SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 8, 1998
UACSC 1998 AUTO TRUSTS
(Exact name of registrant as specified in its charter)
NEW YORK
(State or other jurisdiction of incorporation)
333-52101 35-1937340
(Registration Number) (IRS Employer Identification No.)
9240 Bonita Beach Road
Suite 1109-A
Bonita Springs, Florida 34135
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (941) 948-1850
<PAGE>
Item 5. Other Events.
Computational Materials
-----------------------
On September 8, 1998, Computational Materials were distributed to
potential investors in connection with a proposed offering of
asset-backed certificates under Reg. No. 333-52101. Under the proposed
pooling and servicing agreement (the "Proposed Agreement"), UAC
Securitization Corporation ("UACSC") will act as the proposed
depositor and establish the UACSC 1998-C Auto Trust (the "Proposed
Trust") by selling and assigning the proposed trust property to the
trustee in exchange for certificates, each of which represents a
fractional and undivided interest in the Proposed Trust. Pursuant to
the Proposed Agreement, Union Acceptance Corporation will act as
servicer. Such Computational Materials are filed with this Current
Report on Form 8-K on the basis of the position of the Division of
Corporation Finance set forth in Kidder, Peabody Acceptance
Corporation I (available May 20, 1994), Public Securities Association
(available May 27, 1994), Public Securities Association (available
February 17, 1995) and subsequent related no-action letters.
Item 7. Financial Statements and Exhibits.
Exhibit
Number Description
------ -----------
99 Computational Materials
-2-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized in the City of Bonita Springs, State of
Florida, on September 8, 1998.
UAC SECURITIZATION CORPORATION
as Depositor (Registrant)
/s/ Leeanne Graziani
----------------------------------------
Leeanne Graziani
Vice President, Assistant Treasurer and
Secretary
Computational Materials
- --------------------------------------------------------------------------------
UACSC 1998-C Auto Trust
$ 49,800,000.00 [____]% Class A-1 Money Market Automobile
Receivable Backed Certificates
$110,900,000.00 [____]% Class A-2 Automobile Receivable Backed Certificates
$ 74,675,000.00 [____]% Class A-3 Automobile Receivable Backed Certificates
$ 72,575,000.00 [____]% Class A-4 Automobile Receivable Backed Certificates
$ 43,429,110.20 [____]% Class A-5 Automobile Receivable Backed Certificates
UAC Securitization Corporation
Depositor
Union Acceptance Corporation
Servicer
Neither the Trust, the Depositor, the Underwriters (all as defined
below) nor any of their respective affiliates make any representation as to the
accuracy or completeness of the information herein. The information contained in
the attached materials is referred to as the "Information." The Information is
preliminary, and will be superseded by the applicable Offering Documents (as
defined below) and by any other information subsequently filed with the
Securities and Exchange Commission. The Information addresses only certain
aspects of the characteristics of the applicable securities and thus does not
provide a complete assessment of the characteristics. As such, the Information
may not reflect the impact of all structural characteristics of the securities.
The assumptions underlying the Information, including structure and collateral,
may be modified from time to time to reflect changed circumstances. The attached
Term Sheet is not intended to be a prospectus and any investment decision with
respect to the securities should be made by you based solely upon all of the
information contained in the final prospectus of the UACSC Auto Trusts, as
supplemented by a final prospectus supplement relating to the securities. Such
prospectus and prospectus supplement are referred to collectively herein as the
"Offering Documents." Under no circumstances shall the Information presented
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of the securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of such jurisdiction. The securities may not be sold
nor may an offer to buy be accepted prior to the delivery of the Offering
Documents relating to the securities. All information described herein is
preliminary, limited in nature and subject to completion or amendment. No
representation is made that the above referenced securities will actually
perform as described in any scenario presented. The Depositor has not prepared,
reviewed or participated in the preparation hereof, is not responsible for the
accuracy hereof and has not authorized the dissemination hereof. Offering
Documents may be obtained by contacting the NationsBanc Montgomery Securities
LLC Syndicate Desk at (704) 386-9690 or the Bear, Stearns & Co. Inc. Syndicate
Desk at (212) 272-4955.
The attached Term Sheet has been prepared by Union Acceptance
Corporation. Neither NationsBanc Montgomery Securities LLC ("NationsBanc
Montgomery") nor Bear, Stearns & Co. Inc. ("Bear Stearns" and together with
NationsBanc Montgomery, the "Underwriters") nor any of their respective
affiliates makes any representation as to the accuracy or completeness of the
Information herein. The Information contained herein is preliminary and will be
superseded by the applicable Offering Documents and by any other information
subsequently filed with the Securities and Exchange Commission.
<PAGE>
The Information addresses only certain aspects of the characteristics
of the applicable securities and thus does not provide a complete assessment of
the characteristics. As such, the Information may not reflect the impact of all
structural characteristics of the securities. The assumptions underlying the
Information, including structure, Trust property and collateral, may be modified
from time to time to reflect changed circumstances.
Although a registration statement (including a form of prospectus)
relating to the securities discussed in this communication has been filed with
the Securities and Exchange Commission and is effective, the Offering Documents
relating to the securities discussed in this communication have not been filed
with the Securities and Exchange Commission. Prospective purchasers are referred
to the Offering Documents relating to the securities discussed in this
communication for definitive information on any matter discussed in this
communication. Any investment decision should be based only on the data in the
Offering Documents. Offering Documents contain data that is current as of their
publication dates and after publication may no longer be complete or current.
Offering Documents may be obtained by contacting the NationsBanc Montgomery
Syndicate Desk at (704) 386-9690 or the Bear Stearns Syndicate Desk at (212)
272-4955.
<PAGE>
UACSC 1998-C Auto Trust
UAC Securitization Corporation, Depositor
Union Acceptance Corporation, Servicer
Subject to Revision
Term Sheet dated September 8, 1998
Issuer.................................. UACSC 1998-C Auto Trust (the "Trust").
Depositor.................................UAC Securitization Corporation (the
"Depositor").
Servicer .................................Union Acceptance Corporation (in its
capacity as servicer, the "Servicer,"
otherwise "UAC").
Trustee .................................Harris Trust and Savings Bank.
Underwriters..............................NationsBanc Montgomery Securities LLC
(Lead) and Bear, Stearns & Co. Inc.
(Co).
The Certificates ........................The Trust will be formed and will
issue the Certificates on or about
September 17, 1998 (the "Closing
Date") pursuant to a pooling and
servicing agreement (the "Pooling and
Servicing Agreement"). The
"Certificates" will consist of: (i)
_____% Class A-1 Money Market
Automobile Receivable Backed
Certificates in the aggregate
principal amount of $49,800,000.00
(the "Class A-1 Certificates"); (ii)
_____% Class A-2 Automobile Receivable
Backed Certificates in the aggregate
principal amount of $110,900,000.00
(the "Class A-2 Certificates"); (iii)
_____% Class A-3 Automobile Receivable
Backed Certificates in the aggregate
principal amount of $74,675,000.00
(the "Class A-3 Certificates"); (iv)
_____% Class A-4 Automobile Receivable
Backed Certificates in the aggregate
principal amount of $72,575,000.00
(the "Class A-4 Certificates"); (v)
_____% Class A-5 Automobile Receivable
Backed Certificates in the aggregate
principal amount of $43,429,110.20
(the "Class A-5 Certificates" and
together with the Class A-1
Certificates, the Class A-2
Certificates, the Class A-3
Certificates and the Class A-4
Certificates, the "Class A
Certificates") and (vi) the Class IC
Automobile Receivable Backed
Certificate (the "Class IC
Certificate"). The Class IC
Certificate will be issued to the
Depositor on the Closing Date and is
not being offered hereby.
<PAGE>
Each of the Certificates will
represent a fractional undivided
interest in the Trust. The Trust
assets will include a pool of simple
and precomputed interest installment
sale and installment loan contracts
originated in various states in the
United States of America, secured by
new and used automobiles, light trucks
and vans (the "Receivables"), certain
monies due thereunder as of and after
August 31, 1998 (the "Cutoff Date"),
security interests in the related
vehicles financed thereby (the
"Financed Vehicles"), monies on
deposit in the account into which all
payments made in respect of the
Receivables will be deposited (the
"Certificate Account") and the
proceeds thereof, any proceeds from
claims on certain insurance policies
relating to the Financed Vehicles or
the related obligors (each, an
"Obligor"), any lender's single
interest insurance policy, the Spread
Account (as defined herein) for the
benefit of the Class A
Certificateholders (as defined below)
and the Insurer (as defined below),
the Policy (as defined below) for the
benefit of the Class A
Certificateholders and certain rights
under the Pooling and Servicing
Agreement. Interest paid to the Class
A Certificateholders on the first
Distribution Date will be based upon
the amount of interest accruing from
the Closing Date through the day
before the first Distribution Date and
therefore may include more or less
than a full month's interest.
The Class A Certificates ................Interest. Interest will be
distributable on the eighth calendar
day of each month or, if such day is
not a business day, on the first
business day thereafter (each, a
"Distribution Date") beginning October
8, 1998, to holders of record as of
the last day of the calendar month
immediately preceding the calendar
month in which such Distribution Date
occurs (the "Record Date") of the
Class A Certificates (the "Class A
Certificateholders," which includes
the "Class A-1 Certificateholders,"
the "Class A-2 Certificateholders,"
the "Class A-3 Certificateholders,"
the "Class A-4 Certificateholders" and
the "Class A-5 Certificateholders").
<PAGE>
Interest on the Class A-1 Certificates
will be calculated on the basis of a
360-day year and the actual number of
days from the previous Distribution
Date through the day before the
related Distribution Date or, in the
case of the first Distribution Date,
the number of days from the Closing
Date through the day before the first
Distribution Date. Interest on the
Class A-2 Certificates, the Class A-3
Certificates, the Class A-4
Certificates and the Class A-5
Certificates will be calculated on the
basis of a 360-day year consisting of
twelve 30-day months or, in the case
of the first Distribution Date, the
number of days from the Closing Date
through the day before the first
Distribution Date (assuming the month
of the Closing Date has 30 days). See
"Yield and Prepayment Considerations"
and "The Class A Certificates --
Distributions" herein . "Monthly
Interest" for any Distribution Date
will equal the sum of Class A-1
Monthly Interest, Class A-2 Monthly
Interest, Class A-3 Monthly Interest,
Class A-4 Monthly Interest and Class
A-5 Monthly Interest (each as defined
below). "Class A-1 Monthly Interest"
will equal (i) for the first
Distribution Date, the product of the
following: (1/360th of the applicable
pass-through rate of _____% for the
Class A-1 Certificates (the "Class A-1
Pass-Through Rate")) multiplied by
(the number of days from the Closing
Date through the day before the first
Distribution Date) multiplied by (the
aggregate outstanding principal
balance of the Class A-1 Certificates
(the "Class A-1 Certificate Balance")
at the Closing Date) and (ii) with
respect to each subsequent
Distribution Date, the product of
1/360th of the Class A-1 Pass-Through
Rate, the number of days from the
previous Distribution Date through the
day before the related Distribution
Date and the Class A-1 Certificate
Balance on the preceding Distribution
Date (after giving effect to any
distribution of Monthly Principal
required to be made on such preceding
Distribution Date).
<PAGE>
"Class A-2 Monthly Interest," "Class
A-3 Monthly Interest" and "Class A-4
Monthly Interest" will equal (i) for
the first Distribution Date, the
product of the following: (one-twelfth
of the applicable pass-through rate of
_____% for the Class A-2 Certificates
(the "Class A-2 Pass-Through Rate"),
the applicable pass-through rate of
_____% for the Class A-3 Certificates
(the "Class A-3 Pass-Through Rate")
and the applicable pass-through rate
of _____% for the Class A-4
Certificates (the "Class A-4
Pass-Through Rate"), as the case may
be) multiplied by (the aggregate
outstanding principal balance of the
Class A-2 Certificates, the Class A-3
Certificates and the Class A-4
Certificates (respectively, the "Class
A-2 Certificate Balance," the "Class
A-3 Certificate Balance" and the
"Class A-4 Certificate Balance"), as
the case may be, at the Closing Date)
multiplied by (the number of days from
the Closing Date through the day
before the first Distribution Date
(assuming the month of the Closing
Date has 30 days) divided by 30) and
(ii) with respect to each subsequent
Distribution Date, the product of
one-twelfth of the Class A-2
Pass-Through Rate, the Class A-3
Pass-Through Rate or the Class A-4
Pass-Through Rate, as the case may be,
and the Class A-2 Certificate Balance,
the Class A-3 Certificate Balance or
the Class A-4 Certificate Balance, as
the case may be, on the preceding
Distribution Date (after giving effect
to any distribution of Monthly
Principal required to be made on such
preceding Distribution Date).
"Class A-5 Monthly Interest" will
equal (i) for the first Distribution
Date, the product of the following:
(one-twelfth of the applicable
pass-through rate of _____% for the
Class A-5 Certificates (the "Class A-5
Pass-Through Rate")) multiplied by
(the aggregate outstanding principal
balance of the Class A-5 Certificates
(the "Class A-5 Certificate Balance"
and together with the Class A-1
Certificate Balance, the Class A-2
Certificate Balance, the Class A-3
Certificate Balance and the Class A-4
Certificate Balance, the "Certificate
Balance") at the Closing Date)
multiplied by (the number of days from
the Closing Date through the day
before the first Distribution Date
(assuming the month of the Closing
Date has 30 days) divided by 30) and
(ii) with respect to each subsequent
Distribution Date, the product of
one-twelfth of the Class A-5
Pass-Through Rate (as adjusted after
the Clean-Up Call Date (as defined
below), if required) and the Class A-5
Certificate Balance on the preceding
Distribution Date (after giving effect
to any distribution of Monthly
Principal required to be made on such
preceding Distribution Date).
<PAGE>
Principal. On each Distribution Date,
the Trustee will distribute as
principal to the Class A
Certificateholders in a maximum
aggregate amount equal to the
Certificate Balance as of the previous
Distribution Date (after giving effect
to any distributions of Monthly
Principal required to be made on such
Distribution Date) (or, in the case of
the first Distribution Date, as of the
Closing Date) less the aggregate
outstanding principal amount of the
Receivables (the "Pool Balance") on
the last day of the immediately
preceding calendar month ("Monthly
Principal"). Monthly Principal will be
distributed sequentially to the Class
A Certificateholders as follows: (i)
to the Class A-1 Certificateholders
until the Class A-1 Certificate
Balance has been reduced to zero; (ii)
to the Class A-2 Certificateholders
until the Class A-2 Certificate
Balance has been reduced to zero;
(iii) to the Class A-3
Certificateholders until the Class A-3
Certificate Balance has been reduced
to zero; (iv) to the Class A-4
Certificateholders until the Class A-4
Certificate Balance has been reduced
to zero and (v) to the Class A-5
Certificateholders until the Class A-5
Certificate Balance has been reduced
to zero (the "Principal Distribution
Sequence"). For purposes of
determining Monthly Principal, the
unpaid principal balance of a
defaulted Receivable or a purchased
Receivable will be deemed to be zero
on and after the date such Receivable
became a defaulted Receivable or a
purchased Receivable. The final
scheduled Distribution Date of the
Class A-1 Certificates will be October
8, 1999 (the "Class A-1 Final
Scheduled Distribution Date"). The
final scheduled Distribution Date of
the Class A-2 Certificates will be
October 9, 2001 (the "Class A-2 Final
Scheduled Distribution Date"). The
final scheduled Distribution Date of
the Class A-3 Certificates will be
January 8, 2003 (the "Class A-3 Final
Scheduled Distribution Date"). The
final scheduled Distribution Date of
the Class A-4 Certificates will be
March 8, 2004 (the "Class A-4 Final
Scheduled Distribution Date"). The
final scheduled Distribution Date of
the Class A-5 Certificates will be May
8, 2006 (the "Class A-5 Final
Scheduled Distribution Date").
<PAGE>
No Monthly Principal will be
distributed (i) to the Class A-2
Certificateholders until the Class A-1
Certificate Balance has been reduced
to zero; (ii) to the Class A-3
Certificateholders until the Class A-2
Certificate Balance has been reduced
to zero; (iii) to the Class A-4
Certificateholders until the Class A-3
Certificate Balance has been reduced
to zero; and (iv) to the Class A-5
Certificateholders until the Class A-4
Certificate Balance has been reduced
to zero. Since the rate of payment of
principal of each class of Class A
Certificates depends upon the rate of
payment of principal (including
prepayments) of the Receivables, the
final distribution in respect of each
class of Class A Certificates could
occur significantly earlier than the
respective final scheduled
distribution dates.
Subordination;
Spread Account............................The Depositor will establish an
account (the "Spread Account") on the
Closing Date. On each Distribution
Date thereafter, the Servicer will
deposit into the Spread Account any
amounts remaining in the Certificate
Account after the payment on such date
of all amounts owing pursuant to the
Pooling and Servicing Agreement to the
Class A Certificateholders, the
Insurer, the Servicer for the monthly
servicing fee payable to the Servicer
(the "Monthly Servicing Fee") and any
permitted reimbursement of outstanding
Advances (as defined below). In the
event that Available Funds (as defined
below) are insufficient on any
Distribution Date prior to the
termination of the Trust (after
payment of the Monthly Servicing Fee)
to pay Monthly Principal and Monthly
Interest to the Class A
Certificateholders, draws will be made
on the Spread Account to the extent of
the balance thereof and, if necessary,
the Policy, in the manner and to the
extent described herein. The Spread
Account is solely for the benefit of
the Class A Certificateholders and the
Insurer. In the event the amount on
deposit in the Spread Account is zero,
after giving effect to any draws
thereon for the benefit of the Class A
Certificateholders, and there is a
default under the Policy, any
remaining losses on the Receivables
will be borne directly pro rata by all
classes of Class A Certificateholders
(to the extent of the classes or class
of Class A Certificates which are
outstanding at such time), as
described herein. "Available Funds"
<PAGE>
for any Distribution Date and the
related Collection Period will consist
of all payments on simple interest
Receivables received during such
Collection Period, the scheduled
payments on Precomputed Receivables
(as defined below) received during
such Collection Period, the net amount
to be transferred to the Certificate
Account in respect of payaheads on
Precomputed Receivables for such
Distribution Date, all advances of
funds in respect of delinquent
Receivables made by the Servicer for
such Collection Period (each, an
"Advance"), liquidation proceeds in
respect of defaulted receivables and
the purchase amount for all
Receivables that UAC was required to
purchase during the preceding
Collection Period.
"Precomputed Receivables" are rule of
78's Receivables (as opposed to simple
interest Receivables) which will be
amortized by the Trust using the
actuarial method. The Class A
Certificates will be senior in right
and interest to the Class IC
Certificate. The Trustee will first
withdraw funds from the Spread Account
on each Distribution Date to the
extent of any shortfall in the Monthly
Servicing Fee, permitted
reimbursements of outstanding
Advances, Monthly Interest and Monthly
Principal as described above. Any
amount on deposit in the Spread
Account on any Distribution Date in
excess of the Required Spread Amount
(as defined below) after all other
required deposits thereto and
withdrawals therefrom have been made,
and after payment therefrom of all
amounts due the Insurer, will be
distributed to the holder of the Class
IC Certificate (the "Class IC
Certificateholder" and together with
the Class A Certificateholders, the
"Certificateholders"). Any amount so
distributed to the Class IC
Certificateholder will no longer be an
asset of the Trust. While it is
intended that the amount on deposit in
the Spread Account will grow over
time, through the deposit thereto of
the excess collections, if any, on the
Receivables, to the Required Spread
Amount, there can be no assurance that
such growth will actually occur. The
"Required Spread Amount" with respect
to any Distribution Date will equal
the lesser of (i) [1.25]% of the
initial Pool Balance or (ii) the
Certificate Balance as of the previous
Distribution Date (after giving effect
<PAGE>
to all distributions to Class A
Certificateholders on such date). If
the average aggregate yield of the
Receivables pool in excess of losses
falls below a prescribed level set
forth in the Insurance and
Reimbursement Agreement, entered into
on or before the Closing Date among
the Depositor, Union Acceptance
Funding Corporation ("UAFC"), UAC, in
its individual capacity and as
Servicer, and the Insurer (the
"Insurance Agreement") the Required
Spread Amount will be increased to
[4.75]% of the Pool Balance. Upon and
during the continuance of an Event of
Default or upon the occurrence of
certain other events described in the
Insurance Agreement generally
involving a failure of performance by
the Servicer or a material
misrepresentation made by the Servicer
under the Pooling and Servicing
Agreement or the Insurance Agreement,
the Required Spread Amount shall be
equal to the Policy Amount, as further
described below. Under certain
circumstances, the Required Spread
Amount may be reduced.
The Policy ............................. The Depositor shall obtain an
irrevocable insurance policy (the
"Policy") issued by the Insurer (as
specified below) for the benefit of
the Trustee on behalf of the Class A
Certificateholders. The Trustee shall
draw on the Policy in the event that
sufficient funds are not available
(after payment of the Monthly
Servicing Fee and after withdrawals
from the Spread Account to pay the
Class A Certificateholders on any
Distribution Date in accordance with
the Pooling and Servicing Agreement)
to distribute Monthly Interest and
Monthly Principal, up to the Policy
Amount (as defined below). In
addition, the Policy will cover any
amount distributed or required to be
distributed by the Trust to Class A
Certificateholders that is sought to
be recovered as a voidable preference
by a trustee in bankruptcy of UAC, the
Depositor or UAFC pursuant to the
United States Bankruptcy Code (11
U.S.C.), as amended from time to time,
in accordance with a final
nonappealable order of a court having
competent jurisdiction.
<PAGE>
Policy Amount ............................The term "Policy Amount" means with
respect to any Distribution Date: (x)
the sum of (A) the lesser of (i) the
Certificate Balance (after giving
effect to any distribution of
Available Funds and any funds
withdrawn from the Spread Account to
pay Monthly Principal on such
Distribution Date) and (ii) the Net
Principal Policy Amount, plus (B)
Monthly Interest, plus (C) the Monthly
Servicing Fee; less (y) all amounts on
deposit in the Spread Account on such
Distribution Date (after giving effect
to any funds withdrawn from the Spread
Account to pay Monthly Principal on
such Distribution Date). "Net
Principal Policy Amount" means the
Certificate Balance as of the first
Distribution Date minus all amounts
previously drawn on the Policy or from
the Spread Account with respect to
Monthly Principal.
Insurer ............................... MBIA Insurance Corporation.
Legal Investment ..................... The Class A-1 Certificates will be
eligible securities for purchase by
money market funds under Rule 2a-7 of
the Investment Company Act of 1940, as
amended.
Optional Sale ......................... The Class IC Certificateholder has the
right to cause the Trustee to sell all
of the Receivables (referred to herein
as an "Optional Sale") as of the last
day of any Collection Period on which
the Pool Balance is equal to or less
than 10% of the initial Certificate
Balance. The purchase price applicable
to the Optional Sale shall be equal to
the fair market value of the
Receivables (but not less than the sum
of (i) 100% of the outstanding
Certificate Balance, (ii) accrued and
unpaid interest on such amount at the
weighted average note rates of the
Receivables less any payments received
but not applied to interest or
principal and (iii) any amounts due
the Insurer).
Clean-Up Call Date...................... If the Class IC Certificateholder does
not exercise its rights with respect
to the Optional Sale on the
Distribution Date on which the
Optional Sale was first permitted (the
"Clean-Up Call Date"), the Class A-5
Pass-Through Rate will be increased by
0.50% after the Clean-Up Call Date.
Tax Status .......................... In the opinion of special tax counsel
to the Depositor, the Trust will not
be treated as an association taxable
as a corporation or as a "publicly
traded partnership" taxable as a
corporation. The Trustee and the
Certificateholders will agree to treat
the Trust as a partnership for federal
income tax purposes, which will not be
subject to federal income tax at the
Trust level.
<PAGE>
Ratings ............................... As a condition to the issuance of the
Class A Certificates, the Class A
Certificates must be rated in the
highest category by Moody's Investors
Service, Inc. and Standard & Poor's
Ratings Services, a division of The
McGraw-Hill Companies, Inc. (each a
"Rating Agency" and collectively, the
"Rating Agencies"). A security rating
is not a recommendation to buy, sell
or hold securities and may be subject
to revision or withdrawal at any time
by the assigning rating agency. See
"Risk Factors-- Certificate Rating."
ERISA Considerations .................. Subject to the considerations
discussed under "ERISA Considerations"
in the Prospectus Supplement and the
Prospectus, the Class A Certificates
may be eligible for purchase by
employee benefit plans subject to
Title I of the Employee Retirement
Income Security Act of 1974, as
amended ("ERISA"). Any benefit plan
fiduciary considering the purchase of
a Class A Certificate should, among
other things, consult with experienced
legal counsel in determining whether
all required conditions for such
purchase have been satisfied.
<PAGE>
RISK FACTORS
Investors should carefully consider the information set forth below as
well as the other investment considerations described in this Term Sheet.
Limited Liquidity
There is currently no secondary market for the Class A Certificates.
The Underwriters currently intend to make a market in the Class A Certificates,
but are under no obligation to do so. There can be no assurance that a secondary
market will develop or, if one does develop, that it will provide Class A
Certificateholders with liquidity of investment or that it will continue for the
life of the Class A Certificates.
Certificates Solely Obligations of the Trust
The Class A Certificates are interests in the Trust only and do not
represent the obligation of any other person. The Class A Certificateholders are
senior in right and interest to the Class IC Certificateholder. The Trustee will
withdraw funds from the Spread Account, up to the full balance of the funds on
deposit in such account, only in the event that Available Funds are insufficient
in accordance with the Pooling and Servicing Agreement to distribute Monthly
Interest and Monthly Principal (after payment of the Monthly Servicing Fee). The
amount on deposit in the Spread Account is intended to increase over time to an
amount equal to the Required Spread Amount. There is no assurance that such
growth will occur or that the balance in the Spread Account will always be
sufficient to assure payment in full of Monthly Principal and Monthly Interest.
If the amount on deposit in the Spread Account is reduced to zero after giving
effect to all amounts to be deposited to and withdrawn from the Spread Account
pursuant to the Pooling and Servicing Agreement, on any Distribution Date the
Trustee will draw on the Policy, in an amount equal to the shortfall in respect
of Monthly Interest and Monthly Principal, up to the Policy Amount. If the
Spread Account is reduced to zero and there is a default under the Policy, the
Trust will depend solely on current distributions on the Receivables to make
distributions on the Class A Certificates and distributions on the Class A
Certificates may be made pro rata based on the amounts to which Class A
Certificateholders of each class are entitled. See "The Receivables Pool --
Delinquencies, Repossessions and Net Losses."
Certificate Rating
It is a condition of issuance of the Class A Certificates that the
Class A Certificates be rated in the highest applicable category by the Rating
Agencies. Such ratings will reflect only the views of the relevant rating
agency. There is no assurance that any such rating will continue for any period
of time or that it will not be revised or withdrawn entirely by such rating
agency if, in its judgment, circumstances so warrant. A revision or withdrawal
of such rating may have an adverse effect on the market price of the Class A
Certificates. A security rating is not a recommendation to buy, sell or hold
securities.
<PAGE>
FORMATION OF THE TRUST
The Depositor will establish the Trust by selling and assigning the
Trust property, as described below, to the Trustee in exchange for the Class A
Certificates. The Depositor will retain the Class IC Certificate. UAC will be
responsible for servicing the Receivables pursuant to the Pooling and Servicing
Agreement and will be compensated for acting as the Servicer. To facilitate
servicing and to minimize administrative burden and expense, the Servicer will
be appointed custodian of the Receivables by the Trustee, but will not stamp the
Receivables to reflect the sale and assignment of the Receivables to the Trust
or make any notation of the Trust's lien on the certificates of title of the
Financed Vehicles. In the absence of such notation on the certificates of title,
the Trustee may not have perfected security interests in the Financed Vehicles
securing the Receivables. Under the terms of the Pooling and Servicing
Agreement, UAC may delegate its duties as Servicer and custodian; however, any
such delegation will not relieve UAC of its liability and responsibility with
respect to such duties.
The Depositor will establish the Spread Account for the benefit of the
Class A Certificateholders and the Insurer and will obtain the Policy.
Withdrawals from the Spread Account and, only after such withdrawals, draws on
the Policy will be made in accordance with the Pooling and Servicing Agreement
in the event that sufficient funds are not available (after payment of the
Monthly Servicing Fee) to distribute Monthly Interest and Monthly Principal, up
to the Policy Amount. If the Spread Account is exhausted and there is a default
under the Policy, the Trust will look only to the Obligors on the Receivables
and the proceeds from the repossession and sale of Financed Vehicles that secure
defaulted Receivables for distributions of interest and principal on the Class A
Certificates. In such event, certain factors, such as the Trustee's not having
perfected security interests in some of the Financed Vehicles, may affect the
Trust's ability to realize on the collateral securing the Receivables, and thus
may reduce the proceeds to be distributed to Class A Certificateholders.
THE RECEIVABLES POOL
The Receivables were selected from the portfolio of UAFC, for purchase
by the Depositor by several criteria, including that each Receivable: (i) has an
original number of payments of not more than 84 payments and not less than 12
payments (except that approximately 0.99% of the aggregate principal balance of
the Receivables as of the Cutoff Date consist of contracts which have been
amended or modified after origination to provide that the term from the time of
origination to maturity may exceed 84 payments); (ii) has a remaining maturity
of not more than 84 months and not less than three months; (iii) provides for
level monthly payments that fully amortize the amount financed over the
remaining term and (iv) has a contract rate of interest (a "Contract Rate")
(exclusive of prepaid finance charges) of not less than 4.95%. The weighted
average remaining maturity of the Receivables will be approximately 69 months as
of the Cutoff Date.
Approximately 2.61% of the aggregate principal balance of the
Receivables as of the Cutoff Date were selected from the "non-prime" or "Tier
II" portfolio of UAFC (the "Tier II Receivables"). See "-- Delinquencies,
Repossessions and Net Losses."
<PAGE>
Approximately 98.10% of the aggregate principal balance of the
Receivables as of the Cutoff Date are simple interest contracts which provide
for equal monthly payments. Approximately 1.90% of the aggregate principal
balance of the Receivables as of the Cutoff Date are Precomputed Receivables
originated in the State of California. All of such Precomputed Receivables are
rule of 78's receivables. Approximately 26.14% of the aggregate principal
balance of the Receivables as of the Cutoff Date represent financing of new
vehicles; the remainder of the Receivables represent financing of used vehicles.
Receivables representing more than 10% of the aggregate principal
balance of the Receivables as of the Cutoff Date were originated in metropolitan
areas in the State of Texas. The performance of the Receivables in the aggregate
could be adversely affected in particular by the development of adverse economic
conditions in such metropolitan areas.
Composition of the Receivables as of the Cutoff Date
<TABLE>
<CAPTION>
Weighted
Aggregate Original Average
Number of Principal Principal Contract
Receivables Balance Balance Rate
----------- ------- ------- ----
<S> <C> <C> <C> <C>
New Automobiles and Light-Duty Trucks............ 4,646 $ 82,281,930.80 $ 91,111,263.98 11.89%
Used Automobiles and Light-Duty Trucks........... 18,419 237,291,296.38 255,450,175.27 13.14%
New Vans (1)..................................... 452 9,570,031.25 10,644,778.80 11.73%
Used Vans (1).................................... 1,718 22,235,851.77 24,888,218.19 13.18%
------ --------------- --------------- -----
All Receivables.................................. 25,235 $351,379,110.20 $382,094,436.24 12.81%
====== =============== =============== =====
Weighted Weighted Percent of
Average Average Aggregate
Remaining Original Principal
Term(2) Term(2) Balance(3)
------- ------- ----------
New Automobiles and Light-Duty Trucks.......... 73.6mos. 77.3mos. 23.42%
Used Automobiles and Light-Duty Trucks......... 67.1 69.7 67.53
New Vans (1)................................... 75.4 79.5 2.72
Used Vans (1).................................. 66.0 69.6 6.33
---- ---- ------
All Receivables................................ 68.8mos. 71.8mos. 100.00%
==== ==== ======
</TABLE>
- ----------
(1) References to vans include minivans and van conversions.
(2) Based on scheduled maturity and assuming no prepayments of the Receivables.
(3) Sum may not equal 100% due to rounding.
<PAGE>
Distribution of the Receivables by Remaining Term as of the Cutoff Date
<TABLE>
<CAPTION>
Percent Percent
of Total Aggregate of Aggregate
Remaining Number of Number of Principal Principal
Term Range Receivables Receivables (1) Balance Balance(1)
---------- ----------- --------------- ------- ----------
<S> <C> <C> <C> <C> <C> <C>
1 to 12 months....................... 798 3.16% $ 1,649,455.44 0.47%
13 to 24 months....................... 2,006 7.95 8,939,789.06 2.54
25 to 36 months....................... 813 3.22 5,499,467.32 1.57
37 to 48 months....................... 1,769 7.01 16,688,976.26 4.75
49 to 60 months....................... 4,834 19.16 61,191,393.23 17.41
61 to 72 months....................... 7,631 30.24 118,016,980.36 33.59
73 to 84 months....................... 7,384 29.26 139,393,048.53 39.67
------ ------ --------------- ------
Total....................... 25,235 100.00% $351,379,110.20 100.00%
====== ====== =============== ======
</TABLE>
- ------------
(1) Sum may not equal 100% due to rounding.
<PAGE>
Geographic Distribution of the Receivables as of the Cutoff Date
<TABLE>
<CAPTION>
Percent Percent
of Total Aggregate of Aggregate
Number of Number of Principal Principal
State (1) (2) Receivables Receivables (3) Balance Balance (3)
- ------------- ----------- --------------- ------- -----------
<S> <C> <C> <C> <C>
Arizona................................. 1,076 4.26% $14,930,514.49 4.25%
California.............................. 1,864 7.39 28,430,585.38 8.09
Colorado................................ 442 1.75 5,040,771.04 1.43
Florida................................. 1,830 7.25 26,400,431.09 7.51
Georgia................................. 863 3.42 13,484,418.49 3.84
Idaho................................... 35 0.14 573,212.08 0.16
Illinois................................ 1,537 6.09 21,613,595.97 6.15
Indiana................................. 1,006 3.99 10,612,570.62 3.02
Iowa ................................... 721 2.86 10,351,735.65 2.95
Kansas.................................. 285 1.13 3,760,700.27 1.07
Kentucky................................ 206 0.82 3,024,336.57 0.86
Maryland................................ 315 1.25 4,764,692.87 1.36
Massachussetts.......................... 362 1.43 5,693,171.15 1.62
Michigan................................ 460 1.82 6,935,258.05 1.97
Minnesota............................... 545 2.16 7,776,807.83 2.21
Missouri................................ 641 2.54 7,042,353.02 2.00
Nebraska................................ 168 0.67 2,407,863.97 0.69
Nevada.................................. 98 0.39 1,550,661.38 0.44
New Mexico.............................. 84 0.33 1,228,778.53 0.35
North Carolina.......................... 2,484 9.84 35,006,388.87 9.96
Ohio .................................. 1,854 7.35 21,446,391.47 6.10
Oklahoma................................ 1,201 4.76 13,653,223.14 3.89
Oregon.................................. 118 0.47 2,029,651.04 0.58
Pennsylvania............................ 175 0.69 2,606,400.53 0.74
South Carolina.......................... 834 3.30 12,873,997.83 3.66
South Dakota............................ 7 0.03 104,944.23 0.03
Tennessee............................... 657 2.60 10,608,427.75 3.02
Texas................................... 3,289 13.03 47,192,004.96 13.43
Utah ................................... 216 0.86 3,452,973.57 0.98
Virginia................................ 1,406 5.57 19,997,778.77 5.69
Washington.............................. 123 0.49 2,243,207.52 0.64
Wisconsin............................... 333 1.32 4,541,262.07 1.29
------ ------ --------------- ------
Total................................... 25,235 100.00% $351,379,110.20 100.00%
====== ====== =============== ======
</TABLE>
(1) Based on address of the Dealer selling the related Financed Vehicle.
(2) Receivables originated in Ohio were solicited by Dealers for direct
financing by UAC or the Predecessor. All other Receivables were originated
by Dealers and purchased from such Dealers by UAC or the Predecessor.
(3) Sum may not equal 100% due to rounding.
<PAGE>
Distribution of Receivables by Financed
Vehicle Model Year as of the Cutoff Date
<TABLE>
<CAPTION>
Percent Percent
of Total Aggregate of Aggregate
Model Number of Number of Principal Principal
Year Receivables Receivables(1) Balance Balance(1)
---- ----------- -------------- ------- ----------
<S> <C> <C> <C> <C>
1984 and earlier..................... 6 0.02% $ 44,091.85 0.01%
1985................................. 10 0.04 56,536.73 0.02
1986................................. 13 0.05 72,405.03 0.02
1987................................. 35 0.14 180,946.30 0.05
1988................................. 73 0.29 395,085.25 0.11
1989................................. 282 1.12 1,161,627.46 0.33
1990................................. 748 2.96 4,154,903.60 1.18
1991................................. 1,180 4.68 7,408,786.82 2.11
1992................................. 1,806 7.16 14,580,395.06 4.15
1993................................. 2,783 11.03 26,447,512.19 7.53
1994................................. 3,508 13.90 40,019,048.40 11.39
1995................................. 4,064 16.10 59,439,707.80 16.92
1996................................. 3,142 12.45 51,064,457.83 14.53
1997................................. 3,009 11.92 52,535,660.70 14.95
1998................................. 4,370 17.32 88,800,679.93 25.27
1999................................. 206 0.82 5,017,265.25 1.43
------ ------ --------------- ------
Total.............................. 25,235 100.00% $351,379,110.20 100.00%
====== ====== =============== ======
</TABLE>
- ------------
(1) Sum may not equal 100% due to rounding.
<PAGE>
Distribution of the Receivables by Contract Rate as of the Cutoff Date
<TABLE>
<CAPTION>
Percent Percent
of Total Aggregate of Aggregate
Number of Number of Principal Principal
Contract Rate Range Receivables Receivables(1) Balance Balance(1)
- ------------------- ----------- -------------- ------- ----------
<S> <C> <C> <C> <C>
Less than 7.000%...................... 126 0.50% $ 1,083,340.89 0.31%
7.000 to 7.999%...................... 288 1.14 3,103,921.79 0.88
8.000 to 8.999%...................... 771 3.06 8,389,543.51 2.39
9.000 to 9.999%...................... 1,464 5.80 17,552,809.55 5.00
10.000 to 10.999%...................... 2,610 10.34 36,251,253.39 10.32
11.000 to 11.999%...................... 3,847 15.24 58,064,942.07 16.52
12.000 to 12.999%...................... 5,513 21.85 82,558,872.53 23.50
13.000 to 13.999%...................... 4,572 18.12 65,388,961.97 18.61
14.000 to 14.999%...................... 2,679 10.62 36,607,751.91 10.42
15.000 to 15.999%...................... 1,302 5.16 16,453,202.03 4.68
16.000 to 16.999%...................... 764 3.03 10,303,889.51 2.93
17.000 to 17.999%...................... 399 1.58 5,228,041.40 1.49
18.000 to 18.999%...................... 650 2.58 7,897,347.42 2.25
19.000 to 19.999%...................... 65 0.26 688,812.54 0.20
20.000 to 20.999%...................... 62 0.25 642,692.79 0.18
21.000 to 21.999%...................... 98 0.39 953,525.12 0.27
22.000 to 22.999%...................... 8 0.03 79,908.32 0.02
23.000 to 23.999%...................... 1 0.00 8,954.72 0.00
24.000 to 24.999%...................... 5 0.02 34,113.14 0.01
25.000 to 25.999%...................... 10 0.04 81,449.99 0.02
26.000 to 26.999%...................... 1 0.00 5,775.61 0.00
------ ------ --------------- ------
Total...................... 25,235 100.00% $351,379,110.20 100.00%
====== ====== =============== ======
</TABLE>
(1) Sum may not equal 100% due to rounding.
<PAGE>
Delinquencies, Repossessions and Net Losses
Set forth below is certain information concerning the experience of UAC
and the Predecessor (as defined herein) pertaining to delinquencies,
repossessions, and net losses on its prime fixed rate retail automobile, light
truck and van receivables serviced by UAC and the Predecessor. There can be no
assurance that the delinquency, repossession, and net loss experience on the
Receivables will be comparable to that set forth below.
<TABLE>
<CAPTION>
Delinquency Experience (1) (2)
At June 30, At December 31, At March 31, At June 30,
1996 1997 1997 1998 1998
------------------- ------------------ ------------------- ------------------- ----------------------
(Dollars in thousands)
Number of Number of Number of Number of Number of
Receivables Amount Receivables Amount Receivables Amount Receivables Amount Receivables Amount
----------- ------ ----------- ------ ----------- ------ ----------- ------ ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Servicing portfolio....... 147,722 $1,548,538 173,693 $1,860,272 179,962 $1,920,930 181,026 $1,929,151 184,003 $1,978,920
------- ---------- ------- ---------- ------- ---------- ------- ---------- ------- ----------
Delinquencies
30-59 days............. 1,602 $ 17,030 2,487 $ 27,373 3,954$ 41,778 3,426 $ 35,449 3,179 $ 32,967
60-89 days............. 694 7,629 1,646 18,931 2,274 25,933 1,923 21,818 1,907 20,819
90 days or more........ 333 3,811 723 8,826 688 8,048 623 7,088 657 6,993
------- ---------- ------- ---------- ------- ---------- ------- ---------- ------- ----------
Total delinquencies....... 2,629 $ 28,470 4,856 $ 55,130 6,916 $ 75,759 5,972 $ 64,355 5,743 $ 60,779
======= ========== ======= ========== ======= ========== ======= ========== ======= ==========
Total delinquencies as a
percent of servicing
portfolio............ 1.78% 1.84% 2.80% 2.96% 3.84% 3.94% 3.30% 3.34% 3.12% 3.07%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Credit Loss Experience (1) (2)
Year ended June 30, Three Months Ended Three Months Ended
1996 1997 December 31, 1997 (6) March 31, 1998 (6)
------------------- ------------------- ---------------------- -----------------------
(Dollars in thousands)
Number of Number of Number of Number of
Receivables Amount Receivables Amount Receivables Amount Receivables Amount
----------- ------ ----------- ------ ----------- ------ ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Avg. servicing
portfolio(3)........... 132,363 $1,343,770 164,858 $1,759,666 179,334 $1,916,778 180,631 $1,924,930
Gross charge-offs......... 3,663 $ 40,815 6,280 $ 70,830 1,977 $ 22,373 1,886 $ 20,767
Recoveries (4)............ 19,543 28,511 8,527 8,186
--------- ---------- ---------- ----------
Net losses................ $ 21,272 $ 42,319 $ 13,846 $ 12,581
========= ========== ========== ==========
Gross charge-offs as a % of
avg. servicing
portfolio(5)........... 2.77% 3.04% 3.81% 4.03% 4.41% 4.67% 4.18% 4.32%
Recoveries as a % of gross
charge-offs............ 47.88% 40.25% 38.11% 39.42%
Net losses as a % of avg.
servicing portfolio(5). 1.58% 2.40% 2.89% 2.61%
</TABLE>
Three Months Ended Year Ended
June 30, 1998 (6) June 30, 1998
--------------------- ----------------------
Number of Number of
Receivables Amount Receivables Amount
----------- ------ ----------- ------
Avg. servicing
portfolio(3)........... 183,402 $1,968,595 179,822 $1,922,977
Gross charge-offs......... 1,992 $ 21,129 7,909 $ 87,325
Recoveries (4)............ 8,698 33,546
---------- ----------
Net losses................ $ 12,431 $ 53,779
========== ==========
Gross charge-offs as a % of
avg. servicing
portfolio(5)........... 4.34% 4.29% 4.40% 4.54%
Recoveries as a % of gross
charge-offs............ 41.17% 38.41%
Net losses as a % of avg.
servicing portfolio(5). 2.53% 2.80%
<PAGE>
(1) There is generally no recourse to Dealers under any of the receivables
in the portfolio serviced by UAC or the Predecessor, except to the
extent of representations and warranties made by Dealers in connection
with such receivables.
(2) The delinquency experience and credit loss experience of the Tier II
Receivables are not included herein but are described on the following
page.
(3) Equals the monthly arithmetic average, and includes receivables sold in
prior securitization transactions.
(4) Recoveries include recoveries on receivables previously charged off,
cash recoveries and unsold repossessed assets carried at fair market
value.
(5) Variation in the size of the portfolio serviced by UAC will affect the
percentages in "Gross charge-offs as a percentage of average servicing
portfolio" and "Net losses as a percentage of average servicing
portfolio."
(6) Percentages are annualized in "Gross charge-offs as a percentage of
average servicing portfolio" and "Net losses as a percentage of average
servicing portfolio" for partial years.
UAC continues to see steady improvement in delinquency and credit loss
trends as demonstrated by the last three quarters. UAC attributes the
improvement to strategic efforts made by its origination department in
originating loans and its collection department in collecting delinquent
accounts. The efforts in the origination department include implementing tighter
credit standards beginning in March 1997, developing quality control screens
that rank potential obligors by predetermined debt and income ratios in addition
to credit scores and growing the portfolio with quality obligors through dealer
development and dealer expansion. The collection department's efforts include
restructuring the collectors to form specialized sub-departments of collectors
for auxiliary functions such as skip tracing and high risk accounts, initiating
collection calls earlier in the delinquency process through the use of a power
dialer, targeting higher risk obligors through the use of sophisticated credit
scoring and increasing collection efforts on charged-off accounts.
As indicated by the foregoing delinquency experience table, delinquency
rates on the prime auto portfolio based upon outstanding loan balances of
accounts 30 days past due and over decreased to 3.07% at June 30, 1998, compared
to 3.34%, 3.94% and 4.33% at March 31, 1998, December 31, 1997, and September
30, 1997, respectively. However, the delinquency rate at June 30, 1998, has
increased slightly from 2.96% at June 30, 1997, for UAC's prime servicing
portfolio. The decreased delinquency since September 30, 1997, is primarily
attributed to the factors discussed in the foregoing paragraph.
As indicated in the foregoing credit loss experience table, net credit
losses on the prime auto portfolio totaled approximately $53.8 million for the
year ended June 30, 1998, or 2.80% of the average servicing portfolio, while net
credit losses for the quarter ended June 30, 1998, were 2.53% (annualized)
compared to 2.61% (annualized), 2.89% (annualized) and 3.17% (annualized) for
the quarters ended March 31, 1998, December 31, 1997, and September 30, 1997,
respectively, and 2.40% for the year ended June 30, 1997. Decreased credit
losses since September 30, 1997, are primarily a result of strategic efforts
made by UAC as described above and due to improvements in recovery rates.
<PAGE>
Recoveries have shown gradual improvements over the last three quarters
which contributed to the improvement in credit losses. Recoveries as a
percentage of gross charge-offs improved to 41.17% for the quarter ended June
30, 1998, from 39.42%, 38.11% and 35.28% for the quarters ended March 31, 1998,
December 31, 1997, and September 30, 1997, respectively. Although recovery rates
showed signs of improvement during the past three quarters, UAC continues to
look for ways to improve recovery rates, including more diligently monitoring
and expanding the repossession and remarketing operations.
UAC's non-prime lending began in 1994 and was replaced by UAC's "Tier
II" lending on March 1, 1998. The majority of the Tier II Receivables were
originated under UAC's Tier II lending from applications that did not qualify
for credit under UAC's "Tier I" lending. Although it is too early to determine
actual trends with respect to delinquency and credit losses of the Tier II
Receivables, UAC believes that the rate of delinquency and credit loss
associated with the Tier II Receivables will more closely follow the experience
of UAC's non-prime portfolio rather than the prime or Tier I portfolio which is
set forth on the preceding page. At June 30, 1998, UAC's non-prime servicing
portfolio consisted of approximately $66.9 million in loans and had a
delinquency rate based upon outstanding loan balances of accounts 30 days past
due and over of 8.29% compared to 6.18% at June 30, 1997. For the years ended
June 30, 1998, and 1997, the credit losses on the non-prime portfolio were 7.67%
and 5.18% of the average non-prime servicing portfolio, respectively. As the
Tier II Receivables account for approximately 2.61% of the Receivables as of the
Cutoff Date, UAC believes that the credit quality of the Tier II Receivables
will not affect the credit quality of the Receivables as a whole in a materially
adverse manner.
UAC's expectations with respect to delinquency and credit loss trends
constitute forward-looking statements and are subject to important factors that
could cause actual results to differ materially from those projected by UAC.
Such factors include, but are not limited to, general economic factors affecting
obligors' abilities to make timely payments on their indebtedness such as
employment status, rates of consumer bankruptcy, consumer debt levels generally
and the interest rates applicable thereto. In addition, credit losses are
affected by UAC's ability to realize on recoveries of repossessed vehicles,
including, but not limited to, the market for used cars at any given time.
YIELD AND PREPAYMENT CONSIDERATIONS
Monthly Interest will be distributed to Class A Certificateholders on
each Distribution Date to the extent of the pass-through rate applied to the
applicable Certificate Balance as of the preceding Distribution Date or the
Closing Date, as applicable (after giving effect to distributions of principal
on such preceding Distribution Date). In the event of a full or partial
prepayment on a Receivable, Class A Certificateholders will receive interest for
the full month of such prepayment either (i) through the distribution of
interest paid on the Receivables, (ii) from a withdrawal from the Spread
Account, (iii) by an Advance by the Servicer or (iv) by a draw on the Policy.
<PAGE>
Although the Receivables will have different Contract Rates, each
Receivable's Contract Rate generally will exceed the sum of (a) the weighted
average of the Class A-1 Pass-Through Rate, the Class A-2 Pass-Through Rate, the
Class A-3 Pass-Through Rate, the Class A-4 Pass-Through Rate and the Class A-5
Pass-Through Rate, (b) the per annum rate used to calculate the fee payable to
the Insurer in respect of the Policy and (c) the per annum rate used to
calculate the Monthly Servicing Fee. The Contract Rate on a small percentage of
the Receivables, however, will be less than the foregoing sum. Disproportionate
rates of prepayments between Receivables with higher and lower Contract Rates
could affect the ability of the Trust to distribute Monthly Interest to Class A
Certificateholders.
THE DEPOSITOR AND UAC
UAC currently acquires loans from over 3,500 manufacturer franchised
automobile dealerships in 32 states. UAC is an Indiana corporation, formed in
December 1993 by UAC's predecessor, Union Federal Savings Bank of Indianapolis
(the "Predecessor"), to succeed to the Predecessor's indirect automobile finance
business, which the Predecessor had operated since 1986. UAC began purchasing
and originating receivables in April 1994. For the fiscal years ended June 30,
1995, 1996, 1997, and 1998, UAC and/or the Predecessor acquired prime loans
aggregating $767 million, $995 million, $1,076 million and $945 million,
respectively, representing annual increases of 30%, 8% and an annual decrease of
12%, respectively. Of the $2.0 billion of loans in the servicing portfolio of
UAC (consisting of the principal balance of loans held for sale and securitized
loans) at June 30, 1998, approximately 76% represented loans on used cars and
approximately 24% represented loans on new cars.
THE INSURER
MBIA Insurance Corporation (the "Insurer") is the principal operating
subsidiary of MBIA Inc., a New York Stock Exchange listed company (the
"Company"). The Company is not obligated to pay the debts of or claims against
the Insurer. The Insurer is domiciled in the State of New York and licensed to
do business in and subject to regulation under the laws of all 50 states, the
District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the
Northern Mariana Islands, the Virgin Islands of the United States and the
Territory of Guam. The Insurer has two European branches, one in the Republic of
France and the other in the Kingdom of Spain. New York has laws prescribing
minimum capital requirements, limiting classes and concentrations of investments
and requiring the approval of policy rates and forms. State laws also regulate
the amount of both the aggregate and individual risks that may be insured, the
payment of dividends by the Insurer, changes in control and transactions among
affiliates. Additionally, the Insurer is required to maintain contingency
reserves on its liabilities in certain amounts and for certain periods of time.
Effective February 17, 1998, the Company acquired all of the
outstanding stock of Capital Markets Assurance Corporation ("CMAC") through a
merger with its parent CapMAC Holdings Inc. Pursuant to a reinsurance agreement,
CMAC has ceded all of its net insured risks (including any amounts due but
unpaid from third party reinsurers), as well as its unearned premiums and
contingency reserves, to the Insurer. The Company is not obligated to pay the
debts of or claims against CMAC.
<PAGE>
The consolidated financial statements of the Insurer, a wholly owned
subsidiary of the Company, and its subsidiaries as of December 31, 1997, and
December 31, 1996, and for each of the three years in the period ended December
31, 1997, prepared in accordance with generally accepted accounting principles
("GAAP"), included in the Annual Report on Form 10-K of the Company for the year
ended December 31, 1997, and the consolidated financial statements of the
Insurer and its subsidiaries of June 30, 1998, and for the six month periods
ending June 30, 1998, and June 30, 1997, included in the Quarterly Report on
Form 10-Q of the Company for the period ending June 30, 1998, are hereby
incorporated by reference into this Term Sheet and shall be deemed to be a part
hereof. Any statement contained in a document incorporated by reference herein
shall be modified or superseded for purposes of this Term Sheet to the extent
that a statement contained herein or in any other subsequently filed document
which also is incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Term Sheet.
All financial statements of the Insurer and its subsidiaries included
in documents filed by the Company 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 Term Sheet and prior to the termination of the offering of the Class A
Certificates shall be deemed to be incorporated by reference into this Term
Sheet and to be a part hereof from the respective dates of filing such
documents.
The tables below present selected financial information of the Insurer
determined in accordance with statutory accounting practices prescribed or
permitted by insurance regulatory authorities ("SAP") as well as GAAP:
SAP
-----------------------------------------
December 31 June 30
1997 1998
----------- -----------
(Audited) (Unaudited)
(in millions)
Admitted Assets $5,256 $6,048
Liabilities 3,496 3,962
Capital and Surplus 1,760 2,086
GAAP
-----------------------------------------
December 31 June 30
1997 1998
----------- -----------
(Audited) (Unaudited)
(in millions)
Assets $5,988 $6,794
Liabilities 2,624 2,977
Shareholder's Equity 3,364 3,817
Copies of the financial statements of the Insurer incorporated by
reference herein and copies of the Insurer's 1997 year end audited financial
statements prepared in accordance with SAP are available, without charge, from
the Insurer. The address of the Insurer is 113 King Street, Armonk, New York
10504. The telephone number of the Insurer is (914) 273-4545.
<PAGE>
The Insurer does not accept any responsibility for the accuracy or
completeness of this Term Sheet or any information or disclosure contained
herein, or omitted herefrom, other than with respect to the accuracy of the
information regarding the Insurer set forth under the heading "The Insurer."
Additionally, the Insurer makes no representation regarding the Class A
Certificates or the advisability of investing in the Class A Certificates.
The Policy is not covered by the Property/Casualty Insurance Security
Fund specified in Article 76 of the New York Insurance Law.
Moody's Investors Service, Inc. rates the claims paying ability of the
Insurer "Aaa."
Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. rates the claims paying ability of the Insurer "AAA."
Fitch IBCA, Inc. (formerly known as Fitch Investors Service, L.P.)
rates the claims paying ability of the Insurer "AAA."
Each rating of the Insurer should be evaluated independently. The
ratings reflect the respective rating agency's current assessment of the
creditworthiness of the Insurer and its ability to pay claims on its policies of
insurance. Any further explanation as to the significance of the above ratings
may be obtained only from the applicable rating agency.
The above ratings are not recommendations to buy, sell or hold the
securities, and such ratings may be subject to revision or withdrawal at any
time by the rating agencies. Any downward revision or withdrawal of any of the
above ratings may have an adverse effect on the market price of the securities.
The Insurer does not guaranty the market price of the securities nor does it
guaranty that the ratings on the securities will not be revised or withdrawn.
THE CLASS A CERTIFICATES
The Class A Certificates will be issued pursuant to the Pooling and
Servicing Agreement. Copies of the Pooling and Servicing Agreement (without
exhibits) may be obtained by Class A Certificateholders upon request in writing
to the Servicer. Citations to the relevant sections of the Pooling and Servicing
Agreement appear below in parentheses. The following summary does not purport to
be complete and is subject to and qualified in its entirety by reference to the
Pooling and Servicing Agreement.
<PAGE>
Distributions
In general, it is intended that the Trustee distribute to the Class A
Certificateholders on each Distribution Date beginning October 8, 1998, the
aggregate principal payments, including full and partial prepayments (except
certain prepayments in respect of Precomputed Receivables), received on the
Receivables during the related Collection Period, plus Monthly Interest.
Principal to be distributed to the Class A Certificateholders will be allocated
on the basis of the Principal Distribution Sequence. (Section 9.04.) Monthly
Interest and Monthly Principal may be provided by a payment made by or on behalf
of the Obligor, by an Advance made by the Servicer to cover interest due on a
defaulted Receivable or by a withdrawal from the Spread Account. Monthly
Interest and Monthly Principal may be provided by a draw on the Policy if there
are not sufficient funds (after payment of the Monthly Servicing Fee, permitted
reimbursements of outstanding Advances, and after giving effect to any
withdrawals from the Spread Account for the benefit of the Class A
Certificateholders) to pay Monthly Interest and Monthly Principal. Draws on the
Policy to pay Monthly Interest and Monthly Principal will be limited to the
Policy Amount.
[End of Term Sheet]
