not less
than $1,000,000 that is representative of a single
transaction in such market at such time. If at
least two such quotations are provided, "LIBOR" for
such Interest Reset Period will be the arithmetic
mean of such quotations. If fewer than two such
quotations are provided, "LIBOR" for such Interest
Reset Period will be the arithmetic mean of rates
quoted by three major banks in The City of New York
selected by the Calculation Agent for such LIBOR
Security at approximately 11:00 a.m., New York City
time, on such LIBOR Determination Date for loans in
U.S. dollars to leading European banks, for the
period of the specified Index Maturity, commencing
on such Interest Reset Date, and in a principal
amount equal to an amount of not less than
$1,000,000 that is representative of a single
transaction in such market at such time; provided,
however, that if the banks selected as aforesaid by
such Calculation Agent are not quoting rates as
mentioned in this sentence, "LIBOR" for such
Interest Reset Period will be the same as LIBOR for
the immediately preceding Interest Reset Period.
Treasury Rate Securities. Each Treasury Rate
Security will bear interest for each Interest Reset
Period at the interest rate calculated with reference to
the Treasury Rate and the Spread or Spread Multiplier, if
any, specified in such Security and in the applicable
Prospectus Supplement.
The "Treasury Rate" for each Interest Reset Period
will be the rate for the auction held on the Treasury
Rate Determination Date (as defined below) for such
Interest Reset Period of direct obligations of the United
States ("Treasury bills") having the Index Maturity
specified in the applicable Prospectus Supplement, as
such rate shall be published in H.15(519) under the
heading "U.S. Government Securities Treasury
bills auction average (investment)" or, in the event that
such rate is not published prior to 3:00 p.m., New York
City time, on the Calculation Date (as defined below)
pertaining to such Treasury Rate Determination Date, the
auction average rate (expressed as a bond equivalent on
the basis of a year of 365 or 366 days, as applicable,
and applied on a daily basis) on such Treasury Rate
Determination Date as otherwise announced by the United
States Department of the Treasury. In the event that the
results of the auction of Treasury bills having the
specified Index Maturity are not published or reported as
provided above by 3:00 p.m., New York City time, on such
Calculation Date, or if no such auction is held on such
Treasury Rate Determination Date, then the "Treasury
Rate" for such Interest Reset Period shall be calculated
by the Calculation Agent for such Treasury Rate Security
and shall be the yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the
arithmetic mean of the secondary market bid rates, as of
approximately 3:30 p.m., New York City time, on such
Treasury Rate Determination Date, of three leading
primary United States government securities dealers
selected by such Calculation Agent for the issue of
Treasury bills with a remaining maturity closest to the
specified Index Maturity; provided, however, that if the
dealers selected as aforesaid by such Calculation Agent
are not quoting bid rates as mentioned in this sentence,
then the "Treasury Rate" for such Interest Reset Period
will be the same as the Treasury Rate for the immediately
preceding Interest Reset Period.
The "Treasury Rate Determination Date" for each
Interest Reset Period will be the day of the week in
which the Interest Reset Date for such Interest Reset
Period falls on which Treasury bills would normally be
auctioned. Treasury bills are normally sold at auction
on Monday of each week, unless that day is a legal
holiday, in which case the auction is normally held on
the following Tuesday, except that such auction may be
held on the preceding Friday. If, as the result of a
legal holiday, an auction is so held on the preceding
Friday, such Friday will be the Treasury Rate
Determination Date pertaining to the Interest Reset
Period commencing in the next succeeding week. If an
auction date shall fall on any day that would otherwise
be an Interest Reset Date for a Treasury Rate Security,
then such Interest Reset Date shall instead be the
business day immediately following such auction date.
The "Calculation Date" pertaining to any Treasury
Rate Determination Date shall be the first to occur of
(a) the tenth calendar day after such Treasury Rate
Determination Date or, if such a day is not a business
day, the next succeeding business day or (b) the second
business day preceding the date any payment is required
to be made for any period following the applicable
Interest Reset Date.
INDEXED SECURITIES
To the extent so specified in any Prospectus
Supplement, any class of Securities of a given series may
consist of Securities ("Indexed Securities") in which the
principal amount payable at the final scheduled
Distribution Date for such class (the "Indexed Principal
Amount") is determined by reference to a measure (the
"Index") which will be related to (i) the difference in
the rate of exchange between United States dollars and a
currency or composite currency (the "Indexed Currency")
specified in the applicable Prospectus Supplement (such
Indexed Securities, "Currency Indexed Securities"); (ii)
the difference in the price of a specified commodity (the
"Indexed Commodity") on specified dates (such Indexed
Securities, "Commodity Indexed Securities"); or (iii) the
difference in the level of a specified stock index (the
"Stock Index"), which may be based on U.S. or foreign
stocks, on specified dates (such Indexed Securities,
"Stock Indexed Securities"); or (iv) such other publicly-
disseminated, objective price or economic measures, such
as the Consumer Price Index, the Gross National Product,
or the volume of motor vehicle retail sales as reported
by the Motor Vehicle Manufacturers Association of the
United States, Inc., as are described in the applicable
Prospectus Supplement. The manner of determining the
Indexed Principal Amount of an Indexed Security and
historical and other information concerning the Indexed
Currency, the Indexed Commodity, the Stock Index or other
price or economic measures used in such determination
will be set forth in the applicable Prospectus
Supplement, together with information concerning federal
income tax consequences to the holders of such Indexed
Securities.
If the determination of the Indexed Principal Amount
of an Indexed Security is based on an Index calculated or
announced by a third party and such third party either
suspends the calculation or announcement of such Index or
changes the basis upon which such Index is calculated
(other than changes consistent with policies in effect at
the time such Indexed Security was issued and permitted
changes described in the applicable Prospectus
Supplement), then such Index shall be calculated for
purposes of such Indexed Security by an independent
calculation agent named in the applicable Prospectus
Supplement on the same basis, and subject to the same
conditions and controls, as applied to the original third
party. If for any reason such Index cannot be calculated
on the same basis and subject to the same conditions and
controls as applied to the original third party, then the
Indexed Principal Amount of such Indexed Security shall
be calculated in the manner set forth in the applicable
Prospectus Supplement. Any determination of such
independent calculation agent shall in the absence of
manifest error be binding on all parties.
If so specified in the applicable Prospectus
Supplement, interest on an Indexed Security will be
payable based on the amount designated in the applicable
Prospectus Supplement as the "Face Amount" of such
Indexed Security. The applicable Prospectus Supplement
will describe whether the principal amount of the related
Indexed Security, if any, that would be payable upon
redemption or repayment prior to the applicable final
scheduled Distribution Date will be the Face Amount of
such Indexed Security, the Indexed Principal Amount of
such Indexed Security at the time of redemption or
repayment or another amount described in such Prospectus
Supplement.
BOOK-ENTRY REGISTRATION
The Prospectus Supplement related to a given series
will specify whether the holders of the Notes or
Certificates of such series may hold their respective
Securities through DTC (in the United States) or Cedel
Bank, societe anonyme ("Cedel") or Euroclear (as defined
below) (in Europe) if they are participants of such
systems, or indirectly through organizations that are
participants in such systems ("Book-Entry Notes" or
"Book-Entry Certificates," respectively, and collectively
referred to herein as "Book-Entry Securities").
The Sellers have been informed by DTC that DTC's
nominee will be Cede, unless another nominee is specified
in the related Prospectus Supplement. Accordingly, such
nominee (i.e., DTC's Nominee) is expected to be the
holder of record of the Securities of any series held
through DTC. DTC's Nominee will hold the global
Securities. Cedel and Euroclear will hold omnibus
positions on behalf of the Cedel Participants and the
Euroclear Participants, respectively, through customers'
securities accounts in Cedel's and Euroclear's names on
the books of their respective depositaries (collectively,
the "Depositaries") which in turn will hold such
positions in customers' securities accounts in the
Depositaries' names on the books of DTC.
DTC is a limited-purpose trust company organized
under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within
the meaning of the New York Uniform Commercial Code, and
a "clearing agency" registered pursuant to the provisions
of Section 17A of the Exchange Act. DTC was created to
hold securities for its participating organizations
("Participants") and facilitate the clearance and
settlement of securities transactions between
Participants through electronic book-entries, thereby
eliminating the need for physical movement of
certificates. Participants include securities brokers
and dealers (who may include any of the underwriters of a
series of Securities), banks, trust companies and
clearing corporations and may include certain other
organizations. Indirect access to the DTC system also is
available to others such as banks, brokers, dealers and
trust companies that clear through or maintain a
custodial relationship with a Participant, either
directly or indirectly (the "Indirect Participants").
Transfers between DTC Participants will occur in
accordance with DTC rules. Transfers between Cedel
Participants and Euroclear Participants will occur in the
ordinary way in accordance with their applicable rules
and operating procedures.
Cross-market transfers between persons holding
directly or indirectly through DTC, on the one hand, and
directly or indirectly through Cedel Participants or
Euroclear Participants, on the other, will be effected in
DTC in accordance with DTC rules on behalf of the
relevant European international clearing system by its
Depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European
international clearing system by the counterparty in such
system in accordance with its rules and procedures and
within its established deadlines (European time). The
relevant European international clearing system will, if
the transaction meets its settlement requirements,
deliver instructions to its Depositary to take action to
effect final settlement on its behalf by delivering or
receiving securities in DTC, and making or receiving
payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Cedel Participants
and Euroclear Participants may not deliver instructions
directly to the Depositaries.
Because of time-zone differences, credits of
securities in Cedel or Euroclear as a result of a
transaction with a DTC Participant will be made during
the subsequent securities settlement processing, dated
the business day following the DTC settlement date, and
such credits or any transactions in such securities
settled during such processing will be reported to the
relevant Cedel Participant or Euroclear Participant on
such business day. Cash received by Cedel or Euroclear
as a result of sales of securities by or through a Cedel
Participant or a 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.
The Securityholders who are not Participants or
Indirect Participants but who desire to purchase, sell or
otherwise transfer ownership of, or other interest in,
Securities may do so only through Participants and
Indirect Participants. In addition, Securityholders will
receive all distributions of principal and interest from
the Indenture Trustee or the applicable Trustee, as the
case may be (the "Applicable Trustee"), through the
Participants who in turn will receive them from DTC.
Under a book-entry format, Securityholders may experience
some delay in their receipt of payments, since such
payments will be forwarded by the Applicable Trustee to
DTC's Nominee. DTC will forward such payments to its
Participants which thereafter will forward them to
Indirect Participants or Securityholders. To the extent
the related Prospectus Supplement provides that Book-
Entry Securities will be issued, the only "Noteholder" or
"Certificateholder," as applicable, will be DTC's
Nominee. Securityholders will not be recognized by the
Applicable Trustee as "Noteholders" or
"Certificateholders," as such terms are used in the
Indenture or Trust Agreement, as applicable, and
Securityholders will be permitted to exercise the rights
of Securityholders only indirectly through DTC and its
Participants.
Under the rules, regulations and procedures creating
and affecting DTC and its operations (the "Rules"), DTC
is required to make book-entry transfers of Securities
among Participants on whose behalf it acts with respect
to the Securities and is required to receive and transmit
distributions of principal and interest on the
Securities. Participants and Indirect Participants with
which Securityholders have accounts with respect to their
respective Securities similarly are required to make
book-entry transfers and receive and transmit such
payments on behalf of their respective Securityholders.
Accordingly, although Securityholders will not possess
their respective Securities, the Rules provide a
mechanism by which Participants will receive payments and
will be able to transfer their interests.
Because DTC can only act on behalf of Participants,
who in turn act on behalf of Indirect Participants and
certain banks, the ability of a Securityholder to pledge
Securities to persons or entities that do not participate
in the DTC system, or otherwise take actions with respect
to such Securities, may be limited due to the lack of a
physical certificate for such Securities.
DTC will advise the Administrator in respect of each
Trust that it will take any action permitted to be taken
by a Securityholder under the related Indenture or Trust
Agreement, as applicable, only at the direction of one or
more Participants to whose accounts with DTC such
Securities are credited. DTC may take conflicting
actions with respect to other undivided interests to the
extent that such actions are taken on behalf of
Participants whose holdings include such undivided
interests.
Cedel is incorporated under the laws of Luxembourg
as a professional depository. Cedel holds securities for
its participating organizations ("Cedel Participants")
and facilitates the clearance and settlement of
securities transactions between Cedel Participants
through electronic book-entry changes in accounts of
Cedel Participants, thereby eliminating the need for
physical movement of certificates. Transactions may be
settled by Cedel in any of 28 currencies, including
United States dollars. Cedel provides to its Cedel
Participants, among other things, services for
safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending
and borrowing. Cedel interfaces with domestic markets in
several countries. As a professional depository, Cedel
is subject to regulations by the Luxembourg Monetary
Institute. Cedel Participants are recognized financial
institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations and
may include any of the underwriters of any series of
Securities. Indirect access to Cedel is also available
to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial
relationship with a Cedel Participant, either directly or
indirectly.
The Euroclear System ("Euroclear" or the "Euroclear
System") 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 the risk from
transfers of securities and cash that are not
simultaneous.
The Euroclear System has subsequently been extended
to clear and settle transactions between Euroclear
Participants and counterparties both in Cedel and in many
domestic securities markets. Transactions may now be
settled in any of 32 currencies. In addition to
safekeeping (custody) and securities clearance and
settlement, the Euroclear System includes securities
lending and borrowing and money transfer services. The
Euroclear System is operated by the Brussels, Belgium
office of Morgan Guaranty Trust Company of New York (the
"Euroclear Operator"), under contract with Euroclear
Clearance System, S.C., a Belgian cooperative corporation
that establishes policy on behalf of Euroclear
Participants. 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.
All operations are conducted by the Euroclear
Operator and all Euroclear securities clearance accounts
and cash accounts are accounts with the Euroclear
Operator. They are governed by the Terms and Conditions
Governing Use of Euroclear and the related Operating
Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The
Terms and Conditions govern all transfers of securities
and cash, both within the Euroclear System, and receipts
and withdrawals of securities and cash. All securities
in the Euroclear System are held on a fungible basis
without attribution of specific certificates to specific
securities clearance accounts.
Euroclear Participants include banks (including
central banks), securities brokers and dealers and other
professional financial intermediaries and may include any
of the underwriters of any series of Securities.
Indirect access to the Euroclear System 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 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.
Unless and until Definitive Securities are issued
under the limited circumstances described herein or in
the related Prospectus Supplement, no Securityholder will
be entitled to receive a physical certificate
representing a Book-Entry Security. All references
herein and in the related Prospectus Supplement to
actions by Securityholders shall refer to actions taken
by DTC upon instructions from its Participants, and all
references herein and in the related Prospectus
Supplement to distributions, notices, reports and
statements to Securityholders shall refer to
distributions, notices, reports and statements to DTC or
its nominee as the registered holder of the Book-Entry
Securities, as the case may be, for distribution to Book-
Entry Securityholders in accordance with DTC's procedures
with respect thereto.
In the event that any of DTC, Cedel or Euroclear
should discontinue its services, the Administrator would
seek an alternative depository (if available) or cause
the issuance of Definitive Securities to Securityholders
or their nominees in the manner described under
" Definitive Securities."
Except as required by law, none of the
Administrator, if any, the applicable Trustee or the
applicable Indenture Trustee, if any, will have any
liability for any aspect of the records relating to or
payments made on account of beneficial ownership
interests of the Securities of any series held by DTC's
Nominee, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
DEFINITIVE SECURITIES
With respect to any series of Notes and any series
of Certificates issued in book-entry form, such Notes or
Certificates will be issued in fully registered,
certificated form ("Definitive Notes" and "Definitive
Certificates," respectively, and collectively referred to
herein as "Definitive Securities") to Noteholders or
Certificateholders or their respective nominees, rather
than to DTC or its nominee, only if (i) the related
Administrator or Trustee, as applicable, determines that
DTC is no longer willing or able to discharge properly
its responsibilities as depository with respect to such
Securities and such Administrator or Trustee is unable to
locate a qualified successor (and if it is an
Administrator that has made such determination, such
Administrator so notifies the Applicable Trustee in
writing), (ii) the Administrator or Trustee, as
applicable, at its option, elects to terminate the
book-entry system through DTC or (iii) after the
occurrence of an Event of Default or an Event of
Servicing Termination with respect to such Securities,
holders representing at least a majority of the
outstanding principal amount of the Notes or the
Certificates, as the case may be, of such series advise
the Applicable Trustee through DTC in writing that the
continuation of a book-entry system through DTC (or a
successor thereto) with respect to such Notes or
Certificates is no longer in the best interest of the
holders of such Securities.
Upon the occurrence of any event described in the
immediately preceding paragraph, the Applicable Trustee
will be required to notify all applicable Securityholders
of a given series through Participants of the
availability of Definitive Securities. Upon surrender by
DTC of the definitive certificates representing the
corresponding Securities and receipt of instructions for
re-registration, the Applicable Trustee will reissue such
Securities as Definitive Securities to such
Securityholders.
Distributions of principal of, and interest on, such
Definitive Securities will thereafter be made by the
Applicable Trustee in accordance with the procedures set
forth in the related Indenture or the related Trust
Agreement or Pooling and Servicing Agreement, as
applicable, directly to holders of Definitive Securities
in whose names the Definitive Securities were registered
at the close of business on the applicable Record Date
specified for such Securities in the related Prospectus
Supplement. Such distributions will be made by check
mailed to the address of such holder as it appears on the
register maintained by the Applicable Trustee. The final
payment on any such Definitive Security, however, will be
made only upon presentation and surrender of such
Definitive Security at the office or agency specified in
the notice of final distribution to the applicable
Securityholders.
Definitive Securities will be transferable and
exchangeable at the offices of the Applicable Trustee or
of a registrar named in a notice delivered to holders of
Definitive Securities. No service charge will be imposed
for any registration of transfer or exchange, but the
Applicable Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge
imposed in connection therewith.
REPORTS TO SECURITYHOLDERS
With respect to each series of Securities that
includes Notes, on or prior to each Distribution Date,
the Servicer will prepare and provide to the related
Indenture Trustee a statement to be delivered to the
related Noteholders on such Distribution Date. With
respect to each series of Securities, on or prior to each
Distribution Date, the Servicer will prepare and provide
to the related Trustee a statement to be delivered to the
related Certificateholders on such Distribution Date.
With respect to each series of Securities, each such
statement to be delivered to Noteholders will include (to
the extent applicable) the following information (and any
other information so specified in the related Prospectus
Supplement) as to the Notes of such series with respect
to such Distribution Date or the period since the
previous Distribution Date, as applicable, and each such
statement to be delivered to Certificateholders will
include (to the extent applicable) the following
information (and any other information so specified in
the related Prospectus Supplement) as to the Certificates
of such series with respect to such Distribution Date or
the period since the previous Distribution Date, as
applicable:
(i) the amount of the distribution allocable to
principal of each class of such Notes and to the
Certificate Balance of each class of such
Certificates;
(ii) the amount of the distribution allocable
to interest on or with respect to each class of
Securities of such series;
(iii) the amount of the distribution allocable
to draws from the Reserve Account (if any), the
Yield Supplement Deposit Amount (if any) or payments
in respect of any other credit or cash flow
enhancement arrangement;
(iv) the Pool Balance as of the close of
business on the last day of the preceding Collection
Period;
(v) the aggregate outstanding principal
balance and the Note Pool Factor for each class of
such Notes, and the Certificate Balance and the
Certificate Pool Factor for each class of such
Certificates, each after giving effect to all
payments reported under clause (i) above on such
date;
(vi) the amount of the Servicing Fee paid to
the Servicer with respect to the related Collection
Period or Collection Periods, as the case may be;
(vii) the amount of the aggregate Realized
Losses (as defined in the related Prospectus
Supplement), if any, for such Collection Period;
(viii) the Noteholders' Interest Carryover
Shortfall, the Noteholders' Principal Carryover
Shortfall, the Certificateholders' Interest
Carryover Shortfall and the Certificateholders'
Principal Carryover Shortfall (each as defined in
the related Prospectus Supplement), if any, in each
case as applicable to each class of Securities, and
the change in such amounts from the preceding
statement;
(ix) the aggregate Purchase Amounts for
Receivables, if any, that were repurchased in such
Collection Period;
(x) the balance of the Reserve Account (if
any) on such date, after giving effect to changes
therein on such date;
(xi) the balance of the Yield Supplement
Account (if any) on such date, after giving effect
to changes therein on such date;
(xii) the amount of Advances or Advance
Reserve Withdrawals on such date;
(xiii) for each such date during the Funding
Period (if any), the remaining Pre-Funded Amount;
[and]
(xiv) for the first such date that is on or
immediately following the end of the Funding Period
(if any), the amount of any remaining Pre-Funded
Amount that has not been used to fund the purchase
of Subsequent Receivables and is being passed
through as payments of principal on the Securities
of such series[; and
(xv) the Note Interest Rate and/or Certificate
Rate for the next period for any class of Notes or
Certificates of such series with variable or
adjustable rates.]
Each amount set forth pursuant to subclauses (i),
(ii), (iii), (vi) and (ix) with respect to the Notes or
the Certificates of any series will be expressed as a
dollar amount per $1,000 of the initial principal balance
of such Notes or the initial Certificate Balance of such
Certificates, as applicable.
Within the prescribed period of time for federal
income tax reporting purposes after the end of each
calendar year during the term of each Trust, the
Applicable Trustee will mail to each person who at any
time during such calendar year has been a Securityholder
with respect to such Trust and received any payment
thereon a statement containing certain information for
the purposes of such Securityholder's preparation of
federal income tax returns. See "Certain Federal Income
Tax Consequences" herein and in the related Prospectus
Supplement.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of
each Sale and Servicing Agreement or Pooling and
Servicing Agreement pursuant to which a Trust will
purchase Receivables from the Sellers and the Servicer
will agree to service such Receivables, each Trust
Agreement (in the case of a grantor trust, the Pooling
and Servicing Agreement) pursuant to which a Trust will
be created and Certificates will be issued and each
Administration Agreement pursuant to which NationsBank,
N.A. will undertake certain administrative duties with
respect to a Trust that issues Notes (collectively, the
"Transfer and Servicing Agreements"). Forms of the
Transfer and Servicing Agreements have been filed as
exhibits to the Registration Statement of which this
Prospectus forms a part. This summary does not purport
to be complete and is subject to, and qualified in its
entirety by reference to, all the provisions of the
Transfer and Servicing Agreements.
SALE AND ASSIGNMENT OF RECEIVABLES
Prior to the time of issuance of the Securities of a
given Trust, pursuant to a related Sale and Servicing
Agreement or Pooling and Servicing Agreement, the Sellers
will sell and assign to the Trustee, without recourse,
their entire interest in the Initial Receivables, if any,
of the related Receivables Pool, including their security
interests in the related Financed Vehicles. Each such
Receivable will be identified in a schedule to the
related Sale and Servicing Agreement or Pooling and
Servicing Agreement. The applicable Trustee will not
independently verify the existence and qualification of
any Receivables. The Trustee will, concurrently with
such sale and assignment, execute, authenticate, and
deliver the related Notes and/or Certificates to the
Sellers in exchange for the Receivables. If so provided
in the related Prospectus Supplement, the net proceeds
received by the Sellers from the sale of the Certificates
and the Notes of a given series will be applied to the
deposit of the Pre-Funded Amount into the Pre-Funding
Account, if any, and to make the initial deposit into the
Reserve Account, if any. The related Prospectus
Supplement for a given Trust will specify whether, and
the terms, conditions and manner under which, Subsequent
Receivables will be sold by the Sellers to the applicable
Trust from time to time during any Funding Period on each
date specified as a transfer date in the related
Prospectus Supplement (each, a "Subsequent Transfer
Date").
If so specified in the related Prospectus
Supplement, all or a portion of the Receivables may be
purchased by the Trust from the Sellers for a purchase
price which is less than the aggregate principal balance
thereof. If any Receivables are purchased for a purchase
price less than their respective principal balances, a
portion of the collections or proceeds in respect of
principal from such Receivables may be deemed collections
or proceeds in respect of interest on such Receivables
for the purposes of allocating distributions on the
Securities.
In each Sale and Servicing Agreement or Pooling and
Servicing Agreement the Sellers will represent and
warrant to the applicable Trust, among other things, as
of the applicable Closing Date (or the applicable
Subsequent Transfer Date) (unless otherwise indicated):
(i) the Receivable has been fully and properly executed
by the parties thereto and (a) has been originated or
purchased by such Seller in the ordinary course of its
business and in accordance with such Seller's
underwriting standards to finance the retail sale by a
Dealer of the Financed Vehicle, (b) is secured by a
valid, subsisting, and enforceable security interest in
favor of such Seller in the Financed Vehicle (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) prior in
right to the security interest of any other creditor,
which security interest is assignable together with such
Receivable, and has been so assigned, by such Seller to
the Trustee, (c) contains customary and enforceable
provisions such that the rights and remedies of the
holder thereof are adequate for realization against the
collateral of the benefits of the security, (d) provided,
at origination, for level monthly payments (although the
amount of the last payment may be different), which fully
amortize the initial principal balance of the Receivable
over the original term and (e) provides for interest at
the related contractual interest rate ("Contract Rate");
(ii) the information set forth in the Schedule of
Receivables was true and correct as of the close of
business on the applicable Cut-Off Date (or the
applicable Subsequent Transfer Date); (iii) to the
knowledge of such Seller, the Receivable complied at the
time it was originated or made, and will comply as of the
Closing Date (or the applicable Subsequent Transfer
Date), in all material respects with all requirements of
applicable federal, state and local laws, and regulations
thereunder; provided, however that if notwithstanding the
knowledge of the Seller, the representation set forth in
this clause is untrue, the Seller shall repurchase such
Receivable in accordance with the terms of the applicable
Transfer and Servicing Agreement; (iv) the Receivable
constitutes the genuine, legal, valid and binding payment
obligation in writing of the Obligor, enforceable in all
material respects by the holder thereof in accordance
with its terms, and except as such enforceability may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium, conservatorship,
receivership, liquidation and other similar laws
affecting creditors' rights in general, the Receivable is
not subject to any right of rescission, setoff,
counterclaim or defense, including the defense of usury,
and the operation of any of the terms of the Receivable,
or the exercise of any right thereunder, will not render
the Receivable unenforceable in whole or in part or
subject to any right of rescission, setoff, counterclaim
or defense, including the defense of usury, and such
Seller has not received written notice that any right of
rescission, setoff, counterclaim or defense has been
asserted with respect thereto; (v) such Seller has taken
no action which would have the effect of releasing the
related Financed Vehicle from the lien granted by the
Receivable in whole or in part; (vi) no material
provision of the Receivable has been amended, waived,
altered or modified in any respect, except such waivers
as would be permitted under the applicable Transfer and
Servicing Agreement, and no amendment, waiver, alteration
or modification causes such Receivable not to conform to
the other representations or warranties contained in this
paragraph; (vii) such Seller has not received notice of
any liens or claims, including liens for work, labor,
materials or unpaid state or Federal taxes relating to
the Financed Vehicle securing the Receivable, that are or
may be prior to or equal to or coordinate with the lien
granted by the Receivable; (viii) except for payment
delinquencies continuing for a period of not more than 30
days as of the Cut-Off Date (or the applicable Subsequent
Transfer Date), to the knowledge of such Seller, (a) no
default, breach, violation or event permitting
acceleration under the terms of any Receivable exists and
(b) no continuing condition that with notice or lapse of
time, or both, would constitute a default, breach,
violation or event permitting acceleration under the
terms of the Receivable has arisen; provided, however,
that if notwithstanding the knowledge of the Seller, any
of the events specified in (a) or (b) of this clause
exists or has arisen with respect to a Receivable, the
Seller shall repurchase such Receivable in accordance
with the terms of the applicable Transfer and Servicing
Agreement; (ix) immediately prior to the transfer and
assignment therein contemplated, the Receivable has not
been sold, assigned, pledged or otherwise conveyed by
such Seller to any person other than the Trust, and such
Seller had good and marketable title to the Receivable
free and clear of any encumbrance, equity, lien, pledge,
charge, claim, security interest or other right or
interest of any other person and had full right and power
to transfer and assign the Receivable to the Trust and
immediately upon the transfer and assignment of the
Receivable to the Trust, the Trust will have good and
marketable title to the Receivable, free and clear of any
encumbrance, equity, lien, pledge, charge, claim,
security interest or other right or interest of any other
person and, if such transfer to the Trust is deemed to be
a transfer for security, the Trust's interest in the
Receivable resulting from the transfer has been perfected
under the UCC; (x) such Seller has duly fulfilled all
obligations on its part to be fulfilled under the
Receivable; and (xi) only one original of each Receivable
was executed and, immediately prior to the Closing Date,
the Servicer or NSI will have possession of the
Receivable File.
As of the last day of the second (or, if a Seller
elects, the first) month following the discovery by or
notice to a Seller of a breach of any representation or
warranty of such Seller which materially and adversely
affects the interests of the related Trust in any
Receivable, the Seller of such Receivable, unless it
cures the breach, will repurchase such Receivable from
such Trust at a price equal to the amount required to be
paid by the related Obligor to prepay such Receivable
(including one month's interest thereon, in the month of
payment, at the Contract Rate), after giving effect to
the receipt of any moneys collected (from whatever
source) on such Receivable, if any (such price, the
"Purchase Amount"); provided, however, that if such
breach or failure occurs solely as a result of
NationsBank, N.A.'s practice of retaining original Motor
Vehicle Loan documents only in microfilm form,
NationsBank, N.A. will not be required to repurchase the
affected Receivable unless the related Dealer enters into
bankruptcy, and the bankruptcy trustee or a creditor of
such Dealer asserts that NationsBank, N.A. did not have,
or the applicable Trust does not have, a first priority
perfected ownership interest in such Receivable as a
result of such practice. The purchase obligation will
constitute the sole remedy available to the
Certificateholders or the Trustee and any Noteholders or
Indenture Trustee in respect of such Trust for any such
uncured breach.
Pursuant to each Sale and Servicing Agreement or
Pooling and Servicing Agreement, and in order to assure
uniform quality in servicing the Receivables and to
reduce administrative costs, the Trustee will appoint NSI
as initial custodian of the Receivables. NSI, as
custodian with respect to a particular Seller's
Receivables, will hold such Receivables and physical
registration or evidence of registration as is customary
within each state, including any motor vehicle
certificates of title or ownership relating thereto
(each, a "Receivable File"), on behalf of the applicable
Trustee. The Receivables will not be stamped or otherwise
marked to reflect the sale and assignment of the
Receivables to the applicable Trust and will not be
segregated from other receivables held by NSI. The
Sellers', the Servicer's and their respective affiliates'
accounting records and computer systems will reflect the
sale and assignment of the Receivables to the applicable
Trust, and UCC financing statements with respect to such
sale and assignment will be filed. See "The Trusts" and
"The Receivables Pools General" and "Certain Legal
Aspects of the Receivables Security Interests in
Vehicles."
ACCOUNTS
With respect to each Trust that issues Notes, the
Servicer will establish and maintain with the related
Indenture Trustee one or more accounts, in the name of
the Indenture Trustee on behalf of the related
Noteholders and Certificateholders, into which all
payments made on or with respect to the related
Receivables will be deposited (the "Collection Account").
The Servicer will establish and maintain with such
Indenture Trustee an account, in the name of such
Indenture Trustee on behalf of such Noteholders, into
which amounts released from the Collection Account and
any Pre-Funding Account, Reserve Account or other credit
enhancement for payment to such Noteholders will be
deposited and from which all distributions to such
Noteholders will be made (the "Note Payment Account").
The Servicer will establish and maintain with the related
Trustee an account, in the name of such Trustee on behalf
of such Certificateholders, into which amounts released
from the Collection Account and any Pre-Funding Account,
Yield Supplement Account, Reserve Account or other credit
or cash flow enhancement for distribution to such
Certificateholders will be deposited and from which all
distributions to such Certificateholders will be made
(the "Certificate Distribution Account"). With respect
to each Trust that does not issue Notes, the Servicer
will also establish and maintain the Collection Account
and any other Trust Account in the name of the related
Trustee on behalf of the related Certificateholders.
Any other accounts to be established with respect to
a Trust, including any Pre-Funding Account, Yield
Supplement Account or Reserve Account, will be described
in the related Prospectus Supplement.
For any series of Securities, funds in the
Collection Account, the Note Payment Account and any
Pre-Funding Account, Yield Supplement Account, Reserve
Account and other accounts identified as such in the
related Prospectus Supplement (collectively, the "Trust
Accounts") will be invested as provided in the related
Sale and Servicing Agreement or Pooling and Servicing
Agreement in Permitted Investments. "Permitted
Investments" means (i) direct obligations of, and
obligations fully guaranteed as to timely payment by, the
United States of America or its agencies; (ii) demand
deposits, time deposits, certificates of deposit or
bankers' acceptances of certain depository institutions
or trust companies having the highest rating from the
applicable Rating Agency; (iii) commercial paper having,
at the time of the Trust's investment, a rating in the
highest rating category from the applicable Rating
Agency; (iv) investments in money market funds having the
highest rating from the applicable Rating Agency; (v)
repurchase obligations with respect to any security that
is a direct obligation of, or fully guaranteed by, the
United States of America or its agencies, in either case
entered into with a depository institution or trust
company described in clause (ii) above; and (vii) any
other investment (which may include retail motor vehicle
installment sales contracts) acceptable to the Rating
Agencies rating the Securities of the related Trust as
being consistent with the rating of such Securities.
Permitted Investments are generally limited to
obligations or securities that mature on or before the
date of the next distribution for such series. However,
to the extent permitted by the Rating Agencies, funds in
any Reserve Account may be invested in securities that
will not mature prior to the date of the next
distribution with respect to such Certificates or Notes
and will not be sold to meet any shortfalls. Thus, the
amount of cash in any Reserve Account at any time may be
less than the balance of the Reserve Account. If the
amount required to be withdrawn from any Reserve Account
to cover shortfalls in collections on the related
Receivables (as provided in the related Prospectus
Supplement) exceeds the amount of cash in the Reserve
Account, a temporary shortfall in the amounts distributed
to the related Noteholders or Certificateholders could
result, which could, in turn, increase the average life
of the Notes or the Certificates of such series.
Investment earnings on funds deposited in the Trust
Accounts, net of losses and investment expenses
(collectively, "Investment Earnings"), shall be deposited
in the applicable Collection Account or distributed as
provided in the related Prospectus Supplement.
The Trust 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
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.
"Eligible Institution" means, with respect to a Trust,
(a) the corporate trust department of the related
Indenture Trustee or the related Trustee, as applicable,
or (b) a depository institution organized under the laws
of the United States of America or any one of the states
thereof or the District of Columbia (or any domestic
branch of a foreign bank), (i) which has either (a) a
long-term unsecured debt rating acceptable to the Rating
Agencies or (b) a short-term unsecured debt rating or
certificate of deposit rating acceptable to the Rating
Agencies and (ii) whose deposits are insured by the
Federal Deposit Insurance Corporation.
COLLECTIONS
With respect to each Trust, the Servicer will
deposit all payments on the related Receivables received
from Obligors and all proceeds of the related Receivables
collected during each collection period specified in the
related Prospectus Supplement (each, a "Collection
Period") into the related Collection Account not later
than two business days after receipt. However, so long
as NationsBank, N.A. is the servicer and provided that
(i) there exists no Event of Servicing Termination and
(ii) each other condition to making monthly deposits as
may be required by the related Sale and Servicing
Agreement or Pooling and Servicing Agreement is
satisfied, the Servicer may retain such amounts until the
business day prior to the applicable Distribution Date
(the "Deposit Date"). The Servicer or the Sellers, as
the case may be, will remit the aggregate Purchase Amount
of any Receivables to be purchased from a Trust to the
related Collection Account on the applicable Deposit
Date. Pending deposit into the Collection Account,
collections may be employed by the Servicer at its own
risk and for its own benefit and will not be segregated
from its own funds. To the extent set forth in the
related Prospectus Supplement, the Servicer may, in order
to satisfy the requirements described above, obtain a
letter of credit or other security for the benefit of the
related Trust to secure timely remittances of collections
on the related Receivables and payment of the aggregate
Purchase Amount with respect to Receivables purchased by
the Servicer.
The Sellers and the Servicer will also deposit into
the Collection Account on or before each Deposit Date the
Purchase Amount of each Receivable to be repurchased or
purchased by them pursuant to an obligation that arose
during the preceding Collection Period. The Servicer will
be entitled to retain, or to be reimbursed from, amounts
otherwise payable into, or on deposit in, the Collection
Account but later determined to have resulted from
mistaken deposits or postings or checks returned for
insufficient funds.
ADVANCES AND ADVANCE RESERVE WITHDRAWALS
Servicer Advances. If so provided in the related
Prospectus Supplement, as of the last day of each
Collection Period, the Servicer will, subject to the
limitations described in the following sentence, make a
payment (an "Advance") with respect to each Receivable
(other than a Receivable which the Servicer, on behalf of
the applicable Trust, has determined to charge-off during
such Collection Period, in accordance with its customary
servicing practices (a "Defaulted Receivable")) equal to
the excess, if any, of (x) the amount of interest due on
such Receivable at its applicable Contract Rate, over (y)
the interest actually received by the Servicer with
respect to such Receivable (whether from the Obligor, the
Yield Supplement Agreement (if applicable) or payments of
the Purchase Amount) during or with respect to such
Collection Period. The Servicer may elect not to make an
Advance of due and unpaid interest with respect to a
Receivable to the extent that the Servicer, in its sole
discretion, determines that such Advance is not
recoverable from subsequent payments on such Receivable
or from funds in the Reserve Account. Advances by the
Servicer will not be required to be made pursuant to any
Sale and Servicing Agreement, except to the extent
specified in the related Prospectus Supplement.
To the extent that the amount set forth in clause
(y) above with respect to a Receivable is greater than
the amount set forth in clause (x) above with respect
thereto, such amount shall be distributed to the Servicer
on the related Distribution Date. Any such payment will
only be from accrued interest due from the Obligor under
such Receivable.
The Servicer will deposit Advances, if any, into the
Collection Account on the applicable Deposit Date.
Advance Reserve Withdrawals. To the extent provided
in the related Prospectus Supplement, and only to the
extent that such Prospectus Supplement does not provide
for Advances to be made by the Servicer, the Servicer
may, as of the last day of the Collection Period,
withdraw from the Reserve Account funds in an amount with
respect to each Receivable (other than a Defaulted
Receivable) equal to the excess, if any, of (x) the
amount of interest due on such Receivable at its
applicable Contract Rate, over (y) the interest actually
received by the Servicer with respect to such Receivable
(whether from the Obligor, the Yield Supplement Agreement
(if applicable) or payments of the Purchase Amount)
during or with respect to such Collection Period (an
"Advance Reserve Withdrawal"). The Servicer will deposit
Advance Reserve Withdrawals, if any, into the Collection
Account on the applicable Deposit Date. Advance Reserve
Withdrawals will not be required to be made pursuant to
any Sale and Servicing Agreement, except to the extent
specified in the related Prospectus Supplement.
SERVICING PROCEDURES
With respect to a Trust, the Servicer will make
reasonable efforts to collect all payments due with
respect to the Receivables in a manner consistent with
the terms described in the Sale and Servicing Agreement
or the Pooling and Servicing Agreement and will exercise
the degree of skill and care that the Servicer exercises
with respect to similar motor vehicle installment sales
contracts serviced by the Servicer for itself or others
and that are consistent with prudent industry standards.
Consistent with its normal procedures, the Servicer may,
in its discretion, arrange with the Obligor on a
Receivable to defer or modify the payment schedule. Some
of such arrangements may cause the Servicer to purchase
the Receivable while others may result in Advance Reserve
Withdrawals or the Servicer making Advances with respect
to the Receivable. If the Servicer determines that
eventual payment in full of a Receivable is unlikely, the
Servicer will follow its normal practices and procedures
to realize upon the Receivable, including the
repossession and disposition of the Financed Vehicle
securing the Receivable at a public or private sale, or
the holding of any other action permitted by applicable
law. The Servicer shall be permitted to delegate (i) any
and all of its servicing duties to any of its affiliates
(including the Sellers) or (ii) specific duties to
subcontractors who are in the business of performing such
duties; provided, however, the Servicer will remain
obligated and liable to the Trustee and the
Certificateholders for servicing and administering the
Receivables in accordance with the Sales and Servicing
Agreement or the Pooling and Servicing Agreement as if
the Servicer alone were servicing the Receivables.
With respect to any Trust, the Servicer will
covenant in the Sale and Servicing Agreement and in the
Pooling and Servicing Agreement that: (i) the Servicer
will not release the Financed Vehicle from the security
interest granted by the related Receivable in whole or in
part, except upon payment in full of the Receivable or as
otherwise contemplated by the Sale and Servicing
Agreement and in the Pooling and Servicing Agreement;
(ii) the Servicer will not impair in any material respect
the rights of the Securityholders in the Receivables, the
Dealer Agreements or the physical damage insurance
policies; and (iii) the Servicer will not (a) extend a
Receivable beyond the last day of the Collection Period
immediately preceding the applicable Final Scheduled
Distribution Date specified in the applicable Prospectus
Supplement, (b) amend or modify the principal balance or
Contract Rate of any Receivable, or (c) amend, waive or
otherwise modify any material term of a Receivable,
except in the case of certain extensions explicitly
permitted by the Sale and Servicing Agreement and in the
Pooling and Servicing Agreement.
MANDATORY REPURCHASE OF RECEIVABLES
In the event of a breach by the Servicer of any
covenant described above that materially and adversely
affects the interests of the Trust and the
Securityholders in a Receivable, the Servicer, unless
such breach has been cured by the last day of the
Collection Period which includes the 60th day following
the date on which the Servicer becomes aware of, or
receives written notice of such breach, or earlier in
certain circumstances, will be required to purchase the
Receivable from the Trustee on the Deposit Date
immediately following such Collection Period or earlier
under certain circumstances. The purchase price will be
the Purchase Amount as of the last day of the Collection
Period preceding the date of such purchase. The purchase
obligation will constitute the sole remedy available to
the Noteholders, the Certificateholders, the Trust or the
Trustee against the Servicer for any such uncured breach,
except with respect to certain indemnities of the
Servicer under the Agreement related thereto. See "
Event of Servicing Termination" below.
The Sale and Servicing Agreement and in the Pooling
and Servicing Agreement will also generally require the
Servicer to charge off a Receivable as a Defaulted
Receivable in accordance with its customary standards and
to follow such of its normal collection practices and
procedures as it deems necessary or advisable, and that
are consistent with the standard of care required by the
Agreement, to realize upon any Receivable. The Servicer
may sell the Financed Vehicle securing such Receivable at
judicial sale or take any other action permitted by
applicable law. See "Certain Legal Aspects of the
Receivables."
The Sale and Servicing Agreement and the Pooling
and Servicing Agreement will provide that the Servicer
will defend and indemnify the Trust and the
Certificateholders against any and all costs, expenses,
losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel and expenses of
litigation, arising out of or resulting from (i) the use,
ownership or operation by the Servicer or any affiliate
thereof of any Financed Vehicle or (ii) the willful
misfeasance, negligence or bad faith of the Servicer in
the performance of its duties under the Agreement. The
Servicer's obligations to indemnify the Trust and the
Certificateholders for the Servicer's actions or
omissions will survive the removal of the Servicer, but
will not apply to any action or omission of a successor
Servicer.
SERVICING COMPENSATION AND EXPENSES
The Servicer will be entitled to receive a servicing
fee (the "Servicing Fee") for each Collection Period
equal to a specified percentage (the "Servicing Fee
Rate") of the Pool Balance as of the first day of such
Collection Period. The Servicer also will be entitled to
receive a supplemental servicing fee (the "Supplemental
Servicing Fee") for each Collection Period equal to any
late, prepayment, and other administrative fees and
expenses collected during such Collection Period. To the
extent specified in the related Prospectus Supplement,
the Supplemental Servicing Fee will include Investment
Earnings on funds deposited in the Trust Accounts and
other accounts with respect to a Trust. The Servicer
will be paid the Servicing Fee and the Supplemental
Servicing Fee for each Collection Period on the
applicable Distribution Date.
The Servicing Fee and the Supplemental Servicing Fee
(collectively, the "Servicer Fee") are intended to
compensate the Servicer for performing the functions of a
third party servicer of the 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, reporting federal income tax
information to Obligors, paying costs of collections, and
policing the collateral. The Servicer Fee will also
compensate the Servicer for administering the particular
Receivables Pool, including making Advances, accounting
for collections, furnishing monthly and annual statements
to the related Trustee and Indenture Trustee with respect
to distributions, and generating federal income tax
information for the Trust. The Servicer Fee also will
reimburse the Servicer for certain taxes, the fees of the
related Trustee and Indenture Trustee, accounting fees,
outside auditor fees, data processing costs, and other
costs incurred in connection with administering the
applicable Receivables.
DISTRIBUTIONS
With respect to each series of Securities, beginning
on the Distribution Date specified in the related
Prospectus Supplement, distributions of principal and
interest (or, where applicable, of principal or interest
only) on each class of such Securities entitled thereto
will be made by the Applicable Trustee to the Noteholders
and the Certificateholders of such series. The timing,
calculation, allocation, order, source, priorities of and
requirements for all payments to each class of
Noteholders and all distributions to each class of
Certificateholders of such series will be set forth in
the related Prospectus Supplement.
With respect to each Trust, on each Distribution
Date, collections on the related Receivables will be
transferred from the Collection Account to the Note
Payment Account, if any, and the Certificate Distribution
Account for distribution to Noteholders, if any, and
Certificateholders to the extent provided in the related
Prospectus Supplement. Credit enhancement, such as a
Reserve Account, will be available to cover any
shortfalls in the amount available for distribution on
such date to the extent specified in the related
Prospectus Supplement. As more fully described in the
related Prospectus Supplement, distributions in respect
of principal of a class of Securities of a given series
may be subordinate to distributions in respect of
interest on such class, and distributions in respect of
one or more classes of Certificates of such series may be
subordinate to payments in respect of Notes, if any, of
such series or other classes of Certificates of such
series.
Allocation of Collections on Receivables.
Distributions of principal on the Securities of a series
may be based on the amount of principal collected or due,
or the amount of Realized Losses incurred, in a
Collection Period. On or before the fifth Business Day
preceding each Distribution Date (a "Determination
Date"), the Indenture Trustee, if any, or, otherwise, the
Trustee shall determine the amount in the Collection
Account available for distribution on the related
Distribution Date. Such amount shall be allocated to
interest and to principal as described in the applicable
Prospectus Supplement. Payments to Securityholders shall
be made on each Distribution Date in accordance with such
allocations, together with the statement described under
"Certain Information Regarding the Securities Reports to
Securityholders."
CREDIT AND CASH FLOW ENHANCEMENT
The amounts and types of credit and cash flow
enhancement arrangements and the provider thereof, if
applicable, with respect to each class of Securities of a
given series, if any, will be set forth in the related
Prospectus Supplement. If and to the extent provided in
the related Prospectus Supplement, credit and cash flow
enhancement may be in the form of subordination of one or
more classes of Securities, Reserve Accounts,
over-collateralization, letters of credit, credit or
liquidity facilities, surety bonds, guaranteed investment
contracts, swaps or other interest rate protection
agreements, repurchase obligations, yield supplement
agreements, other agreements with respect to third party
payments or other support, cash deposits or such other
arrangements as may be described in the related
Prospectus Supplement or any combination of two or more
of the foregoing. If specified in the applicable
Prospectus Supplement, credit or cash flow enhancement
for a class of Securities may cover one or more other
classes of Securities of the same series, and credit or
cash flow enhancement for a series of Securities may
cover one or more other series of Securities.
The presence of a Reserve Account and other forms of
credit enhancement for the benefit of any class or series
of Securities is intended to enhance the likelihood of
receipt by the Securityholders of such class or series of
the full amount of principal and interest due thereon and
to decrease the likelihood that such Securityholders will
experience losses. The credit enhancement for a class or
series of Securities may not provide protection against
all risks of loss and may not guarantee repayment of the
entire principal balance and interest thereon. If losses
occur which exceed the amount covered by any credit
enhancement or which are not covered by any credit
enhancement, Securityholders of any class or series will
bear their allocable share of deficiencies, as described
in the related Prospectus Supplement. In addition, if a
form of credit enhancement covers more than one series of
Securities, Securityholders of any such series will be
subject to the risk that such credit enhancement will be
exhausted by the claims of Securityholders of other
series.
The Sellers may replace the credit enhancement for
any class of Securities with another form of credit
enhancement without the consent of Securityholders,
provided the applicable Rating Agencies confirm in
writing that substitution will not result in the
reduction or withdrawal of the rating of such class of
Securities or any other class of Securities of the
related series.
Reserve Account. If so provided in the related
Prospectus Supplement, pursuant to the related Sale and
Servicing Agreement or Pooling and Servicing Agreement,
the Sellers will establish for a series or class of
Securities an account, as specified in the related
Prospectus Supplement (the "Reserve Account"), which will
be maintained with the related Trustee or Indenture
Trustee, as applicable. If so provided in the related
Prospectus Supplement, the Reserve Account will be funded
by an initial deposit by the Sellers on the Closing Date
in the amount set forth in the related Prospectus
Supplement and, if the related series has a Funding
Period, will also be funded on each Subsequent Transfer
Date to the extent described in the related Prospectus
Supplement. As further described in the related
Prospectus Supplement, the amount on deposit in the
Reserve Account will be increased on each Distribution
Date thereafter up to the Specified Reserve Account
Balance (as defined in the related Prospectus Supplement)
by the deposit therein of the amount of collections on
the related Receivables remaining on each such
Distribution Date after the payment of all other required
payments and distributions on such date. The related
Prospectus Supplement will describe the circumstances and
manner under which distributions may be made out of the
Reserve Account, either to holders of the Securities
covered thereby or to the Sellers.
The Sellers may at any time, without consent of the
Securityholders, sell, transfer, convey or assign in any
manner its rights to and interests in distributions from
the Reserve Account provided that (i) the Rating Agencies
confirm in writing that such action will not result in a
reduction or withdrawal of the rating of any class of
Securities, (ii) the Sellers provide to the applicable
Trustee and any Indenture Trustee an opinion of
independent counsel that such action will not cause the
related Trust to be classified as an association (or
publicly traded partnership) taxable as a corporation for
federal income tax purposes and (iii) such transferee or
assignee agrees in writing to take positions for federal
income tax purposes consistent with the federal income
tax positions agreed to be taken by the Sellers.
Yield Supplement Account; Yield Supplement
Agreement. If so provided in the related Prospectus
Supplement, pursuant to the related Sale and Servicing
Agreement or Pooling and Servicing Agreement, the Sellers
will establish for a series an account, as specified in
the related Prospectus Supplement (the "Yield Supplement
Account"), which will be maintained with the same entity
at which the related Collection Account is maintained
and, if so specified in the related Prospectus
Supplement, will be created with an initial deposit by
the Sellers of the Yield Supplement Initial Deposit.
Each Yield Supplement Account will be designed solely to
hold funds to be applied by the Indenture Trustee or
applicable Trustee to provide payments to Securityholders
in respect of Receivables the Contract Rate of which is
less than the Required Rate.
On each Distribution Date, the related Indenture
Trustee or applicable Trustee, as the case may be, will
transfer to the related Collection Account from monies on
deposit in the Yield Supplement Account an amount equal
to the Yield Supplement Deposit Amount (as such term is
defined in the related Prospectus Supplement, the "Yield
Supplement Deposit Amount") in respect of the Receivables
for such Distribution Date. If so specified in the
related Prospectus Supplement, amounts on deposit on any
Distribution Date in the Yield Supplement Account in
excess of the Required Yield Supplement Amount, after
giving effect to all distributions to be made on such
Distribution Date, will be released to the Sellers.
Monies on deposit in the Yield Supplement Account may be
invested in Permitted Investments under the circumstances
and in the manner described in the related Sale and
Servicing Agreement or Pooling and Servicing Agreement,
as applicable. If so specified in the related Prospectus
Supplement, Investment Earnings on investment of funds in
a Yield Supplement Account will be deposited into such
Yield Supplement Account. If so specified in the related
Prospectus Supplement, any monies remaining on deposit in
a Yield Supplement Account upon the termination of the
related Trust pursuant to its terms shall be released to
the Sellers.
If a Yield Supplement Account is established with
respect to any Trust as to which a Pre-Funding Account
has been established, the Sellers and the related
Indenture Trustee or applicable Trustee, will enter into
a Yield Supplement Agreement pursuant to which, on each
Subsequent Transfer Date, the Sellers will deposit into
the Yield Supplement Account the Additional Yield
Supplement Amount in respect of the related Subsequent
Receivables. Each Yield Supplement Agreement will affect
only Receivables having Contract Rates less than the
related Required Rate.
NET DEPOSITS
As an administrative convenience and for so long as
certain conditions are satisfied (see " Collections"
above), the Servicer will be permitted to make the
deposit of collections, aggregate Advances, if any, and
Purchase Amounts for any Trust for or with respect to the
related Collection Period, net of distributions to the
Servicer as reimbursement of Advances or payment of the
Servicer Fee with respect to such Collection Period. The
Servicer, however, will account to the Trustee, any
Indenture Trust, the Noteholders, if any, and the
Certificateholders with respect to each Trust as if all
deposits, distributions, and transfers were made
individually.
STATEMENTS TO TRUSTEES AND TRUST
Prior to each Distribution Date with respect to each
series of Securities, the Servicer will provide to the
applicable Indenture Trustee, if any, and the applicable
Trustee as of the close of business on the last day of
the preceding Collection Period a statement setting forth
substantially the same information as is required to be
provided in the periodic reports provided to
Securityholders of such series described under "Certain
Information Regarding the Securities Reports to
Securityholders."
EVIDENCE AS TO COMPLIANCE
Each Sale and Servicing Agreement and Pooling and
Servicing Agreement will provide that a firm of certified
independent public accountants will furnish to the
related Trust and Indenture Trustee or Trustee, as
applicable, annually a statement as to compliance in all
material respects by the Servicer during the preceding
twelve months (or, in the case of the first such
certificate, from the applicable Closing Date) with
certain standards relating to the servicing of the
applicable Receivables, the Servicer's accounting records
and computer files with respect thereto and certain other
matters.
Each Sale and Servicing Agreement and Pooling and
Servicing Agreement will also provide for delivery to the
related Trust and Indenture Trustee or Trustee, as
applicable, substantially simultaneously with the
delivery of such accountants' statement referred to
above, of a certificate signed by an officer of the
Servicer stating that the Servicer has fulfilled its
obligations under the Sale and Servicing Agreement or
Pooling and Servicing Agreement, as applicable,
throughout the preceding twelve months (or, in the case
of the first such certificate, from the Closing Date) or,
if there has been a default in the fulfillment of any
such obligation, describing each such default. The
Servicer has agreed to give each Indenture Trustee and
each Trustee notice of certain Events of Servicing
Termination under the related Sale and Servicing
Agreement or Pooling and Servicing Agreement, as
applicable.
Copies of such statements and certificates may be
obtained by Securityholders by a request in writing
addressed to the Applicable Trustee.
CERTAIN MATTERS REGARDING THE SERVICER
Each Sale and Servicing Agreement and Pooling and
Servicing Agreement will provide that NationsBank, N.A.
may not resign from its obligations and duties as
Servicer thereunder, except upon determination that
NationsBank, N.A.'s performance of such duties is no
longer permissible under applicable law. No such
resignation will become effective until the related
Indenture Trustee or Trustee, as applicable, or a
successor servicer has assumed NationsBank, N.A.'s
servicing obligations and duties under such Sale and
Servicing Agreement or Pooling and Servicing Agreement.
Each Sale and Servicing Agreement and Pooling and
Servicing Agreement will further provide that neither the
Servicer nor any of its directors, officers, employees
and agents will be under any liability to the related
Trust or the related Noteholders or Certificateholders
for taking any action or for refraining from taking any
action pursuant to such Sale and Servicing Agreement or
Pooling and Servicing Agreement or for errors in
judgment; except 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 the
Servicer's duties thereunder or by reason of reckless
disregard of its obligations and duties thereunder. In
addition, each Sale and Servicing Agreement and Pooling
and Servicing Agreement will provide that the Servicer is
under no obligation to appear in, prosecute or defend any
legal action that is not incidental to the Servicer's
servicing responsibilities under such Sale and Servicing
Agreement or Pooling and Servicing Agreement and that, in
its opinion, may cause it to incur any expense or
liability. Each of the Sale and Servicing Agreement and
the Pooling and Servicing Agreement will provide that the
Servicer will be liable only to the extent of the
obligations specifically undertaken by it under each such
agreement and will have no other obligations or
liabilities thereunder. The Servicer may, however,
undertake any reasonable action that it may deem
necessary or desirable in respect of a particular Sale
and Servicing Agreement or Pooling and Servicing
Agreement, the rights and duties of the parties thereto,
and the interests of the related Securityholders
thereunder. In such event, the legal expenses and costs
of such action and any liability resulting therefrom will
be expenses, costs, and liabilities of the Servicer, and
the Servicer will not be entitled to be reimbursed
therefor.
Under the circumstances specified in each Sale and
Servicing Agreement and Pooling and Servicing 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 (where
the Servicer is not the surviving entity and where such
entity assumes all obligations of the Servicer, will be
the successor of the Servicer under such Sale and
Servicing Agreement or Pooling and Servicing Agreement.
EVENT OF SERVICING TERMINATION
"Events of Servicing Termination" under each Sale
and Servicing Agreement and Pooling and Servicing
Agreement will consist of (i) any failure by the Servicer
or the applicable Seller, as the case may be, to deliver
to the Applicable Trustee for distribution to the
Securityholders of the related series or for deposit in
any of the Trust Accounts or the Certificate Distribution
Account any required payment, which failure continues
unremedied for five business days after written notice
from the Applicable Trustee is received by the Servicer
or the applicable Seller, as the case may be, or after
discovery by an officer of the Servicer or the applicable
Seller, as the case may be; (ii) any failure by the
Servicer or the Seller, as the case may be, duly to
observe or perform in any material respect any other
covenant or agreement in such Sale and Servicing
Agreement or Pooling and Servicing Agreement, which
failure materially and adversely affects the rights of
the Noteholders or the Certificateholders of the related
series and which continues unremedied for 90 days after
the giving of written notice of such failure (A) to the
Servicer or the Seller, as the case may be, by the
Applicable Trustee or (B) to the Servicer or the Seller,
as the case may be, and to the Applicable Trustee by
holders of Notes or Certificates of such series, as
applicable, evidencing not less than a majority in
principal amount of such outstanding Notes or of such
Certificate Balance; (iii) certain events of bankruptcy,
receivership, insolvency or similar proceedings and
certain actions of the Servicer indicating its insolvency
pursuant to bankruptcy, readjustment, receivership,
conservatorship, insolvency, marshalling of assets and
liabilities or similar proceedings or its inability to
pay its obligations as they become due (any such event
with respect to any Person, an "Insolvency Event"); and
(iv) such other events, if any, set forth in the related
Prospectus Supplement.
RIGHTS UPON EVENT OF SERVICING TERMINATION
In the case of any Trust that has issued Notes, as
long as an Event of Servicing Termination under a Sale
and Servicing Agreement remains unremedied, the related
Indenture Trustee or holders of Notes of the related
series evidencing not less than a majority of principal
amount of such Notes then outstanding may terminate all
the rights and obligations of the Servicer under such
Sale and Servicing Agreement, whereupon such Indenture
Trustee or a successor servicer appointed by such
Indenture Trustee will succeed to all the
responsibilities, duties and liabilities of the Servicer
under such Sale and Servicing Agreement and will be
entitled to similar compensation arrangements. In the
case of any Trust that has not issued Notes, as long as
an Event of Servicing Termination under the related Sale
and Servicing Agreement or Pooling and Servicing
Agreement remains unremedied, the related Trustee or
holders of Certificates of the related series evidencing
not less than a majority of the principal amount of such
Certificates then outstanding may terminate all the
rights and obligations of the Servicer under such Sale
and Servicing Agreement or Pooling and Servicing
Agreement, whereupon such Trustee or a successor servicer
appointed by such Trustee will succeed to all the
responsibilities, duties and liabilities of the Servicer
under such Sale and Servicing Agreement or Pooling and
Servicing Agreement and will be entitled to similar
compensation arrangements. If, however, a receiver or
similar official has been appointed for the Servicer, and
no Event of Servicing Termination other than such
appointment has occurred, such trustee or official may
have the power to prevent such Indenture Trustee, such
Noteholders, such Trustee or such Certificateholders from
effecting a transfer of servicing. In the event that
such Indenture Trustee or Trustee is unwilling or unable
to so act, it 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 motor
vehicle receivables. Such Indenture Trustee or Trustee
may make such arrangements for compensation to be paid,
which in no event may be greater than the servicing
compensation to the Servicer under such Sale and
Servicing Agreement or Pooling and Servicing Agreement.
WAIVER OF PAST EVENTS OF SERVICING TERMINATION
With respect to each Trust that has issued Notes,
the holders of Notes evidencing at least a majority in
principal amount of the then outstanding Notes of the
related series (or the holders of the Certificates of
such series evidencing not less than a majority of the
outstanding Certificate Balance, in the case of any Event
of Servicing Termination which does not adversely affect
the related Indenture Trustee or such Noteholders) may,
on behalf of all such Noteholders and Certificateholders,
waive any Event of Servicing Termination under the
related Sale and Servicing Agreement and its
consequences, except an Event of Servicing Termination
consisting of a failure to make any required deposits to
or payments from any of the Trust Accounts or to the
Certificate Distribution Account in accordance with such
Sale and Servicing Agreement. With respect to each Trust
that has not issued Notes, holders of Certificates of
such series evidencing not less than a majority of the
principal amount of such Certificates then outstanding
may, on behalf of all such Certificateholders, waive any
Event of Servicing Termination under the related Sale and
Servicing Agreement or Pooling and Servicing Agreement,
except an Event of Servicing Termination consisting of a
failure to make any required deposits to or payments from
the Certificate Distribution Account or the related Trust
Accounts in accordance with such Sale and Servicing
Agreement or Pooling and Servicing Agreement. No such
waiver will impair such Noteholders' or
Certificateholders' rights with respect to subsequent
defaults.
AMENDMENT
Each of the Transfer and Servicing Agreements may be
amended by the parties thereto, without the consent of
the related Noteholders or Certificateholders, for the
purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of such
Transfer and Servicing Agreements or of modifying in any
manner the rights of such Noteholders or
Certificateholders; provided that such action will not,
in the opinion of counsel (which may be an employee of a
Seller, the Servicer or any of their affiliates)
satisfactory to the related Trustee or Indenture Trustee,
as applicable, materially and adversely affect the
interest of any such Noteholder or Certificateholder, and
provided that an opinion of counsel as to certain tax
matters is delivered, if required. The Transfer and
Servicing Agreements may also be amended by the Sellers,
the Servicer, the related Trustee and any related
Indenture Trustee with the consent of the holders of
Notes evidencing at least a majority in principal amount
of then outstanding Notes, if any, of the related series
and the holders of the Certificates of such series
evidencing at least a majority of the principal amount of
such Certificates then outstanding, for the purpose of
adding any provisions to or changing in any manner or
eliminating any of the provisions of such Transfer and
Servicing Agreements or of modifying in any manner the
rights of such Noteholders or 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 the related Receivables or distributions that
are required to be made for the benefit of such
Noteholders or Certificateholders or (ii) reduce the
aforesaid percentage of the Notes or Certificates of such
series which are required to consent to any such
amendment, without the consent of the holders of all the
outstanding Notes or Certificates, as the case may be, of
such series, and provided that an opinion of counsel as
to certain tax matters is delivered, if required.
INSOLVENCY EVENT OR DISSOLUTION
With respect to a Trust that is not a grantor trust,
if an Insolvency Event or a dissolution occurs with
respect to [any of the Sellers or] [NB-SPC], the related
Receivables of such Trust will be liquidated and the
Trust will be terminated 90 days after the date of such
Insolvency Event or dissolution, unless, before the end
of such 90-day period, the related Trustee shall have
received written instructions from (i) the Noteholders
(other than [NB-SPC], the Sellers, the Servicer or their
affiliates) of Notes of such series representing a
majority of the aggregate unpaid principal amount of each
class of all such Notes and the right to receive interest
thereon, (ii) the Certificateholders (other than [NB-
SPC]) of Certificates of such series representing not
less than a majority of the aggregate Certificate
Balance, and (iii) not less than a majority of the
holders (other than [NB-SPC], the Sellers, the Servicer
or their affiliates) of certain interests, if any, in the
Reserve Account and any other person specified in a
Prospectus Supplement with respect to such Trust, to the
effect that each such party disapproves of the
liquidation of such Receivables and termination of such
Trust and in connection therewith, the related Trustee
(x) appoints an entity acceptable to the Sellers and [NB-
SPC] to acquire an interest in such Trust and to act as a
substitute "general partner" for federal income tax
purposes and (y) obtains an opinion of counsel that such
Trust will thereafter not be classified as an association
taxable as a corporation for federal income tax and
applicable state tax purposes. Promptly after the
occurrence of an Insolvency Event or a dissolution with
respect to any of the Sellers or [NB-SPC], notice thereof
is required to be given to such Noteholders,
Certificateholders and holders of interests in the
Reserve Account; provided that any failure to give such
required notice will not prevent or delay termination of
such Trust. Upon termination of any Trust, the related
Trustee shall, or shall direct the related Indenture
Trustee to, promptly sell the assets of such Trust (other
than the Trust Accounts and the Certificate Distribution
Account) in a commercially reasonable manner and on
commercially reasonable terms. The proceeds from any
such sale, disposition or liquidation of the Receivables
of such Trust will be treated as collections on such
Receivables and deposited in the related Collection
Account. With respect to any Trust, if the proceeds from
the liquidation of the related Receivables and any
amounts on deposit in the Reserve Account (if any), the
Note Payment Account (if any) and the Certificate
Distribution Account are not sufficient to pay the Notes,
if any, and the Certificates of the related series in
full, the amount of principal returned to Noteholders and
Certificateholders thereof will be reduced and some or
all of such Noteholders and Certificateholders will incur
a loss.
Each Trust Agreement will provide that the
applicable Trustee does not have the power to commence a
voluntary proceeding in bankruptcy with respect to the
related Trust without the unanimous prior approval of all
Certificateholders (including the Sellers) of such Trust
and the delivery to such Trustee by each such
Certificateholder (including the Sellers) of a
certificate certifying that such Certificateholder
reasonably believes that such Trust is insolvent.
PAYMENT OF NOTES
Upon the payment in full of all outstanding Notes of
a given series and the satisfaction and discharge of the
related Indenture, the related Trustee will succeed to
all the rights of the Indenture Trustee, and the
Certificateholders of such series will succeed to all the
rights of the Noteholders of such series, under the
related Sale and Servicing Agreement, except as otherwise
provided therein.
[NB-SPC] LIABILITY
Under each Trust Agreement, [NB-SPC] will agree to
be liable directly to an injured party for the entire
amount of any losses, claims, damages or liabilities
(other than those incurred by a Noteholder or a
Certificateholder in the capacity of an investor with
respect to such Trust) arising out of or based on the
arrangement created by such Trust Agreement as though
such arrangement created a partnership under the Delaware
Revised Uniform Limited Partnership Act in which [NB-SPC]
acted as general partner.
TERMINATION
With respect to each Trust, the obligations of the
Servicer, the Sellers, the related Trustee and the
related Indenture Trustee, if any, pursuant to the
Transfer and Servicing Agreements will terminate upon the
earlier of (i) the maturity or other liquidation of the
last related Receivable and the disposition of any
amounts received upon liquidation of any such remaining
Receivables, (ii) the payment to Noteholders, if any, and
Certificateholders of the related series of all amounts
required to be paid to them pursuant to the Transfer and
Servicing Agreements and (iii) the occurrence of either
event described below.
In order to avoid excessive administrative expense,
the Servicer will be permitted at its option to purchase
from each Trust, as of the end of any applicable
Collection Period, if the then outstanding Pool Balance
with respect to the Receivables held by such Trust is 5%
or less of the Initial Pool Balance (as defined in the
related Prospectus Supplement, the "Initial Pool
Balance"), all remaining related Receivables at a price
equal to the aggregate of the Purchase Amounts thereof as
of the end of such Collection Period.
If and to the extent provided in the related
Prospectus Supplement with respect to a Trust, the
Applicable Trustee will, within ten days following a
Distribution Date as of which the Pool Balance is equal
to or less than the percentage of the Initial Pool
Balance specified in the related Prospectus Supplement,
solicit bids for the purchase of the Receivables
remaining in such Trust, in the manner and subject to the
terms and conditions set forth in such Prospectus
Supplement. If the Applicable Trustee receives
satisfactory bids as described in such Prospectus
Supplement, then the Receivables remaining in such Trust
will be sold to the highest bidder.
As more fully described in the related Prospectus
Supplement, any outstanding Notes of the related series
will be redeemed concurrently with either of the events
specified above and the subsequent distribution to the
related Certificateholders of all amounts required to be
distributed to them pursuant to the applicable Trust
Agreement or Pooling and Servicing Agreement will effect
early retirement of the Certificates of such series.
ADMINISTRATION AGREEMENT
The entity acting as Servicer, in its capacity as
administrator (the "Administrator"), will enter into an
agreement (as amended and supplemented from time to time,
an "Administration Agreement") with each Trust that
issues Notes and the related Indenture Trustee pursuant
to which the Administrator will agree, to the extent
provided in such Administration Agreement, to provide the
notices and to perform other administrative obligations
required by the related Indenture. With respect to any
such Trust, the Servicing Fee will provide compensation
for the performance of the Administrator's obligations
under the applicable Administration Agreement and as
reimbursement for its expenses related thereto.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
RIGHTS IN THE RECEIVABLES
The Receivables are "chattel paper" as defined in
the 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 Sellers will cause appropriate financing
statements to be filed with the appropriate governmental
authorities in the states of North Carolina, Texas,
Georgia and Florida to perfect the interest of the Trust
in its purchase of the Receivables from the Sellers.
Pursuant to the Transfer and Servicing Agreements,
NSI will hold the Receivables and the Receivable Files as
custodian for the Trustee following the sale and
assignment of the Receivables to the Trust. The Sellers
will take such action as is required to perfect the
rights of the Trustee in the Receivables (subject to the
following two paragraphs). The Receivables will not be
stamped, or otherwise marked, to indicate that they have
been sold to the Trust; however, the Servicer, the
Sellers and their respective affiliates will indicate in
their computer records that the Receivables 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.
As part of its normal operating procedures since at
least 1979 until January 4, 1996, after receiving Motor
Vehicle Loan documents from Dealers and after reviewing
those documents, NationsBank, N.A. has microfilmed the
manually signed original Motor Vehicle Loan document and
then destroyed the manually signed original document;
however, certificates of title were not destroyed as part
of these procedures. The applicable Prospectus Supplement
will identify the percentage of Receivables contributed
by NationsBank, N.A. by principal balance as of the
applicable Cut-Off date. The lack of manually signed
original documents has not materially impaired
NationsBank, N.A.'s enforcement of its rights under the
Motor Vehicle Loans.
It is possible however, that, in the event of a
bankruptcy of a Dealer, a creditor of such Dealer or the
bankruptcy trustee of such Dealer could assert that
NationsBank, N.A., to the extent NationsBank, N.A. was
relying solely on possession as a means of perfecting a
first priority perfected ownership interest in the
affected Receivable, no longer had a first priority
perfected ownership interest in such Receivable because
it no longer had the manually signed original Receivable
document as a result of its destruction of the manually
signed original Receivable document. If successful, such
assertion would render NationsBank, N.A. an unsecured
creditor of the Dealer in bankruptcy and as a result, the
transfer by NationsBank, N.A. to the Trust would be
effective only to transfer such unsecured claim rather
than a first priority perfected ownership interest in
such Receivable. Historically, NationsBank, N.A. has
perfected its interest in approximately 50% (by original
principal balance) of its Motor Vehicle Loans by filing
financing statements with respect to such Motor Vehicle
Loans naming certain Dealers as debtors, although it has
not been determined whether any such filings resulted in
a first priority perfected ownership interest or a junior
interest in any affected Receivable, and there can be no
assurance that continuation statements with respect to
such filings will be filed in the future. NationsBank,
N.A. has agreed that if, after the bankruptcy of a
Dealer, the bankruptcy trustee of such Dealer or a
creditor of such dealer asserts that NationsBank, N.A.
did not have, or the Trust does not have, a first
priority perfected ownership interest in any Receivable
acquired by NationsBank, N.A. from such Dealer and such
assertion is related to NationsBank, N.A.'s practice of
retaining original Motor Vehicle Loan documents only in
microfilm form, NationsBank, N.A. will repurchase such
Receivable from the Trust at the Purchase Amount. To
NationsBank, N.A.'s knowledge, its interest in a Motor
Vehicle Loan has never been challenged in a Dealer
bankruptcy based on the lack of manually signed original
Motor Vehicle Loan documents.
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 VEHICLES
In all states in which the Receivables have been
originated, retail motor vehicle installment sales
contracts such as the Receivables evidence the credit
sale of automobiles and light trucks by dealers to
obligors; the contracts also constitute personal property
security agreements and include grants of security
interests in the vehicles under the Uniform Commercial
Code (the "UCC"). Perfection of security interests in
the vehicles is generally governed by the motor vehicle
registration laws of the state in which the vehicle is
located. In most states in which the Receivables have
been originated, a security interest in a vehicle is
perfected by notation of the secured party's lien on the
vehicle's certificate of title. Each Receivable
prohibits the sale or transfer of the Financed Vehicle
without the applicable Seller's and the Servicer's
consent.
With respect to each Trust, pursuant to the related
Dealer Agreement, the Dealer will assign its security
interests in the Financed Vehicles securing the related
Receivables to a Seller and, pursuant to the related Sale
and Servicing Agreement or Pooling and Servicing
Agreement, the Sellers will assign their security
interests in the Financed Vehicles securing such
Receivables to the Trust. However, because of the
administrative burden and expense, the Servicer, the
Sellers and the Trust will not amend any certificate of
title to identify the Trust as the new secured party on
the certificates of title relating to the Financed
Vehicles. Also, NSI will hold any certificates of title
relating to the Financed Vehicles in its possession as
custodian for the Trust pursuant to the related Sale and
Servicing Agreement or Pooling and Servicing Agreement.
See "Description of the Transfer and Servicing
Agreements Sale and Assignment of Receivables."
In most states, assignments such as those under the
Sale and Servicing Agreement or Pooling and Servicing
Agreement, as applicable, relating to each Trust,
together with a perfected security interest in the
chattel paper are an effective conveyance of a security
interest in the vehicles subject to the chattel paper
without amendment of any lien noted on a vehicle's
certificate of title, and the assignee succeeds thereby
to the assignor's rights as secured party. In the
absence of fraud or forgery by the vehicle owner or the
Servicer or administrative error by state or local
agencies, the notation of the Seller's lien on the
certificates of title will be sufficient to protect such
Trust against the rights of subsequent purchasers of a
Financed Vehicle or subsequent lenders who take a
security interest in a Financed Vehicle. If there are
any Financed Vehicles as to which a Seller failed to
obtain a perfected security interest, its security
interest would be subordinate to, among others,
subsequent purchasers of the Financed Vehicles and
holders of perfected security interests. Such a failure
would constitute a breach of the Sellers' warranties
under the related Sale and Servicing Agreement or Pooling
and Servicing Agreement, as applicable, and would create
an obligation of the Sellers under such Sale and
Servicing Agreement or Pooling and Servicing Agreement to
repurchase the related Receivable unless the breach is
cured. See "Description of the Transfer and Servicing
Agreements Sale and Assignment of Receivables." By not
identifying the Trust as the secured party on the
certificate of title, the Trust's interest in the chattel
paper may not have the benefit of the security interest
in the Financed Vehicle in all states or such security
interest could be defeated through fraud or negligence.
The Sellers will assign their rights under each Dealer
Agreement to the related Trust.
Under the laws of most states, the perfected
security interest in a vehicle would continue for four
months after a vehicle is moved to a state other than the
state in which it is initially registered and thereafter
until the vehicle owner re-registers the vehicle in the
new state. A majority of states generally require
surrender of a certificate of title to re-register a
vehicle; accordingly, a secured party must surrender
possession if it holds the certificate of title to the
vehicle, or, in the case of vehicles registered in states
providing for the notation of a lien on the, certificate
of title but not possession by the secured party, the
secured party would receive notice of surrender if the
security interest is noted on the certificate of title.
Thus, the secured party would have the opportunity to re-
perfect its security interest in the vehicle in the state
of relocation. 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 receivables, the Servicer takes steps
to effect re-perfection upon receipt of notice of re-
registration or information from the obligor as to
relocation. Similarly, when an obligor sells a vehicle,
the Servicer must surrender possession of the certificate
of title or will receive notice as a result of its lien
noted thereon and accordingly will have an opportunity to
require satisfaction of the related Receivable before
release of the lien. Under each Sale and Servicing
Agreement or Pooling and Servicing Agreement, the
Servicer will be obligated to take appropriate steps, at
the Servicer's expense, to maintain perfection of
security interests in the Financed Vehicles.
Under the laws of most states, liens for repairs
performed on a motor vehicle and liens for certain unpaid
taxes take priority over even a perfected security
interest in a Financed Vehicle. The Internal Revenue
Code of 1986, as amended, also grants priority to certain
federal tax liens over the lien of a secured party.
Federal law and the laws of certain states permit the
confiscation of motor vehicles under certain
circumstances if used in unlawful activities, which may
result in the loss of a secured party's perfected
security interest in the confiscated motor vehicle. With
respect to each Trust, the Sellers will represent to the
Trust that each security interest in a Financed Vehicle
is or will be prior to all other present liens (other
than tax liens and liens that arise by operation of law)
upon and security interests in such Financed Vehicle.
However, liens for repairs or taxes, or the confiscation
of a Financed Vehicle, could arise or occur at any time
during the term of a Receivable. No notice will be given
to the applicable Trustee or Certificateholders and any
Indenture Trustee or Noteholders, if any, in the event
such a lien arises or confiscation occurs.
REPOSSESSION
In the event of default by vehicle purchasers, the
holder of a Receivable has all the remedies of a secured
party under the UCC, except where specifically limited by
other state laws or by contract. The UCC remedies for a
secured party include the right to repossession by self-
help means, unless such means would constitute a breach
of the peace. Unless a vehicle is voluntarily
surrendered, self-help repossession is the method
employed by the Servicer in the majority of instances in
which a default occurs and is accomplished simply by
retaking possession of the financed vehicle. In cases
where the obligor objects or raises a defense to
repossession, or if otherwise required by applicable
state law, a court order must be obtained from the
appropriate state court, and the vehicle must then be
repossessed in accordance with that order.
NOTICE OF SALE; REDEMPTION RIGHTS
In the event of default by the obligor, some
jurisdictions require that the obligor be notified of the
default and be given a time period within which the
obligor may cure the default prior to repossession.
Generally, this cure right may be exercised on a limited
number of occasions in any one-year period.
The UCC and other state laws require the secured
party to provide the 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 has the right to redeem the
collateral prior to actual sale by paying the secured
party the unpaid principal balance of the obligation plus
reasonable expenses for repossessing, holding, and
preparing the collateral for disposition and arranging
for this sale, plus, in some jurisdictions, reasonable
attorneys' fees, or, in some states, a right to
reinstatement by payment of delinquent installments or
the unpaid balance. Repossessed vehicles are generally
resold by the Servicer through automobile auctions which
are attended principally by dealers.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the repossessed vehicles
generally will be applied to the expenses of resale and
repossession and then to the satisfaction of the
indebtedness of the obligor on the receivable. While
some states impose prohibitions or limitations on the
pursuit of deficiencies and deficiency judgments if the
unpaid balance does not exceed a specified amount of the
indebtedness, a deficiency judgment can be sought in
those states that do not prohibit or limit such
judgments. However, the deficiency judgment would be a
personal judgment against the obligor for the shortfall,
and a defaulting obligor can be expected to have very
little capital or sources of income available following
repossession. Therefore, in many cases, it may not be
useful to seek a deficiency judgment or, if one is
obtained, it may be settled at a significant discount.
Occasionally, after resale of a vehicle and payment
of all expenses and indebtedness, there is a surplus of
funds. In that case, the UCC requires the lender to
remit the surplus to any holder of any lien with respect
to the vehicle or if no such lienholder exists or there
are remaining funds, the UCC requires the lender to remit
the surplus to the former 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 Reporting Act, the Fair Debt Collection
Practices Act, the Magnuson-Moss Warranty Act, the
Federal Reserve Board's Regulations B and Z, state
adaptations of the National Consumer Act and of the
Uniform Consumer Credit Code, the Soldiers and Sailors
Civil Relief Act of 1940, and state motor vehicle retail
installment sales acts, retail installment sales acts,
state lemon laws and other similar laws. Also, state
laws impose finance charge ceilings and other
restrictions on consumer transactions and require
contract disclosures in addition to those required under
federal law. The requirements impose specific statutory
liabilities upon creditors who fail to comply with their
provisions. In some cases, this liability could affect
an assignee's ability to enforce consumer finance
contracts such as the Receivables.
The so-called "Holder-in-Due-Course" Rule of the
Federal Trade Commission (the "FTC Rule"), the provisions
of which are generally duplicated by the Uniform Consumer
Credit Code, other state statutes, or the common law in
certain states, has the effect of subjecting a seller
(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 obligor in
the transaction could assert against the seller of the
goods. Liability under the FTC Rule is limited to the
amounts paid by the obligor under the contract, and the
holder of the contract may also be unable to collect any
balance remaining due thereunder from the obligor.
Most of the Receivables will be subject to the
requirements of the FTC Rule. Accordingly, each Trust,
as holder of the related Receivables, will be subject to
any claims or defenses that the purchaser of the Financed
Vehicle may assert against the seller of the Financed
Vehicle. Such claims are limited to a maximum liability
equal to the amounts paid by the obligor on the
Receivable. Under most state motor vehicle dealer
licensing laws, sellers of motor vehicles are required to
be licensed to sell motor vehicles at retail sale.
Furthermore, Federal Odometer Regulations promulgated
under the Motor Vehicle Information and Cost Savings Act
require that all sellers of new and used 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 an Odometer Disclosure Statement
was not provided to the purchaser of the related financed
vehicle, the obligor may be able to assert a defense
against the seller of the vehicle. If an obligor were
successful in asserting any such claim or defense, such
claim or defense would constitute a breach of the
Sellers' representations and warranties under the related
Sale and Servicing Agreement or Pooling and Servicing
Agreement and would create an obligation of the related
Seller to repurchase the Receivable unless the breach is
cured. See "Description of the Transfer and Servicing
Agreements Sale and Assignment of the Receivables."
Courts have imposed general equitable principles on
secured parties pursuing repossession of collateral 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.
In several cases, obligors have asserted that the
self-help remedies of secured parties under the UCC and
related laws violate the due process protections provided
under the 14th Amendment to the Constitution of the
United States. Courts have generally upheld the notice
provisions of the UCC and related laws as reasonable or
have found that the repossession and resale by the
creditor do not involve sufficient state action to afford
constitutional protection to consumers.
The Sellers will warrant under the applicable Sale
and Servicing Agreement or Pooling and Servicing
Agreement that each Receivable complies with all
requirements of law in all material respects.
Accordingly, if an obligor has a claim against a Trust
for violation of any law and such claim materially and
adversely affects such Trust's interest in a Receivable,
such violation would constitute a breach of warranty
under the related Sale and Servicing Agreement or Pooling
and Servicing Agreement and would create an obligation of
the applicable Seller to repurchase the Receivable unless
the breach is cured. See "Description of the Transfer
and Servicing Agreements Sale and Assignment of the
Receivables."
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting
deficiency judgments, numerous other statutory
provisions, including federal bankruptcy laws and related
state laws, may interfere with or affect the ability of a
lender to realize upon collateral or enforce a deficiency
judgment. For example, in a Chapter 13 proceeding under
the federal bankruptcy law, 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 the motor 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 Sellers intend that the transfer of the
Receivables under the applicable Sale and Servicing
Agreement or Pooling and Servicing Agreement constitute a
sale. FIRREA sets forth certain powers that the FDIC
could exercise if it were appointed as receiver for a
Seller. Subject to clarification by FDIC regulations or
interpretations, it would appear from the positions taken
by the FDIC before and after the passage of FIRREA that
the FDIC in its capacity as receiver for a Seller would
not interfere with the timely transfer to the applicable
Trust of payments collected on the Receivables. To the
extent that a Seller is deemed to have granted a security
interest in the Receivables to the applicable Trust, and
that interest was validly perfected before such Seller's
insolvency and was not taken in contemplation of
insolvency, that security interest should not be subject
to avoidance and payments to the applicable Trust with
respect to the Receivables should not be subject to
recovery by the FDIC as receiver. If, however, the FDIC
were to assert a contrary position, such as by requiring
the Applicable Trustee to establish its right to those
payments by submitting to and completing the
administrative claims procedure established under FIRREA,
delays in payments on the Securities and possible
reductions in the amount of those payments could occur.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain
federal income tax consequences of the purchase,
ownership and disposition of the Notes and the
Certificates. The summary does not purport to deal with
federal income tax consequences applicable to all
categories of holders, some of which may be subject to
special rules. For example, it does not discuss the tax
treatment of Noteholders or Certificateholders that are
insurance companies, regulated investment companies or
dealers in securities. Moreover, there are no cases or
Internal Revenue Service ("IRS") rulings on similar
transactions involving both debt instruments and equity
interests issued by a trust with terms similar to those
of the Notes and the Certificates. As a result, the IRS
may disagree with all or a part of the discussion below.
Prospective investors are urged to consult their own tax
advisors in determining the federal, state, local,
foreign and any other tax consequences to them of the
purchase, ownership and disposition of the Notes and the
Certificates of any series.
The following summary is based upon current
provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), the Treasury regulations
promulgated thereunder and judicial or ruling authority,
all of which are subject to change, which change may be
retroactive. Each Trust will be provided with an opinion
of special federal tax counsel to each Trust specified in
the related Prospectus Supplement ("Special Tax
Counsel"), regarding certain federal income tax matters
discussed below. An opinion of Special Tax Counsel,
however, is not binding on the IRS or the courts. No
ruling on any of the issues discussed below will be
sought from the IRS. For purposes of the following
summary, references to the Trust, the Notes, the
Certificates and related terms, parties and documents
shall be deemed to refer, unless otherwise specified
herein, to each Trust and the Notes, Certificates and
related terms, parties and documents applicable to such
Trust.
The federal income tax consequences to
Certificateholders will vary depending on whether the
Trust is intended to be treated as a partnership under
the Code or whether the Trust will be treated as a
grantor trust. The Prospectus Supplement for each series
of Certificates will specify whether the Trust is
intended to be treated as a partnership or as a grantor
trust.
SCOPE OF THE TAX OPINIONS
It is expected that Special Tax Counsel will, upon
issuance of a series of Notes and/or Certificates deliver
its opinion that the applicable Trust will not be
classified as an association (or publicly traded
partnership) taxable as a corporation for federal income
tax purposes. Further, with respect to each series of
Notes, Special Tax Counsel expects to advise the Trust
that the Notes will be classified as debt for federal
income tax purposes.
In addition, Special Tax Counsel will render its
opinion that it has prepared or reviewed the statements
in this Prospectus and the related Prospectus Supplement
under the heading "Summary Tax Status" relating to
federal income tax matters and under the heading "Certain
Federal Income Tax Consequences," and is of the opinion
that such statements are correct in all material
respects. Such statements are intended as an explanatory
discussion of the possible effects of the classification
of the Trust as a partnership for federal income tax
purposes on investors generally and of related tax
matters affecting investors generally, but do not purport
to furnish information in the level of detail or with the
attention to the investor's specific tax circumstances
that would be provided by an investor's own tax adviser.
Accordingly, each investor is advised to consult its own
tax advisers with regard to the tax consequences to it of
investing in the Certificates.
ERISA CONSIDERATIONS
ERISA and Section 4975 of the Code impose certain
restrictions on (a) employee benefit plans (as defined in
Section 3(3) of ERISA), (b) plans described in section
4975(e)(1) of the Code, including individual retirement
accounts or Keogh plans, (c) any entities whose
underlying assets include plan assets by reason of a
plan's investment in such entities (each of (a), (b) and
(c), a "Plan") and (d) persons who have certain specified
relationships to such Plans ("Parties in Interest" under
ERISA and "Disqualified Persons" under the Code).
Moreover, based on the reasoning of the United States
Supreme Court in John Hancock Life Ins. Co. v. Harris
Trust and Sav. Bank, 114 S. Ct. 517 (1993), an insurance
company's general account may be deemed to include assets
of the Plans investing in the general account (e.g.,
through the purchase of an annuity contract), and the
insurance company might be treated as a Party in Interest
with respect to a Plan by virtue of such investment.
ERISA also imposes certain duties on persons who are
fiduciaries of Plans subject to ERISA and prohibits
certain transactions between a Plan and Parties in
Interest or Disqualified Persons with respect to such
Plans. Violation of these rules may result in the
imposition of an excise tax or penalty.
A fiduciary of any Plan should carefully review with
its legal and other advisors whether the purchase or
holding of any Securities of a series could give rise to
a transaction prohibited or otherwise impermissible under
ERISA or the Code, and should refer to "ERISA
Considerations" in the related Prospectus Supplement
regarding any restrictions on the purchase and/or holding
of the Securities offered thereby.
Certain employee benefit plans, such as governmental
plans (as defined in Section 3(32) of ERISA) and certain
church plans (as defined in Section 3(33) of ERISA) are
not subject to the prohibited transaction provisions of
ERISA and Section 4975 of the Code. Accordingly, assets
of such plans may, subject to the provisions of any other
applicable federal and state law, be invested in
Securities of any series without regard to the factors
described herein and under "ERISA Considerations" in the
related Prospectus Supplement. It should be noted,
however, that any such plan that is qualified and exempt
from taxation under Sections 401(a) and 501(a) of the
Code is subject to the prohibited transaction rules set
forth in Section 503 of the Code.
Certain transactions involving a Trust might be
deemed to constitute prohibited transactions under ERISA
and the Code if assets of the Trust were deemed to be
assets of a Plan investing in Securities issued by the
Trust. Under a regulation (the "Plan Assets Regulation")
issued by the United States Department of Labor ("DOL"),
29 C.F.R. SECTION 2510.3-101, the assets of the Trust would be
treated as plan assets of a Plan for purposes of ERISA
and the Code only if the Plan acquires an "Equity
Interest" in the Trust and none of the exceptions
contained in the Plan Assets Regulation is applicable.
An Equity Interest is defined under the Plan Assets
Regulation as an interest other than an instrument which
is treated as indebtedness under applicable local law and
which has no substantial equity features. The
Certificates will most likely be deemed Equity Interests
for purposes of ERISA. It should be noted, however, as
discussed below, that the purchase of Notes by a Plan may
also give rise to potential prohibited transactions, and
all prospective investors should review the discussion
herein with their legal advisors
CERTIFICATES ISSUED BY TRUSTS THAT ISSUE ONLY CERTIFICATES
The ERISA considerations that apply with respect to
Securities issued by a Trust differ depending on whether
the Trust issuing the Securities (i) issues both Notes
and Certificates or (ii) issues only Certificates. The
discussion in this section " Certificates Issued by
Trusts That Issue Only Certificates" applies only with
respect to Certificates issued by a Trust that issues
only Certificates.
Senior Certificates. The following discussion
applies only to nonsubordinated Certificates (referred to
herein as "Senior Certificates") issued by a Trust that
does not issue Notes.
Except to the extent otherwise specified in the
related Prospectus Supplement, the DOL has issued an
individual exemption, Prohibited Transaction Exemption
93-31, to NationsBank Corporation and its affiliates as
one or more of the underwriters of the Senior
Certificates (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 Sections 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 fixed rate [simple interest] retail motor vehicle
installment sales contracts such as the Receivables. The
Exemption will apply to the acquisition, holding and
resale of the Senior Certificates by a Plan from the
applicable underwriters, provided that specified
conditions (certain of which are described below) are
met. The Sellers believe that the Exemption will apply to
the acquisition and holding of the Senior 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 Senior Certificates by a Plan to be
eligible for the exemptive relief thereunder:
(1) the acquisition of the Senior Certificates
by a Plan is on terms (including the price for the
Senior 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
Senior Certificates acquired by a Plan are not
subordinated to the rights and interests evidenced
by other certificates of the Trust;
(3) the Senior 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 Agencies;
(4) the Trustee is not an affiliate of any
other member of the "Restricted Group," which
consists of the applicable underwriters, the
Sellers, the Servicer, the Trustee and any Obligor
with respect to the Receivables included in the
Trust constituting more than 5% of the aggregate
unamortized principal balance of the assets of the
Trust as of the date of initial issuance of the
Senior Certificates, and any affiliate of such
parties;
(5) the sum of all payments made to and
retained by the applicable underwriters in
connection with the distribution or placement of the
Senior Certificates represents not more than
reasonable compensation for underwriting or placing
the Senior Certificates. The sum of all payments
made to and retained by the Sellers pursuant to the
sale of the Receivables to the Trust represents not
more than the fair market value of such Receivables.
The sum of all payments made to and retained by the
Servicer represents not more than reasonable
compensation for the Servicer's services under the
Agreement and reimbursement of the Servicer's
reasonable expenses in connection therewith; and
(6) the Plan investing in the Senior
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
Senior 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 Senior Certificates that they be
rated in the highest rating category by a Rating Agency.
A fiduciary of a Plan contemplating purchasing a Senior
Certificate must make its own determination that at the
time of such acquisition, the Senior Certificates
continue to satisfy the third general condition set forth
above. The Sellers and the Servicer expect that the
fourth general condition set forth above will be
satisfied with respect to the Senior Certificates. A
fiduciary of a Plan contemplating purchasing a Senior
Certificate must make its own determination that the
first, fifth and sixth general conditions set forth above
will be satisfied with respect to the Senior
Certificates.
In addition the Trust must satisfy the following
requirements:
(a) the corpus of the Trust must consist solely
of assets of the type which have been included in
other investment pools,
(b) certificates in such other investment pools
must have been rated in one of the three highest
generic rating categories of one of the Rating
Agencies for at least one year prior to the Plan's
acquisition of Senior Certificates, and
(c) certificates evidencing interests in such
other investments pools must have been purchased by
investors other than Plans for at least one year
prior to any Plan's acquisition of Senior
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 Sections
4975(a) and (b) of the Code by reason of Sections
4975(c)(1)(A) through (D) of the Code, in connection with
the direct or indirect sale, exchange, transfer or
holding of the Senior 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 Senior Certificate on behalf
of an "Excluded Plan" by any person who has discretionary
authority or renders investment advice with respect to
the assets of such Excluded Plan. For purposes of the
Senior 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 Sections 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 Senior Certificates in
the initial issuance of Senior Certificates between the
Sellers or 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 Senior 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 Sellers expect such specific conditions to
be satisfied with respect to the issuance of Senior
Certificates.
The Exemption also applies to transactions in
connection with the servicing, management and operation
of the Trust, provided that, in addition to the general
requirements described above, (a) such transactions are
carried out in accordance with the terms of a binding
pooling and servicing agreement and (b) the pooling and
servicing agreement is provided to, or described in all
material respects in the prospectus provided to,
investing Plans before their purchase of Senior
Certificates issued by the Trust. The Agreement is a
pooling and servicing agreement as defined in the
Exemption. All transactions relating to the servicing,
management and operations of the Trust will be carried
out in accordance with the Agreement. See "Description of
the Transfer and Servicing Agreements" herein and in the
related Prospectus Supplement.
The Exemption also may provide relief from the
restrictions imposed by Sections 406(a) and 407(a) of
ERISA and the taxes imposed by Sections 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 Senior Certificates.
Any Plan fiduciary considering whether to purchase a
Senior Certificate on behalf of a Plan should consult
with experienced legal counsel regarding the
applicability of the Exemption and other applicable
issues and whether the Senior Certificates are an
appropriate investment for a Plan under ERISA and the
Code.
Pre-Funding Accounts. The Exemption in its current
form [does not apply with respect to Pre-Funding
Accounts. However, the DOL has under consideration a
proposal to amend the Exemption to extend its application
to Pre-Funding Accounts. If the Exemption does not apply
to Pre-Funding Accounts, assets held in any Pre-Funding
Account maintained in connection with a Trust that issues
only Certificates could be deemed to be Plan assets,
which could give rise to prohibited transaction
liability. Investors considering the purchase of Senior
Certificates issued by a Trust that maintains a Pre-
Funding Account should consult with their legal advisors
concerning this issue.]
Subordinated Certificates. The following discussion
applies only to subordinated Certificates (referred to
herein as "Subordinated Certificates") issued by a Trust
that does not issue Notes.
Because the Subordinated Certificates are
subordinate interests, the Exemption will not apply to
exempt the purchase and subsequent holding of the
Subordinated Certificates by or on behalf of a Plan from
the prohibited transaction provisions of ERISA and the
Code. However, certain other administrative exemptions
may be available with respect to the purchase and
subsequent holding of the Subordinated Certificates by or
on behalf of a Plan. These exemptions include PTE 95-60,
which applies to certain transactions involving insurance
company general accounts, PTE 90-1, which applies to
certain transactions involving insurance company pooled
separate accounts, PTE 91-38, which applies to certain
transactions involving bank collective investment funds,
and PTE 84-14, which applies to certain transactions
entered into on behalf of a Plan by qualified
professional asset managers.
PTE 95-60 in particular, among other things,
provides an exemption for transactions in connection with
the servicing, management, and operation of a trust in
which an insurance company general account has an
interest as a result of its acquisition of certificates
issued by the trust. PTE 95-60 would apply to the
acquisition of the Class B Certificates issued by the
Trust provided that certain conditions are met, including
the requirement that the Trust is described in and
otherwise meets the requirements of an "underwriter
exemption," such as PTE 93-31, other than the
requirements relating to the nonsubordination and rating
of the Subordinated Certificates. Accordingly, an
insurance company may acquire the Subordinated
Certificates on behalf of its general account if the
conditions of PTE 95-60 are otherwise satisfied.
Any Plan fiduciary considering the purchase of a
Subordinated Certificate on behalf of a Plan should
consult with experienced legal counsel regarding the
applicability of any such exemption from the prohibited
transaction rules, other relevant issues, and whether the
Subordinated Certificates would be an appropriate
investment for the Plan under ERISA and the Code.
Each investor purchasing the Subordinated
Certificates by or on behalf of a Plan will be deemed to
have represented that an exemption from the prohibited
transaction rules applies such that the acquisition and
subsequent holding of the Subordinated Certificates by or
on behalf of such Plan will not constitute a non-exempt
prohibited transaction in violation of Section 406 of
ERISA or Section 4975 of the Code by reason of the
application of one or more statutory or administrative
exemptions from the prohibited transaction rules.
SECURITIES ISSUED BY TRUSTS THAT ISSUE BOTH NOTES AND
CERTIFICATES
The discussion in this section " Securities Issued
by Trusts That Issue Both Notes and Certificates" applies
only to Securities issued by a Trust that issues both
Notes and Certificates.
The Notes. The Sellers believe that the Notes of
any series should be treated as indebtedness without
substantial equity features for purposes of the Plan
Assets Regulation. However, without regard to whether
the Notes of a series are treated as an Equity Interest
for such purposes, the acquisition or holding of such
Notes by or on behalf of a Plan could be considered to
give rise to a prohibited transaction if the applicable
Trust, Trustee, Indenture Trustee, any holder of the
Certificates of such series or any of their respective
affiliates, is or becomes a Party in Interest or a
Disqualified Person with respect to such Plan. In such
case, certain exemptions from the prohibited transaction
rules could be applicable depending on the type and
circumstances of the Plan fiduciary making the decision
to acquire a Note. Included among these exemptions are
PTCE 90-1,which exempts certain transactions involving
insurance company pooled separate accounts; PTCE 95-60,
PTCE 91-38, and PTCE 84-14, as described above.
The Certificates. Because the Certificates issued
by a Trust that also issues Notes will most likely be
treated as Equity Interests under the Plan Assets
Regulation, such Certificates may not be acquired by (i)
an employee benefit plan (as defined in Section 3(3) of
ERISA) that is subject to Title I of ERISA, (ii) a plan
described in Section 4975(e)(1) of the Code, (iii) a
governmental plan, as defined in Section 3(32) of ERISA,
subject to any Federal, state or local law which is, to a
material extent, similar to the provisions of Section 406
of ERISA or Section 4975 of the Code, (iv) an entity
whose underlying assets include plan assets by reason of
a plan's investment in the entity (within the meaning of
Department of Labor Regulation 29 C.F.R. SECTION 2510.3-101),
or (v) a person investing "plan assets" of any such plan
(excluding, for purposes of this clause (v), any entity
registered under the Investment Company Act of 1940, as
amended) (each, a "Plan Investor").
In addition, investors other than Plan Investors
should be aware that a prohibited transaction could be
deemed to occur if any holder of the Certificates or any
of their respective affiliates, is or becomes a Party in
Interest or a Disqualified Person with respect to any
Plan that purchases and holds the related Notes without
being covered by one or more of the exemptions described
above in "The Notes."
GENERAL INVESTMENT CONSIDERATIONS
Prospective investors who are Plan Investors should
consult with their legal advisors concerning the impact
of ERISA and the Code and the potential consequences of
making an investment in any Securities of a series with
respect to such investors' specific circumstances.
Moreover, each Plan fiduciary should take into account,
among other considerations, whether the fiduciary has the
authority to make the investment; the composition of the
Plan's portfolio with respect to diversification by type
of asset; the Plan's funding objectives; the tax effects
of the investment; and whether under the general
fiduciary standards of investment procedure and
diversification an investment in any Securities of a
series is appropriate for the Plan, taking into account
the overall investment policy of the Plan and the
composition of the Plan's investment portfolio.
PLAN OF DISTRIBUTION
On the terms and conditions set forth in an
underwriting agreement with respect to the Notes, if any,
of a given series and an underwriting agreement with
respect to the Certificates of such series (collectively,
the "Underwriting Agreements"), the Sellers will agree to
cause the related Trust to sell to the underwriters named
therein and in the related Prospectus Supplement, and
each of such underwriters will severally agree to
purchase, the principal amount of each class of Notes and
Certificates, as the case may be, of the related series
set forth therein and in the related Prospectus
Supplement.
In each of the Underwriting Agreements with respect
to any given series of Securities, the several
underwriters will agree, subject to the terms and
conditions set forth therein, to purchase all the Notes
and Certificates, as the case may be, described therein
which are offered hereby and by the related Prospectus
Supplement if any of such Notes and Certificates, as the
case may be, are purchased.
Each Prospectus Supplement will either (i) set forth
the price at which each class of Notes and Certificates,
as the case may be, being offered thereby will be offered
to the public and any concessions that may be offered to
certain dealers participating in the offering of such
Notes and Certificates or (ii) specify that the related
Notes and Certificates, as the case may be, are to be
resold by the underwriters in negotiated transactions at
varying prices to be determined at the time of such sale.
After the initial public offering of any such Notes and
Certificates, such public offering prices and such
concessions may be changed.
The Sellers and the Servicer will indemnify the
underwriters against certain civil liabilities, including
liabilities under the Securities Act, or contribute to
payments the several underwriters may be required to make
in respect thereof.
Each Trust may, from time to time, invest the funds
in its Trust Accounts in Permitted Investments acquired
from such underwriters or from one or more of the
Sellers.
Pursuant to each Underwriting Agreement with respect
to a given series of Securities, the closing of the sale
of any class of Securities subject to such Underwriting
Agreement will be conditioned on the closing of the sale
of all other such classes of Securities of that series.
The place and time of delivery for the Securities in
respect of which this Prospectus is delivered will be set
forth in the related Prospectus Supplement.
LEGAL OPINIONS
Certain legal matters relating to the Securities of
any series will be passed upon for the related Trust, the
Sellers and the Servicer by Robert W. Long, Jr., Esq.,
Assistant General Counsel of NationsBank Corporation.
Certain legal matters relating to the Securities will be
passed upon for the underwriters by Skadden, Arps, Slate,
Meagher & Flom (or such other counsel specified in the
related Prospectus Supplement). Certain federal income
tax matters and other matters will be passed upon for the
Sellers by Skadden, Arps, Slate, Meagher & Flom (or such
other counsel specified in the Prospectus Supplement).
Skadden, Arps, Slate, Meagher & Flom has represented and
may in the future represent one or more of the Sellers.
INDEX OF TERMS
Set forth below is a list of the defined terms used
in this Prospectus and the pages on which the definitions
of such terms may be found herein:
Additional Yield Supplement Amount . . . . . . . . . . 9
Administration Agreement . . . . . . . . . . . . . . 53
Administrator . . . . . . . . . . . . . . . . . . . . 53
Advance . . . . . . . . . . . . . . . . . . . . . . 9, 44
Advance Reserve Withdrawal . . . . . . . . . . . 10, 44
Applicable Trustee . . . . . . . . . . . . . . . . . 36
Balloon Receivables . . . . . . . . . . . . . . . . . 19
Bank . . . . . . . . . . . . . . . . . . . . . . . . . 4
Banks . . . . . . . . . . . . . . . . . . . . . . . . . 4
Base Rate . . . . . . . . . . . . . . . . . . . . . . 30
Basic Documents . . . . . . . . . . . . . . . . . . . 27
BHCA . . . . . . . . . . . . . . . . . . . . . . . . 23
Book-Entry Certificates . . . . . . . . . . . . . . . 35
Book-Entry Notes . . . . . . . . . . . . . . . . . . 35
Book-Entry Securities . . . . . . . . . . . . . . . . 35
Calculation Agent . . . . . . . . . . . . . . . . . . 30
Calculation Date . . . . . . . . . . . . . . 31, 32, 34
CD Rate . . . . . . . . . . . . . . . . . . . . . . . 31
CD Rate Determination Date . . . . . . . . . . . . . 31
CD Rate Security . . . . . . . . . . . . . . . . . . 30
CDs (Secondary Market) . . . . . . . . . . . . . . . 31
Cede . . . . . . . . . . . . . . . . . . . . . . . . . 7
Cedel . . . . . . . . . . . . . . . . . . . . . . . . 35
Cedel Participants . . . . . . . . . . . . . . . . . 36
Certificate Balance . . . . . . . . . . . . . . . . . . 6
Certificate Distribution Account . . . . . . . . . . 42
Certificate Owners . . . . . . . . . . . . . . . . . . 3
Certificate Pool Factor . . . . . . . . . . . . . . . 22
Certificate Rate . . . . . . . . . . . . . . . . . . . 6
Certificateholders . . . . . . . . . . . . . . . . . . 3
Certificates . . . . . . . . . . . . . . . . . . . . . 1
Certificates of Deposit . . . . . . . . . . . . . . . 31
Closing Date . . . . . . . . . . . . . . . . . . . . . 4
Code . . . . . . . . . . . . . . . . . . . . . . 12, 58
Collection Account . . . . . . . . . . . . . . . . . 42
Collection Period . . . . . . . . . . . . . . . . . . 43
Commercial Paper . . . . . . . . . . . . . . . . . . 31
Commercial Paper Rate . . . . . . . . . . . . . . 31, 32
Commercial Paper Rate Determination Date . . . . . . 31
Commercial Paper Rate Security . . . . . . . . . . . 30
Commission . . . . . . . . . . . . . . . . . . . . . . 3
Commodity Indexed Securities . . . . . . . . . . . . 34
Composite Quotations . . . . . . . . . . . . . . . . 30
Contract Rate . . . . . . . . . . . . . . . . . . . . 41
Currency Indexed Securities . . . . . . . . . . . . . 34
Dealer Agreements . . . . . . . . . . . . . . . . . . 17
Dealers . . . . . . . . . . . . . . . . . . . . . . . . 5
Defaulted Receivable . . . . . . . . . . . . . . . . 44
Definitive Certificates . . . . . . . . . . . . . . . 38
Definitive Notes . . . . . . . . . . . . . . . . . . 38
Definitive Securities . . . . . . . . . . . . . . . . 38
Deposit Date . . . . . . . . . . . . . . . . . . . . 43
Depositaries . . . . . . . . . . . . . . . . . . . . 35
Depository . . . . . . . . . . . . . . . . . . . . . 24
Determination Date . . . . . . . . . . . . . . . . . 46
DFSG . . . . . . . . . . . . . . . . . . . . . . . . 19
Disqualified Persons . . . . . . . . . . . . . . . . 58
Distribution Date . . . . . . . . . . . . . . . . . . 29
DOL . . . . . . . . . . . . . . . . . . . . . . . . . 59
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . 3
DTC's Nominee . . . . . . . . . . . . . . . . . . . . . 7
Eligible Deposit Account . . . . . . . . . . . . . . 43
Eligible Institution . . . . . . . . . . . . . . . . 43
Equity Interest . . . . . . . . . . . . . . . . . . . 59
ERISA . . . . . . . . . . . . . . . . . . . . . . . . 12
Euroclear . . . . . . . . . . . . . . . . . . . . . . 37
Euroclear Operator . . . . . . . . . . . . . . . . . 37
Euroclear Participants . . . . . . . . . . . . . . . 37
Euroclear System . . . . . . . . . . . . . . . . . . 37
Events of Default . . . . . . . . . . . . . . . . . . 26
Events of Servicing Termination . . . . . . . . . . . 49
Exemption . . . . . . . . . . . . . . . . . . . . . . 59
Excluded Plan . . . . . . . . . . . . . . . . . . . . 61
Face Amount . . . . . . . . . . . . . . . . . . . . . 35
FDIC . . . . . . . . . . . . . . . . . . . . . . . . 14
Federal Funds Rate . . . . . . . . . . . . . . . . . 32
Federal Funds Rate Determination Date . . . . . . . . 32
Federal Funds Rate Security . . . . . . . . . . . . . 30
Final Scheduled Maturity Date . . . . . . . . . . . . 10
Financed Vehicles . . . . . . . . . . . . . . . . . . . 4
FIRREA . . . . . . . . . . . . . . . . . . . . . . . 14
Fixed Rate Securities . . . . . . . . . . . . . . . . 30
Floating Rate Securities . . . . . . . . . . . . . . 30
FTC Rule . . . . . . . . . . . . . . . . . . . . . . 56
Funding Period . . . . . . . . . . . . . . . . . . . . 6
H.15(519) . . . . . . . . . . . . . . . . . . . . . . 30
Indenture . . . . . . . . . . . . . . . . . . . . . . . 5
Indenture Trustee . . . . . . . . . . . . . . . . . . . 1
Index . . . . . . . . . . . . . . . . . . . . . . . . 34
Index Maturity . . . . . . . . . . . . . . . . . . . 30
Indexed Commodity . . . . . . . . . . . . . . . . . . 34
Indexed Currency . . . . . . . . . . . . . . . . . . 34
Indexed Principal Amount . . . . . . . . . . . . . . 34
Indexed Securities . . . . . . . . . . . . . . . . . 34
Indirect Participants . . . . . . . . . . . . . . . . 35
Initial Cut-Off Date . . . . . . . . . . . . . . . . . 4
Initial Pool Balance . . . . . . . . . . . . . . . . 52
Initial Receivables . . . . . . . . . . . . . . . . . . 4
Insolvency Event . . . . . . . . . . . . . . . . . . 50
Interest Reset Date . . . . . . . . . . . . . . . . . 30
Interest Reset Period . . . . . . . . . . . . . . . . 30
Investment Earnings . . . . . . . . . . . . . . . . . 43
IRS . . . . . . . . . . . . . . . . . . . . . . . . . 58
Issuer . . . . . . . . . . . . . . . . . . . . . . . . 4
LIBO . . . . . . . . . . . . . . . . . . . . . . . . 33
LIBOR . . . . . . . . . . . . . . . . . . . . . . . . 33
LIBOR Determination Date . . . . . . . . . . . . . . 33
LIBOR Security . . . . . . . . . . . . . . . . . . . 30
London Banking Day . . . . . . . . . . . . . . . . . 33
Money Market Yield . . . . . . . . . . . . . . . . . 32
Motor Vehicle Loans . . . . . . . . . . . . . . . . . 19
NationsBank South . . . . . . . . . . . . . . . . . . . 4
NationsBank Texas . . . . . . . . . . . . . . . . . . . 4
NB-SPC . . . . . . . . . . . . . . . . . . . . . . 5, 23
Note Interest Rate . . . . . . . . . . . . . . . . . . 5
Note Payment Account . . . . . . . . . . . . . . . . 42
Note Pool Factor . . . . . . . . . . . . . . . . . . 22
Noteholders . . . . . . . . . . . . . . . . . . . . . . 3
Notes . . . . . . . . . . . . . . . . . . . . . . . . . 1
NSI . . . . . . . . . . . . . . . . . . . . . . . . . 13
Obligors . . . . . . . . . . . . . . . . . . . . . . 17
Participants . . . . . . . . . . . . . . . . . . 24, 35
Parties in Interest . . . . . . . . . . . . . . . . . 58
Permitted Investments . . . . . . . . . . . . . . . . 42
Plan . . . . . . . . . . . . . . . . . . . . . . . . 58
Plan Assets Regulation . . . . . . . . . . . . . . . 59
Plan Investor . . . . . . . . . . . . . . . . . . . . 63
Pool Balance . . . . . . . . . . . . . . . . . . . . 22
Pooling and Servicing Agreement . . . . . . . . . . . . 4
Pre-Funded Amount . . . . . . . . . . . . . . . . . . . 5
Pre-Funding Account . . . . . . . . . . . . . . . . 1, 6
Prepayments . . . . . . . . . . . . . . . . . . . 15, 21
Prospectus Supplement . . . . . . . . . . . . . . . . . 1
Purchase Amount . . . . . . . . . . . . . . . . . . . 42
Rating Agencies . . . . . . . . . . . . . . . . . . . 27
Receivable File . . . . . . . . . . . . . . . . . . . 42
Receivables . . . . . . . . . . . . . . . . . . . . 1, 4
Receivables Pool . . . . . . . . . . . . . . . . . . 17
Registration Statement . . . . . . . . . . . . . . . . 3
Required Initial Yield Supplement Amount . . . . . . . 9
Required Subsequent Yield Supplement Amount . . . . . . 9
Required Rate . . . . . . . . . . . . . . . . . . . . . 8
Required Yield Supplement Amount . . . . . . . . . . . 9
Reserve Account . . . . . . . . . . . . . . . . . . . 47
Restricted Group . . . . . . . . . . . . . . . . . . 60
Reuters Screen LIBO Page . . . . . . . . . . . . . . 33
Rules . . . . . . . . . . . . . . . . . . . . . . . . 36
Sale and Servicing Agreement . . . . . . . . . . . . . 4
Securities . . . . . . . . . . . . . . . . . . . . . . 1
Securities Act . . . . . . . . . . . . . . . . . . . . 3
Securityholders . . . . . . . . . . . . . . . . . . . . 7
Seller . . . . . . . . . . . . . . . . . . . . . . 1, 4
Sellers . . . . . . . . . . . . . . . . . . . . . . 1. 4
Senior Certificates . . . . . . . . . . . . . . . . . 59
Servicer . . . . . . . . . . . . . . . . . . . . . 1, 4
Servicer Fee . . . . . . . . . . . . . . . . . . . . 46
Servicing Fee . . . . . . . . . . . . . . . . . . . . 45
Servicing Fee Rate . . . . . . . . . . . . . . . . . 45
Simple Interest Receivables . . . . . . . . . . . . . 19
Special Tax Counsel . . . . . . . . . . . . . . . . . 58
Spread . . . . . . . . . . . . . . . . . . . . . . . 30
Spread Multiplier . . . . . . . . . . . . . . . . . . 30
Statistical Release H.15(519) . . . . . . . . . . . . 30
Stock Index . . . . . . . . . . . . . . . . . . . . . 34
Stock Indexed Securities . . . . . . . . . . . . . . 34
Strip Certificates . . . . . . . . . . . . . . . . . . 7
Strip Notes . . . . . . . . . . . . . . . . . . . . . . 6
Subordinated Certificates . . . . . . . . . . . . . . 61
Subsequent Receivables . . . . . . . . . . . . . . 1, 5
Subsequent Transfer Date . . . . . . . . . . . . . . 40
Supplemental Servicing Fee . . . . . . . . . . . . . 45
Terms and Conditions . . . . . . . . . . . . . . . . 37
Transfer and Servicing Agreements . . . . . . . . . . 40
Treasury bills . . . . . . . . . . . . . . . . . . . 33
Treasury Rate . . . . . . . . . . . . . . . . . . 33, 34
Treasury Rate Determination Date . . . . . . . . . . 34
Treasury Rate Security . . . . . . . . . . . . . . . 30
Trust . . . . . . . . . . . . . . . . . . . . . . . 1, 4
Trust Accounts . . . . . . . . . . . . . . . . . . . 42
Trust Agreement . . . . . . . . . . . . . . . . . . . . 4
Trustee . . . . . . . . . . . . . . . . . . . . . . . . 1
UCC . . . . . . . . . . . . . . . . . . . . . . . 13, 54
Underwriting Agreements . . . . . . . . . . . . . . . 63
Yield Supplement Account . . . . . . . . . . . . . 8, 47
Yield Supplement Agreement . . . . . . . . . . . . . . 9
Yield Supplement Amount . . . . . . . . . . . . . . . . 9
Yield Supplement Deposit Amount . . . . . . . . . . . 48
Yield Supplement Initial Deposit . . . . . . . . . . . 9
The 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 supplement and the accompanying
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 _____ __, 1996
Prospectus Supplement
(To Prospectus dated , 1996)
$
NATIONSBANK AUTO OWNER TRUST 199 -
$ % [Class A-1] Asset Backed Notes
Floating Rate Class A-2 Asset Backed Notes]
[$ % Class A-3 Asset Backed Notes]
[$ % Asset Backed Certificates]
[NationsBank Logo]
---------------------------------------
NATIONSBANK, N.A.
NATIONSBANK, N.A. (SOUTH)
NATIONSBANK OF TEXAS, N.A.
Sellers
NationsBank, N.A.
---------------------------------------
Servicer
Prospective investors should consider, among other things,
the information set forth in "Risk Factors" beginning on page S-_ herein and
on page _____ of the accompanying Prospectus.
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT BENEFICIAL
INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS OF OR INTERESTS
IN, AND ARE NOT GUARANTEED OR INSURED BY, THE FEDERAL DEPOSIT INSUR-
ANCE CORPORATION, ANY GOVERNMENTAL AGENCY, ANY OF THE
SELLERS, THE SERVICER OR NATIONSBANK CORPORATION
OR ANY OF THEIR RESPECTIVE AFFILIATES.
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 SUPPLEMENT OR THE PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
===============================================================================================================
Underwriting Proceeds to
Price to Public (1) Discount the Seller (1)(2)
- ---------------------------------------------------------------------------------------------------------------
Per [Class A-1] Note........... % % %
- ---------------------------------------------------------------------------------------------------------------
[Per Class A-2 Note............ % % %]
- ---------------------------------------------------------------------------------------------------------------
[Per Class A-3 Note............ % % %]
- ---------------------------------------------------------------------------------------------------------------
[Per Certificate............... % % %]
- ---------------------------------------------------------------------------------------------------------------
Total.......................... $ $ $
===============================================================================================================
<FN>
(1) Plus accrued interest, if any, from , 199 .
(2) Before deducting expenses, estimated to be $ .
The Notes and the Certificates are offered by the Underwriters when,
as and if issued 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 Notes and the Certificates will be made in book-entry form only through
the Same Day Funds Settlement System of The Depository Trust Company, or
through Cedel Bank, societe anonyme or the Euroclear System, on or about
the Closing Date.
The date of this Prospectus Supplement is ____, 199 .
The NationsBank Auto Owner Trust 199 - (the "Trust") will be governed
by a Trust Agreement, to be dated as of ____, 199 , among NationsBank, N.A.,
NationsBank, N.A. (South), NationsBank of Texas, N.A. (each, a "Seller" and
a "Bank" and collectively, the "Sellers" and the "Banks") and ____, as Owner
Trustee. The Trust will issue $____ aggregate initial principal amount of
[Class A-1] % Asset Backed Notes (the "[Class A-1] Notes")[, $ aggregate
initial principal amount of Class A-2 Floating Rate Asset Backed Notes (the
"Class A-2 Notes") and $ aggregate initial principal amount of Class A-3 ____%
Asset Backed Notes (the "Class A-3 Notes" and, together with the Class A-1
Notes and the Class A-2 Notes, the "Notes")] pursuant to an Indenture to be
dated as of ____, 199 , between the Trust and ____, as Indenture Trustee. The
Trust will also issue $____ aggregate initial principal balance of % Asset
Backed Certificates (the "Certificates" and, together with the Notes, the
"Securities"). The assets of the Trust will include a pool of retail motor
vehicle installment sales contracts (the "Receivables") secured by security
interests in the motor vehicles financed thereby, including certain monies
received thereunder after the related Cut-Off Date (as defined herein),
which will be purchased by the Trust from the Seller on or prior to the
Closing Date, [monies on deposit in a trust account (the "Pre-Funding
Account") to be established with the Indenture Trustee] and certain other
property, as more fully described herein. See "Summary--The Trust Property"
herein. [Additional retail motor vehicle installment sales contracts (the
"Subsequent Receivables") will be purchased by the Trust from the Seller
from time to time on or before ____, 199 , from funds on deposit in the
Pre-Funding Account.] The Notes will be secured by the assets of the Trust
pursuant to the Indenture.
Interest on [the] [all classes of] Notes [other than the Class A-2
Notes] will accrue at the fixed per annum interest rates specified above.
[The Class A-2 Notes will accrue interest at a rate of % per annum for the
period from the Closing Date through 199 . Thereafter, the Class A-2 Notes
will accrue interest at a per annum rate equal to [LIBOR] plus %.] Interest
on the Notes will generally be payable [quarterly] on the day of each
[month] [ ____, ____, and ] (each, a "[Distribution] [Payment] Date"),
commencing ____, 199 . Interest will accrue from and including the Closing
Date (in the case of the first [Distribution] [Payment] Date), or from the
most recent [Distribution] [Payment] Date on which interest has been paid to
but excluding the following [Distribution] [Payment] Date (each an "Interest
Period"). [With respect to the Class A-2 Rate, the "Index Maturity" for
[LIBOR] will be [one month, in the case of monthly Payment Dates] [three
months (in the case of quarterly Payment Dates)] and] the "Interest Reset
Period" for such calculation will be the Interest Period. See "Certain
Information Regarding the Securities--Floating Rate Securities" in the
Prospectus.] Principal on the Notes will be payable on each [Distribution]
[Payment] Date to the extent described herein[; however, no principal will
be paid on the Class A-2 Notes until the Class A-1 Notes have been paid in
full and no principal will be paid on the Class A-3 Notes until the Class
A-2 Notes have been paid in full].
The Certificates will represent [fractional undivided] interests in
the Trust. Interest, to the extent of the Certificate Rate specified above,
will be distributed to the Certificateholders on [each Distribution Date]
[the day of each month (each, a "Distribution Date"), commencing ____, 199 ].
Principal, to the extent described herein, will be distributed to the
Certificateholders on each Distribution Date commencing with the later of
(i) the Distribution Date next succeeding the Distribution Date on which
the [Class A-1] Notes are paid in full and (ii) the ____, 199 Distribution
Date. Distributions of principal and interest on the Certificates will be
subordinated in priority to payments due on the Notes [to the extent] [as]
described herein. In addition, upon the occurrence and during the
continuation of an Event of Default which has resulted in an acceleration
of the Notes or following an Insolvency Event or a dissolution with respect
to any of the Sellers [or the General Partner], distributions of any
amounts on the Certificates will be subordinated in priority of payment to
payment in full of principal of the Notes. [Moreover, upon any downgrading
or withdrawal by any Rating Agency of its rating of any class of Notes, no
distributions of principal on the Certificates will be made until all the
Notes have been paid in full, unless such rating has been restored.]
[The] [Class A-1] Notes will be payable in full on the [Payment]
[Distribution] Date[, the Class A-2 Notes will be payable in full on the
[Payment] [Distribution] Date and the Class A-3 Notes will be payable in
full on the [Payment] [Distribution] Date. The final scheduled Distribution
Date with respect to the Certificates will be the Distribution Date (the
"Final Scheduled Distribution Date"). However, payment in full of [the] [a
class of] Notes or of the Certificates could occur earlier or later than
such dates as described herein. In addition, the [Class A-3] Notes will be
subject to redemption in whole, but not in part, and the Certificates will
be subject to prepayment in whole, but not in part, on any Distribution
Date on which the Servicer exercises its option to purchase the
Receivables. The Servicer may purchase the Receivables when the aggregate
principal balance of the Receivables shall have declined to 5% or less of
the initial aggregate principal balance of the Receivables purchased by the
Trust. [One or more classes of the Notes will be subject to partial
mandatory redemption and the Certificates may be subject to partial
mandatory prepayment, at a premium described herein, in the event that
funds remain in the Pre-Funding Account at the end of the Funding Period
(as defined herein).]
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT
THE OFFERING OF THE NOTES AND THE CERTIFICATES. ADDITIONAL INFORMATION IS
CONTAINED IN THE PROSPECTUS AND PROSPECTIVE INVESTORS ARE URGED TO READ
BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE
NOTES OR THE CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS
RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE
NOTES AND 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 SECURITYHOLDERS
Unless and until Definitive Notes or 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 Notes and the
Certificates. See "Certain Information Regarding the Securities--Book-Entry
Registration" and "--Reports to Securityholders" in the accompanying
Prospectus (the "Prospectus"). Such reports will not constitute financial
statements prepared in accordance with generally accepted accounting
principles. The Sellers, as originators 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.
The Sellers have filed with the Commission, on behalf of the Trust, a
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 such
Registration Statement, and the exhibits thereto, which are available for
inspection without charge at the public reference facilities of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, as well as
the Regional Offices of the Commission at 500 West Madison Street, Suite
1400, Chicago, Illinois 60661, and 7 World Trade Center, Suite 1300, New
York, New York 10048. Copies of such information can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Servicer, on behalf of the
Trust, will also file or cause to be filed with the Commission such
periodic reports as may be required under the Exchange Act, and the rules
and regulations of the Commission thereunder. The Servicer intends to cause
the Trust to suspend the filing of such periodic reports if such periodic
reports are no longer required by the Exchange Act.
SUMMARY
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus.
Certain capitalized terms used herein are defined elsewhere in this
Prospectus Supplement on the pages indicated in the "Index of Terms" or, to
the extent not defined herein, have the meanings assigned to such terms in
the Prospectus.
Issuer.................. NationsBank Auto Owner Trust 199 - (the "Trust" or
the "Issuer"), a Delaware business trust to be
formed by the Sellers and the Trustee pursuant to
a trust agreement, (as amended, and supplemented
from time to time, the "Trust Agreement") dated as
of ____, 199 , among the Sellers and the Owner
Trustee.
Seller................... NationsBank, N.A., NationsBank, N.A. (South)
("NationsBank South") and NationsBank of Texas,
N.A. ("NationsBank Texas") (each a "Seller" and a
"Bank" and, collectively, the "Sellers" and the
"Banks").
Servicer................. NationsBank, N.A., in its capacity as servicer
(the "Servicer").
Indenture Trustee....... ____, a ____, as trustee under the Indenture (the
"Indenture Trustee").
Owner Trustee........... ____, a ____, as trustee under the Trust Agreement
(the "Owner Trustee").
The Notes............... The Trust will issue [____%] Asset Backed Notes (the
"Notes") pursuant to an Indenture to be dated as
of ____, 199 (as amended, modified and supple- mented
from time to time, the "Indenture"), between the
Issuer and the Inden- ture Trustee[, as follows:
(1) Class A-1 ____% Asset-Backed Notes (the "Class
A-1 Notes") in the aggregate initial principal amount
of $____ ; (2) Class A-2 [Floating Rate] Asset Backed
Notes (the "Class A-2 Notes") in the aggregate
initial principal amount of $____ ; and (3) Class A-3
____% Asset Backed Notes (the "Class A-3 Notes") in
the aggregate initial principal amount of $____ ].
The Notes will be secured by the assets of the
Trust pursuant to the Indenture.
The Notes will be available for purchase in book
entry form only in minimum denominations of $1,000
and integral multiples thereof. The Noteholders
will not be entitled to receive Definitive Notes
except in the limited circumstances described
herein. See "Certain Information Regarding the
Securi- ties--Definitive Securities" in the
Prospectus.
The Certificates........ The Trust will issue ____% Asset-Backed Certificates
(the "Certificates" and, together with the Notes,
the "Securities") with an aggregate initial
Certificate Balance of $____ . The Certificates will
represent [fractional undivided] interests in the
Trust and will be issued pursuant to the Trust
Agreement.
The Certificates will be available for purchase
in book entry form only in mini- mum denominations
of $1,000 and integral multiples thereof. The
Certificate-holders will not be entitled to
receive Definitive Certificates except in the
limited circumstances described herein. See
"Certain Information Regarding the
Securities--Definitive Securities" in the
Prospectus. The rights of the Certificateholders
to receive distributions with respect to the
Certificates will be subordinated to the rights of
the Noteholders to receive principal and interest
on the Notes [to the extent] [as] described
herein.
The Trust Property..... The property of the Trust (the "Trust Property")
includes a pool of fixed rate simple interest
retail motor vehicle installment sales contracts
purchased by the Sellers from motor vehicle
dealers (the "Dealers") that provide for the
allocation of payments between principal and
interest according to the simple interest method
(collectively, the "Receivables"), all monies
received under the [Initial] Receivables after the
close of business of the Servicer on ____, 1996 (the
"[Initial] Cut-Off Date") [and all monies received
under the Subsequent Receivables after the close
of business of the Servicer on each applicable
Subsequent Transfer Date] and will also include:
(i) such amounts as from time to time are on
deposit in one or more accounts maintained
pursuant to the Sale and Servicing Agreement to be
dated as of ____, 199 (as amended and supplemented
from time to time, the "Sale and Servicing
Agreement"), among the Trust, the Sellers and the
Servicer [and the Collateral Agent], as described
herein[, including the Yield Supplement
Account][and the Pre-Funding Account]; (ii)
security interests in the new and used
automobiles, vans and light-duty trucks financed
thereby (collectively, the "Financed Vehi- cles")
and any accessions thereto; (iii) the Sellers'
rights (if any) to receive proceeds from claims
under certain insurance policies covering the
Financed Vehicles or the obligors under the
Receivables (each, an "Obligor"), as the case may
be; (iv) certain rights of the Trust to receive
payments from the Reserve Account [and pursuant to
the Yield Supplement Agreement] as de- scribed
below; (v) any property that shall have secured a
Receivable and shall have been acquired by the
Trust; (vi) each Seller's rights relating to the
repurchase of Receivables under agreements between
each Seller and the Deal- ers that sold the
Financed Vehicles to the Obligors and any
assignments and other documents related thereto
(collectively, the "Dealer Agreements") and under
the documents and instruments contained in the
Receivable Files; (vii) certain rebates of
premiums and other amounts relating to certain
insurance policies and other items financed under
the Receivables; (viii) the rights of the Trust
under the Sale and Servicing Agreement; and (ix)
any and all pro- ceeds of the foregoing. The
Reserve Account [and the Yield Supplement Ac-
count,] and any amounts therein, will not be
property of the Trust, but will be pledged to and
held by ________ acting in its capacity as
property-holding agent for the benefit of the
Certificateholders (the "Collateral Agent").
The Receivables......... On ____, 199 (the "Closing Date"), the Trust will
purchase Receivables (the "[Initial] Receivables")
having an aggregate principal balance (the
"[Initial] Pool Balance") of approximately $ as of
____, 199 (the "[Initial] Cut- Off Date") from the
Sellers pursuant to a Sale and Servicing
Agreement. As of the [Initial] Cut-Off Date, the
weighted average annual percentage rate of the
[Initial] Receivables was approximately ____%, the
weighted average remaining maturity of the
[Initial] Receivables was approximately months and
the weighted average original maturity of the
[Initial] Receivables was approximately months.
[On and following the Closing Date, pursuant to
the Sale and Servicing Agree- ment, the Sellers
will be obligated, subject only to the
availability thereof, to sell, and the Trust will
be obligated to purchase, subject to the
satisfaction of certain conditions set forth
therein, additional Receivables (the "Subsequent
Receivables") from time to time during the Funding
Period having an aggregate principal balance
equal to approximately $____ (such amount being equal
to an amount on deposit in the Pre-Funding Account
(the "Pre-Funded Amount") on the Closing Date).
The Sellers will designate as a cut-off date (each
a "Subsequent Cut-Off Date") each date as of which
payments in respect of particular Subsequent
Receivables are conveyed to the Trust. It is
expected that certain of the Subsequent
Receivables arising between the Initial Cut-Off
Date and the Closing Date will be conveyed to the
Trust on the Closing Date and that other
Subsequent Receivables will be conveyed to the
Trust as frequently as daily thereafter on dates
specified by the Sellers (each date on which
Subsequent Receivables are conveyed to the Trust
being referred to as a "Subsequent Transfer Date")
occurring during the Funding Period. See
"Description of the Transfer and Servicing
Agreements--Sale and Assignment of Receivables;
Subsequent Receivables" herein.] [Coincident with
each such transfer of Subsequent Receivables, the
Yield Supplement Agreement will require the
Sellers to deposit into the Yield Supplement
Account an amount equal to the Additional Yield
Supplement Amount, if any, in respect of such
Subsequent Receivables. See "Description of the
Transfer and Servicing Agreements--Yield
Supplement Account; Yield Supplement Agreement"
herein.]
The [Initial] Receivables [and the Subsequent
Receivables] arise or will arise from loans
originated by Dealers and purchased by the Sellers
pursuant to Dealer Agreements. The [Initial]
Receivables have been selected[, and the
Subsequent Receivables will be selected,] from the
contracts owned by Sellers based on the criteria
specified in the Sale and Servicing Agreement and
described herein and in the Prospectus. No
[Initial] Receivable has[, and no Subsequent
Receivable will have,] a scheduled maturity later
than (the "Final Scheduled Maturity Date")
[Subsequent Receivables may be originated by the
Dealers at a later date using credit criteria
different from those which were applied to the
Initial Receivables and may be of a different
credit quality and seasoning. In addition,
following the transfer of Subsequent Receivables
to the Trust, the characteristics of the entire
pool of Receivables included in the Trust may vary
significantly from those of the Initial
Receivables. See "Risk Factors--The Subsequent
Receivables and the Pre-Funding Account" and "The
Receivables Pool" herein.]
The "Pool[/Pre-Funding] Balance" at any time
[will represent] [is the sum of (i)] the aggregate
principal balance of the Receivables at the end of
the preceding Collection Period, after giving
effect to all payments received from Obligors,
Liquidation Proceeds, and Purchase Amounts to be
remitted by the Servicer or the Seller, as the
case may be, all for such Collection Period and
all [Realized Losses] during such Collection
Period [(such amount, the "Pool Balance") and (ii)
the amount on deposit in the Pre-Funding Account
(excluding any Investment Earnings)].
Terms of the Notes.... The principal terms of the Notes will be as
described below:
A. [Distribution] [Payment]
Dates....................Payments of interest and principal on the Notes
will be made [quarterly] on the day of each [month]
[____ ,____ , and____ ] or, if any
such day is not a Business Day, on the next
succeeding Business Day (each, a "[Distribution]
[Payment] Date"), commencing ____, 199 . [Under
certain limited circumstances, such payments will
be made monthly rather than quarterly.] Payments
will be made to holders of record of the Notes
(the "Noteholders") as of the day immediately
preceding such [Distribution] [Payment] Date or,
if Definitive Notes are issued, as of the day of
the preceding month [(a "Record Date")]. A
"Business Day" is a day other than a Saturday, a
Sunday or a day on which banking institutions or
trust companies in The City of New York are
authorized by law, regulation or executive order
to be closed.
B. Note Interest Rates The [Class A-1] Notes will bear
interest at the rate of ____% per annum (the ["Note
Interest Rate"] ["Class A-1 Rate"]) [and the Class
A-3 Notes will bear interest at the rate of ____% per
annum (the "Class A-3 Rate"). The rate of interest
with respect to the Class A-2 Notes (the "Class
A-2 Rate" and, together with the Class A-1 Rate
and the Class A-3 Rate, the "Note Interest Rates")
will be ____% per annum for the period from the
Closing Date to but excluding the first
[Distribution] [Payment] Date, and will be equal
to [LIBOR] for the applicable Interest Reset
Period plus ____% for each [Distribu- tion] [Payment]
Date thereafter[; provided that the Class A-2 Rate
shall not exceed ____% per annum]].
C. Interest............ On each [Distribution]
[Payment] Date, the Indenture Trustee will
distribute pro rata to Noteholders [of each class
of Notes] accrued interest at the [applicable]
Note Interest Rate generally to the extent of
funds available following payment of the Servicing
Fee from the Available Funds and the Reserve
Account. Interest on the outstanding principal
amount of the Notes [of each class] will accrue at
the [applicable] Note Interest Rate from and
including the Closing Date (in the case of the
first [Distribution] [Payment] Date) or from and
including the most recent [Distribution] [Payment]
Date on which interest has been paid to but
excluding the following [Distribution] [Payment]
Date (each an "Interest Period"). [Interest on the
Class A-1 Notes will be calculated on the basis of
actual days elapsed and a 365- or 366-day year, as
applicable.] Interest on the [[Class A-1 Notes
and] Class A-3] Notes will be calculated on the
basis of a 360-day year of twelve 30-day months.
[Interest on the Class A-2 Notes will be
calculated on the basis of actual days elapsed and
a 360-day year.] See "Description of the
Notes--Payments of Interest" herein.
D. Principal............Principal of the Notes will be
payable [quarterly] on each [Distribution]
[Payment] Date in an amount equal to [the sum of]
the Noteholders' Principal Payment Amount for
[each of] the [three] calendar month[s] ([the]
[each, a] "Collection Period") preceding such
[Distribution] [Payment] Date (in the case of the
first [Distribution] [Payment] Date, including the
period from , ____199 to and including , ____199 )
to the extent of funds available therefor. The
"Noteholders' Principal Payment Amount" [with
respect to a Collection Period] will generally be
the sum of (i) the [Noteholders' Percentage of
the] Regular Principal (such "Regular Principal"
being the sum of (a) the principal portion of all
payments collected, and (b) the principal balance
of each Receivable purchased by the Servicer,
repurchased by the Sellers or liquidated by the
Servicer, each with respect to [the preceding]
[such] Collection Period), plus (ii) ____% of the
portion, if any, of the Available Funds for such
Collection Period that remains after payment of
(a) the Servicing Fee, (b) the interest [due]
[accrued] on the Notes, (c) the portion of the
Regular Principal allocated to the Noteholders
pursuant to clause (i), (d) the interest due on
the Certificates, (e) the portion of the Regular
Principal distributed to the Certificateholders as
described below under "Description of the
Certificates--Distributions of Principal Payments"
herein, and (f) the amount, if any, required to be
deposited in the Reserve Account on [such] [the
related] Distribution Date [plus the excess of the
amount on deposit in the Reserve Account on such
Distribution Date (after giving effect to all
deposits or withdrawals therefrom on such
Distribution Date) over the Specified Reserve
Account Balance)] (such percentage of the
remaining portion of Available Funds [plus such
excess], the "Noteholders' Accelerated
Principal"). [Or, state other method for
determining the amount of principal to be paid on
the Notes.]
On the Business Day immediately preceding each
Distribution Date (a "Determination Date") the
Indenture Trustee will determine the amount in the
Collection Account allocable to interest and the
amount allocable to principal on the basis described
under "Description of the Transfer and Servicing
Agreements--Distributions--Allocation of
Collections on Receivables" in the Prospectus, and
payments to Securityholders on the following
Distribution Date will be based on such
allocation.
Payments of principal on the
Notes will be made on each [Distribution]
[Payment] Date in the amounts and subject to the
priorities described in "De- scription of the
Notes--Payments of Principal" herein.
The outstanding principal amount of the [Class A-1]
Notes, to the extent not previously paid, will be
payable on ____(the "[Class A-1] Final Scheduled
[Distribution] [Payment] Date")[, the outstanding
principal amount of the Class A-2 Notes, to the
extent not previously paid, will be payable on (the
____"Class A-2 Final Scheduled [Distribution]
[Payment] Date") and the outstanding principal amount
of the Class A-3 Notes, to the extent not previously
paid, will be payable on (the "Class A-3 Final
Scheduled [Distribution] [Payment] Date")].
E. Optional Redemption..The [Class A-3] Notes will be
redeemed in whole, but not in part, on any
Distribution Date [after all the other classes of
Notes have been paid in full] on which the
Servicer exercises its option to purchase the
Receivables, which can occur after the Pool
Balance declines to 5% or less of the Initial Pool
Balance, at a redemption price at least equal to
the unpaid principal amount of the [Class A-3]
Notes plus accrued and unpaid interest thereon.
See "Description of the Notes--Optional
Redemption" herein. The "Initial Pool Balance"
will equal [the sum of (i)] the aggregate
principal balance of the [Initial] Receivables as
of the [Initial] Cut-Off Date [plus (ii) the
aggregate principal balances of all Subsequent
Receivables added to the Trust on or prior to such
date as of their respective Subsequent Cut-Off
Dates].
[F. Mandatory Redemption
from Pre-Funding Account.[The] [A class or classes of] Notes then outstanding
will be redeemed in part on the Distribution Date
on or immediately following the last day of the
Funding Period in the event that amounts remain on
deposit in the Pre-Funding Account after giving
effect to the purchase of all Receivables,
including any such purchase on such date (a
"Mandatory Redemption"). If the amount on deposit
in the Pre-Funding Account on such date is equal
to $____ or less, then such amount will be used to
redeem the [Class A-1] Notes [up to an amount not
to exceed their outstanding balance, with any
remaining amount used to redeem the Class A-2
Notes]. Otherwise the amount on deposit in the
Pre-Funding Account on such date will be used to
redeem [each class of] the Notes and the
Certificates. The aggregate principal amount of
[each class of] the Notes to be redeemed will be
an amount equal to [the Notes'] [such class']
Pre-Funded Percentage of the amount then on
deposit in the Pre-Funding Account. The
"Pre-Funded Percentage" with respect to [the] [a
class of] Notes or the Certificates is the
percentage derived from the fraction, the
numerator of which is the initial principal amount
of [the] [such class of] Notes or the initial
Certificate Balance, as the case may be, and the
denomina- tor of which is the sum of the initial
principal amount of the Notes and the initial
Certificate Balance.]
[A limited recourse mandatory prepayment premium
(the "Note Prepayment Premium")
will be payable by the Trust to the Noteholders
pursuant to a Mandatory Redemption if the amount
on deposit in the Pre-Funding Account exceeds $____.
The Note Prepayment Premium [for each class of
Notes] will equal the excess, if any, discounted
as described below, of (i) the amount of interest
that would accrue on [the Notes'] [such class']
portion of any remaining Pre-Funded Amount (the
"Note Prepayment Amount") at the Note Interest
Rate borne by [the] [such class of] Notes during
the period commencing on and including the
Distribution Date on which such Note prepayment
amount is required to be distributed to
Noteholders [of such class] to but excluding [, in
the case of the Class A-1 Notes, ____, in the case of
the Class A-2 Notes and ____, in the case of the Class
A-3 Notes], over (ii) the amount of interest that
would have accrued on such Note Prepayment Amount
over the same period at a per annum rate of
interest equal to the bond equivalent yield to
maturity on the Determination Date preceding such
Distribution Date on the ____[, in the case of the
Class A-1 Notes, the ____, in the case of the Class
A-2 Notes, and the , in the case of the Class A-3
Notes]. Such excess shall be discounted to present
value to such Distribution Date at the applicable
yield described in clause (ii) above. Pursuant to
the Sale and Servicing Agreement, the Sellers will
be obligated to pay the sum of the Note Prepayment
Premium [for each class of Notes] and the
Certificate Prepayment Premium to the Trust as
liquidated damages for the failure to deliver
Subsequent Receivables having an aggregate
principal balance equal to the Pre-Funded Amount.
The Trust's obligation to pay the Note Prepayment
Premium [for each class of Notes] and the
Certificate Prepayment Premium will be limited to
funds received from the Sellers pursuant to the
preceding sentence. In the event that such funds
are insufficient to pay the Note Prepayment
Premium [for each class of Notes] and the
Certificate Prepayment Premium in full,
Noteholders [of each class of Notes] will receive
their ratable share (based upon the aggregate Note
Prepayment Premium [for such class]) of the
aggregate amount available to be distributed in
respect of the Note Prepayment Premium and the
Certificate Prepayment Premium. No other assets of
the Trust will be available for the purpose of
making such payment.]][Or, state other method for
determining the amount of principal to be paid on
the Notes.]
Terms of th Certificates.The principal terms of the
Certificates will be as described below:
A. Distribution Dates...Distributions with respect to the Certificates
will be made on [each Distribution Date] [the day
of each month or, if any such day is not a
Business Day, on the next succeeding Business Day
(each, a "Distribution Date")], commencing ____,
199 . Distributions will be made to holders of
record of the Certificates (the
"Certificateholders," and, together with the
Noteholders, the "Securityholders") as of the
[related Record Date (which will be the day of
the month if Definitive Certificates are issued)]
[as of the day immediately preceding such
Distribution Date or, if Definitive Certificates
are issued, as of the day of the preceding month].
B. Certificate Rate... ____% per annum (the "Certificate
Rate").
C. Interest.............On each Distribution Date, the
Owner Trustee will distribute pro rata to
Certificateholders accrued interest at the
Certificate Rate on the outstanding Certificate
Balance generally to the extent of funds available
following payment of the Servicing Fee and
distributions in respect of the Notes from the
Available Funds and the Reserve Account; provided,
however, that upon the occurrence and during the
continuation of an Event of Default which has
resulted in an acceleration of the Notes or
following an Insolvency Event or a dissolution
with respect to any of the Sellers, [or [NB-SPC]],
distributions of any amounts on the Certificates
will be subordinated in priority of payment to
payment in full of principal of the Notes.
Interest in respect of a Distribu- tion Date will
accrue from and including the Closing Date (in the
case of the first Distribution Date) or from and
including the most recent Distribution Date on
which interest has been paid to but excluding the
following Distribu- tion Date. Interest will be
calculated on the basis of a 360-day year
consisting of twelve 30-day months.
D. Principal............On each Distribution Date
commencing on the later of (i) the 199 Distribu-
tion Date and (ii) the Distribution Date next
succeeding the Distribution Date on which the
[Class A-1] Notes are paid in full, principal of
the Certificates will be payable in an amount
generally equal to the Certificateholders'
Principal Distribution Amount for the Collection
Period preceding such Distribution Date, to the
extent of funds available therefor following
payment of the Servicing Fee and payments of
interest and principal in respect of the Notes and
the distribution of interest in respect of the
Certificates; provided, however, that upon the
occurrence and during the continuation of an Event
of Default which has resulted in an acceleration
of the Notes or following an Insolvency Event or a
dissolution with respect to any of the Sellers,[
or [NB- SPC], distributions of any amounts on the
Certificates will be subordinated in priority of
payment to payment in full of principal of the
Notes[; and provided further that upon any
reduction or withdrawal by any Rating Agency of
its rating of [the] [any class of] Notes, no
distributions of principal on the Certif- icates
will be made until all the Notes have been paid in
full or until such rating has been restored]. The
Certificateholders' Principal Distribution Amount
will be based on the Certificateholders'
Percentage of the Regular Principal, and will be
calculated by the Servicer in the manner described
under "Description of the Transfer and Servicing
Agreements--Distributions" herein. The outstanding
principal balance, if any, of the Certificates
will be payable in full on ____, 199 (the "Final
Scheduled Distribution Date").
E. Optional Prepayment..If the Servicer exercises its
option to purchase the Receivables, which can
occur after the Pool Balance declines to 5% or
less of the Initial Pool Balance, the
Certificateholders will receive an amount in
respect of the Certificates equal to the
Certificate Balance together with accrued interest
at the Certificate Rate, and the Certificates will
be retired. See "Description of the Certifi-
cates--Optional Prepayment" herein.
[F. Mandatory Repurchase
from Pre-Funding Account.The Certificates will be
prepaid, in part, pro rata on the basis of their
initial principal amounts, on the Distribution
Date on or immediately following the last day of
the Funding Period in the event that the amount on
deposit in the Pre-Funding Account after giving
effect to the purchase of all Receivables,
including any such purchase on such date exceeds $
(a "Mandatory Repurchase"). The aggregate
principal amount of Certificates to be prepaid
will be an amount equal to the Certificates'
Pre-Funded Percentage of the amount then on
deposit in the Pre-Funding Account.
[A limited recourse mandatory
prepayment premium (the "Certificate Prepay- ment
Premium") will be payable by the Trust to the
Certificateholders at the time of any prepayment
of the Certificates pursuant to a Mandatory Repur-
chase. The Certificate Prepayment Premium will
equal the excess, if any, discounted as described
below, of (i) the amount of interest that would
accrue on the Certificates' portion of any
remaining Pre-Funded Amount (the "Certificate
Prepayment Amount") at the Certificate Rate during
the period commencing on and including the
Distribution Date on which such Certificate
Prepayment Amount is required to be distributed to
Certificateholders to but excluding ____, over (ii)
the amount of interest that would have accrued on
such Certificate Prepayment Amount over the same
period at a per annum rate of interest equal to
the bond equivalent yield to maturity on the
Determination Date preceding such Distribution
Date on the ____. Such excess will be discounted to
present value to such Distribution Date at the
yield described in clause (ii) above. Pursuant to
the Sale and Servicing Agreement, the Sellers will
be obligated to pay the sum of the Note Prepayment
Premium [for each class of Notes] and the
Certificate Prepayment Premium to the Trust as
liquidated damages for the failure to deliver
Subsequent Receivables having an aggregate
principal balance equal to the Pre-Funded Amount.
The Trust's obligation to pay the Note Prepayment
Premium [for each class of Notes] and the
Certificate Prepayment Premium will be limited to
funds received from the Sellers pursuant to the
preceding sentence. In the event that such funds
are insufficient to pay the Note Prepayment
Premium [for each class of Notes] and the
Certificate Prepayment Premium in full,
Certificateholders will receive their ratable
share (based upon the aggregate Certificate
Prepayment Premium) of the aggregate amount
available to be distributed in respect of the Note
Prepayment Premium and the Certificate Prepayment
Premium. No other assets of the Trust will be
available for the purpose of making such payment.]
[Interest Rate Cap.......On the Closing Date, the
Sellers will enter into an Interest Rate Cap in
respect of the Class A-2 Notes with ____(the
"Interest Rate Cap Provider"). Pursuant to the
Interest Rate Cap, the Interest Rate Cap Provider
will make a payment to the Trust on each
[Distribution] [Payment] Date on which [the Class
A-2 Rate] [LIBOR] for the preceding [Distribution]
[Payment] Date exceeds the Cap Rate in an amount equal
to the product of (i) the difference between [such
Class A-2 Rate] [LIBOR] and the Cap Rate, (ii) the
Cap Notional Amount and (iii) the actual number of
days from and including the preceding
[Distribution] [Payment] Date to but excluding
such [Distribution] [Payment] Date divided by 360.
The Cap Notional Amount on any [Distribution]
[Payment] Date will equal at least the principal
amount of the Class A-2 Notes as of the close of
the preceding [Distribution] [Payment] Date. See
"Descrip- tion of the Transfer and Servicing
Agreements--Interest Rate Cap" herein. Payments
received by the Indenture Trustee pursuant to the
Interest Rate Cap will be deposited in the
Collection Account for the benefit of all
Securityholders.]
[Interest Rate Swap......On the Closing Date, the Indenture Trustee,
on behalf of the Trust, will enter into one
or more Interest Rate Swap Agreements (collectively,
the "Interest Rate Swap") with ____
(the "Swap Counterparty"). Pursuant to
the Interest Rate Swap, the Swap Counterparty will
pay to the Trust, on each [Distribution]
[Payment] Date, interest at a per annum rate equal
to [the Class A-2 Rate] [LIBOR] on the Swap
Notional Amount. The Swap Notional Amount on any
[Distribution] [Payment] Date will equal the
principal amount of the Class A-2 Notes as of the
close of the preceding [Distribution] [Payment]
Date. In exchange for such payments, the Trust
will pay to the Swap Counterparty, on each
[Distribution] [Payment] Date, interest at a per
annum rate equal to [the lesser of] [ %] [and]
[the Prime Rate less %], on the outstanding
principal amount of the Notes as of the close of
the preceding [Distribution] [Payment] Date [,
which rate will be reset [on various dates in]
each [month] [Interest Period]]. With respect to
each [Distribution] [Payment] Date, any difference
between the [monthly] [quarterly] payment by the
Swap Counterparty to the Trust and the [monthly]
[quarterly] payment by the Trust to the Swap
Counterparty will be referred to herein as the
"Net Trust Swap Receipt," if such difference is a
positive number, and the "Net Trust Swap Payment,"
if such difference is a negative number. Net Trust
Swap Receipts, if any, will be deposited in the
Collection Account for the benefit of all
Securityholders and Net Trust Swap Payments, if
any, will be paid from the Collection Account in
the same manner and priority as accrued and unpaid
in- terest on the Notes on each [Distribution]
[Payment] Date. See "Description of the Transfer
and Servicing Agreements--Interest Rate Swap."]
[Pre-Funding Account.....During the period (the "Funding Period") from and
including the Closing Date until
the earliest of (a) the Determination
Date on which the amount on deposit in the
Pre-Funding Account is equal to $____ or less, (b)
the occurrence of an Event of Default under the
Indenture or an Event of Servicing Termination
under the Sale and Servicing Agreement, (c) the
occurrence of certain events of insolvency or
dissolution with respect to the Sellers, [NB-SPC]
or the Servicer and (d) the Determination Date
with respect to the ____, 199 Distribution Date, the
Pre-Funded Amount will be maintained as an account
in the name of the Indenture Trustee (the
"Pre-Funding Account"). The Pre-Funded Amount will
initially equal approximately $____, and, during the
Funding Period, will be reduced by the amount
thereof used to purchase Subsequent Receivables in
accordance with the Sale and Servicing Agreement
and the amount thereof deposited in the Reserve
Account in connection with the purchase of such
Subsequent Receivables. The Sellers expect that
the Pre-Funded Amount will be reduced to $____ or less
by the Distribution Date. Any Pre-Funded Amount
remaining at the end of the Funding Period will be
payable to the Noteholders and Certificateholders
as described above.]
Reserve Account..........An account (the "Reserve
Account") will be created with an initial deposit
by the Sellers on the Closing Date of cash or
Permitted Investments having a value at least
equal to ____% of the [Initial Pool Balance] [Pool
Balance as of the Initial Cut-Off Date] [plus an
amount attributable to the difference between the
anticipated investment earnings on the Pre-Funded
Amount and the weighted average interest expense
on the portion of the Notes and Certificates
represented by the Pre-Funded Amount]. [On each
Subsequent Transfer Date, cash or Permitted
Investments having a value approximately equal to
____% of the aggregate principal balance of the
Subsequent Receivables conveyed to the Trust on
such Subsequent Transfer Date will be withdrawn
from the Pre-Funding Account from amounts
otherwise distributable to the Sellers in
connection with the sale of Subsequent Receivables
and shall be deposited in the Reserve Account.]
The amount initially deposited in the Reserve
Account by the Sellers [and the aggregate amount
transferred from the Pre-Funding Account to the
Reserve Account on each Subsequent Transfer Date]
is referred to as the "Reserve Account Initial
Deposit" [and the "Additional Reserve Account
Deposit," respectively.] The Reserve Account will
be maintained as an account in the name of the
Indenture Trustee for the benefit of
Securityholders.
Funds will be withdrawn from
the Reserve Account up to the Available Reserve
Amount to the extent that the Available Funds with
respect to any Collection Period remaining after
the Servicing Fee is paid is less than the
Noteholders' Payment Amount and will be deposited
in the Note Payment Account for dis- tribution to
the Noteholders on the related [Distribution]
[Payment] Date. In addition, funds will be
withdrawn from the Reserve Account up to the
Available Reserve Amount (as reduced by any
withdrawal pursuant to the preceding sentence) to
the extent that the Available Funds remaining
after payment of the Servicing Fee and the deposit
of the Noteholders' Payment Amount in the Note
Payment Account is less than the
Certificateholders' Distribution Amount and will
be deposited in the Certificate Distribution
Account for distribution to the
Certificateholders.
On each Distribution Date,
the Reserve Account will be reinstated up to the
Specified Reserve Account Balance to the extent,
if any, of the Available Funds remaining after
payment of the Servicing Fee, the deposit of the
Noteholders' Payment Amount into the Note Payment
Account and the deposit of the Certificateholders'
Distribution Amount into the Certificate
Distribution Account.
Certain amounts in the Reserve Account
on any Distribution Date (after
giving effect to all distributions to be made on
such Distribution Date) in excess of the Specified
Reserve Account Balance for such Distribution Date
will be released to the Sellers (except to the
extent described under "Description of the
Transfer and Servicing Agreements--Reserve
Account" herein). Subject to reduction as
described below, the "Specified Reserve Account
Balance" with respect to any Distribution Date
generally will be equal to the sum of (i) ____% of the
[Initial Pool Balance] [Pool Balance as of the
Initial Cut-Off Date] [, plus an amount related to
the difference between anticipated investment
earnings on the remaining Pre-Funded Amount and
the weighted average interest expense on the
portion of the Notes and Certificates represented
by the remaining Pre-Funded Amount] and (ii) ____% of
the Pool Balance on the first day of the related
Collection Period. [However, so long as on any
Distribution Date (except the first Distribution
Date) the outstanding principal amount of the
Securities (after giving effect to distributions
made on the prior Distribution Date) is less than
or equal to ____% of [the sum of] [(a)] the Pool
Balance on the first day of the related Collection
Period [and (b) the Pre-Funded Amount on such
date],) then the portion of the Specified Reserve
Account Balance set forth in clause (i) above will
be reduced to ____% of the [Initial Pool Balance]
[Pool Balance as of the Initial Cut-Off Date].]
[In addition, so long as on any Distribution Date
(except the first Distribution Date) the
outstanding principal amount of the Securities
(after giving effect to distributions made on the
prior Distribution Date) is less than or equal to
____% of [the sum of] [(a)] the Pool Balance on the
first day of the related Collection Period [and
(b) the Pre-Funded Amount on such day], then such
portion of the Specified Reserve Account Balance
set forth in clause (i) above will be reduced to ____%
of the [Initial Pool Balance] [Pool Balance as of
the Initial Cut-Off Date].] [With respect to the
portion of the Specified Reserve Account Balance
set forth in clause (ii) above, so long as on any
Distribution Date (except the first Distribution
Date) the outstanding principal amount of the
Securities (after giving effect to distributions
made on the prior Distribution Date) is less than
or equal to ____% of [the sum of] [(a)] the Pool
Balance on the first day of the related Collection
Period [and (b) the Pre-Funded Amount on such
day], then such portion will be reduced to an
amount equal to the product of (I) the Pool
Balance on the first day of the related Collection
Period and (II) the percentage (which shall not be
greater than ____% or less than zero) equal to (X) the
percentage derived from the fraction, the numer-
ator of which is the outstanding principal amount
of the Securities (after giving effect to
distributions made on the prior Distribution Date)
and the denominator of which is such Pool Balance
less (Y) ____%.] [The Specified Reserve Account
Balance is further subject to adjustment in
certain circum- stances described herein.]
[Yield Supplement Account;
Yield Supplement
Agreement................The Sellers will establish a
yield supplement account with the Indenture
Trustee for the benefit of the Securityholders
(the "Yield Supplement Account"). The Yield
Supplement Account is designed solely to hold
funds to be applied to provide payments to the
Securityholders in respect of Receivables the
contracted annual percentage rate ("Contract
Rate") of which is less than the sum of (i) the
weighted average of the Note Interest Rates and
Certificate Rate and (ii) the Servicing Fee Rate
(the "Required Rate"). The Yield Supplement
Account will be created with an initial deposit by
the Sellers (the "Yield Supplement Initial
Deposit") in an amount (which amount may be
discounted at a rate to be specified in the Sale
and Servicing Agreement) equal to the aggregate
amount by which (i) interest on the principal
balance of each [Initial] Receivable for the
period commencing on the [Initial] Cut-Off Date
and ending with the scheduled maturity of such
Receivable, assuming that payments on such
Receivables are made as scheduled and no
prepayments are made, at a rate equal to the
Required Rate, exceeds (ii) interest on such
principal balances at the Contract Rate of such
Receivable (the "Yield Supplement Amount" and,
with respect to all of the [Initial] Receivables,
the "Required [Initial] Yield Supplement Amount").
[The Sellers and the Indenture
Trustee will enter into a Yield
Supplement Agreement (as amended and supplemented
from time to time, the "Yield Supplement
Agreement") pursuant to which, on each Subsequent
Transfer Date, the Sellers will deposit an amount
(which amount may be discounted at a rate to be
specified in the Sale and Servicing Agreement), if
any, into the Yield Supplement Account (the
"Additional Yield Supplement Amount") equal to the
aggregate Yield Supplement Amounts in respect of
the such Subsequent Receivable for the period
commencing with the related Subsequent Cut-Off
Date and ending with the scheduled maturity of
each such Subsequent Receiv- able, assuming that
payments on such Receivables are made as scheduled
and no prepayments are made. The aggregate of the
Additional Yield Supplement Amounts in respect of
the Subsequent Receivables is referred to herein
as the "Required Subsequent Yield Supplement
Amount" and, together with the Required Initial
Yield Supplement Amount, the "Required Yield
Supplement Amount." See "Description of the
Transfer and Servicing Agreements--Yield
Supplement Account; Yield Supplement Agreement"
herein.]]
Collection Account.......Except under certain conditions
described herein, the Servicer will be
required to remit collections received with
respect to the Receivables not later than the [ ]
Business Day after receipt to one or more accounts
in the name of the Indenture Trustee (the
"Collection Account"). Pursuant to the Sale and
Servicing Agreement, the Servicer will have the
power, revocable at the discretion of the
Indenture Trustee or at the discretion of the
Owner Trustee with the consent of the Indenture
Trustee, to instruct the Indenture Trustee to
withdraw funds on deposit in the Collection
Account and to apply such funds on each
Distribution Date to the following (in the
priority indicated): (i) the Servicing Fee for the
prior Collection Period and any overdue Servicing
Fees to the Servicer, (ii) the Accrued Note
Interest and the Noteholders' Principal Payment
Amount into the Note Payment Account, (iii) the
Accrued Certificate Interest and, commencing on
the later of (a) the ____199 Distribution Date and (b)
the Distribution Date next succeeding the
Distribution Date on which the [Class A-1] Notes
are paid in full, the Certificateholders'
Principal Distribution Amount into the Certificate
Distribution Account and (iv) the remaining
balance, if any, to the Reserve Account; provided,
however, that on each Distribution Date following
the occurrence of an Event of Default which has
resulted in acceleration of the Notes or following
an Insolvency Event or a dissolution with respect
to any of the Sellers or [NB-SPC], the principal
of the Notes must be paid in full prior to the
distribution of any amounts on the Certificates.
[Guaranteed Rate
Agreement................Amounts on deposit in the
[Collection] [Note Payment] Account will be
invested from the date of deposit to the related
[Distribution] [Payment] Date by the Indenture
Trustee at the direction of ____ (the "Investment
Provider") in certain eligible investments
pursuant to a Guaranteed Rate Agreement, which
provides that the Investment Provider will
guarantee a rate of return on such amounts equal
to the weighted average of the Note Interest Rates
[and the Certificate Rate] and will be entitled to
receive any Investment Earnings in ex- cess of
such guaranteed return. See "Description of the
Transfer and Servicing Agreements--Guaranteed
Rate Agreement."]
Servicer Fee.............The Servicer will receive each
month a fee for servicing the Receivables equal to
(a) the product of one-twelfth of [1.00]% (the
"Servicing Fee Rate") and the Pool Balance
outstanding at the beginning of the previous
month, plus (b) any late, prepayment, and other
administrative fees and expenses collected during
such month [plus (c) reinvestment proceeds on any
payments received in respect of the Receivables].
Maturity and Prepayment
Considerations...........The [Class A-2 Notes, the
Class A-3 Notes and the] Certificates will not
receive any principal payments until the [Class
A-1] Notes have been paid in full[, and the Class
A-3 Notes will not receive any principal payments
until the Class A-2 Notes have been paid in full].
In addition, no principal payments on the
Certificates will be made until the later of (i)
the ____199 Distribution Date and (ii) the
Distribution Date next succeeding the Distribution
Date on which the [Class A-1] Notes are paid in
full. As the rate of payment of principal of [the]
[each class of] Notes and the Certificates depends
on the rate of payment (including prepayments) of
the principal balance of the Receivables, final
payment of [the] [any class of] Notes and the
final distribution in respect of the Certificates
could occur significantly earlier than the
respective [Final Scheduled Distribution Dates]
[final scheduled Payment Dates or Distribution
Date]. In addition, the rate of payment of
principal of [the] [each Class of] Notes and the
Certificates will be affected by the application
of the Noteholders' Accelerated Principal to pay
the principal of the Notes. Reinvestment risk
associated with early payment of the Notes and the
Certificates will be borne exclusively by the
Noteholders and the Certificateholders,
respectively.
It is expected that the final
payment of [the] [each class of] Notes and the
final distribution in respect of the Certificates
will occur on or prior to the respective [Final
Scheduled Distribution Dates] [final scheduled
Payment Dates or Distribution Date]. However, if
sufficient funds are not available to pay [the]
[any class of] Notes or the Certificates in full
on or prior to the respective [Final Scheduled
Distribution Dates] [final scheduled Payment Dates
or Distribution Date], final payment of [the]
[such class of] Notes and the final distribution
in respect of the Certificates could occur later
than such dates.
All of the Receivables are
prepayable at any time. Prepayments will shorten
the weighted average remaining term of the
Receivables and the weighted average life of the
Securities. Such prepayments, to the extent
allocable to principal, will be included in the
Noteholders' Principal Payment Amount or the
Certificateholders' Principal Distribution Amount
and will be payable to the Securityholders as set
forth in the priority of distributions herein. See
"Description of the Transfer and Servicing
Agreements--Distributions" herein.
Clearance and Settlement.Securityholders may elect to
hold their Notes or Certificates through any of
DTC (in the United States) or Cedel or Euroclear
(in Europe). Transfers within DTC, Cedel or
Euroclear, as the case may be, will be in
accordance with the usual rules and operation
procedures of the relevant system. Crossmarket
transfers between persons holding directly or
indirectly through DTC, on the one hand, and
counterparties holding directly or indirectly
through Cedel or Euroclear, on the other, will be
effected in DTC through the relevant Depositaries
of Cedel or Euroclear. See "Certain Information
Regarding the Securities--Book-Entry Registration"
in the Prospectus [and Annex 1 to this Prospectus
Supplement, "Global Clearance, Settlement and Tax
Documentation Procedures."].
Tax Status...............In the opinion of ("Special
Tax Counsel"), for federal income tax purposes,
the Notes will be characterized as debt, and the
Trust will not be characterized as an association
(or publicly traded partnership) taxable as a
corporation. Each Noteholder, by the acceptance of
a Note, will agree to treat the Notes as
indebtedness, and each Certificateholder, by the
acceptance of a Certificate, will agree to treat
the Trust as a partnership in which the
Certificateholders are partners for federal income
tax purposes. Alternative characterizations of the
Trust and the Certificates are possible, but would
not result in materially adverse tax consequences
to Certificateholders. Certificateholders may be
allocated income equal to the amount of interest
accruing on the Certificates at the Certificate
Rate even though the Trust may not have sufficient
cash to make current cash distributions of such
amount. See "Certain Federal Income Tax
Consequences" herein and in the Prospectus for
additional information concerning the application
of federal income tax laws to the Trust and the
Securities.
ERISA Considerations.....Subject to the considerations
discussed under "ERISA Considerations" herein and
in the Prospectus, the Notes may, in general, be
purchased by or on behalf of employee benefit
plans subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). Any
employee benefit plan fiduciary considering a
purchase of Notes should, among other things,
consult with legal counsel regarding the
availability of a statutory or administrative
exemption from the prohibited transaction rules of
ERISA and the Internal Revenue Code of 1986, as
amended (the "Code").
The Certificates may not be
acquired by an employee benefit plan subject to
ERISA or Section 4975 of the Code, or by an
individual retirement account. Any investor
considering the purchase of Certificates should be
aware that such purchase and subsequent holding
could, under certain circumstances, be deemed to
involve an indirect prohibited transaction if a
plan with respect to which the investor is a
"party in interest" or "disqualified person"
purchases the Certificates without the benefit of
an exemption from the prohibited transaction
rules. See "ERISA Considerations" herein and in
the Prospectus.
[Legal Investment........The [Class A-1] Notes will be
eligible securities for purchase by money market
funds under paragraph (a)(5) of Rule 2a-7 under
the Investment Company Act of 1940, as amended.]
Rating[s] of the Notes...It is a condition to the
issuance of the [Class A-1,] [Class A-2] [and
Class A-3] Notes that they be rated in the highest
investment rating category by at least two
nationally recognized rating agencies. [However,
the rating agencies do not evaluate, and the
rating does not address, the likelihood that the
Note Prepayment Premium will be paid.] There can
be no assurance that a rating will not be lowered
or withdrawn by a rating agency if circumstances
so warrant.
Rating of the
Certificates.............It is condition of the issuance
of the Certificates that they be rated [at least]
"____" or its equivalent by at least two nationally
recognized rating agencies. [However, the rating
agencies do not evaluate, and the rating does not
ad- dress, the likelihood that the Certificate
Prepayment Premium will be paid.] There can be no
assurance that a rating will not be lowered or
withdrawn by a rating agency if circumstances so
warrant.
Risk Factors.............Prospective investors should
consider the factors set forth under "Risk
Factors" on pages S-__ through S-__.
Limited Liquidity
There is currently no secondary market for the Securities. Each
Underwriter currently intends to make a market in the Securities for which
it is an Underwriter, but it is under no obligation to do so. There can be
no assurance that a secondary market will develop or, if a secondary market
does develop, that it will provide the Securityholders with liquidity of
investment or that it will continue for the life of the Securities.
[The Subsequent Receivables and the Pre-Funding Account
On the Closing Date, the Sellers will transfer to the Trust the
approximately $____ of Initial Receivables and the approximately $____
Pre-Funded Amount on deposit in the Pre-Funding Account. If the principal
amount of eligible Receivables originated by the Sellers during the Funding
Period is less than the Pre-Funded Amount, the Sellers will have
insufficient Receivables to sell to the Trust on the Subsequent Transfer
Dates, thereby resulting in a prepayment of principal to the Noteholders
and the Certificateholders as described in the following paragraph. See
"Risk Factors--Trust's Relationship to Sellers, NationsBank Corporation and
their Affiliates" in the Prospectus. In addition, any conveyance of
Subsequent Receivables is subject to the satisfaction, on or before the
related Subsequent Transfer Date, of the following conditions precedent,
among others: (i) each such Subsequent Receivable must satisfy the
eligibility criteria specified in the Sale and Servicing Agreement; (ii)
the Sellers will not select such Subsequent Receivables in a manner that it
believes is adverse to the interests of the Noteholders or the
Certificateholders; (iii) as of the related Subsequent Cut-Off Date, the
Receivables in the Trust at that time, including the Subsequent Receivables
to be conveyed by the Sellers as of such Subsequent Cut-Off Date, will
satisfy the parameters described under "The Receivables Pool" herein and
under "The Receivables Pools" in the Prospectus; (iv) the applicable
Additional Reserve Account Deposit [and the applicable Additional Yield
Supplement Amount, if any] for such Subsequent Transfer Date shall have
been made; and (v) the Sellers shall have executed and delivered to the
Trust (with a copy to the Indenture Trustee) a written assignment conveying
such Subsequent Receivables to the Trust (including a schedule identifying
such Subsequent Receivables). Moreover, any such conveyance of Subsequent
Receivables made during any given Collection Period will also be subject to
the satisfaction, on or about the fifteenth day of the month following such
Collection Period, of the following conditions subsequent, among others:
(a) the Sellers will deliver certain opinions of counsel to the Owner
Trustee, Indenture Trustee and the Rating Agencies with respect to the
validity of the conveyance of all such Subsequent Receivables conveyed
during such Collection Period; (b) the Trust and the Indenture Trustee
shall have received written confirmation from a firm of independent
certified public accountants that, as of the end of the preceding
Collection Period, the Receivables in the Trust at that time, including the
Subsequent Receivables conveyed by the Sellers during such Collection
Period, satisfied the parameters described under "The Receivables Pool"
herein and under "The Receivables Pools" in the Prospectus; and (c) the
Rating Agencies shall have each notified the Sellers in writing that,
following the addition of all such Subsequent Receivables, [each class of]
the Notes and the Certificates will be rated in the same rating category as
they were rated by the Rating Agencies on the Closing Date. The Sellers
will immediately repurchase any Subsequent Receivable, at a price equal to
the Purchase Amount thereof, upon the failure of the Sellers to satisfy any
of the foregoing conditions subsequent with respect thereto. Such
confirmation of the ratings of the Notes and the Certificates may depend on
factors other than the characteristics of the Subsequent Receivables,
including the delinquency, repossession and net loss experience on the
automobile and light truck receivables in the portfolio serviced by the
Servicer.
To the extent that amounts on deposit in the Pre-Funding Account have
not been fully applied to the conveyance of Subsequent Receivables to the
Trust by the end of the Funding Period and such amount exceeds $____, the
Noteholders and the Certificateholders will receive, on the Distribution
Date on or immediately following the last day of the Funding Period, a
prepayment of principal in an amount equal to the applicable Pre-Funded
Percentage, in respect of [a class of] the Notes or the Certificates, of
the Pre-Funded Amount remaining in the Pre-Funding Account following the
purchase of any Subsequent Receivables on such Distribution Date. Otherwise
such remaining Pre-Funded Amount will be paid as principal of the [Class
A-1] Notes [up to an amount not to exceed their outstanding principal
amount, with any remaining amount used to redeem the Class A-2 Notes]. It
is anticipated that the principal balance of Subsequent Receivables sold to
the Trust will not be exactly equal to the amount on deposit in the
Pre-Funding Account and that therefore there will be at least a nominal
amount of principal prepaid to the [Class A-1] Noteholders.
Each Subsequent Receivable must satisfy the eligibility criteria
specified in the Sale and Servicing Agreement and any additional criteria
specified by the Rating Agencies at the time of its addition. However,
Subsequent Receivables may have been originated by the Sellers at a later
date using credit criteria different from those which were applied to the
Initial Receivables and may be of a different credit quality and seasoning.
[In addition, an increasing percentage of the Subsequent Receivables may be
Balloon Receivables.] Therefore, following the transfer of Subsequent
Receivables to the Trust, the characteristics of the entire Receivables
Pool included in the Trust may vary significantly from those of the Initial
Receivables. See "The Receivables Pool" herein and "The Receivables Pools"
in the Prospectus.
None of the Sellers is generally obligated to make any payments in
respect of the Notes, the Certificates or the Receivables. [However, the
ability of the Sellers to convey Subsequent Receivables on Subsequent
Transfer Dates is completely dependent upon the generation of additional
receivables by the Sellers. The ability of the Sellers to generate
Subsequent Receivables is largely dependent upon the Sellers' ability to
offer competitive rates of interest on motor vehicle installment sales
contracts to be acquired by the Sellers. In addition, the number of Dealers
from which the Sellers' acquire retail motor vehicle installment sales
contracts may effect the Sellers' ability to generate Subsequent
Receivables. In addition, the level of retail sales of automobiles, vans
and light trucks may change as a result of a variety of social and economic
factors. Economic factors include interest rates, unemployment levels, the
rate of inflation and consumer perceptions of economic conditions
generally. There can be no assurance, therefore, that the Sellers will
continue to generate receivables at the same rate as in prior years. The
Sellers are unable to determine and have no basis to predict to what extent
these factors will affect the Sellers' ability to generate Subsequent
Receivables.] In addition, if NationsBank, N.A. were to cease acting as
Servicer, delays in processing payments on the Receivables and information
in respect thereof could occur and result in delays in payments to the
Noteholders and Certificateholders.
NationsBank Corporation and the Trust are subject to the informational
requirements of the Exchange Act and in accordance therewith file, and will
cause to be filed, reports and other information with the Commission. For
further information regarding NationsBank Corporation, the Sellers and the
Servicer, reference is made to such reports and other information which are
available as described under "Available Information" above.]
Limited Assets
The Trust will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables[, the
Pre-Funding Account] [, the Yield Supplement Account] and the Reserve
Account [and the payments, if any, received pursuant to the [Interest Rate
Cap,] [the Interest Rate Swap] [and the] [Guaranteed Rate Agreement]].
Holders of the Notes and the Certificates must rely for repayment upon
payments on the Receivables and, if and to the extent available, amounts on
deposit in the [Pre-Funding Account][, the Yield Supplement Account] [and
the] Reserve Account [and the payments, if any, received pursuant to the
[Interest Rate Cap,] [the Interest Rate Swap] [and the] [Guaranteed Rate
Agreement]]. [The Pre-Funding Account will be available only during the
Funding Period and is designed solely to cover obligations of the Trust
relating to a portion of its funds not invested in Receivables and is not
designed to cover losses on the Receivables.] [The Yield Supplement Account
is designed solely to hold funds to be applied to provide payments to the
Securityholders in respect of Receivables the Contract Rate of which is
less than the Required Rate.] Funds in the Reserve Account will be
available on each Distribution Date to cover shortfalls in distributions of
interest and principal on the Notes and the Certificates. However, amounts
to be deposited in the [Pre-Funding Account[, the Yield Supplement Account]
and the] Reserve Account are limited in amount. If the [Pre-Funding
Account[, the Yield Supplement Account] and the] Reserve Account is [are]
exhausted, the Trust will depend solely on current distributions on the
Receivables [and the payments, if any, received pursuant to the [Interest
Rate Cap,] [the Interest Rate Swap] [and the] [Guaranteed Rate Agreement]]
to make payments on the Notes and the Certificates. [Payments under [the
Interest Rate Cap,] [the Interest Rate Swap] [and the Guaranteed Rate
Agreement] will be received only under certain circumstances. See
"Description of the Transfer and Servicing Agreements[--Interest Rate
Cap,"] ["--Interest Rate Swap"] [and "--Guaranteed Rate Agreement."]]
Subordination
Distributions of interest and principal on the Certificates will be
subordinated in priority of payment to interest and principal due on the
Notes, [and distributions of interest on the [Class Notes] are subordinated
in priority of payment to interest [and principal] due on the [Class Notes]
[and the Class Notes]. Consequently, the Certificateholders will not
receive any distributions on a Distribution Date until the full amount of
interest on and principal of the Notes on such Distribution Date has been
deposited in the Note Payment Account. The Certificateholders will not
receive any distributions of principal until after the later to occur of
(i) the Distribution Date next succeeding the Distribution Date on which
the [Class A-1] Notes were paid in full and (ii) ____ the Distribution Date.
However, upon the occurrence and during the continuation of an Event of
Default which has resulted in an acceleration of the Notes or following an
Insolvency Event or a dissolution with respect to any of the Sellers or
[NB-SPC], distributions of any amounts on the Certificates will be
subordinated in priority of payment to payment in full of principal of the
Notes. [In addition, upon any reduction or withdrawal by any Rating Agency
of its rating of [the] [any class of] Notes (see "--Ratings of the
Securities" below), the Certificateholders will not receive any
distributions of principal until after all the Notes have been paid in full
or until such rating has been restored]. [The [Class ] Noteholders will not
receive any distributions of interest on a [Distribution] [Payment] Date
unless the full amount of interest on the [Class Notes] [and the Class
Notes] due on such [Distribution] [Payment] Date has been or will be paid
on such [Distribution] [Payment] Date.]
If an Event of Default occurs, the Indenture Trustee or the holders of
a majority of the aggregate principal amount of all the Notes may declare
the principal of the Notes to be immediately due and payable, and the
Indenture Trustee may institute or be required to institute proceedings to
collect amounts due or exercise its remedies as a secured party (including
foreclosure or sale of the Receivables). In the event of a sale of
Receivables by the Inden- ture Trustee following an Event of Default or
following an Insolvency Event or a dissolution with respect to any of the
Sellers or [NB-SPC], there is no assurance that the proceeds of such sale
will be equal to or greater than the aggregate outstanding principal amount
of the Notes and the Certificates plus accrued interest. Because neither
interest nor principal is distributed to Certificateholders upon sale of
the Receivables following an Event of Default and acceleration of the Notes
under the Indenture or following an Insolvency Event or a dissolution with
respect to any of the Sellers or [NB-SPC] until all the Notes have been
paid in full, the interests of Noteholders and the Certificateholders may
conflict, and the exercise by the Indenture Trustee of its right to sell
the Receivables or exercise other remedies under the Indenture and
applicable law may cause the Certificateholders to suffer a loss of all or
part of their investment. See "Description of the Notes--The
Indenture--Events of Default; Rights upon Event of Default" and
"Description of the Transfer and Servicing Agreements--Insolvency Event or
Dissolution" in the Prospectus.
In general, the Sellers may, and in certain circumstances the
Certificateholders may, direct the Owner Trustee in the administration of
the Trust. However, because the Trust has pledged the Trust Property to the
Indenture Trustee to secure the payment of the Notes, including in such
pledge certain rights of the Trust under the Sale and Servicing Agreement,
the Indenture Trustee and not the Sellers or the Certificateholders has the
power to direct the Trust to take certain actions in connection with the
administration of the Trust Property until the Notes have been paid in full
and the lien of the Indenture has been released. In addition, the Sellers
and Certificateholders are not allowed to direct the Owner Trustee to take
any action which conflicts with the provisions of any of the Basic
Documents. The Indenture specifically prohibits the Owner Trustee from
taking any action which would impair the Indenture Trustee's security
interest in the Trust and requires the Owner Trustee to obtain the consent
of the Indenture Trustee or the holders of a majority of the aggregate
principal amount of the Notes before modifying, amending, supplementing,
waiving or terminating any Basic Document or any provision of any Basic
Document. Therefore, until the Notes have been paid in full, the ability to
direct the Trust with respect to certain actions permitted to be taken by
it under the Basic Documents rests with the Indenture Trustee and the
Noteholders instead of the Sellers or the Certificateholders.
If an Event of Servicing Termination were to occur, the holders of a
majority of the outstanding principal amount of the Notes, or the Indenture
Trustee acting on behalf of the Noteholders, and not the Sellers or the
Certificateholders, would have the right to terminate the Servicer as the
servicer of the Receivables without consideration of the effect such
termination would have on Certificateholders. In addition, the holders of
not less than a majority of the outstanding principal amount of the Notes
would have the right to waive certain Events of Servicing Termination,
without consideration of the effect such waiver would have on
Certificateholders. After all the Notes have been paid in full and the lien
of the Indenture has been released, upon the occurrence of an Event of
Servicing Termination, the holders of a majority of the outstanding
Certificate Balance, or the Owner Trustee acting on behalf of the
Certificateholders, may terminate the Servicer. See "Description of the
Transfer and Servicing Agreements--Waiver of Past Events of Servicing
Termination" and "--Rights Upon Event of Servicing Termination" in the
Prospectus.
Maturity and Prepayment Considerations
The [Class A-2 Notes, the Class A-3 Notes and the] Certificates will
not receive any principal payments until the [Class A-1] Notes have been
paid in full[, and the Class A-3 Notes will not receive any principal
payments until the Class A-2 Notes have been paid in full]. In addition, no
principal payments on the Certificates will be made until the later of (i)
the ____199 Distribution Date and (ii) the ____ Distribution Date next
succeeding the Distribution Date on which the [Class A-1] Notes are paid in
full. As the rate of payment of principal of [the] [each class of] Notes
and the Certificates depends on the rate of payment (including prepayments)
of the principal balance of the Receivables, final payment of [the] [any
class of] Notes and the final distribution in respect of the Certificates
could occur significantly earlier than the respective [Final Scheduled
Distribution Dates] [final scheduled Payment Dates or Distribution Date].
In addition, the rate of payment of principal of [the] [each Class of]
Notes and the Certificates will be affected by the application of the
Noteholders' Accelerated Principal to pay the principal of the Notes. It is
expected that final payment of [the] [each class of] Notes and the final
distribution in respect of the Certificates will occur on or prior to the
respective [Final Scheduled Distribution Dates] [final scheduled Payment
Dates or Distribution Date]. However, if sufficient funds are not available
to pay [the] [any class of] Notes or the Certificates in full on or prior
to the respective [Final Scheduled Distribution Dates] [final scheduled
Payment Dates or Distribution Date], final payment of [the] [such class of]
Notes and the final distribution in respect of the Certificates could occur
later than such dates. See "Maturity and Prepayment Considerations" herein
and in the Prospectus.
Geographic Concentration
Economic conditions in states where Obligors reside may affect the
delinquency, loan loss and repossession experience of the Trust with
respect to the Receivables. As of the Cut-Off Date, the Sellers' records
indicate that the mailing addresses of Obligors with respect to
approximately __%, __%, __%, __% and __% by principal balance of the
Receivables were in [Texas, North Carolina, Florida, Georgia and South
Carolina], respectively. As a result, economic conditions in such states
may have a disproportionate impact on the Trust. In particular, an economic
downturn in one or more of such states could adversely affect the
performance of the Trust (even if national economic conditions remain
unchanged or improve) as Obligors in such state or states experience the
effects of such a downturn and face greater difficulty in making payments
on their Financed Vehicles. See "The Receivables Pool."
Ratings of the Securities
It is a condition to the issuance of [each class of] the Notes and of
the Certificates that [each class of] the Notes be rated in the highest
rating category, and the Certificates be rated [at least] " " or its
equivalent, by at least two nationally recognized rating agencies (the
"Rating Agencies"). A rating is not a recommendation to purchase, hold or
sell Securities, inasmuch as such rating does not comment as to market
price or suitability for a particular investor. The ratings of the
Securities address the likelihood of the payment of principal and interest
on the Securities pursuant to their terms. [However, the Rating Agencies do
not evaluate, and the ratings of the Securities do not address, the
likelihood that the Note Prepayment Premium or the Certificate Prepayment
Premium will be paid.] 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 in
the future so warrant.
THE TRUST
General
The Issuer, NationsBank Auto Trust 199 - , is a business trust formed
under the laws of the State of Delaware pursuant to the Trust Agreement for
the transactions described in this Prospectus Supplement. After its
formation, the Trust will not engage in any activity other than (i)
acquiring, holding and managing the Receivables and the other assets of the
Trust and proceeds therefrom, (ii) issuing the Notes and the Certificates,
(iii) making payments on the Notes and the Certificates and (iv) engaging
in other activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith.
The Trust will initially be capitalized with the Notes and the
Certificates. Certificates with an original principal balance of $____ will
be issued to [NB-SPC] and the remaining Certificates will be sold to third
party investors that are expected to be unaffiliated with the Sellers, the
Servicer or their affiliates or the Trust. The proceeds from the issuance
of the Notes and the Certificates will be used by the Trust to purchase the
[Initial] Receivables from the Sellers pursuant to the Sale and Servicing
Agreement [and to fund the deposit of the Pre-Funded Amount] and to fund
the initial deposit of the Reserve Account.
If the protection provided to the investment of the Noteholders and
Certificateholders by the [Yield Supplement Account and the] Reserve
Account is insufficient, the Trust would have to look principally to the
Obligors on the Receivables and the proceeds from the repossession and sale
of Financed Vehicles which secure defaulted Receivables [and from the
Pre-Funding Account]. In such event, certain factors, such as the Trust's
not having perfected security interests in the Financed Vehicles in all
states, may affect the Servicer's ability to repossess and sell the
collateral securing the Receivables, and thus may reduce the proceeds to be
distributed to the Noteholders and Certificateholders. See "Description of
the Transfer and Servicing Agreements--Distributions" [, "--Yield
Supplement Account; Yield Supplement Agreement"] and "--Reserve Account"
herein and "Certain Legal Aspects of the Receivables" in the Prospectus.
Capitalization of the Trust
The following table illustrates the capitalization of the Trust as of
the Closing Date, as if the issuance and sale of the Notes and the
Certificates had taken place on such date:
[Class A-1] Notes................. $
[Class A-2 Notes]................. [ ]
[Class A-3 Notes]................. [ ]
Certificates...................... _____________
Total............................. $
.................................. =============
The Owner Trustee
____ is the Owner Trustee under the Trust Agreement. ____is a Delaware
____and its principal offices are located at ____, Delaware. Each of the
Sellers and their affiliates may maintain normal commercial banking
relations with the Owner Trustee and its affiliates.
THE RECEIVABLES POOL
The pool of Receivables (the "Receivables Pool") will include the
[Initial] Receivables purchased as of the [Initial] Cut-Off Date [and will
include any Subsequent Receivables purchased as of any Subsequent Cut-Off
Date (the Initial Cut-Off Date or any Subsequent Cut-Off Date being
individually referred to herein as a "Cut-Off Date")]. The [Initial]
Receivables were purchased[, and the Subsequent Receivables were or will be
purchased,] by the Sellers from Dealers in the ordinary course of business.
The Receivables were randomly selected from among the Motor Vehicle Loans
owned by the Sellers. The Sellers will warrant in the Sale and Servicing
Agreement that all the Receivables have the following individual
characteristics, among others: (i) the obligation of the related Obligor
under each Receivable is secured by a security interest in either a new or
used automobile, van or light-duty truck; (ii) each Receivable has a
contractual interest rate ("Contract Rate") of at least ____% and no more
than ____%]; (iii) each Receivable has a remaining maturity, as of the
Cut-Off Date, of not less than months and not more than months; (iv) no
Receivable was more than days past due as of the Cut-Off Date; (v) each
Receivable is a Simple Interest Receivable (as defined below) that [(except
for those Receivables which are Balloon Receivables)], at origination,
provides for level monthly payments that fully amortize the amount financed
over the original term; (vi) as of the Cut-Off Date, each Receivable has a
remaining principal balance of no less than $____ and no more than $____ ;
(vii) each Receivable is not a Defaulted Receivable; and (viii) each
Receivable is not related to a motor vehicle that is the subject of
forced-placed insurance. "Forced-placed insurance" is insurance placed on a
motor vehicle by the lienholder to protect the motor vehicle as collateral
for a loan when there is evidence that the borrower has neglected to do so
as required by the applicable loan agreement. See " -- Certain
Characteristics of the [Initial] Receivables" below. No selection
procedures believed by the Sellers to be adverse to the Noteholders or
Certificateholders were [or will be] used in selecting the Receivables. [As
of the [Initial] Cut-Off Date, ____% at the [Initial Receivables, by
principal balance, were Balloon Receivables.]
[The obligation of the Trust to purchase the Subsequent Receivables on
a Subsequent Transfer Date will be subject to the Receivables in the Trust,
including the Subsequent Receivables to be conveyed to the Trust on such
Subsequent Transfer Date, meeting the following criteria: (i) not more than
____% of the principal balance of the Receivables in the Trust will
represent vehicles financed at [less than] [more than ___%]; [and] (ii) the
weighted average Contract Rate of the Receivables in the Trust will not be
less than ____% [and (iii) not more that ____% at the principal balance of
the Receivables in the Trust will be Balloon Receivables], unless the
Sellers increase the Reserve Account Initial Deposit by the amounts, if
any, specified by the Rating Agencies to maintain the ratings of the
Certificates. In addition, such obligation will be subject to the
Receivables, including the Subsequent Receivables to be transferred to the
Trust on such Subsequent Transfer Date, having a weighted average remaining
term not greater than months. Such criteria will be based on the
characteristics of the Initial Receivables on the Initial Cut-Off Date and
any Subsequent Receivables on the related Subsequent Cut-Off Dates.]
[The Initial Receivables will represent approximately ____% of the
aggregate initial principal balance of the Notes and the Certificates.
However, except for the criteria described in the preceding paragraphs and
the criteria, if any, specified by the Rating Agencies to maintain the
ratings of the Certificates, there will be no required characteristics of
the Subsequent Receivables. Therefore, following the transfer of Subsequent
Receivables to the Trust, the aggregate characteristics of the entire
Receivables Pool, including the composition of the Receivables, the
distribution by Contract Rate and the geographic distribution described in
the following tables, may vary significantly from those of the Initial
Receivables.]
NationsBank, N.A., through DFSG and units in predecessor banks
of NationsBank, N.A., has been servicing indirect motor vehicle loan
portfolios since 1970. The indirect motor vehicle loan portfolio serviced
either directly by NationsBank, N.A. or through its affiliates was
approximately $5.5 billion as of March 31, 1996. DFSG also services other
indirect and direct consumer loan portfolios totalling over $25.3 billion
(including the indirect motor vehicle loan portfolio) as of March 31, 1996.
Certain Characteristics of the [Initial] Receivables
As of the Cut-Off Date, the [Initial] Receivables had, in the
aggregate, the following characteristics: (i) approximately [ ]% of the
[Initial] Receivables] was attributable to loans for purchases of new
Financed Vehicles and approximately [ ]% of the [Initial] Pool Balance was
attributable to loans for purchases of used Financed Vehi- cles; (ii) the
weighted average Contract Rate of the [Initial] Receivables was [ ]%; (iii)
there were [ ] [Initial] Receivables being conveyed by the Sellers to the
Trust; (iv) the average principal balance of the [Initial] Receivables, as
of the Cut-Off Date, was $[ ]; and (v) the weighted average original term
and weighted average remaining term of the [Initial] Receivables were [ . ]
months and [ . ] months, respectively. Approximately % of the [Initial]
Receivables by principal balance as of the [Initial] Cut-Off Date were
contributed to the Trust by NationsBank, N.A.
The Composition of the [Initial] Receivables, Distribution of the
[Initial] Receivables by New/Used Motor Vehicles, Distribution of the
Receivables by Contract Rate, Distribution of the [Initial] Receivables by
Remaining Term, Distribution of the [Initial] Receivables by Principal
Balance and Geographic Distribution of the [Initial] Receivables, each as
of the [Initial] Cut-Off Date, are set forth in the following tables.
Composition of the [Initial] Receivables
Weighted Average Contract Rate......................
Range of Contract Rates.............................
Aggregate Principal Balance.........................
Number of Receivables...............................
Weighted Average Remaining Term.....................
Range of Remaining Terms............................
Weighted Average Original Term......................
Range of Original Terms.............................
Average Principal Balance...........................
Average Original Amount Financed....................
Range of Original Amounts Financed..................
Distribution of the [Initial] Receivables by New/Used Motor Vehicles
Weighted
Aggregate Original Average
Number of Principal Principal Contract
Receivables Balance Balance Rate(%)
New Autos, Vans and
Light-Duty Trucks.........
Used Autos, Vans and
Light-Duty Trucks.........
All Receivables.............
Distribution of the [Initial] Receivables by Contract Rate
% of
Aggregate Aggregate
Number of % of Total Principal Principal
Receivables Receivables Balance Balance
7.50 to 7.99%.........
8.00 to 8.99%.........
9.00 to 9.99%.........
10.00 to 10.99%.........
11.00 to 11.99%.........
12.00 to 12.99%.........
13.00 to 13.99%.........
14.00 to 14.99%.........
15.00 to 15.99%.........
16.00 to 16.99%.........
17.00 to 17.99%.........
18.00 to 18.99%.........
19.00 to 19.99%.........
20.00 to 21.00%.........
Total.........
Distribution of the [Initial] Receivables by Remaining Term
% of
Aggregate Aggregate
Number of % of Principal Principal
Receivables Receivables Balance Balance
12 to 18 months.........
19 to 24 months.........
25 to 30 months.........
31 to 36 months.........
37 to 42 months.........
43 to 48 months.........
49 to 54 months.........
55 to 60 months.........
61 to 66 months.........
67 to 72 months.........
Total.........
Distribution of the [Initial] Receivables by Principal Balance
% of
Aggregate Aggregate
Number of % of Principal Principal
Receivables Receivables Balance Balance
$ 2,000 to $ 9,999......
$10,000 to $19,999......
$20,000 to $29,999......
$30,000 to $39,999......
$40,000 to $49,999......
Total.........
Geographic Distribution of the [Initial] Receivables
% of
Aggregate Aggregate
Number of % of Principal Principal
State(1) Receivables Receivables Balance Balance
- --------
Florida.................
Georgia.................
North Carolina..........
South Carolina..........
Texas...................
Other(2)................
Total.........
- ---------
(1) Receivables are categorized by the Sellers' records of
the mailing addresses of the Obligors as of the [Initial] Cut-Off Date.
(2) Each other state represents less than [5]% of the total number of
Receivables.
Delinquency and Loss Experience
The tables set forth below indicate the delinquency and credit
loss/repossession experience for each of the last three calendar years and
for the three month periods ending March 31, 1996 and 1995 of the Banks'
portfolio of Motor Vehicle Loans from which the Receivables have been
selected [(which portfolio excludes certain Motor Vehicle Loans acquired by
the Banks in acquisitions)]. No assurance can be made, however, that the
delinquency and loss experience for the Motor Vehicle Loans or the
Receivables in the future will be similar to the historical experience set
forth in the following tables.
Delinquency Experience (Dollars in Thousands)(1)
As of March 31, As of December 31,
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
Number Number Number Number Number
of of of of of
Loans Amount Loans Amount Loans Amount Loans Amount Loans Amount
----- ------ ----- ------ ----- ------ ----- ------ ----- ------
Total Serviced Portfolio
at the Period End...........
Delinquency(2)
30-59 Days................
60-89 Days................
90 Days or More...........
Total Delinquencies...........
Total Delinquencies as a
Percentage of the Total
Serviced Portfolio..........
<FN>
- ----------
(1) Delinquencies shown in dollars include principal amounts only.
(2) The period of delinquencies is based on the number of days
payments are contractually past due until the applicable Motor
Vehicle Loan is charged off.
Credit Loss/Repossession Experience (Dollars in Thousands)
Nine Months Ended Year Ended
March 31, December 31,
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
Period End Outstandings(1)...................
Average Amount Outstanding During
the Period(2)..............................
Average Number of Loans Outstanding
During the Period(3).......................
Gross Charge-offs(4).........................
Recoveries on Losses(5)......................
Net Charge-offs..............................
Net Charge-offs as a Percentage of the
Period End Outstandings(6).................
Net Charge-offs as a Percentage of the
Average Amount Outstanding(6)..............
<FN>
- ----------
(1) Amount represents principal amounts only.
(2) Amount represents principal amounts only and reflects a daily weighted average of such amounts during the
periods shown.
(3) Amount based on the average outstanding for the period divided by the average loan amount. the average loan
amount was derived from the month end outstanding balances divided by month end number of loans.
(4) Amount of charge-off is the remaining principal balance less the net proceeds from sale of loan collateral.
(5) Recoveries include post-disposition monies and are net of any related expenses.
(6) Figures for the nine months ended March 31, 1996 and March 31, 1995 are annualized.
[Payments on the Receivables
The entire Initial Pool Balance is attributable to Receivables that
provide for the allocation of payments according to the "Simple Interest"
method (each a "Simple Interest Receivable"). See "The Receivables Pools
- --General" in the Prospectus for a description of the application of
payments received on Simple Interest Receivables.
The Receivables are prepayable at any time. Prepayments may also
result from liquidations due to default, the receipt of monthly
installments earlier than the scheduled due dates for such installments,
the receipt of proceeds from credit life, disability, theft or physical
damage insurance, repurchases by the Sellers as a result of certain uncured
breaches of the warranties made by them in the Sale and Servicing Agreement
with respect to the Receivables, purchases by the Servicer as a result of
certain uncured breaches of the covenants made by it in the Sale and
Servicing Agreement with respect to the Receivables, or the Servicer
exercising its option to purchase all of the remaining Receivables. The
rate of prepayments on the Receivables may be influenced by a variety of
economic, social and other factors, including Obligor refinancings
resulting from decreases in interest rates and the fact that the Obligor is
generally not permitted to sell or transfer the Financed Vehicle securing a
Receivable without the consent of the relevant Seller.]
[Neither DFSG, the Servicer, the Sellers nor any of their affiliates
maintains records adequate to provide quantitative data regarding
prepayment experience on the Sellers' portfolio of Motor Vehicle Loans.
However, the Sellers (i) believe that the actual rate of prepayments will
result in a substantially shorter weighted average life than the scheduled
weighted average life and (ii) estimate that the actual weighted average
life of its portfolio of Motor Vehicle Loans ranges between [60% and 70%]
of their scheduled weighted average life. See "Maturity and Prepayment
Considerations" herein and in the Prospectus.]
[Weighted Average Life of the Securities
Prepayments on automotive receivables can be measured relative to a
prepayment standard or model. The model used in this Prospectus, the
Absolute Prepayment Model ("APM"), represents an assumed rate of prepayment
each month relative to the original number of receivables in a pool of
receivables. APM further assumes that all the receivables are the same size
and amortize at the same rate and that each receivable in each month of its
life will either be paid as scheduled or be prepaid in full. For example,
in a pool of receivables originally containing 10,000 receivables, a 1% APM
rate means that 100 receivables prepay each month. APM does not purport to
be an historical description of prepayment experience or a prediction of
the anticipated rate of prepayment of any pool of receivables, including
the Receivables.
As the rate of payment of principal of each class of Notes and the
Certificates will depend on the rate of payment (including prepayments) of
the principal balance of the Receivables, final payment of any class of
Notes and the final distribution in respect of the Certificates could occur
significantly earlier than the respective [Final Scheduled Distribution
Dates] [final scheduled Payment Dates or Distribution Date]. Reinvestment
risk associated with early payment of the Notes and the Certificates will
be borne exclusively by the Noteholders and the Certificateholders,
respectively.
The table captioned "Percent of Initial Note Principal Amount or
Initial Certificate Balance at Various APM Percentages" (the "APM Table")
has been prepared on the basis of the characteristics of the [Initial]
Receivables [and certain assumed characteristics with respect to the
Subsequent Receivables]. The APM Table assumes that (i) the Receivables
prepay in full at the specified constant percentage of APM monthly, with no
defaults, losses or repurchases, (ii) each scheduled monthly payment on the
Receivables is made on the last day of each month and each month has 30
days, (iii) payments on the Notes [are made on each Payment Date] and
distributions on the Certificates are made on each Distribution Date (and
each such date is assumed to be the day of [the month in which such Payment
Date or Distribution Date occurs] [each applicable month]), (iv) the
balance in the Reserve Account on each [Payment Date and] Distribution Date
is equal to the Specified Reserve Account Balance, and (v) the Sellers
exercise their option to purchase the Receivables on the first Distribution
Date on which it is permitted to do so, as described herein. [State assumed
characteristics with respect to the Subsequent Receivables.][And/or, state
other assumptions on which the APM Table is based.] The pools have an
assumed cut-off date of ____, 199 . The APM Table indicates the projected
weighted average life of each class of Notes and the Certificates and sets
forth the percent of the initial principal amount of each class of Notes
and the percent of the initial Certificate Balance that is projected to be
outstanding after each of the [Payment Dates or] Distribution Dates shown
at various constant APM percentages. [State assumed characteristics with
respect to the hypothetical pools of Subsequent Receivables.]
The APM Table also assumes that the [Initial] Receivables have been
aggregated into hypothetical pools with all of the [Initial] Receivables
within each such pool having the following characteristics and that the
level scheduled monthly payment for each of the pools (which is based on
its aggregate principal balance, Contract Rate, original term to maturity
and remaining term to maturity as of the [Initial] Cut-Off Date) will be
such that each pool will be fully amortized by the end of its remaining
term to maturity.
Original Term Remaining Term
Aggregate Contract to Maturity to Maturity
Pool Principal Balance Rate (In Months) (in Months)
1......... $ %
2.........
3.........
4.........
-----------
===========
The actual characteristics and performance of the Receivables will
differ from the assumptions used in constructing the APM Table. The
assumptions used are hypothetical and have been provided only to give a
general sense of how the principal cash flows might behave under varying
prepayment scenarios. For example, it is very unlikely that the Receivables
will prepay at a constant level of APM until maturity or that all of the
Receivables will prepay at the same level of APM. Moreover, the diverse
terms of Receivables within each of the hypothetical pools could produce
slower or faster principal distributions than indicated in the APM Table at
the various constant percentages of APM specified, even if the original and
remaining terms to maturity of the Receivables are as assumed. Any
difference between such assumptions and the actual characteristics and
performance of the Receivables, or actual prepayment experience, will
affect the percentages of initial balances outstanding over time and the
weighted average lives of each class of Notes and the Certificates.
[Remainder of page intentionally blank]
Percent of Initial Note Principal Amount or
Initial Certificate Balance at Various APM Percentages
Class A-1 Notes Class A-2 Notes Class A-3 Notes
[Payment] ------------------------------ ------------------------------ ------------------------------
[Distribution] 0.5% 1.0% 1.5% 1.8% 0.5% 1.0% 1.5% 1.8% 0.5% 1.0% 1.5% 1.8%
------------------------------ ------------------------------ ------------------------------
Date
06/15/96....... 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
07/15/96.......
08/15/96.......
09/15/96.......
10/15/96.......
11/15/96.......
12/15/96.......
01/15/97.......
02/15/97.......
03/15/97.......
04/15/97.......
05/15/97.......
06/15/97.......
07/15/97.......
08/15/97.......
09/15/97.......
10/15/97.......
11/15/97.......
12/15/97.......
01/15/98.......
02/15/98.......
03/15/98.......
04/15/98.......
05/15/98.......
06/15/98.......
07/15/98.......
08/15/98.......
09/15/98.......
10/15/98.......
11/15/98.......
12/15/98.......
01/15/99.......
02/15/99.......
03/15/99.......
04/15/99.......
05/15/99.......
06/15/99.......
07/15/99.......
Weighted Average
Life (years)(1)...................
<FN>
(1) The weighted average life of a Class A-1 Note, Class A-2 Note, or Class A-3 Note is determined by (i) multiplying the
amount of each principal payment on a Note by the number of years from the date of the issuance of the Note to the related
[Payment] [Distribution] Date, (ii) adding the results and (iii) dividing the sum by the related initial principal
amount of the Note.
The APM Table has been prepared based on the assumptions described above
(including the assumptions regarding the characteristics and performance of
the [Initial] Receivables which will differ from the actual characteristics
and performance thereof) and should be read in conjunction therewith.
Percent of Initial Note Principal Balance or
Initial Certificate Balance at Various APM Percentages
Certificates
------------------------------------------------
Distribution Date 0.5% 1.0% 1.5% 1.8%
- --------------------------------------------------------------------
06/15/96.......... 100.000 100.000 100.000 100.000
07/15/96..........
08/15/96..........
09/15/96..........
10/15/96..........
11/15/96..........
12/15/96..........
01/15/97..........
02/15/97..........
03/15/97..........
04/15/97..........
05/15/97..........
06/15/97..........
07/15/97..........
08/15/97..........
09/15/97..........
10/15/97..........
11/15/97..........
12/15/97..........
01/15/98..........
02/15/98..........
03/15/98..........
04/15/98..........
05/15/98..........
06/15/98..........
07/15/98..........
08/15/98..........
09/15/98..........
10/15/98..........
11/15/98..........
12/15/98..........
01/15/99..........
02/15/99..........
03/15/99..........
04/15/99..........
05/15/99..........
06/15/99..........
07/15/99..........
Weighted Average
Life (years)(1)(2)................
(1) The weighted average life of a Certificate is determined by (i)
multiplying the amount of each distribution in respect of the Certificate
Balance of a Certificate by the number of years from the date of the
issuance of the Certificate to the related Distribution Date, (ii) adding
the results and (iii) dividing the sum by the original Certificate
Balance of the Certificate.
The APM Table has been prepared based on the assumptions described
above (including the assumptions regarding the characteristics and
performance of the [Initial] Receivables which will differ from the actual
characteristics and performance thereof) and should be read in conjunction
therewith.]
POOL FACTORS
The "Note Pool Factor" for [the] [each class of] Notes will be a
seven-digit decimal which the Servicer will compute prior to each
distribution with respect to such [class of] Notes indicating the remaining
outstanding principal amount of such [class of] Notes, as of the applicable
[Distribution] [Payment] Date (after giving effect to payments to be made
on such [Distribution] [Payment] Date), as a fraction of the initial
outstanding principal amount of such [class of] Notes. The "Certificate
Pool Factor" for the Certificates will be a seven-digit decimal which the
Servicer will compute prior to each distribution with respect to the
Certificates indicating the remaining Certificate Balance, as of the
applicable Distribution Date (after giving effect to distributions to be
made on such Distribution Date), as a fraction of the initial Certificate
Balance. [The] [Each] Note Pool Factor and the Certificate Pool Factor will
initially be 1.0000000 and thereafter will decline to reflect reductions in
the outstanding principal amount of the [applicable class of] Notes, or the
reduction of the Certificate Balance, as the case may be, as a result of
scheduled payments, prepayments and liquidations of the Receivables [(and
also as a result of a prepayment arising from application of the
Pre-Funding Account)]. [The] [Each] Note Pool Factor and the Certificate
Pool Factor will not change as a result of the addition of Subsequent
Receivables. A Noteholder's portion of the aggregate outstanding principal
amount of the [related class of] Notes is the product of (i) the original
denomination of such Noteholder's Note and (ii) the [applicable] Note Pool
Factor. A Certificateholder's portion of the aggregate outstanding
Certificate Balance for the Certificates is the product of (a) the original
denomination of such Certificateholder's Certificate and (b) the
Certificate Pool Factor.
MATURITY AND PREPAYMENT CONSIDERATIONS
Information regarding certain maturity and prepayment considerations
with respect to the Securities is set forth under "Maturity and Prepayment
Considerations" in the Prospectus. In addition, the [Class A-2 Notes, the
Class A-3 Notes and the] Certificates will not receive any principal
payments until the [Class A-1] Notes have been paid in full[, and the Class
A-3 Notes will not receive any principal payments until the Class A-2 Notes
have been paid in full]. In addition, no principal payments on the
Certificates will be made until the later of (i) the 199 Distribution Date
and (ii) the _____ Distribution Date next succeeding the Distribution Date on
which the [Class A-1] Notes are paid in full. See "Description of the
Notes--Payments of Principal" and "Description of the
Certificates--Distributions of Principal Payments" herein. As the rate of
payment of principal of [the] [each class of] Notes and the Certificates
depends on the rate of payment (including prepayments) of the principal
balance of the Receivables, final payment of [the] [any class of] Notes and
the final distribution in respect of the Certificates could occur
significantly earlier than the respective [Final Scheduled Distribution
Dates] [final scheduled Payment Dates or Distribution Date]. In addition,
the rate of payment of principal of [the] [each Class of] Notes and the
Certificates will be affected by the application of the Noteholders'
Accelerated Principal to pay principal of the Notes.
It is expected that final payment of [the] [each class of] Notes and
the final distribution in respect of the Certificates will occur on or
prior to the respective [Final Scheduled Distribution Dates] [final
scheduled Payment Dates or Distribution Date]. Failure to make final
payment of [the] [any class of] Notes on or prior to the respective Final
Scheduled [Payment] [Distribution] Dates would constitute an Event of
Default under the Indenture. See "Description of the Notes--The
Indenture--Events of Default; Rights upon Event of Default". In addition,
the Sale and Servicing Agreement requires that any remaining Certificate
Balance be paid in full on the Final Scheduled Distribution Date. However,
no assurance can be given that sufficient funds will be available to pay
[the] [each class of] Notes and the Certificates in full on or prior to the
respective [Final Scheduled Distribution Dates] [final scheduled Payment
Dates or Distribution Date]. If sufficient funds are not available, final
payment of [the] [any class of] Notes and the final distribution in respect
of the Certificates could occur later than such dates.
The rate of prepayments of the Receivables may be influenced by a
variety of economic, social and other factors, and under certain
circumstances relating to breaches of representations, warranties or
covenants, the Sellers and/or the Servicer will be obligated to repurchase
Receivables from the Trust. See "The Receivables Pool" herein and
"Description of the Transfer and Servicing Agreements--Sale and Assignment
of Receivables" in the Prospectus. A higher than anticipated rate of
prepayments will reduce the aggregate principal balance of the Receivables
more quickly than expected and thereby reduce anticipated aggregate
interest payments on the Securities. Any reinvestment risks resulting from
a faster or slower incidence of prepayment of Receivables will be borne
entirely by the Noteholders and the Certificateholders as set forth in the
priority of distributions herein. Such reinvestment risks include the risk
that interest rates may be lower at the time such holders received payments
from the Trust than interest rates would otherwise have been had such
prepayments not been made or had such prepayments been made at a different
time.
Holders of Securities should consider, in the case of Securities
purchased at a discount, the risk that a slower than anticipated rate of
principal payments on the Receivables could result in an actual yield that
is less than the anticipated yield and, in the case of Securities purchased
at a premium, the risk that a faster than anticipated rate of principal
payments on the Receivables could result in an actual yield that is less
than the anticipated yield.
DESCRIPTION OF THE NOTES
General
The Notes will be issued pursuant to the terms of the Indenture, a
form of which has been filed as an exhibit to the Registration Statement. A
copy of the Indenture will be filed with the Commission following the
issuance of the Securities. The following summary describes certain terms
of the Notes and the Indenture. The summary does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, all
the provisions of the Notes and the Indenture, which are hereby
incorporated by reference. The following summary supplements the
description of the general terms and provisions of the Notes of any given
series and the related Indenture set forth under the headings "Description
of the Notes" and "Certain Information Regarding the Securities" in the
Prospectus, to which description reference is hereby made.
Payments of Interest
[The] [Each class of] Notes [other than the Class A-2 Notes] will
constitute Fixed Rate Securities, as such term is defined under "Certain
Information Regarding the Securities--Fixed Rate Securities" in the
Prospectus. [The Class A-2 Notes will constitute Floating Rate Securities
which are [LIBOR] Securities, as such terms are defined under "Certain
Information Regarding the Securities--Floating Rate Securities" in the
Prospectus.] Interest on the principal amount[s] of the [classes of the]
Notes will accrue at the [respective] per annum Note Interest Rate[s] and
will be payable to the Noteholders [monthly] [quarterly] on each
[Distribution] [Payment] Date commencing ____, 199 . [However, if on any
two consecutive Distribution Dates any amount is withdrawn from the Reserve
Account to cover shortfalls on the Notes or the Certificates, then each
following Distribution Date will constitute a Payment Date, until the
quarterly Payment Date following the first Distribution Date on which (i)
no amount is withdrawn from the Reserve Account to cover shortfalls and
(ii) the amount on deposit in the Reserve Account is equal to the Specified
Reserve Account Balance.] [However, if the commercial paper rating or
certificate of deposit rating of the Investment Provider is at any time
reduced below A-1+ or P1 by the applicable Rating Agency and the Servicer
is unable to obtain a Replacement Guaranteed Rate Agreement or a pledge of
securities or otherwise satisfy the applicable Rating Agency within 60 days
of receiving notice of such decline, then each following Distribution Date
will constitute a Payment Date. See "Description of the Transfer and
Servicing Agree- ments--Guaranteed Rate Agreement" herein.] Interest will
accrue from and including the Closing Date (in the case of the first
[Distribution] [Payment] Date), or from the most recent [Distribution]
[Payment] Date on which interest has been paid to but excluding the
following [Distribution] [Payment] Date (each an "Interest Period").
[Interest on the Class A-1 Notes will be calculated on the basis of actual
days elapsed and a 365- or 366-day year, as applicable.] Interest on the
[Class A-1 Notes and] Class A-3] Notes will be calculated on the basis of a
360-day year of twelve 30-day months. [Interest on the Class A-2 Notes will
be calculated on the basis of actual days elapsed and a 360-day year.]
Interest accrued as of any [Distribution] [Payment] Date but not paid on
such [Distribution] [Payment] Date will be due on the next [Distribution]
[Payment] Date, together with interest on such amount at the [applicable]
Note Interest Rate [plus 2.00%] (to the extent lawful). [With respect to
the Class A-2 Rate, the "Index Maturity" for [LIBOR] will be [one] [three]
month[s] [(in the case of quarterly Payment Dates) and one month (in the
case of monthly Payment Dates)] and the "Interest Reset Period" for such
calculation will be the Interest Period. See "Certain Information Regarding
the Securities--Floating Rate Securities" in the Prospectus.] Interest
payments on the Notes will generally be derived from the Available Funds
remaining after the payment of the Servicing Fee and from the Reserve
Account. See "Description of the Transfer and Servicing
Agreements--Distributions" and "--Reserve Account" herein. [Interest
payments to all classes of Noteholders will have the same priority. Under
certain circumstances, the amount available for interest payments could be
less than the amount of interest payable on the Notes on any [Distribution]
[Payment] Date, in which case each class of Noteholders will receive their
ratable share (based upon the aggregate amount of interest due to such
class of Noteholders) of the aggregate amount avail- able to be distributed
in respect of interest on the Notes.] [The [Class ] Noteholders will not
receive any distributions of interest on a [Distribution] [Payment] Date
unless the full amount of interest on the [Class Notes] [and the Class
Notes] due on such [Distribution] [Payment] Date has been or will be paid
on such [Distribution] [Payment] Date.]
Payments of Principal
Principal payments will be made [quarterly] to the Noteholders on each
[Distribution] [Payment] Date in an amount generally equal to the sum [,
for each of the three Collection Periods preceding such Payment Date,] of
(i) the Noteholders' Percentage of the amount (such amount, the "Regular
Principal") equal to the sum of (a) the principal portion of all payments
collected, and (b) the principal balance of each Receivable purchased by
the Servicer, repurchased by the Sellers or liquidated by the Servicer,
each with respect to the preceding Collection Period, plus (ii) _____% of
the portion, if any, of the Available Funds for such Collection Period that
remains after payment of (a) the Servicing Fee, (b) the Accrued Note
Interest, (c) the portion of the Regular Principal allocated to the
Noteholders pursuant to clause (i), (d) the Accrued Certificate Interest,
(e) the portion of the Regular Principal distributed to Certificateholders
as described under "Description of the Certificates--Distributions of
Principal Payments" herein, and (f) the amount, if any, required to be
deposited in the Reserve Account on [such] [the related] Distribution Date
[plus the excess of the amount on deposit in the Reserve Account on such
Distribution Date (after giving effect to all deposits or withdrawals
therefrom on such Distribution Date) over the Specified Reserve Account
Balance)] (such percentage of the remaining portion of Available Funds
[plus such excess], the "Noteholders' Accelerated Principal"). [Principal]
[Amounts deposited in the Note Payment Account on each Distribution Date in
respect of principal] payments on the Notes generally will be derived from
the Available Funds and the amount, if any, in the Reserve Account up to
the Available Reserve Amount remaining after the payment of the Servicing
Fee and the Accrued Note Interest and, in the case of the Noteholders'
Accelerated Principal, the Certificateholders' Distribution Amount and the
amount, if any, required to be deposited into the Reserve Account. See
"Description of the Transfer and Servicing Agreements--Distributions" and
"--Reserve Account" herein.
On the fifth Business Day preceding each Distribution Date (a
"Determination Date") the Indenture Trustee will determine the amount in
the Collection Account allocable to interest and the amount allocable to
principal on the basis described under "Description of the Transfer and
Servicing Agreements--Distributions" in the Prospectus, and payments to
Securityholders on the following Distribution Date will be based on such
allocation.
[On each Distribution Date, the Indenture Trustee will deposit into
the Note Payment Account amounts set aside for the payment of principal and
interest on the Notes on the related Payment Date, as described under
"Description of the Transfer and Servicing Agreements--Distributions"
herein. Such amounts will be invested from the date of deposit to the
related Payment Date by the Indenture Trustee in [Permitted Investments]
[certain eligible investments pursuant to the Guaranteed Rate Agreement].
[See "Description of the Transfer and Servicing Agree- ments--Guaranteed
Rate Agreement" herein.]]
Principal payments on the Notes will be applied on each [Distribution]
[Payment] Date [, first,] to the principal amount of the [Class A-1] Notes
until such principal amount is reduced to zero[, then second, to the
principal amount of the Class A-2 Notes until such principal amount is
reduced to zero and then third, to the principal amount of the Class A-3
Notes until such principal amount is reduced to zero]. The principal amount
of the [Class A-1] Notes, to the extent not previously paid, will be due on
the [Class A-1] Final Scheduled [Distribution] [Payment] Date[, the
principal amount of the Class A-2 Notes, to the extent not previously paid,
will be due on the Class A-2 Final Scheduled [Distribution] [Payment] Date,
and the principal amount of the Class A-3 Notes, to the extent not
previously paid, will be due on the Class A-3 Final Scheduled
[Distribution] [Payment] Date]. The actual date on which the aggregate
outstanding principal amount of [the] [any class of] Notes is paid may be
earlier or later than the [respective] Final Scheduled [Distribution]
[Payment] Date[s] set forth above based on a variety of factors, including
those described under "Maturity and Prepayment Considerations" herein and
in the Prospectus.
[Mandatory Redemption
[The] [A class or classes of] Notes will be redeemed in part on the
Distribution Date on or immediately following the last day of the Funding
Period in the event that amounts remain on deposit in the Pre-Funding
Account after giving effect to the purchase of all Subsequent Receivables,
including any such purchase on such date (a "Mandatory Redemption"). If the
amount on deposit in the Pre-Funding Account is less than or equal to $_____,
then such amount will be used to redeem the [Class A-1] Notes [up to an
amount not to exceed their outstanding principal amount and then to redeem
the Class A-2 Notes]. Otherwise the amount on deposit in the Pre-Funding
Account on such date will be used to redeem [each class of] the Notes and
the Certificates, and the aggregate princi- pal amount of [each class of]
the Notes to be redeemed will be an amount equal to [the Notes'] [such
class'] Pre-Funded Percentage of the amount then on deposit in the
Pre-Funding Account.
[The Note Prepayment Premium will be payable by the Trust to the
Noteholders pursuant to a Mandatory Redemption if the amount on deposit in
the Pre-Funding Account exceeds $____ . The Note Prepayment Premium [for
each class of Notes] will equal the excess, if any, discounted as described
below, of (i) the amount of interest that would accrue on [the Notes']
[such class'] Pre-Funded Percentage of any remaining Pre-Funded Amount (the
"Note Prepayment Amount") at the Note Interest Rate borne by [the] [such
class of] Notes during the period commencing on and including the
Distribution Date on which such Note Prepayment Amount is required to be
distributed to the Noteholders [of such Class] to but excluding ____[, in the
case of the Class A-1 Notes, ____, in the case of the Class A-2 Notes and
_____, in the case of the Class A-3 Notes], over (ii) the amount of
interest that would have accrued on such Note Prepayment Amount over the
same period at a per annum rate of interest equal to the bond equivalent
yield to maturity on the Determination Date preceding such Distribution
Date on the _____ [, in the case of the Class A-1 Notes, the _____, in the
case of the Class A-2 Notes and the _____, in the case of the Class A-3
Notes]. Such excess shall be discounted to present value to such
Distribution Date at the applicable yield described in clause (ii) above.
Pursuant to the Sale and Servicing Agreement, the Sellers will be obligated
to pay the sum of the Note Prepayment Premium [for each class of Notes] and
the Certificate Prepayment Premium to the Trust as liquidated damages for
the failure to deliver Subsequent Receivables having an aggregate principal
balance equal to the Pre-Funded Amount. The Trust's obligation to pay the
Note Prepayment Premium [for each class of Notes] and the Certificate
Prepayment Premium will be limited to funds received from the Sellers
pursuant to the preceding sentence. In the event that such funds are
insufficient to pay the Note Prepayment Premium [for each class of Notes]
and the Certificate Prepayment Premium in full, Noteholders [of each class
of Notes] will receive their ratable share (based upon the aggregate Note
Prepayment Premium [for such class]) of the aggregate amount available to
be distributed in respect of the Note Prepayment Premium and the
Certificate Prepayment Premium. No other assets of the Sellers or the Trust
will be available for the purpose of making such payment.]]
Optional Redemption
The [Class A-3] Notes will be redeemed in whole, but not in part, on
any Distribution Date [after all the other classes of Notes have been paid
in full] on which the Servicer exercises its option to purchase the
Receivables. The Servicer may purchase the Receivables when the Pool
Balance shall have declined to 5% or less of the Initial Pool Balance, as
described in the Prospectus under "Description of the Transfer and
Servicing Agreements--Termination." The redemption price will be equal to
the unpaid principal amount of the [Class A-3] Notes plus accrued and
unpaid interest thereon (the "Redemption Price"). No prepayment premium
will be payable to Noteholders in connection with any such optional
redemption.
DESCRIPTION OF THE CERTIFICATES
General
The Certificates will be issued pursuant to the terms of the Trust
Agreement, a form of which has been filed as an exhibit to the Registration
Statement. A copy of the Trust Agreement will be filed with the Commission
following the issuance of the Securities. The following summary describes
certain terms of the Certificates and the Trust Agreement. The summary does
not purport to be complete and is subject to, and qualified in its entirety
by reference to, all the provisions of the Certificates and the Trust
Agreement. The following summary supplements the description of the general
terms and provisions of the Certificates of any given series and the
related Trust Agreement set forth under the headings "Description of the
Certificates," "Certain Information Regarding the Securities" and
"Description of the Transfer and Servicing Agreements" in the Prospectus,
to which description reference is hereby made.
Distributions of Interest Income
On each Distribution Date, commencing ____, 199 , the
Certificateholders will be entitled to distributions in an amount equal to
the amount of interest that would accrue on the Certificate Balance at the
Certificate Rate. The Certificates will constitute Fixed Rate Securities,
as such term is defined under "Certain Information Regarding the
Securities--Fixed Rate Securities" in the Prospectus. Interest in respect
of a Distribution Date will accrue from and including the Closing Date (in
the case of the first Distribution Date) or from and including the most
recent Distribution Date on which interest has been paid to but excluding
the following Distribution Date, and will be calculated on the basis of a
360-day year of twelve 30-day months. Interest distributions due for any
Distri- bution Date but not distributed on such Distribution Date will be
due on the next Distribution Date increased by an amount equal to interest
on such amount at the Certificate Rate (to the extent lawful). Interest
distributions with respect to the Certificates will generally be funded
from the portion of the Available Funds and the funds in the Reserve
Account remaining after the distribution of the Servicing Fee and the
Noteholders' Payment Amount. Following the occurrence of an Event of
Default resulting in an acceleration of the Notes or following an
Insolvency Event or a dissolution with respect to any of the Sellers or
[NB-SPC], the Noteholders will be entitled to be paid in full before any
distributions may be made on the Certificates. See "Description of the
Transfer and Servicing Agreements--Distributions" and "--Reserve Account"
herein.
Distributions of Principal Payments
Certificateholders will be entitled to distributions on each
Distribution Date, commencing with the later of (i) the _____ Distribution
Date and (ii) the _____ Distribution Date next succeeding the Distribution Date
on which the [Class A-1] Notes are paid in full, in an amount generally
equal to the Certificateholders' Percentage of the Regular Principal.
Distributions with respect to principal payments will generally be funded
from the portion of the Available Funds and funds in the Reserve Account
remaining after the distribution of the Servicing Fee, the Noteholders'
Payment Amount and the Accrued Certificate Interest. See "Description of
the Transfer and Servicing Agreements--Distributions" and "--Reserve
Account" herein. However, following the occurrence of an Event of Default
resulting in an acceleration of the Notes or following an Insolvency Event
or a dissolution with respect to any of the Sellers or [NB-SPC], the
Noteholders will be entitled to be paid in full before any distributions
may be made on the Certificates. [In addition, upon any reduction or
withdrawal by any Rating Agency of its rating of [any class of] the Notes,
then, with respect to each Distribution Date thereafter, the
Certificateholders will not receive any distributions of principal until
all the Notes have been paid in full or such rating has been restored.
There can be no assurance that a rating will remain for a given period of
time or that a rating will not be lowered or withdrawn entirely by a Rating
Agency if in its judgment circumstances in the future so warrant.]
[Mandatory Repurchase of Certificates
Cash distributions to Certificateholders will be made, on a pro rata
basis, on the Distribution Date on or immediately following the last day of
the Funding Period in the event that the amount on deposit in the
Pre-Funding Account after giving effect to the purchase of all Subsequent
Receivables, including any such purchase on such date, exceeds $_____ (a
"Mandatory Repurchase"). The aggregate principal balance of the
Certificates to be repurchased will be an amount equal to the Certificates'
Pre-Funded Percentage of the amount then on deposit in the Pre-Funding
Account.
[The Certificate Prepayment Premium will be payable by the Trust to
the Certificateholders at the time of any prepayment of the Certificates
pursuant to a Mandatory Repurchase. The Certificate Prepayment Premium for
the Certificates will equal the excess, if any, discounted as described
below, of (i) the amount of interest that would accrue on the Certificates'
share of any remaining Pre-Funded Amount (the "Certificate Prepayment
Amount") at the Certificate Rate during the period commencing on and
including the Distribution Date on which such Certificate Prepayment Amount
is required to be distributed to Certificateholders to but excluding _____,
over (ii) the amount of interest that would have accrued on such
Certificate Prepayment Amount over the same period at a per annum rate of
interest equal to the bond equivalent yield to maturity on the
Determination Date preceding such Distribution Date on the _____. Such
excess shall be discounted to present value to such Distribution Date at
the yield de- scribed in clause (ii) above. Pursuant to the Sale and
Servicing Agreement, the Sellers will be obligated to pay the sum of the
Note Prepayment Premium [for each class of Notes] and the Certificate
Prepayment Premium to the Trust as liquidated damages for the failure to
deliver Subsequent Receivables having an aggregate principal balance equal
to the Pre-Funded Amount. The Trust's obligation to pay the Note Prepayment
Premium [for each class of Notes] and the Certificate Prepayment Premium
will be limited to funds received from the Sellers pursuant to the
preceding sentence. In the event that such funds are insufficient to pay
the Note Prepayment Premium [for each class of Notes] and the Certificate
Prepayment Premium in full, Certificateholders will receive their ratable
share (based upon the aggregate Certificate Prepayment Premium) of the
aggregate amount available to be distributed in respect of the Note
Prepayment Premium and the Certificate Prepayment Premium. No other assets
of the Trust will be available for the purpose of making such payment.]]
Optional Prepayment
If the Servicer exercises its option to purchase the Receivables when
the Pool Balance declines to 5% or less of the Initial Pool Balance,
Certificateholders will receive an amount in respect of the Certificates
equal to the outstanding Certificate Balance together with accrued interest
at the Certificate Rate, which distribution shall effect the early
retirement of the Certificates. See "Description of the Transfer and
Servicing Agreements--Termination" in the Prospectus. No prepayment premium
will be payable to Certificateholders in connection with any such
prepayment.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of the Sale and
Servicing Agreement, the Administration Agreement and the Trust Agreement
(collectively, the "Transfer and Servicing Agreements"). Forms of the
Trans- fer and Servicing Agreements have been filed as exhibits to the
Registration Statement. A copy of the Transfer and Servicing Agreements
will be filed with the Commission following the issuance of the Securities.
The summary does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all the provisions of the
Transfer and Servicing Agreements. The following summary supplements the
description of the general terms and provisions of the Transfer and
Servicing Agreements set forth under the headings "Description of the
Transfer and Servicing Agreements" in the Prospectus, to which description
reference is hereby made.
[Sale and Assignment of Receivables; Subsequent Receivables
Certain information with respect to the conveyance of the Initial
Receivables from the Sellers to the Trust on the Closing Date pursuant to
the Sale and Servicing Agreement is set forth under "Description of the
Transfer and Servicing Agreements--Sale and Assignment of Receivables" in
the Prospectus. In addition, during the Funding Period, pursuant to the
Sale and Servicing Agreement, the Sellers will be obligated to sell to the
Trust Subsequent Receivables having an aggregate principal balance equal to
approximately $_____ (such amount being equal to the initial Pre-Funded
Amount) to the extent that such Subsequent Receivables are available.
During the Funding Period on each Subsequent Transfer Date, subject to
the conditions described below, the Sellers will sell and assign to the
Trust, without recourse, the Sellers' entire interest in the Subsequent
Receivables designated by the Sellers as of the related Subsequent Cut-Off
Date and identified in a schedule attached to a subsequent transfer
assignment relating to such Subsequent Receivables executed on such date by
the Seller. It is expected that on the Closing Date, subject to the
conditions described below, certain of the Subsequent Receivables
designated by the Sellers and arising between the Initial Cut-Off Dates and
the Closing Date will be conveyed to the Trust. Upon the conveyance of
Subsequent Receivables to the Trust on a Subsequent Transfer Date, (i) the
Pool Balance will increase in an amount equal to the aggregate principal
balances of the Subsequent Receivables, (ii) an amount equal to % of the
aggregate principal balance of such Subsequent Receivables will be
withdrawn from the Pre-Funding Account and will be deposited in the Reserve
Account and (iii) an amount equal to the excess of the aggregate principal
balances of such Subsequent Receivables over the amount described in clause
(ii) will be withdrawn from the Pre-Funding Account and paid to the
Sellers.] [Coincident with each such transfer of Subsequent Receivables,
the Yield Supplement Agreement will require the Sellers to deposit into the
Yield Supplement Account an amount equal to the Additional Yield Supplement
Amount, if any, in respect of such Subsequent Receivables. See "--Yield
Supplement Account; Yield Supplement Agreement" herein.]
[Any conveyance of Subsequent Receivables is subject to the
satisfaction, on or before the related Subsequent Transfer Date, of the
following conditions precedent, among others: (i) each such Subsequent
Receivable must satisfy the eligibility criteria specified in the Sale and
Servicing Agreement; (ii) the Sellers will not have selected such
Subsequent Receivables in a manner that they believe is adverse to the
interests of the Noteholders or the Certificateholders; (iii) as of the
related Subsequent Cut-Off Date, the Receivables, including any Subsequent
Receivables conveyed by the Sellers as of such Subsequent Cut-Off Date,
satisfy the criteria described under "The Receivables Pool" herein and "The
Receivables Pools" in the Prospectus; (iv) the applicable Additional
Reserve Account Deposit [and the applicable Additional Yield Supplement
Amount, if any] for such Subsequent Transfer Date shall have been made; and
(v) the Sellers shall have executed and delivered to the Trust (with a copy
to the Indenture Trustee) a written assignment conveying such Subsequent
Receivables to the Trust (including a schedule identifying such Subsequent
Receivables). Moreover, any such conveyance of Subsequent Receivables made
during any given Collection Period will also be subject to the
satisfaction, on or before the fifteenth day of the month following the end
of such Collection Period, of the following conditions subsequent, among
others: (i) the Sellers will have delivered certain opinions of counsel to
the Owner Trustee, the Indenture Trustee and the Rating Agencies with
respect to the validity of the conveyance of all such Subsequent
Receivables conveyed during such Collection Period; (ii) the Trust and the
Indenture Trustee shall have received written confirmation from a firm of
independent certified public accountants that, as of the end of the
preceding Collection Period, the Receivables in the Trust at that time,
including the Subsequent Receivables conveyed by the Sellers during each
Collection Period, satisfied the parameters described under "The
Receivables Pool" herein and under "The Receivables Pools" in the
Prospectus; and (iii) each of the Rating Agencies shall have notified the
Sellers in writing that, following the addition of all such Subsequent
Receivables, each class of the Notes and the Certificates will be rated by
the Rating Agencies in the same rating category as they were rated by the
Rating Agencies on the Closing Date. The Sellers will immediately
repurchase any Subsequent Receivable, at a price equal to the Purchase
Amount thereof, upon the failure of the Sellers to satisfy any of the
foregoing conditions subsequent with respect thereto.]
[Subsequent Receivables may have been originated by the Sellers at a
later date using credit criteria dif- ferent from those which were applied
to the Initial Receivables. See "Risk Factors--The Subsequent Receivables
and the Pre-Funding Account" and "The Receivables Pool" herein.]]
Accounts
In addition to the Accounts referred to under "Description of the
Transfer and Servicing Agreements--Accounts" in the Prospectus, the
Servicer will also establish and will maintain with the Indenture Trustee
[the Pre-Funding Account] [the Yield Supplement Account] [and] the Reserve
Account, in the name of the Indenture Trustee on behalf of the Noteholders
and the Certificateholders.
Servicing Compensation and Expenses
The Servicing Fee Rate with respect to the Servicing Fee for the
Servicer will be [1.00]% per annum of the Pool Balance as of the first day
of the related Collection Period. The Servicing Fee (together with any
portion of the Servicing Fee that remains unpaid from prior Distribution
Dates) will be paid on each Distribution Date solely to the extent of the
Available Interest. The Servicer is also entitled to receive a supplemental
servicing fee (the "Supplemental Servicing Fee") for each Collection Period
equal to any late, prepayment, and other administrative fees and expenses
collected during the Collection Period[, plus any interest earned during
the Collection Period on deposits made with respect to the Receivables].
See "Description of the Transfer and Servicing Agree- ments--Servicing
Compensation and Expenses" in the Prospectus.
[Advances] [Advance Reserve Withdrawals]
[Servicer Advances. As of the last day of each Collection Period, the
Servicer will, subject to the limitations described in the following
sentence, make a payment (an "Advance") with respect to each Receivable
(other than a Defaulted Receivable) in an amount equal to the excess, if
any, of (x) the amount of interest due on such Receivable at its applicable
Contract Rate, over (y) the interest actually received by the Servicer with
respect to such Receivable (whether from the Obligor, [the Yield Supplement
Agreement] or payments of the Purchase Amount) during or with respect to
such Collection Period. The Servicer may elect not to make an Advance of
due and unpaid interest with respect to a Receivable to the extent that the
Servicer, in its sole discretion, determines that such Advance is not
recoverable from subsequent payments on such Receivable or from funds in
the Reserve Account.
To the extent that the amount set forth in clause (y)
above with respect to a Receivable is greater than the amount set forth in
clause (x) above with respect thereto, such amount shall be distributed to
the Servicer on the related Distribution Date. Any such payment will only
be from accrued interest due from the Obligor under such Receivable.
The Servicer will deposit Advances, if any, into the Collection
Account on the applicable Deposit Date.]
[Advance Reserve Withdrawals. The Servicer shall, as of the last day
of the Collection Period, withdraw from the Reserve Account funds in an
amount with respect to each Receivable (other than a Defaulted Receivable)
equal to the excess, if any, of (x) the amount of interest due on such
Receivable at its applicable Contract Rate, over (y) the interest actually
received by the Servicer with respect to such Receivable (whether from the
Obligor, [the Yield Supplement Agreement] or payments of the Purchase
Amount) during or with respect to such Collection Period (the "Advance
Reserve Withdrawal"). The Servicer will deposit Advance Reserve
Withdrawals, if any, into the Collection Account on the applicable Deposit
Date.]
Distributions
Deposits to Collection Account. On or before each Determination Date,
the Servicer will provide the Trust- ee with a certificate (the "Servicer's
Certificate") containing certain information with respect to the preceding
Collection Period, including the amount of aggregate collections on the
Receivables during such Collection Period, the aggregate amount of
Receivables which became Defaulted Receivables during such Collection
Period, [the Yield Supplement Deposit Amount,] the aggregate Purchase
Amounts of Receivables to be repurchased by the Sellers or to be purchased
by the Servicer on the related Deposit Date [and the aggregate amount to be
withdrawn from the Reserve Account].
On or before each Deposit Date (a) the Servicer will cause all
Collections and Liquidation Proceeds and Recoveries to be deposited into
the Collection Account and will deposit into the Collection Account all
Purchase Amounts of Receivables to be purchased by the Servicer on such
Deposit Date, (b) the Sellers will deposit into the Collection Account all
Purchase Amounts of Receivables to be repurchased by the Sellers on such
Deposit Date, (c) the Servicer will deposit [all Advances for the related
Distribution Date into the Collection Account] [the amount of the Advance
Reserve Withdrawal with respect to the related Distribution Date] [and (d)
the Sellers (or, in certain circumstances, the Collateral Agent) will
deposit the Yield Supplement Deposit Amount for the related Distribution
Date into the Collection Account].
"Available Funds" means, with respect to a Distribution Date, the sum
of the Available Interest and the Available Principal.
"Available Interest" means, with respect to any Distribution Date,
[the excess of (a)] the sum of (i) Interest Collections for such
Distribution Date, [(ii) the Yield Supplement Deposit Amount for such
Distribution Date], [(iii) [all Advances][the proceeds of any Advance
Reserve Withdrawal] made by the Servicer with respect to such Distri-
bution Date], [(iv) Investment Earnings for such Distribution Date,] [(v)
the payments, if any, received under the Interest Rate Cap for such
Distribution Date,] [and (vi) the Net Trust Swap Receipt, if any, for such
Distribution Date], [over (b) the amount of certain Advances previously
made but not reimbursed (each, an "Outstanding Advance") to be reimbursed
on or with respect to such Distribution Date].
"Available Principal" means, with respect to any Distribution Date,
the sum of the following amounts with respect to the preceding Collection
Period: (i) that portion of all Collections on the Receivables allocable to
principal in accordance with the terms of the Receivables and the
Servicer's customary servicing procedures; (ii) to the extent attributable
to principal, the Purchase Amount received with respect to each Receivable
repurchased by the Sellers or purchased by the Servicer under an obligation
which arose during the related Collection Period; and (iii) all Liquidation
Proceeds, to the extent allocable to principal, received during such
Collection Period. "Available Principal" on any Distribution Date shall
exclude all payments and proceeds of any Receivables the Purchase Amount of
which has been distributed on a prior Distribution Date.
"Collections" mean, with respect to any Distribution Date, all
collections on the Receivables.
"Defaulted Receivable" means, with respect to any Collection Period, a
Receivable (other than a Purchased Receivable) which the Servicer, on
behalf of the Trust, has determined to charge off during such Collection
Period in accordance with its customary servicing practices.
"Interest Collections" mean, with respect to any Distribution Date,
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 accordance with the terms of the Receivables and the Servicer's
customary servicing procedures; (ii) all Liquidation Proceeds, to the
extent allocable to interest, received during such Collection Period; (iii)
all Recoveries on Receivables which became Defaulted Receivables received
during any Collection Period following the Collection Period in which such
Receivable became a Defaulted Receivable; and (iv) to the extent
attributable to accrued interest, the Purchase Amount with respect to each
Receivable repurchased by the Sellers or purchased by the Servicer under an
obligation which arose during such Collection Period. "Interest
Collections" for any Distribution Date shall exclude all payments and
proceeds of any Receivables the Purchase Amount of which has been
distributed on a prior Distribution Date.
"Liquidation Proceeds" mean, with respect to any Distribution Date and
a Receivable that has become a Defaulted Receivable during a related
Collection Period, (i) insurance proceeds received during such Collection
Period by the Servicer, with respect to insurance policies relating to the
Financed Vehicle or the Obligor, (ii) amounts received by the Servicer
during such Collection Period from a Dealer in connection with such
Defaulted Receivable pursuant to the exercise of rights under a Dealer
Agreement, and (iii) the monies collected by the Servicer (from whatever
source, including, but not limited to proceeds of a sale of a Financed
Vehicle or deficiency balance recovered after the charge off of the related
Receivable) during such Collection Period on such Defaulted Receivable net
of any fees, costs and expenses incurred by the Servicer in connection
therewith and any payments required by law to be remitted to the Obligor.
Liquidation Proceeds shall be applied first to accrued and unpaid interest
on the Receivable and then to the principal balance thereof.
"Purchased Receivable" means, at any time, a Receivable as to which
payment of the Purchase Amount has previously been made by the Sellers or
the Servicer pursuant to the Sale and Servicing Agreement.
"Recoveries" mean, with respect to any Collection Period, all monies
received by the Servicer with respect to any Defaulted Receivable during
any Collection Period following the Collection Period in which such
Receivable became a Defaulted Receivable, net of any fees, costs and
expenses incurred by the Servicer in connection with the collection of such
Receivable and any payments required by law to be remitted to the Obligor.
[The Available Interest and the Available Principal on any
Distribution Date shall exclude the following: (i) amounts received in
respect of interest on Simple Interest Receivables during the preceding
Collection Period in excess of the amount of interest that would have been
due during the Collection Period on Simple Interest Receiv- ables at their
respective Contract Rates (assuming that a payment is received on each
Simple Interest Receivable on the due date thereof), [and] (ii) Liquidation
Proceeds with respect to a Simple Interest Receivable attributable to
accrued and unpaid interest thereon (but not including interest for the
then current Collection Period) but only to the extent of any unreimbursed
Outstanding Advances[, and (iii) amounts released from the Pre-Funding
Account.]]
Monthly Withdrawals from Collection Account. On each Distribution
Date, the Servicer will allocate amounts on deposit in the Collection
Account as described under "Description of the Transfer and Servicing
Agree- ments--Distributions--Allocation of Collections on Receivables" in
the Prospectus and will instruct the Indenture Trustee to make the
following deposits and distributions, to the extent of the amount then on
deposit in the Col- lection Account, in the following order of priority:
(i) to the Servicer, from the Available Interest (as so
allocated), the Servicing Fee and all unpaid Servicing Fees from prior
Collection Periods;
(ii) to the Note Payment Account, from the Available Funds
remaining after the application of clause (i), the Accrued Note
Interest [and the Net Trust Swap Payment, if any];
(iii) to the Note Payment Account, from the Available Funds
remaining after the application of clauses (i) and (ii), the
Noteholders' Principal Payment Amount;
(iv) to the Certificate Distribution Account, from the Available
Funds remaining after the application of clauses (i) through (iii),
the Accrued Certificate Interest;
(v) to the Certificate Distribution Account, from the Available
Funds remaining after the application of clauses (i) through (iv), the
Certificateholders' Principal Distribution Amount; and
(vi) to the Reserve Account, the Available Funds remaining after
the application of clauses (i) through (v).
Notwithstanding the foregoing, following the occurrence and during the
continuation of an Event of Default which has resulted in an acceleration
of the Notes or following an Insolvency Event with respect to any of the
Sellers or [NB-SPC], the Available Funds remaining after the application of
clauses (i) and (ii) above will be deposited in the Note Payment Account to
the extent necessary to reduce the principal amount of all the Notes to
zero, and the Certificateholders will not receive any distributions until
the principal amount and accrued interest on the Notes has been paid in
full.
On each Determination Date (other than the first Determination Date),
the Servicer will provide the Indenture Trustee with certain information
with respect to the Collection Period related to the prior Distribution
Date, including the amount of aggregate collections on the Receivables, the
aggregate amount of Receivables which were written off, the aggregate
Advances to be made by the Servicer and the aggregate Purchase Amount of
Re- ceivables to be repurchased by the Sellers or to be purchased by the
Servicer.
For purposes hereof, the following terms shall have the following
meanings:
"Accrued Note Interest" means, with respect to any Distribution Date,
the sum of the Noteholders' Monthly Accrued Interest for such Distribution
Date and the Noteholders' Interest Carryover Shortfall for such
Distribution Date.
"Noteholders' Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of the Noteholders' Monthly Accrued Interest
for the preceding Distribution Date and any outstanding Noteholders'
Interest Carryover Shortfall on such preceding Distribution Date, over the
amount in respect of interest that is actually deposited in the Note
Payment Account on such preceding Distribution Date, plus interest on the
amount of interest due but not paid to Noteholders on the preceding
[Distribution] [Payment] Date, to the extent permitted by law, at the
[respective] Note Interest Rate[s] borne by [each class of] the Notes for
the [related Interest Period] [period from and including the prior
Distribution Date to but excluding such Distribution Date] [plus 2.00% per
annum].
"Noteholders' Monthly Accrued Interest" means, with respect to any
Distribution Date, interest accrued for the [related Interest Period]
[period from and including the Closing Date (in the case of the first
Distribution Date) or from and including the prior Distribution Date to but
excluding such Distribution Date] on [the] [each class of] Notes at the
[respective] Note Interest Rate [for such class] on the outstanding
principal amount of the Notes [of such class] on the immediately preceding
[Distribution] [Payment] Date after giving effect to all payments of
principal to the Noteholders [of such class] on or prior to such
[Distribution] [Payment] Date (or, in the case of the first [Distribution]
[Payment] Date, on the Closing Date).
"Noteholders' Monthly Principal" means, with respect to any
Distribution Date, the sum of (i) the Noteholders' Percentage of the
Regular Principal and (ii) the Noteholders' Accelerated Principal. [Or,
state other formula for determining the Noteholders' Monthly Principal.]
"Noteholders' Payment Amount" means, with respect to any Distribution Date,
the sum of the Noteholders' Principal Payment Amount and the Accrued Note
Interest. "Noteholders' Percentage" means (i) 100% for each Distribution
Date to and including the later to occur of (x) the Distribution Date next
succeeding the Distribution Date, on which the principal amount of the
[Class A-1] Notes is reduced to zero [and (y) the _____ 199 Distribution
Date], (ii) for each Distribution Date thereafter to and including the
Distribution Date on which the principal amount of the [Class A-3] Notes is
reduced to zero, the percentage equivalent of a fraction, the numerator of
which is the outstanding principal amount of the Notes on the Distribution
Date immediately preceding the Distribution Date for which the Noteholders'
Percentage is being calculated (after giving effect to all distributions
made on such immediately preceding Distribution Date) and the denominator
of which is the Pool[/Pre-Funding] Balance on the last day of the
Collection Period second preceding the Distribution Date for which the
Noteholders' Percentage is being calculated, [unless the Reserve Account
balance is less than [ % of] the Specified Reserve Account Balance, then
the Noteholders' Percentage shall be %,] and (iii) zero for each
Distribution Date thereafter [; provided, however, upon any reduction or
withdrawal by any Rating Agency of its rating of [the] [any class of]
Notes, then, with respect to each Distribution Date thereafter until the
principal amount of all the Notes is paid in full or such rating is
restored, the Noteholders' Percentage shall mean 100%]. [Or, state other
methods for determining the Noteholders' Percentage.]
"Noteholders' Principal Carryover Shortfall" means, as of the close of
any Distribution Date, the excess of the Noteholders' Monthly Principal and
any outstanding Noteholders' Principal Carryover Shortfall from the
preceding Distribution Date over the amount in respect of principal that is
actually deposited in the Note Payment Account.
"Noteholders' Principal Payment Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Monthly Principal for such
Distribution Date and the Noteholders' Principal Carryover Shortfall as of
the close of the preceding Distribution Date; provided, however, that the
Noteholders' Principal Payment Amount shall not exceed the outstanding
principal amount of the Notes; and provided, further, that (i) the
Noteholders' Principal Payment Amount on the [Class A-1] Final Scheduled
[Distribution] [Payment] Date shall not be less than the amount that is
necessary (after giving effect to other amounts [on deposit and] to be
deposited in the Note Payment Account on such Distribution Date and
allocable to principal) to reduce the outstanding principal amount of the
[Class A-1] Notes to zero[; (ii) the Noteholders' Principal Payment Amount
on the Class A-2 Final Scheduled [Distribution] [Payment] Date shall not be
less than the amount that is necessary (after giving effect to other
amounts [on deposit and] to be deposited in the Note Payment Account on
such Distribution Date and allocable to principal) to reduce the
outstanding principal amount of the Class A-2 Notes to zero; and (iii) on
the Class A-3 Final Scheduled [Distribution] [Payment] Date the
Noteholders' Principal Payment Amount shall not be less than the amount
that is necessary (after giving effect to other amounts [on deposit and] to
be deposited in the Note Payment Account on such Distribution Date and
allocable to principal) to reduce the outstanding principal amount of the
Class A-3 Notes to zero].
"Accrued Certificate Interest" means, with respect to any Distribution
Date, the sum of the Certificateholders' Monthly Accrued Interest for such
Distribution Date and the Certificateholders' Interest Carryover Shortfall
for such Distribution Date.
"Certificate Balance" equals, initially, $_____ and, thereafter,
equals the initial Certificate Balance, reduced by all amounts allocable to
principal previously distributed to Certificateholders.
"Certificateholders' Distribution Amount" means, with respect to any
Distribution Date, the sum of the Certificateholders' Principal
Distribution Amount and the Accrued Certificate Interest.
"Certificateholders' Interest Carryover Shortfall" means, with respect
to any Distribution Date, the excess of the Certificateholders' Monthly
Accrued Interest for the preceding Distribution Date and any outstanding
Certificateholders' Interest Carryover Shortfall on such preceding
Distribution Date, over the amount in respect of interest that is actually
deposited in the Certificate Distribution Account on such preceding
Distribution Date, plus interest on such excess, to the extent permitted by
law, at the Certificate Rate for the related Interest Period.
"Certificateholders' Monthly Accrued Interest" means, with respect to
any Distribution Date, 30 days of interest (or, in the case of the first
Distribution Date, interest accrued from and including the Closing Date to
but excluding such Distribution Date) at the Certificate Rate on the
Certificate Balance on the immediately preceding Distribution Date, after
giving effect to all payments allocable to the reduction of the Certificate
Balance made on or prior to such Distribution Date (or, in the case of the
first Distribution Date, on the Closing Date).
"Certificateholders' Monthly Principal" means, with respect to any
Distribution Date, the Certificateholders' Percentage of the Regular
Principal. [Or, state other method for determining the Certificateholders'
Monthly Principal.]
"Certificateholders' Percentage" means (i) for each Distribution Date
to and including the later to occur of (x) the Distribution Date next
succeeding the Distribution Date on which the principal amount of [all
classes of] the [Class A-1] Notes is reduced to zero [and (y) the _____ 199
Distribution Date], zero, and (ii) for each Distribution Date thereafter to
and including the Distribution Date on which the Certificate Balance is
reduced to zero, the percentage equivalent of a fraction, the numerator of
which is the outstanding Certificate Balance on the Distribution Date
immediately preceding the Distribution Date for which the
Certificateholders' Percentage is being calculated (after giving effect to
all distributions made on such immediately preceding Distribution Date) and
the denominator of which is the Pool[/Pre-Funding] Balance on the last day
of the Collection Period second preceding the Distribution Date for which
the Certificateholders' Percentage is being calculated, [unless the Reserve
Account balance is less than [ % of] the Specified Reserve Account Balance,
then the Certificateholders' Percentage shall be %] [; provided, however,
upon any reduction or withdrawal by any Rating Agency of its rating of
[the] [any class of] Notes, then, with respect to each Distribution Date
thereafter until the principal amount of all the Notes is paid in full or
such rating is restored, the Certificateholders' Percentage shall mean
zero]. [Or, state other methods for determining the Certificateholders'
Percentage.]
"Certificateholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Certificateholders'
Monthly Principal and any outstanding Certificateholders' Principal
Carryover Shortfall from the preceding Distribution Date, over the amount
in respect of principal that is actually deposited in the Certificate
Distribution Account.
"Certificateholders' Principal Distribution Amount" means, with
respect to any Distribution Date, the sum of the Certificateholders'
Monthly Principal for such Distribution Date and the Certificateholders'
Principal Carryover Shortfall as of the close of the preceding Distribution
Date; provided, however, that the Certificateholders' Principal
Distribution Amount shall not exceed the Certificate Balance. In addition,
on the Final Scheduled Distribution Date, the principal required to be
distributed to Certificateholders will include the lesser of (a) any
principal due and remaining unpaid on each Simple Interest Receivable, in
each case, in the Trust as of the Final Scheduled Maturity Date or (b) the
portion of the amount required to be advanced under clause (a) above that
is necessary (after giving effect to the other amounts to be deposited in
the Certificate Distribution Account on such Distribution Date and
allocable to principal) to reduce the Certificate Balance to zero, and, in
the case of clauses (a) and (b), remaining after any required distribution
in respect of the Notes.
On each [Distribution] [Payment] Date, all amounts on deposit in the
Note Payment Account [(other than [any] Investment Earnings [in excess of
the weighted average of the Note Interest Rates] [and the Certificate
Rate])] will be paid in the following order of priority:
(i) to the [applicable] Noteholders, accrued and unpaid interest
on the outstanding principal amount of the [applicable class of] Notes
at the [applicable] Note Interest Rate [and to the Swap Counterparty,
the Net Trust Swap Payment, if any, for such [Distribution] [Payment]
Date, on a pro rata basis with the amount[s] payable to the
Noteholders pursuant to this clause (i)]; [and]
(ii) to the [Class A-1] Noteholders in reduction of principal
until the principal amount of the [Class A-1] Notes has been reduced
to zero[;
(iii) to the Class A-2 Noteholders in reduction of principal
until the principal amount of the Class A-2 Notes has been reduced to
zero; and
(iv) to the Class A-3 Noteholders in reduction of principal until
the principal amount of the Class A-3 Notes has been reduced to zero].
On each Distribution Date, all amounts on deposit in the Certificate
Distribution Account will be distributed to the Certificateholders.
Reserve Account
The rights of the Certificateholders to receive distributions with
respect to the Receivables generally will be subordinated to the rights of
the Noteholders in the event of defaults and delinquencies on the
Receivables as provided in the Sale and Servicing Agreement. The protection
afforded to the Noteholders through subordination will be effected both by
the preferential right of the Noteholders to receive current distributions
with respect to the Receivables and by the establishment of the Reserve
Account. The Reserve Account will be created with a deposit initially by
the Sellers on the Closing Date [and thereafter with deposits from funds in
the Pre-Funding Account that would otherwise be payable to the Sellers on
each Subsequent Transfer Date] (such deposit[s, respectively], the "Reserve
Account Initial Deposit" [and the "Additional Reserve Account Deposit."]).
The initial deposit by the Sellers on the Closing Date will also include
the amount specified in clause (b) of the following paragraph.
Subject to reduction as hereafter described, the "Specified Reserve
Account Balance" with respect to any Distribution Date means the sum of (i)
[the sum of (a)] _____% of the [Initial Pool Balance] [Pool Balance as of
the Initial Cut-Off Date] [, plus (b) an amount related to the difference
between anticipated investment earnings on the remaining Pre-Funded Amount
and the weighted average interest expense on the portion of the Notes and
Certificates represented by the remaining Pre-Funded Amount] and (ii)
_____% of the Pool Balance on the first day of the related Collection
Period. [However, so long as on any Distribution Date (except the first
Distribution Date) the outstanding principal amount of the Securities
(after giving effect to distributions made on the prior Distribution Date)
is less than or equal to _____% of [the sum of] [(a)] the Pool Balance on
the first day of the related Collection Period [and (b) the Pre-Funded
Amount on such date]], then the portion of the Specified Reserve Account
Balance set forth in clause (i) above will be reduced to _____% of the
[Initial Pool Balance] [Pool Balance as of the Initial Cut- Off Date].] [In
addition, so long as on any Distribution Date (except the first
Distribution Date) the outstanding principal amount of the Securities
(after giving effect to distributions made on the prior Distribution Date)
is less than or equal to _____% of [the sum of] [(a)] the Pool Balance on
the first day of the related Collection Period [and (b) the Pre-Funded
Amount on such day]], then such portion of the Specified Reserve Account
Balance set forth in clause (i) above will be reduced to _____% of the
[Initial Pool Balance] [Pool Balance as of the Initial Cut-Off Date].]
[With respect to the portion of the Specified Reserve Account Balance set
forth in clause (ii) above, so long as on any Distribution Date (except the
first Distribution Date) the outstanding principal amount of the Securities
(after giving effect to distributions made on the prior Distribution Date)
is less than or equal to _____% of [the sum of] [(a)] the Pool Balance on
the first day of the related Collection Period [and (b) the Pre-Funded
Amount on such day]], then such portion will be reduced to an amount equal
to the product of (I) the Pool Balance on the first day of the related
Collection Period and (II) the percentage (which shall not be greater than
% or less than zero) equal to (X) the percentage derived from the fraction,
the numerator of which is the outstanding principal amount of the
Securities (after giving effect to distributions made on the prior
Distribution Date) and the denominator of which is such Pool Balance less
(Y) _____%.] The portion of the Specified Reserve Account Balance specified
in clause (ii) above may be invested in motor vehicle sale contracts
originated by the Sellers and secured by motor vehicles financed thereby
that are not included in the Pool Balance. [The Specified Reserve Account
Balance is further subject to adjustment in certain circumstances described
herein.]
[The Specified Reserve Account Balance would also be increased to the
extent that the Receivables in the Trust on a Subsequent Transfer Date,
including the Subsequent Receivables to be conveyed to the Trust on such
Subsequent Transfer Date, have a weighted average Contract Rate of less
than _____%. See "The Receivables Pool" herein. In addition, subject to
certain limitations, the Sellers have the option to increase the Specified
Reserve Account Balance in connection with the addition of Subsequent
Receivables.]
If the amount on deposit in the Reserve Account on any Distribution
Date (after giving effect to all deposits or withdrawals therefrom on such
Distribution Date) is greater than the Specified Reserve Account Balance
for such Distribution Date, except as described below and subject to
certain limitations, the Servicer will instruct the Indenture Trustee to
[distribute such excess to the Sellers] [apply such excess as Noteholders'
Accelerated Principal]. Upon any distribution to the Sellers of amounts
from the Reserve Account, neither the Noteholders nor the Certifi-
cateholders will have any rights in, or claims to, such amounts.
[Subsequent to any reduction or withdrawal by any Rating Agency of its
rating of [the] [any class of] Notes, unless such rating has been restored,
any such excess released from the Reserve Account on a Distribution Date
will be deposited in the Note Payment Account for payment to Noteholders as
an accelerated payment of principal on [such Distribution] [the related
Payment] Date.] [Or, state other methods for determining the Specified
Reserve Account Balance and applying such excess amounts.]
Amounts held from time to time in the Reserve Account will be held for
the benefit of Noteholders and Certificateholders. [On each Distribution
Date, funds will be withdrawn from the Reserve Account up to the Available
Reserve Amount to the extent of the amount of the Advance Reserve
Withdrawal for such Distribution Date.] On each Distribution Date, funds
will be withdrawn from the Reserve Account up to the Available Reserve
Amount to the extent that the [part of the] Available Funds (after the
payment of the Servicing Fee) with respect to any Collection Period is less
than the Noteholders' Payment Amount and will be deposited in the Note
Payment Account. In addition, funds will be withdrawn from the Reserve
Account up to the Available Reserve Amount (as reduced by any withdrawal
pursuant to the [preceding sentence][two preceding sentences]) to the
extent that the Available Funds remaining after the payment of the
Servicing Fee and the deposit of the Noteholders' Payment Amount in the
Note Payment Account is less than the Certificateholders' Distribution
Amount and will be deposited in the Certificate Distribution Account. [If
funds applied in accordance with the preceding sentence are insufficient to
distribute interest due on the Certificates, subject to certain
limitations, funds will be withdrawn from the Reserve Account and applied
to distribute interest due on the Certificates to the extent of the
Certificate Interest Reserve Amount.] On each Distribution Date, the
Reserve Account will be reinstated up to the Specified Reserve Account
Balance to the extent, if any, of the Available Funds remaining after
payment of the Servicing Fee, the deposit of the Noteholders' Payment
Amount into the Note Payment Account and the deposit of the
Certificateholders' Distribution Amount into the Certificate Distribution
Account.
"Available Reserve Amount" means, with respect to any
Distribution Date, the amount of funds on deposit in the Reserve Account on
such Distribution Date [(other than Investment Earnings)] [ less the
Certificate Interest Reserve Amount with respect to such Distribution Date,
in each case,] before giving effect to any reduction thereto on such
Distribution Date.
["Certificate Interest Reserve Amount" means the lesser of (i) $_____
less the amount of any application of the Certificate Interest Reserve
Amount to pay interest on the Certificates on any prior Distribution Date
and (ii) ____% of the Certificate Balance on such Distribution Date (before
giving effect to any reduction thereof on such Distribution Date)[;
provided, however, that the Certificate Interest Reserve Amount shall be
zero subsequent to any reduction by any Rating Agency to less than " " or
its equivalent, or withdrawal by any Rating Agency, of its rating of [the]
[any class of] Notes, unless such rating has been restored].]
If on any Distribution Date the entire Noteholders' Payment Amount for
such Distribution Date (after giving effect to any amounts withdrawn from
the Reserve Account) is not deposited in the Note Payment Account, the
Certificateholders generally will not receive any distributions.
After the payment in full, or the provision for such payment, of (i)
all accrued and unpaid interest on the Securities and (ii) the outstanding
principal amount of the Securities, any funds remaining on deposit in the
Reserve Account, subject to certain limitations, will be paid to the
Seller.
The Reserve Account is intended to enhance the likelihood of receipt
by the Noteholders and the Certificateholders of the full amount of
principal and interest due them and to decrease the likelihood that the
Noteholders and the Certificateholders will experience losses. In addition,
the subordination of the Certificates to the Notes is intended to enhance
further the likelihood of receipt by Noteholders of the full amount of
principal and interest due them and to decrease the likelihood that the
Noteholders will experience losses. However, in certain circumstances, the
Reserve Account could be depleted. If the amount required to be withdrawn
from the Reserve Account to cover shortfalls in collections on the
Receivables exceeds the amount of available cash in the Reserve Account,
Noteholders or Certificateholders could incur losses or a shortfall in the
amounts distributed to the Noteholders or the Certificateholders could
result, which could, in turn, increase the average life of the Notes or the
Certificates.
[Yield Supplement Account; Yield Supplement Agreement
The Yield Supplement Account will be created with an initial deposit
by the Sellers of the Yield Supplement Initial Deposit. The Yield
Supplement Initial Deposit will equal an amount (which amount may be
discounted at a rate to be specified in the Sale and Servicing Agreement)
equal to the aggregate amount by which (i) interest on the principal
balance of each [Initial] Receivable for the period commencing on the
[Initial] Cut-Off Date and ending with the scheduled maturity of such
Receivable, assuming that payments on such Receivables are made as
scheduled and no prepayments are made) at a rate equal to the Required
Rate, exceeds (ii) interest on such principal balances at the Contract Rate
of such Receivable (the "Yield Supplement Amount" and, with respect to all
of the [Initial] Receivables, the "Required [Initial] Yield Supplement
Amount").
On each Distribution Date, the Indenture Trustee will transfer to the
Collection Account from monies on deposit in the Yield Supplement Account
an amount equal to the Yield Supplement Deposit Amount in respect of the
Receivables for such Distribution Date. The "Yield Supplement Deposit
Amount" with respect to a Distribution Date is the aggregate Yield
Supplement Amount, if any, in respect of the Receivables for the related
Collection Period. Amounts on deposit on any Distribution Date in the Yield
Supplement Account in excess of the Required Yield Supplement Amount, after
giving effect to all distributions to be made on such Distribution Date,
will be paid to the Sellers. Monies on deposit in the Yield Supplement
Account may be invested in Permitted Investments under the circumstances
and in the manner described in the Sale and Servicing Agreement. Any monies
remaining on deposit in the Yield Supplement Account upon the termination
of the Trust will be paid to the Sellers.
[Pursuant to the Yield Supplement Agreement, on each Subsequent
Transfer Date, the Sellers will deposit into the Yield Supplement Account
an amount equal to the Additional Yield Supplement Amount. The aggregate of
the Additional Yield Supplement Amounts in respect of Subsequent
Receivables, if any, is referred to herein as the "Required Subsequent
Yield Supplement Amount" and, together with the Required Initial Yield
Supplement Amount, the "Required Yield Supplement Amount."]]
[Interest Rate Cap
With respect to the Class A-2 Notes, the Sellers will enter into an
Interest Rate Cap, dated as of the Closing Date (the "Interest Rate Cap")
with the Interest Rate Cap Provider. The notional amount of the Interest
Rate Cap on any [Distribution] [Payment] Date (the "Cap Notional Amount")
will be at least equal to the outstanding principal amount of the Class A-2
Notes as of the close of the preceding [Distribution] [Payment] Date.
Pursuant to the Interest Rate Cap, on each [Distribution] [Payment] Date on
which [the Class A-2 Rate] [LIBOR] for the preceding [Distribution]
[Payment] Date exceeds _____% (the "Cap Rate"), the Interest Rate Cap Provider
will make a payment to the Indenture Trustee, on behalf of the Trust, in an
amount equal to the product of (i) the differ- ence between [such Class A-2
Rate] [LIBOR] and the Cap Rate, (ii) the Cap Notional Amount and (iii) the
actual number of days from and including the preceding [Distribution]
[Payment] Date to but excluding such [Distribution] [Payment] Date divided
by 360. The Interest Rate Cap will terminate on the Class A-2 Scheduled
Final [Distribution] [Payment] Date. Payments received by the Indenture
Trustee pursuant to the Interest Rate Cap will be deposited in the
Collection Account for the benefit of all Securityholders.
The payment obligations of the Interest Rate Cap Provider under the
Interest Rate Cap constitute general unsecured obligations of the Interest
Rate Cap Provider. No assurance can be given that the Trust will receive
the payments due to be received under the Interest Rate Cap when due. A
failure by the Interest Rate Cap Provider to make such payments or to make
such payments on a timely basis would reduce amounts available for
distributions to Securityholders, and in such event Securityholders could
incur a loss on their investment.
The Interest Rate Cap will be provided by (the "Interest Rate Cap
Provider"). The Interest Rate Cap Provider was incorporated in . The
Interest Rate Cap Provider is engaged in the business of _____. As of
_____, 199 , the Interest Rate Cap Provider had total consolidated assets
of $_____, total consolidated liabilities of $ and total consolidated
stockholders' equity of $_____ .
The information set forth in the preceding paragraph has been provided
by the Interest Rate Cap Provider. The Sellers make no representations as
to the accuracy or completeness of such information.]
[Interest Rate Swap
With respect to the Class A-2 Notes, the Indenture Trustee, on behalf
of the Trust, will enter into one or more Interest Rate Swap Agreements,
dated as of the Closing Date (collectively, the "Interest Rate Swap") with
the Swap Counterparty. The notional amount of the Interest Rate Swap on any
[Distribution] [Payment] Date (the "Swap Notional Amount") will equal the
outstanding principal amount of the Class A-2 Notes as of the close of the
preceding [Distribution] [Payment] Date. Pursuant to the terms of the
Interest Rate Swap, the Swap Counterparty will pay to the Trust, on each
[Distribution] [Payment] Date, interest at a per annum rate equal to [the
Class A-2 Rate] [LIBOR] on the Swap Notional Amount. In exchange for such
payments, the Trust will pay to the Swap Counterparty, on each
[Distribution] [Payment] Date, interest at a per annum rate equal to [the
lesser of] [ %] [and] [the Prime Rate less %], on the Swap Notional
Amount[, which rate will be reset [on various dates in] each [month]
[Interest Period]]. With respect to each [Distribution] [Payment] Date, any
difference between the [monthly] [quarterly] payment by the Swap
Counterparty to the Trust and the [monthly] [quarterly] payment by the
Trust to the Swap Counterparty will be referred to herein as the "Net Trust
Swap Receipt," if such difference is a positive number, and the "Net Trust
Swap Payment," if such difference is a negative number. Net Trust Swap
Receipts, if any, will be deposited in the Collection Account for the
benefit of all Securityholders and Net Trust Swap Payments, if any, will be
paid from the Collection Account in the same manner and priority as accrued
and unpaid interest on the Notes on each [Distribution] [Payment] Date.
The payment obligations of the Swap Counterparty under the Interest
Rate Swap constitute general unsecured obligations of the Swap
Counterparty. No assurance can be given that the Trust will receive the
payments due to be received under the Interest Rate Swap when due. A
failure by the Swap Counterparty to make such payments or to make such
payments on a timely basis would reduce amounts available for distributions
to Securityholders, and in such event Securityholders could incur a loss on
their investment.
The Interest Rate Swap will be provided by (the "Swap Counterparty").
The Swap Counterparty was incorporated in _____. The Swap Counterparty is
engaged in the business of _____. As of _____, 199 , the Swap Counterparty
had total consolidated assets of $_____, total consolidated liabilities of
$_____ and total consolidated stockholders' equity of $_____ .
The information set forth in the preceding paragraph has been provided
by the Swap Counterparty. The Sellers make no representations as to the
accuracy or completeness of such information.]
[Guaranteed Rate Agreement
The Sellers will enter into an Guaranteed Rate Agreement, dated as of
the Closing Date (the "Guaranteed Rate Agreement") with the Investment
Provider. Pursuant to the Guaranteed Rate Agreement, amounts on deposit in
the [Collection] [Note Payment] Account will be invested from the date of
deposit to the related [Distribution] [Payment] Date by the Indenture
Trustee at the direction of the Investment Provider in certain eligible
investments (which are substantially similar to Permitted Investments).
Amounts invested pursuant to the Guaranteed Rate Agreement will continue to
be held in the name of the Indenture Trustee for the benefit of
Securityholders and will remain assets of the Trust for purposes of
bankruptcy, tax and other applicable laws. The Guaranteed Rate Agree- ment
provides that the Investment Provider will guarantee a rate of return on
such amounts equal to the weighted average of the Note Interest Rates [and
the Certificate Rate] and will be entitled to receive any Investment
Earnings in excess of such guaranteed return.
If the commercial paper rating or certificate of deposit rating of the
Investment Provider is at any time reduced below A-1+ or P1 by the
applicable Rating Agency, within 60 days of receiving notice of such
decline, the Servicer will either (i) with the prior written assurance of
each Rating Agency that such action will not result in a reduction of the
rating of any of the Notes or the Certificates, cause the Investment
Provider to pledge securities, in a manner conferring on the Indenture
Trustee a perfected first lien in such securities, securing the Investment
Provider's performance of its obligations under the Guaranteed Rate
Agreement, (ii) direct the Indenture Trustee to terminate the Guaranteed
Rate Agreement and to obtain a Replacement Guaranteed Rate Agreement or
(iii) establish any other arrangement satisfactory to each Rating Agency
such that such Rating Agency will not reduce the rating of any of the Notes
or the Certificates. A "Replacement Guaranteed Rate Agreement" means an
agree- ment (i) which is substantially similar to the original Guaranteed
Rate Agreement, (ii) the obligor of which is an insurance company, trust
company, commercial bank or other entity which has a commercial paper or
certificate of deposit rating of at least A-1+ or P1 by the applicable
Rating Agency and (iii) which provides for either the payment of interest
on funds invested pursuant thereto at a rate per annum at least equal to
the weighted average of the Note Interest Rates [and the Certificate Rate].
If the Servicer is unable to obtain a Replacement Guaranteed Rate Agreement
or a pledge of securities or otherwise satisfy the applicable Rating Agency
within such 60-day period, then each following Distribution Date will
constitute a Payment Date and distributions in respect of the Notes and the
Certificates will be made monthly. See "Description of the Notes--Payments
of Interest" herein.
The payment obligations of the Investment Provider under the
Guaranteed Rate Agreement constitute general unsecured obligations of the
Investment Provider. No assurance can be given that the Trust will receive
the payments due to be received under the Guaranteed Rate Agreement when
due. A failure by the Investment Pro- vider to make such payments or to
make such payments on a timely basis would reduce amounts available for
distributions to Securityholders, and in such event Securityholders could
incur a loss on their investment.
The Guaranteed Rate Agreement will be provided by _____ (the
"Investment Provider"). The Investment Provider was incorporated in . The
Investment Provider is engaged in the business of . As of ____, 199 , the
Investment Provider had total consolidated assets of $_____ , total
consolidated liabilities of $_____ and total consolidated stockholders'
equity of $_____ . The Investment Provider is currently rated / .
The information set forth in the preceding paragraph has been provided
by the Investment Provider. The Sellers make no representations as to the
accuracy or completeness of such information.]
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain federal income tax
consequences of the purchase, ownership and disposition of the Notes and
the Certificates. The summary does not purport to deal with federal income
tax consequences applicable to all categories of holders, some of which may
be subject to special rules. For example, it does not discuss the tax
treatment of Noteholders or Certificateholders that are insurance
companies, regulated investment companies or dealers in securities.
Moreover, there are no cases or Internal Revenue Service ("IRS") rulings on
similar transactions involving both debt instruments and equity interests
issued by a trust with terms similar to those of the Notes and the
Certificates. As a result, the IRS may disagree with all or a part of the
discussion below. Prospective investors are urged to consult their own tax
advisors in determining the federal, state, local, foreign and any other
tax consequences to them of the pur- chase, ownership and disposition of
the Notes and the Certificates.
The following summary is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder and judicial or ruling authority, all of which are
subject to change, which change may be retroactive. The Trust will be
provided with an opinion of Special Tax Counsel regarding certain federal
income tax matters discussed below. An opinion of Special Tax Counsel,
however, is not binding on the IRS or the courts. No ruling on any of the
issues discussed below will be sought from the IRS.
Scope of the Tax Opinions
It is expected that Special Tax Counsel, will, upon issuance of the
Notes and Certificates deliver its opinion that the Trust will not be
classified as an association (or publicly traded partnership) taxable as a
corporation for federal income tax purposes. Further, with respect to the
Notes, Special Tax Counsel will advise the Trust that the Notes will be
classified as debt for federal income tax purposes.
In addition, Special Tax Counsel has prepared or reviewed the
statements under the heading "Summary--Tax Status" relating to federal
income tax matters and under the heading "Certain Federal Income Tax
Consequences" herein and in the Prospectus and is of the opinion that such
statements are correct in all material respects. Such statements are
intended as an explanatory discussion of the possible effects of the
classification of the Trust as a partnership for federal income tax
purposes on investors generally and of related tax matters affecting
investors generally, but do not purport to furnish information in the level
of detail or with the attention to the investor's specific tax
circumstances that would be provided by an investor's own tax adviser.
Accordingly, each investor is advised to consult its own tax advisers with
regard to the tax consequences to it of investing in the certificates.
Tax Characterization of the Trust
As set forth above, it is the opinion of Special Tax Counsel that the
Trust will not be classified as an association (or publicly traded
partnership) taxable as a corporation for federal income tax purposes. This
opin- ion is based on the assumption that the terms of the Trust Agreement
and related documents will be complied with, and on counsel's conclusions
that (1) the Trust does not have certain characteristics necessary for a
business trust to be classified as an association taxable as a corporation
and (2) either the nature of the income of the Trust will exempt it from
the provisions of the Code requiring certain publicly traded partnerships
to be taxed as corporations or the Trust will otherwise qualify for an
exemption from the rules governing publicly traded partnerships.
If the Trust were taxable as a corporation for federal income tax
purposes, the Trust would be subject to corporate income tax on its taxable
income. The Trust's taxable income would include all of its income on the
Receivables, possibly reduced by its interest expense on the Notes. Any
such corporate income tax could materially reduce the amount of cash
available to make payments on the Notes and distributions on the Certifi-
cates, and Certificateholders could be liable for any such tax that is
unpaid by the Trust.
Tax Consequences to Holders of the Notes
Treatment of the Notes as Indebtedness. The Noteholders will agree by
their purchase of the Notes, to treat the Notes as debt for federal income
tax purposes. The discussion below assumes that this characterization of
the Notes is correct.
OID, Indexed Securities, etc.
Original Issue Discount, Indexed Securities, etc. A Note will be
treated as issued with Original Issue Discount ("OID") if the excess of the
Note's "stated redemption price at maturity" over the issue price equals or
exceeds a de minimis amount equal to 1/4 of 1 percent of the Note's stated
redemption price at maturity multiplied by the number of complete years
(based on the anticipated weighted average life of a Note) to its maturity.
In general, OID, if any, will equal the difference between the stated
redemption price at maturity of a Note and its issue price. A holder of a
Note must include such OID in gross income as ordinary interest income as
it accrues under a method taking into account an economic accrual of the
discount. In general, OID must be included in income in advance of the
receipt of the cash representing that income. The amount of OID on a Note
will be considered to be zero if it is less than a de minimis amount
determined as described above.
However, the amount of any de minimis OID must be included in income
as principal payments are received on a Note, in the proportion that each
such payment bears to the original principal amount of the Note. The issue
price of a Note will generally be the initial offering price at which a
substantial amount of the Notes are sold. The Trust intends to treat the
issue price as including, in addition, the amount paid by the Noteholder
for accrued interest that relates to a period prior to the Closing Date of
such Note. Under applicable Treasury regulations governing the accrual of
OID (the "OID Regulations"), the stated redemption price at maturity is the
sum of all payments on the Note other than any "qualified stated interest"
payments. Qualified stated interest is defined as any one of a series of
payments equal to the product of the outstanding principal balance of the
Note and a single fixed rate, or certain variable rates of interest that is
unconditionally payable at least annually.
The Holder of a Note issued with OID must include in gross income, for
all days during its taxable year on which it holds such Note, the sum of
the "daily portions" of such OID. Such daily portions are computed by
allocating to each day during a taxable year a pro rata portion of the OID
that accrued during the relevant accrual period. In the case of an
obligation the principal on which is subject to prepayment as a result of
prepayments on the underlying collateral, (a "Prepayable Obligation"), such
as the Notes, OID is computed by taking into account the anticipated rate
of prepayments assumed in pricing the debt instrument (the "Prepayment
Assumption"). The Prepayment Assumption that will be used in determining
the rate of accrual of original issue discount, premium and market
discount, if any, is ___% APM. The amount of OID that will accrue during an
accrual period (generally the period between interest payments or
compounding dates) is the excess (if any) of the sum of (a) the present
value of all payments remaining to be made on the Note as of the close of
the accrual period and (b) the payments during the accrual period of
amounts included in the stated redemption price of the Note, over the
"adjusted issue price" of the Note at the beginning of the accrual period.
An "accrual period" is the period over which OID accrues, and may be of any
length, provided that each accrual period is no longer than one year and
each scheduled payment of interest or principal occurs on either the last
day or the first day of an accrual period. The Issuer intends to report OID
on the basis of an accrual period that corresponds to the interval between
payment dates. The adjusted issue price of a Note is the sum of its issue
price plus prior accruals of OID, reduced by the total payments made with
respect to such Note in all prior periods, other than qualified stated
interest payments. The present value of the remaining payments is
determined on the basis of three factors: (i) the original yield to
maturity of the Note (determined on the basis of compounding at the end of
each accrual period and properly adjusted for the length of the accrual
period), (ii) events which have occurred before the end of the accrual
period and (iii) the assumption that the remaining payments will be made in
accordance with the original Prepayment Assumption.
The effect of this method is to increase the portions of OID required
to be included in income by a Noteholder to take into account prepayments
on the Receivables at a rate that exceeds the Prepayment Assumption, and to
decrease (but not below zero for any period) the portions of OID required
to be included in income by a Noteholder to take into account prepayments
with respect to the Receivables at a rate that is slower than the
Prepayment Assumption. Although OID will be reported to Noteholders based
on the Prepayment Assumption, no representation is made to Noteholders that
Receivables will be prepaid at that rate or at any other rate.
A holder of a Note that acquires the Note for an amount that exceeds
its stated redemption price will not include any OID in gross income. A
subsequent holder of a Note which acquires the Notes for an amount that is
less than its stated redemption price will be required to include OID in
gross income, but such a holder who purchases such Note for an amount that
exceeds its adjusted issue price will be entitled (as will an initial
holder who pays more than a Note's issue price) to reduce the amount of OID
included in income in each period by the amount of OID multiplied by a
fraction, the numerator of which is the excess of (w) the purchaser's
adjusted basis in the Note immediately after purchase thereof over (x) the
adjusted issue price of the Note, and the denominator of which is the
excess of (y) all amounts remaining to be paid on the Note after the
purchase date, other than qualified stated interest, over (z) the adjusted
issue price of the Note.
Total Accrual Election. As an alternative to separately accruing
stated interest, OID, de minimis OID, market discount, de minimis market
discount, unstated interest, premium, and acquisition premium, a holder of
a Note may elect to include all income that accrues on the Note using the
constant yield method. If a Noteholder makes this election, income on a
Note will be calculated as though (i) the issue price of the Note were
equal to the Noteholder's adjusted basis in the Note immediately after its
acquisition by the Noteholder; (ii) the Note were issued on the
Noteholder's acquisition date; and (iii) none of the interest payments on
the Note were "qualified stated interest." A Noteholder may make such an
election for a Note that has premium or market discount, respectively, only
if the Noteholder makes, or has previously made, an election to amortize
bond premium or to include market discount in income currently. See
"--Market Discount" and "--Amortizable Bond Premium."
Market Discount. The Notes, whether or not issued with original issue
discount, will be subject to the "market discount rules" of section 1276 of
the Code. In general, these rules provide that if the Note Owner purchases
a Note at a market discount (that is, a discount from its stated redemption
price at maturity or, if the Notes were issued with OID, its original issue
price plus any accrued original issue discount that exceeds a de minimis
amount specified in the Code) and thereafter (a) recognizes gain upon a
disposition, or (b) receives payments of principal, the lesser of (i) such
gain or principal payment or (ii) the accrued market discount will be taxed
as ordinary interest income. Generally, the accrued market discount will be
the total market discount on the Note multiplied by a fraction, the
numerator of which is the number of days the Note Owner held the Note and
the denominator of which is the number of days from the date the Note Owner
acquired the Note until its maturity date. The Note Owner may elect,
however, to determine accrued market discount under the constant-yield
method.
Limitations imposed by the Code which are intended to match deductions
with the taxation of income may defer deductions for interest on
indebtedness incurred or continued, or short-sale expenses incurred, to
purchase or carry a Note with accrued market discount. A Note Owner may
elect to include market discount in gross income as it accrues and, if the
Note Owner makes such an election, is exempt from this rule. Any such
election will apply to all debt instruments acquired by the taxpayer on or
after the first day of the first taxable year to which such election
applies. The adjusted basis of a Note subject to such election will be
increased to reflect market discount included in gross income, thereby
reducing any gain or increasing any loss on a sale or taxable disposition.
Amortizable Bond Premium. In general, if a Note Owner purchases a Note
at a premium (that is, an amount in excess of the amount payable upon the
maturity thereof), such Note Owner will be considered to have purchased
such Note with "amortizable bond premium" equal to the amount of such
excess. Such Note Owner may elect to amortize such bond premium as an
offset to interest income and not as a separate deduction item as it
accrues under a constant-yield method over the remaining term of the Note.
Such Note Owner's tax basis in the Note will be reduced by the amount of
the amortized bond premium. Any such election shall apply to all debt
instruments (other than instruments the interest on which is excludible
from gross income) held by the Note Owner at the beginning of the first
taxable year for which the election applies or thereafter acquired and is
irrevocable without the consent of the IRS. Bond premium on a Note held by
a Note Owner who does not elect to amortize the premium will decrease the
gain or increase the loss otherwise recognized on the disposition of the
Note.
Short-Term Obligations. Under the Code, special rules apply to Notes
that have a maturity of one year or less from their date of original
issuance ("Short-Term Notes"). Such Notes are treated as issued with
"acquisition discount" which is calculated and included in income under
principles similar to those governing OID except that "acquisition
discount" is equal to the excess of all payments of principal and interest
on the Short-Term Notes over their issue price. In general, an individual
or other cash basis holder of a short-term obligation is not required to
accrue acquisition discount for federal income tax purposes unless it
elects to do so. Accrual basis Noteholders and certain other Noteholders,
including banks, regulated investment companies, dealers in securities and
cash basis Noteholders who so elect, are required to accrue acquisition
discount on Short-Term Notes on either a straight-line basis or under a
constant yield method (based on daily compounding), at the election of the
Noteholder. In the case of a Noteholder not required and not electing to
include acquisition discount in income currently, any gain realized on the
sale or retirement of the Short-Term Notes will be ordinary income to the
extent of the acquisition discount accrued on a straight-line basis (unless
an election is made to accrue the acquisition discount under the constant
yield method) through the date of sale or retirement. Noteholders who are
not required and do not elect to accrue acquisition discount on Short-Term
Notes will be required to defer deductions for interest on borrowings
allocable to short term obligations in an amount not exceeding the deferred
income until the deferred income is realized.
Sale or Other Disposition. If a Noteholder sells a Note, the holder
will recognize gain or loss in an amount equal to the difference between
the amount realized on the sale and the holder's adjusted tax basis in the
Note. The adjusted tax basis of a Note to a particular Noteholder generally
will equal the holder's cost for the Note, increased by any market
discount, acquisition discount, OID and gain previously included by such
Noteholder in income with respect to the Note and decreased by any bond
premium previously amortized and principal payments previously received by
such Noteholder with respect to such Note. Any such gain or loss will be
capital gain or loss if the Note was held as a capital asset, except for
gain representing accrued interest, accrued market discount or OID that has
not previously accrued, in each case to the extent not previously included
in income. Capital losses incurred on sale or disposition of a Note
generally may be used only to offset capital gains.
Non-U.S. Note Owners. In general, a non-U.S. Note Owner will not be
subject to U.S. federal income tax on interest (including OID) on a
beneficial interest in a Note unless (i) the non-U.S. Note Owner actually
or constructively owns 10 percent or more of the total combined voting
power of all classes of stock of the Sellers (or affiliate of the Seller)
entitled to vote (or of a profits or capital interest of the Trust), (ii)
the non-U.S. Note Owner is a controlled foreign corporation that is related
to the Sellers (or the Trust) through stock ownership, (iii) the non-U.S.
Note Owner is a bank receiving interest described in Code Section
881(c)(3)(A), (iv) such interest is contingent interest described in Code
Section 871(h)(4), or (v) the non-U.S. Note Owner bears certain
relationships to any Certificate Owner. To qualify for the exemption from
taxation, the Note Owner must comply with applicable certification
requirements, which will be described in the Prospectus Supplement.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from
United States federal income tax and withholding tax, provided that (i)
such gain is not effectively connected with the conduct of a trade or
business in the United States by the foreign person and (ii) in the case of
an individual foreign person, the foreign person is not present in the
United States for 183 days or more in the taxable year.
Backup Withholding. Each holder of a Note (other than an exempt holder
such as a corporation, tax-exempt organization, qualified pension and
profit-sharing trust, individual retirement account or nonresident alien
who provides certification as to status as a nonresident) will be required
to provide, under penalties of perjury, a certificate containing the
holder's name, address, correct taxpayer identification number and a
statement that the holder is not subject to backup withholding. Should a
nonexempt Noteholder fail to provide the required certification, the Trust
will be required to withhold 31 percent of the amount otherwise payable to
the holder, and remit the withheld amount to the IRS as a credit against
the holder's federal income tax liability.
Possible Alternative Treatments of the Notes. If, contrary to the
opinion of Special Tax Counsel, the IRS successfully asserted that one or
more of the Notes did not represent debt for federal income tax purposes,
the Notes might be treated as equity interests in the Trust. If so treated,
the Trust might be taxable as a corporation with the adverse consequences
described above (and the taxable corporation would not be able to reduce
its taxable income by deductions for interest expense on Notes
recharacterized as equity). Alternatively, the Trust might be treated as a
publicly traded partnership that would not be taxable as a corporation
because it would meet certain qualifying income tests. Nonetheless,
treatment of the Notes as equity interests in such a publicly traded
partnership could have adverse tax consequences to certain holders. For
example, income to certain tax-exempt entities (including pension funds)
would be "unrelated business taxable income," income to foreign holders
generally would be subject to U.S. federal tax and U.S. federal tax return
filing and withholding requirements, and individual holders might be
subject to certain limitations on their ability to deduct their share of
Trust expenses.
Tax Consequences to Holders of Offered Certificates
Treatment of the Trust as a Partnership. The Sellers and the Servicer
will agree, and the Certificateholders of the Trust will agree by their
purchase of Certificates, to treat the Trust as a partnership for purposes
of federal and state income tax, franchise tax and any other tax measured
in whole or in part by income, with the assets of the partnership being the
assets held by the Trust, the partners of the partnership being the
Certificateholders of the Trust (including the Sellers and NB-SPC), and the
Notes being debt of the partnership. However, the proper characterization
of the arrangement involving the Trust, the Certificates evidencing
interests in the Trust, the Notes, the Sellers and the Servicer is not
clear because there is no authority on transactions closely comparable to
those contemplated herein.
A variety of alternative characterizations of the Certificates are
possible. For example, because the Certificates of beneficial interest in
the Trust generally will have certain features characteristic of debt, the
Certificates issued by the Trust might be considered debt of the Sellers[,
NB-SPC] or the Trust. Any such characterization would not result in
materially adverse tax consequences to Certificateholders as compared to
the consequences from treatment of the Certificates as equity in a
partnership, described below. The following discussion assumes that the
Certificates represent equity interests in a partnership.
Indexed Securities, etc. The following discussion assumes that all
payments on the Certificates are denominated in U.S. dollars, the
Certificates are not Indexed Securities or Strip Certificates, and that a
Series of Securities includes a single class of Certificates.
Partnership Taxation. Assuming that the Trust is classified as a
partnership, the Trust will not be subject to federal income tax, but each
Certificateholder will be required to take into account separately such
holder's allocated share of income, gains, losses, deductions and credits
of the Trust. The Trust's income will consist primarily of interest accrued
on the Receivables (including appropriate adjustments for market discount
(as discussed below), and any OID and bond premium), investment income from
investments of collections held between Distribution Dates, any gain upon,
or with respect to, collection or disposition of the Receivables and any
income earned on any notional principal contracts. The Trust's deductions
will consist primarily of interest accruing on the Notes, servicing and
other fees and losses or deductions upon, or with respect to, collection or
the disposition of the Receivables.
The tax items of a partnership are allocable to the partners in
accordance with the Code, Treasury regulations and the partnership
agreement. In the Trust Agreement, the Certificateholders of the Trust will
agree that the yield on a Certificate is intended to qualify as a
"guaranteed payment" and not as a distributive share of partnership income.
A guaranteed payment would be treated by a Certificateholder as ordinary
income, but may well not be treated as interest income. The Trust Agreement
will provide that, to the extent that such treatment is not respected, the
Certificateholders will be allocated ordinary gross income of the Trust for
each interest period equal to the sum of (i) the amount of interest that
accrues on the Certificates for such interest period based on the
Certificate Rate; (ii) an amount equivalent to interest that accrues during
such interest period on amounts previously due on the Certificates but not
yet distributed; and (iii) any Trust income attributable to discount on the
Receivables that corresponds to any excess of the principal amount of the
Certificates over their initial issue price. All remaining taxable income
of the Trust generally will be allocated to the [Sellers,] as "general
partners" of the Trust.
Except as set forth below, losses and deductions generally will not be
allocated to the Certificateholders of the Trust except to the extent the
Certificateholders of the Trust are reasonably expected to bear the
economic burden of such losses or deductions. Any such losses could be
characterized as capital losses, and the Certificateholder generally would
only be able to deduct such losses against capital gain income.
Accordingly, a Certificateholder's taxable income from the Trust could
exceed the cash it receives from the Trust.
Although the allocation of gross income to Certificateholders
described above is intended to comply with applicable Treasury regulations
and other authorities, no assurance can be given that the IRS would not
instead require that Certificateholders be allocated a distributive share
of partnership net income or loss. Moreover, if losses or deductions were
allocated to Certificateholders, such losses or deductions would, to the
extent that funds were available therefor, later be reimbursed through
allocations of ordinary income.
It is believed that allocating partnership income on the foregoing
basis should comport with the partners' economic interests in the
partnership, although no assurance can be given that the IRS would not
require a greater amount of income to be allocated to Certificateholders of
the Trust. Moreover, under the foregoing method of allocation,
Certificateholders may be allocated income equal to the amount of interest
accruing on the Certificates based on the Certificate Rate even though the
Trust might not have sufficient cash to make current cash distributions of
such amount or Certificateholders may have no right to cash equal to such
amount. Thus, cash basis Certificateholders will in effect be required to
report income from the Certificates on the accrual basis and
Certificateholders may become liable for taxes on Trust income even if they
have not received cash from the Trust to pay such taxes. In addition,
because tax allocation and tax reporting will be done on a uniform basis
for all Certificateholders of the Trust but Certificateholders of the Trust
may be pur- chasing Certificates at different times and at different
prices, Certificateholders may be required to report on their tax returns
taxable income that is greater or less than the amount reported to them by
the Trust.
Certificateholders will be required to report items of income, loss
and deduction allocated to them by the Trust in the taxable year in which
or with which the taxable year of the Trust to which such allocations
relate ends. The Code prescribes certain rules for determining the taxable
year of the Trust. It is likely that, under these rules, the taxable year
of the Trust will be the calendar year. However, in the event that all of
the Certificateholders possessing a 5 percent or greater interest in the
equity or the profits of the Trust share a taxable year that is other
than the calendar year, the Trust would be required to use that year as its
taxable year.
All of the taxable income allocated to a Certificateholder that is a
pension, profit sharing or employee benefit plan or other tax-exempt entity
(including an individual retirement account) will constitute "unrelated
business taxable income" generally taxable to such a holder under the Code.
The characterization under the Trust Agreement of yield on the Certificates
as a guaranteed payment could adversely affect taxpayers, such as RICs and
REITs, that expect to earn "interest" income.
Limitations on Losses. Under the "passive activity" rules of the Code,
any loss allocated to a Certificateholder who is a natural person, estate,
trust, closely held "C" corporation or personal service corporation would
be a passive activity loss while, for purposes of those rules, income
allocated to such a Certificateholder would be "portfolio income."
In addition a taxpayer that is an individual, trust or estate may
generally deduct miscellaneous itemized deductions (which do not include
interest expense) only to the extent they exceed two percent of the
individual's adjusted gross income. Those limitations would apply to an
individual Certificateholder's share of expenses of the Trust (including
fees paid to the Servicer) and might result in such holder having net
taxable income that exceeds the amount of cash actually distributed to such
holder over the life of the Trust.
The Trust intends to make all tax calculations relating to income and
allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each Receivable, the
Trust might be required to incur additional expense but it is believed that
there would not be a material adverse effect on Certificateholders.
Discount and Premium. It is believed that the [Receivables] were not
issued with OID or imputed interest, and, therefore, the Trust should not
have OID or imputed interest income. However, the purchase price paid by
the Trust for the Receivables may be greater or less than the remaining
principal balance of the Receivables at the time of purchase. If so, the
Receivables will have been acquired at a premium or discount, as the case
may be. (As indicated above, the Trust will make this calculation on an
aggregate basis, but might be required to recompute it on a
Receivable-by-Receivable basis.)
If the Trust acquires the Receivables at a market discount or premium,
the Trust will elect to include any such discount in income currently as it
accrues over the life of the Receivables or to offset any such premium
against interest income on the Receivables. As indicated above, a portion
of such market discount income or premium deduction may be allocated to
Certificateholders.
Section 708 Termination. Under Section 708 of the Code, the Trust will
be deemed to terminate for federal income tax purposes if 50% or more of
the capital and profits interests in the Trust are sold or exchanged within
a 12-month period. If such a termination occurs, the Trust will be
considered to distribute its assets to the partners, who would then be
treated as recontributing those assets to the Trust, as a new part-
nership. The Trust will not comply with certain technical requirements that
might apply when such a constructive termination occurs. As a result, the
Trust may be subject to certain tax penalties and may incur additional
expenses if it is required to comply with those requirements. Furthermore,
the Trust might not be able to comply due to lack of data.
Distributions to Certificateholders. Certificateholders generally will
not recognize gain or loss with respect to distributions from the Trust. A
Certificateholder will, however, recognize gain to the extent any money
distributed exceeds the Certificateholder's adjusted basis in the
Certificates (as described below under "Disposition of Certificates")
immediately before distribution, and a Certificateholder will recognize
loss upon termination of the Trust or termination of the
Certificateholder's interest in the Trust if the Trust only distributes
money to the Certificateholder and the amount distributed is less than the
Certificateholder's adjusted basis in the Certificates. Any such gain or
loss would be long-term capital gain or loss if the holding period of the
Certificates were more than one year, assuming that the Certificates are
held as capital assets.
Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates
sold. A Certificateholder's tax basis in a Certificate will generally equal
the holder's cost increased by the holder's share of Trust income
(includible in income) and decreased by any distributions received with
respect to such Certificate. In addition, both the tax basis in the
Certificates and the amount realized on a sale of a Certificate would
include the holder's share of the Notes and other liabilities of the Trust.
A holder acquiring Certificates at different prices may be required to
maintain a single aggregate adjusted tax basis in such Certificates, and,
upon sale or other disposition of some of the Certificates, allocate a
portion of such aggregate tax basis to the Certificates sold (rather than
maintaining a separate tax basis in each Certificate for purposes of
computing gain or loss on a sale of that Certificate).
Any gain on the sale of a Certificate attributable to the holder's
share of unrecognized accrued market discount on the Receivables would
generally be treated as ordinary income to the holder and would give rise
to special federal income tax reporting requirements. The Trust does not
expect to have any other assets that would give rise to such special
reporting requirements. Thus, to avoid those special reporting
requirements, the Trust will elect to include market discount in income as
it accrues.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed miscellaneous
itemized deductions described above) over the life of the Certificates that
exceeds the aggregate cash distributions with respect thereto, such excess
will generally give rise to a capi- tal loss upon the retirement of the
Certificates.
Allocations Between Transferors and Transferees. In general, the
Trust's taxable income and losses will be determined monthly and the tax
items for a particular calendar month will be apportioned among the
Certificateholders in proportion to the principal amount of Certificates
owned by them as of the close of the last day of such month. As a result, a
holder purchasing Certificates may be allocated tax items (which will
affect its tax liability and tax basis) attributable to periods before the
actual transaction.
The use of such a monthly convention may not be permitted by existing
Treasury regulations. If a monthly convention is not allowed (or only
applies to transfers of less than all of the partner's interest), taxable
income or losses of the Trust might be reallocated among the
Certificateholders. The Sellers are authorized to revise the Trust's method
of allocation between transferors and transferees to conform to a method
permitted by future Treasury regulations.
Section 754 Election. In the event that a Certificateholder sells its
Certificates at a profit (loss), the purchasing Certificateholder will have
a higher (lower) basis in the Certificates than the selling
Certificateholder had. The tax basis of the Trust's assets will not be
adjusted to reflect that higher (or lower) basis unless the Trust were to
file an election under Section 754 of the Code. In order to avoid the
administrative complexities that would be involved in keeping accurate
accounting records, as well as potentially onerous information reporting
requirements, the Trust will not make such election. As a result,
Certificateholders might be allocated a greater or lesser amount of Trust
income than would be appropriate based on their own purchase price for
Certificates.
Administrative Matters. The Owner Trustee is required to keep or have
kept complete and accurate books of the Trust. Such books will be
maintained for financial reporting and federal income tax purposes on an
accrual basis and the fiscal year of the Trust will be the calendar year.
The Trustee will file a partnership information return (Form 1065) with the
IRS for each taxable year of the Trust and will report each
Certificateholder's allocable share of items of Trust income and expense to
holders and the IRS on Schedule K-1. The Trust will provide the Schedule
K-1 information to nominees that fail to provide the Trust with the
information statement described below and such nominees will be required to
forward such information to the beneficial owners of the Certificates.
Generally, holders must file federal income tax returns that are consistent
with the information return filed by the Trust or be subject to penalties
unless the holder notifies the IRS of all such inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as
a nominee at any time during a calendar year is required to furnish the
Trust with a statement containing certain information on the nominee, the
beneficial owners and the Certificates so held. Such information includes
(i) the name, address and federal taxpayer identification number of the
nominee and (ii) as to each beneficial owner (x) the name, address and
federal taxpayer identification number of such person, (y) whether such
person is a United States person, a tax-exempt entity or a foreign
government, an international organization, or any wholly owned agency or
instrumentality of either of the foregoing, and (z) certain information
on Certificates that were held, bought or sold on behalf of such person
throughout the year. In addition, brokers and financial institutions that
hold Certificates through a nominee are required to furnish directly to the
Trust information as to themselves and their ownership of Certificates. A
clearing agency registered under Section 17A of the Exchange Act is not
required to furnish any such information statement to the Trust. The
information referred to above for any calendar year must be furnished to
the Trust on or before the following January 31. Nominees, brokers and
financial institutions that fail to provide the Trust with the information
described above may be subject to penalties.
The general partner will be designated as the "tax matters partner" in
the Trust Agreement and, as such, will be responsible for representing the
Certificateholders in any dispute with the IRS. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on
which the partnership information return is filed. Any adverse
determination following an audit of the return of the Trust by the
appropriate taxing authorities could result in an adjustment of the returns
of the Certificateholders, and, while a Certificateholder may participate
in any adjudicative process that is undergone in arriving at such a
determination, in most cases such Certificateholders will be precluded from
separately litigating a proposed adjustment to the items of the Trust. An
adjustment could also result in an audit of a Certificateholder's returns
and adjustments of items not related to the income and losses of the Trust.
Backup Withholding. Distributions made on the Certificates and
proceeds from the sale of the Certificates will not be subject to a
"backup" withholding tax of 31% unless, in general, the Certificateholder
fails to comply with certain identification procedure and is not an exempt
recipient under applicable provisions of the Code.
Tax Consequences to Non-U.S. Certificateholders
The Certificates may not be purchased by persons other than U.S.
persons and non-U.S. persons who will satisfy the Sellers and the Trustee
of the Trust that such non-U.S. person will be taxed with respect to its
ownership of Certificates as if it were a U.S. person. However, in the case
of such a non-U.S. person, the Trust will withhold U.S. income tax at the
highest marginal rate.
THE FEDERAL TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A NOTEHOLDER'S OR
CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF
THE PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES AND CERTIFICATES,
INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX
LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
The Notes
The Notes may, in general, be purchased by or on behalf of (i)
"employee benefit plans" (as defined in Section 3(3) of ERISA), (ii)
"plans" described in Section 4975(e)(1) of the Code, including individual
retirement accounts and Keogh Plans, or (iii) entities whose underlying
assets include plan assets by reason of a plan's investment in such entity
(each, a "Plan"). However, the acquisition and holding of Notes by or on
behalf of a Plan could be considered to give rise to a prohibited
transaction under ERISA and the Code if the Trust, the Owner Trustee, the
Indenture Trustee, any holder of the Certificates or any of their
respective affiliates, is or becomes a "party in interest" or a
"disqualified person" (as defined in ERISA and the Code, respectively) with
respect to such Plan. In such case, certain exemptions from the prohibited
transaction rules could be applicable to such acquisition and holding by a
Plan depending on the type and circumstances of the Plan fiduciary making
the decision to acquire a Note. For additional information regarding
treatment of the Notes under ERISA, see "ERISA Considerations" in the
Prospectus.
The Certificates
The Certificates may not be acquired by a Plan or a person investing
"plan assets" of a Plan (exclud- ing, for this purpose, any entity
registered under the Investment Company Act of 1940, as amended) (each, a
"Plan Investor"). In addition, investors other than Plan Investors should
be aware that a prohibited transaction under ERISA and the Code could be
deemed to occur if any holder of the Certificates or any of their
respective affiliates, is or becomes a party in interest or a disqualified
person with respect to any Plan that acquires and holds the Notes without
such Plan being covered by one or more exemptions from the prohibited
transaction rules. For additional information regarding treatment of the
Certificates under ERISA, see "ERISA Considerations" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting
Agreement (the "Note Underwriting Agreement"), the Sellers have agreed to
cause the Trust to sell to each of the Note Underwriters named below
(collectively, the "Note Underwriters"), and each of the Note Underwriters
has severally agreed to purchase, the initial principal amount of Notes set
forth opposite its name below:
PRINCIPAL [PRINCIPAL [PRINCIPAL
AMOUNT OF AMOUNT OF AMOUNT OF
[CLASS A-1] CLASS A-2 CLASS A-3
NOTE UNDERWRITERS NOTES NOTES] NOTES]
NationsBanc Capital Markets, Inc... $ $[ ] $[ ]
................................... [ ] [ ]
................................... [ ] [ ]
[ ] [ ]
Total.................................. $ $[ ] $[ ]
The Sellers have been advised by the Note Underwriters that they
propose initially to offer the Notes to the public at the prices set forth
herein, and to certain dealers at such prices less the initial concession
not in excess of ____% per [Class A-1] Note[, ____% per Class A-2 Note and
____% per Class A-3 Note]. The Note Underwriters may allow, and such
dealers may reallow, a concession not in excess of _____% per [Class A-1]
Note[, % per Class A-2 Note and ____% per Class A-3 Note] to certain other
dealers. After the initial public offering of the Notes, the public
offering price and such concessions may be changed.
Subject to the terms and conditions set forth in an Underwriting
Agreement (the "Certificate Underwriting Agreement"), the Sellers have
agreed to cause the Trust to sell to each of the Certificate Underwriters
named below (the "Certificate Underwriters" and, together with the Note
Underwriters, the "Underwriters"), and each of the Certificate Underwriters
has severally agreed to purchase, the initial Certificate Balance of
Certificates set forth opposite its name below:
CERTIFICATE
BALANCE OF
CERTIFICATE UNDERWRITERS CERTIFICATES
NationsBanc Capital Markets, Inc........ $
........................................
Total....................................... $
The Sellers have been advised by the Certificate Underwriters that
they propose initially to offer the Certificates to the public at the price
set forth herein, and to certain dealers at such price less the initial
concession not in excess of _____% per Certificate. The Certificate
Underwriters may allow, and such dealers may reallow, a concession not in
excess of _____% per Certificate to certain other dealers. After the
initial public offering of the Certificates, the public offering price and
such concessions may be changed.
NationsBanc Capital Markets, Inc. ("NCMI") is a separate subsidiary of
NationsBank Corporation. NCMI is a registered broker-dealer and not a bank.
Any obligations of NCMI are the sole responsibility of NCMI and do not
create any obligation or guarantee on the part of any affiliate of NCMI.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus, certain
legal matters relating to the Notes and the Certificates will be passed
upon for the Underwriters and certain federal income tax and other matters
will be passed upon for the Trust by [ ].
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered
NationsBank Auto Owner Trust % [Class A-1] Asset Backed Notes[, Floating
Rate Class A-2 Asset Backed Notes and % Class A-3 Asset Backed Notes]
(collectively, [the "Global Notes") and % Asset Backed Certificates (the
"Global Certificates" and together with the Global Notes,] the "Global
Securities") will be available only in book-entry form. Investors in the
Global Securities may hold such Global Securities through any of The
Depository Trust Company ("DTC"), Cedel Bank, societe anonyme ("Cedel") or
the Euroclear System ("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 Global Securities will be effected on a
delivery-against-payment basis through the respective Depositaries 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 & Co. 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 Depositaries, 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 applicable to U.S. corporate debt
obligations. 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
security 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 ensure that settlement can be made on the
desired value date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to U.S.
corporate debt obligations 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
Depositary, 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. Payment will then be made by the respective Depositary to
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 debit 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 debit 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
pre-position 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
pre-position funds and allow that credit line to be drawn upon to finance
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 Depositary 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 Participant 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 Depositary, 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 Depositary, as
appropriate, to deliver the bonds to the DTC Participant's account 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. 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 debit in anticipation of
receipt of the sale proceeds in its account, the back-valuation will
extinguish any overdraft charges 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:
(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 Income Tax Documentation Requirements
[Global Notes]
A beneficial owner of Global [Securities] [Notes] holding securities
through Cedel or Euroclear (or through DTC if the holder has an address
outside the U.S.) will be subject to the 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 owner takes 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] [Notes] 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] [Notes] 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 only 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 beneficial
owner of Global [Securities] [Notes] 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 beneficial owner of a
Global [Security] [Note] 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.
[Global Certificates
The Global Certificates may not be purchased by persons other than
U.S. Persons and non-U.S. Persons who will have satisfied the Sellers and
the Owner Trustee that such non-U.S. Person will be taxed with respect to
its beneficial ownership of Global Certificates as if it were a U.S.
Person.]
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 does not deal
with all aspects of U.S. federal income tax withholding that may be
relevant to foreign holders of the Global [Securities] [Notes]. Investors
are advised to consult their own tax advisers for specific tax advice
concerning their holding and disposing of the Global Securities.
INDEX OF TERMS
Set forth below is a list of the defined terms used in this Prospectus
Supplement and defined herein and the pages on which the definitions of
such terms may be found herein. Certain defined terms used in this
Prospectus Supplement are defined in the Prospectus. See "Index of Terms"
in the Prospectus.
Accrued Certificate Interest...........................................S-45
Accrued Note Interest..................................................S-44
Additional Yield Supplement Amount.....................................S-15
Additional Reserve Account Deposit.....................................S-13
APM....................................................................S-30
APM Table..............................................................S-30
Available Funds........................................................S-42
Available Interest.....................................................S-42
Available Principal....................................................S-42
Available Reserve Amount...............................................S-48
Bank, Banks........................................................S-1, S-4
Business Day............................................................S-7
Cap Notional Amount....................................................S-49
Cap Rate...............................................................S-49
Cede....................................................................S-2
CEDEL...................................................................I-1
Certificate Balance....................................................S-45
Certificate Interest Reserve Amount....................................S-48
Certificate Pool Factor................................................S-34
Certificate Prepayment Amount....................................S-11, S-39
Certificate Prepayment Premium.........................................S-11
Certificate Rate.......................................................S-10
Certificate Underwriters...............................................S-61
Certificate Underwriting Agreement.....................................S-61
Certificateholders.....................................................S-10
Certificateholders' Distribution Amount................................S-45
Certificateholders' Interest Carryover Shortfall.......................S-45
Certificateholders' Monthly Accrued Interest...........................S-45
Certificateholders' Monthly Principal..................................S-45
Certificateholders' Percentage.........................................S-45
Certificateholders' Principal Carryover Shortfall......................S-45
Certificateholders' Principal Distribution Amount......................S-45
Certificates.......................................................S-1, S-4
[Class A-1] Final Scheduled [Distribution] [Payment] Date...............S-8
Class A-1 Notes.........................................................S-4
[Class A-1] Notes.......................................................S-1
[Class A-1 Rate]........................................................S-7
Class A-2 Final Scheduled [Distribution] [Payment] Date.................S-8
Class A-2 Notes....................................................S-1, S-4
Class A-2 Rate..........................................................S-7
Class A-3 Final Scheduled [Distribution] [Payment] Date.................S-8
Class A-3 Notes....................................................S-1, S-4
Class A-3 Rate..........................................................S-7
Closing Date............................................................S-5
Code.............................................................S-18, S-51
Collateral Agent........................................................S-5
Collection Account.....................................................S-16
Collection Period.......................................................S-8
Collections............................................................S-42
Commission..............................................................S-3
Contract Rate....................................................S-15, S-25
Cut-Off Date...........................................................S-25
Date....................................................................S-9
Dealer Agreements.......................................................S-5
Dealers.................................................................S-5
Defaulted Receivable...................................................S-42
Determination Date................................................S-8, S-36
Disposition of Certificates............................................S-58
Distribution Date.................................................S-3, S-10
[Distribution] [Payment] Date......................................S-2, S-7
DTC................................................................S-3, I-1
ERISA..................................................................S-18
Euroclear...............................................................I-1
Exchange Act............................................................S-3
Final Scheduled Distribution Date......................................S-11
Final Scheduled Maturity Date...........................................S-6
Financed Vehicles.......................................................S-5
Forced-Placed Insurance................................................S-25
Funding Period.........................................................S-13
Global Certificates.....................................................I-1
Global Notes............................................................I-1
Global Securities.......................................................I-1
Guaranteed Rate Agreement..............................................S-50
Indenture...............................................................S-4
Indenture Trustee.......................................................S-4
Index Maturity....................................................S-2, S-36
[Initial] Cut-Off Date..................................................S-5
Initial Pool Balance....................................................S-9
[Initial] Pool Balance..................................................S-5
[Initial] Receivables...................................................S-5
Interest Collections...................................................S-42
Interest Period..............................................S-2, S-7, S-35
Interest Rate Cap......................................................S-49
Interest Rate Cap Provider.......................................S-12, S-49
Interest Rate Swap...............................................S-12, S-50
Interest Reset Period.............................................S-2, S-36
Investment Provider..............................................S-16, S-51
IRS....................................................................S-51
Issuer..................................................................S-4
Liquidation Proceeds...................................................S-43
Mandatory Redemption..............................................S-9, S-37
Mandatory Repurchase.............................................S-11, S-39
NationsBank South.......................................................S-4
NationsBank Texas.......................................................S-4
Net Trust Swap Payment...........................................S-13, S-50
Net Trust Swap Receipt...........................................S-13, S-50
Note Interest Rate[s]...................................................S-7
Note Pool Factor.......................................................S-34
Note Prepayment Amount............................................S-9, S-37
Note Prepayment Premium.................................................S-9
Note Underwriters......................................................S-61
Note Underwriting Agreement............................................S-61
Noteholders.............................................................S-7
Noteholders' Accelerated Principal................................S-8, S-36
Noteholders' Interest Carryover Shortfall..............................S-44
Noteholders' Monthly Accrued Interest..................................S-44
Noteholders' Monthly Principal.........................................S-44
Noteholders' Payment Amount............................................S-44
Noteholders' Percentage................................................S-44
Noteholders' Principal Carryover Shortfall.............................S-44
Noteholders' Principal Payment Amount.............................S-8, S-44
Notes..............................................................S-1, S-4
Obligor.................................................................S-5
OID....................................................................S-52
OID Regulations........................................................S-52
Owner Trustee...........................................................S-4
Payment Date.....................................................S-35, S-50
Plan...................................................................S-60
Plan Investor..........................................................S-61
Pool Balance............................................................S-7
Pool [/Prefunding] Balance..............................................S-6
Pre-Funded Amount.......................................................S-6
Pre-Funded Percentage...................................................S-9
Pre-Funding Account...............................................S-2, S-13
Prepayable Obligation..................................................S-53
Prepayment Assumption..................................................S-53
Prospectus..............................................................S-2
Purchase Receivable....................................................S-43
Rating Agencies........................................................S-24
Receivables........................................................S-1, S-5
Receivables Pool.......................................................S-25
Record Date.............................................................S-7
Recoveries.............................................................S-43
Redemption Price.......................................................S-38
Regular Principal.................................................S-8, S-36
Replacement Guaranteed Rate Agreement..................................S-51
Required Rate..........................................................S-15
Required Subsequent Yield Supplement Amount......................S-16, S-49
Required Yield Supplement Amount.................................S-16, S-49
Required [Initial] Yield Supplement Amount.......................S-15, S-49
Reserve Account........................................................S-13
Reserve Account Initial Deposit..................................S-13, S-47
Sale and Servicing Agreement............................................S-5
Securities.........................................................S-1, S-4
Securities Act..........................................................S-3
Securityholders........................................................S-10
Seller, Sellers....................................................S-1, S-4
Servicer................................................................S-4
Servicer's Certificate.................................................S-41
Servicing Fee Rate.....................................................S-16
Short-Term Notes.......................................................S-54
Simple Interest Receivable.............................................S-29
Special Tax Counsel....................................................S-17
Specified Reserve Account Balance................................S-14, S-47
Subsequent Cut-Off Date.................................................S-6
Subsequent Receivables.............................................S-2, S-6
Subsequent Transfer Date................................................S-6
Supplemental Servicing Fee.............................................S-41
Swap Counterparty................................................S-12, S-50
Swap Notional Amount...................................................S-50
Transfer and Servicing Agreements......................................S-39
Trust..............................................................S-1, S-4
Trust Agreement.........................................................S-4
Trust Property..........................................................S-5
U.S. Person.............................................................I-4
Underwriters...........................................................S-61
Yield Supplement Account...............................................S-15
Yield Supplement Agreement.............................................S-15
Yield Supplement Amount..........................................S-15, S-49
Yield Supplement Deposit Amount........................................S-49
Yield Supplement Initial Deposit.......................................S-15
No dealer, salesman 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
Supplement or the Prospectus and, NationsBank 199 -
if given or made, such information
or representations must not be relied Auto Owner Trust
upon. This Prospectus Supplement and
the Prospectus do not constitute an
offer to sell or a solicitation of an
offer to buy any securities other than $
the securities offered hereby, nor an
offer of the securities in any state or % Asset Backed
jurisdiction in which, or to any person
to whom, such offer would be unlawful. Notes[, Class A-1]
The delivery of this Prospectus
Supplement or the Prospectus at any
time does not imply that information
herein or therein is correct as of [$
any time subsequent to its date. Floating Rate Asset Backed
____________________ Notes, Class A-2]
TABLE OF CONTENTS [$
Page % Asset Backed
PROSPECTUS SUPPLEMENT Notes, Class A-3]
Reports to Securityholders.............S-2
Summary................................S-4
Risk Factors...........................S-20
The Trust..............................S-24 $
The Receivables Pool...................S-25 % Asset Backed
Pool Factors...........................S-34 Certificates
Maturity and Prepayment Considerations.S-34
Description of the Notes...............S-35
Description of the Certificates........S-38 NationsBank, N.A.
Description of the Transfer and NationsBank, N.A. (South)
Servicing Agreements..................S-39 NationsBank of Texas, N.A.
Certain Federal Income Tax Sellers
Consequences..........................S-51 _______
ERISA Considerations...................S-60 NationsBank, N.A.
Underwriting...........................S-61 Servicer
Legal Opinions.........................S-62 ________
Annex I--Global Clearance, Settlement
and Tax Documentation Procedures......I-1
Index of Terms
PROSPECTUS
Reports to Securityholders... ...........3
Available Information....................3
Incorporation of Certain Documents
by Reference...........................3 PROSPECTUS
Summary.................................4 SUPPLEMENT
Risk Factors............................13
The Trusts..............................17
The Receivables Pools...................19
Maturity and Prepayment Considerations..21
Pool Factors and Trading Information....22
Use of Proceeds.........................22
The Banks, NationsBank Corporation
and [NB-SPC]...........................23
The Servicer............................23
Description of the Notes................24
Description of the Certificates.........28
Certain Information Regarding the
Securities.............................30
Description of the Transfer and
Servicing Agreements...................40
Certain Legal Aspects of the
Receivables............................53
Certain Federal Income Tax
Consequences...........................57
ERISA Considerations....................58
Plan of Distribution....................63
Legal Opinions..........................64
Index of Terms
Until ____, 199_ (90 days after
the date of this Prospectus
Supplement), all dealers
effecting transactions in the
Notes or the Certificates,
whether or not participating in
this distribution, may be
required to deliver a Prospectus
Supplement and a Prospectus. This
is in addition to the obligation
of dealers to deliver a Pro-
spectus Supplement and a
Prospectus when acting as
underwriters and with respect
to their unsold allotments or
subscriptions.
The 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 supplement and the accompanying
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 _____ __, 1996
Prospectus Supplement
(To Prospectus dated , 1996)
$
NationsBank Auto Grantor Trust 199_
$ % Asset Backed Certificates, Class A
[$ % Asset Backed Certificates, Class B]
[NationsBank Logo]
NationsBank, N.A.
NationsBank, N.A. (South)
NationsBank of Texas, N.A.
Sellers
NationsBank, N.A.
Servicer
The NationsBank Auto Grantor Trust 199 - (the "Trust") will be
formed pursuant to a Pooling and Servicing Agreement (the "Agreement"),
to be dated as of , 199 , among NationsBank, N.A.,
NationsBank, N.A. (South) and NationsBank of Texas, N.A. (each,
"Seller" and collectively, the "Sellers"), NationsBank, N.A. (the
"Servicer") and , as Trustee, and will issue $
aggregate initial principal balance of % Asset Backed Certificates,
Class A (the "Class A Certificates") and $ aggregate initial
principal balance of % Asset Backed Certificates, Class B (the
"Class B Certificates" and, together with the Class A Certificates, the
"Certificates"). [Only the Class A Certificates are being offered
hereby.] The Class A Certificates will evidence in the aggregate an
undivided ownership interest of approximately % in the Trust. The
Class B Certificates will evidence in the aggregate an undivided
ownership interest of approximately % in the Trust. The rights of
the Class B Certificateholders to receive distributions with respect to
the Receivables are subordinated to the rights of the Class A
Certificateholders to the extent described herein. The Trust property
will include a pool of fixed rate simple interest retail motor vehicle
installment sales contracts indirectly originated by the Sellers (the
"Receivables") secured by security interests in the motor vehicles
financed thereby, including certain monies due or received thereunder
on , 199 (the "Cut-Off Date"), other than the portion thereof
payable to the Servicer as its Servicing Fee as described herein and
certain other property, as more fully described herein. See
"Summary The Trust Property" herein. [The Trustee also will hold
monies on deposit in a trust account (the "Pre-Funding Account").
Additional retail motor vehicle installment sales contracts (the
"Subsequent Receivables") will be purchased by the Trust from the
Seller from time to time on or before , 199 out of funds
on deposit in the Pre-Funding Account.]
Principal and interest to the extent of the [applicable]
Certificate Rate generally will be distributed on the day of each
month (the "Distribution Date"), commencing , 199 . The
final scheduled Distribution Date on the [Class A] Certificates will be
, 199 (the "Final Scheduled Distribution Date").
Prospective investors should consider, among other things, the
information set forth in "Risk Factors" on page S-__ herein and
on page of the accompanying Prospectus.
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND
DO NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN, AND ARE NOT GUARANTEED
OR INSURED BY, NATIONSBANK, N.A., NATIONSBANK, N.A. (SOUTH),
NATIONSBANK OF TEXAS, N.A. OR NATIONSBANK CORPORATION OR ANY OF THEIR
RESPECTIVE AFFILIATES.
A CERTIFICATE IS NOT A DEPOSIT AND NEITHER THE CERTIFICATES NOR THE
RECEIVABLES ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER 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
SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
=======================================================================
Proceeds to
Price to Underwriting the Seller
Public (1) Discount (1)(2)
_______________________________________________________________________
Per Class A Certificate ... % % %
[Per Class B Certificate ... % % %
Total ...................... $ $ $]
=======================================================================
(1) Plus accrued interest, if any, from , 199 .
(2) Before deducting expenses, estimated to be $ .
The [Class A] Certificates are offered by the Underwriters when,
as and if issued 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 [Class A] Certificates will be made in book-entry form
only through the Same Day Funds Settlement System of The Depository
Trust Company, or through Cedel Bank, societe anonyme or the Euroclear
System on or about the Closing Date.
The date of this Prospectus Supplement is , 199 .
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE
INFORMATION ABOUT THE OFFERING OF THE [CLASS A] CERTIFICATES.
ADDITIONAL INFORMATION IS CONTAINED IN THE PROSPECTUS AND
PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE [CLASS A]
CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS
RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY
OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICES OF THE [CLASS A] 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
[Class A] Certificates. See "Certain Information Regarding the
Securities Book-Entry Registration" and " Reports to
Securityholders" in the accompanying Prospectus (the
"Prospectus"). Such reports will not constitute financial
statements prepared in accordance with generally accepted
accounting principles. The Seller, as originator 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.
The Sellers have filed with the Commission, on behalf of the
Trust, a 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 such Registration Statement,
and the exhibits thereto, which are available for inspection
without charge at the public reference facilities of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, as
well as the Regional Offices of the Commission at 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, and 7 World
Trade Center, Suite 1300, New York, New York 10048. Copies of
such information can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. The Servicer, on behalf of the
Trust, will also file or cause to be filed with the Commission
such periodic reports as may be required under the Exchange Act,
and the rules and regulations of the Commission thereunder. The
Servicer intends to cause the Trust to suspend the filing of such
periodic reports if such periodic reports are no longer required
by the Exchange Act.
SUMMARY
The following summary is qualified in its entirety by
reference to the detailed information appearing elsewhere herein
and in the Prospectus. Certain capitalized terms used herein are
defined elsewhere in this Prospectus Supplement on the pages
indicated in the "Index of Terms" or, to the extent not defined
herein, have the meanings assigned to such terms in the
Prospectus.
ISSUER . . . . . NationsBank Auto Grantor Trust 199 - (the
"Trust" or the "Issuer"), a trust to be
formed by the Sellers and the Trustee
pursuant to the Agreement.
SELLERS . . . . . NationsBank, N.A., NationsBank, N.A. (South)
("NationsBank South"), and NationsBank of
Texas, N.A. ("NationsBank Texas") (each a
"Seller" and a "Bank" and, collectively,
the "Sellers" and the "Banks").
SERVICER . . . . NationsBank, N.A., in its capacity as
servicer (the "Servicer").
TRUSTEE . . . . . , a , as trustee under
the Agreement (the "Trustee").
COLLATERAL AGENT . . , a , in its capacity
as collateral agent (the "Collateral Agent").
THE TRUST PROPERTY. The property of the Trust (the "Trust
Property") includes a pool of fixed rate
simple interest retail motor vehicle
installment sales contracts purchased by
the Sellers from motor vehicle dealers
(the "Dealers") that provide for the
allocation of payments between principal
and interest according to the simple
interest method (collectively, the
"Receivables"), all monies received
under the [Initial] Receivables after
the close of business of the Servicer on
, 1996 (the "[Initial] Cut-Off
Date") [and all monies received under
the Subsequent Receivables after the
close of business of the Servicer on
each applicable Subsequent Transfer
Date] and will also include: (i) such
amounts as from time to time are on
deposit in one or more accounts
maintained pursuant to the Pooling and
Servicing Agreement to be dated as of
, 199_ (as amended and supplemented
from time to time, the "Agreement")
among the Banks, as Sellers, the
Servicer, the Trustee and the Collateral
Agent, as described herein[, including
the Yield Supplement Account][and the
Pre-Funding Account]; (ii) security
interests in the new and used
automobiles, vans and light-duty trucks
financed thereby (collectively, the
"Financed Vehicles") and any accessions
thereto; (iii) the Sellers' rights (if
any) to receive proceeds from claims
under certain insurance policies
covering the Financed Vehicles or the
obligors under the Receivables (each, an
"Obligor"), as the case may be; (iv)
certain rights of the Trust to receive
payments from the Reserve Account [and
pursuant to the Yield Supplement
Agreement] as described below; (v) any
property that shall have secured a
Receivable and shall have been acquired
by the Trust; (vi) each Seller's rights
relating to the repurchase of
Receivables under agreements between
each Seller and the Dealers that sold
the Financed Vehicles to the Obligors
and any assignments and other documents
related thereto (collectively, the
"Dealer Agreements") and under the
documents and instruments contained in
the Receivable Files; (vii) certain
rebates of premiums and other amounts
relating to certain insurance policies
and other items financed under the
Receivables; (viii) all other rights of
the Trust under the Agreement; and (ix)
any and all proceeds of the foregoing.
The Reserve Account [and the Yield
Supplement Account,] and any amounts
therein, will not be property of the
Trust, but such accounts will be pledged
to and held by ________ acting in its
capacity as property-holding agent for
the benefit of the Certificateholders
(the "Collateral Agent").
THE CERTIFICATES. . The Trust will issue Asset Backed
Certificates (the "Certificates") in an
aggregate initial balance of $ .
The Certificates represent fractional
undivided interests in the Trust and will
be issued pursuant to the Agreement.
The Certificates will consist of $
aggregate initial principal amount
of % Asset Backed Certificates, Class
A (the "Class A Certificates") [and $
aggregate initial principal amount
of % Asset Backed Certificates, Class
B (the "Class B Certificates")]. [Only the
Class A Certificates are being offered
hereby.] Each Certificate will represent a
fractional undivided ownership interest in
the Trust.
The [Class A] Certificates will be available
for purchase in book entry form only in
minimum denominations of $1,000 and
integral multiples thereof. The [Class A]
Certificateholders will not be entitled to
receive Definitive Certificates except in
the limited circumstances described herein.
See "Certain Information Regarding the
Securities Definitive Securities" in the
Prospectus.
[The Class A Certificates will evidence in
the aggregate an undivided ownership
interest (the "Class A Percentage") of
approximately % in the Trust
(initially representing $ )
and the Class B Certificates will evidence
in the aggregate an undivided ownership
interest (the "Class B Percentage") of
approximately % in the Trust
(initially representing $ ).
The Class B Certificates are subordinated
to the Class A Certificates to the extent
described herein.] [The Class B
Certificates are not being offered hereby.]
REGISTRATION OF
CERTIFICATES . . Except in certain limited circumstances, the
Certificates will be available only in
book-entry form and will each be
represented initially by global
certificates registered in the name of Cede
& Co. ("Cede"), as nominee of The
Depository Trust Company ("DTC")(for
Certificates held in the United States),
[Cedel Bank, societe anonyme ("Cedel") or
the Euroclear System ("Euroclear")(for
Certificates held in Europe). No person
acquiring a beneficial ownership interest
in the Certificates (a "Certificate Owner")
will be entitled to receive a Definitive
Certificate representing such person's
interest in the Trust except under certain
limited circumstances. Under the terms of
the Agreement, Certificate Owners will not
be recognized as Certificateholders and
will be permitted to exercise the rights of
the Certificateholders only indirectly
through DTC. See "Risk Factors Form of
Certificates; Certificate Owners Not
Recognized as Certificateholders" and
"Description of the Certificates Book-
Entry Registration," " Definitive
Certificates" and Annex I to this
Prospectus Supplement, "Global Clearance,
Settlement and Tax Documentation
Procedures."
THE RECEIVABLES . On , 199 (the "Closing Date"), the
Trust will purchase Receivables (the
"[Initial] Receivables") having an
aggregate principal balance of
approximately $ as of ,
199 (the "[Initial] Cut-Off Date"), from
the Sellers pursuant to the Agreement. As
of the [Initial] Cut-Off Date, the weighted
average annual percentage rate of the
[Initial] Receivables was approximately
%, the weighted average remaining
maturity of the [Initial] Receivables was
approximately months and the weighted
average original maturity of the [Initial]
Receivables was approximately months.
[On and following the Closing Date, pursuant
to the Agreement, the Sellers will be
obligated, subject only to the availability
thereof, to sell, and the Trust will be
obligated to purchase, subject to the
satisfaction of certain conditions set
forth therein, additional Receivables (the
"Subsequent Receivables") from time to time
during the Funding Period having an
aggregate principal balance equal to
approximately $ (such amount
being equal to an amount on deposit in the
Pre-Funding Account (the "Pre-Funded
Amount") on the Closing Date). The Sellers
will designate as a Cut-Off Date (each a
"Subsequent Cut-Off Date") the date as of
which Subsequent Receivables are conveyed
to the Trust. It is expected that certain
of the Subsequent Receivables arising
between the Initial Cut-Off Date and the
Closing Date will be conveyed to the Trust
on the Closing Date and that other
Subsequent Receivables will be conveyed to
the Trust as frequently as daily thereafter
on dates specified by the Sellers (each
date on which Subsequent Receivables are
conveyed to the Trust being referred to as
a "Subsequent Transfer Date") occurring
during the Funding Period. See
"Description of the Certificates Sale and
Assignment of Receivables; Subsequent
Receivables" herein.]
The [Initial] Receivables [and the Subsequent
Receivables] arise or will arise from loans
originated by Dealers and purchased by the
Sellers pursuant to Dealer Agreements. The
[Initial] Receivables have been selected[,
and the Subsequent Receivables will be
selected,] from the contracts owned by
Sellers based on the criteria specified in
the Agreement and described herein and in
the Prospectus. No Initial Receivable
has[, and no Subsequent Receivable will
have,] a scheduled maturity later than
_______ (the "Final Scheduled Maturity
Date").
[Subsequent Receivables may be originated by
the Dealers and purchased by the Sellers at
a later date using credit criteria
different from those which were applied to
the Initial Receivables and may be of a
different credit quality and seasoning. In
addition, following the transfer of
Subsequent Receivables to the Trust, the
characteristics of the entire pool of
Receivables included in the Trust may vary
significantly from those of the Initial
Receivables. See "Risk Factors The
Subsequent Receivables and the Pre-Funding
Account" and "The Receivables Pool"
herein.]
The "Pool[/Pre-Funding] Balance" at any time
[will represent] [is the sum of (i)] the
aggregate principal balance of the
Receivables at the end of the preceding
Collection Period, after giving effect to
all payments received from Obligors,
Liquidation Proceeds and Purchase Amounts
to be remitted by the Servicer or the
Sellers, as the case may be, all for such
Collection Period and all Realized Losses
during such Collection Period [(such
amount, the "Pool Balance") and (ii) the
amount on deposit in the Pre-Funding
Account (excluding any Investment
Earnings)].
DISTRIBUTION DATES. Distributions with respect to the
Certificates will be made on the
day of each month or, if any such day is
not a Business Day, on the next
succeeding Business Day (each, a
"Distribution Date") commencing
, 199 . Distributions will be made to
holders of the [Class A] Certificates
(the "[Class A] Certificateholders") of
record as of the day immediately
preceding such Distribution Date or, if
Definitive Certificates are issued, as
of the day of the preceding month
(a "Record Date"). A "Business Day" is
a day that in The City of New York or in
the city in which the corporate trust
office of the Trustee is located is
neither a legal holiday nor a day on
which banking institutions are
authorized by law, regulation or
executive order to be closed.
CERTIFICATE RATE. . % per annum with respect to the Class A
certificates (the "[Class A] Certificate
Rate"), [and % per annum with respect to
the Class B Certificates (the "[Class B]
Certificate Rate"), in each case] calculated
on the basis of a 360-day year consisting of
twelve 30-day months. [The Class A
Certificate Rate and the Class B Certificate
Rate are both sometimes referred to as the
applicable "Pass-Through Rate."]
INTEREST . . . . On each Distribution Date, interest at one-
twelfth of the applicable Pass-Through Rate,
calculated on the basis of a 360-day year
consisting of twelve 30-day months, on the
Class A Certificate Balance [and the Class B
Certificate Balance, respectively, in each
case] as of the preceding Distribution Date
(after giving effect to all payments of
principal made on such preceding Distribution
Date) or, in the case of the first
Distribution Date, as of the Closing Date,
will be distributed to the registered holders
of the Class A Certificates (the "Class A
Certificateholders") [and the registered
holders of the Class B Certificates (the
"Class B Certificateholders" and, together
with the Class A Certificateholders,] the
"Certificateholders") as of the day
immediately preceding such Distribution Date
(or, if Definitive Certificates are issued,
the last day of the related Collection
Period) (in each case, the "Record Date"), to
the extent that sufficient funds are on
deposit in the Certificate Account or
available in the Reserve Account to make such
distribution. A "Collection Period" means the
calendar month preceding each Distribution
Date. See "Description of the Certificates
Distributions on Certificates" and " Reserve
Account." [The rights of the Class B
Certificateholders to receive distributions
of interest will be subordinated to the
rights of the Class A Certificateholders to
receive distributions of interest to the
extent described herein. See "Risk Factors
Limited Assets" and " Subordination of Class
B Certificates."]
PRINCIPAL . . . . On each Distribution Date, as described more
fully herein, all payments of principal on
the Receivables received by the Servicer
during the preceding Collection Period, plus
an amount equal to the principal balance of
any Receivables which became Defaulted
Receivables during the preceding Collection
Period, will be distributed by the Trustee to
the Class A Certificateholders [and to the
Class B Certificateholders] of record on the
preceding Record Date, to the extent that
sufficient funds are available therefor on
deposit in the Certificate Account or
available in the Reserve Account to make such
distribution. See "The Certificates
Distributions on Certificates" and " Reserve
Account." [The rights of the Class B
Certificateholders to receive distributions
of principal will be subordinated to the
rights of the Class A Certificateholders to
receive distributions of interest and
principal to the extent described herein.]
[SUBORDINATION OF
CLASS B
CERTIFICATES. . . Distributions of interest on the Class B
Certificates will be subordinated in
priority of payment to distributions of
interest (but not principal) due on the
Class A Certificates, and distributions of
principal on the Class B Certificates will
be subordinated in priority of payment to
distributions of interest and principal due
on the Class A Certificates, in the event
of defaults on the Receivables to the
extent described herein. The Class B
Certificateholders will not receive any
distributions of interest with respect to a
Collection Period until the full amount of
interest on the Class A Certificates
relating to such Collection Period has been
deposited in the Distribution Account. The
Class B Certificateholders will not receive
any distributions of principal with respect
to a 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
Distribution Account. See "Risk Factors
Limited Assets" and " Subordination of the
Class B Certificates" herein.]
OPTIONAL PURCHASE If the Servicer exercises its option to
purchase the Receivables, which can occur
after the Pool Balance declines to 5% or
less of the Initial Pool Balance, the Class
A Certificateholders will receive an amount
equal to the Class A Certificate Balance
together with accrued interest at the
[Class A] Certificate Rate, [the Class B
Certificateholders will receive and amount
equal to the Class B Certificate Balance
together with accrued interest at the Class
B Certificate Rate] and the [Class A]
Certificates will be retired. The "Initial
Pool Balance" will equal [the sum of (i)]
the Pool Balance as of the [Initial] Cut-
Off Date [plus (ii) the aggregate principal
balances of all Subsequent Receivables
added to the Trust as of their respective
Subsequent Cut-Off Dates]. See
"Description of the Certificates Optional
Purchase" herein.
[MANDATORY RE-
PURCHASE FROM
PRE-FUNDING
ACCOUNT. . . . . . The [Class A] Certificates will be prepaid,
in part, on the Distribution Date on or
immediately following the last day of
the Funding Period in the event that any
amount remains on deposit in the
Pre-Funding Account after giving effect
to the purchase of all Subsequent
Receivables, including any such purchase
on such date (a "Mandatory Repurchase").
The aggregate principal balance of
[Class A] Certificates to be prepaid
will be an amount equal to the amount
then on deposit in the Pre-Funding
Account.
A limited recourse mandatory prepayment
premium (the "Certificate Prepayment
Premium") will be payable by the Trust to
the [Class A] Certificateholders if the
aggregate principal balance of [Class A]
Certificates to be prepaid pursuant to a
Mandatory Repurchase exceeds $ .
The Certificate Prepayment Premium will
equal the excess, if any, discounted as
described below, of (i) the amount of
interest that would accrue on the remaining
Pre-Funded Amount (the "Certificate
Prepayment Amount") at the related
Certificate Rate during the period
commencing on and including the
Distribution Date on which such Certificate
Prepayment Amount is required to be
distributed to Certificateholders to but
excluding , over (ii) the amount
of interest that would have accrued on such
Certificate Prepayment Amount over the same
period at a per annum rate of interest
equal to the bond equivalent yield to
maturity on the Determination Date
preceding such Distribution Date on the
, in the case of a Class A
Certificate, and on the , in the
case of a Class B Certificate. Such excess
shall be discounted to present value to
such Distribution Date at the applicable
yield described in clause (ii) above.
Pursuant to the Agreement, the Sellers will
be obligated to pay the Certificate
Prepayment Premium to the Trust as
liquidated damages for the failure to
deliver Subsequent Receivables having an
aggregate principal balance equal to the
Pre-Funded Amount. The Trust's obligation
to pay the Certificate Prepayment Premium
will be limited to funds received from the
Sellers pursuant to the preceding sentence.
In the event that such funds are
insufficient to pay the aggregate
Certificate Prepayment Premium in full,
[Class A] Certificateholders [of each class
of Certificates] will receive their ratable
share [(based upon the Certificate
Prepayment Premium for each class of
Certificates)] of the aggregate amount
available to be distributed in respect of
the Certificate Prepayment Premium. No
other assets of the Trust will be available
for the purpose of making such payment.]
[PRE-FUNDING
ACCOUNT. . . . . During the period (the "Funding Period")
from and including the Closing Date
until the earliest of (i) the date
on which (a) the amount on deposit
in the Pre-Funding Account is less
than $ , (b) an Event of
Default occurs under the Agreement
or (c) certain events of insolvency
occur with respect to any of the
Sellers or the Servicer or (ii) the
close of business on the
Distribution Date, the Pre-Funded
Amount will be maintained as an
account in the name of the Trustee
(the "Pre-Funding Account"). The
Pre-Funded Amount will initially
equal approximately $ ,
and, during the Funding Period,
will be reduced by the amount
thereof used to purchase Subsequent
Receivables in accordance with the
Agreement and the amount thereof
deposited in the Reserve Account in
connection with the purchase of
such Subsequent Receivables. The
Sellers expect that the Pre-Funded
Amount will be reduced to less than
$ by the
Distribution Date. Any Pre-Funded
Amount remaining at the end of the
Funding Period will be payable to
the Certificateholders pro rata in
proportion to their initial
principal balances.]
[YIELD SUPPLEMENT
ACCOUNT; YIELD
SUPPLEMENT
AGREEMENT . . . . The Sellers will establish a yield supplement
account with the Trustee for the benefit of
the Certificateholders (the "Yield
Supplement Account"). The Yield Supplement
Account is designed solely to hold funds to
be applied by the Trustee to provide
payments to the Certificateholders in
respect of Receivables the Contract Rate of
which is less than the sum of (i) the
weighted average of the Class A Certificate
Rate and the Class B Certificate Rate and
(ii) the Servicing Fee Rate (the "Required
Rate"). The Yield Supplement Account will
be created with an initial deposit by the
Sellers (the "Yield Supplement Initial
Deposit") in an amount (which amount may be
discounted at a rate to be specified in the
Agreement) equal to the aggregate amount by
which (i) interest on the principal balance
of each [Initial] Receivable for the period
commencing on the [Initial] Cut-Off Date
and ending with the scheduled maturity of
such Receivable, assuming that payments on
such Receivables are made as scheduled and
no prepayments are made, at a rate equal to
the Required Rate, exceeds (ii) interest on
such principal balances at the Contract
Rate of such Receivable (the "Yield
Supplement Amount" [and, with respect to
all of the [Initial] Receivables, the
"Required [Initial] Yield Supplement
Amount")].
The Sellers, the Servicer and the Trustee
will enter into a Yield Supplement
Agreement (as amended and supplemented from
time to time, the "Yield Supplement
Agreement") pursuant to which, on each
Subsequent Transfer Date, the Sellers will
deposit an amount (which amount may be
discounted at a rate to be specified in the
Agreement), if any, into the Yield
Supplement Account (the "Additional Yield
Supplement Amount") equal to the aggregate
Yield Supplement Amounts in respect of the
related Subsequent Receivables for the
period commencing with the related
Subsequent Cut-Off Date and ending with the
scheduled maturity of each such Subsequent
Receivable, assuming that payments on such
Receivables are made as scheduled and no
prepayments are made. The aggregate of the
Additional Yield Supplement Amounts in
respect of the Subsequent Receivables is
referred to herein as the "Required
Subsequent Yield Supplement Amount" and,
together with the Required Initial Yield
Supplement Amount, the "Required Yield
Supplement Amount." See "Description of
the Certificates Yield Supplement Account;
Yield Supplement Agreement" herein.]
RESERVE ACCOUNT . A reserve account (the "Reserve Account")
will be established by the Sellers and
maintained by the Collateral Agent with an
initial deposit (the "Reserve Account
Initial Deposit") of cash of at least $
[plus an amount attributable to the
difference between the anticipated
investment earnings on the Pre-Funded
Amount and the weighted average interest
expense on the portion of the Certificates
represented by the Pre-Funded Amount]. [On
each Subsequent Transfer Date, cash or
Permitted Investments having a value
approximately equal to % of the
aggregate principal balance of the
Subsequent Receivables conveyed to the
Trust on such Subsequent Transfer Date will
be withdrawn from the Pre-Funding Account
from amounts otherwise distributable to the
Sellers in connection with the sale of
Subsequent Receivables and shall be
deposited in the Reserve Account. The
aggregate amount transferred from the Pre-
Funding Account to the Reserve Account on
each Subsequent Transfer Date is referred
to as the "Additional Reserve Account
Deposit."] On each Distribution Date, any
amounts on deposit in the Certificate
Account with respect to the related
Collection Period after all payments to the
Certificateholders and the Servicer have
been made will be deposited into the
Reserve Account until the amount on deposit
in the Reserve Account is equal to the
Specified Reserve Account Balance.
On each Distribution Date, the Collateral
Agent will withdraw funds from the Reserve
Account, to the extent of the funds therein
(exclusive of any investment earnings on
such funds), [(i) first to reimburse the
Servicer for certain Advances previously
made but not reimbursed ("Outstanding
Advances") and (ii) second] to make
available to Certificateholders the excess,
if any, of (x) the sum of the amounts
required to be distributed to
Certificateholders and the Servicer on the
related Distribution Date over (y) the
amount to be deposited in the Certificate
Account with respect to the preceding
Collection Period (exclusive of investment
earnings thereon). If the amount in the
Reserve Account is reduced to zero,
Certificateholders will bear directly the
credit and other risks associated with
ownership of the Receivables, including the
risk that the Trust may not have a
perfected security interest in the Financed
Vehicles. See "Risk Factors" herein and in
the Prospectus, "The Certificates Reserve
Account" herein and "Certain Legal Aspects
of the Receivables; Repurchase Obligations"
in the Prospectus.
SPECIFIED RESERVE
ACCOUNT BALANCE . On any Distribution Date, the "Specified
Reserve Account Balance" will equal % (or
% under certain circumstances described
herein) of the Pool Balance as of the last
day of the preceding Collection Period, but
in any event not less than the lesser of
(i) $ and (ii) the sum of the
Pool Balance and an amount sufficient to
pay interest on such Pool Balance at a rate
equal to the weighted average Pass-Through
Rate plus the Servicing Fee Rate through
the Final Scheduled Distribution Date. The
Specified Reserve Account Balance may be
reduced to a lesser amount as determined by
the Sellers, provided that each Rating
Agency shall have confirmed in writing that
such action will not result in a withdrawal
or reduction in its rating of the
Certificates (the "Rating Agency
Condition"). Amounts in the Reserve Account
on any Distribution Date (after giving
effect to all distributions made on that
date) in excess of the Specified Reserve
Account Balance will be paid to the
Servicer on behalf of the Sellers.
SERVICER FEE . . The Servicer will receive each month a fee
for servicing the Receivables equal to (a)
the product of one-twelfth of [1.00]% (the
"Servicing Fee Rate") and the Pool Balance
outstanding at the beginning of the
previous month, plus (b) any late,
prepayment, and other administrative fees
and expenses collected during such month
[plus reinvestment proceeds on any payments
received in respect of the Receivables].
PREPAYMENT
CONSIDERATIONS. . The weighted average life of the Certificates
may be reduced by full or partial
prepayments on the Receivables. The
Receivables are prepayable at any time.
Prepayments may also result from
liquidations due to default, the receipt of
monthly installments earlier than the
scheduled due dates for such installments,
the receipt of proceeds from credit life,
credit disability, theft or physical damage
insurance, repurchases by the Sellers as a
result of certain uncured breaches of the
warranties made by them in the Agreement
with respect to the Receivables, purchases
by the Servicer as a result of certain
uncured breaches of the covenants made by
it in the Agreement with respect to the
Receivables, or the Servicer exercising its
option to purchase all of the remaining
Receivables. The rate of prepayments on the
Receivables may be influenced by a variety
of economic, social and other factors,
including Obligor refinancings resulting
from decreases in interest rates and the
fact that the Obligor is generally not
permitted to sell or transfer the Financed
Vehicle securing a Receivable without the
consent of the relevant Seller. No
prediction can be made as to the actual
prepayment rates which will be experienced
on the Receivables. If prepayments were to
occur after a decline in interest rates,
investors seeking to reinvest their
distributed funds might be required to
invest at a rate of return lower than the
applicable Pass-Through Rate. Certificate
Owners will bear all reinvestment risk
resulting from prepayment of the
Receivables. See "Risk Factors Effects of
Prepayments of Receivables" herein and
"Maturity and Prepayment Considerations"
herein.
CLEARANCE AND
SETTLEMENT . . . [Class A] Certificateholders may
elect to hold their [Class A]
Certificates through any of
DTC (in the United States) or
Cedel or Euroclear (in
Europe). Transfers within
DTC, Cedel or Euroclear, as
the case may be, will be in
accordance with the usual
rules and operation procedures
of the relevant system.
Cross-market transfers between
persons holding directly or
indirectly through DTC, on the
one hand, and counterparties
holding directly or indirectly
through Cedel or Euroclear, on
the other, will be effected in
DTC through the relevant
Depositaries of Cedel or
Euroclear. See "Certain
Information Regarding the
Securities Book-Entry
Registration" in the
Prospectus and Annex I to this
Prospectus Supplement, "Global
Clearance, Settlement and Tax
Documentation Procedures."
TAX STATUS . . . In the opinion of [Skadden, Arps, Slate,
Meagher & Flom, special tax counsel to the
Sellers] ("Special Tax Counsel"), the Trust
will be treated as a grantor trust for
federal income tax purposes and will not be
subject to federal income tax. Certificate
Owners will report their pro rata share of
all income earned on the Receivables (other
than amounts, if any, treated as "stripped
coupons") and, subject to certain
limitations in the case of Certificate
Owners who are individuals, trusts, or
estates, may deduct their pro rata share of
reasonable servicing and other fees paid or
incurred by the Trust. See "Certain
Federal Income Tax Consequences" herein and
in the Prospectus for additional
information concerning the application of
federal income tax laws, respectively, to
the Trust and the Certificates.
ERISA
CONSIDERATIONS. . The Class A Certificates may, in
general, be purchased by employee
benefit plans that are subject to
the Employee Retirement Income
Security Act of 1974, as amended
("ERISA"), upon satisfaction of
certain conditions described under
"ERISA Considerations" herein and
in the Prospectus with respect to
the Exemption. [However, as set
forth in "ERISA Considerations" in
the Prospectus, certain special
considerations may apply with
respect to the Pre-Funding
Account.]
[The Exemption does not apply to the Class B
Certificates, which may be purchased by
employee benefit plans subject to ERISA
only if some other statutory or
administrative exemption from the
prohibited transaction rules of ERISA and
the Internal Revenue Code of 1986, as
amended (the "Code") applies to such
purchases. These exemptions may apply with
respect to, inter alia, purchases by
certain insurance company general accounts,
insurance company pooled separate accounts,
and bank collective investment funds, and
on behalf of employee benefit plans by
certain qualified professional asset
managers.]
Any benefit plan fiduciary considering a
purchase of [Class A] Certificates should,
among other things, consult with legal
counsel in determining whether all required
conditions with respect to the various
exemptions have been satisfied. See "ERISA
Considerations" herein and in the
Prospectus.
RATINGS OF THE
CERTIFICATES . . It is a condition to the
issuance of the Class A
Certificates that they be
rated in the highest
investment rating
category by at least two
nationally recognized
rating agencies[, and it
is a condition to the
issuance of the Class B
Certificates that they be
rated by at least two
nationally recognized
rating agencies [at
least] " " or its
equivalent]. [However,
the rating agencies do
not evaluate, and the
ratings do not address,
the likelihood that the
Certificate Prepayment
Premium will be paid.]
There can be no assurance
that a rating will not be
lowered or withdrawn by a
rating agency if
circumstances so warrant.
RISK FACTORS . . Prospective investors should consider the
factors set forth under "Risk Factors" on
pages S-__ through S-__.
RISK FACTORS
LIMITED LIQUIDITY
There is currently no secondary market for the Class A
Certificates [or the Class B Certificates]. The Underwriters
currently intend to make a market in the Class A Certificates
[and the Class B Certificates], but they 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 [Class A] Certificateholders with liquidity of
investment or that it will continue for the life of the Class A
Certificates [or the Class B Certificates].
[THE SUBSEQUENT RECEIVABLES AND THE PRE-FUNDING ACCOUNT
On the Closing Date, the Sellers will transfer to the Trust
the approximately $ of Initial Receivables and
approximately $ Pre-Funded Amount on deposit in the
Pre-Funding Account. If the principal balance of eligible
Receivables originated by the Sellers during the Funding Period
is less than the Pre-Funded Amount, the Sellers will have
insufficient Receivables to sell to the Trust on the Subsequent
Transfer Dates, thereby resulting in a prepayment of principal to
the Certificateholders as described in the following paragraph.
See "Risk Factors Trust's Relationship to Sellers, NationsBank
Corporation and their Affiliates" in the Prospectus. In
addition, any conveyance of Subsequent Receivables is subject to
the satisfaction, on or before the related Subsequent Transfer
Date, of the following conditions precedent, among others: (i)
each such Subsequent Receivable must satisfy the eligibility
criteria specified in the Agreement; (ii) the Sellers will not
select such Subsequent Receivables in a manner believed by the
Sellers to be adverse to the interests of the Certificateholders;
(iii) as of the related Subsequent Cut-Off Date, the Receivables
in the Trust at that time, including the Subsequent Receivables
to be conveyed by the Sellers as of such Subsequent Cut-Off Date,
will satisfy the parameters described under "The Receivables
Pool" herein and under "The Receivables Pools" in the Prospectus;
(iv) the applicable Additional Reserve Account Deposit [and any
applicable Additional Yield Supplement Amount] for such
Subsequent Transfer Date shall have been made; and (v) the
Sellers shall have executed and delivered to the Trustee a
written assignment conveying such Subsequent Receivables to the
Trustee (including a schedule identifying such Subsequent
Receivables). Moreover, any such conveyance of Subsequent
Receivables made during any given Collection Period will also be
subject to the satisfaction, on or about the fifteenth day of the
month following the end of such Collection Period, of the
following conditions subsequent, among others: (a) the Sellers
will deliver certain opinions of counsel to the Trustee and the
Rating Agencies with respect to the validity of the conveyance of
all such Subsequent Receivables conveyed during such Collection
Period; (b) the Trustee shall have received written confirmation
from a firm of independent certified public accountants that, as
of the end of the preceding Collection Period, the Receivables in
the Trust at that time, including the Subsequent Receivables
conveyed by the Sellers during such Collection Period, satisfied
the parameters described under "The Receivables Pool" herein and
under "The Receivables Pools" in the Prospectus; and (c) the
Rating Agencies shall have each notified the Sellers in writing
that, following the addition of all such Subsequent Receivables,
the Certificates will be rated by the Rating Agencies in the same
respective rating categories in which they were rated on the
Closing Date. The Sellers will immediately repurchase any
Subsequent Receivable, at a price equal to the Purchase Amount
thereof, upon the failure of the Sellers to satisfy any of the
foregoing conditions subsequent with respect thereto. Such
confirmation of the ratings of the Certificates may depend on
factors other than the characteristics of the Subsequent
Receivables, including the delinquency, repossession and net loss
experience on the automobile and light truck receivables in the
portfolio serviced by the Servicer.
To the extent that amounts on deposit in the Pre-Funding
Account have not been fully applied to the conveyance of
Subsequent Receivables to the Trust by the end of the Funding
Period, the Certificateholders will receive, on the Distribution
Date on or immediately following the last day of the Funding
Period, a prepayment of principal in an amount equal to the
Pre-Funded Amount remaining in the Pre-Funding Account following
the purchase of any Subsequent Receivables on such Distribution
Date. It is anticipated that the principal balance of Subsequent
Receivables sold to the Trust will not be exactly equal to the
amount on deposit in the Pre-Funding Account and that therefore
there will be at least a nominal amount of principal prepaid to
the Certificateholders.
Each Subsequent Receivable must satisfy the eligibility
criteria specified in the Agreement and any additional criteria
specified by the Rating Agencies at the time of its addition.
However, Subsequent Receivables may have been originated by the
Sellers at a later date using credit criteria different from
those which were applied to the Initial Receivables and may be of
a different credit quality and seasoning. [In addition, an
increasing percentage of the Subsequent Receivables may be
Balloon Receivables.] Therefore, following the transfer of
Subsequent Receivables to the Trust, the characteristics of the
entire Receivables Pool included in the Trust may vary
significantly from those of the Initial Receivables. See "The
Receivables Pool" herein and "The Receivables Pools" in the
Prospectus. The ability of the Sellers to generate Subsequent
Receivables is largely dependent upon the Sellers' ability to
offer competitive rates of interest on motor vehicle installment
sales contracts to be acquired by the Sellers. In addition, the
number of Dealers from which the Sellers acquire motor vehicle
installment sales contracts may effect the Sellers' ability to
generate Subsequent Receivables. In addition, the level of
retail sales of automobiles, vans and light-duty trucks may
change as a result of a variety of social and economic factors.
Economic factors include interest rates, unemployment levels, the
rate of inflation and consumer perceptions of economic conditions
generally. There can be no assurance, therefore, that the
Sellers will be able to generate receivables at the same rate as
in prior years. The Sellers are unable to determine and have no
basis to predict to what extent these factors will affect the
Sellers' ability to generate Subsequent Receivables.
LIMITED ASSETS
The Trust will not have, nor is it permitted or expected to
have, any significant assets or sources of funds other than the
Receivables[, the Pre-Funding Account] [, the Yield Supplement
Account] and the Reserve Account. Holders of the Certificates
must rely for repayment upon payments on the Receivables and, if
and to the extent available, amounts on deposit in the
[Pre-Funding Account[, the Yield Supplement Account] and the]
Reserve Account. [The Pre-Funding Account will be available only
during the Funding Period and is designed solely to cover
obligations of the Trust relating to a portion of its funds not
invested in Receivables and is not designed to cover losses on
the Receivables.] [The Yield Supplement Account is designed
solely to hold funds to be applied to provide payments to the
Securityholders in respect of Receivables the Contract Rate of
which is less than the Required Rate.] Funds in the Reserve
Account will be available on each Distribution Date to cover
shortfalls in distributions of interest and principal on the
Certificates. However, amounts to be deposited in the [Pre-
Funding Account[, the Yield Supplement Account] and the] Reserve
Account are limited in amount. If the [Pre-Funding Account[, the
Yield Supplement Account] and the] Reserve Account is [are]
exhausted[, and in the case of the Reserve Account,] and not
replenished, the Trust will depend solely on current
distributions on the Receivables to make distributions on the
Certificates, and Certificateholders will bear directly, without
any additional credit enhancement (except to the extent that the
Reserve Account is replenished from Collections on Receivables),
the risk of delinquencies, loan losses and repossessions with
respect to the Receivables. There can be no assurance that the
future delinquency, loan loss and repossession experience of the
Trust with respect to the Receivables will be better or worse
than that set forth herein with respect to the total portfolio of
Motor Vehicle Loans currently and historically owned and serviced
by the Banks and thus whether the credit enhancement available to
Certificateholders will be sufficient. See "The Receivables Pool
Delinquency and Loss Experience," "Description of the
Certificates Reserve Account" and " Distributions on
Certificates."
SUBORDINATION OF THE CLASS B CERTIFICATES
Distributions of interest on the Class B Certificates will
be subordinated in priority of payment to distributions of
interest on the Class A Certificates, and distributions of
principal on the Class B Certificates will be subordinated to
distributions of interest and principal on the Class A
Certificates, to the extent described herein. In particular, 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 a Collection Period
until the full amount of interest on and principal of the Class A
Certificates relating to such Collection Period has been
deposited in the Class A Distribution Account. However,
distributions of interest on the Class B Certificates, to the
extent of collections on the Receivables allocable to interest
and the amounts on deposit in the Reserve Account available after
the distribution of interest on the Class A Certificates has been
made, will not be subordinated to the distribution of principal
of the Class A Certificates. See "Description of the Certificates
Distributions on Certificates."
EFFECTS OF PREPAYMENTS OF RECEIVABLES
The weighted average life of the Certificates may be reduced
by full or partial prepayments on the Receivables. Such a
reduction in the weighted average life of the Certificates would
mean that Certificateholders would not receive the benefit of the
applicable Pass-Through Rate for the period of time originally
expected. The Receivables are prepayable at any time. Prepayments
may also result from liquidations due to default, the receipt of
monthly installments earlier than the scheduled due dates for
such installments, the receipt of proceeds from credit life,
credit disability, theft or physical damage insurance,
repurchases by the Sellers as a result of certain uncured
breaches of the warranties made by them in the Agreement with
respect to the Receivables, purchases by the Servicer as a result
of certain uncured breaches of the covenants made by it in the
Agreement with respect to the Receivables, or the Servicer
exercising its option to purchase all of the remaining
Receivables. The rate of prepayments on the Receivables may be
influenced by a variety of economic, social and other factors,
including changes in interest rates, general or regional economic
conditions, the conditions of the resale market for motor
vehicles and the fact that the Obligor is generally not permitted
to sell or transfer the Financed Vehicle securing a Receivable
without the consent of the relevant Seller. The Sellers have no
basis on which to assess the specific effects of the foregoing
factors (or the magnitude of such effects) on the rate of
prepayment on the Banks' portfolio of Motor Vehicle Loans
generally or on the Receivables. No prediction can be made as to
the actual prepayment rates which will be experienced on the
Receivables. If prepayments were to occur after a decline in
interest rates, investors seeking to reinvest their funds might
be required to invest their distributed funds at a rate of return
lower than the applicable Pass-Through Rate. Certificate Owners
will bear all reinvestment risk resulting from prepayment of the
Receivables. See "Maturity and Prepayment Considerations" herein
and in the Prospectus.
GEOGRAPHIC CONCENTRATION
Economic conditions in states where Obligors reside may
affect the delinquency, loan loss and repossession experience of
the Trust with respect to the Receivables. As of the Cut-Off
Date, the Sellers' records indicate that the mailing addresses of
Obligors with respect to approximately __%, __%, __%, __% and __%
by principal balance of the Receivables were in [Texas, North
Carolina, Florida, Georgia and South Carolina], respectively. As
a result, economic conditions in such states may have a
disproportionate impact on the Trust. In particular, an economic
downturn in one or more of such states could adversely affect the
performance of the Trust (even if national economic conditions
remain unchanged or improve) as Obligors in such state or states
experience the effects of such a downturn and face greater
difficulty in making payments on their Financed Vehicles. See
"The Receivables Pool."
[FEDERAL INCOME TAX; EFFECTS OF SUBORDINATION ON CLASS B
CERTIFICATEHOLDERS
It is expected that, for federal income tax purposes,
amounts otherwise distributable 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 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 generally
"Certain Federal Income Tax Consequences Tax Characterization
of the Trust as a Grantor Trust" herein.
If the Class B Certificate Owners received distributions of
less than their share of the Trust's receipts of principal or
interest (the "Shortfall Amount") because of the subordination of
the Class B Certificates, 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
Account.
Under this analysis (1) Class B Certificate Owners would be
required to accrue as current income any interest or OID income
of the Trust that was a component of the Shortfall Amount, even
though such amount was in fact paid to the Class A Certificate
Owners, (2) a loss would only be allowed to the Class B
Certificate Owners when their right to receive reimbursement of
such Shortfall Amount became worthless (i.e., when it becomes
clear that such Shortfall Amount will not be reimbursed from any
source) 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.]
FEDERAL INCOME TAX; TAX ACCOUNTING ISSUES
There is uncertainty regarding a number of issues that could
affect the amount, character, and timing of income required to be
reported by Certificateholders because there are no judicial or
administrative authorities addressing substantially similar
facts. Such issues, in general, include: the possibility that the
Trust could be treated as holding a debt obligation of the
Sellers rather than an ownership interest in the Receivables; the
allocation of basis among the assets of the Trust; the method
(including assumptions) of calculating original issue discount;
whether any portion of the Servicing Fee exceeds reasonable
compensation for the services performed by the Servicer and thus
would be treated as additional "stripped coupons" under Section
1286 of the Code; the interaction of the "imputed interest" and
market discount rules of the Code; [accounting for the Class B
Certificates (see "Federal Income Tax; Effects of Subordination
of the Class B Certificateholders" above);][ and the proper
manner of allocating basis to, amortizing basis in, and
calculating income attributable to the Yield Supplement
Agreement.] Furthermore, for administrative convenience the
Servicer has adopted certain conventions for calculating income
on the Receivables, which include estimation of accrued amounts
and aggregation of all of the Receivables and the Yield
Supplement Agreement, if applicable. The use of such methods
could result in the income reported to Certificateholders for any
period being different from the income that would be reported if
income were reported on a Receivable-by-Receivable basis over the
period during which income accrues on each Receivable. If
reporting on such basis resulted in under-reporting of income, or
if the Internal Revenue Service were to take a position different
from that adopted by the Trust with respect to any issue, a
Certificate Owner could be required to pay interest on overdue
amounts and could be subject to penalties for under-reporting of
income. For a further discussion of the foregoing, see "Certain
Federal Income Tax Consequences" herein and in the Prospectus.
FORM OF CERTIFICATES; CERTIFICATE OWNERS NOT RECOGNIZED AS
CERTIFICATEHOLDERS
The Class A Certificates [and the Class B Certificates] will
[each] be represented initially by global certificates registered
in the name of Cede, as nominee of DTC (for Certificates held in
the United States), [Cedel Bank, societe anonyme ("Cedel") or the
Euroclear System ("Euroclear")(for Certificates held in Europe)].
No Certificate Owner will be entitled to receive a Definitive
Certificate representing such person's interest in the Trust
except in certain limited circumstances. Under the terms of the
Agreement, Certificate Owners will not be recognized as
Certificateholders, and will be permitted to exercise the rights
of the Certificateholders only indirectly through DTC. See
"Description of the Certificates Book-Entry Registration" and
"Definitive Certificates" herein and in the Prospectus and
Annex I to this Prospectus Supplement, "Global Clearance,
Settlement and Tax Documentation Procedures."
RATINGS
It is a condition to the issuance of the [Class A]
Certificates that the Class A Certificates be rated in the
highest rating category [and the Class B Certificates be rated
[at least] " " or its equivalent] by at least two nationally
recognized rating agencies (the "Rating Agencies"). A rating is
not a recommendation to purchase, hold or sell Certificates,
inasmuch as such rating does not comment as to market price or
suitability for a particular investor. The ratings of the
Certificates address the likelihood of the payment of principal
and interest on the Certificates pursuant to their terms.
[However, the Rating Agencies do not evaluate, and the ratings of
the Certificates do not address, the likelihood that the
Certificate Prepayment Premium will be paid.] 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 in the future so
warrant.
THE TRUST
GENERAL
The Sellers will establish the Trust by selling and
assigning the Trust property, as described below, to the Trustee
in exchange for the Certificates. Prior to such sale and
assignment, the Trust will have no assets or obligations or any
operating history. The Servicer will service the Receivables,
either directly or through subservicers, pursuant to the
Agreement and will be compensated for acting as the Servicer.
See "Description of the Certificates Servicing Compensation and
Expenses" herein. The Servicer will hold or appoint its
affiliate, NSI, to hold the Receivables and Receivable Files as
custodian for the Trustee. Although the Receivables will not be
marked or stamped to indicate that they have been sold to the
Trust, and the certificates of title or ownership for the
Financed Vehicles will not be endorsed or otherwise amended to
identify the Trust as the new secured party, the Servicer and the
Sellers will indicate in their computer records that the
Receivables have been sold to the Trust. Under such 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" in the Prospectus.
If the protection provided to the [Class A]
Certificateholders by the [Yield Supplement Account and the]
Reserve Account and[, in the case of the Class A
Certificateholders,] the subordination of the Class B
Certificates is insufficient, the Trust would have to look to the
Obligors on the Receivables, the proceeds from the repossession
and sale of Financed Vehicles which secure defaulted Receivables
[and from the Pre-Funding Account]. In such event, certain
factors, such as the Trust's not having perfected security
interests in the Financed Vehicles in all states, may affect the
Servicer's ability to repossess and sell the collateral securing
the Receivables, and thus may reduce the proceeds to be
distributed to the Certificateholders. See "Description of the
Certificates Distributions on Certificates" [, " Yield Supplement
Account; Yield Supplement Agreement"] and " Reserve Account"
herein and "Certain Legal Aspects of the Receivables" in the
Prospectus.
Each [Class A] Certificate represents a fractional undivided
ownership interest in the Trust. The Trust property includes the
Receivables and all monies received under the [Initial]
Receivables after the [Initial] Cut-Off Date [and all monies
received under the Subsequent Receivables after the close of
business of the Servicer on each applicable Subsequent Transfer
Date] and also includes (i) such amounts as from time to time may
be held in one or more accounts maintained pursuant to the
Agreement [and the Yield Supplement Agreement], as described
herein[, including the Yield Supplement Account] [and the Pre-
Funding Account]; (ii) security interests in the Financed
Vehicles and any accessions thereto; (iii) the rights to proceeds
from claims on certain physical damage, credit life, credit
disability or other insurance policies, if any, covering the
Financed Vehicles or the Obligors; (iv) certain rights under the
Agreement, including the right to receive payments from the
Reserve Account [and pursuant to the Yield Supplement Agreement];
(v) any property that shall have secured a Receivable and shall
have been acquired by the Trust; (vi) certain rights of each of
the Sellers relating to the repurchase of Receivables under each
Dealer Agreement and under the documents and instruments
contained in the Receivable Files; (vii) certain rebates of
premiums and other amounts relating to certain insurance policies
and other items financed under the Receivables; (viii) all other
rights of the Trust under the Agreement; and (ix) any and all
proceeds of the foregoing. The property of the Trust does not
include [the Yield Supplement Account] and the Reserve Account[,
but such account[s] will be pledged to and held by the Collateral
Agent, as secured party for the benefit of the
Certificateholders].
THE RECEIVABLES POOL
The pool of Receivables (the "Receivables Pool") will
include the [Initial] Receivables purchased as of the [Initial]
Cut-Off Date [and will include any Subsequent Receivables
purchased as of any Subsequent Cut-Off Date (the Initial Cut-Off
Date or any Subsequent Cut-Off Date being individually referred
to herein as a "Cut-Off Date")]. The [Initial] Receivables were
purchased[, and the Subsequent Receivables were or will be
purchased,] by the Sellers from Dealers in the ordinary course of
business. The Receivables were randomly selected from among the
Motor Vehicle Loans owned by the Sellers. The Sellers will
warrant in the Agreement that all the Receivables have the
following individual characteristics, among others: (i) the
obligation of the related Obligor under each Receivable is
secured by a security interest in either a new or used
automobile, van or light-duty truck; (ii) each Receivable has a
contractual interest rate ("Contract Rate") of at least % and
no more than %; (iii) each Receivable has a remaining
maturity, as of the Cut-Off Date, of not less than months and
not more than months]; (iv) no Receivable was more than __
days past due as of the Cut-Off Date; (v) each Receivable is a
Simple Interest Receivable (as defined below) that [(except for
those Receivables which are Balloon Receivables)], at
origination, provides for level monthly payments that fully
amortize the amount financed over the original term; (vi) as of
the Cut-Off Date, each Receivable has a remaining principal
balance of no less than $ and no more than $ ; (vii)
each Receivable is not a Defaulted Receivable; and (viii) each
Receivable is not related to a motor vehicle that is the subject
of forced-placed insurance. "Forced-placed insurance" is
insurance placed on a motor vehicle by the lienholder to protect
the motor vehicle as collateral for a loan when there is evidence
that the borrower has neglected to do so as required by the
applicable loan agreement. See " Certain Characteristics of
the [Initial] Receivables" below. No selection procedures
believed by the Sellers to be adverse to the Certificateholders
were [or will be] used in selecting the Receivables. [As of the
[Initial] Cut-Off Date, % of the [Initial] Receivables, by
aggregate principal balance, were Balloon Receivables.]
[The obligation of the Trust to purchase the Subsequent
Receivables on a Subsequent Transfer Date will be subject to the
Receivables in the Trust, including the Subsequent Receivables to
be conveyed to the Trust on such Subsequent Transfer Date,
meeting the following criteria: (i) not more than % of the
principal balances of the Receivables in the Trust will represent
vehicles financed at [less than] [more than ___%]; and (ii) the
weighted average Contract Rate of the Receivables in the Trust
will not be less than %, [and (iii) not more than % of the
aggregate principal balance of the Receivables in the Trust will
be Balloon Receivables] unless the Sellers increase the Reserve
Account Initial Deposit by the amounts, if any, specified by the
Rating Agencies to maintain the ratings of the Certificates. In
addition, such obligation will be subject to the Receivables,
including the Subsequent Receivables to be transferred to the
Trust on such Subsequent Transfer Date, having a weighted average
remaining term not greater than months. Such criteria
will be based on the characteristics of the Initial Receivables
on the Initial Cut-Off Date and any Subsequent Receivables on the
related Subsequent Cut-Off Dates.]
[The Initial Receivables will represent approximately %
of the aggregate initial principal balance of the Certificates.
However, except for the criteria described in the preceding
paragraphs and the criteria, if any, specified by the Rating
Agencies to maintain the ratings of the Certificates, there will
be no required characteristics of the Subsequent Receivables.
Therefore, following the transfer of Subsequent Receivables to
the Trust, the aggregate characteristics of the entire
Receivables Pool, including the composition of the Receivables,
the distribution by Contract Rate and the geographic distribution
described in the following tables, may vary significantly from
those of the Initial Receivables.]
THE SERVICER
NationsBank, N.A., through DFSG and units in predecessor
banks of NationsBank, N.A., has been servicing indirect motor
vehicle loan portfolios since 1970. The indirect motor vehicle
loan portfolio serviced either directly by NationsBank, N.A. or
through its affiliates was approximately $5.5 billion as of March
31, 1996. DFSG also services other indirect and direct consumer
loan portfolios totalling over $25.3 billion (including the
indirect motor vehicle loan portfolio) as of March 31, 1996.
CERTAIN CHARACTERISTICS OF THE [INITIAL] RECEIVABLES
As of the [Initial] Cut-Off Date, the [Initial] Receivables
had, in the aggregate, the following characteristics: (i)
approximately [ ]% of the [Initial] Receivables was attributable
to loans for purchases of new Financed Vehicles and approximately
[ ]% of the Initial Pool Balance was attributable to loans for
purchases of used Financed Vehicles; (ii) the weighted average
Contract Rate of the [Initial] Receivables was [ ]%; (iii)
there were [ ] [Initial] Receivables being conveyed by the
Sellers to the Trust; (iv) the average principal balance of the
[Initial] Receivables, as of the [Initial] Cut-Off Date, was $[
]; and (v) the weighted average original term and weighted
average remaining term of the [Initial] Receivables were [ . ]
months and [ . ] months, respectively. Approximately % of the
[Initial] Receivables by principal balance as of the [Initial]
Cut-Off Date were contributed to the Trust by NationsBank, N.A.
The Composition of the [Initial] Receivables, Distribution
of the [Initial] Receivables by New/Used Motor Vehicles,
Distribution of the [Initial] Receivables by Contract Rate,
Distribution of the [Initial] Receivables by Remaining Term,
Distribution of the [Initial] Receivables by Principal Balance
and Geographic Distribution of the [Initial] Receivables, each as
of the Cut-Off Date, are set forth in the following tables.
COMPOSITION OF THE [INITIAL] RECEIVABLES
Weighted Average Contract Rate . . . . . . .
Range of Contract Rates . . . . . . . . . . .
Aggregate Principal Balance . . . . . . . . .
Number of [Initial] Receivables . . . . . . .
Weighted Average Remaining Term . . . . . . .
Range of Remaining Terms . . . . . . . . . .
Weighted Average Original Term . . . . . . .
Range of Original Terms . . . . . . . . . . .
Average Principal Balance . . . . . . . . . .
Average Original Amount Financed . . . . . .
Range of Original Amounts Financed . . . . .
DISTRIBUTION OF THE [INITIAL] RECEIVABLES BY NEW/USED MOTOR VEHICLES
NUMBER WEIGHTED
OF AGGREGATE ORIGINAL AVERAGE
RECEIV- PRINCIPAL PRINCIPAL CONTRACT
ABLES BALANCE BALANCE RATE(%)
------- -------- --------- --------
New Autos, Vans and
Light-Duty Trucks...
Used Autos, Vans and
Light-Duty Trucks...
All [Initial]
Receivables.........
DISTRIBUTION OF THE [INITIAL] RECEIVABLES BY CONTRACT RATE
NUMBER % OF % OF
OF TOTAL AGGREGATE AGGREGATE
RECEIV- RECEIV- PRINCIPAL PRINCIPAL
ABLES ABLES BALANCE BALANCE
------- ------- -------- ---------
7.50 to 7.99% . . . .
8.00 to 8.99% . . . .
9.00 to 9.99% . . . .
10.00 to 10.99% . . . .
11.00 to 11.99% . . . .
12.00 to 12.99% . . . .
13.00 to 13.99% . . . .
14.00 to 14.99% . . . .
15.00 to 15.99% . . . .
16.00 to 16.99% . . . .
17.00 to 17.99% . . . .
18.00 to 18.99% . . . .
19.00 to 19.99% . . . .
20.00 to 21.00% . . . .
Total . . . .
DISTRIBUTION OF THE [INITIAL] RECEIVABLES BY REMAINING TERM
NUMBER % OF
OF % OF AGGREGATE AGGREGATE
RECEIV- RECEIV- PRINCIPAL PRINCIPAL
ABLES ABLES BALANCE BALANCE
------- ------- -------- ---------
12 to 18 months . . . .
19 to 24 months . . . .
25 to 30 months . . . .
31 to 36 months . . . .
37 to 42 months . . . .
43 to 48 months . . . .
49 to 54 months . . . .
55 to 60 months . . . .
61 to 66 months . . . .
67 to 72 months . . . .
Total . . . .
DISTRIBUTION OF THE [INITIAL] RECEIVABLES BY PRINCIPAL BALANCE
NUMBER % OF
OF % OF AGGREGATE AGGREGATE
RECEIV- RECEIV- PRINCIPAL PRINCIPAL
ABLES ABLES BALANCE BALANCE
------- ------- -------- ---------
$ 2,000 to $ 9,999 ...
$10,000 to $19,999 ...
$20,000 to $29,999 ...
$30,000 to $39,999 ...
$40,000 to $49,999 ...
Total ......
GEOGRAPHIC DISTRIBUTION OF THE [INITIAL] RECEIVABLES
NUMBER % OF
OF % OF AGGREGATE AGGREGATE
RECEIV- RECEIV- PRINCIPAL PRINCIPAL
STATE(1) ABLES ABLES BALANCE BALANCE
--------- ------- ------- -------- ---------
Florida . . . . . . . . .
Georgia . . . . . . . . .
North Carolina . . . . .
South Carolina . . . . .
Texas . . . . . . . . . .
Other(2) . . . . . . . .
Total . . . . .
_________
(1) Receivables are categorized by the Sellers' records of the
mailing addresses of the Obligors as of the Cut-Off Date.
(2) Each other state represents less than [5]% of the total
number of Receivables.
DELINQUENCY AND LOSS EXPERIENCE
The tables set forth below indicate the delinquency and
credit loss/repossession experience for each of the last three
calendar years and for the three month periods ending March 31,
1996 and 1995 of the Banks' portfolio of Motor Vehicle Loans from
which the Receivables have been selected (which portfolio
excludes certain Motor Vehicle Loans acquired by the Banks in
acquisitions). No assurance can be made, however, that the
delinquency and loss experience for the Motor Vehicle Loans or
the Receivables in the future will be similar to the historical
experience set forth in the following tables.
DELINQUENCY EXPERIENCE (DOLLARS IN THOUSANDS)(1)
As of March 31, As of December 31,
--------------- ------------------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
Number Number Number Number Number
of of of of of
Loans Amount Loans Amount Loans Amount Loans Amount Loans Amount
----- ------ ----- ------ ----- ------ ----- ------ ------ ------
Total Serviced
Portfolio at
the Period
End............
Delinquency(2)
30-59 Days ....
60-89 Days ....
90 Days or More..
Total
Delinquencies....
Total Delin-
quencies as a
Percentage
of the
Total
Serviced
Portfolio ........
<FN>
__________
(1) Delinquencies shown in dollars include principal amounts only.
(2) The period of delinquencies is based on the number of days
payments are contractually past due until the applicable
Motor Vehicle Loan is charged off.
CREDIT LOSS/REPOSSESSION EXPERIENCE (DOLLARS IN THOUSANDS)
NINE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
--------- ------------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
Period End
Outstandings(1) .........
Average Amount Outstanding
During the Period(2) ....
Average Number of Loans
Outstanding During
the Period(3) ...........
Gross Charge-offs(4).......
Recoveries on Losses(5) ...
Net Charge-offs ...........
Net Charge-offs as a
Percentage of the
Period End
Outstanding(6) ..........
Net Charge-offs as a
Percentage of the
Average Amount
Outstanding(6) ..........
__________
(1) Amount represents principal amounts only.
(2) Amount represents principal amounts only and reflects a
daily weighted average of such amounts during the periods
shown.
(3) Amount based on the average outstanding for the period
divided by the average loan amount. the average loan amount
was derived from the month end outstanding balances divided
by month end number of loans.
(4) Amount of charge-off is the remaining principal balance
less the net proceeds from sale of loan collateral.
(5) Recoveries include post-disposition monies and are net of
any related expenses.
(6) Figures for the nine months ended March 31, 1996 and March
31, 1995 are annualized.
PAYMENTS ON THE RECEIVABLES
[The entire Initial Pool Balance is attributable to
Receivables that provide for the allocation of payments according
to the "Simple Interest" method (each a "Simple Interest
Receivable"). See "The Receivables Pool General" in the
Prospectus for a description of the application of payments
received on Simple Interest Receivables.]
[The Receivables are prepayable at any time. Prepayments may
also result from liquidations due to default, the receipt of
monthly installments earlier than the scheduled due dates for
such installments, the receipt of proceeds from credit life,
credit disability, theft or physical damage insurance,
repurchases by the Sellers as a result of certain uncured
breaches of the warranties made by them in the Agreement with
respect to the Receivables, purchases by the Servicer as a result
of certain uncured breaches of the covenants made by it in the
Agreement with respect to the Receivables, or the Servicer
exercising its option to purchase all of the remaining
Receivables. The rate of prepayments on the Receivables may be
influenced by a variety of economic, social and other factors,
including Obligor refinancings resulting from decreases in
interest rates and the fact that the Obligor is generally not
permitted to sell or transfer the Financed Vehicle securing a
Receivable without the consent of the relevant Seller.]
[Neither DFSG, the Servicer, the Sellers nor any of their
affiliates maintain records adequate to provide quantitative data
regarding prepayment experience on the Sellers' portfolio of
Motor Vehicle Loans. However, the Sellers (i) believe that the
actual rate of prepayments will result in a substantially shorter
weighted average life than the scheduled weighted average life
and (ii) estimate that the actual weighted average life of its
portfolio of Motor Vehicle Loans ranges between [60% and 70%] of
their scheduled weighted average life. See "Maturity and
Prepayment Considerations" herein and in the Prospectus.]
POOL FACTORS
The "Certificate Pool Factor" for [the Class A] [each class
of] Certificates will be a seven-digit decimal which the Servicer
will compute prior to each distribution with respect to such
[class of] Certificates indicating the remaining Certificate
Balance of such [class of] Certificates, as of the applicable
Distribution Date (after giving effect to distributions to be
made on such Distribution Date), as a fraction of the initial
Certificate Balance of such [class of] Certificates. [The]
[Each] Certificate Pool Factor will initially be 1.0000000 and
thereafter will decline to reflect reductions of the Certificate
Balance of the [Class A] [applicable class of] Certificates as a
result of scheduled payments, prepayments and liquidations of the
Receivables [(and also as a result of a prepayment arising from
application of the Pre-Funding Account)]. [[The] [Each]
Certificate Pool Factor will not change as a result of the
addition of Subsequent Receivables.] A Certificateholder's
portion of the aggregate outstanding Certificate Balance for the
[Class A] [related class of] Certificates is the product of (a)
the original denomination of such Certificateholder's Certificate
and (b) the [applicable] Certificate Pool Factor.
MATURITY AND PREPAYMENT CONSIDERATIONS
Information regarding certain maturity and prepayment
considerations with respect to the Certificates is set forth
under "Maturity and Prepayment Considerations" in the Prospectus.
It is expected that the final distribution in respect of the
Certificates will occur on or prior to the Final Scheduled
Distribution Date. However, if sufficient funds are not
available to reduce the aggregate Certificate Balance of [either
class of] the Certificates to zero on or prior to the Final
Scheduled Distribution Date, the final distribution in respect of
[such class of] the Certificates could occur later than such
date. In addition, full or partial prepayments on the
Receivables will have the effect of reducing the weighted average
life of the Certificates, while delinquencies by Obligors under
the Receivables, as well as extensions and deferrals on the
Receivables, will have the effect of increasing the weighted
average life of the Certificates. The Receivables may be prepaid
at any time and mandatory prepayments of a Receivable may result
from, among other things, the sale, insured loss or other
disposition of the Financed Vehicle or the Receivable becoming a
Defaulted Receivable.
No prediction can be made as to the prepayment rates that
will be experienced on the Receivables. The rate of prepayments
of the Receivables may be influenced by a variety of economic,
social and other factors, and under certain circumstances
relating to breaches of representations, warranties or covenants,
the Sellers and/or the Servicer will be obligated to repurchase
Receivables from the Trust. See "The Receivables Pool" herein
and "Description of the Transfer and Servicing Agreements Sale
and Assignment of Receivables" in the Prospectus. A higher than
anticipated rate of prepayments will reduce the aggregate
principal balance of the Receivables more quickly than expected
and thereby reduce anticipated aggregate distributions of
interest on the Certificates. Any reinvestment risks resulting
from a faster or slower incidence of prepayment of Receivables
will be borne entirely by the Certificateholders. Such
reinvestment risks include the risk that interest rates may be
lower at the time such holders received payments from the Trust
than interest rates would otherwise have been had such
prepayments not been made or had such prepayments been made at a
different time.
Holders of Certificates should consider, in the case of
Certificates purchased at a discount, the risk that a slower than
anticipated rate of principal payments on the Receivables could
result in an actual yield that is less than the anticipated yield
and, in the case of Certificates purchased at a premium, the risk
that a faster than anticipated rate of principal payments on the
Receivables could result in an actual yield that is less than the
anticipated yield.
YIELD CONSIDERATIONS
On each Distribution Date, interest on the Certificates will
be distributed at the applicable Pass-Through Rate on the Class A
Certificate Balance and the Class B Certificate Balance,
respectively, as of the preceding Distribution Date (after giving
effect to all distributions made on such preceding Distribution
Date) or, in the case of the first Distribution Date, as of the
Closing Date. In the event of a principal prepayment on a
Receivable during a Collection Period, Certificateholders will
receive their pro rata share of interest for the full Collection
Period with respect to the unpaid principal balance of such
Receivable as of the first day of such Collection Period to the
extent that amounts on deposit in the Certificate Account and in
the Reserve Account are available for such purpose. The
Receivables are Simple Interest Receivables and, to the extent
that payments of the fixed monthly installments thereunder are
received prior to the scheduled due dates for such installments,
the portions of such installments allocable to interest will be
less than they would be if the payments were received as
scheduled [(although the Servicer will make an advance for the
shortfall)][(although an Advance Reserve Withdrawal may be made
for the shortfall)]. If the Reserve Account is exhausted, the
amount of interest distributed to the Class B Certificateholders
and, in certain circumstances, the Class A Certificateholders,
may be less than that described above. See "Description of the
Certificates - Distributions on Certificates."
[Although the Receivables have different Contract Rates,
disproportionate rates of prepayments between Receivables with
Contract Rates greater than or less than a rate equal to the sum
of the highest Pass-Through Rate and the Servicing Fee Rate
should generally not affect the yield to Certificateholders
because the Sellers will, if there are any Receivables having a
Contact Rate, as of the [Initial] Cut-Off Date, below the sum of
the highest Pass-Through Rate and the Servicing Fee Rate, enter
into the Yield Supplement Agreement with the Trust. Pursuant to
the Yield Supplement Agreement the Sellers will be obligated to
pay to the Trust an amount equal to the excess of (i) interest on
the affected Receivable's principal balance at a rate equal to
the sum of the highest Pass-Through Rate and the Servicing Fee
Rate over (ii) interest on such Receivable's principal balance at
its Contract Rate. Thus, even a Receivable with a Contract Rate
below the sum of the highest Pass-Through Rate and the Servicing
Fee Rate will, when payments with respect to such Receivable are
made by the Obligor under the Receivable and by the applicable
Seller under the Yield Supplement Agreement, yield enough to
support payments on the Certificates. However, higher rates of
prepayments of Receivables with higher Contract Rates will
decrease the amount available to cover delinquencies and defaults
on the Receivables. See "Description of the Certificates
Distributions on Certificates."]
USE OF PROCEEDS
The Sellers will receive the Certificates in exchange for
the contribution to the Trust of the Receivables and the other
Trust Property. The net proceeds to be received by the Sellers
from the sale of the Certificates will be added to their general
corporate funds and will be used [to purchase additional Motor
Vehicle Loans and] for general corporate purposes.
DESCRIPTION OF THE CERTIFICATES
The [Class A] Certificates will be issued pursuant to the
terms of the Agreement, a form of which has been filed as an
exhibit to the Registration Statement. Copies of the Agreement
may be obtained free of charge (except for copying and postage
costs) by the Certificateholders and Certificate Owners upon
written request to the Trustee at [ , New
York, New York 100__, Attention: .] A copy of
the Agreement will be filed with the Commission following the
issuance of the [Class A] Certificates. The following summary
describes certain terms of the [Class A] Certificates and the
Agreement. The summary does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all
the provisions of the [Class A] Certificates and the Agreement.
The following summary supplements the description of the general
terms and provisions of the [Class A] Certificates of any given
series and the related Agreement set forth in the Prospectus, to
which description reference is hereby made.
GENERAL
The Certificates will evidence interests in the Trust
created pursuant to the Agreement. The Class A Certificates will
evidence in the aggregate an undivided fractional ownership
interest (the "Class A Percentage") of approximately % in the
Trust [and the Class B Certificates will evidence in the
aggregate an undivided fractional ownership interest (the "Class
B Percentage") of approximately % in the Trust.]
The Certificates will be offered for purchase in
denominations of $1,000 and integral multiples thereof and will
be represented initially by global certificates registered in the
name of Cede, as nominee of DTC. No Certificate Owner will be
entitled to receive a Definitive Certificate representing such
person's interest in the Trust unless Definitive Certificates are
issued under the limited circumstances described herein. Unless
and until Definitive Certificates are issued, all references to
actions by Certificateholders shall refer to actions taken by DTC
upon instructions from its Direct Participants and all references
to distributions, notices, reports and statements to
Certificateholders shall refer to distributions, notices, reports
and statements to DTC. See " Definitive Certificates."
[MANDATORY REPURCHASE OF CERTIFICATES
Cash distributions to Certificateholders will be made, on a
pro rata basis, on the Distribution Date on or immediately
following the last day of the Funding Period in the event that
the amount on deposit in the Pre-Funding Account after giving
effect to the purchase of all Subsequent Receivables, including
any such purchase on such date, exceeds $ (a "Mandatory
Repurchase").
[The Certificate Prepayment Premium will be payable by the
Trust to the Certificateholders pursuant to a Mandatory
Repurchase if the amount on deposit in the Pre-Funding Account
exceeds $ . The Certificate Prepayment Premium will equal
the excess, if any, discounted as described below, of (i) the
amount of interest that would accrue on the remaining Pre-Funded
Amount (the "Certificate Prepayment Amount") at the Class A
Certificate Rate or Class B Certificate Rate, as applicable,
during the period commencing on and including the Distribution
Date on which such Certificate Prepayment Amount is required to
be distributed to Certificateholders to but excluding
over (ii) the amount of interest that would have accrued on such
Certificate Prepayment Amount over the same period at a per annum
rate of interest equal to the bond equivalent yield to maturity
on the Determination Date preceding such Distribution Date on the
, in the case of a Class A Certificate, and on the
, in the case of a Class B Certificate. Such excess shall be
discounted to present value to such Distribution Date at the
applicable yield described in clause (ii) above. Pursuant to the
Agreement, the Sellers will be obligated to pay the Certificate
Prepayment Premium to the Trust as liquidated damages for the
failure to deliver Subsequent Receivables having an aggregate
principal balance equal to the Pre-Funded Amount. The Trust's
obligation to pay the Certificate Prepayment Premium will be
limited to funds received from the Sellers pursuant to the
preceding sentence. In the event that such funds are
insufficient to pay the aggregate Certificate Prepayment Premium
in full, [Class A] Certificateholders [of each class of
Certificates] will receive their ratable share [(based upon the
Certificate Prepayment Premium for each class of Certificates)]
of the aggregate amount available to be distributed in respect of
the Certificate Prepayment Premium. No other assets of the Trust
will be available for the purpose of making such payment.]]
OPTIONAL PURCHASE
If the Servicer exercises its option to purchase the
Receivables when the Pool Balance declines to [5]% or less of the
Initial Pool Balance, the Class A Certificateholders will receive
an amount in respect of the Class A Certificates equal to the
outstanding Class A Certificate Balance together with accrued
interest at the [Class A] Certificate Rate, [the Class B
Certificateholders will receive an amount in respect of the Class
B Certificates equal to the outstanding Class B Certificate
Balance together with accrued interest at the Class B Certificate
Rate,] which distributions shall effect early retirement of the
Certificates. See "Description of the Transfer and Servicing
Agreements Termination" in the Prospectus.
BOOK-ENTRY REGISTRATION
For information related to the settlement and clearance
procedures for the Certificates, investors should refer to Annex
I to this Prospectus Supplement, "Global Clearance, Settlement
and Tax Documentation Procedures and "Certain Information
Regarding the Securities -- Book-Entry Registration" in the
Prospectus.
DEFINITIVE CERTIFICATES
The Certificates will be issued in fully registered,
certificated form ("Definitive Certificates") to Certificate
Owners or their nominees, rather than to DTC or its nominee, only
if (i) the Sellers advise 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 Trustee or
the Sellers are unable to locate a qualified successor, (ii) the
Sellers, at their option, elect to terminate the book-entry
system through DTC or (iii) after the occurrence of an Event of
Servicing Termination, Certificate Owners representing in the
aggregate not less than a majority of the aggregate outstanding
principal balance of the Certificates advise the Trustee and DTC
through Direct Participants in writing that the continuation of a
book-entry system through DTC (or a successor thereto) is no
longer in the Certificate Owners' best interests.
Upon the occurrence of any event described in the
immediately preceding paragraph, DTC is required to notify all
Direct Participants of the availability through DTC of Definitive
Certificates. Upon surrender by DTC to the Trustee of the global
certificates representing the Certificates and receipt by the
Trustee of instructions for re-registration, the Trustee will
reissue the Certificates as Definitive Certificates and
thereafter the Trustee will recognize the holders of such
Definitive Certificates as Certificateholders under the Agreement
("Holders").
[SALE AND ASSIGNMENT OF RECEIVABLES; SUBSEQUENT RECEIVABLES
Certain information with respect to the conveyance of the
Initial Receivables from the Sellers to the Trust on the Closing
Date pursuant to the Agreement is set forth under "Description of
the Transfer and Servicing Agreements Sale and Assignment of
Receivables" in the Prospectus. In addition, during the Funding
Period, pursuant to the Agreement, the Sellers will be obligated
to sell to the Trust Subsequent Receivables having an aggregate
principal balance equal to approximately $ (such amount
being equal to the initial Pre-Funded Amount) to the extent that
such Subsequent Receivables are available.
During the Funding Period on each Subsequent Transfer Date,
subject to the conditions described below, the Sellers will sell
and assign to the Trust, without recourse, the Sellers' entire
interest in the Subsequent Receivables designated by the Sellers
as of the related Subsequent Cut-Off Date and identified in a
schedule attached to a subsequent transfer assignment relating to
such Subsequent Receivables executed on such date by the Sellers.
It is expected that on the Closing Date, subject to the
conditions described below, certain of the Subsequent Receivables
designated by the Sellers and arising between the Initial Cut-Off
Date and the Closing Date will be conveyed to the Trust. Upon
the conveyance of Subsequent Receivables to the Trust on a
Subsequent Transfer Date, (i) the Pool Balance will increase in
an amount equal to the aggregate principal balance of the
Subsequent Receivables, (ii) an amount equal to % of the
aggregate principal balance of such Subsequent Receivables will
be withdrawn from the Pre-Funding Account and will be deposited
in the Reserve Account (each, an "Additional Reserve Account
Deposit") and (iii) an amount equal to the excess of the
aggregate principal balance of such Subsequent Receivables over
the amount described in clause (ii) will be withdrawn from the
Pre-Funding Account and paid to the Sellers. [Coincident with
each such transfer of Subsequent Receivables, the Yield
Supplement Agreement will require the Sellers to deposit into the
Yield Supplement Account an amount equal to the Additional Yield
Supplement Amount, if any, in respect of such Subsequent
Receivables. See " Yield Supplement Account; Yield Supplement
Agreement" herein.]
[Any conveyance of Subsequent Receivables is subject to the
satisfaction, on or before the related Subsequent Transfer Date,
of the following conditions precedent, among others: (i) each
such Subsequent Receivable must satisfy the eligibility criteria
specified in the Agreement; (ii) the Sellers will not have
selected such Subsequent Receivables in a manner that they
believe is adverse to the interests of the Certificateholders;
(iii) as of the related Subsequent Cut-Off Date, the Receivables,
including any Subsequent Receivables conveyed by the Sellers as
of such Subsequent Cut-Off Date, satisfy the criteria described
under "The Receivables Pool" herein and "The Receivables Pools"
in the Prospectus; (iv) the applicable Additional Reserve Account
Deposit [and any Additional Yield Supplement Amount] for such
Subsequent Transfer Date shall have been made; and (v) the
Sellers shall have executed and delivered to the Trustee a
written assignment conveying such Subsequent Receivables to the
Trust (including a schedule identifying such Subsequent
Receivables). Moreover, any such conveyance of Subsequent
Receivables made during any Collection Period will also be
subject to the satisfaction, on or about the fifteenth day of the
month following the end of such Collection Period, of the
following conditions subsequent, among others: (i) the Sellers
will have delivered certain opinions of counsel to the Trustee
and the Rating Agencies with respect to the validity of the
conveyance of all such Subsequent Receivables conveyed during
such Collection Period; (ii) the Trustee shall have received
written confirmation from a firm of independent certified public
accountants that, as of each applicable Subsequent Cut-Off Date,
the Receivables in the Trust at that time, including the
Subsequent Receivables conveyed by the Sellers as of such
Subsequent Cut-Off Date, satisfied the parameters described under
"The Receivables Pool" herein and under "The Receivables Pools"
in the Prospectus; and (iii) the Rating Agencies shall have each
notified the Sellers in writing that, following the addition of
all such Subsequent Receivables, the Class A Certificates are
rated in the same rating categories in which they were rated at
the Closing Date. The Sellers will immediately repurchase any
Subsequent Receivable, at a price equal to the Purchase Amount
thereof, upon the failure of the Sellers to satisfy any of the
foregoing conditions subsequent with respect thereto.
[Subsequent Receivables may have been originated by the
Sellers at a later date using credit criteria different from
those which were applied to the Initial Receivables. See "Risk
Factors The Subsequent Receivables and the Pre-Funding Account"
and "The Receivables Pool" herein.]]
ACCOUNTS
In addition to the accounts referred to under "Description
of the Transfer and Servicing Agreements--Accounts" in the
Prospectus, the Trustee will also establish and maintain [the
Prefunding Account] [the Yield Supplement Account] [and] the
Reserve Account . The Reserve Account will not be part of the
Trust. In addition, the Trustee will establish a segregated
account in the name of the Trustee on behalf of the Trust and for
the benefit of the Certificateholders (the "Distribution
Account") from which all distributions with respect to the
Certificates will be made.
SERVICING COMPENSATION AND EXPENSES
The Servicing Fee Rate with respect to the Servicing Fee for
the Servicer will be [1.00]% per annum of the Pool Balance as of
the first day of the Collection Period (after giving effect to
distributions to be made on the following Distribution Date).
The Servicing Fee (together with any portion of the Servicing Fee
that remains unpaid from prior Distribution Dates) will be paid
on each Distribution Date solely to the extent of the Available
Interest. The Servicer is also entitled to receive a
supplemental servicing fee (the "Supplemental Servicing Fee") for
each Collection Period equal to any late, prepayment, and other
administrative fees and expenses collected during the Collection
Period[, plus any interest earned during the Collection Period on
deposits made with respect to the Receivables]. See "Description
of the Transfer and Servicing Agreements Servicing Compensation
and Expenses" in the Prospectus.
[ADVANCES] [ADVANCE RESERVE WITHDRAWALS]
[Servicer Advances. As of the last day of each Collection
Period, the Servicer will, subject to the limitations described
in the following sentence, make a payment (an "Advance") with
respect to each Receivable (other than a Defaulted Receivable) in
an amount equal to the excess, if any, of (x) the amount of
interest due on such Receivable at its applicable Contract Rate,
over (y) the interest actually received by the Servicer with
respect to such Receivable (whether from the Obligor, [the Yield
Supplement Agreement] or payments of the Purchase Amount) during
or with respect to such Collection Period. The Servicer may elect
not to make an Advance of due and unpaid interest with respect to
a Receivable to the extent that the Servicer, in its sole
discretion, determines that such Advance is not recoverable from
subsequent payments on such Receivable or from funds in the
Reserve Account.
To the extent that the amount set forth in clause (y) above
with respect to a Receivable is greater than the amount set forth
in clause (x) above with respect thereto, such amount shall be
distributed to the Servicer on the related Distribution Date. Any
such payment will only be from accrued interest due from the
Obligor under such Receivable.
The Servicer will deposit Advances, if any, into the
Collection Account on the applicable Deposit Date.]
[Advance Reserve Withdrawals. The Servicer shall, as of the
last day of the Collection Period, withdraw from the Reserve
Account funds in an amount with respect to each Receivable (other
than a Defaulted Receivable) equal to the excess, if any, of (x)
the amount of interest due on such Receivable at its applicable
Contract Rate, over (y) the interest actually received by the
Servicer with respect to such Receivable (whether from the
Obligor, [the Yield Supplement Agreement] or payments of the
Purchase Amount) during or with respect to such Collection Period
(the "Advance Reserve Withdrawal"). The Servicer will deposit
Advance Reserve Withdrawals, if any, into the Collection Account
on the applicable Deposit Date.]
RESERVE ACCOUNT
The Reserve Account will be created with an initial deposit
of cash having a value of at least the Reserve Account Initial
Deposit. In addition, on each Distribution Date, any amounts on
deposit in the Collection Account with respect to the preceding
Collection Period after payments to the Certificateholders and
the Servicer have been made will be deposited into the Reserve
Account until the amount of the Reserve Account is equal to the
Specified Reserve Account Balance.
The Reserve Account will be an Eligible Account which the
Sellers shall establish and maintain in the name of, and under
the control of, the Collateral Agent. Funds on deposit in the
Reserve Account will be invested in Permitted Investments. See
"Description of the Transfer and Servicing Agreements --Accounts"
in the Prospectus.
On each Distribution Date, the amount available in the
Reserve Account (the "Available Reserve Amount") will equal the
lesser of (i) the amount on deposit in the Reserve Account
[(exclusive of Investment Earnings)] and (ii) the Specified
Reserve Account Balance. On each Deposit Date, the Collateral
Agent will withdraw funds from the Reserve Account to make
available to Certificateholders the excess, if any, of (x) the
sum of the amounts required to be distributed to
Certificateholders, any accrued and unpaid Servicing Fees payable
to the Servicer on such Distribution Date [and any amounts
required to reimburse any Outstanding Advances (excluding
Advances made as a result of prepayments by Obligors)] over (y)
the amounts to be deposited in the Collection Account with
respect to the preceding Collection Period [(exclusive of
Investment Earnings)]. Such deficiencies in the Collection
Account may result from, among other things, Receivables becoming
Defaulted Receivables or the failure by a Servicer to make any
remittance required to be made under the Agreement. The aggregate
amount to be withdrawn from the Reserve Account on any
Distribution Date will not exceed the Available Reserve Amount
with respect to the related Distribution Date. The Collateral
Agent will deposit the proceeds of such withdrawal from the
Reserve Account into the Distribution Account or pay such
proceeds to the Servicer, as applicable, on the Distribution Date
with respect to which such withdrawal was made.
The Specified Reserve Account Balance on any Distribution
Date will equal % of the Pool Balance as of the last day of the
preceding Collection Period, but in any event will not be less
than the lesser of (i) $ and (ii) the sum of such
Pool Balance plus an amount sufficient to pay interest on such
Pool Balance at a rate equal to the sum of the weighted average
Pass-Through Rate and the Servicing Fee Rate through the Final
Scheduled Distribution Date; provided, however, that the
Specified Reserve Account Balance will be calculated using a
percentage of % for any Distribution Date (beginning on the
199 Distribution Date) [on which the [Average Net
Loss Ratio] exceeds % or the [Average Delinquency Ratio]
exceeds %] [describe alternative test].
"Average Delinquency Ratio" means, as of any Distribution
Date, the average of the Delinquency Ratios for the preceding
[three] Collection Periods.
["Average Net Loss Ratio" means, as of any Distribution
Date, the average of the Net Loss Ratios for the preceding three
Collection Periods.]
"Defaulted Receivable" means, with respect to any Collection
Period, a Receivable (other than a Purchased Receivable) which
the Servicer, on behalf of the Trust, has determined to charge
off during such Collection Period in accordance with its
customary servicing practices.
["Delinquency Ratio" means, for any Collection Period, the
ratio, expressed as a percentage, of (i) the principal amount of
all outstanding Receivables (other than Purchased Receivables and
Defaulted Receivables) which are 60 or more days delinquent as of
the end of such Collection Period, determined in accordance with
the Servicer's customary practices, divided by (ii) the Pool
Balance as of the last day of such Collection Period.]
"Liquidation Proceeds" mean, with respect to any
Distribution Date and a Receivable that has become a Defaulted
Receivable during a related Collection Period, (i) insurance
proceeds received during such Collection Period by the Servicer,
with respect to insurance policies relating to the Financed
Vehicle or the Obligor, (ii) amounts received by the Servicer
during such Collection Period from a Dealer in connection with
such Defaulted Receivable pursuant to the exercise of rights
under a Dealer Agreement, and (iii) the monies collected by the
Servicer (from whatever source, including, but not limited to
proceeds of a sale of a Financed Vehicle or deficiency balance
recovered after the charge off of the related Receivable) during
such Collection Period on such Defaulted Receivable net of any
fees, costs and expenses incurred by the Servicer in connection
therewith and any payments required by law to be remitted to the
Obligor. Liquidation Proceeds shall be applied first to accrued
and unpaid interest on the Receivable and then to the principal
balance thereof.
["Net Loss Ratio" means, for any Collection Period, an
amount, expressed as an annualized percentage, equal to (i)
Realized Losses minus Recoveries for such Collection Period,
divided by (ii) the average of the Pool Balances on the first day
of such Collection Period and the last day of such Collection
Period.]
"Recoveries" mean, with respect to any Collection Period,
all monies received by the Servicer with respect to any Defaulted
Receivable during any Collection Period following the Collection
Period in which such Receivable became a Defaulted Receivable,
net of any fees, costs and expenses incurred by the Servicer in
connection with the collection of such Receivable and any
payments required by law to be remitted to the Obligor.
The Specified Reserve Account Balance may be reduced to a
lesser amount as determined by the Sellers, subject to
satisfaction of the Rating Agency Condition. Amounts on deposit
in the Reserve Account will be released to the Servicer on each
Distribution Date to the extent that the amount on deposit in the
Reserve Account would exceed the Specified Reserve Account
Balance. The Collateral Agent will cause all investment earnings
attributable to the Reserve Account to be distributed on each
Distribution Date to the Servicer on behalf of the Sellers. Upon
any distribution to the Servicer of amounts from the Reserve
Account, the Certificateholders will not have any rights in, or
claims to, such amounts.
In the event that the funds in the Reserve Account are
reduced to zero, the Certificateholders will bear directly the
credit and other risks associated with ownership of the
Receivables. In such a case, the amount available for
distribution may be less than that described below, and the
Certificateholders may experience delays or suffer losses as a
result of, among other things, defaults or delinquencies by the
Obligors or previous extensions made by the Servicer.
DISTRIBUTIONS ON CERTIFICATES
Deposits to Collection Account. On or before each
Determination Date, the Servicer will provide the Trustee with a
certificate (the "Servicer's Certificate") containing certain
information with respect to the preceding Collection Period,
including the amount of aggregate collections on the Receivables
during such Collection Period, the aggregate amount of
Receivables which became Defaulted Receivables during such
Collection Period, [the Yield Supplement Deposit Amount,] the
aggregate Purchase Amounts of Receivables to be repurchased by
the Sellers or to be purchased by the Servicer on the related
Deposit Date [and the aggregate amount to be withdrawn from the
Reserve Account].
On or before each Deposit Date (a) the Servicer will cause
all Collections and Liquidation Proceeds and Recoveries to be
deposited into the Collection Account and will deposit into the
Collection Account all Purchase Amounts of Receivables to be
purchased by the Servicer on such Deposit Date, (b) the Sellers
will deposit into the Collection Account all Purchase Amounts of
Receivables to be repurchased by the Sellers on such Deposit
Date, (c) the Servicer will deposit [all Advances for the related
Distribution Date] [the amount of the Advance Reserve Withdrawal
with respect to the related Distribution Date] into the
Collection Account [and (d) the Sellers (or, in certain
circumstances, the Collateral Agent) will deposit the Yield
Supplement Deposit Amount for the related Distribution Date into
the Collection Account].
"Available Interest" means, with respect to any Distribution
Date, [the excess of (a)] the sum of (i) Interest Collections for
such Distribution Date, [(ii) the Yield Supplement Deposit Amount
for such Distribution Date], [(iii) [all Advances][the proceeds
of any Advance Reserve Withdrawal] made by the Servicer with
respect to such Distribution Date], and [(iv) Investment Earnings
for such Distribution Date,] [over (b) the amount of Outstanding
Advances to be reimbursed on or with respect to such Distribution
Date].
"Available Principal" means, with respect to any
Distribution Date, the sum of the following amounts with respect
to the preceding Collection Period: (i) that portion of all
Collections on the Receivables allocable to principal in
accordance with the terms of the Receivables and the Servicer's
customary servicing procedures; (ii) to the extent attributable
to principal, the Purchase Amount received with respect to each
Receivable repurchased by the Sellers or purchased by the
Servicer under an obligation which arose during the related
Collection Period; and (iii) all Liquidation Proceeds, to the
extent allocable to principal, received during such Collection
Period. "Available Principal" on any Distribution Date shall
exclude all payments and proceeds of any Receivables the Purchase
Amount of which has been distributed on a prior Distribution
Date.
"Collections" mean, with respect to any Distribution Date,
all collections on the Receivables.
"Interest Collections" mean, with respect to any
Distribution Date, 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
accordance with the terms of the Receivables and the Servicer's
customary servicing procedures; (ii) all Liquidation Proceeds, to
the extent allocable to interest, received during such Collection
Period; (iii) all Recoveries on Receivables which became
Defaulted Receivables received during any Collection Period
following the Collection Period in which such Receivable became a
Defaulted Receivable; and (iv) to the extent attributable to
accrued interest, the Purchase Amount with respect to each
Receivable repurchased by the Sellers or purchased by the
Servicer under an obligation which arose during such Collection
Period. "Interest Collections" for any Distribution Date shall
exclude all payments and proceeds of any Receivables the Purchase
Amount of which has been distributed on a prior Distribution
Date.
"Purchased Receivable" means, at any time, a Receivable as
to which payment of the Purchase Amount has previously been made
by the Sellers or the Servicer pursuant to the Sale and Servicing
Agreement.
Deposits to the Distribution Account. On each Distribution
Date, [after making reimbursements of Outstanding Advances to the
Servicer from Available Interest to the extent then reimbursable
pursuant to the Agreement], the Trustee will make the following
deposits and distributions, to the extent of Available Interest
and any Available Reserve Amount remaining after such
reimbursements (and, in the case of shortfalls occurring under
clause (ii) below in the Class A Interest Distribution, the Class
B Percentage of Available Principal to the extent of such
shortfalls), in the following priority:
(i) to the Servicer, first from Available Interest, and then,
if necessary, from the Available Reserve Amount, any
unpaid Servicing Fee for the related Collection Period and
all unpaid Servicing Fees from prior Collection Periods;
(ii) to the Distribution Account, first from Available
Interest, then, if necessary, from the Available
Reserve Amount, and finally, if necessary, from
the Class B Percentage of Available Principal, the
Class A Interest Distribution for such
Distribution Date; and
(iii) to the Distribution Account, first from Available
Interest and then, if necessary, from the
Available Reserve Amount, the Class B Interest
Distribution for such Distribution Date.
On each Distribution Date, the Trustee will make the
following deposits and distributions, to the extent of the
portion of Available Principal, Available Interest and Available
Reserve Amount (to be applied in that order of priority)
remaining after the application of clauses (i), (ii) and (iii)
above, in the following priority:
(iv) to the Distribution Account, the Class A Principal
Distribution for such Distribution Date;
(v) to the Distribution Account, the Class B Principal
Distribution for such Distribution Date;
(vi) to the Reserve Account, any amounts remaining, until
the amount on deposit in the Reserve Account equals the
Specified Reserve Account Balance; and
(vii) to the Sellers, any amounts remaining.
On each Distribution Date, from amounts on deposit in the
Distribution Account, the Class A Interest Distribution and the
Class A Principal Distribution will be distributed to the Class A
Certificateholders and the Class B Interest Distribution and the
Class B Principal Distribution will be distributed to the Class B
Certificateholders by the Trustee.
"Class A Certificate Balance," at any time, equals the
Original Class A Certificate Balance, as reduced by all principal
amounts distributed to Class A Certificateholders prior to such
time.
"Class A Interest Carryover Shortfall" means, (i) with
respect to the initial Distribution Date, zero, and (ii) with
respect to any other Distribution Date, the excess of Class A
Monthly Interest for the preceding Distribution Date and any
outstanding Class A Interest Carryover Shortfall on such
preceding Distribution Date, over the amount in respect of
interest that was actually distributed on the Class A
Certificates on such preceding Distribution Date, plus 30 days of
interest on such excess, to the extent permitted by law, at the
Class A Pass-Through Rate.
"Class A Interest Distribution" means, with respect to any
Distribution Date, the sum of Class A Monthly Interest for such
Distribution Date and the Class A Interest Carryover Shortfall
for such Distribution Date.
"Class A Monthly Interest" means, with respect to any
Distribution Date, one-twelfth of the Class A Pass-Through Rate
multiplied by the Class A Certificate Balance as of the preceding
Distribution Date (after giving effect to all payments of
principal made on such Distribution Date) or, in the case of the
first Distribution Date, as of the Closing Date.
"Class A Monthly Principal" means, with respect to any
Distribution Date, the Class A Percentage of Available Principal
for such Distribution Date plus the Class A Percentage of
Realized Losses with respect to the related Collection Period.
"Class A Percentage" means %.
"Class A Principal Carryover Shortfall" means, (i) with
respect to the initial Distribution Date, zero, and (ii) with
respect to any other Distribution Date, the excess of Class A
Monthly Principal for such Distribution Date and any outstanding
Class A Principal Carryover Shortfall from the preceding
Distribution Date over the amount in respect of principal that
was actually distributed on the Class A Certificates on such
Distribution Date.
"Class A Principal Distribution" means, with respect to any
Distribution Date, the sum of Class A Monthly Principal for such
Distribution Date and, in the case of any Distribution Date other
than the initial Distribution Date, the Class A Principal
Carryover Shortfall as of the preceding Distribution Date. In
addition, on the Final Scheduled Distribution Date, the Class A
Principal Distribution shall include any additional amount
required to reduce the outstanding principal balance of the Class
A Certificates to zero.
"Class B Certificate Balance", at any time, equals the
Original Class B Certificate Balance, as reduced by all principal
amounts distributed to Class B Certificateholders prior to such
time.
"Class B Interest Carryover Shortfall" means, (i) with
respect to the initial Distribution Date, zero, and (ii) with
respect to any other Distribution Date, the excess of Class B
Monthly Interest for the preceding Distribution Date and any
outstanding Class B Interest Carryover Shortfall on such
preceding Distribution Date, over the amount in respect of
interest that was actually distributed on the Class B
Certificates on such preceding Distribution Date, plus 30 days of
interest on such excess, to the extent permitted by law, at the
Class B Pass-Through Rate.
"Class B Interest Distribution" means, with respect to any
Distribution Date, the sum of Class B Monthly Interest for such
Distribution Date and the Class B Interest Carryover Shortfall
for such Distribution Date.
"Class B Monthly Interest" means, with respect to any
Distribution Date, one-twelfth of the Class B Pass-Through Rate
multiplied by the Class B Certificate Balance as of the preceding
Distribution Date (after giving effect to all payments of
principal made on such Distribution Date) or, in the case of the
first Distribution Date, as of the Closing Date.
"Class B Monthly Principal" means, with respect to any
Distribution Date, the Class B Percentage of Available Principal
for such Distribution Date plus the Class B Percentage of
Realized Losses with respect to the related Collection Period.
"Class B Percentage" means %.
"Class B Principal Carryover Shortfall" means, (i) with
respect to the initial Distribution Date, zero and (ii) with
respect to any other Distribution Date, the excess of Class B
Monthly Principal for such Distribution Date and any outstanding
Class B Principal Carryover Shortfall from the preceding
Distribution Date over the amount in respect of principal that
was actually distributed on the Class B Certificates on such
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, in the case of any Distribution Date other
than the initial Distribution Date, the Class B Principal
Carryover Shortfall as of the preceding Distribution Date. In
addition, on the Final Scheduled Distribution Date, the Class B
Principal Distribution will include any additional amount
required to reduce the outstanding principal balance of the Class
B Certificates to zero.
"Realized Losses" mean, for any Collection Period and for
each Receivable that became a Defaulted Receivable during such
Collection Period, the excess of the aggregate principal balance
of such Receivable over Liquidation Proceeds received with
respect to such Receivable during such Collection Period, to the
extent allocable to principal.
The following chart sets forth an example of the application
of the foregoing provisions to a hypothetical monthly
distribution:
March 1 - March 31...Collection Period. The Servicer receives
monthly payments, prepayments and other proceeds
in respect of the Receivables.
April 8..............Determination Date. On or before this date,
the Servicer delivers to the Trustee
the Servicer's Certificate, which notifies the
Trustee of the amounts required to
be distributed and the amounts available for
distribution on the next Distribution Date.
April 14.............Record Date. Distributions on the next
Distribution Date are made to Certificate-
holders of record as of the close of
business on this date (or, if Definitive
Certificates are issued, the last day of the
preceding Collection Period, in this example
March 31).
April 14.............Deposit Date. All Collections, [Advances],
Purchase Amounts [and any Yield Supplement
Amount] relating to the preceding Collection
Period are required to be deposited in the
Collection Account on or before this date.
April 15.............Distribution Date. The Trustee distributes
to Certificateholders amounts payable
in respect of the Certificates, pays the
Servicing Fee [and reimburses Outstanding
Advances to the Servicer to the extent then
reimbursable], withdraws funds from the
Reserve Account to the extent necessary,
deposits any excess funds to the Reserve
Account and, if the amount on deposit in the
Reserve Account is equal to the Specified
Reserve Account Balance, pays any remaining funds
to the Sellers.
[YIELD SUPPLEMENT ACCOUNT; YIELD SUPPLEMENT AGREEMENT
The Yield Supplement Account will be created with an initial
deposit by the Sellers of the Yield Supplement Initial Deposit.
The Yield Supplement Initial Deposit will equal an amount (which
amount may be discounted at a rate to be specified in the
Agreement) equal to the aggregate amount by which (i) interest on
the principal balance of each [Initial] Receivable for the period
commencing on the [Initial] Cut-Off Date and ending with the
scheduled maturity of such Receivable, assuming that payments on
such Receivables are made as scheduled and no prepayments are
made) at a rate equal to the Required Rate, exceeds (ii) interest
on such principal balances at the Contract Rate of such
Receivable (the "Yield Supplement Amount" [and, with respect to
all of the [Initial] Receivables, the "Required [Initial] Yield
Supplement Amount"]).
On each Distribution Date, the Trustee will transfer to the
Collection Account from monies on deposit in the Yield Supplement
Account an amount equal to the Yield Supplement Deposit Amount
in respect of the Receivables for such Distribution Date. The
"Yield Supplement Deposit Amount" with respect to a Distribution
Date is the aggregate Yield Supplement Amount, if any, in respect
of the Receivables for the related Collection Period. Amounts on
deposit on any Distribution Date in the Yield Supplement Account
in excess of the Required Yield Supplement Amount, after giving
effect to all distributions to be made on such Distribution Date,
will be paid to the Sellers. Monies on deposit in the Yield
Supplement Account may be invested in Permitted Investments under
the circumstances and in the manner described in the Agreement.
Any monies remaining on deposit in the Yield Supplement Account
upon the termination of the Trust will be paid to the Sellers.
[Pursuant to the Yield Supplement Agreement, on each
Subsequent Transfer Date, the Sellers will deposit into the Yield
Supplement Account an amount equal to the Additional Yield
Supplement Amount. The aggregate of the Additional Yield
Supplement Amounts in respect of Subsequent Receivables, if any,
is referred to herein as the "Required Subsequent Yield
Supplement Amount" and, together with the Required Initial Yield
Supplement Amount, the "Required Yield Supplement Amount."]]
STATEMENTS TO CERTIFICATEHOLDERS
Certificate Owners may obtain the monthly statements and
annual tax statement and tax information provided to the Trustee
by the Servicer free of charge (except for copying and postage
costs) by request in writing to the Trustee at [
, Attention:
.] See "Description of Transfer and Servicing Agreements--
Statements to Trustee and Trust" in the Prospectus for a
description of such statements.
TERMINATION
The Trust, and the respective obligations of the Sellers,
the Servicer, the Trustee and the Collateral Agent under the
Agreement will, except with respect to certain reporting
requirements, terminate upon the earliest of (i) the Distribution
Date next succeeding the Servicer's purchase of the remaining
Trust Property, as described below, (ii) payment to
Certificateholders 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
liquidation of the last Receivable and the disposition of any
amounts received upon liquidation of any property remaining in
the Trust in accordance with the terms and priorities set forth
in the Agreement.
The Trustee will give written notice of termination of the
Trust to each Certificateholder of record at such time. The final
distribution to any Certificateholder will be made only upon
surrender and cancellation of such holder's Certificate (whether
a Definitive Certificate or the physical certificate representing
the Certificates) at the office or agency of the Trustee
specified in the notice of termination. Any funds remaining in
the Trust after setting aside all funds required to be
distributed to Certificateholders will be distributed to the
Sellers or as otherwise provided in the Agreement.
THE TRUSTEE
[ ] a [ banking
corporation], will be the Trustee. 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 Agreement will provide that the Servicer will pay the
Trustee's reasonable fees, costs and expenses.
The Trustee may resign at any time upon thirty (30) days
prior written notice to the Servicer, 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. Any 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.
The Trustee's Corporate Trust Office is located at [
.] The Sellers,
the Servicer and their respective affiliates may have other
banking relationships with the Trustee and its affiliates in the
ordinary course of their business.
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 Sellers or the
Servicer of any funds paid to the Sellers or the Servicer in
respect of the Certificates or the Receivables or for any monies
prior to the time such monies are deposited into the Certificate
Account. The Trustee will not independently verify the existence
or status of 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 by the Servicer to the Trustee under the Agreement, in
which case the Trustee will only be required to examine such
instruments to determine whether they conform to the requirements
of 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
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 against the
fees, 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 security or
indemnity, and the Trustee for 30 days has neglected or refused
to institute any such proceeding.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material United States
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 income tax consequences applicable to all categories
of investors, some of which may be subject to special rules.
Consequences to individual investors of investment in the
Certificates will vary according to circumstances. In addition,
this summary is generally limited to investors who will hold the
Certificates as "capital assets" (generally, property held for
investment) within the meaning of Section 1221 of the Internal
Revenue Code of 1986, as amended (the "Code"). 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.
INVESTORS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISERS
TO DETERMINE THE FEDERAL, STATE, LOCAL, AND OTHER TAX
CONSEQUENCES TO THEM OF THEIR PURCHASE, OWNERSHIP AND DISPOSITION
OF THE CERTIFICATES.
TAX STATUS OF THE TRUST; SCOPE OF TAX OPINION
In the opinion of Skadden, Arps, Slate, Meagher & Flom,
special tax counsel to the Sellers ("Special Tax Counsel"), the
Trust will not be classified as an association taxable as a
corporation for federal income tax purposes, but will be
classified as a grantor trust, and 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 addition,
Special Tax Counsel has prepared or reviewed the statements in
this Prospectus under the headings "Prospectus Summary Tax
Status" and "Certain Federal Income Tax Consequences," and is of
the opinion that such statements are correct in all material
respects. Such statements are intended as an explanatory
discussion of the possible effects of the classification of the
Trust as a grantor trust for federal income tax purposes on
investors generally and of related tax matters affecting
investors generally, but do not purport to furnish information in
the level of detail or with the attention to an investor's
specific tax circumstances that would be provided by an
investor's own tax adviser. Accordingly, each investor is advised
to consult its own tax advisers with regard to the tax
consequences to it of investing in the Certificates.
TAX CHARACTERIZATION OF THE TRUST AS A GRANTOR TRUST
Special Tax Counsel will deliver its opinion that the Trust
will not be classified as an association taxable as a corporation
but that such Trust will be classified as a grantor trust under
subpart E, Part I of subchapter J of the Code. In this case,
owners of Certificates (referred to herein as "Grantor Trust
Certificateholders"), subject to the discussion of stripped
coupons below under " Tax Consequences to Holders of Offered
Certificates Characterization of Fees," will be treated for
federal income tax purposes as owners of a portion of the Trust's
assets as described below. The Certificates issued by a Trust
that is treated as a grantor trust are referred to herein as
"Grantor Trust Certificates."
TAX CONSEQUENCES TO HOLDERS OF OFFERED CERTIFICATES
Income on the Receivables. If the Receivables are not
characterized as "stripped bonds" or otherwise recharacterized,
each Grantor Trust Certificateholder will be required to report
on its federal income tax return its pro rata share of the entire
income of the Trust indicated herein for the period during which
it owns a Grantor Trust Certificate, including interest or
finance charges earned on the Receivables, and any gain or loss
upon collection or disposition of the Receivables. Because the
Receivables, when originally issued by the Obligors to the
Dealers, are believed to have had adequate stated interest, the
OID and imputed interest rules should not apply to the
Receivables except to the extent that a Receivable is treated as
a "stripped bond," as discussed below. The portion of each
monthly payment to a Grantor Trust Certificateholder that is
allocable to principal on the Receivables will represent a
recovery of capital, which will reduce the tax basis of such
Grantor Trust Certificateholder's undivided interest in the
Receivables. In computing its federal income tax liability, a
Grantor Trust Certificateholder 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
Grantor Trust Certificateholder is an individual, estate or trust
the deduction for his pro rata share of such fees will be allowed
only to the extent that all of his miscellaneous itemized
deductions, including his share of such fees, exceed 2% of his
adjusted gross income. In addition, in the case of Grantor Trust
Certificateholders who are individuals, otherwise allowable
itemized deductions will be reduced, but not more than 80%, by an
amount equal to 3% of the Grantor Trust Certificateholder's
adjusted gross income in excess of statutorily defined threshold
($117,950 in the case of a married couple filing jointly for
taxable years beginning in 1996, which amount will be adjusted
for inflation). Because the Servicer will not report to holders
of Grantor Trust Certificates offered by Prospectus Supplement
the amount of income or deductions attributable to the
Supplemental Servicing Fee, such a Grantor Trust
Certificateholder may effectively underreport his net taxable
income. To the extent that the Receivables are characterized as
"stripped bonds," as discussed below, the portion of interest
treated as retained by the Sellers or the Servicer would not be
included in the income of Grantor Trust Certificateholders. See
" Characterization of Fees" below.
To the extent that the purchase price of a Grantor Trust
Certificate allocated to a Grantor Trust Certificateholder's
undivided interest in a Receivable is greater than or less than
the portion of the principal balance of the Receivable allocable
to the Grantor Trust Certificate, such interest in the Receivable
will have been acquired at a premium or discount, as the case may
be. In determining whether a Grantor Trust Certificateholder has
purchased its interest in the Receivables (or any Receivable) at
a discount, a portion of the purchase price for a Grantor Trust
Certificate may be allocated to accrued interest on each
Receivable and to amounts held in the Collection Account pending
distribution to Certificateholders at the time of purchase as
though such accrued interest and collections on the Receivables
were separate assets purchased by the Grantor Trust
Certificateholder, thus reducing the portion of the purchase
price allocable to a Grantor Trust Certificateholder's undivided
interest in each Receivable (the "Purchase Price") and increasing
the potential discount on the Receivables.
Characterization of Fees. The Servicer intends to report
income to Grantor Trust Certificateholders on the assumption that
the holders of the Grantor Trust Certificates ("Offered Grantor
Trust Certificates") own an interest (equal to the percentage
indicated in the related Prospectus Supplement) in all of the
principal and interest derived from the Receivables. However, to
the extent that the amounts paid to the Servicer or the Sellers
exceed reasonable fees for services rendered, by reason of the
extent to which either the weighted average Contract Rate of the
Receivables, or the individual stated Contract Rates of some of
the Receivables, exceed the Certificate Rate, such amounts will
be treated as an interest in the Receivables retained by the
Sellers or the Servicer. There are no authoritative
pronouncements for federal income tax purposes as to either the
maximum amount of compensation that may be considered reasonable
for servicing Receivables or performing other services in the
context of transactions involving receivables such as the
Receivables, although the Service has issued such guidelines in
the context of mortgage loans. To the extent that amounts paid
to the Servicer or the Sellers exceed reasonable compensation for
services provided, they would be viewed as having retained for
federal income tax purposes an ownership interest in a portion of
each interest payment with respect to the certain Receivables
(each such payment, a "stripped coupon"). As a result, such
Receivables would be treated as "stripped bonds" within the
meaning of the Code.
To the extent that the Receivables are characterized as
"stripped bonds," the income and deductions of the Trust
allocable to holders of Offered Grantor Trust Certificates will
not include the portion of the interest on the Receivables
treated as having been retained by the Sellers (or other holder
of non-Offered Grantor Trust Certificates) and the Trust's
deductions will be limited to reasonable servicing and other
fees. In addition, a holder of Offered Grantor Trust
Certificates will not be subject to the market discount rules
discussed below with respect to the stripped Receivables, but
instead will be subject to the OID rules. However, if the price
at which such a Certificateholder were deemed to have acquired a
stripped Receivable is less than the remaining principal balance
of such Receivable by an amount which is less than a statutorily
defined de minimis amount, such Receivable would not be treated
as having OID. In general, the amount of OID on a Receivable
treated as a "stripped bond" will be de minimis if it is less
than 1/4 of one percent for each remaining full year of weighted
average life of the Receivable (probably based on a prepayment
assumption) remaining after the purchase date until the final
maturity of the Receivable. If the amount of OID is de minimis
under this rule, the actual amount of OID on such a Receivable
would be includible in income proportionately as principal
payments are received on the Receivable in the proportion that
the amount of the principal payment made bears to the total
principal amount of the Receivable.
If the OID on a Receivable, which may differ for each
Receivable, based on the Purchase Price paid by a holder of an
Offered Grantor Trust Certificate, is not treated as being de
minimis, such a Certificateholder will be required to include any
OID on a Receivable in income as it accrues, regardless of when
cash payments are received, using a method reflecting a constant
yield to maturity on the Receivable. It is possible that the IRS
could require use of a prepayment assumption in computing the
yield of a stripped Receivable. If a stripped Receivable is
deemed to be acquired by a holder of an Offered Grantor Trust
Certificate at a greater than de minimis OID, such treatment
would accelerate the accrual of income by such holder.
Prospective investors are advised to consult their own tax
advisors regarding the extent to which a portion of the amounts
paid to the Servicer (or other holder of non-Offered Grantor
Trust Certificates) could be characterized other than as
compensation for services rendered for federal income tax
purposes and the calculation of OID on the Receivables.
It is also possible that any fees deemed to be excessive
could be characterized as deferred purchase price payable to the
Sellers by holders of Offered Grantor Trust Certificates in
exchange for the Receivables. The likely effect of such
recharacterization would be to accelerate realization of taxable
income by such a holder.
Market Discount. If the Receivables are not treated as
"stripped bonds," the interest of a holder of Offered Grantor
Trust Certificates in each Receivable whose Purchase Price is
less than the original issue price (plus OID, if any, previously
includible in the income of any holder) of the Receivable will be
treated as having been purchased at a "market discount". The
market discount on a Receivable will be considered to be zero if
it is less than a statutorily defined de minimis amount.
In general, under the market discount provisions of the
Code, principal payments received by the Trust, and all or a
portion of the gain recognized upon a sale or other disposition
of a Receivable or upon the sale or other disposition of an
Offered Grantor Trust Certificate by a holder thereof, will be
taxable as ordinary income to the extent of accrued market
discount, and a portion of the interest deductions attributable
to indebtedness treated as incurred or continued to purchase or
carry a Receivable or an Offered Grantor Trust Certificate must
be deferred. The ordinary income treatment on dispositions and
deferral of interest deductions described in the preceding
sentence will not apply if a holder of an Offered Grantor Trust
Certificate elects to include market discount in income currently
as it accrues for each taxable year during which it holds the
Offered Grantor Trust Certificate. Market discount will accrue
in the manner to be provided in Treasury regulations, but the
Conference Report accompanying the Tax Reform Act of 1986 states
that, until such regulations are issued, it is intended that
taxpayers may elect to accrue market discount either (i) under a
constant yield (economic accrual) method or (ii) at the election
of the taxpayer, in the proportion that the stated interest paid
on the obligation for the current period bears to total remaining
interest on the obligation. As described above, if the Offered
Grantor Trust Certificates are characterized as "stripped bonds,"
any discount would be treated as OID, the amount and timing of
which should be comparable to the amount and timing of market
discount if an election is made to include market discount in
income currently on the constant yield method. See "
Characterization of Fees" above. Due to the complexity of the
market discount rules, the holders of Offered Grantor Trust
Certificates are urged to consult their tax advisors as to
whether market discount will result from the acquisition of
Offered Grantor Trust Certificates, and as to the tax treatment
of any such discount.
Premium. In the event that a Receivable is treated as
purchased at a premium (i.e., the Purchase Price exceeds the sum
of principal payments to be made thereon), such premium will be
amortizable by a holder of an Offered Grantor Trust Certificate
as an offset to interest income (with a corresponding reduction
in such holder's basis) under a constant yield method over the
term of the Receivable if an election under Section 171 of the
Code is made (or previously in effect in accordance with the
provisions of the Tax Reform Act of 1986) with respect to the
Offered Grantor Trust Certificates. Any such election will also
apply to debt instruments held by the taxpayer during the year in
which the election is made and all debt instruments acquired
thereafter.
Sale of a Class A Certificate or a Receivable. If an
Offered Grantor Trust Certificate is sold, gain or loss will be
recognized equal to the difference between the amount realized on
the sale and the adjusted basis of the holder of the Offered
Grantor Trust Certificate in the Receivables and any other assets
held by the Trust. A holder of an Offered Grantor Trust
Certificate's adjusted basis will equal such holder's cost for
the Offered Grantor Trust Certificate, increased by any discount
previously included in income, and decreased by any deduction
previously allowed for accrued premium and by the amount of
principal payments previously received on the Receivables. Any
gain or loss will be capital gain or loss if the Offered Grantor
Trust Certificate was held as a capital asset, except that gain
will be treated in whole or in part as ordinary interest income
to the extent of the seller's interest in accrued market discount
not previously taken into income on Receivables having a fixed
maturity date of more than one year from the date of origination.
Under proposed Treasury regulations, the grant of an
extension of the maturity of a Receivable to the Obligor thereon
could be treated as an exchange if it changes the yield on the
Receivable by more than a de minimis amount, potentially
resulting in taxable gain or loss to Certificateholders. Reports
to Certificateholders will not include information sufficient to
calculate any such gain or loss and accordingly, in the event
that an extension were to result in a deemed exchange, a
Certificateholder could underreport its taxable income. No
assurance can be given as to whether the proposed regulations
will be adopted as final regulations in their present form or
whether, if adopted, they will apply to the Receivables.
Foreign Class A Certificate Owners. Interest attributable
to Receivables which is received by a foreign holder of an
Offered Grantor Trust Certificate will generally not be subject
to the 30% withholding tax imposed with respect to payments of
interest, provided that such foreign holder is not engaged in a
trade or business in the United States and that such foreign
holder fulfills certain certification requirements. Under such
requirements, the holder must certify, under penalties of
perjury, that it is not a "United States person" and provide its
name and address. For this purpose, "United States person" means
a citizen or resident of the U.S., a corporation, partnership, or
other entity created or organized in or under the laws of the
U.S. or any political subdivision thereof, or an estate or trust
the income of which is includible in gross income for U.S.
federal income tax purposes, regardless of its source.
Backup Withholding. Payments made on the Offered Grantor
Trust Certificates and proceeds from the sale of the Offered
Grantor Trust Certificates will not be subject to a "backup"
withholding tax of 31% unless, in general, a holder of an Offered
Grantor Trust Certificate fails to comply with certain reporting
procedures and is not an exempt recipient under applicable
provisions of the Code.
THE FEDERAL TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON
A NOTEHOLDER'S OR CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION.
PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF NOTES AND CERTIFICATES, INCLUDING
THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX
LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX
LAWS.
ERISA CONSIDERATIONS
[THE CLASS A CERTIFICATES]
The Class A Certificates may, in general, be purchased by or
on behalf of (i) "employee benefit plans" (as defined in Section
3(3) of ERISA), (ii) "plans" described in Section 4975(e)(1) of
the Code, including individual retirement accounts and Keogh
Plans, or (iii) entities whose underlying assets include plan
assets by reason of a plan's investment in such entity (each, a
"Plan"), provided that certain conditions are met with respect to
an individual administrative exemption issued by the United
States Department of Labor to , , (the
"Underwriters' Exemption"). The Sellers believes that the
Exemption will apply to the acquisition and holding of the Class
A Certificates by a Plan and that all conditions of the Exemption
other than those within the control of the investors have been or
will be met. 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 Underwriters'
Exemption and other relevant issues. For additional information
regarding treatment of the Class A Certificates under ERISA,
[including certain special considerations that apply with respect
to the Pre-Funding Account,] see "ERISA Considerations" in the
Prospectus.
[THE CLASS B CERTIFICATES
Because the Class B Certificates are subordinated to the
Class A Certificates in certain respects, the Exemption will not
apply to the purchase of Class B Certificates by or on behalf of
a Plan. However, other prohibited transaction exemptions may be
applicable. These exemptions may apply with respect to, inter
alia, purchases by certain insurance company general accounts,
insurance company pooled separate accounts and bank collective
investment funds, and on behalf of employee benefit plans by
certain qualified professional asset managers. Any Plan
fiduciary considering whether to purchase a Class B Certificate
on behalf of a Plan should consult with its counsel regarding the
applicability of one or more of such exemptions to such purchase.
For additional information regarding treatment of the Class B
Certificates under ERISA, see "ERISA Considerations" in the
Prospectus.]
UNDERWRITING
Subject to the terms and conditions set forth in an
Underwriting Agreement (the "Underwriting Agreement"), the
Sellers have agreed to cause the Trust to sell to each of the
Underwriters named below (the "Underwriters"), and each of the
Underwriters has severally agreed to purchase, the principal
balance of the Class A Certificates [and Class B Certificates]
set forth opposite its name below:
PRINCIPAL
BALANCE OF
CLASS A
UNDERWRITERS CERTIFICATES
------------- ------------
NationsBanc Capital
Markets, Inc. . . . . $
. . . . . ------------
Total . . . . . $
------------
PRINCIPAL
BALANCE OF
CLASS B
[UNDERWRITERS CERTIFICATES]
------------- -------------
NationsBanc Capital
Markets, Inc. . . . . $
. . . . . -------------
Total . . . . . $
--------------
The Sellers have been advised by the Underwriters that they
propose initially to offer the Class A Certificates to the public
at the prices set forth herein, and to certain dealers at such
price less the initial concession not in excess of % per Class
A Certificate. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of % per Class A
Certificate to certain other dealers. After the initial public
offering of the Class A Certificates, the public offering prices
and such concessions may be changed.
[The Sellers have been advised by the Underwriters that they
propose initially to offer the Class B Certificates to the public
at the prices set forth herein, and to certain dealers at such
price less the initial concession not in excess of % per Class
B Certificate. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of % per Class B
Certificate to certain other dealers. After the initial public
offering of the Class B Certificates, the public offering prices
and such concessions may be changed.]
The Sellers will indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or
contribute to payments the Underwriters may be required to make
in respect thereof.
NationsBanc Capital Markets, Inc. ("NCMI") is a separate
subsidiary of NationsBank Corporation. NCMI is a registered
broker/dealer and not a bank. Any obligations of NCMI are the
sole responsibility of NCMI and do not create any obligation or
guarantee on the part of any affiliate of NCMI.
LEGAL OPINIONS
In addition to the legal opinions described in the
Prospectus, certain legal matters relating to the Certificates
will be passed upon for the Underwriters and certain federal
income tax and other matters will be passed upon for the Trust by
. [ has represented
and may from time to time in the future render legal services to
one or more of the Sellers and their affiliates.]
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally
offered NationsBank Auto Grantor Trust % Asset Backed
Certificates, Class A [and % Asset Backed Certificates, Class
B] ([collectively,] the "Global Securities") will be available
only in book-entry form. Investors in the Global Securities may
hold such Global Securities through any of The Depository Trust
Company ("DTC"), Cedel Bank, societe anonyme ("Cedel") or the
Euroclear System ("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 Global Securities will be effected
on a delivery-against-payment basis through the respective
Depositaries 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 & Co. 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 Depositaries, 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 applicable to U.S.
corporate debt obligations. 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 security 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 ensure that
settlement can be made on the desired value date.
Trading between DTC Participants. Secondary market trading
between DTC Participants will be settled using the procedures
applicable to U.S. corporate debt obligations 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 Depositary, 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. Payment will then be made by the respective
Depositary to 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 debit 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
debit 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 pre-position 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 pre-position funds and allow that credit line to
be drawn upon to finance 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
Depositary 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 Participant 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
Depositary, 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 Depositary, as appropriate, to deliver the bonds to
the DTC Participant's account 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. 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 debit in
anticipation of receipt of the sale proceeds in its account, the
back-valuation will extinguish any overdraft charges 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:
(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 INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities
through Cedel or Euroclear (or through DTC if the holder has an
address outside the U.S.) will be subject to the 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 owner takes 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 only 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 beneficial owner of Global
Securities 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 beneficial
owner of a Global Security 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 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 advisers for
specific tax advice concerning their holding and disposing of the
Global Securities.
INDEX OF TERMS
Set forth below is a list of the defined terms used in this
Prospectus Supplement and defined herein and the pages on which
the definitions of such terms may be found herein. Certain
defined terms used in this Prospectus Supplement are defined in
the Prospectus. See "Index of Terms" in the Prospectus.
Additional Yield Supplement Amount . . . . . . . . . . . . . S-9
Additional Reserve Account Deposit . . . . . . . . . S-10, S-26
Advance . . . . . . . . . . . . . . . . . . . . . . . . . . S-27
Advance Reserve Withdrawal . . . . . . . . . . . . . . . . S-28
Agreement . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Available Interest . . . . . . . . . . . . . . . . . . . . S-30
Available Principal . . . . . . . . . . . . . . . . . . . . S-30
Available Reserve Amount . . . . . . . . . . . . . . . . . S-28
Average Delinquency Ratio . . . . . . . . . . . . . . . . . S-29
Average Net Loss Ratio . . . . . . . . . . . . . . . . . . S-29
Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Business Day . . . . . . . . . . . . . . . . . . . . . . . . S-6
Cede . . . . . . . . . . . . . . . . . . . . . . . . . S-2, S-4
Cedel . . . . . . . . . . . . . . . . . . . . . . S-4, S-16, I-1
Certificate Owner . . . . . . . . . . . . . . . . . . . . . . S-4
Certificate Pool Factor . . . . . . . . . . . . . . . . . . S-23
Certificate Prepayment Amount . . . . . . . . . . . . . S-8, S-25
Certificate Prepayment Premium . . . . . . . . . . . . . . . S-8
Certificateholders . . . . . . . . . . . . . . . . . . . . . S-6
Certificates . . . . . . . . . . . . . . . . . . . . . S-1, S-4
Class A Certificate Balance . . . . . . . . . . . . . . . . S-31
[Class A] Certificate Rate . . . . . . . . . . . . . . . . . S-6
Class A Certificateholders . . . . . . . . . . . . . . . . . S-6
Class A Certificates . . . . . . . . . . . . . . . . . S-1, S-4
Class A Interest Carryover Shortfall . . . . . . . . . . . S-31
Class A Interest Distribution . . . . . . . . . . . . . . . S-31
Class A Monthly Interest . . . . . . . . . . . . . . . . . S-32
Class A Monthly Principal . . . . . . . . . . . . . . . . . S-32
Class A Percentage . . . . . . . . . . . . . . . S-4, S-25, S-32
Class A Principal Carryover Shortfall . . . . . . . . . . . S-32
Class A Principal Distribution . . . . . . . . . . . . . . S-32
Class B Certificate Balance . . . . . . . . . . . . . . . . S-32
Class B Certificate Rate . . . . . . . . . . . . . . . . . . S-6
Class B Certificateholders . . . . . . . . . . . . . . . . . S-6
Class B Certificates . . . . . . . . . . . . . . S-1, S-4, S-39
Class B Interest Carryover Shortfall . . . . . . . . . . . S-32
Class B Interest Distribution . . . . . . . . . . . . . . . S-32
Class B Monthly Interest . . . . . . . . . . . . . . . . . S-32
Class B Monthly Principal . . . . . . . . . . . . . . . . . S-32
Class B Percentage . . . . . . . . . . . . . . . S-4, S-25, S-32
Class B Principal Carryover Shortfall . . . . . . . . . . . S-32
Class B Principal Distribution . . . . . . . . . . . . . . S-33
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . S-5
Code . . . . . . . . . . . . . . . . . . . . . . . . S-12, S-35,
Collateral Agent . . . . . . . . . . . . . . . . . . . S-3, S-4
Collection Account . . . . . . . . . . . . . . . . . . . . S-11
Collection Period . . . . . . . . . . . . . . . . . . . . . . S-6
Collections . . . . . . . . . . . . . . . . . . . . . . . . S-30
Commission . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Contract Rate . . . . . . . . . . . . . . . . . . . . S-18, S-31
Cut-Off Date . . . . . . . . . . . . . . . . . . S-1, S-3, S-18
Dealer Agreements . . . . . . . . . . . . . . . . . . . . . . S-3
Dealers . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Defaulted Receivable . . . . . . . . . . . . . . . . . . . S-29
Definitive Certificates . . . . . . . . . . . . . . . . . . S-26
Delinquency Ratio . . . . . . . . . . . . . . . . . . . . . S-29
Distribution Account . . . . . . . . . . . . . . . . . . . S-27
Distribution Date . . . . . . . . . . . . . . . . . . . S-1, S-6
DTC . . . . . . . . . . . . . . . . . . . . . . . . S-2, S-4, I-1
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . S-12
Euroclear . . . . . . . . . . . . . . . . . . . . S-4, S-16, I-1
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . S-2
Final Scheduled Maturity Date . . . . . . . . . . . . . . . . S-5
Final Scheduled Distribution Date . . . . . . . . . . . . . . S-1
Financed Vehicles . . . . . . . . . . . . . . . . . . . . . . S-3
"Forced-placed insurance" . . . . . . . . . . . . . . . . . S-18
Funding Period . . . . . . . . . . . . . . . . . . . . . . . S-8
Global Securities . . . . . . . . . . . . . . . . . . . . . . I-1
Grantor Trust Certificateholders . . . . . . . . . . . . . S-36
Grantor Trust Certificates. . . . . . . . . . . . . . . . . S-36
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . S-26
[Initial] Cut-Off Date . . . . . . . . . . . . . . . . S-3, S-5
[Initial] Receivables . . . . . . . . . . . . . . . . . . . S-5
Interest Collections . . . . . . . . . . . . . . . . . . . S-30
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-35
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . S-29
Mandatory Repurchase . . . . . . . . . . . . . . . . . S-7, S-25
market discount . . . . . . . . . . . . . . . . . . . . . . S-38
NationsBank South . . . . . . . . . . . . . . . . . . . . . . S-3
NationsBank Texas . . . . . . . . . . . . . . . . . . . . . . S-3
NCMI . . . . . . . . . . . . . . . . . . . . . . . . . . . S-41
Net Loss Ratio . . . . . . . . . . . . . . . . . . . . . . S-29
Obligor . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Offered Grantor Trust Certificates . . . . . . . . . . . . S-37
Outstanding Advances . . . . . . . . . . . . . . . . . . . S-10
Pass-Through Rate. . . . . . . . . . . . . . . . . . . . . . S-6
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . S-39
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . S-6
Pool[/Pre-Funding] Balance . . . . . . . . . . . . . . . . . S-6
Pre-Funded Amount . . . . . . . . . . . . . . . . . . . . . . S-5
Pre-Funding Account . . . . . . . . . . . . . . . . . . S-1, S-8
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Purchase Price . . . . . . . . . . . . . . . . . . . . . . S-37
Purchased Receivable . . . . . . . . . . . . . . . . . . . S-31
Rating Agencies . . . . . . . . . . . . . . . . . . . . . . S-17
Rating Agency Condition . . . . . . . . . . . . . . . . . . S-10
Realized Losses . . . . . . . . . . . . . . . . . . . . . . S-33
Receivables . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Receivables Pool . . . . . . . . . . . . . . . . . . . . . S-18
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . S-29
Required [Initial] Yield Supplement Amount . . . . . . S-9, S-33
Required Subsequent Yield Supplement Amount . . . . . . S-9, S-34
Required Rate . . . . . . . . . . . . . . . . . . . . . . . . S-9
Required Yield Supplement Amount. . . . . . . . . . . . S-9, S-33
Reserve Account . . . . . . . . . . . . . . . . . . . . . . . S-9
Reserve Account Initial Deposit . . . . . . . . . . . . . . . S-9
Securities Act . . . . . . . . . . . . . . . . . . . . . . . S-2
Seller . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Sellers . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Servicer . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Servicer's Certificate . . . . . . . . . . . . . . . . . . S-30
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . S-10
Shortfall Amount . . . . . . . . . . . . . . . . . . . . . S-15
Simple Interest Receivable . . . . . . . . . . . . . . . . S-22
Special Tax Counsel . . . . . . . . . . . . . . . . . S-11, S-36
Specified Reserve Account Balance . . . . . . . . . . . . . S-10
Subsequent Cut-Off Date . . . . . . . . . . . . . . . . . . . S-5
Subsequent Receivables . . . . . . . . . . . . . . . . S-1, S-5
Subsequent Transfer Date . . . . . . . . . . . . . . . . . . S-5
Supplemental Servicing Fee . . . . . . . . . . . . . . . . S-27
Trust . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Trust Property . . . . . . . . . . . . . . . . . . . . . . . S-3
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
U.S. Person . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Underwriters . . . . . . . . . . . . . . . . . . . . . . . S-40
Underwriters' Exemption . . . . . . . . . . . . . . . . . . S-39
Underwriting Agreement . . . . . . . . . . . . . . . . . . S-40
United States person . . . . . . . . . . . . . . . . . . . S-39
Yield Supplement Amount . . . . . . . . . . . . . . . . S-9, S-33
Yield Supplement Agreement . . . . . . . . . . . . . . . . . S-9
Yield Supplement Account . . . . . . . . . . . . . . . . . . S-9
Yield Supplement Initial Deposit . . . . . . . . . . . . . . S-9
Yield Supplement Deposit Amount . . . . . . . . . . . . . . S-33
NO DEALER, SALESMAN OR OTHER $
PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO NationsBank
MAKE ANY REPRESENTATIONS OTHER Auto Grantor Trust 199 -
THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN $
THIS PROSPECTUS SUPPLEMENT OR % Asset Backed
THE PROSPECTUS AND, IF GIVEN Certificates, Class A
OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE [$
RELIED UPON. THIS PROSPECTUS % Asset Backed
SUPPLEMENT AND THE PROSPECTUS Notes, Class B]
DO NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES
OTHER THAN THE SECURITIES *
OFFERED HEREBY, NOR AN OFFER NATIONSBANK, N.A.
OF THE SECURITIES IN ANY STATE NATIONSBANK, N.A. (SOUTH)
OR JURISDICTION IN WHICH, OR NATIONSBANK OF TEXAS, N.A.
TO ANY PERSON TO WHOM, SUCH SELLERS
OFFER WOULD BE UNLAWFUL. THE __________________________
DELIVERY OF THIS PROSPECTUS NATIONSBANK, N.A.
SUPPLEMENT OR THE PROSPECTUS SERVICER
AT ANY TIME DOES NOT IMPLY ___________________________
THAT INFORMATION HEREIN OR
THEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO ITS DATE.
PROSPECTUS
____________________ SUPPLEMENT
TABLE OF CONTENTS
PAGE
PROSPECTUS SUPPLEMENT
Reports to Certificate-
holders . . . . . . . . S-2
Summary . . . . . . . . . S-3
Risk Factors . . . . . . S-13
The Trust . . . . . . . . S-17
The Receivables Pool . . S-18
Pool Factors . . . . . . S-23
Maturity and Prepayment
Considerations. . . . . S-23
Yield Considerations . . S-24
Use of Proceeds . . . . . S-24
Description of the
Certificates . . . . . S-24
Certain Federal Income Tax
Consequences . . . . . . S-35
ERISA Considerations . . S-39
Underwriting . . . . . . S-40
Legal Opinions . . . . . S-41
Annex I Global Clearance,
Settlement and Tax
Documentation Procedures. I-1
Index of Terms
PROSPECTUS
Reports to Securityholders. 3
Available Information . . . 3
Incorporation of Certain
Documents by Reference . . 3
Summary . . . . . . . . . . 4
Risk Factors . . . . . . . 13
The Trusts . . . . . . . . 17
The Receivables Pools . . . 19
Maturity and Prepayment
Considerations. . . . . . .21
Pool Factors and Trading
Information . . . . . . . 22
Use of Proceeds . . . . . . 22
The Banks, NationsBank
Corporation and [NB-SPC]. 23
The Servicer. . . . . . . . 23
Description of the Notes. . 24
Description of the
Certificates. . . . . . . 28
Certain Information
Regarding the
Securities. . . . . . . . 30
Description of the Transfer
and Servicing
Agreements. . . . . . . . 40
Certain Legal Aspects
of the Receivables. . . . 53
Certain Federal Income
Tax Consequences. . . . . 57
ERISA Considerations. . . . 58
Plan of Distribution. . . . 63
Legal Opinions. . . . . . . 64
Until , 1996 (90 days after
the date of the Prospectus Supplement),
all dealers effecting transactions in
the Certificates, whether or not
participating in this distribution,
may be required to deliver a Prospectus
Supplement and a Prospectus. This is
in addition to the obligation of
dealers to deliver a Prospectus
Supplement and a Prospectus when
acting as underwriters and with
respect to there unsold allotments
or subscriptions.
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses
in connection with the offering described in this Registration
Statement.
Securities and Exchange Commission . . . . . . $______
Rating agency fees . . . . . . . . . . . . . . $______
Printing . . . . . . . . . . . . . . . . . . . $______
Legal fees and expenses . . . . . . . . . . . . $______
Accountants' fees . . . . . . . . . . . . . . . $______
Fees and expenses of Indenture Trustee . . . . $______
Fees and expenses of applicable Trustee . . . . $______
Miscellaneous expenses . . . . . . . . . . . . $______
Total . . . . . . . . . . . . . . . . . . $
======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Articles of Association of NationsBank, N.A. provide as
follows:
TENTH. To the fullest extent permitted by the laws of
the state in which the bank's holding company is
incorporated, subject only to the limits of the corporate
powers of a national association, a director of the
association shall not be personally liable to the
association, its shareholders or otherwise for monetary
damage for breach of duty as a director. Any repeal or
modification of this article shall be prospective only and
shall not adversely affect any limitation on the personal
liability of a director of the association existing at the
time of such repeal or modification.
The association shall indemnify and hold harmless any
director, officer, employee, or agent of the association and
its subsidiaries against all liability and expenses to the
fullest extent permitted by the laws of the state in which
the association's holding company is incorporated, and in
addition to the indemnification otherwise provided by law,
the association shall indemnify and hold harmless such
directors, officers, employees, or agents against all
liability and expenses, including reasonable attorney's
fees, in any proceeding (including without limitation a
proceeding brought by or on behalf of the association
itself) arising out of their status as directors, officers,
employees, or agents, or their service at the association's
request as a director, officer, partner, trustee, employee
or agent of another foreign or domestic corporation,
association, partnership, joint venture, trust, employee
benefit plan or other enterprise, or their activities in any
such capacity.
The extent of indemnification provided for in this
section and the procedures for implementation of that
indemnification shall be in accordance with the provisions
of the bylaws of NationsBank Corporation. The association
may also provide insurance for such indemnification relating
to the directors, officers, employees or agent's service to
the association in accordance with the provisions of the
bylaws of NationsBank Corporation. To the extent that
indemnification or insurance coverage is prohibited or
limited by lawful and binding regulations of the Office of
the Comptroller of the Currency, such regulations shall
govern this indemnification provision.
The Articles of Association of NationsBank, N.A. (South)
provide as follows:
TENTH. To the fullest extent permitted by the laws of
the state in which the bank's holding company is
incorporated, subject only to the limits of the corporate
powers of a national association, a director of the
association shall not be personally liable to the
association, its shareholders or otherwise for monetary
damage for breach of duty as a director. Any repeal or
modification of this article shall be prospective only and
shall not adversely affect any limitation of the personal
liability of a director of the association existing at the
time of such repeal or modification.
The association shall indemnify and hold harmless any
director, officer, employee, or agent of the association and
its subsidiaries against all liability and expenses to the
fullest extent permitted by the laws of the state in which
the association's holding company is incorporated, and in
addition to the indemnification otherwise provided by law,
the association shall indemnify and hold harmless such
directors, officers, employees, or agents against all
liability and expenses, including reasonable attorney's
fees, in any proceeding (including without limitation a
proceeding brought by or on behalf of the association
itself) arising out of their status as directors, officers,
employees, or agents, or their service at the associations's
request as a director, officer, partner, trustee, employee
or agent of another foreign or domestic corporation,
association, partnership, joint venture, trust, employee
benefit plan or other enterprise, or their activities in any
such capacity.
The extent of indemnification provided for in this
section and the procedures for implementation of that
indemnification shall be in accordance with the provisions
of the bylaws of NationsBank Corporation. The association
may also provide insurance for such indemnification relating
to the directors, officers, employees or agent's service to
the association in accordance with the provisions of the
bylaws of NationsBank Corporation. To the extent that
indemnification or insurance coverage is prohibited or
limited by lawful and binding regulations of the Office of
the Comptroller of the Currency, such regulations shall
govern this indemnification provision.
The Articles of Association of NationsBank of Texas, N.A.
provide as follows:
ELEVENTH. (a) The Association shall indemnify and hold
harmless each person who was or is a Director of the
Association who was or is made a party or is threatened to
be made a party to or is otherwise involved in any action,
suit or proceeding, whether civil, criminal, administrative
or investigative (hereinafter a "proceeding"), other than a
proceeding by or in the right of the Association, whether
the basis of such proceeding is alleged action by such
person (i) in an official capacity as a Director of the
Association or (ii) while such person is also serving as a
Director of the Association, in the capacity of an officer,
employee or agent of the Association, including service with
respect to an employee benefit plan, against all expense,
liability and loss (including, without limitation,
Attorneys' Fees [as defined in the last sentence of this
Section 11(a)], judgments, fines or penalties and amounts
paid in settlement) actually and reasonably incurred or
suffered by such person in connection therewith; provided
that such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the
best interests of the Association and, with respect to any
criminal proceeding, had no reasonable cause to believe such
person's conduct was unlawful. Reasonable expenses incurred
by such person in defending a proceeding shall be paid or
reimbursed by the Association in advance of the final
disposition of such proceeding and without any determination
that such person has met the standard of conduct referred to
in this Section 11(a); provided that the Association
receives a written undertaking by such person that such
person has a good faith belief that he has met the standard
of conduct necessary for indemnification under this section
[sic] 11(a) and receives a written undertaking by or on
behalf of such person to repay the amount paid or reimbursed
if it is ultimately determined that such person has not met
such standard of conduct. Such written undertaking with
respect to repayment need not be secured and shall be
acceptable without reference to financial ability to make
repayment. Indemnification and payment or reimbursement of
expenses shall continue as to any person who has ceased to
be a Director and shall inure to the benefit of, and be
binding upon, such person's heirs, executors and
administrators. As used in this Article Eleventh, the term
"Attorneys' Fees" shall mean, in the context of a particular
proceeding, the reasonable attorneys' fees incurred by an
individual in connection with the defense of such individual
in such proceeding, the reasonable expenses of such
attorneys in such defense and court costs incurred in
connection therewith.
(b) The Association shall indemnify and hold harmless
each person who was or is an officer, employee or agent
(each of the foregoing being referred to as an "Officer") of
the Association who was or is made a party or is threatened
to be made a party to or is otherwise involved in any
proceeding, other than a proceeding by or in the right of
the Association, whether the basis of such proceeding is
alleged action by such person (i) in an official capacity as
an Officer of the Association, including service with
respect to an employee benefit plan, or (ii) as a Designated
Representative (as defined in the following sentence),
against all expense, liability and loss (including, without
limitation, Attorneys' Fees, judgments, fines or penalties
and amounts paid in settlement) actually and reasonably
incurred or suffered by such person in connection therewith;
provided that such person acted in good faith and in a
manner such person reasonably believed to be in or not
opposed to the best interests of the Association and, with
respect to any criminal proceeding, had no reasonable cause
to believe such person's conduct was unlawful; and provided
further, that the Association shall not indemnify and hold
harmless such person against any expense (other than
Attorneys' Fees), liability or loss (including, without
limitation, judgments, fines or penalties and amounts paid
in settlement) to the extent that such expense (other than
Attorneys' Fees), liability or loss (including, without
limitation, judgments, fines or penalties and amounts paid
in settlement) arose from such person's acts or failures to
act prior to July 30, 1988 ("Prior Acts"). A person shall be
acting as a Designated Representative for purposes of this
Article Eleventh if such person is serving at the written
request of the Association made pursuant to specific
authority of the Board of Directors, in the capacity of a
director, officer, employee or agent of any corporation,
partnership, joint venture, trust or other enterprise other
than the Association. Reasonable expenses incurred by a
person who was or is an Officer of the Association in
defending a proceeding shall be paid or reimbursed by the
Association in advance of the final disposition of a
proceeding and without any determination that such person
has met the standard of conduct referred to in this Section
11(b); provided that the Association receives a written
undertaking by such person that such person has a good faith
belief that he has met the standard of conduct necessary for
indemnification under this section [sic] 11(b) and receives
a written undertaking by or on behalf of such person to
repay the amount paid or reimbursed if it is ultimately
determined that such person has not met such standard of
conduct. Such written undertaking with respect to repayment
need not be secured and shall be acceptable without
reference to financial ability to make repayment.
Indemnification and payment or reimbursement of expenses
shall continue as to any person who has ceased to be an
Officer of the Association and shall inure to the benefit
of, and be binding upon, such person's heirs, executors and
administrators.
(c) The Association may indemnify and hold harmless any
person who was or is a Director or Officer who was or is
made a party or is threatened to be made a party to or is
otherwise involved in any proceeding by or in the right of
the Association to procure a judgment in its favor by reason
of the fact that he is or was a Director, Officer or
Designated Representative against expenses (including,
without limitation, Attorneys' Fees) actually and reasonably
incurred by him in connection with the defense or settlement
of such proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best
interests of the Association, and except that no
indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged
to be liable to the Association unless and only to the
extent that a court of competent jurisdiction shall
determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the
proceeding, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem
proper. Reasonable expenses incurred by such person in
defending a proceeding may be paid or reimbursed by the
Association in advance of the final disposition of such
proceeding and without any determination that such person
has met the standard of conduct referred to in this Section
11(c); provided that the Association receives a written
undertaking by such person that such person has a good faith
belief that he has met the standard of conduct necessary for
indemnification under this Section 11(c) and receives a
written undertaking by or on behalf of such person to repay
the amount paid or reimbursed if it is ultimately determined
that such person has not met such standard of conduct (but
subject to the determination, by a court of competent
jurisdiction, as to indemnity for expenses described in the
immediately preceding sentence). Such written undertaking
with respect to repayment need not be secured and shall be
acceptable without reference to financial ability to make
repayment. Indemnification for, and payment or reimbursement
of, expenses shall continue as to any person who has ceased
to be a Director or Officer and shall inure to the benefit
of, and be binding upon, such person's heirs, executors and
administrators.
(d) Notwithstanding the provisions of Section 11(a),
Section 11(b) or Section 11(c), the Association shall not
indemnify any Director or Officer (each of the foregoing
being referred to as an "indemnitee") against expenses,
penalties or any other payments incurred in an
administrative proceeding or action instituted by an
appropriate bank regulatory agency, which proceeding or
action results in a final order assessing civil money
penalties or requiring affirmative action by the indemnitee
in the form of payments to the Association.
(e) To the extent that an indemnitee has been wholly
successful on the merits or otherwise in defense of any
proceeding referred to in Section 11(a), Section 11(b) or
Section 11(c), the Association shall indemnify, and pay or
reimburse, such indemnitee for expenses (including, without
limitation, Attorneys' Fees) actually and reasonably
incurred by such indemnitee in connection therewith.
(f) Any indemnification under Section 11(a), Section
11(b) or Section 11(c) (unless ordered by a court of
competent jurisdiction) shall be made by the Association
only as authorized in the specific case upon a determination
that indemnification of the indemnitee is proper in the
circumstances because the indemnitee has met the applicable
standard of conduct referred to in Section 11(a), Section
11(b) or Section 11(c), as the case may be. Such
determination shall be made in any of the following manners:
(1) by the Board of Directors by a majority vote of a quorum
consisting of Directors who were not named defendants or
respondents in such proceeding (a "Disinterested Board
Majority"), or if such a quorum is not obtainable, by a
majority vote of a committee of the Board of Directors,
designated to act in the matter by a majority vote of all
Directors, consisting solely of two or more Directors who at
the time are not named defendants or respondents in the
proceeding (a "Disinterested Committee Majority"); (2) by
special legal counsel selected by a Disinterested Board
Majority or a Disinterested Committee Majority, as the case
may be, or, if neither a Disinterested Board Majority nor a
Disinterested Committee Majority can be obtained, by a
majority vote of all Directors; or (3) by shareholders by a
majority vote that excludes the shares held by Directors who
are named defendants or respondents in such proceeding, in
the event that the issue is submitted to the shareholders of
the Association for determination by a Disinterested Board
Majority or a Disinterested Committee Majority, as the case
may be, or if neither a Disinterested Board Majority nor a
Disinterested Committee Majority can be obtained, by a
majority vote of all Directors.
(g) The rights to indemnification and to the payment or
reimbursement of expenses conferred in this Article Eleventh
shall not be exclusive of any other right which any
indemnitee may have or hereafter acquire under any statute,
bylaw, agreement, vote of shareholders or disinterested
Directors or otherwise, including, without limitation,
rights granted by the Federal Deposit Insurance Corporation
in connection with the formation of the Association.
(h) The Association may maintain insurance, at its
expense, to protect itself and any indemnitee against any
expense, liability or loss, whether or not the Association
would have the power to indemnify such person against such
expense, liability or loss under this Article Eleventh;
provided, however, the Association shall not maintain
insurance coverage for a formal order assessing civil money
penalties against an indemnitee.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS.
(a) EXHIBITS:
1.1 - Form of Underwriting Agreement for the Notes.*
1.2 - Form of Underwriting Agreement for the Certificates.*
4.1 - Form of Indenture between the Trust and the Indenture
Trustee (including forms of Notes).*
4.2 - Form of Trust Agreement among the Sellers and the Owner
Trustee (including forms of Certificates).*
4.3 - Form of Pooling and Servicing Agreement among the
Sellers, the Servicer and the Trustee (including forms
of Certificates).*
4.4 - Form of Standard Terms and Conditions of Agreement among
the Sellers, the Servicer and the Trustee.*
5.1 - Opinion of Skadden, Arps, Slate, Meagher & Flom with
respect to legality.*
8.1 - Opinion of Skadden, Arps, Slate, Meagher & Flom with
respect to tax matters.*
23.1 - Consent of Skadden, Arps, Slate, Meagher & Flom
(included as part of Exhibit 5.1).*
23.2 - Consent of Skadden, Arps, Slate, Meagher & Flom
(included as part of Exhibit 8.1).*
24.1 - Powers of Attorney.
25.1 - Form of T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of [Indenture Trustee].*
99.1 - Form of Sale and Servicing Agreement among the Sellers,
the Servicer and the Trust.*
99.2 - Form of Administration Agreement among the Trust, the
Administrator and the Indenture Trustee.*
99.3 - Form of Dealer Agreement between a Dealer and a Seller.*
* To be filed by amendment
ITEM 17.UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) 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) 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; (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; provided, however, that (a)(i) and (a)(ii) will not
apply if the information required to be included in a post-
effective amendment thereby is contained in periodic reports
filed pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this
registration statement.
(b) 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.
(c) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(d) That, for purposes of determining any liability
under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) 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.
(e) To provide to the underwriters at the closing
specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the
underwriters to permit prompt delivery to each purchaser.
(f) That insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the registrant
pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is
against public policy as expressed in the 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 Act and will be governed by the final
adjudication of such issue.
(g) That, for purposes of determining any liability
under the Securities Act of 1933, 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)(i) or
(4) or 497(h) under the Securities Act of 1933 shall be deemed to
be part of this Registration Statement as of the time it was
declared effective.
(h) That, for the purpose of determining any liability
under the Securities Act of 1933, each post-effective amendment
that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
SIGNATURES
SIGNATURES
Pursuant to the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds
to belive that it meets all of the requirements for
filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Charlotte,
State of North Carolina, on May 10, 1996.
NATIONSBANK, N.A.
By: /s/ James H. Hance, Jr.
Name: James H. Hance, Jr.
Title: Chief Financial Officer
Pursuant to the requirements of the Securities Act
of 1933, as amended, this Registration Statement has been
signed on May10, 1996 by the following persons in the
capacities indicated.
SIGNATURE TITLE
* Principal Executive Officer
F. William Vandiver, Jr. Director
* Principal Financial Officer
James H. Hance, Jr. Director
* Principal Accounting Officer
Marc D. Oken
* Director
H.W. McKay Belk
* Director
Joseph R. Hendrick, III
* Director
William L. Jews
* Director
Thomas G. Johnson, Jr.
* Director
Edgar H. Lawton, Jr.
* Director
Kenneth D. Lewis
* Director
George V. McGowan
* Director
Anna Spangler Nelson
* Director
John S. Rainey
* Director
George P. Ramsey, Jr.
* Director
Dr. Morton I. Rapoport
* Director
James T. Rhodes
* Director
A. Pope Shuford
* Director
William E. Simms
* Director
Joel A. Smith, III
* Director
Hugh R. Stallard
* Director
R. Eugene Taylor
* Director
Stephen J. Trachtenberg
* Director
James S. Watkinson
* The undersigned, by signing his name hereto, does
hereby sign this Registration Statement on behalf of
each of the above-indicated directors and officers
of the Registrant pursuant to a power of attorney
signed by such directors and officers and included
herein as Exhibit 24.1.
/s/ Robert W. Long, Jr.
Robert W. Long, Jr.
Attorney-in-Fact
SIGNATURES
Pursuant to the Securities Act of 1933, as amended,
the Registrant 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 Registration Statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Charlotte, State of North
Carolina, on May 10, 1996.
NATIONSBANK, N.A. (SOUTH)
By: /s/ James H. Hance, Jr.
Name: James H. Hance, Jr.
Title: Chief Financial Officer
Pursuant to the requirements of the Securities Act
of 1933, as amended, this Registration Statement has been
signed on May10, 1996 by the following persons in the
capacities indicated.
SIGNATURE TITLE
* Principal Executive Officer
Kenneth D. Lewis Director
* Principal Financial Officer
James H. Hance, Jr.
* Principal Accounting Officer
Marc D. Oken
* Director
William H. Allen, Jr.
* Director
R. Mark Bostick
* Director
Betty Castor
* Director
Hugh M. Chapman
* Director
Dr. Johnetta B. Cole
* Director
Harold A. Dawson
* Director
H. Michael Dye
* Director
W. Douglas Ellis, Jr.
* Director
Earl L. Frye
* Director
Jeffrey D. Gargiulo
* Director
L.L. Gellerstedt III
* Director
Cecil S. Harrell
* Director
Neil H. Hightower
* Director
James R. Jolly
* Director
James R. Lientz, Jr.
* Director
Carol Ellis Martin
* Director
Douglas B. Mitchell
* Director
Jorge M.Perez
* Director
Joe W. Rogers, Jr.
________________________ Director
Jerry R. Satrum
* Director
Adelaide A. Sink
* Director
Hugh M. Tarbutton
* Director
Dr. Israel Tribble, Jr.
* Director
Karen L. Wrenn
* The undersigned, by signing his name hereto, does
hereby sign this Registration Statement on behalf of
each of the above-indicated directors and officers
of the Registrant pursuant to a power of attorney
signed by such directors and officers and included
herein as Exhibit 24.1.
/s/ Robert W. Long, Jr.
Robert W. Long, Jr.
Attorney-in-Fact
SIGNATURES
Pursuant to the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds
to belive that it meets all of the requirements for
filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Charlotte,
State of North Carolina, on May 10, 1996.
NATIONSBANK OF TEXAS, N.A.
By: /s/ James H. Hance, Jr.
Name: James H. Hance, Jr.
Title: Chief Financial Officer
Pursuant to the requirements of the Securities Act
of 1933, as amended, this Registration Statement has been
signed on May 10, 1996 by the following persons in the
capacities indicated.
SIGNATURE TITLE
* Principal Executive Officer
Robert B. Lane Director
* Principal Financial Officer
James H. Hance, Jr.
* Principal Accounting Officer
Marc D. Oken
* Director
Samuel J. Atkins, III
_____________________ Director
James M. Berry
* Director
Guy S. Bodine, III
* Director
Lee Drain
_____________________ Director
James R. Erwin
* Director
Robert L. Kirby
* Director
Kenneth D. Lewis
_____________________ Director
Joseph R. Musolino
* The undersigned, by signing his name hereto, does
hereby sign this Registration Statement on behalf of
each of the above-indicated directors and officers
of the Registrant pursuant to a power of attorney
signed by such directors and officers and included
herein as Exhibit 24.1.
/s/ Robert W. Long, Jr.
Robert W. Long, Jr.
Attorney-in-Fact
EXHIBIT INDEX
EXHIBITS DESCRIPTION
PAGE
1.1 - Form of Underwriting Agreement for the Notes.*
1.2 - Form of Underwriting Agreement for the Certificates.*
4.1 - Form of Indenture between the Trust and the Indenture
Trustee (including forms of Notes).*
4.2 - Form of Trust Agreement among the Sellers and the Owner
Trustee (including forms of Certificates).*
4.3 - Form of Pooling and Servicing Agreement among the Sellers,
the Servicer and the Trustee (including forms of
Certificates).*
4.4 - Form of Standard Terms and Conditions of Agreement among
the Sellers, the Servicer and the Trustee.*
5.1 - Opinion of Skadden, Arps, Slate, Meagher & Flom with
respect to legality.*
8.1 - Opinion of Skadden, Arps, Slate, Meagher & Flom with
respect to tax matters.*
23.1 - Consent of Skadden, Arps, Slate, Meagher & Flom (included
as part of Exhibit 5.1).*
23.2 - Consent of Skadden, Arps, Slate, Meagher & Flom (included
as part of Exhibit 8.1).*
24.1 - Powers of Attorney.
25.1 - Form of T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of [Indenture Trustee].*
99.1 - Form of Sale and Servicing Agreement among the Sellers,
the Servicer and the Trust.*
99.2 - Form of Administration Agreement among the Trust, the
Administrator and the Indenture Trustee.*
99.3 - Form of Dealer Purchase Agreement between a Dealer and a
Seller.*
* To be filed by amendment