REGISTRATION NO.333-03557
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
AMENDMENT NO. 1 TO
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 incorporation or Identification
Code No.) organization) Nos.)
NationsBank, N.A. NationsBank, N.A. NationsBank of Texas, N.A.
(South)
NationsBank Corporate 600 Peachtree 901 Main Street
Center Street, N.E. Dallas, Texas 75202
100 North Tryon Street Atlanta, Georgia 30308 (214) 508-6262
Charlotte, (404) 581-2121
North Carolina 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
Maximum Maximum
Title of Offering Aggregate Amount of
Securities Amount to be Price Offering Registration
to be Registered Registered Per Unit(2) Price(2) Fee
Asset Backed
Notes and
Asset Backed
Certificates $1,000,000 100% $344.83(3)
(1) The Asset Backed Certificates and Asset Backed Notes (together,
the "Securities") are also being registered for the purpose of market-
making.
(2) Estimated solely for the purpose of calculating registration fee.
(3) Previously paid.
_______________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGIS-
TRANT 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 Certifi-
cates under this Registration Statement. Because NationsBanc Capital
Markets, Inc. ("NCMI"), a subsidiary of NationsBank Corporation, the parent
corporation of each of the Originators of the Trust, intends to act as an
underwriter in any offering of the Securities and intends to make a market
in the Securities for which it acts as an underwriter, NCMI will distribute
the prospectus and the applicable Prospectus Supplement in connection with
any such offering.
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 Prospec-
tus (a "Prospectus Supplement"). Each series of Securi-
ties, 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 speci-
fied 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 originated by Dealers and
purchased 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 appli-
cable 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. See "The
Trusts." 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 Inden-
ture Trustee or the applicable Trustee, as the case may
be, which will be used to purchase additional retail
motor vehicle installment sales contracts (the "Subse-
quent Receivables") from the Sellers from time to time
during the Funding Period specified in the related Pro-
spectus Supplement. Certain capitalized terms used in
this Prospectus are defined elsewhere in this Prospectus
on the pages indicated in the "Index of Terms" beginning
on page [65].
Each class of Securities of any series will repre-
sent 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. Distri-
butions on one or more classes of Certificates of a
series may be subordinated in priority to payments due on
one or more classes of Notes or Certificates 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 dispro-
portionate, 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 Supple-
ment.
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 OBLIGA-
TIONS 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 Securi-
ties 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:______] [Ad-
dress:___________________], 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, The Chase Manhattan Bank,(National
Association) at [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 "Book-Entry and
Definitive Securities; Reports to Securityholders Book-
Entry Registration" and " Reports to Securityholders."
The Servicer intends to continue to file with respect to
each Trust periodic reports pursuant to the requirements
of the Securities Exchange Act of 1934, as amended, for
the period after such filings could be discontinued in
reliance on Section 15(d) thereof until the Securities
issued by such Trust are no longer outstanding.
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. Each of the Sellers is a wholly-owned sub-
sidiary of NationsBank Corporation, a multibank holding
company incorporated under the laws of North Carolina,
headquartered in Charlotte, North Carolina and registered
under the Bank Holding Company Act of 1956, as amended.
NationsBank Corporation is subject to the periodic re-
porting requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports and other information with the
Commission. For further information, reference is made
to the Registration Statement, the exhibits thereto, and
the reports and other information filed by NationsBank
Corporation 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, including the Midwest
Regional Office, located at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511,
and the Northeast Regional Office located at Seven World
Trade Center, Suite 1300, New York, New York 10048. Paper
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. In addition, the Commission maintains a public
access site on the Internet through a World Wide Web site
at which reports, information statements and other infor-
mation, including all electronic filings, regarding the
Sellers and NationsBank Corporation may be viewed. The
Internet address of such World Wide Web site is
http://www.sec.gov.
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 termina-
tion of the offering of the Securities shall be deemed to
be incorporated by reference in this Prospectus.
This Prospectus and the related Prospectus Supplement may
be used by NationsBanc Capital Markets, Inc., an affili-
ate of the Sellers and the Servicer, in connection with
offers and sales related to market-making transactions in
the Securities. In connection with any such market-
making transactions in the Securities by NationsBanc
Capital Markets, Inc., all documents filed by or on
behalf of the related 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 Prospec-
tus and prior the date of any offer and sale related to
such a market-making transaction shall be deemed incorpo-
rated by reference into this Prospectus and to be a part
hereof. Any statement contained 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 super-
sedes 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 docu-
ments). 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 else-
where in this Prospectus and by reference to the informa-
tion with respect to the Securities of any series con-
tained in the related Prospectus Supplement to be pre-
pared 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 Secu-
rities, the Trust to be formed pur-
suant 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 Servic-
ing Agreement (as amended and sup-
plemented 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 a na-
tional banking association (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 Secu-
rities, the Trustee specified in
the related Prospectus Supplement.
INDENTURE TRUSTEE With respect to any applicable series
of Securities, the Indenture Trust-
ee specified in the related Pro-
spectus Supplement.
THE TRUST PROPERTY The property of each Trust will in-
clude a pool of retail motor vehi-
cle installment sales contracts
secured by new or used automobiles,
vans or light trucks (the "Receiv-
ables"), including rights to re-
ceive certain payments made with
respect to such Receivables, secu-
rity interests in the vehicles fi-
nanced thereby (the "Financed Vehi-
cles"), certain accounts, which
will include the Collection Account
and may include a Reserve Account
and/or a Yield Supplement Account,
and the proceeds thereof and any
proceeds from claims on certain
related insurance policies. On the
Closing Date specified in the re-
lated 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 Sell-
ers, 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 cer-
tain trust accounts, including the
related Collection Account, any
Pre-Funding Account, any Yield Sup-
plement Account, any Reserve Ac-
count and any other account identi-
fied in the applicable Prospectus
Supplement.
THE RECEIVABLES . The Receivables will consist of a pool
of retail motor vehicle installment
sales contracts secured by new or
used automobiles or light trucks.
The Receivables for any given Receiv-
ables 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 aggre-
gate principal balance thereof.
Subsequent Receivables. To the ex-
tent provided in the related Pro-
spectus Supplement, the Sellers
will be obligated (subject only to
the availability thereof) to sell,
and the related Trust will be obli-
gated to purchase (subject to the
satisfaction of certain conditions
described in the applicable Sale
and Servicing Agreement or Pooling
and Servicing Agreement), addition-
al Receivables (the "Subsequent
Receivables") from time to time (as
frequently as daily) during the
Funding Period specified in the
related Prospectus Supplement hav-
ing an aggregate principal balance
approximately equal to the amount
on deposit in the Pre-Funding Ac-
count (the "Pre-Funded Amount") on
the Closing Date. See "Risk Fac-
tors Risk Associated with Subse-
quent Receivables and the Pre-Fund-
ing Account" and "The Receivables
Pool Subsequent Receivables."
Simple Interest Receivables. Simple
Interest Receivables are receiv-
ables secured by new or used auto-
mobiles, vans or light trucks that
provide for the amortization of the
amount financed under the Receiv-
able over a series of fixed level
monthly payments (except that the
last such payment may be differ-
ent). Each monthly payment in-
cludes 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 in-
terest was made.
Balloon Receivables. Balloon Receiv-
ables are monthly payment receiv-
ables secured by new or used auto-
mobiles, vans or light trucks that
provide for the amortization of the
amount financed under the Receiv-
able over a series of fixed level
monthly payments like a Simple In-
terest Receivable, but also re-
quires a final scheduled payment
due after payment of such monthly
installments which differs signifi-
cantly from the preceding fixed
level monthly installments. In
addition, the Balloon Receivables
provide that the related Obligor
may satisfy the final scheduled
payment by (1) paying the full
amount due on its due date; (2)
refinancing the amount of the final
scheduled payment subject to cer-
tain conditions; or (3) transfer-
ring the Financed Vehicle to the
Seller on behalf of the Trust in
satisfaction of the final scheduled
payment and paying a disposition
fee to the Servicer and any appli-
cable charges for excess wear and
tear and excess mileage. See
"Risk Factors Balloon Receivables;
Final Scheduled Payment Risk."
[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 inci-
dental activities.
NO RECOURSE
TO SELLERS OR SERVICER The Receivables sold and assigned
to the applicable Trust will be sold
and assigned by the Sellers to such
Trust without recourse to the Sellers,
the Servicer or any of their respec-
tive affiliates for credit losses on
such Receivables. 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 se-
ries will be insured or guaranteed by
the Seller, the Servicer, the applica-
ble Trustee, any Indenture Trustee or
any other person or entity.
THE NOTES . . . . The terms of the Notes generally are
described below.
A. General . . . A series of Securities may include
one or more classes of Notes, which
will be issued pursuant to an In-
denture between the Trust and the
Indenture Trustee (as amended and
supplemented from time to time, an
"Indenture"). The related Prospec-
tus Supplement will specify which
class or classes, if any, of Notes
of the related series are being
offered thereby.
B. Denominations;
Book-Entry . 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 "Book-
Entry and Definitive Securities;
Reports to
Securityholders Definitive Securi-
ties."
C. Note Interest Rate. Each class of Notes may have a stated
principal amount or notional amount
and may bear interest at a speci-
fied rate or rates (with respect to
each class of Notes, the "Note In-
terest Rate") or may not bear in-
terest. Each class of Notes may
have a different Note Interest
Rate, which may be a fixed, vari-
able or adjustable Note Interest
Rate, or any combination of the
foregoing. The related Prospectus
Supplement will specify the stated
principal amount, if any, and the
Note Interest Rate, if any, for
each class of Notes, or the method
for determining such Note Interest
Rate.
D. Characteristics With respect to a series that in-
cludes two or more classes of
Notes, each class may differ as to
the timing and priority of pay-
ments, allocations of losses, Note
Interest Rate or amount of payments
of principal or interest, or pay-
ments of principal or interest in
respect of any such class or class-
es may or may not be made upon the
occurrence of specified events or
on the basis of collections from
designated portions of the Receiv-
ables Pool. In addition, a series
may include one or more classes of
Notes ("Strip Notes") entitled to
(i) principal payments with dispro-
portionate, nominal or no interest
payments or (ii) interest payments
with disproportionate, nominal or
no principal payments.
E. Clean Up Call;
Redemption . If the Servicer exercises its option
to purchase the Receivables of a
Trust, in the manner and on the
respective terms and conditions
described under "Description of the
Transfer and Servicing Agree-
ments Termination," the outstanding
Notes will be redeemed as set forth
in the related Prospectus Supple-
ment.
F. Sale of Receivables;
Redemption . If the Servicer does not exercise its
option to purchase the Receivables
of a Trust, to the extent provided
in the related Prospectus Supple-
ment, the Servicer may obtain bids
for the purchase of the Receivables
in the manner and on the respective
terms described under "Description
of the Transfer and Servicing
Agreements -- Termination," and
upon any resulting sale of the Re-
ceivables the outstanding Notes
will be redeemed as set forth in
the applicable Prospectus Supple-
ment. No such bid will be accepted
unless, among other things, the
amount thereof shall be sufficient
to pay in full all outstanding
principal of and all accrued inter-
est on all Notes outstanding.
G. Pre-Funding Account
and Redemption. In addition, if the related Prospec-
tus Supplement provides that the
property of a Trust will include a
Pre-Funding Account (as such term
is defined in the related Prospec-
tus Supplement, the "Pre-Funding
Account"), one or more classes of
the outstanding Notes will be sub-
ject 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 Supple-
ment. 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 Supple-
ment.
THE CERTIFICATES The terms of the Certificates gener-
ally are described below.
A. General . . A series of Securities will include
one or more classes of Certificates
and may or may not include any
Notes. The related Prospectus Sup-
plement will specify which class or
classes, if any, of the Certificates
are being offered thereby.
B. Denominations;
Book-Entry or
Registered Form. 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, Cer-
tificateholders will be able to
receive Definitive Certificates
only in the limited circumstances
described herein or in the related
Prospectus Supplement. See "Book-
Entry and Definitive Securities;
Reports to Securityholders
Definitive Securities."
C. Certificate
Rate. Each class of Certificates may have a
stated Certificate Balance (with
respect to each class of Certifi-
cates, 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, vari-
able or adjustable Certificate
Rate, or any combination of the
foregoing. The related Prospectus
Supplement will specify the Certif-
icate Balance and the Certificate
Rate for each class of Certificates
or the method for determining the
Certificate Rate.
D. Characteristics With respect to a series that in-
cludes two or more classes of Cer-
tificates, each class may differ as
to the timing and priority of dis-
tributions, allocation of losses,
Certificate Rate or amount of dis-
tributions in respect of principal
or interest, or distributions in
respect of principal or interest in
respect of any such class or class-
es may or may not be made upon the
occurrence of specified events or
on the basis of collections from
designated portions of the Receiv-
ables Pool. In addition, a series
may include one or more classes of
Certificates ("Strip Certificates")
entitled to (i) distributions in
respect of principal with dispro-
portionate, nominal or no interest
distributions or (ii) interest dis-
tributions with disproportionate,
nominal or no distributions in re-
spect of principal.
E. Certificates
May Be Subor-
dinated to Notes
of the Same
Trust.......... 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 ex-
tent specified in the related Pro-
spectus Supplement.
F. Clean-Up Call;
Redemption If the Servicer exercises its option
to purchase the Receivables of a
Trust, in the manner and on the
respective terms and conditions
described under "Description of the
Transfer and Servicing Agree-
ments Termination," Certificate-
holders will receive as a prepay-
ment an amount in respect of the
Certificates as specified in the
related Prospectus Supplement.
G. Sale of Receivables;
Redemption If the Servicer does not exercise its
option to purchase the Receivables
of a Trust, to the extent provided
in the related Prospectus Supple-
ment the Servicer may obtain bids
for the purchase of the Receivables
in the manner and on the respective
terms described under "Description
of the Transfer and Servicing
Agreements -- Termination," and
upon any resulting sale of the Re-
ceivables Certificateholders will
receive a prepayment of principal
as set forth in the applicable Pro-
spectus Supplement. No such bid
will be accepted unless, among oth-
er things, the amount thereof shall
be sufficient to distribute in full
all outstanding principal of and
all accrued interest on all Certif-
icates outstanding.
H. Pre-Funding
Account and
Partial Pre-
payment....... In addition, if the related Prospec-
tus Supplement provides that the
property of a Trust will include a
Pre-Funding Account, Certificate-
holders may receive a partial pre-
payment of principal on or immedi-
ately 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 re-
lated Prospectus Supplement.
BOOK-ENTRY
REGISTRATION . . Each class of Securities of a given
series may be initially represented
by one or more certificates regis-
tered in the name of Cede & Co.
("Cede"), or any other nominee for
DTC set forth in the related Prospec-
tus Supplement (Cede, or such other
nominee, "DTC's Nominee"), and for
each such class, will not be regis-
tered in the names of the holders of
the Securities of such series or
their nominees. Because of this,
unless and until Definitive Securi-
ties for such series are issued,
holders of such Securities will not
be recognized by the Trustee or any
Indenture Trustee as "Certificate-
holders," "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 Securi-
ties will be able to exercise the
rights of Securityholders only indi-
rectly through DTC and its partici-
pating organizations. See "Risk
Factors Book-Entry Registration;
Owners of Securities Not Recognized
as "Securityholders"" and "Book-Entry
and Definitive Securities; Reports to
Securityholders Book-Entry Registra-
tion,"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: subordina-
tion of one or more other classes
of Securities, a Reserve Account,
over-collateralization, letters of
credit, credit or liquidity facili-
ties, surety bonds, guaranteed in-
vestment contracts, guaranteed rate
agreements, swaps or other interest
rate protection agreements, repur-
chase 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 Pro-
spectus Supplement, a Reserve Ac-
count may be created for the relat-
ed Trust with an initial deposit of
cash or certain investments having
a value equal to the amount speci-
fied in the related Prospectus Sup-
plement. To the extent specified
in the related Prospectus Supple-
ment, 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 Re-
ceivables. Amounts in the Reserve
Account will be available to cover
shortfalls in amounts due to the
holders of those classes of Securi-
ties specified in the related Pro-
spectus Supplement in the manner
and under the circumstances speci-
fied therein. The related Prospec-
tus Supplement will also specify to
whom and the manner and circum-
stances under which amounts on de-
posit 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 Prospec-
tus Supplement) will be distribut-
ed.
PRE-FUNDING ACCOUNT If so specified in the related Pro-
spectus Supplement, the property of
each Trust may include monies on
deposit in a Pre-Funding Account,
which monies will be used to pur-
chase or otherwise acquire Subse-
quent Receivables from the Sellers
from time to time during the Fund-
ing 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 ini-
tially deposited into a Pre-Funding
Account, and the length of a Fund-
ing Period, will be specified in
the related Prospectus Supplement.
YIELD SUPPLEMENT ACCOUNT;
YIELD SUPPLEMENT AGREEMENT
If so specified in the related Pro-
spectus Supplement, the Sellers, [NB-
SPC] or a third party will establish
a yield supplement account with the
related Indenture Trustee or applica-
ble 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 per-
son to make payments under a Yield
Supplement Agreement, as the case may
be, to provide payments to the
Securityholders in respect of Receiv-
ables the Contract Rate of which is
less than the Required Rate (as such
term is defined in the related Pro-
spectus Supplement, the "Required
Rate").
If so specified in the related Pro-
spectus Supplement, the Yield Sup-
plement Account will be created
with an initial deposit (the
"Yield Supplement Initial Deposit")
in an amount equal to the net pres-
ent value (discounted at a per an-
num rate specified in the related
Sale and Servicing Agreement or
Pooling and Servicing Agreement) of
the aggregate amount by which in-
terest 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 Receiv-
able, assuming that payments on
such Receivables are made as sched-
uled and no prepayments are made,
at the Required Rate exceeds inter-
est on such principal balances at
the Contract Rate of each such Re-
ceivable (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 re-
lated Indenture Trustee or applica-
ble Trustee, as the case may be,
may enter into a Yield Supplement
Agreement (as amended and supple-
mented 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 Sup-
plement 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 Sub-
sequent Receivables for the periods
commencing with the related Subse-
quent Cut-Off Date and ending with
the scheduled maturities of the
related Subsequent Receivables,
assuming that payments on such Re-
ceivables are made as scheduled and
no prepayments are made. The ag-
gregate of the Additional Yield
Supplement Amounts in respect of
the Subsequent Receivables is re-
ferred 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 Agree-
ments Credit and Cash Flow Enhance-
ment Yield Supplement Account;
Yield Supplement Agreement."
TRANSFER AND SERVICING
AGREEMENTS . . With respect to each Trust, the Sell-
ers will sell the related Receiv-
ables 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 servic-
ing, managing, maintaining custody
of and making collections on the
Receivables. The Servicer will un-
dertake certain administrative du-
ties under an Administration Agree-
ment 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 Receiv-
ables. If the related Prospectus
Supplement does not provide for the
making of Advances, such Prospectus
Supplement may provide that inter-
est 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 pay-
ment by the Obligor of such Receiv-
able beyond the last day of the
Collection Period immediately pre-
ceding the applicable Final Sched-
uled 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 Receiv-
able or fails to maintain a first
priority perfected security inter-
est in the related Financed Vehi-
cle.
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 princi-
pal balance of the related Receiv-
ables Pool, as set forth in the
related Prospectus Supplement, and
may, in addition, include certain
late fees, prepayment charges and
other administrative fees or simi-
lar charges, plus reinvestment pro-
ceeds on any payments received in
respect of the Receivables. See
"Description of the Transfer and
Servicing Agreements Servicing Com-
pensation and Expenses" herein and
in the related Prospectus Supple-
ment.
MATERIAL LEGAL ASPECTS
OF THE RECEIVABLES
Pursuant to the Transfer and Servicing
Agreements, NSI will hold the Receiv-
ables and the Receivable Files as
custodian for the Trustee following
the sale and assignment of the Re-
ceivables to the applicable Trust.
The Receivables will not be segregat-
ed or stamped, or otherwise marked,
to indicate that they have been sold
to the Trust. If another party pur-
chases (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 ap-
plicable Trust's interest, the pur-
chaser (or secured party) will ac-
quire an interest in the Receivables
superior to the interest of the
Trust.
In connection with the sale of Re-
ceivables to a Trust, security in-
terests in the Financed Vehicles
securing such Receivables will be
assigned by the Sellers to such
Trust; however, the certificates of
title to the Financed Vehicles will
not be amended to reflect the as-
signment to such Trust. As a re-
sult, such Trust may not have a
first priority perfected security
interest in the Financed Vehicles
securing the Receivables in some
states. 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 af-
fected. To the extent the security
interest is perfected, such Trust
will have a prior claim over subse-
quent purchasers of such Financed
Vehicles and holders of subsequent-
ly perfected security interests.
However, as against subsequent pur-
chasers who were to obtain physical
possession of the Receivables with-
out knowledge of their assignment
to the Trust or holders of liens
for repairs of Financed Vehicles or
for taxes unpaid by an Obligor un-
der a Receivable, or because of
fraud or negligence, such Trust
could lose the priority of its se-
curity interest or its security
interest in Financed Vehicles. See
"Risk Factors Risk of Superior In-
terests in Receivables and Financed
Vehicles" and "Certain Legal As-
pects of the Receivables Security
Interests in Vehicles."
Federal and state consumer protection
laws impose requirements upon cred-
itors 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 there-
on for any violation by the lender.
In each Sale and Servicing Agreement,
each Seller will make certain rep-
resentations and warranties with
respect to such Seller's rights in
and to the related Financed Vehi-
cles and the Trust's rights in and
to the Receivables conveyed by such
Seller as well as to the compliance
of such Receivables with federal
and state consumer laws. The
breach of such representations and
warranties with respect to a Re-
ceivable by a Seller may result in
such Seller being obligated to re-
purchase such Receivable.
TAX STATUS . . . Unless the Prospectus Supplement
specifies that the related Trust
will be treated as a grantor trust
or a "financial asset securitiza-
tion investment trust" ("FASIT"),
upon the issuance of the related
series of Securities, Special Tax
Counsel to such Trust will 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 trad-
ed partnership) taxable as a corpo-
ration. 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 Cer-
tificateholder, by the acceptance
of a Certificate of such series,
will agree to treat such Trust as a
partnership in which such Certifi-
cateholder is a partner for federal
income tax purposes. Alternative
characterizations of such Trust and
such Certificates are possible.
A Note may be treated as having been
issued with original issue dis-
count, which may be included in the
holder's gross income. The sale of
a Note by the holder may result in
a gain or a loss depending on the
difference between the net sale
proceeds and the Noteholder's ad-
justed tax basis in the Note sold.
Certificateholders' will be re-
quired to take into account sepa-
rately such holder's allocated
share of income, losses, gains,
deductions and credits of the re-
lated Trust. Under certain circum-
stances, a Certificateholder's tax-
able income from the related Trust
could exceed the cash it is enti-
tled to receive from such Trust.
The sale of a Certificate by the
holder may result in a gain or a
loss depending upon the difference
between the net sale proceeds and
the Certificateholder's adjusted
tax basis in the Certificate sold.
If the Prospectus Supplement speci-
fies that the related Trust will be
treated as a grantor trust, upon
the issuance of the related series
of Certificates, Special Tax Coun-
sel to such Trust will deliver an
opinion to the effect that such
Trust will be treated as a grantor
trust for federal income tax pur-
poses and will not be subject to
federal income tax. With certain
exceptions, each Certificateholder
of such a Trust will be required to
report on its federal income tax
return its pro rata share of the
entire income of the related Trust
for the period during which it owns
a Certificate. The sale of a Cer-
tificate by the holder may result
in a gain or a loss depending on
the difference between the amount
realized on the sale and the ad-
justed basis of the holder in the
Receivables and other assets held
by the related Trust. Each such
opinion delivered by the Special
Tax Counsel referred to in this
paragraph and the preceding para-
graph will be filed with the Com-
mission either as an exhibit to the
Registration Statement by a post-
effective amendment to the Regis-
tration Statement, or as an exhibit
in a Current Report filed on Form
8-K.
In the event that legislation is
enacted providing for a federal
income tax election to be a FASIT,
a Trust may make such election and
Securities may be classified as
"regular interests" in a FASIT.
Any Securities that represent "reg-
ular interests" in a FASIT will be
classified as indebtedness for fed-
eral income tax purposes.
See "Federal Income Tax Consequences"
herein and in the related Prospec-
tus Supplement for additional in-
formation concerning the applica-
tion 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 careful-
ly 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 permissi-
ble under ERISA or Section 4975 of
the Code. See "ERISA Considerations"
herein and in the related Prospectus
Supplement.
MATERIAL RISKS . There are material risks associated
with an investment in the Securi-
ties. Prospective investors should
consider the factors set forth un-
der "Risk Factors" on pages __ to
__, and as are provided in the re-
lated Prospectus Supplement.
RATING OF THE SECURITIES
It is a condition to the issuance of
the Securities that the Notes be
rated in one of the four highest
investment rating categories by at
least two nationally recognized sta-
tistical rating organizations, and to
the issuance of the Certificates that
they be rated at or above the rating
specified in the applicable Prospec-
tus Supplement. However, the rating
agencies do not evaluate, and any
such rating will not address, the
likelihood that, in the case of the
Notes, the Note Prepayment Premium
will be paid, and in the case of the
Certificates, the Certificate Prepay-
ment Premium will be paid. In addi-
tion, there can be no assurance that
a rating will not be lowered or with-
drawn by a rating agency if circum-
stances so warrant.
LISTING . . . . . Except to the extent described in an
applicable Prospectus Supplement,
application will not be made to
list the Securities on a national
securities exchange or on the Lux-
embourg Stock Exchange. Except to
the extent described in the appli-
cable Prospectus Supplement, the
Securities will not be listed in
an automated quotation system of a
registered securities association.
RISK FACTORS
LIMITED LIQUIDITY
It is expected that upon the issuance of any
Securities, there will be no secondary market for such
Securities, and there can be no assurance that any such
secondary market will develop.
RISK OF SUPERIOR INTERESTS IN RECEIVABLES AND FINANCED
VEHICLES
The Receivables and Receivables Files Not Trans-
ferred to Trustee. The Receivables and the Receivables
Files (as defined below) will not be held by the applica-
ble Trustee, but rather will be held by Servicer or its
affiliate, NationsBank Services, Inc. ("NSI"), an indi-
rect wholly-owned subsidiary of NationsBank Corporation,
as custodian for the applicable Trustee. Due to adminis-
trative burden and expense associated with the segrega-
tion or the marking of individual receivables and receiv-
ables files, the Receivables and the Receivables Files
will not be segregated or marked or stamped to indicate
that the related Receivables have been sold and assigned
to the applicable Trust. The Sellers, however, will
cause financing statements to be filed with the appropri-
ate 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"). If, as a result of fraud or negligence on the
part of a Seller or the Servicer (and in violation of
covenants contained in the applicable Transfer and Ser-
vicing Agreement), a Receivable is sold (or a security
interest therein is granted) by a Seller to a purchaser
(or a secured party) for new value in the ordinary course
of business of such purchaser (or secured party) and such
purchaser (or secured party) takes possession of such
Receivable without actual knowledge of the applicable
Trust's interest, the purchaser (or secured party) will
acquire an interest in such Receivable superior to the
interest of the Trust. Such an acquisition of a superior
interest in the Receivables would deprive Certificate-
holders of the benefits of the ownership of the Receiv-
ables. The Sellers believe that it is customary for
Receivables and Receivables Files to not be segregated or
stamped or otherwise marked in connection with asset
securitizations of the type contemplated hereby. The
Sellers historically have not purchased pools of automo-
tive retail installment sale contracts similar to the
Receivables; however if any of the Sellers did so, the
Sellers believe that if the transferor of such install-
ment sales contracts were to retain servicing rights with
respect to such installment sale contracts, the transfer-
or would retain, and the applicable Seller would not take
possession of, the related receivables and receivables
files. In the event that a Seller were to purchase a
pool of automotive retail installment sale contracts
similar to the Receivables and were to also service such
installment sale contracts, the Sellers believe that the
applicable Seller would take possession of, the related
receivables and receivables files.
Certificates of Title Not Endorsed. Although the
Sellers will assign their security interests in the
Financed Vehicles to the applicable Trustee, the certifi-
cates of title or ownership with respect to the related
Financed Vehicles will not be endorsed or otherwise
amended to identify the Trust as the new secured party.
There exists a risk 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 inter-
est. As a result, Certificateholders might not be able
to obtain the proceeds of the repossession and sale of an
affected Financed Vehicle. The Sellers believe that it
is customary for certificates of title or ownership to
not be endorsed or amended in connection with asset
securitizations of the type contemplated hereby. The
Sellers historically have not purchased pools of automo-
tive retail installment sale contracts similar to the
Receivables for their own account. In the event that a
Seller were to purchase such a pool of installment sales
contracts, the Sellers believe that, because of the
associated administrative burden and expense, the appli-
cable Seller would not generally require that the certif-
icates of title or ownership covering the related fi-
nanced vehicles be endorsed or amended to reflect that
the security interests in the related financed vehicles
have been assigned to the applicable Seller.
Certain Original Loan Documents Not Retained; Risk
of Prepayment. As part of its normal operating proce-
dures 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 origi-
nal 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 docu-
ment 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 a Trust would be effec-
tive 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.
POTENTIAL DELAYS OR REDUCTIONS IN PAYMENTS AS A RESULT OF
THE INSOLVENCY OF A SELLER
Subject to certain qualifications, to the extent
that a Trust has a valid perfected security interest in
the Receivables sold and assigned, such security interest
of the applicable Trustee should be enforceable (to the
extent of such Trust's "actual direct compensatory damag-
es") notwithstanding the insolvency of, or the appoint-
ment of a receiver or conservator for, a Seller, and
payments to such Trust with respect to the Receivables
sold and assigned by such Seller (up to the amount of
such damages) should not be subject to a stay of payment
or to recovery by such a conservator or receiver. If,
however, the conservator or receiver were to assert that
the security interest was unperfected or unenforceable,
or were to require the applicable Trustee to establish
its right to those payments by submitting to and complet-
ing administrative claims procedure established under the
United States Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA"), or the conservator or
receiver were to request a stay of proceedings with
respect to a Seller as provided under FIRREA, delays in
payments on the Securities and possible reductions in the
amount of those payments could occur. In addition, a
conservator or receiver of a Seller has the power under
FIRREA to repudiate contracts of such Seller. To the
extent a conservator or receiver of a Seller exercised
its right to repudiate the obligations of such Seller
under the applicable Transfer and Servicing Agreement,
the security interest of the applicable Trustee should
nevertheless be enforceable (to the extent of such
Trust's "actual direct compensatory damages"). It is
expected that in most cases "actual direct compensatory
damages" would include the outstanding principal on the
Securities issued by such Trust plus interest accrued
thereon to the date of payment. In the event of a repu-
diation of obligations, FIRREA provides that a claim for
the repudiated obligation is limited to "actual direct
compensatory damages" determined as of the date of the
appointment of the conservator or receiver. The FDIC has
not adopted a formal policy statement on payment of
principal and interest on collateralized borrowings of
banks which are repudiated. The Sellers believe that the
general policy of the FDIC in such circumstances is to
permit the collateral to be applied to pay the principal
owed plus interest at the contract rate up to the date of
payment, together with the costs of liquidation of the
collateral if provided for in the contract. In one case
involving the repudiation by the Resolution Trust Corpo-
ration of certain secured zero-coupon bonds issued by a
savings association, a United States federal district
court held that "actual direct compensatory damages" in
the case of a marketable security meant the value of the
repudiated bonds as of the date of repudiation. If such
court's view were applied to determine a Trust's "actual
direct compensatory damages" in the event a conservator
or receiver of a Seller repudiated its obligations under
a Transfer and Servicing Agreement, the amount paid to
Securityholders could, depending upon circumstances
existing on the date of the repudiation, be less than the
principal of the Securities and the interest accrued
thereon to the date of payment.
TRUST'S RELATIONSHIP TO THE SELLERS, NATIONSBANK CORPORA-
TION AND THEIR AFFILIATES
None of the Sellers, the Servicer, NSI, [NB-SPC] 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 char-
acteristics of such Receivables and, in certain circum-
stances, the applicable Seller may be required to repur-
chase Receivables with respect to which such representa-
tions and warranties have been breached. See "Descrip-
tion 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 Ser-
vicing 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, [NB-SPC] 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."
RISK OF CREDIT LOSSES ON RECEIVABLES
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 Re-
serve Account and any other credit or cash flow enhance-
ment. 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 Ac-
count (if any) and any other credit or cash flow enhance-
ment, all as specified in the related Prospectus Supple-
ment. Amounts to be deposited in any such Reserve Ac-
count 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. 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 Securi-
ties.
RISK OF SALE OF RECEIVABLES UPON EVENT OF DEFAULT
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. There is no assur-
ance that the market value of such Receivables will at
any time be equal to or greater than the aggregate prin-
cipal amount of such outstanding Notes and the aggregate
principal amount of Certificates issued by the related
Trust. As a result, upon an Event of Default with re-
spect to the Notes of any series, there can be no assur-
ance that sufficient funds will be available to repay the
related Noteholders or Certificateholders 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. There-
fore, unless otherwise specified in the related Prospec-
tus 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 Distribu-
tion Date for such class of Notes.
BALLOON RECEIVABLES; FINAL SCHEDULED PAYMENT RISK
The Balloon Receivables provide that the Obligors
may satisfy the final scheduled payment thereon by (1)
paying the full amount on its due date; (2) refinancing
the amount of the final scheduled payment through a
modification agreement; or (3) transferring the Financed
Vehicle to the Seller on behalf of the Trust in satisfac-
tion of the final scheduled payment and paying any appli-
cable charges for excess wear and tear and excess mileage
and paying a disposition fee to the Seller. The final
scheduled payment on a Balloon Receivable is determined
by the applicable Seller at the time the related retail
installment sales contract is entered into based on the
Seller's projection of the anticipated end of term whole-
sale value of the vehicle that is being financed under
such contract. [With respect to Balloon Receivables, if
so provided in the related Prospectus Supplement, only
the principal and interest payments due prior to the
final scheduled payment and not the final scheduled
payment will be included in such Trust; the final sched-
uled payment will be retained by the applicable Seller.
However, in the case of a Trust that is not a grantor
trust, each Seller will have the option to transfer the
final scheduled payments with respect to the related
Balloon Receivables retained by such Seller to such Trust
and to cause such Trust to issue certificates represent-
ing interests in such final scheduled payments or indebt-
edness secured by such final scheduled payments.]
[With respect to each Trust to which final scheduled
payments have been transferred, if, at the end of the
applicable retail installment sales contract, the Obligor
on a Balloon Receivable elects to pay the final scheduled
payment in full in cash [or by refinancing], the entire
amount of such final scheduled payment will be deposited
as a collection on the Receivable. [In the case of a
refinancing, [the applicable Seller will make a payment
to the Trust in satisfaction of the final scheduled
payment][the term of the related Receivable will be
extended by the number of months necessary to amortize
the then remaining principal balance, bearing interest at
the existing Contract Rate, with a monthly payment equal
to the regular monthly payment required under such Bal-
loon Receivable]. If the Obligor elects to If the Obligor
elects the option to transfer the Financed Vehicle to the
Seller thereof on behalf of the Trust in satisfaction of
the final scheduled payment and pay any applicable charg-
es for excess wear and tear and excess mileage, it must
also pay a disposition fee to the Servicer, which the
Servicer will retain. The Servicer will then sell the
Financed Vehicle at wholesale, by either public or pri-
vate sale. Such sale proceeds plus amounts paid in
respect of excess wear ant tear and excess mileage will
be transferred to the applicable Trust. Under the relat-
ed retail installment sales contracts for such Balloon
Receivables, such sale proceeds and amounts are deemed to
satisfy in full the Obligor's obligation to make the
final scheduled payment. Consequently, in the event that
such proceeds and amounts are less than the related final
scheduled payments transferred to the Trust, none of the
Sellers, the Servicer, or the Trust will have any re-
course to the Obligor for any shortfall, nor will the
Sellers or the Servicer have any obligation to pay any
such shortfall to the Trust.]
The Servicer's continued operation of its existing
business will affect the Trust's ability to realize in
cash the amount of any final scheduled payments which
have been transferred to the Trust. The Sellers are
obligated, to the extent that each offers vehicle financ-
ing, to offer an option to an Obligor to refinance the
final scheduled payment on a Balloon Receivable purchased
by the Seller and transferred to the Trust. If an Obli-
gor elects the refinancing option, [the related Seller
will deposit into the Collection Account of the Trust an
amount equal to the final scheduled payment for the
Balloon Receivable at the time of such refinancing] [the
term of the Balloon Receivable may be extended as de-
scribed above]. The Securityholders will bear all rein-
vestment risk associated with the receipt by the Trust of
any such refinancing proceeds and as well will bear all
risks associated with any increase in the weighted aver-
age maturity of the Securities which may occur as a
result of any such modifications to Balloon receivables.]
MATURITY AND PREPAYMENT CONSIDERATIONS
All the Receivables are prepayable at any time.
(For this purpose the term "prepayments" includes prepay-
ments 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 Agree-
ment 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 Servic-
ing Agreement as a result of breaches of certain cove-
nants. See "Description of the Transfer and Servicing
Agreements Sale and Assignment of Receivables." Consis-
tent 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 arrange-
ments (including any extension beyond the Final Scheduled
Maturity Date set forth in the related Prospectus Supple-
ment) will cause the Servicer to be obligated to repur-
chase such Receivables, as described above. Any rein-
vestment risks resulting from a faster or slower inci-
dence 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" re-
garding the Servicer 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.
RISK OF PREPAYMENT AND POSSIBLE ADVERSE EFFECT ON YIELD
The yield on the Strip Notes will be extremely
sensitive to the rate and timing of payments (including
prepayments) on the Receivables. An investor purchasing
a Strip Note which receives interest distributions and no
or nominal principal distributions at a significant
premium could, under certain prepayment scenarios, fail
to recoup its original investment. The yield to maturity
on any Strip Notes which receives principal distributions
and no or nominal interest distributions will be adverse-
ly affected by a lower than anticipated rate of payment
on the related Receivables Pool. The reinvestment risk
of an investment in any Strip Note will be borne solely
by the investor.
The weighted average life of any class of Notes
described in the related Prospectus Supplement as a
companion class to either a specified planned amortiza-
tion class of Notes or targeted amortization class of
Notes will be extremely sensitive to decreases or in-
creases in the rate of payment on the Receivables. The
weighted average life of such a class of Notes generally
will be shortened if the rate of payment on the related
Receivables Pool increases and such weighted average life
will generally increase if the rate of payment on the
related Receivables Pool decreases. Any such change in
the weighted average life of such a class of Notes will
effect the yield to maturity of an investor in such
Notes.
Any ratings assigned to any class of Notes by a
Rating Agency will reflect only such Rating Agency's
assessment of the likelihood that timely distributions
will be made with respect to such Notes in accordance
with the applicable Transfer and Servicing Agreement and,
if applicable, the related Indenture. Such rating will
not constitute an assessment of the likelihood that
principal prepayments on the Receivables will occur or of
the degree to which the rate of such prepayments might
differ from that originally anticipated. As a result,
such rating will not address the possibility that prepay-
ment rates higher or lower than anticipated by an inves-
tor may cause such investor to experience a lower than
anticipated yield or that any investor in a Strip Note
which is entitled to receive interest distributions but
no or nominal principal distributions which Note was
purchased at a significant premium might fail to recoup
its investment.
RISK OF SHORTFALLS AND PREPAYMENTS DUE TO 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, available cashflow
from other non-delinquent Receivables, or any other
credit or yield enhancement. The delinquency experience
of the Receivables may be affected by general or regional
economic conditions as well as by the underwriting and
servicing expertise of the Servicer. If a delinquency on
a Receivable is not remedied, the Servicer will generally
cause the related Financed Vehicle to be repossessed and
resold. The proceeds of any such liquidation will be
distributed to the holders of the Securities in the
manner described in the related Prospectus Supplement and
will generally have the effect of a principal prepayment
in respect of the liquidated Receivable. 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 Receiv-
ables. 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 depos-
it 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 remit-
tances of collections on the related Receivables and
payment of the aggregate Purchase Amount with respect to
Receivables purchased by the Servicer.
RISKS ASSOCIATED WITH SUBSEQUENT RECEIVABLES AND THE PRE-
FUNDING ACCOUNT
If so specified in the applicable Prospectus Supple-
ment, the property of a Trust may include monies on
deposit in a Pre-Funding Account, which monies will be
used to purchase or otherwise acquire Subsequent Receiv-
ables from the Sellers from time to time during the
Funding Period specified in the related Prospectus Sup-
plement. If a Pre-Funding Account is included in the
property of a Trust, the ability of the Sellers to gener-
ate Subsequent Receivables to be conveyed to such Trust
will affect the amount on deposit in such account which
is not applied to the conveyance of Subsequent Receiv-
ables during the Funding Period. Such Funding Period may
be up to one year in length. At the end of the Funding
Period, the holders of Securities issued by such Trust
may receive a prepayment of principal in an amount equal
to the amount remaining in the Pre-Funding Account. The
reinvestment risk associated with any such distribution
of principal will be borne by the holders of the Securi-
ties issued by such Trust. The amount that may be ini-
tially 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. There is no limitation on the per-
centage of a Trust's property which may be represented by
amounts on deposit in a Pre-Funding Account and conse-
quently, there is no limitation on the percentage of a
series or class of Securities which may be represented by
amounts on deposit in a Pre-Funding Account. Amounts on
deposit in any Pre-Funding Account may be invested only
in Permitted Investments. To the extent provided in the
related Prospectus supplement, the Sellers will apply
their usual and customary credit underwriting standards
in connection with the origination of any Subsequent
receivable. To the extent that amounts on deposit in the
Pre-Funding Account have not been fully applied to the
conveyance of Subsequent Receivables to a Trust by the
end of the Funding Period and such amount exceeds the
applicable amount described in the related Prospectus
Supplement, the holders of Securities issued by the
related Trust will receive, on the Distribution Date on
or immediately following the last day of the applicable
Funding Period, a prepayment of principal in an amount
equal to the 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 a
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
holders of the Securities issued by such Trust. Holders
of Securities issued by a Trust the property of which
includes a Pre-Funding Account will bear the reinvestment
risk associated with any such distribution of amounts on
deposit in the Pre-Funding Account after the termination
of the applicable Pre-Funding Period. Any such distribu-
tion will have the effect of a prepayment on the related
Receivables and will result in a reduction in the yield
to maturity of any class of Securities to which such
amounts are distributed.
EVENT OF SERVICING TERMINATION; RIGHTS OF NOTEHOLDERS
With respect to a series of Securities that includes
Notes, in the event that an Event of Servicing Termina-
tion occurs, the Indenture Trustee or the Noteholders
with respect to such series, as described under "Descrip-
tion 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 and any Notes
are outstanding. In addition, the Noteholders of such
series have the ability, with certain specified excep-
tions, 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." In the event of an
Event of Servicing Termination, if a conservator or
receiver is appointed for the Servicer, and no Event of
Servicing Termination other than such conservatorship or
receivership or insolvency of the Servicer exists, the
conservator or receiver may have the power to prevent a
transfer of servicing to a successor Servicer.
BOOK-ENTRY REGISTRATION; OWNERS OF SECURITIES NOT RECOG-
NIZED AS "SECURITYHOLDERS"
If so specified in the related Prospectus Supple-
ment, each class of Securities of a given series will be
initially represented by one or more certificates regis-
tered 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 recog-
nized by the Trustee or any Indenture Trustee as "Certif-
icateholders," "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 "Book-Entry and Defini-
tive Securities; Reports to Securityholders 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 "Receiv-
ables 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 pursu-
ant to agreements with Dealers and any assignments and
other documents related thereto ("Dealer Agreements").
Pursuant to the Dealer Agreements, the Dealers are obli-
gated 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 financ-
ing 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 applica-
ble 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 prop-
erty 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 Agree-
ment 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) cer-
tain 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 ac-
quired 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) rebates of premiums and other amounts relat-
ing to certain insurance policies and other items fi-
nanced under the Receivables, in each case to the extent
applied to reduce the principal balance of the related
Receivable; (viii) the 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 re-
spect 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 Supple-
ment, 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, pursu-
ant 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 Receiv-
ables 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 per-
fected security interest in the Financed Vehicles in all
states. See "Certain Legal Aspects of the Receiv-
ables Security Interests in Vehicles." Neither the Trust-
ee 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 Certifi-
cates 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 Receiv-
ables, 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 ability
to repossess and sell the collateral securing the Receiv-
ables, 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 Agree-
ments 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 Trust-
ee may resign at any time, in which event the Servicer,
or its successor, will be obligated to appoint a succes-
sor 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 Adminis-
trator 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 portfo-
lio 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 materi-
al 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 dif-
ferent). Each monthly payment includes an installment of
interest which is calculated on the basis of the out-
standing 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 correspond-
ingly 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 neces-
sary to repay the then outstanding principal balance.
"Balloon Receivables" are monthly payment receiv-
ables secured by new or used automobiles, vans or light
trucks with a final scheduled payment which differs
significantly from the scheduled monthly payments. The
final scheduled payment on a Balloon Receivable is deter-
mined by the applicable Seller at the time the related
retail installment sales contract is entered into based
on the Seller's projection of the anticipated end of term
wholesale value of the vehicle that is being financed
under such contract. Each 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 significantly from the preceding fixed level
monthly installments. In addition, the Balloon Receiv-
ables provide that the Obligors may satisfy the final
scheduled payment by (1) paying the full amount on its
due date; (2) refinancing the amount of the final sched-
uled payment; or (3) transferring the Financed Vehicle to
the Seller on behalf of the Trust in satisfaction of the
final scheduled payment and paying a disposition fee to
the Seller and any applicable charges for excess wear and
tear and excess mileage.
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.
SUBSEQUENT RECEIVABLES
Subsequent Receivables may be originated by the
Dealers at a later date using credit criteria different
from those which were applied to any Initial Receivables
and may be of a different credit quality and seasoning.
In addition, following the transfer of Subsequent Receiv-
ables to the applicable Trust, the characteristics of the
entire pool of Receivables included in such Trust may
vary significantly from those of the Initial Receivables
transferred to such Trust. See "Risk Factors Risks
Associated with Subsequent Receivables and the Pre-Fund-
ing Account." Each Prospectus Supplement will describe
the effects including such Subsequent Receivables may
have on the Receivables Pool included in the Trust Prop-
erty of each Trust issuing Securities. Regular periodic
information regarding the Subsequent Receivables will be
included under Item 5 in each Current Report filed on
Form 8-K with the Commission pursuant to the Exchange Act
and with respect to each Trust to which Subsequent Re-
ceivables have been transferred.
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 applica-
tion 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 informa-
tion. For each loan application, DFSG's underwriting
decision relies on the results of an objective credit
scoring system, underwriting guidelines with established
tolerances for advances, loan to value, term and capacity
to repay and, typically, a credit analyst's 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,
including the customized credit grade (consisting of a
credit score based on a proprietary credit scorecard and
a credit score obtained from a credit bureau), the pres-
ence or absence of any derogatory credit events, and the
capacity of the obligor to repay (evaluating the amount
of the proposed loan measured against income, overall
indebtedness and monthly cash flow). Generally, the
amount advanced on a specific loan is based upon guide-
lines for the percentage (which may vary based on the
obligor's credit quality) of the manufacturer's invoice
price (for new vehicles) or the wholesale value (for used
vehicles) versus the credit quality of the obligor,
maximum funding limits for the funding of warranty and
insurance products and the downpayment amount. 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.
There is no required relationship between the out-
standing principal balance of any Receivable included in
a Trust and the value of the Financed Vehicle securing
such Receivable.
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 poli-
cies and practices may change from time to time in accor-
dance 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. Col-
lections 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 collec-
tion 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 strate-
gies 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 collec-
tions personnel as having an otherwise serious delinquen-
cy problem, are considered for liquidation. To minimize
losses on liquidation, DFSG has a dedicated unit estab-
lished to manage the liquidation of collateral effective-
ly. This group principally contracts with outside agen-
cies 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 arrange-
ments, litigation, post-judgment initiatives and collec-
tion 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 delin-
quent.
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' experi-
ence 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 influ-
enced 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 Receiv-
ables, or the Servicer exercising its option to purchase
all of the remaining Receivables.) All of the Receiv-
ables are prepayable at any time without penalty to the
Obligor. The rate of prepayment of automotive receiv-
ables is influenced by a variety of economic, social and
other factors, including the fact that an Obligor gener-
ally may not sell or transfer the Financed Vehicle secur-
ing 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 breach-
es 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 Receiv-
ables, 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 Agree-
ments Termination" regarding the Servicer's option to
purchase the Receivables from a given Trust as well as
the possible sale of Receivables by a given Trust to a
successful bidder for the Receivables and " Insolvency
Event or Dissolution" regarding the sale of the Receiv-
ables owned by a Trust that is not a grantor trust if an
Insolvency Event or a dissolution with respect to the
Seller occurs.
In addition, if a Pre-Funding Account is included in
the property of a Trust, the ability of the Sellers to
generate Subsequent Receivables to be conveyed to such
Trust will effect the amount on deposit in such account
which is not applied to the conveyance of Subsequent
Receivables. At the end of the Funding Period, the
holders of Securities issued by such Trust may receive a
prepayment of principal in an amount equal to the amount
remaining in the Pre-Funding Account. It is anticipated
that there will be at least a nominal amount of principal
prepaid to the holders of the Securities issued by such
Trust. Holders of Securities issued by a Trust the
property of which includes a Pre-Funding Account will
bear the reinvestment risk associated with any such
distribution of amounts on deposit in the Pre-Funding
Account after the termination of the applicable Pre-
Funding Period.
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 prin-
cipal 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 Certifi-
cates, as of the applicable Distribution Date (after
giving effect to distributions to be made on such Distri-
bution 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 reduc-
tions in the outstanding principal balance of the appli-
cable 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, prepay-
ments 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 princi-
pal 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 immedi-
ately preceding such Distribution Date, the Pool Balance
(as such term is defined in the related Prospectus Sup-
plement, 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 "Book-Entry and Defin-
itive Securities; Reports to Securityholders 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 ini-
tial 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 subsid-
iaries. Through its banking subsidiaries and its various
non-banking subsidiaries, NationsBank Corporation pro-
vides 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. See "Risk Fac-
tors Trust's Relationship to the Sellers, NationsBank
Corporation and their Affiliates" and "Available Informa-
tion."
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 sharehold-
er 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 prede-
cessor 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 appli-
cable 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 summa-
ry 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 deposito-
ry 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 Pro-
spectus Supplement. Accordingly, such nominee is expect-
ed 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 Supple-
ment to actions by Noteholders refer to actions taken by
DTC upon instructions from its participating organiza-
tions (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 "Book-Entry and
Definitive Securities; Reports to Securityholders
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 Supple-
ment. 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 "Description of Fixed and Floating Rate Op-
tions Fixed Rate Securities" and " Floating Rate Securi-
ties." 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 exercising its option to purchase the
related Receivables Pool or as a result of the sale of
the related Receivables Pool to a successful bidder. See
"Description of the Transfer and Servicing Agree-
ments Termination."
If so specified in the related Prospectus Supple-
ment, payments to Noteholders of all classes within a
series in respect of interest will have the same priori-
ty. Under certain circumstances, the amount available
for such payments could be less than the amount of inter-
est 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 inter-
est 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 prior-
ity 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.
FIXED PAYMENT NOTES
To the extent specified in any Prospectus Supple-
ment, 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.
MONEY MARKET NOTES
To the extent specified in any Prospectus Supple-
ment, one or more classes of Notes of a given series may
have a final scheduled distribution date of less than 397
days from the initial trade date related thereto or such
other date on which an initial investor's interest there-
in is subject to market action. The failure to pay such
a class of Notes on or prior to the related final sched-
uled distribution date would constitute an event of
default under the related Indenture.
PLANNED AMORTIZATION CLASS
To the extent specified in any Prospectus Supple-
ment, one or more classes of Notes of a given series may
be designed to receive principal payments using a prede-
termined principal balance schedule (a "planned balance")
derived by assuming two constant prepayment rates for the
related Receivables Pool. The applicable Prospectus
Supplement will set forth a schedule of the planned
balance of such a class of Notes for each applicable
Distribution Date. Noteholders of such a class of Notes
would be entitled to receive principal payments in re-
spect of a Distribution Date only to the extent necessary
to reduce the principal balance of such Notes to the
amount set forth as the planned balance for such Distri-
bution Date.
TARGETED AMORTIZATION CLASS
To the extent specified in any Prospectus Supple-
ment, one or more classes of Notes of a given series may
be designed to receive principal payments using a prede-
termined principal balance schedule (a "targeted bal-
ance") derived by assuming one constant prepayment rate
for the related Receivables Pool. The applicable Pro-
spectus Supplement will set forth a schedule of the
planned balance of such a class of Notes for each appli-
cable Distribution Date. Noteholders of such a class of
Notes would be entitled to receive principal payments in
respect of a Distribution Date only to the extent neces-
sary to reduce the principal balance of such Notes to the
amount set forth as the targeted balance for such Distri-
bution Date.
COMPANION CLASS
To the extent specified in any Prospectus Supple-
ment, one or more classes of Notes of a given series may
be designed to receive principal payments on a Distribu-
tion date only if principal payments have been made on a
specified planned amortization class of Notes or targeted
amortization class of Notes.
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 relat-
ed 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 pay-
able; (ii) impair the right to institute suit for the
enforcement of certain provisions of the related Inden-
ture 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 out-
standing 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 relat-
ed 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 obtain-
ing the consent of the Noteholders of the related series,
for the purpose of, among other things, adding any provi-
sions 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 Trust-
ee 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 out-
standing; (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 Sched-
uled Distribution Date for such class of Notes.
If an Event of Default should occur and be continu-
ing 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 pay-
able. Such declaration may, under certain circumstances,
be rescinded by the holders of a majority in principal
amount of such Notes then outstanding. Any such rescis-
sion 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 Inden-
ture 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 direc-
tion of any of the holders of such Notes, if such Inden-
ture Trustee reasonably believes it will not be adequate-
ly indemnified against the costs, expenses and liabili-
ties which might be incurred by it in complying with such
request. Subject to the provisions for indemnification
and certain limitations contained in the related Inden-
ture, 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 inconsis-
tent with such written request has been given to such
Indenture Trustee during such 60-day period by the hold-
ers 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 cove-
nant 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 individ-
ual capacity, nor any holder of a Certificate represent-
ing 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 consoli-
dation 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 (collective-
ly, 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 other-
wise 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 indebted-
ness 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. Unless and until Definitive Securities
are issued in fully registered, certificated form, refer-
ences to the "holders of Notes" and to the "Noteholders"
shall refer to DTC and its nominee. See "Book-Entry and
Definitive Securities; Reports to Securityholders
Definitive Securities." 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 Inden-
ture 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 pay-
ment 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 be-
comes 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 pursu-
ant 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 summa-
ry 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 Cer-
tificateholder (other than the Seller) will be entitled
to receive a physical certificate representing a Certifi-
cate. 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 distribu-
tions, 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 "Book-Entry and Definitive Securities; Reports to
Securityholders 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 determin-
ing whether the requisite percentage of Certificatehold-
ers have given any request, demand, authorization, direc-
tion, notice, consent or other action under the Basic
Documents (other than the commencement by the related
Trust of a voluntary proceeding in bankruptcy as de-
scribed 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 distribu-
tions 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 Certif-
icates entitled to (i) distributions in respect of prin-
cipal with disproportionate, nominal or no interest
distributions or (ii) interest distributions with dispro-
portionate, nominal or no distributions in respect of
principal. Each class of Certificates may have a differ-
ent 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 Certifi-
cates of a given series or the method for determining
such Certificate Rate. See also "Description of Fixed
and Floating Rate Options 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 Pro-
spectus 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 in-
cludes two or more classes of Certificates, the timing,
sequential order, priority of payment or amount of dis-
tributions 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 Certificate-
holders 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 Certifi-
cates. Unless and until Definitive Securities are
issued in fully registered, certificated form, references
to the "holders of Certificates" and the "Certificate-
holders" shall refer to DTC and its nominee. See "Book-
Entry and Definitive Securities; Reports to
Securityholders Definitive Securities."
DESCRIPTION OF FIXED AND FLOATING RATE OPTIONS
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 Supple-
ment. 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 Certifi-
cates 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 speci-
fied 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 publica-
tion 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 re-
lease 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 Pro-
spectus Supplement with respect to a class of Floating
Rate Securities.
As specified in the applicable Prospectus Supple-
ment, Floating Rate Securities of a given class may also
have either or both of the following (in each case ex-
pressed 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 applica-
tion.
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 "Cal-
culation 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 ab-
sence 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 calcu-
lation of the rate of interest on a Floating Rate Securi-
ty 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 pub-
lished 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 Calcula-
tion 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 Determina-
tion 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 Quota-
tions, 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 certif-
icates of deposit in The City of New York selected by the
Calculation Agent for such CD Rate Security for negotia-
ble 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 desig-
nated in the related Prospectus Supplement in a denomina-
tion of $5,000,000; provided, however, that if the deal-
ers 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 Inter-
est 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 succeed-
ing 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 refer-
ence 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 Determi-
nation Date") and shall be the Money Market Yield (as
defined below) on such Commercial Paper Rate Determina-
tion 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 Commer-
cial 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 nation-
ally 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:
Money Market Yield = D x 360 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 busi-
ness 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 applica-
ble 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 Multipli-
er, if any, specified in such Security and in the appli-
cable 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 (Effec-
tive)." In the event that such rate is not published
prior to 3:00 p.m., New York City time, on the Calcula-
tion 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 Inter-
est 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 succeed-
ing 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 Calcula-
tion Agent for such LIBOR Security will determine
the arithmetic mean of the offered rates for depos-
its 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 Determi-
nation 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 Inter-
est Reset Date, to prime banks in the London inter-
bank 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 trans-
action 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 approx-
imately 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 Inter-
est Reset Date, and in a principal amount equal to
an amount of not less than $1,000,000 that is repre-
sentative 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 Secu-
rity will bear interest for each Interest Reset Period at
the interest rate calculated with reference to the Trea-
sury Rate and the Spread or Spread Multiplier, if any,
specified in such Security and in the applicable Prospec-
tus 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 arithme-
tic mean of the secondary market bid rates, as of approx-
imately 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 Maturi-
ty; 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 holi-
day, 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 fol-
lowing 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 Inter-
est Reset Date.
BOOK-ENTRY AND DEFINITIVE SECURITIES; REPORTS TO
SECURITYHOLDERS
BOOK-ENTRY REGISTRATION
The Prospectus Supplement related to a given series
will specify whether the holders of the Notes or Certifi-
cates 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 Certifi-
cates," 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 Securi-
ties. Cedel and Euroclear will hold omnibus positions on
behalf of the Cedel Participants and the Euroclear Par-
ticipants, respectively, through customers' securities
accounts in Cedel's and Euroclear's names on the books of
their respective depositaries (collectively, the "Deposi-
taries") 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 settle-
ment 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 Partici-
pants").
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 rele-
vant European international clearing system by its Depos-
itary; 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, deliv-
er 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 securi-
ties 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 Partic-
ipant 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 re-
ceived 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 Indi-
rect 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 Indi-
rect 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 Nomi-
nee. Securityholders will not be recognized by the
Applicable Trustee as "Noteholders" or "Certificatehold-
ers," 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 Securi-
ties. 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 pay-
ments on behalf of their respective Securityholders.
Accordingly, although Securityholders will not possess
their respective Securities, the Rules provide a mecha-
nism 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 Securi-
ties 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 securi-
ties transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Par-
ticipants, 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 secu-
rities and securities lending and borrowing. Cedel
interfaces with domestic markets in several countries.
As a professional depository, Cedel is subject to regula-
tions by the Luxembourg Monetary Institute. Cedel Par-
ticipants 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 physi-
cal 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 Par-
ticipants and counterparties both in Cedel and in many
domestic securities markets. Transactions may now be
settled in any of 32 currencies. In addition to safe-
keeping (custody) and securities clearance and settle-
ment, 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 Opera-
tor 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 (collec-
tively, the "Terms and Conditions"). The Terms and
Conditions govern all transfers of securities and cash,
both within the Euroclear System, and receipts and with-
drawals of securities and cash. All securities in the
Euroclear System are held on a fungible basis without
attribution of specific certificates to specific securi-
ties 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. Indi-
rect access to the Euroclear System is also available to
other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either direct-
ly or indirectly. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Partici-
pants 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 represent-
ing 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 dis-
tributions, 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 " Defini-
tive Securities."
Except as required by law, none of the Administra-
tor, 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 Securi-
ties of any series held by DTC's Nominee, or for main-
taining, 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, certifi-
cated form ("Definitive Notes" and "Definitive Certifi-
cates," respectively, and collectively referred to herein
as "Definitive Securities") to Noteholders or Certifi-
cateholders 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 respon-
sibilities 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 noti-
fies the Applicable Trustee in writing), (ii) the Admin-
istrator 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 outstand-
ing 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 availabili-
ty of Definitive Securities. Upon surrender by DTC of
the definitive certificates representing the correspond-
ing 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 applica-
ble, 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 Defini-
tive 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 suffi-
cient 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 previ-
ous Distribution Date, as applicable, and each such
statement to be delivered to Certificateholders will
include (to the extent applicable) the following informa-
tion (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 applica-
ble:
(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 Certifi-
cates;
(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 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 bal-
ance and the Note Pool Factor for each class of such
Notes, and the Certificate Balance and the Certifi-
cate Pool Factor for each class of such Certifi-
cates, 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 Supple-
ment), if any, for such Collection Period;
(viii) the Noteholders' Interest Carryover
Shortfall, the Noteholders' Principal Carryover
Shortfall, the Certificateholders' Interest Carry-
over 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 Re-
ceivables, 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 Re-
serve 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 adjust-
able 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 Applica-
ble 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 "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 Servic-
ing 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 Agree-
ment) pursuant to which a Trust will be created and
Certificates will be issued and each Administration
Agreement pursuant to which NationsBank, N.A. will under-
take certain administrative duties with respect to a
Trust that issues Notes (collectively, the "Transfer and
Servicing Agreements"). Forms of the Transfer and Ser-
vicing 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 relat-
ed Sale and Servicing Agreement or Pooling and Servicing
Agreement. The applicable Trustee will not independently
verify the existence and qualification of any Receiv-
ables. The Trustee will, concurrently with such sale and
assignment, execute, authenticate, and deliver the relat-
ed 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 Supple-
ment, all or a portion of the Receivables may be pur-
chased 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 war-
rant 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 govern-
ment 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, reorganiza-
tion, moratorium, conservatorship, receivership, liquida-
tion 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 rescis-
sion, setoff, counterclaim or defense, including the
defense of usury, and such Seller has not received writ-
ten notice that any right of rescission, setoff, counter-
claim 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 Trans-
fer and Servicing Agreement, and no amendment, waiver,
alteration or modification causes such Receivable not to
conform to the other representations or warranties con-
tained 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, viola-
tion 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 consti-
tute a default, breach, violation or event permitting
acceleration under the terms of the Receivable has aris-
en; provided, however, that if notwithstanding the knowl-
edge 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 Receiv-
able 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, securi-
ty 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 Receiv-
able; 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.
In the event of a breach or failure to be true of
any representation or warranty by a Seller with respect
to the Receivables described above, which breach or
failure materially and adversely affects the interests of
the related Trust in a Receivable (it being understood
that any such breach or failure with respect to certain
representations and warranties which does not affect the
ability of the Trust to receive and retain payment in
full on the Receivable will not be deemed to have such a
material and adverse effect), such Seller, unless such
breach or failure has been cured by the last day of the
Collection Period which includes the 60th day after the
date on which such Seller becomes aware of, or receives
written notice from the Trustee or the Servicer of, such
breach or failure, will be required to repurchase the
Receivable from the Trustee for 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 Trust does not have, a first
priority perfected ownership interest in such Receivable
as a result of such practice. The Purchase Amount is
payable on the next Deposit Date. The repurchase obliga-
tion will constitute the sole remedy available to the
Certificateholders, the Noteholders, the Indenture Trust-
ee or the Trust against such Seller for any such uncured
breach or failure.
The "Purchase Amount" of any Receivable means, with
respect to any Deposit Date, an amount equal to the sum
of (i) the outstanding principal balance of such Receiv-
able as of the last day of the preceding Collection
Period and (ii) the amount of accrued and unpaid interest
on such principal balance at the related Contract Rate
from the date a payment was last made by or on behalf of
the Obligor through and including the last day of such
preceding Collection Period, in each case after giving
effect to the receipt of monies collected on such Receiv-
able in such preceding Collection Period.
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 custodi-
an 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 Receiv-
ables will not be stamped or otherwise marked to reflect
the sale and assignment of the Receivables to the appli-
cable Trust and will not be segregated from other receiv-
ables 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 Receiv-
ables 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 pay-
ments 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 re-
leased 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 estab-
lish and maintain with the related Trustee an account, in
the name of such Trustee on behalf of such Certificate-
holders, 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 Supple-
ment Account or Reserve Account, will be described in the
related Prospectus Supplement.
For any series of Securities, funds in the Collec-
tion 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 Invest-
ments" 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' accep-
tances of certain depository institutions or trust compa-
nies 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 cate-
gory from the applicable Rating Agency; and (iv) invest-
ments in money market funds having the highest rating
from the applicable Rating Agency; provided, that no such
Permitted Investment shall be of a type such that the
investment therein by the applicable Trust would result
in such Trust being required to register as an investment
company under the Investment Company Act of 1940, as
amended. 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 distribu-
tion 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 re-
quired 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 Earn-
ings"), shall be deposited in the applicable Collection
Account or distributed as provided in the related Pro-
spectus Supplement.
The Trust Accounts will be maintained as Eligible
Deposit Accounts. "Eligible Deposit Account" means
either (a) a segregated account with an Eligible Institu-
tion 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 relat-
ed Trustee, as applicable, or (b) a depository institu-
tion 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 depos-
it rating acceptable to the Rating Agencies and (ii)
whose deposits are insured by the Federal Deposit Insur-
ance Corporation.
COLLECTIONS
With respect to each Trust, the Servicer will depos-
it 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 Peri-
od") 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 Receiv-
ables to be purchased from a Trust to the related Collec-
tion 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 Supple-
ment, the Servicer may, in order to satisfy the require-
ments 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 Receiv-
ables 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 mis-
taken deposits or postings or checks returned for insuf-
ficient funds.
ADVANCES AND ADVANCE RESERVE WITHDRAWALS
Servicer Advances. If so provided in the related
Prospectus Supplement, as of the last day of each Collec-
tion Period, the Servicer will, subject to the limita-
tions 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 recover-
able 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, with-
draw from the Reserve Account funds in an amount with
respect to each Receivable (other than a Defaulted Re-
ceivable) 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 With-
drawals will not be required to be made pursuant to any
Sale and Servicing Agreement, except to the extent speci-
fied 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 Receiv-
able 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 reposses-
sion 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 (includ-
ing the Sellers) or (ii) specific duties to subcontrac-
tors 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 servic-
ing the Receivables.
With respect to any Trust, the Servicer will cove-
nant 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 Agree-
ment 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 poli-
cies; and (iii) the Servicer will not (a) extend a Re-
ceivable 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 Collec-
tion 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 Receiv-
able 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 pre-
ceding 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 Re-
ceivable 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 Receiv-
ables."
The Sale and Servicing Agreement and the Pooling
and Servicing Agreement will provide that the Servicer
will defend and indemnify the Trust and the Certificate-
holders 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 occurring in connection with any
repossession of a 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 omis-
sions 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 applica-
ble Distribution Date.
The Servicing Fee and the Supplemental Servicing Fee
(collectively, the "Servicer Fee") are intended to com-
pensate 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 infor-
mation 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 Pro-
spectus Supplement, distributions of principal and inter-
est (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, calcula-
tion, allocation, order, source, priorities of and re-
quirements 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 Prospec-
tus 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 short-
falls 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 prin-
cipal 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. Distribu-
tions 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 alloca-
tions, together with the statement described under "Book-
Entry and Definitive Securities; Reports to
Securityholders Reports to Securityholders."
CREDIT AND CASH FLOW ENHANCEMENT
The amounts and types of credit and cash flow en-
hancement 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 agree-
ments, repurchase obligations, yield supplement agree-
ments, other agreements with respect to third party
payments or other support, cash deposits or such other
arrangements as may be described in the related Prospec-
tus 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 en-
hancement, 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 writ-
ing 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 Pro-
spectus 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 Supple-
ment, 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 pay-
ment of all other required payments and distributions on
such date. The related Prospectus Supplement will de-
scribe the circumstances and manner under which distribu-
tions 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 indepen-
dent 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 Agree-
ment. If so provided in the related Prospectus Supple-
ment, pursuant to the related Sale and Servicing Agree-
ment 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 Supple-
ment, 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 applica-
ble 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 Seller shall deposit
to the related Collection Account, or the related Inden-
ture 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 Amount (as such term
is defined in the related Prospectus Supplement, the
"Yield Supplement 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 Inden-
ture 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 Supple-
ment Amount in respect of the related Subsequent Receiv-
ables. 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 depos-
it of collections, aggregate Advances, if any, and Pur-
chase 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 Certif-
icateholders with respect to each Trust as if all depos-
its, 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 "Book-
Entry and Definitive Securities; Reports to
Securityholders 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 relat-
ed 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 appli-
cable, 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 Agree-
ment, 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 resig-
nation will become effective until the related Indenture
Trustee or Trustee, as applicable, or a successor
servicer has assumed NationsBank, N.A.'s servicing obli-
gations and duties under such Sale and Servicing Agree-
ment 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 judg-
ment; 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 liabil-
ity. 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 obliga-
tions specifically undertaken by it under each such
agreement and will have no other obligations or liabili-
ties 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 Servic-
ing Agreement or Pooling and Servicing Agreement.
EVENT OF SERVICING TERMINATION
"Events of Servicing Termination" under each Sale
and Servicing Agreement and Pooling and Servicing Agree-
ment 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 Agree-
ment 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 Appli-
cable 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, insol-
vency or similar proceedings and certain actions of the
Servicer indicating its insolvency pursuant to bankrupt-
cy, readjustment, receivership, conservatorship, insol-
vency, 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 (or if no Notes are
outstanding, the Trustee or holders of Certificates of
the related Series evidencing not less than a majority of
principal amount of such Certificates then outstanding)
may terminate all the rights and obligations of the
Servicer under such Sale and Servicing Agreement, where-
upon 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 Agree-
ment 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 Certifi-
cates 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 arrange-
ments. If, however, a receiver or similar official has
been appointed for the Servicer, and no Event of Servic-
ing 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 compen-
sation 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 relat-
ed 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 Distribu-
tion 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 Servic-
ing 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 Certificatehold-
ers; 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 deliv-
ered, 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 majori-
ty 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, collec-
tions of payments on the related Receivables or distribu-
tions 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 amend-
ment, 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 [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 disso-
lution, 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 Sell-
ers, 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 Certificate-
holders (other than [NB-SPC]) of Certificates of such
series representing not less than a majority of the
aggregate Certificate Balance of each class of Certifi-
cates, 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 connec-
tion therewith, the related Trustee (x) appoints an
entity acceptable to NationsBank Corporation 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 there-
after 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 Insol-
vency Event or a dissolution with respect to [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 termina-
tion of such Trust. Upon termination of any Trust, the
related Trustee shall, or shall direct the related Inden-
ture Trustee to, promptly sell the assets of such Trust
(other than the Trust Accounts and the Certificate Dis-
tribution Account) in a commercially reasonable manner
and on commercially reasonable terms. The proceeds from
any such sale, disposition or liquidation of the Receiv-
ables 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 Distri-
bution 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 applica-
ble Trustee does not have the power to commence a volun-
tary proceeding in bankruptcy with respect to the related
Trust without the unanimous prior approval of all Certif-
icateholders (including the Sellers) of such Trust and
the delivery to such Trustee by each such Certificate-
holder (including the Sellers) of a certificate certify-
ing 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 Certifi-
cateholders 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 Certifi-
cateholder 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 arrange-
ment 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 relat-
ed 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 Receiv-
ables, (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 Collec-
tion 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 Bal-
ance"), all remaining related Receivables at a price
equal to the aggregate of the Purchase Amounts thereof as
of the end of such Collection Period.
To the extent provided in the related Prospectus
Supplement with respect to a Trust, the Servicer 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 a commercial-
ly reasonable manner and on commercially reasonable
terms. The minimum price of any such bid which may be
accepted shall be an amount not less than the sum of (i)
the amount of all accrued and unpaid interest on the
outstanding Notes, if any, issued by such Trust to the
next succeeding Distribution Date, (ii) the unpaid prin-
cipal amount of all outstanding Notes, if any, issued by
such Trust, (iii) the amount of all accrued and unpaid
interest on the outstanding Certificates issued by such
Trust to the next succeeding Distribution Date, and (iv)
the principal balance of all outstanding Certificates
issued by such Trust. The Applicable Trustee's interest
in such Receivables will not be released or terminated
except upon receipt of payment of the purchase price
therefor. If two or more bids are received, each of
which are at least equal to the amount described above,
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 assign-
ment 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 Receiv-
ables 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 Receiv-
ables 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 af-
fected Receivable, no longer had a first priority per-
fected 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 Deal-
er, 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 per-
fected 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 Re-
ceivables and their proceeds.
SECURITY INTERESTS IN VEHICLES
In all states in which the Receivables have been
originated, retail motor vehicle installment sales con-
tracts 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 originat-
ed, 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 applica-
ble Seller's and the Servicer 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 Agree-
ment, 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 relat-
ing 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 Receiv-
ables."
In most states, assignments such as those under the
Sale and Servicing Agreement or Pooling and Servicing
Agreement, as applicable, relating to each Trust, togeth-
er 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 Agree-
ment 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 secu-
rity 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 inter-
est 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-regis-
tration could defeat perfection. In the ordinary course
of servicing receivables, the Servicer takes steps to
effect re-perfection upon receipt of notice of re-regis-
tration 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
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 inter-
est 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 con-
fiscated 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 Receiv-
able. 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 surren-
dered, 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 juris-
dictions 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 collat-
eral prior to actual sale by paying the secured party the
unpaid principal balance of the obligation plus reason-
able 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 principal-
ly 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 indebt-
edness 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 indebt-
edness, 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 repos-
session. 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 Feder-
al 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 trans-
actions 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 Receiv-
ables.
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 Receiv-
able. Under most state motor vehicle dealer licensing
laws, sellers of motor vehicles are required to be li-
censed to sell motor vehicles at retail sale. Further-
more, 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 equita-
ble principles may have the effect of relieving an obli-
gor 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 credi-
tor 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 Agree-
ment 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 Agree-
ment 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 provi-
sions, 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 unse-
cured 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.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of material
anticipated federal income tax consequences of the pur-
chase, ownership and disposition of the Notes and the
Certificates of a series. The summary does not purport
to deal with federal income tax consequences applicable
to all categories of holders, some of which may be sub-
ject to special rules. For example, it does not discuss
the tax treatment of Noteholders or Certificateholders
that are insurance companies, regulated investment compa-
nies 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 provi-
sions of the Internal Revenue Code of 1986, as amended
(the "Code"), the Treasury regulations promulgated there-
under 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 Pro-
spectus 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 purpos-
es 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, Certifi-
cates and related terms, parties and documents applicable
to such Trust.
The federal income tax consequences to Certificate-
holders 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
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 associ-
ation (or publicly traded partnership) taxable as a
corporation for federal income tax purposes. Further,
with respect to each series of Notes, Special Tax Counsel
will opine that the Notes will be classified as debt for
federal income tax purposes. Any such opinion will be
filed either as an exhibit to the registration statement
of which this Prospectus forms a part or will be filed as
an exhibit to a Form 8K filed in connection with the
establishment of the related Trust and issuance of Secu-
rities.
In addition, Special Tax Counsel will render its
opinion that it has prepared or reviewed the statements
herein and in the related Prospectus Supplement under the
heading "Summary Tax Status" relating to federal income
tax matters and under the heading "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 partner-
ship or a grantor trust, as the case may be, 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 circum-
stances that would be provided by an investor's own tax
adviser. Accordingly, each investor is advised to con-
sult its own tax advisers with regard to the tax conse-
quences 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 underly-
ing 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 rela-
tionships to such Plans ("Parties in Interest" under
ERISA and "Disqualified Persons" under the Code). More-
over, 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 fiducia-
ries of Plans subject to ERISA and prohibits certain
transactions between a Plan and Parties in Interest or
Disqualified Persons with respect to such Plans. Viola-
tion 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 Consider-
ations" 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 Securi-
ties of any series without regard to the factors de-
scribed 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 Inter-
est" 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 poten-
tial prohibited transactions, and all prospective inves-
tors should review the discussion herein with their legal
advisors
CERTIFICATES ISSUED BY TRUSTS THAT ISSUE ONLY CERTIFI-
CATES
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 Certifi-
cates (the "Exemption"). The Exemption generally exempts
from the application of the prohibited transaction provi-
sions of Section 406 of ERISA and the excise taxes im-
posed on such prohibited transactions pursuant to Sec-
tions 4975(a) and (b) of the Code and Section 502(i) of
ERISA certain transactions relating to the initial pur-
chase, holding and subsequent resale by Plans of certifi-
cates 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 under-
writers, 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 acqui-
sition of the Senior Certificates by a Plan to be eligi-
ble 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 con-
sists 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 unamor-
tized 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 re-
tained 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 services under the Agreement and reim-
bursement of the Servicer reasonable expenses in
connection therewith; and
(6) the Plan investing in the Senior Certifi-
cates 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 subordi-
nated 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 fidu-
ciary of a Plan contemplating purchasing a Senior Certif-
icate 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 contem-
plating 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 Certifi-
cates.
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 hold-
ing 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 acquisi-
tion 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 con-
nection 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, invest-
ing 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 Prospec-
tus 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 speci-
fied 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 applicabili-
ty of the Exemption and other applicable issues and
whether the Senior Certificates are an appropriate in-
vestment 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 Ac-
counts. 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 liabili-
ty. Investors considering the purchase of Senior Certif-
icates issued by a Trust that maintains a Pre-Funding
Account should consult with their legal advisors concern-
ing 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 subordi-
nate 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 prohibit-
ed 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, pro-
vides an exemption for transactions in connection with
the servicing, management, and operation of a trust in
which an insurance company general account has an inter-
est 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 require-
ment 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 Certifi-
cates. Accordingly, an insurance company may acquire the
Subordinated Certificates on behalf of its general ac-
count if the conditions of PTE 95-60 are otherwise satis-
fied.
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 invest-
ment for the Plan under ERISA and the Code.
Each investor purchasing the Subordinated Certifi-
cates by or on behalf of a Plan will be deemed to have
represented that an exemption from the prohibited trans-
action rules applies such that the acquisition and subse-
quent 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 appli-
cation of one or more statutory or administrative exemp-
tions 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 Dis-
qualified 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 Regula-
tion, 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 fiducia-
ry standards of investment procedure and diversification
an investment in any Securities of a series is appropri-
ate for the Plan, taking into account the overall invest-
ment 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 under-
writing 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 pur-
chase, 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 Supple-
ment.
In each of the Underwriting Agreements with respect
to any given series of Securities, the several underwrit-
ers will agree, subject to the terms and conditions set
forth therein, to purchase all the Notes and Certifi-
cates, 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 con-
cessions 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 Sell-
ers.
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 . . . . . . . . . 11
Administration Agreement . . . . . . . . . . . . . . 60
Administrator . . . . . . . . . . . . . . . . . . . . 60
Advance . . . . . . . . . . . . . . . . . . . . . . 12,51
Advance Reserve Withdrawal . . . . . . . . . . . . 12,51
Applicable Trustee . . . . . . . . . . . . . . . . . 43
Balloon Receivables . . . . . . . . . . . . . . . . . 25
Bank . . . . . . . . . . . . . . . . . . . . . . . . . 5
Banks . . . . . . . . . . . . . . . . . . . . . . . . . 5
Base Rate . . . . . . . . . . . . . . . . . . . . . . 38
Basic Documents . . . . . . . . . . . . . . . . . . . 35
BHCA . . . . . . . . . . . . . . . . . . . . . . . . 29
Book-Entry Certificates . . . . . . . . . . . . . . . 42
Book-Entry Notes . . . . . . . . . . . . . . . . . . 42
Book-Entry Securities . . . . . . . . . . . . . . . . 42
Calculation Agent . . . . . . . . . . . . . . . . . . 38
Calculation Date . . . . . . . . . . . . . . 39, 40, 42
CD Rate . . . . . . . . . . . . . . . . . . . . . . . 38
CD Rate Determination Date . . . . . . . . . . . . . 38
CD Rate Security . . . . . . . . . . . . . . . . . . 38
CDs (Secondary Market) . . . . . . . . . . . . . . . 38
Cede . . . . . . . . . . . . . . . . . . . . . . . . . 9
Cedel . . . . . . . . . . . . . . . . . . . . . . . . 42
Cedel Participants . . . . . . . . . . . . . . . . . 43
Certificate Balance . . . . . . . . . . . . . . . . . . 8
Certificate Distribution Account . . . . . . . . . . 49
Certificate Owners . . . . . . . . . . . . . . . . . . 3
Certificate Pool Factor . . . . . . . . . . . . . . . 29
Certificate Rate . . . . . . . . . . . . . . . . . . . 8
Certificateholders . . . . . . . . . . . . . . . . . . 3
Certificates . . . . . . . . . . . . . . . . . . . . . 1
Certificates of Deposit . . . . . . . . . . . . . . . 39
Closing Date . . . . . . . . . . . . . . . . . . . . . 5
Code . . . . . . . . . . . . . . . . . . . . . . 14, 64
Collection Account . . . . . . . . . . . . . . . . . 49
Collection Period . . . . . . . . . . . . . . . . . . 50
Commercial Paper . . . . . . . . . . . . . . . . . . 39
Commercial Paper Rate . . . . . . . . . . . . . . . . 39
Commercial Paper Rate Determination Date . . . . . . 39
Commercial Paper Rate Security . . . . . . . . . . . 38
Commission . . . . . . . . . . . . . . . . . . . . . . 3
Composite Quotations . . . . . . . . . . . . . . . . 38
Contract Rate . . . . . . . . . . . . . . . . . . . . 48
Dealer Agreements . . . . . . . . . . . . . . . . . . 23
Dealers . . . . . . . . . . . . . . . . . . . . . . . . 6
Defaulted Receivable . . . . . . . . . . . . . . . . 51
Definitive Certificates . . . . . . . . . . . . . . . 45
Definitive Notes . . . . . . . . . . . . . . . . . . 45
Definitive Securities . . . . . . . . . . . . . . . . 45
Deposit Date . . . . . . . . . . . . . . . . . . . . 50
Depositaries . . . . . . . . . . . . . . . . . . . . 42
Depository . . . . . . . . . . . . . . . . . . . . . 31
Determination Date . . . . . . . . . . . . . . . . . 53
DFSG . . . . . . . . . . . . . . . . . . . . . . . . 24
Disqualified Persons . . . . . . . . . . . . . . . . 65
Distribution Date . . . . . . . . . . . . . . . . . . 37
DOL . . . . . . . . . . . . . . . . . . . . . . . . . 66
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . 3
DTC's Nominee . . . . . . . . . . . . . . . . . . . . . 9
Eligible Deposit Account . . . . . . . . . . . . . . 50
Eligible Institution . . . . . . . . . . . . . . . . 50
Equity Interest . . . . . . . . . . . . . . . . . . . 66
ERISA . . . . . . . . . . . . . . . . . . . . . . . . 14
Euroclear . . . . . . . . . . . . . . . . . . . . . . 44
Euroclear Operator . . . . . . . . . . . . . . . . . 44
Euroclear Participants . . . . . . . . . . . . . . . 44
Euroclear System . . . . . . . . . . . . . . . . . . 44
Events of Default . . . . . . . . . . . . . . . . . . 33
Events of Servicing Termination . . . . . . . . . . . 56
Exemption . . . . . . . . . . . . . . . . . . . . . . 66
Excluded Plan . . . . . . . . . . . . . . . . . . . . 68
FDIC . . . . . . . . . . . . . . . . . . . . . . . . 17
Federal Funds Rate . . . . . . . . . . . . . . . . . 40
Federal Funds Rate Determination Date . . . . . . . . 40
Federal Funds Rate Security . . . . . . . . . . . . . 38
Final Scheduled Maturity Date . . . . . . . . . . . . 12
Financed Vehicles . . . . . . . . . . . . . . . . . . . 5
FIRREA . . . . . . . . . . . . . . . . . . . . . . . 17
Fixed Rate Securities . . . . . . . . . . . . . . . . 37
Floating Rate Securities . . . . . . . . . . . . . . 37
FTC Rule . . . . . . . . . . . . . . . . . . . . . . 63
Funding Period . . . . . . . . . . . . . . . . . . . . 8
H.15(519) . . . . . . . . . . . . . . . . . . . . . . 38
Indenture . . . . . . . . . . . . . . . . . . . . . . . 7
Indenture Trustee . . . . . . . . . . . . . . . . . . . 1
Index Maturity . . . . . . . . . . . . . . . . . . . 38
Indirect Participants . . . . . . . . . . . . . . . . 42
Initial Cut-Off Date . . . . . . . . . . . . . . . . . 5
Initial Pool Balance . . . . . . . . . . . . . . . . 59
Initial Receivables . . . . . . . . . . . . . . . . . . 5
Insolvency Event . . . . . . . . . . . . . . . . . . 57
Interest Reset Date . . . . . . . . . . . . . . . . . 38
Interest Reset Period . . . . . . . . . . . . . . . . 38
Investment Earnings . . . . . . . . . . . . . . . . . 50
IRS . . . . . . . . . . . . . . . . . . . . . . . . . 64
Issuer . . . . . . . . . . . . . . . . . . . . . . . . 5
LIBO . . . . . . . . . . . . . . . . . . . . . . . . 40
LIBOR . . . . . . . . . . . . . . . . . . . . . . . . 40
LIBOR Determination Date . . . . . . . . . . . . . . 40
LIBOR Security . . . . . . . . . . . . . . . . . . . 38
London Banking Day . . . . . . . . . . . . . . . . . 40
Money Market Yield . . . . . . . . . . . . . . . . . 39
Motor Vehicle Loans . . . . . . . . . . . . . . . . . 24
NationsBank South . . . . . . . . . . . . . . . . . . . 5
NationsBank Texas . . . . . . . . . . . . . . . . . . . 5
NB-SPC . . . . . . . . . . . . . 6,11,18,20,29,30,58,59
Note Interest Rate . . . . . . . . . . . . . . . . . . 7
Note Payment Account . . . . . . . . . . . . . . . . 49
Note Pool Factor . . . . . . . . . . . . . . . . . . 29
Noteholders . . . . . . . . . . . . . . . . . . . . . . 3
Notes . . . . . . . . . . . . . . . . . . . . . . . . . 1
NSI . . . . . . . . . . . . . . . . . . . . . . . . . 16
Obligors . . . . . . . . . . . . . . . . . . . . . . 23
Participants . . . . . . . . . . . . . . . . . . . 31,42
Parties in Interest . . . . . . . . . . . . . . . . . 65
Permitted Investments . . . . . . . . . . . . . . . . 50
Plan . . . . . . . . . . . . . . . . . . . . . . . . 65
Plan Assets Regulation . . . . . . . . . . . . . . . 66
Plan Investor . . . . . . . . . . . . . . . . . . . . 69
Pool Balance . . . . . . . . . . . . . . . . . . . . 29
Pooling and Servicing Agreement . . . . . . . . . . . . 5
Prospectus Supplement . . . . . . . . . . . . . . . . . 1
Purchase Amount . . . . . . . . . . . . . . . . . . . 49
Rating Agencies . . . . . . . . . . . . . . . . . . . 35
Receivable File . . . . . . . . . . . . . . . . . . . 49
Receivables . . . . . . . . . . . . . . . . . . . . 1, 5
Receivables Pool . . . . . . . . . . . . . . . . . . 23
Registration Statement . . . . . . . . . . . . . . . . 3
Required Initial Yield Supplement Amount . . . . . . 11
Required Subsequent Yield Supplement Amount . . . . . 11
Required Rate . . . . . . . . . . . . . . . . . . . . 11
Required Yield Supplement Amount . . . . . . . . . . 11
Reserve Account . . . . . . . . . . . . . . . . . . . 54
Restricted Group . . . . . . . . . . . . . . . . . . 67
Reuters Screen LIBO Page . . . . . . . . . . . . . . 40
Rules . . . . . . . . . . . . . . . . . . . . . . . . 43
Sale and Servicing Agreement . . . . . . . . . . . . . 5
Securities . . . . . . . . . . . . . . . . . . . . . . 1
Securities Act . . . . . . . . . . . . . . . . . . . . 3
Securityholders . . . . . . . . . . . . . . . . . . . 10
Seller . . . . . . . . . . . . . . . . . . . . . . 1, 5
Sellers . . . . . . . . . . . . . . . . . . . . . . 1. 5
Senior Certificates . . . . . . . . . . . . . . . . . 66
Servicer . . . . . . . . . . . . . . . . . . . . . 1, 5
Servicer Fee . . . . . . . . . . . . . . . . . . . . 53
Servicing Fee . . . . . . . . . . . . . . . . . . . . 52
Servicing Fee Rate . . . . . . . . . . . . . . . . . 52
Simple Interest Receivables . . . . . . . . . . . . . 25
Special Tax Counsel . . . . . . . . . . . . . . . . . 65
Spread . . . . . . . . . . . . . . . . . . . . . . . 38
Spread Multiplier . . . . . . . . . . . . . . . . . . 38
Statistical Release H.15(519) . . . . . . . . . . . . 38
Strip Certificates . . . . . . . . . . . . . . . . . . 9
Strip Notes . . . . . . . . . . . . . . . . . . . . . . 7
Subordinated Certificates . . . . . . . . . . . . . . 68
Subsequent Receivables . . . . . . . . . . . . . . 1, 6
Subsequent Transfer Date . . . . . . . . . . . . . . 47
Supplemental Servicing Fee . . . . . . . . . . . . . 52
Terms and Conditions . . . . . . . . . . . . . . . . 44
Transfer and Servicing Agreements . . . . . . . . . . 47
Treasury bills . . . . . . . . . . . . . . . . . . . 41
Treasury Rate . . . . . . . . . . . . . . . . . . . . 41
Treasury Rate Determination Date . . . . . . . . . . 41
Treasury Rate Security . . . . . . . . . . . . . . . 38
Trust . . . . . . . . . . . . . . . . . . . . . . . 1, 5
Trust Accounts . . . . . . . . . . . . . . . . . . . 49
Trust Agreement . . . . . . . . . . . . . . . . . . . . 5
Trustee . . . . . . . . . . . . . . . . . . . . . . . . 1
UCC . . . . . . . . . . . . . . . . . . . . . . . 16, 61
Underwriting Agreements . . . . . . . . . . . . . . . 70
Yield Supplement Account . . . . . . . . . . . . 11, 54
Yield Supplement Agreement . . . . . . . . . . . . . 11
Yield Supplement Amount . . . . . . . . . . . . . 11, 55
Yield Supplement Initial Deposit . . . . . . . . . . 11
TABLE OF CONTENTS
Page
REPORTS TO SECURITYHOLDERS . . . . . . . . . . . . . 3
AVAILABLE INFORMATION . . . . . . . . . . . . . . . 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . 3
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . 5
RISK FACTORS . . . . . . . . . . . . . . . . . . . . 16
THE TRUSTS . . . . . . . . . . . . . . . . . . . . . 23
THE RECEIVABLES POOLS . . . . . . . . . . . . . . . . 24
MATURITY AND PREPAYMENT CONSIDERATIONS . . . . . . . 27
POOL FACTORS AND TRADING INFORMATION . . . . . . . . 29
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . 29
THE BANKS, NATIONSBANK CORPORATION AND [NB-SPC] . . . 29
THE SERVICER . . . . . . . . . . . . . . . . . . . . 30
DESCRIPTION OF THE NOTES . . . . . . . . . . . . . . 30
DESCRIPTION OF THE CERTIFICATES . . . . . . . . . . . 36
DESCRIPTION OF FIXED AND FLOATING RATE OPTIONS . . . 37
BOOK-ENTRY AND DEFINITIVE SECURITIES;
REPORTS TO SECURITYHOLDERS . . . . . . . . . . . . . 42
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS 47
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES . . . . . . 60
FEDERAL INCOME TAX CONSEQUENCES . . . . . . . . . . . 64
ERISA CONSIDERATIONS . . . . . . . . . . . . . . . . 65
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . 70
LEGAL OPINIONS . . . . . . . . . . . . . . . . . . . 71
[FLAG]
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
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
(continued on following page)
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 REP-
RESENT 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 INSURANCE CORPORATION, ANY GOVERN-
MENTAL 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 REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
PROCEEDS TO
PRICE TO UNDERWRITING THE SELLER
PUBLIC (1) DISCOUNT (1)(2)
Per [Class A-1] Note . % % %
[Per Class A-2 Note . . % % %]
[Per Class A-3 Note . . % % %]
[Per Certificate . . . % % %]
Total . . . . . . . . . $ $ $
(1) Plus accrued interest, if any, from , 199 .
(2) Before deducting expenses, estimated to be $ .
[This Prospectus Supplement and the related Prospectus may be
used by NationsBanc Capital Markets, Inc., an affiliate of the sellers
and the Servicer, in connection with offers and sales related to market-
making transactions in the Notes and the Certificates. NationsBanc
Capital markets, Inc. may act as principal or agent in such transactions.
Such sales will be made at prices related to prevailing markets prices at
the time of sale or otherwise. Certain information in this Prospectus
Supplement and the Prospectus will be updated from time to time as
described in "Incorporation of Certain Documents by Reference" in the
Prospectus.]
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 .
(continued from previous page)
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. (Certain capitalized terms used in this Prospectus
Supplement are defined elsewhere in this Prospectus Supplement on the
pages indicated in the "Index of Terms.")
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 "Description of Fixed
and Floating Rate Options 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 [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.
[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 "Book-Entry and Definitive Securities;
Reports to Securityholders 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
Servicer, on behalf of the Trust, will file with the Securities and
Exchange Commission (the "Commission") such periodic reports as are
required under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission
thereunder.
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 Midwest Regional Offices
of the Commission at the Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511, and at the Northeast
Regional Office of the Commission at 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. In
addition, the Commission maintains a public access site on the
Internet through the World Wide Web at which site reports, information
statements and other information, including all electronic filings,
regarding the Sellers and NationsBank Corporation, the parent
corporation of each of the Sellers, may be viewed. The Internet
address of such World Wide Web site is http://www.sec.gov. See
"Available Information" in the Prospectus. See "Available Information"
in the Prospectus.
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 supplemented from
time to time, the "Indenture"), between the
Issuer and the Indenture 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 "Book-Entry and
Definitive Securities; Reports to
Securityholders 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.
$_________ aggrgegate principal amount of
Certificates will initially be held by [NB-
SPC] amd are not offerred hereby..
The Certificates will be available for
purchase in book entry form only in minimum
denominations of $1,000 and integral
multiples thereof. The Certificateholders
will not be entitled to receive Definitive
Certificates except in the limited
circumstances described herein. See "Book-
Entry and Definitive Securities; Reports to
Securityholders 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 Reserve Account[, 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 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) the rights of
the Trust under the Sale and Servicing
Agreement; and (ix) any and all proceeds
of the foregoing.
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 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") 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 Receivable Pool may contain both Simple
Interest Receivables and Balloon
Receivables. See "The Receivables Pools,"
"Risk Factors General," " Subsequent
Receivables" and " Balloon Receivables;
Final Scheduled Payment Risk" in the
Prospectus.
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
[Distribution] [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 "Description 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.SIGNIFICANT
CHARACTERISTICS
OF CLASS _
NOTES . . . . . . [Interest will accrue on the Class _ Notes
from [the Closing Date] but no interest
will be payable on the Class _ Notes until
[[the ____ Distribution] [Payment] Date]]
[the [Distribution] [Payment] Date on or
after which the Class _ Notes have been
paid in full]. [The Class _ Notes [do not
bear interest] [bear interest at a nominal
rate] and principal thereon is due and
payable on [and after] [the [Distribution]
[Payment] Date following the [Distribution]
[Payment] Date on or after which the Class
_ Notes have been paid in full] [each
[Distribution] [Payment] Date to the extent
that principal available to be paid on the
Class _ Notes exceeds the amount necessary
to reduce the outstanding principal balance
of the Class _ Notes to the [planned
balance] for such [Distribution] [Payment]
Date. [No principal is payable with respect
to the Class _ Notes. The Class _ Notes
are entitled only to interest on the
[nominal] [notional] amount thereof, as
described above under "Principal."] As a
result the yield to maturity on the Class _
Notes will be particularly sensitive to the
rate and timing of repayment, repurchase
and defaults on the Receivables.] [See
"Risk Factors" and "The Receivables Pool --
Weighted Average Life of the Securities."]
F. 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].
[G. 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
denominator 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 THE
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 [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 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. 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 Distribution 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 [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 Certificates 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 Certificates 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 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 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 "Description 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 interest 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 [NB-SPC] 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 distribution 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][NB-SPC] (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 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 Specified Reserve Account Balance
is further subject to adjustment in certain
circumstances described herein.]
[YIELD SUPPLEMENT
ACCOUNT;
YIELD SUPPLEMENT
AGREEMENT If any Receivable has, as of the Cutoff Date, a
Contract Rate below 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 Sellers, the Servicer
and the Trust will enter into a yield supplement
agreement (the "Yield Supplement Agreement").
The Yield Supplement Agreement will, with
respect to each Receivable subject
thereto, provide for payment by the applicable
Seller, on the each Deposit Date, of an
amount calculated by the Servicer to be equal to
one-twelfth of the excess, if any, of (i)
interest on such Receivable's principal
balance as of the first day of the preceding
Collection Period at a rate equal to the
Required Rate over (ii) interest at the Contract
Rate on such Receivable's principal balance as of
the first day of the related Collection Period
(in the aggregate for all Receivables with respect
to any Deposit Date, the "Yield Supplement
Amount"). The 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 provide security for the payment by the
Sellers of the Yield Supplement Amount on any
Deposit Date. The Yield Supplement Account will
be created with a deposit
by [the Sellers][NB-SPC][a third party] in an
amount equal to the Required [Initial] Yield
Supplement Amount. [Pursuant to the Yield
Supplement Agreement, on each Subsequent Transfer
Date, [the Sellers][NB-SPC][a third party] will
deposit an amount 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
Receivable, assuming that payments on such
Receivables are made as scheduled and no
prepayments are made. 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 [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 excess 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. Cross-market transfers between persons
olding 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 "Book-Entry
and Definitive Securities; Reports to
Securityholders 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 "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 [one of the
[four] [the] highest investment rating
[category][categories] 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[S] 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 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 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, van 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. 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. Social factors influencing the level of retail motor
vehicle sales include an increasing awareness of environmental
consequences derived from regional and national dependence on
private motor vehicles for transportation and the local and
regional political commitment to develop and encourage reliance
on mass transit and alternative transportation projects, such as
light rail, high occupancy vehicle highways and, in certain
communities, an expanding network of bicycle lanes. 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 and the Trust, reference is
made to such reports and other information which are available as
described under "Available Information" in the Prospectus.]
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 [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 Indenture Trustee following an
Event of Default or following an Insolvency Event or a
dissolution with respect to [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 [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.
[THE YIELD ON THE CLASS _ NOTES WILL BE EXTREMELY SENSITIVE
TO THE RATE AND TIMING OF PAYMENTS (INCLUDING PREPAYMENTS) ON THE
RECEIVABLES. [AN INVESTOR PURCHASING A CLASS _ NOTE AT A
SIGNIFICANT PREMIUM COULD, UNDER CERTAIN PREPAYMENT SCENARIOS,
FAIL TO RECOUP ITS ORIGINAL INVESTMENT.] [THE YIELD TO MATURITY
ON THE CLASS _ NOTES WILL BE ADVERSELY AFFECTED BY A LOWER THAN
ANTICIPATED RATE OF PAYMENT ON THE RECEIVABLES.] [The
reinvestment risk to an investor in the Class _ Notes may be
exacerbated in the event of [an increase in the rate of payment
on the Receivables in a decreasing interest rate environment] [a
decrease in the rate of payment on the Receivables in an
increasing rate environment]. Any ratings assigned to the Class
_ Notes by a Rating Agency will reflect only such Rating Agency's
assessment of the likelihood that timely distributions will be
made with respect to the Class _ Notes in accordance with the
Sale and Servicing Agreement and the Indenture. Such rating will
not constitute an assessment of the likelihood that principal
prepayments on the Receivables will occur or of the degree to
which the rate of such prepayments might differ from that
originally anticipated. As a result, such rating will not
address the possibility that prepayment rates higher or lower
than anticipated by an investor may cause [such investor to
experience a lower than anticipated yield] [an investor
purchasing a Class _ Note at a significant premium might fail to
recoup its investment]. See "The Receivable Pool -- Sensitivity
of the Class _ Notes to Prepayments."]
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 [one of the [four]] [the] highest rating
[category][catagories], 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 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 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] AS OF DECEMBER 31,
1996 1995 1995 1994 1993
NUMBER NUMBER NUMBER NUMBER NUMBER
OF OF OF OF OF
LOANS LOANS LOANS LOANS LOANS
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 . . .
________________
(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)
[THREE] 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) . . . . . . .
__________
(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 [three] 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 ("ABS"),
represents an assumed rate of prepayment each month relative to
the original number of receivables in a pool of receivables. ABS
further assumes that all the receivables are the same size and
amortize at the same rate and that each receivable in each month
of its life will either be paid as scheduled or be prepaid in
full. For example, in a pool of receivables originally
containing 10,000 receivables, a 1% ABS rate means that 100
receivables prepay each month. ABS does not purport to be an
historical description of prepayment experience or a prediction
of the anticipated rate of prepayment of any pool of receivables,
including the Receivables.
As the rate of payment of principal of each class of Notes
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 ABS Percentages"
(the "ABS 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
ABS Table assumes that (i) the Receivables prepay in full at the
specified constant percentage of ABS monthly, with no defaults,
losses or repurchases, (ii) each scheduled monthly payment on the
Receivables is made on the last day of each month and each month
has 30 days, (iii) 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 ABS Table is based.] The pools have an assumed cut-off
date of , 199 . The ABS 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
ABS percentages. [State assumed characteristics with respect
to the hypothetical pools of Subsequent Receivables.]
The ABS 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 ABS Table. The assumptions used are hypothetical and have
been provided only to give a general sense of how the principal
cash flows might behave under varying prepayment scenarios. For
example, it is very unlikely that the Receivables will prepay at
a constant level of ABS until maturity or that all of the
Receivables will prepay at the same level of ABS. Moreover, the
diverse terms of Receivables within each of the hypothetical
pools could produce slower or faster principal distributions than
indicated in the ABS Table at the various constant percentages of
ABS specified, even if the original and remaining terms to
maturity of the Receivables are as assumed. Any difference
between such assumptions and the actual characteristics and
performance of the Receivables, or actual prepayment experience,
will affect the percentages of initial 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 ABS 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 ABS 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 ABS PERCENTAGES
Certificates
Distribution 0.5% 1.0% 1.5% 1.8%
Date
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 ABS 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.]
[SENSITIVITY OF THE CLASS _ NOTES TO PREPAYMENTS
[Describe method of calculating principal and interest
payable on the Class _ Notes, including setting forth notional
balance for each [Distribution] [Payment] Date, if applicable.
Set forth in tabular form relationship between yield to maturity
of the Class _ Notes and assumed prepayment speeds. State
assumptions, including as to purchase price of the Class _ Notes,
if applicable, used in calculating the data set forth in the
table.]
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 "Maturity and Prepayment Considerations" 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
"Description of Fixed and Floating Rate Options" 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 "Description of Fixed and Floating Rate
Options 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 "Description of Fixed
and Floating Rate Options 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
Agreements 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
"Description of Fixed and Floating Rate Options 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 available 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
Agreements 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 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 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.
STATEMENTS TO NOTEHOLDERS AND NOTE OWNERS
Unless and until Definitive Notes are issued, unaudited
monthly and annual reports concerning the Receivables and each
Trust, prepared by the Servicer and delivered by the Indenture
Trustee, on behalf of the Trust, will be sent to each Noteholder
pursuant to the Indenture. Such reports will not contain audited
financial statements with respect to the Trust. Note Owners may
obtain the monthly statements and annual tax statement and tax
information provided to the Noteholders and the Indenture Trustee
by the Servicer free of charge (except for copying and postage
costs) by request in writing to the Indenture Trustee at [
, Attention:
.] See "Book-Entry and Definitive Securities;
Reports to Securityholders Reports to Securityholders" in the
Prospectus for a description of such statements.
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,"
"Description of Fixed and Floating Rate Options," "Book-Entry and
Definitive Securities; Reports to Securityholders" 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 "Description of Fixed and Floating Rate Options 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 Distribution
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 [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 [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 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.]]
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.
STATEMENTS TO CERTIFICATEHOLDERS AND CERTIFICATE OWNERS
Unless and until Definitive Certificates are issued,
unaudited monthly and annual reports concerning the Receivables
and each Trust, prepared by the Servicer and delivered by the
Indenture Trustee, on behalf of the Trust, will be sent to each
Certifcateholder pursuant to the Trust Agreement. Such reports
will not contain audited financial statements with respect to the
Trust. Certificate Owners may obtain the monthly statements and
annual tax statement and tax information provided to the
Certificateholders by the Servicer free of charge (except for
copying and postage costs) by request in writing to the Indenture
Trustee at [ ,
Attention: .] See "Book-Entry
and Definitive Securities; Reports to Securityholders Reports to
Securityholders" in the Prospectus for a description of such
statements.
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 Transfer 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 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 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 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.]
DISTRIBUTIONS
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 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 Indenture Trustee) will deposit the Yield
Supplement 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 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], [(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 Receivables 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 Agreements 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
Collection 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 [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 Receivables 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][NB-SPC][a
third party] 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 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] [[NB-SPC]] [apply such excess as
Noteholders' Accelerated Principal]. Upon any distribution to
[the Sellers] [[NB-SPC]] of amounts from the Reserve Account,
neither the Noteholders nor the Certificateholders 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 Sellers] [[NB-SPC]].
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
If any Receivable has, as of the Cutoff Date, a Contract
Rate below the Required Rate, the Sellers, the Servicer and the
Indenture Trustee will, simultaneously with the sale and
assignment of the Receivables, enter into the Yield Supplement
Agreement. The Yield Supplement Agreement will, with respect to
each Receivable subject thereto, if any, provide for the payment
into the Collection Account by the applicable Seller on or prior
to each Deposit Date of an amount calculated by the Servicer
equal to one-twelfth of the excess, if any, of (i) interest on
such Receivable's principal balance as of the first day of the
preceding Collection Period at a rate equal to the Required Rate
over (ii) interest at the Contract Rate on such Receivable's
principal balance as of the first day of such Collection Period
(in the aggregate for all Receivables with respect to any Deposit
Date, the "Yield Supplement Amount").
Each Seller's obligations under the Yield Supplement
Agreement will be secured by funds, if any, deposited by [the
Sellers][NB-SPC][a third party] on the Closing Date in an
Eligible Deposit Account to be maintained by the Indenture
Trustee for the benefit of the holders of the Notes and the
Certificates (the "Yield Supplement Account"). The amount
required to be retained (to the extent of funds available
therefor) in the Yield Supplement Account on any Distribution
Date will be equal to the Specified Yield Supplement Balance.
Funds, if any, on deposit in the Yield Supplement Account
may be invested in Permitted Investments in the manner permitted
by the Sale and Servicing Agreement
Amounts on deposit in the Yield Supplement Account will be
released to [the Sellers] [[NB-SPC]] each Distribution Date to
the extent the amount on deposit in the Yield Supplement Account
exceeds the Required Yield Supplement Balance. The "Required
[Initial] Yield Supplement Balance," on any date of
determination, is the sum of all projected Yield Supplement
Amounts for all future Distribution Dates, assuming that future
scheduled payments on the [Initial] Receivables are made on their
scheduled due dates. No funds will be deposited in the Yield
Supplement Account, however, if the amount on deposit therein is
less than the Required [Initial] Yield Supplement Balance. [All
investment earnings attributable to the Yield Supplement Account
to be distributed on each Distribution Date to [the Sellers]
[[NB-SPC]]. Upon any release of amounts from the Yield
Supplement Account, the Securityholders will not have any rights
in, or claims to, such amounts. Any monies remaining on deposit
in the Yield Supplement Account upon the termination of the Trust
will be paid to [the Sellers] [NB-SPC]].
[Pursuant to the Yield Supplement Agreement, on each
Subsequent Transfer Date, [the Sellers][NB-SPC][a third party]
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 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 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 Agreement 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 agreement (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 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 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.]
FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of material anticipated
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 ("RIC's") 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.
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; TAX CHARACTERIZATION OF THE TRUST
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. Any
such opinion will be filed either as an exhibit to the
registration statement of which this Prospectus forms a part or
will be filed as an exhibit to a Form 8-K filed in connection
with the establishment of the related Trust and issuance of
Securities. This opinion 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. Further, with respect to the
Notes, Special Tax Counsel will opine 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 "Federal Income
Tax Consequences" herein and "Federal Income Tax Consequences" 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.
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
Certificates, 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 be deemed to have agreed 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.
Original Issue Discount. 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 ___% ABS. 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.
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, potentially, 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 [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.
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
[the Sellers] [[NB-SPC]], [[as "] [the] [general partner]["] 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. Further, losses and deductions will not be be
allocated to Certificateholders of a particular class of
Certificates except to the extent the Certificateholders of such
class of Certificates are expected to bear the economic burden of
such losses or deductions. Any such losses could be
characterized as capital losses deductible by the
Certificateholder only against capital gain income, while any
such deductions would be subject to the limitations set forth
below. Accordingly, a Certificateholder's taxable income from
the Trust could exceed the cash it is entitled to receive from
the Trust.
Although the allocation of gross income to
Certificateholders provided above as an alternative to the
characterization of the yield on the Certificates as guaranteed
payments 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
this alternative 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 purchasing 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
Certificateholder's 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 real estate investment trusts
("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] [were] 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 partnership.
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
capital 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 Code provides for administrative examination of a
partnership as if the partnership were a separate taxpayer.
Under these audit procedures, the tax treatment of items of Trust
income, gain, loss, deduction and credit would be determined at
the Trust level in a unified proceeding, rather than in separate
proceedings with each Certificateholder. Generally, the statute
of limitations for Trust items does not expire before three years
after the date on which the partnership information return is
filed. The General Partner will be designated the "tax matters
partner" for the Trust and, as such, is designated to receive
notice on behalf of, and to provide notice to those
Certificateholders not receiving notice from, the IRS, and to
represent the Certificateholders in any dispute with the IRS.
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
the Certificateholders may participate in any adjudicative
process that is undergone at the Trust level in arriving at such
a determination, such Certificateholders will be precluded from
separately litigating a proposed adjustment to the items of the
Trust. As the tax matters partner, the General Partner may enter
into a binding settlement on behalf of all Certificateholders
with a less than a 1 percent interest in the Partnership (except
for any group of such Certificateholders with an aggregate
interest of 5 percent or more in Trust profits that elects to
form a notice group or Certificateholders who otherwise notify
the IRS that the General Partner is not authorized to settle on
their behalf). In the absence of a proceeding at the Trust
level, a Certificateholder under certain circumstances may pursue
a claim for credit or refund on his own behalf by filing a
request for administrative adjustment of a Trust item. Each
Certificateholder is advised to consult its own tax advisor with
respect to the impact of these procedures on its particular case.
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 (excluding, 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:
PRINCIP [PRINCI [PRINCI
AL PAL PAL
AMOUNT AMOUNT AMOUNT
OF OF OF
[CLASS CLASS CLASS
A-1] A-2 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.
[This Prospectus Supplement and the related Prospectus may
be used by NCMI in connection with offers and sales related to
market-making transactions in the Notes and the Certificates.
NCMI may act as principal or agent in such transactions. Such
sales will be made at prices related to prevailing markets prices
at the time of sale or otherwise. NCMI does not have any
obligation to make a market in the Notes or the Certificates,
and it may discontinue any such market-making activities at any
time without notice, in its sole discretion. NCMI is among the
underwriters participating in the initial distribution of the
Notes and the Certificates.]
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.
ABS . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-30
ABS Table . . . . . . . . . . . . . . . . . . . . . . . . . S-30
Accrued Certificate Interest . . . . . . . . . . . . . . . S-46
Accrued Note Interest . . . . . . . . . . . . . . . . . . . S-45
Additional Yield Supplement Amount . . . . . . . . . . . . S-16
Additional Reserve Account Deposit . . . . . . . . . S-14, S-48
Available Funds . . . . . . . . . . . . . . . . . . . . . . S-43
Available Interest . . . . . . . . . . . . . . . . . . . . S-43
Available Principal . . . . . . . . . . . . . . . . . . . . S-43
Available Reserve Amount . . . . . . . . . . . . . . . . . S-49
Bank, Banks . . . . . . . . . . . . . . . . . . . . . . S-1, S-4
Business Day . . . . . . . . . . . . . . . . . . . . . . . . S-7
Cap Notional Amount . . . . . . . . . . . . . . . . . . . . S-51
Cap Rate . . . . . . . . . . . . . . . . . . . . . . . . . S-51
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
CEDEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Certificate Balance . . . . . . . . . . . . . . . . . . . . S-46
Certificate Interest Reserve Amount . . . . . . . . . . . . S-49
Certificate Pool Factor . . . . . . . . . . . . . . . . . . S-35
Certificate Prepayment Amount . . . . . . . . . . . . S-12, S-40
Certificate Prepayment Premium . . . . . . . . . . . . . . S-12
Certificate Rate . . . . . . . . . . . . . . . . . . . . . S-11
Certificate Underwriters . . . . . . . . . . . . . . . . . S-63
Certificate Underwriting Agreement . . . . . . . . . . . . S-63
Certificateholders . . . . . . . . . . . . . . . . . . . . S-11
Certificateholders' Distribution Amount . . . . . . . . . . S-47
Certificateholders' Interest Carryover Shortfall . . . . . S-47
Certificateholders' Monthly Accrued Interest . . . . . . . S-47
Certificateholders' Monthly Principal . . . . . . . . . . . S-47
Certificateholders' Percentage . . . . . . . . . . . . . . S-47
Certificateholders' Principal Carryover Shortfall . . . . . S-47
Certificateholders' Principal Distribution Amount . . . . . S-47
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-9
Class A-3 Notes . . . . . . . . . . . . . . . . . . . . S-1, S-4
Class A-3 Rate . . . . . . . . . . . . . . . . . . . . . . . S-7
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . S-5
Code . . . . . . . . . . . . . . . . . . . . . . . . S-18, S-53
Collection Account . . . . . . . . . . . . . . . . . . . . S-16
Collection Period . . . . . . . . . . . . . . . . . . . . . . S-8
Collections . . . . . . . . . . . . . . . . . . . . . . . . S-44
Commission . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Contract Rate . . . . . . . . . . . . . . . . . . . . . . . S-25
Cut-Off Date . . . . . . . . . . . . . . . . . . . . . . . S-25
Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Dealer Agreements . . . . . . . . . . . . . . . . . . . . . . S-5
Dealers . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Defaulted Receivable . . . . . . . . . . . . . . . . . . . S-44
Determination Date . . . . . . . . . . . . . . . . . . S-8, S-37
Disposition of Certificates . . . . . . . . . . . . . . . . S-58
Distribution Date . . . . . . . . . . . . . . . . . . . S-2, S-10
[Distribution] [Payment] Date . . . . . . . . . . . . . S-2, S-7
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . S-2, I-1
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . S-18
Euroclear . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . S-3
Final Scheduled Distribution Date . . . . . . . . . . . S-2, 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-52
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . S-4
Index Maturity . . . . . . . . . . . . . . . . . . . . S-2, S-37
[Initial] Cut-Off Date . . . . . . . . . . . . . . . . . . . S-5
Initial Pool Balance . . . . . . . . . . . . . . . . . . . . S-9
[Initial] Pool Balance . . . . . . . . . . . . . . . . . . . S-5
[Initial] Receivables . . . . . . . . . . . . . . . . . . . . S-5
Interest Collections . . . . . . . . . . . . . . . . . . . S-44
Interest Period . . . . . . . . . . . . . . . . . S-2, S-7, S-36
Interest Rate Cap . . . . . . . . . . . . . . . . . . . . . S-51
Interest Rate Cap Provider . . . . . . . . . . . . . S-12, S-51
Interest Rate Swap . . . . . . . . . . . . . . . . . S-13, S-51
Interest Reset Period . . . . . . . . . . . . . . . . . S-2, S-37
Investment Provider . . . . . . . . . . . . . . . . . S-17, S-53
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-53
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . S-44
Mandatory Redemption . . . . . . . . . . . . . . . . . S-9, S-38
Mandatory Repurchase . . . . . . . . . . . . . . . . S-12, S-40
NationsBank South . . . . . . . . . . . . . . . . . . . . . . S-4
NationsBank Texas . . . . . . . . . . . . . . . . . . . . . . S-4
Net Trust Swap Payment . . . . . . . . . . . . . . . S-13, S-52
Net Trust Swap Receipt . . . . . . . . . . . . . . . S-13, S-52
Note Interest Rate[s] . . . . . . . . . . . . . . . . . . . . S-7
Note Pool Factor . . . . . . . . . . . . . . . . . . . . . S-35
Note Prepayment Amount . . . . . . . . . . . . . . . S-10, S-38
Note Prepayment Premium . . . . . . . . . . . . . . . . . . S-10
Note Underwriters . . . . . . . . . . . . . . . . . . . . . S-63
Note Underwriting Agreement . . . . . . . . . . . . . . . . S-62
Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Noteholders' Accelerated Principal . . . . . . . . . . S-8, S-37
Noteholders' Interest Carryover Shortfall . . . . . . . . . S-45
Noteholders' Monthly Accrued Interest . . . . . . . . . . . S-45
Noteholders' Monthly Principal . . . . . . . . . . . . . . S-46
Noteholders' Payment Amount . . . . . . . . . . . . . . . . S-46
Noteholders' Percentage . . . . . . . . . . . . . . . . . . S-46
Noteholders' Principal Carryover Shortfall . . . . . . . . S-46
Noteholders' Principal Payment Amount . . . . . . . . . S-8, S-46
Notes . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-4
Obligor . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
OID . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-54
OID Regulations . . . . . . . . . . . . . . . . . . . . . . S-54
Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . S-4
Payment Date . . . . . . . . . . . . . . . . . . . . S-35, S-50
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . S-62
Plan Investor . . . . . . . . . . . . . . . . . . . . . . . S-62
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . S-7
Pool [/Prefunding] Balance . . . . . . . . . . . . . . . . . S-7
Pre-Funded Amount . . . . . . . . . . . . . . . . . . . . . . S-6
Pre-Funded Percentage . . . . . . . . . . . . . . . . . . . S-10
Pre-Funding Account . . . . . . . . . . . . . . . . . . S-2, S-13
Prepayable Obligation . . . . . . . . . . . . . . . . . . . S-54
Prepayment Assumption . . . . . . . . . . . . . . . . . . . S-54
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Purchase Receivable . . . . . . . . . . . . . . . . . . . . S-44
Rating Agencies . . . . . . . . . . . . . . . . . . . . . . S-24
Receivables . . . . . . . . . . . . . . . . . . . . . . S-1, S-5
Receivables Pool . . . . . . . . . . . . . . . . . . . . . S-25
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . S-44
Redemption Price . . . . . . . . . . . . . . . . . . . . . S-39
Regular Principal . . . . . . . . . . . . . . . . . . . S-8, S-37
Replacement Guaranteed Rate Agreement . . . . . . . . . . . S-52
Required Rate . . . . . . . . . . . . . . . . . . . . . . . S-15
Required Subsequent Yield Supplement Amount . . . . . . . . S-51
Required Yield Supplement Amount . . . . . . . . . . . . . S-49
Required [Initial] Yield Supplement Amount . . . . . . . . S-50
Reserve Account . . . . . . . . . . . . . . . . . . . . . . S-14
Reserve Account Initial Deposit . . . . . . . . . . . S-14, S-48
Sale and Servicing Agreement . . . . . . . . . . . . . . . . S-5
Securities . . . . . . . . . . . . . . . . . . . . . . S-1, S-4
Securities Act . . . . . . . . . . . . . . . . . . . . . . . S-3
Securityholders . . . . . . . . . . . . . . . . . . . . . . S-11
Seller, Sellers . . . . . . . . . . . . . . . . . . . . S-1, S-4
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Servicer's Certificate . . . . . . . . . . . . . . . . . . S-43
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . S-17
Short-Term Notes . . . . . . . . . . . . . . . . . . . . . S-56
Simple Interest Receivable . . . . . . . . . . . . . . . . S-29
Special Tax Counsel . . . . . . . . . . . . . . . . . . . . S-18
Specified Reserve Account Balance . . . . . . . . . . S-15, S-47
Subsequent Cut-Off Date . . . . . . . . . . . . . . . . . . . S-6
Subsequent Receivables . . . . . . . . . . . . . . . . S-2, S-6
Subsequent Transfer Date . . . . . . . . . . . . . . . . . . S-6
Supplemental Servicing Fee . . . . . . . . . . . . . . . . S-42
Swap Counterparty . . . . . . . . . . . . . . . . . . S-13, S-52
Swap Notional Amount . . . . . . . . . . . . . . . . . . . S-51
Transfer and Servicing Agreements . . . . . . . . . . . . . S-41
Trust . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-4
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . S-4
Trust Property . . . . . . . . . . . . . . . . . . . . . . . S-5
U.S. Person . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Underwriters . . . . . . . . . . . . . . . . . . . . . . . S-63
Yield Supplement Account . . . . . . . . . . . . . . S-16, S-50
Yield Supplement Agreement . . . . . . . . . . . . . . . . S-15
Yield Supplement Amount . . . . . . . . . . . . . . . S-16, S-50
Yield Supplement Initial Deposit . . . . . . . . . . . . . S-15
NO DEALER, SALESMAN OR OTHER $
PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE NationsBank
ANY REPRESENTATIONS OTHER THAN Auto Owner Trust 199 -
THOSE CONTAINED OR INCORPORATED $
BY REFERENCE IN THIS PROSPECTUS % Asset Backed
SUPPLEMENT OR THE PROSPECTUS Notes[, Class A-1]
AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS [$
MUST NOT BE RELIED UPON. THIS Floating Rate Asset
PROSPECTUS SUPPLEMENT AND THE Backed
PROSPECTUS DO NOT CONSTITUTE AN Notes, Class A-2]
OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY [$
SECURITIES OTHER THAN THE % Asset Backed
SECURITIES OFFERED HEREBY, NOR Notes, Class A-3]
AN OFFER OF THE SECURITIES IN
ANY STATE OR JURISDICTION IN $
WHICH, OR TO ANY PERSON TO % Asset Backed
WHOM, SUCH OFFER WOULD BE Certificates
UNLAWFUL. THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AT ANY TIME DOES NOT NATIONSBANK, N.A.
IMPLY THAT INFORMATION HEREIN NATIONSBANK, N.A. (SOUTH)
OR THEREIN IS CORRECT AS OF ANY NATIONSBANK OF TEXAS,
TIME SUBSEQUENT TO ITS DATE. N.A.
____________________ SELLERS
NATIONSBANK, N.A.
TABLE OF CONTENTS
SERVICER
PAGE
PROSPECTUS SUPPLEMENTReports to
Securityholders . . . . . . S-2
Summary . . . . . . . . . . S-4
PROSPECTUS
Risk Factors . . . . . . S-20
SUPPLEMENT
The Trust . . . . . . . . S-24
The Receivables Pool . . S-25
Pool Factors . . . . . . S-35
Maturity and Prepayment
Considerations . . . . . S-35
Description of the Notes S-36
Description of the Certificates
S-39
Description of the Transfer and
Servicing Agreements . . S-41
Federal Income Tax Consequences
S-53
ERISA Considerations . . S-62
Underwriting . . . . . . S-62
Legal Opinions . . . . . S-64
Annex I Global Clearance,
Settlement and Tax
Documentation Procedures I-1
Index of Terms . . . . . . . i
PROSPECTUS
Reports to Securityholders. . 3
Available Information . . . . 3
Incorporation of Certain
Documents by Reference . . . 3
Summary . . . . . . . . . . . 5
Risk Factors . . . . . . . 16
The Trusts . . . . . . . . 23
The Receivables Pools . . . 24
Maturity and Prepayment
Considerations . . . . . . 27
Pool Factors and Trading
Information . . . . . . . 29
Use of Proceeds . . . . . . 29
The Banks, NationsBank
Corporation and [NB-SPC]. . 29
The Servicer . . . . . . . 30
Description of the Notes. . 30
Description of the
Certificates . . . . . . . 36
Description of Fixed and
Floating Rate Options . . . 37
Book-Entry and Definitive
Securities; Reports to
Securityholders . . . . . . 42
Description of the Transfer
and Servicing Agreements. . 47
Certain Legal Aspects of the
Receivables . . . . . . . . 60
Federal Income Tax
Consequences . . . . . . . . 64
ERISA Considerations .. . . 65
Plan of Distribution .. . . 70
Legal Opinions . . . .. . . 71
Index of Terms . . . .. . . 72
UNTIL , 199 (90 DAYS AFTER THE DATE OF THIS
PROSPECTUS SUPPLEMENT), ALL DEALERS EFFECTING TRANSAC-
TIONS 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 PROSPECTUS
SUPPLEMENT AND A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
[FLAG]
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, "Sell-
er" 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 Certifi-
cateholders to the extent described herein. The Trust property will
include a pool of fixed rate simple interest retail motor vehicle
installment sales contracts originated by Dealers and purchased 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.] (Certain capitalized terms
used in this Prospectus Supplement are defined elsewhere in this
Prospectus Supplement on the pages indicated in the "Index of Terms.")
Principal and interest to the extent of the [applicable] Certifi-
cate 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 REPRE
SENTATION 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 Supple-
ment is , 199 .
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFOR-
MATION ABOUT THE OFFERING OF THE [CLASS A] CERTIFICATES. ADDI-
TIONAL 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 STABILIZ-
ING, 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 "Book-Entry and Definitive Securi-
ties 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.
<R/>
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 Certifi-
cates offered pursuant to this Prospectus. For further informa-
tion, 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
Midwest Regional Offices of the Commission at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511, and at the
Northeast Regional Office of the Commission at 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. In addition, the Commission maintains a
public access site on the Internet through a World Wide Web at
which reports, information statements and other information,
including all electronic filings, regarding the Sellers and
NationsBank Corporation, the parent corporation of each of the
Sellers, may be viewed. The Internet address of such World Wide
Web site is http://www.sec.gov. See "Available Information" in
the Prospectus. 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.
<R/>
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 pur-
suant 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 Prop-
erty") 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 "Re-
ceivables"), 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 main-
tained pursuant to the Pooling and Ser-
vicing 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 (col-
lectively, the "Financed Vehicles") and
any accessions thereto; (iii) the
Sellers' rights (if any) to receive
proceeds from claims under certain in-
surance policies covering the Financed
Vehicles or the obligors under the Re-
ceivables (each, an "Obligor"), as the
case may be; (iv) certain rights of the
Trust to receive payments from the Re-
serve Account [and pursuant to the Yield
Supplement Agreement] as described be-
low; (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 repur-
chase 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 Re-
ceivables; (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 Sup-
plement Account,] and any amounts there-
in, 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 bene-
fit of the Certificateholders (the "Col-
lateral Agent").
THE CERTIFICATES The Trust will issue Asset Backed Certifi-
cates (the "Certificates") in an aggregate
initial balance of $ . The Cer-
tificates 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 inte-
gral multiples thereof. The [Class A] Cer-
tificateholders will not be entitled to
receive Definitive Certificates except in
the limited circumstances described herein.
See "Book-Entry and Definitive Securities;
Reports to Securityholders Definitive Secu-
rities" in the Prospectus.
<R/>
[The Class A Certificates will evidence in
the aggregate an undivided ownership inter-
est (the "Class A Percentage") of approxi-
mately % in the Trust (initially rep-
resenting $ ) 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 subor-
dinated 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 represent-
ed initially by global certificates regis-
tered 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 Eu-
rope). No person acquiring a beneficial
ownership interest in the Certificates (a
"Certificate Owner") will be entitled to
receive a Definitive Certificate represent-
ing such person's interest in the Trust
except under certain limited circumstances.
Under the terms of the Agreement, Certifi-
cate Owners will not be recognized as Cer-
tificateholders and will be permitted to
exercise the rights of the Certificatehold-
ers only indirectly through DTC. See "Risk
Factors Form of Certificates; Certificate
Owners Not Recognized as Certificatehold-
ers" and "Description of the Certificates
Book-Entry Registration," " Definitive
Certificates" and Annex I to this Prospec-
tus Supplement, "Global Clearance, Settle-
ment and Tax Documentation Procedures."
THE RECEIVABLES . On , 199 (the "Closing Date"), the
Trust will purchase Receivables (the "[Ini-
tial] 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 per-
centage rate of the [Initial] Receivables
was approximately %, the weighted av-
erage 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 obli-
gated, subject only to the availability
thereof, to sell, and the Trust will be
obligated to purchase, subject to the sat-
isfaction of certain conditions set forth
therein, additional Receivables (the "Sub-
sequent Receivables") from time to time
during the Funding Period having an aggre-
gate principal balance equal to approxi-
mately $ (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 be-
tween the Initial Cut-Off Date and the
Closing Date will be conveyed to the Trust
on the Closing Date and that other Subse-
quent 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 con-
veyed to the Trust being referred to as a
"Subsequent Transfer Date") occurring dur-
ing the Funding Period. See "Description
of the Certificates Sale and Assignment of
Receivables; Subsequent Receivables" here-
in.]
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 se-
lected,] from the contracts owned by Sell-
ers 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 differ-
ent from those which were applied to the
Initial Receivables and may be of a differ-
ent credit quality and seasoning. In addi-
tion, following the transfer of Subsequent
Receivables to the Trust, the characteris-
tics of the entire pool of Receivables in-
cluded 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 Re-
ceivables Pool" herein.]
The "Pool[/Pre-Funding] Balance" at any time
[will represent] [is the sum of (i)] the
aggregate principal balance of the Receiv-
ables at the end of the preceding Collec-
tion Period, after giving effect to all
payments received from Obligors, Liquida-
tion 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 In-
vestment Earnings)].
DISTRIBUTION DATES Distributions with respect to the Certifi-
cates 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 Dis-
tribution Date or, if Definitive Certif-
icates 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 Trust-
ee 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 Certifi-
cate Rate and the Class B Certificate Rate
are both sometimes referred to as the appli-
cable "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 prin-
cipal made on such preceding Distribution
Date) or, in the case of the first Distribu-
tion Date, as of the Closing Date, will be
distributed to the registered holders of the
Class A Certificates (the "Class A Certifi-
cateholders") [and the registered holders of
the Class B Certificates (the "Class B Cer-
tificateholders" and, together with the Class
A Certificateholders,] the "Certificatehold-
ers") 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 Ac-
count or available in the Reserve Account to
make such distribution. A "Collection Period"
means the calendar month preceding each Dis-
tribution Date. See "Description of the Cer-
tificates Distributions on Certificates"
and " Reserve Account." [The rights of the
Class B Certificateholders to receive distri-
butions 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 Re-
ceivables 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 avail-
able in the Reserve Account to make such
distribution. See "The Certificates Distri-
butions on Certificates" and " Reserve Ac-
count." [The rights of the Class B Certifi-
cateholders to receive distributions of prin-
cipal 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 prior-
ity of payment to distributions of interest
(but not principal) due on the Class A Cer-
tificates, and distributions of principal
on the Class B Certificates will be subor-
dinated in priority of payment to distribu-
tions of interest and principal due on the
Class A Certificates, in the event of de-
faults on the Receivables to the extent
described herein. The Class B Certificate-
holders 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 Certifi-
cateholders will not receive any distribu-
tions of principal with respect to a Col-
lection 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 Distribu-
tion Account. See "Risk Factors Limited
Assets" and " Subordination of the Class B
Certificates" herein.]
OPTIONAL PURCHASE If the Servicer exercises its option to pur-
chase the Receivables, which can occur af-
ter 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] Cer-
tificates 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 add-
ed to the Trust as of their respective Sub-
sequent Cut-Off Dates]. See "Description
of the Certificates Optional Purchase"
herein.
[MANDATORY REPURCHASE 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 Re-
ceivables, 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 Ac-
count.
A limited recourse mandatory prepayment pre-
mium (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 Re-
purchase exceeds $ . The Certifi-
cate Prepayment Premium will equal the ex-
cess, if any, discounted as described be-
low, 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 includ-
ing 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 in-
terest equal to the bond equivalent yield
to maturity on the Determination Date pre-
ceding 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 dis-
counted to present value to such Distribu-
tion 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 ob-
ligation 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 Certifi-
cate Prepayment Premium in full, [Class A]
Certificateholders [of each class of Cer-
tificates] will receive their ratable share
[(based upon the Certificate Prepayment
Premium for each class of Certificates)] of
the aggregate amount available to be dis-
tributed in respect of the Certificate Pre-
payment 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 Distri-
bution Date. Any Pre-Funded Amount
remaining at the end of the Funding
Period will be payable to the Cer-
tificateholders pro rata in propor-
tion to their initial principal
balances.]
[YIELD SUPPLEMENT ACCOUNT;
YIELD SUPPLEMENT
AGREEMENT . . . . If any Receivable has, as of the Cutoff Date,
a Contract Rate below the sum of (i) the
weighted average of the Certificate Rates
and (ii) the Servicing Fee Rate (the "Re-
quired Rate"), the Sellers, the Servicer
and the Trustee will enter into a yield
supplement agreement (the "Yield Supplement
Agreement"). The Yield Supplement Agree-
ment will, with respect to each Receivable
subject thereto, provide for payment by the
applicable Seller, on the each Deposit
Date, of an amount calculated by the
Servicer to be equal to one-twelfth of the
excess, if any, of (i) interest on such
Receivable's principal balance as of the
first day of the preceding Collection Peri-
od at a rate equal to the Required Rate
over (ii) interest at the Contract Rate on
such Receivable's principal balance as of
the first day of the related Collection
Period (in the aggregate for all Receiv-
ables with respect to any Deposit Date, the
"Yield Supplement Amount"). The Sellers
will establish a yield supplement account
with ____________ (the "Collateral Agent")
for the benefit of the Certificateholders
(the "Yield Supplement Account"). The
Yield Supplement Account is designed solely
to hold funds to provide security for the
payment by the Sellers of the Yield Supple-
ment Amount on any Deposit Date. The Yield
Supplement Account will be created with a
deposit by the Sellers in an amount equal
to the Required [Initial] Yield Supplement
Amount.
[Pursuant to the Yield Supplement Agreement,
on each Subsequent Transfer Date, the Sell-
ers will deposit an amount 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 ma-
turity of each such Subsequent Receivable,
assuming that payments on such Receivables
are made as scheduled and no prepayments
are made. See "Description of the Certifi-
cates Yield Supplement Account; Yield Sup-
plement 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 Ini-
tial Deposit") of cash of at least $
[plus an amount attributable to the differ-
ence 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 Subse-
quent Transfer Date, cash or Permitted In-
vestments having a value approximately
equal to % of the aggregate principal
balance of the Subsequent Receivables con-
veyed 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 re-
ferred to as the "Additional Reserve Ac-
count Deposit."] On each Distribution Date,
any amounts on deposit in the Certificate
Account with respect to the related Collec-
tion Period after all payments to the Cer-
tificateholders 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 Ad-
vances") 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 own-
ership of the Receivables, including the
risk that the Trust may not have a perfect-
ed security interest in the Financed Vehi-
cles. 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 Certifi-
cates (the "Rating Agency Condition").
Amounts in the Reserve Account on any Dis-
tribution 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 previ-
ous month, plus (b) any late, prepayment,
and other administrative fees and expenses
collected during such month [plus reinvest-
ment 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 prepay-
ments on the Receivables. The Receivables
are prepayable at any time. Prepayments may
also result from liquidations due to de-
fault, 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 un-
cured 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 pre-
payments on the Receivables may be influ-
enced by a variety of economic, social and
other factors, including Obligor
refinancings resulting from decreases in
interest rates and the fact that the Obli-
gor is generally not permitted to sell or
transfer the Financed Vehicle securing a
Receivable without the consent of the rele-
vant Seller. No prediction can be made as
to the actual prepayment rates which will
be experienced on the Receivables. If pre-
payments were to occur after a decline in
interest rates, investors seeking to rein-
vest their distributed funds might be re-
quired to invest at a rate of return lower
than the applicable Pass-Through Rate. Cer-
tificate Owners will bear all reinvestment
risk resulting from prepayment of the Re-
ceivables. See "Risk Factors Effects of
Prepayments of Receivables" herein and "Ma-
turity and Prepayment Considerations" here-
in.
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 Eu-
rope). Transfers within DTC,
Cedel or Euroclear, as the
case may be, will be in accor-
dance 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 Deposi-
taries of Cedel or Euroclear.
See "Book-Entry and Definitive
Securities; Reports to
Securityholders Book-Entry
Registration" in the Prospec-
tus and Annex I to this Pro-
spectus 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 fed-
eral 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 limita-
tions 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 "Federal Income Tax Con-
sequences" herein and in the Prospectus for
additional information concerning the ap-
plication of federal income tax laws, re-
spectively, to the Trust and the Certifi-
cates.
ERISA CONSIDERATIONS The Class A Certificates may, in gener-
al, be purchased by employee bene-
fit plans that are subject to the
Employee Retirement Income Security
Act of 1974, as amended ("ERISA"),
upon satisfaction of certain condi-
tions described under "ERISA Con-
siderations" herein and in the
Prospectus with respect to the
Exemption. [However, as set forth
in "ERISA Considerations" in the
Prospectus, certain special consid-
erations 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 administra-
tive exemption from the prohibited transac-
tion rules of ERISA and the Internal Reve-
nue Code of 1986, as amended (the "Code")
applies to such purchases. These exemp-
tions may apply with respect to, inter
alia, purchases by certain insurance compa-
ny general accounts, insurance company
pooled separate accounts, and bank collec-
tive 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 ex-
emptions have been satisfied. See "ERISA
Considerations" herein and in the Prospec-
tus.
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 catego-
ry by at least two nationally recognized rat-
ing agencies[, and it is a condition to the issu-
ance 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 approxi-
mately $ 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 Receiv-
ables to sell to the Trust on the Subsequent Transfer Dates,
thereby resulting in a prepayment of principal to the Certifi-
cateholders 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 satisfac-
tion, 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 appli-
cable 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 execut-
ed 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, repos-
session and net loss experience on the automobile, van 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 Subse-
quent 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 pur-
chase 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 signifi-
cantly from those of the Initial Receivables. See "The Receiv-
ables 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 automo-
biles, 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 obliga-
tions of the Trust relating to a portion of its funds not invest-
ed 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 Certifi-
cateholders 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 Receiv-
ables to make distributions on the Certificates, and Certificate-
holders will bear directly, without any additional credit en-
hancement (except to the extent that the Reserve Account is
replenished from Collections on Receivables), the risk of delin-
quencies, loan losses and repossessions with respect to the
Receivables. There can be no assurance that the future delinquen-
cy, 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 Certificate-
holders will be sufficient. See "The Receivables Pool Delin-
quency 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 Certifi-
cates, 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 subordi-
nated to the distribution of principal of the Class A Certifi-
cates. 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 reduc-
tion 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, repurchas-
es 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 distribut-
ed 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 dispro-
portionate 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 CERTIFI-
CATEHOLDERS
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
"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 collec-
tions 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 Certifi-
cate 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 un-
clear.]
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 calculat-
ing income attributable to the Yield Supplement Agreement.]
Furthermore, for administrative convenience the Servicer has
adopted certain conventions for calculating income on the Receiv-
ables, which include estimation of accrued amounts and aggrega-
tion of all of the Receivables and the Yield Supplement Agree-
ment, 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 Certifi-
cate 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 "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 Certifi-
cateholders, 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] Certifi-
cates 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 Certifi-
cates do not address, the likelihood that the Certificate Prepay-
ment 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 assign-
ing the Trust property, as described below, to the Trustee in
exchange for the Certificates. Prior to such sale and assign-
ment, the Trust will have no assets or obligations or any operat-
ing 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 indi-
cate 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] Certificatehold-
ers by the [Yield Supplement Account and the] Reserve Account
and[, in the case of the Class A Certificateholders,] the subor-
dination 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] Receiv-
ables 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 insur-
ance 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 pur-
chased 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 automo-
bile, van or light-duty truck; (ii) each Receivable has a con-
tractual 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 agree-
ment. See " Certain Characteristics of the [Initial] Receiv-
ables" 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 Receiv-
ables 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) approx-
imately [ ]% 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, Distri-
bution of the [Initial] Receivables by Contract Rate, Distribu-
tion 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
% OF
AGGREGATE AGGREGATE
NUMBER % OF TO- PRINCIPAL PRINCIPAL
OF TAL
RE- RECEIV- BALANCE BALANCE
CEIV- ABLES
ABLES
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 PRINCIPAL PRINCIPAL
OF
RE- RECEIV- BALANCE BALANCE
CEIV- ABLES
ABLES
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 PRINCIPAL PRINCIPAL
OF
RECEIV- RECEIV- BALANCE BALANCE
ABLES ABLES
$ 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 AGGRE-
GATE
NUMBER % OF PRINCIPAL PRINCI-
OF PAL
STATE(1) RE- RECEIV- BALANCE BALANCE
CEIV- ABLES
ABLES
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 ex-
cludes 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)
THREE MONTHS YEAR
ENDED ENDED
[MARCH 31], DECEMBER 31,
1996 1995 1995 1994 1993
Period End
Outstandings(1) . . .
Average Amount Out-
standing During
the Period(2) . . . .
Average Number of
Loans Outstanding
During the Period(3) .
Gross Charge-offs(4)
Recoveries on Loss-
es(5) . . . . . . . .
Net Charge-offs . . .
Net Charge-offs as a
Percentage of the
Period End Out-
standing(6) . . . . .
Net Charge-offs as a
Percentage of the
Average Amount Out-
standing(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 [three] months ended [March 31], 1996 and
[March 31], 1995 are annualized.
PAYMENTS ON THE RECEIVABLES
[The entire Initial Pool Balance is attributable to Receiv-
ables that provide for the allocation of payments according to
the "Simple Interest" method (each a "Simple Interest Receiv-
able"). 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, repurchas-
es 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 Prepay-
ment 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] Certif-
icate 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 origi-
nal 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 avail-
able 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 Receiv-
ables, 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 Receiv-
able.
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 relat-
ing 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 princi-
pal 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, respec-
tively, 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 Receiv-
able 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 distrib-
uted to the Class B Certificateholders and, in certain circum-
stances, the Class A Certificateholders, may be less than that
described above. See "Description of the Certificates Distribu-
tions 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 aggre-
gate an undivided fractional ownership interest (the "Class B
Percentage") of approximately % in the Trust.]
The Certificates will be offered for purchase in denomina-
tions 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 Certificate-
holders 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 Repur-
chase 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 insuffi-
cient to pay the aggregate Certificate Prepayment Premium in
full, [Class A] Certificateholders [of each class of Certifi-
cates] will receive their ratable share [(based upon the Certifi-
cate 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 Receiv-
ables 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 Certifi-
cateholders 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 Certifi-
cates. See "Description of the Transfer and Servicing Agree-
ments 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 "Book-Entry and Definitive
Securities; Reports to Securityholders Book-Entry Registration"
in the Prospectus.
DEFINITIVE CERTIFICATES
The Certificates will be issued in fully registered, certif-
icated 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 immediate-
ly 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 thereaf-
ter the Trustee will recognize the holders of such Definitive
Certificates as Certificateholders under the Agreement ("Hold-
ers").
[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 condi-
tions 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 Subse-
quent Receivables, (ii) an amount equal to % of the aggregate
principal balance of such Subsequent Receivables will be with-
drawn 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 princi-
pal 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 Agree-
ment will require the Sellers to deposit into the Yield Supple-
ment 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 Receiv-
ables). 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 follow-
ing the end of such Collection Period, of the following condi-
tions subsequent, among others: (i) the Sellers will have deliv-
ered 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 Receiv-
able, 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 [and the Yield Supplement
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 Certif-
icateholders (the "Distribution Account") from which all distri-
butions 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 supplemen-
tal 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 discre-
tion, 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 Collec-
tion 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 Certificatehold-
ers, 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 Speci-
fied Reserve Account Balance will be calculated using a percent-
age 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 custom-
ary 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 Distribu-
tion 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. Liquida-
tion 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 pay-
ments 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 satisfac-
tion of the Rating Agency Condition. Amounts on deposit in the
Reserve Account will be released to the Servicer on each Distri-
bution 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 Receiv-
ables. 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 Determi-
nation Date, the Servicer will provide the Trustee with a certif-
icate (the "Servicer's Certificate") containing certain informa-
tion 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 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 Collec-
tion Account [and (d) the Sellers (or, in certain circumstances,
the Collateral Agent) will deposit the Yield Supplement 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 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 Distribu-
tion 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 repur-
chased 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 Distribu-
tion 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 alloca-
ble 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 distrib-
uted 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 reimburse-
ments (and, in the case of shortfalls occurring under clause (ii)
below in the Class A Interest Distribution, the Class B Percent-
age 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 Distribu-
tion Date; and
(iii) to the Distribution Account, first from Available
Interest and then, if necessary, from the Avail-
able Reserve Amount, the Class B Interest Distri-
bution for such Distribution Date.
On each Distribution Date, the Trustee will make the follow-
ing 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 preced-
ing 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 princi-
pal 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 Real-
ized 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 Distri-
bution Date over the amount in respect of principal that was
actually distributed on the Class A Certificates on such Distri-
bution 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 Carry-
over Shortfall as of the preceding Distribution Date. In addi-
tion, 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 preced-
ing 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 princi-
pal 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 Real-
ized 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 Distri-
bution Date over the amount in respect of principal that was
actually distributed on the Class B Certificates on such Distri-
bution 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 Carry-
over Shortfall as of the preceding Distribution Date. In addi-
tion, on the Final Scheduled Distribution Date, the Class B
Principal Distribution will include any additional amount re-
quired 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 distribu-
tion:
March 1 March 31...Collection Period. The Servicer receives
monthly payments, pre-payments 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
Certificateholders 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 Servic-
ing 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
If any Receivable has, as of the Cutoff Date, a Contract
Rate below the Required Rate, the Sellers, the Servicer and the
Trustee will, simultaneously with the sale and assignment of the
Receivables, enter into the Yield Supplement Agreement. The
Yield Supplement Agreement will, with respect to each Receivable
subject thereto, if any, provide for the payment into the Collec-
tion Account by the applicable Seller on or prior to each Deposit
Date of an amount calculated by the Servicer equal to one-twelfth
of the excess, if any, of (i) interest on such Receivable's
principal balance as of the first day of the preceding Collection
Period at a rate equal to the Required Rate over (ii) interest at
the Contract Rate on such Receivable's principal balance as of
the first day of such Collection Period (in the aggregate for all
Receivables with respect to any Deposit Date, the "Yield Supple-
ment Amount").
Each Seller's obligations under the Yield Supplement Agree-
ment will be secured by funds, if any, deposited by the Sellers
on the Closing Date in an Eligible Deposit Account to be main-
tained by the Collateral Agent for the benefit of the holders of
the Certificates (the "Yield Supplement Account"). The amount
required to be retained (to the extent of funds available there-
for) in the Yield Supplement Account on any Distribution Date
will be equal to the Specified Yield Supplement Balance.
Funds, if any, on deposit in the Yield Supplement Account
may be invested in Permitted Investments in the manner permitted
by the Pooling and Servicing Agreement
Amounts on deposit in the Yield Supplement Account will be
released to the Seller each Distribution Date to the extent the
amount on deposit in the Yield Supplement Account exceeds the
Required Yield Supplement Balance. The "Required [Initial] Yield
Supplement Balance," on any date of determination, is the sum of
all projected Yield Supplement Amounts for all future Distribu-
tion Dates, assuming that future scheduled payments on the
[Initial] Receivables are made on their scheduled due dates. No
funds will be deposited in the Yield Supplement Account, however,
if the amount on deposit therein is less than the Required
[Initial] Yield Supplement Balance. [All investment earnings
attributable to the Yield Supplement Account to be distributed on
each Distribution Date to the Sellers]. Upon any release of
amounts from the Yield Supplement Account, the Certificateholders
will not have any rights in, or claims to, such amounts. 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 Subse-
quent 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 Supple-
ment 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 descrip-
tion 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 require-
ments, 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 Agree-
ment.
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 speci-
fied 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 juris-
dictions, 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 jurisdic-
tion 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 circum-
stances, the Servicer will be obligated to appoint a successor
Trustee. Any resignation or removal of the Trustee and appoint-
ment 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 Receiv-
ables, 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. General-
ly, those duties are limited to the receipt of the various
certificates, reports or other instruments required to be fur-
nished 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 insti-
tute, conduct or defend any litigation thereunder or in relation
thereto at the request, order, or direction of any of the Certif-
icateholders, unless such Certificateholders have offered the
Trustee reasonable security or indemnity against the fees, costs,
expenses and liabilities which may be incurred therein or there-
by. No Class A Certificateholder or Class B Certificateholder
will have any right under the Agreement to institute any proceed-
ing 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.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material anticipated
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"). Prospec-
tive 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 CONSEQUENC-
ES 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 classi-
fied 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 "Federal Income Tax Consequences," and is of the
opinion that such statements are correct in all material re-
spects. 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 general-
ly, 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 invest-
ing 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 Receiv-
ables 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 capi-
tal, 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 Certificate-
holder 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 deduc-
tions 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 Receiv-
able 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 Certificate-
holder, 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 pronounce-
ments 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 Receiv-
ables 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 alloca-
ble 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 Certifi-
cateholder 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 Receiv-
able. 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 Receiv-
able.
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. Prospec-
tive 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 " Character-
ization 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 exten-
sion of the maturity of a Receivable to the Obligor thereon could
be treated as an exchange if it changes the yield on the Receiv-
able by more than a de minimis amount, potentially resulting in
taxable gain or loss to Certificateholders. Reports to Certifi-
cateholders 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 Certificatehold-
er 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 perju-
ry, 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 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 DISPOSI-
TION 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' Exemp-
tion 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 fiducia-
ry 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 Under-
writing Agreement (the "Underwriting Agreement"), the Sellers
have agreed to cause the Trust to sell to each of the Underwrit-
ers named below (the "Underwriters"), and each of the Underwrit-
ers 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 Certifi-
cate 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 Certifi-
cate 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.
[This Prospectus Supplement and the related Prospectus may be
used by NCMI in connection with offers and sales related to market-
making transactions in the Certificates. NCMI may act as principal
or agent in such transactions. Such sales will be made at prices
related to prevailing markets prices at the time of sale of
otherwise. NCMI does not have any obligation to make a market in
the Certificates, and it may discontinue any such market-making
activities at any time without notice, in its sole discretion.
NCMI is among the underwriters participating in the initial
distribution of the Certificates.]
LEGAL OPINIONS
In addition to the legal opinions described in the Prospec-
tus, 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 Certifi-
cates, 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' inter-
ests in the Global Securities will be represented through finan-
cial 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 respec-
tive 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 (Europe-
an 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 Securi-
ties 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 invest-
ment 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 busi-
ness 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 settle-
ment date. Thus, to the DTC Participant a cross-market transac-
tion 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 Deposi-
tary, 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 Partici-
pant 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 settle-
ment 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. with-
holding 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 interme-
diaries between such beneficial owner and the U.S. entity re-
quired 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 benefi-
cial 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 subdivi-
sion 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-9, 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-36
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-36
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-7
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . S-30
Required [Initial] Yield Supplement Amount . . . . . . S-9, S-35
Required Subsequent Yield Supplement Amount . . . . . . S-9, S-35
Required Rate . . . . . . . . . . . . . . . . . . . . . . . S-10
Required Yield Supplement Amount. . . . . . . . . . . . S-9, S-35
Reserve Account . . . . . . . . . . . . . . . . . . . . . . S-10
Reserve Account Initial Deposit . . . . . . . . . . . . . . S-10
Securities Act . . . . . . . . . . . . . . . . . . . . . . . S-3
Seller . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Sellers . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Servicer . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Servicer's Certificate . . . . . . . . . . . . . . . . . . S-31
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . S-11
Shortfall Amount . . . . . . . . . . . . . . . . . . . . . S-16
Simple Interest Receivable . . . . . . . . . . . . . . . . S-23
Special Tax Counsel . . . . . . . . . . . . . . . . . S-12, S-36
Specified Reserve Account Balance . . . . . . . . . . . . . S-11
Subsequent Cut-Off Date . . . . . . . . . . . . . . . . . . . S-6
Subsequent Receivables . . . . . . . . . . . . . . . . S-1, S-5
Subsequent Transfer Date . . . . . . . . . . . . . . . . . . S-6
Supplemental Servicing Fee . . . . . . . . . . . . . . . . S-28
Trust . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Trust Property . . . . . . . . . . . . . . . . . . . . . . . S-4
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
U.S. Person . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Underwriters . . . . . . . . . . . . . . . . . . . . . . . S-40
Underwriters' Exemption . . . . . . . . . . . . . . . . . . S-40
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
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 INCOR-
PORATED BY REFERENCE IN THIS $
PROSPECTUS SUPPLEMENT OR THE % Asset Backed
PROSPECTUS AND, IF GIVEN OR Certificates, Class A
MADE, SUCH INFORMATION OR REP-
RESENTATIONS MUST NOT BE RE- [$
LIED UPON. THIS PROSPECTUS % Asset Backed
SUPPLEMENT AND THE PROSPECTUS Certificates, Class B]
DO NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES
OTHER THAN THE SECURITIES OF- *
FERED HEREBY, NOR AN OFFER OF NATIONSBANK, N.A.
THE SECURITIES IN ANY STATE OR NATIONSBANK, N.A. (SOUTH)
JURISDICTION IN WHICH, OR TO NATIONSBANK OF TEXAS, N.A.
ANY PERSON TO WHOM, SUCH OFFER
WOULD BE UNLAWFUL. THE DELIV- SELLERS
ERY OF THIS PROSPECTUS SUPPLE- NATIONSBANK, N.A.
MENT OR THE PROSPECTUS AT ANY SERVICER
TIME DOES NOT IMPLY THAT IN-
FORMATION HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSE-
QUENT TO ITS DATE.
PROSPECTUS
____________________
SUPPLEMENT
TABLE OF CONTENTS
PAGE
PROSPECTUS SUPPLEMENTReports
to Certificateholders . . 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 Con-
siderations . . . . . . . S-23
Yield Considerations . . S-24
Use of Proceeds . . . . . S-24
Description of the Certifi-
cates . . . . . . . . . . S-24
Federal Income Tax Consequenc-
es . . . . . . . . . . . S-36
ERISA Considerations . . S-40
Underwriting . . . . . . S-40
Legal Opinions . . . . . S-41
Annex I Global Clearance, Set-
tlement and Tax
Documentation Procedures I-1
Index of Terms . . . . . . i
PROSPECTUS
Reports to Securityholders. 3
Available Information . . . 3
Incorporation of Certain Docu-
ments by Reference . . . . 3
Summary . . . . . . . . . . 5
Risk Factors . . . . . . . 16
The Trusts . . . . . . . . 23
The Receivables Pools . . . 24
Maturity and Prepayment
Considerations . . . . . . 27
Pool Factors and Trading
Information . . . . . . . 29
Use of Proceeds . . . . . . 29
The Banks, NationsBank
Corporation and [NB-SPC]. . 29
The Servicer . . . . . . . 30
Description of the Notes. . 30
Description of the
Certificates . . . . . . . 36
Description of Fixed and
Floating Rate Options . . . 37
Book-Entry and Definitive
Securities; Reports to
Securityholders . . . . . . 42
Description of the Transfer
and Servicing Agreements. . 47
Certain Legal Aspects of the
Receivables . . . . . . . . 60
Federal Income Tax
Consequences . . . . . . . . 64
ERISA Considerations .. . . 65
Plan of Distribution .. . . 70
Legal Opinions . . . .. . . 71
Index of Terms . . . .. . . 72
UNTIL , 199 (90 DAYS AFTER THE DATE OF THIS
PROSPECTUS SUPPLEMENT), ALL DEALERS EFFECTING TRANSAC-
TIONS IN THE CERTIFICATES, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PRO-
SPECTUS 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 THEIR 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 actual and estimated
expenses in connection with the offering described in this
Registration Statement.
Securities and Exchange Commission registration fee$ 344.83
Rating agency fees . . . . . . . . . . . . . . $______*
Printing (estimated) . . . . . . . . . . . . . $______*
Legal fees and expenses (estimated) . . . . . . $______*
Accountants' fees (estimated) . . . . . . . . . $______*
Fees and expenses of Indenture Trustee (estimated) $______*
Fees and expenses of applicable Trustee (estimated)$______*
Miscellaneous expenses (estimated) . . . . . . $______*
Total . . . . . . . . . . . . . . . . . . $ *
* To be completed by amendment
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 incorporat-
ed, 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 sharehold-
ers 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 modifica-
tion.
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 lia-
bility 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, part-
nership, 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 indem-
nification 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 indemnifica-
tion or insurance coverage is prohibited or limited by
lawful and binding regulations of the Office of the Comp-
troller 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 incorporat-
ed, 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 sharehold-
ers 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 modifica-
tion.
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 lia-
bility 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, part-
nership, 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 indem-
nification 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 indemnifica-
tion or insurance coverage is prohibited or limited by
lawful and binding regulations of the Office of the Comp-
troller 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 Associ-
ation 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 dispo-
sition 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 there-
with.
(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 pro-
ceeding, 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 Repre-
sentative (as defined in the following sentence), against
all expense, liability and loss (including, without limita-
tion, 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 Designat-
ed Representative for purposes of this Article Eleventh if
such person is serving at the written request of the Associ-
ation 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. Rea-
sonable 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 determina-
tion that such person has met the standard of conduct re-
ferred to in this Section 11(b); provided that the Associa-
tion 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 ac-
ceptable 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, execu-
tors 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 Desig-
nated Representative against expenses (including, without
limitation, Attorneys' Fees) actually and reasonably in-
curred 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 indemnifi-
cation 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 administra-
tive 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 in-
curred 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 compe-
tent 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 circum-
stances because the indemnitee has met the applicable stan-
dard 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 "Disin-
terested Committee Majority"); (2) by special legal counsel
selected by a Disinterested Board Majority or a Disinterest-
ed 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 Direc-
tors; or (3) by shareholders by a majority vote that ex-
cludes 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 indemni-
tee 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 insur-
ance coverage for a formal order assessing civil money
penalties against an indemnitee.
Each of NationsBank, N.A., NationsBank, N.A. (South) and
NationsBank of Texas, N.A. provides liability insurance coverage
for its respective directors and officers.
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 Sell-
ers, the Servicer and the Trustee (including forms of
Certificates).
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 (includ-
ed as part of Exhibit 5.1).
23.2 - Consent of Skadden, Arps, Slate, Meagher & Flom (includ-
ed 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 The Chase Manhattan Bank (Na-
tional Association)
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.**
* Previously filed.
** Incorporated herein by reference to Exhibit 4(b) filed under
Registration Statement No. 33-97436.
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 infor-
mation 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, howev-
er, 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 Securi-
ties 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 incorporat-
ed 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 regis-
trant 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 adjudica-
tion 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 State-
ment in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act 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 there-
in, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(i) To file an application for the purpose of determin-
ing the eligibility of the Indenture Trustee to act as trustee
under subsection (a) of Section 310 of the Trust Indenture Act in
accordance with the rules and regulations prescribed by the
Commission under Section 305(b)(2) of the Act.
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 Amendment Number 1 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Charlotte, State of North Carolina, on
June 27, 1996.
NATIONSBANK, N.A.
By: *
___________________________________
Name: James H. Hance, Jr.
Title: Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment Number 1 to the Registration Statement has
been signed on June 27, 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 Amendment Number 1 to the 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
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 Amendment Number 1 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Charlotte, State of North Carolina, on
June 27, 1996.
NATIONSBANK, N.A. (SOUTH)
By: *
_________________________________
Name: James H. Hance, Jr.
Title: Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment Number 1 to the Registration Statement has
been signed on June 27, 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 Amendment Number 1 to the 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
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 Amendment Number 1 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Charlotte, State of North Carolina, on
June 27, 1996.
NATIONSBANK OF TEXAS, N.A.
By: *
________________________________
Name: James H. Hance, Jr.
Title: Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment Number 1 to Registration Statement has
been signed on June 27, 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 Amendment Number 1 to the 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 Certifi-
cates).
5.1 - Opinion of Skadden, Arps, Slate, Meagher & Flom with re-
spect to legality.
8.1 - Opinion of Skadden, Arps, Slate, Meagher & Flom with re-
spect 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 In-
denture Act of 1939 of The Chase Manhattan Bank (National
Association).
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.**
* Previously filed.
** Incorporated herein by reference to Exhibit 4(b) filed under
Registration Statement No. 33-97436.