<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 10, 1997
REGISTRATION NO. 333-33441
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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NATIONSCREDIT GRANTOR TRUST 1997-2
(Issuer with respect to the Certificates)
NATIONSCREDIT SECURITIZATION CORPORATION
(Exact name of Registrant as specified in its charter)
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<C> <C>
DELAWARE 75-2655744
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
</TABLE>
225 E. JOHN CARPENTER FREEWAY
IRVING, TEXAS 75062-2731
(972) 506-5026
(Address, including zip code and telephone number, including area code, of
registrant's principal executive offices)
JOHN STOCKTON, ESQ.
NATIONSCREDIT MANAGEMENT CORPORATION
ONE CANTERBURY GREEN
STAMFORD, CONNECTICUT 06901
(203) 352-4134
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
REED D. AUERBACH, ESQ.
STROOCK & STROOCK & LAVAN LLP
180 MAIDEN LANE
NEW YORK, NEW YORK 10038
(212) 806-5400
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable on or after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, 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 of 1933, 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 of 1933, please 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
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) PER UNIT(2) OFFERING PRICE(2) FEE(3)
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<S> <C> <C> <C> <C>
NationsCredit Grantor Trust Marine
Receivable-Backed Certificates.......... $120,803,719.92 100.00% $120,803,719.92 $36,607.19
- ------------------------------------------------------------------------------------------------------------------
NationsCredit Grantor Trust Recreational
Vehicle Receivable-Backed
Certificates............................ $48,386,535.24 100.00% $48,386,535.24 $14,662.59
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</TABLE>
(1) This Registration Statement also relates to market-making transactions that
will be made by NationsBanc Montgomery Securities, Inc., an affiliate of the
Registrant.
(2) Estimated solely for purposes of calculating the registration fee.
(3) $606.06 of which was 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 REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1993 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
EXPLANATORY NOTE
THIS REGISTRATION STATEMENT CONTAINS (i) A PROSPECTUS RELATING TO A PUBLIC
OFFERING BY NATIONSCREDIT GRANTOR TRUST 1997-2 (THE "TRUST") OF $120,803,719.92
AGGREGATE PRINCIPAL AMOUNT OF % MARINE RECEIVABLE-BACKED CERTIFICATES (THE
"MARINE CERTIFICATES") AND $48,386,535.24 AGGREGATE PRINCIPAL AMOUNT OF %
RECREATIONAL VEHICLE RECEIVABLE-BACKED CERTIFICATES (THE "RV CERTIFICATES" AND
TOGETHER WITH THE MARINE CERTIFICATES, THE "CERTIFICATES"); AND (ii) CERTAIN
PAGES OF A SECOND PROSPECTUS TO BE USED IN CONNECTION WITH OFFERS AND SALES
RELATING TO MARKET-MAKING TRANSACTIONS IN THE CERTIFICATES BY AN AFFILIATE OF
THE REGISTRANT. THE PROSPECTUS RELATING TO THE CERTIFICATES FOLLOWS IMMEDIATELY
AFTER THIS EXPLANATORY NOTE. FOLLOWING SUCH PROSPECTUS ARE ALTERNATE PAGES OF
THE MARKET-MAKING PROSPECTUS RELATING TO THE CERTIFICATES. ALL OTHER PAGES OF
THE PUBLIC OFFERING PROSPECTUS FOR THE CERTIFICATES ARE ALSO TO BE USED FOR THE
MARKET-MAKING PROSPECTUS.
<PAGE> 3
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to 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 OCTOBER 10, 1997
PROSPECTUS
NATIONSCREDIT LOGO
$169,190,255.16
NATIONSCREDIT GRANTOR TRUST 1997-2
$120,803,719.92 % MARINE RECEIVABLE-BACKED CERTIFICATES
$48,386,535.24 % RECREATIONAL VEHICLE RECEIVABLE-BACKED CERTIFICATES
NATIONSCREDIT SECURITIZATION CORPORATION
DEPOSITOR
NATIONSCREDIT COMMERCIAL CORPORATION OF AMERICA
SERVICER
The certificates issued by NationsCredit Grantor Trust 1997-2 (the "Trust")
and offered hereby will consist of (i) % Marine Receivable-Backed
Certificates (the "Marine Certificates") and (ii) % Recreational Vehicle
Receivable-Backed Certificates (the "RV Certificates" and together with the
Marine Certificates, the "Certificates"). The Trust will be formed pursuant to a
Pooling and Servicing Agreement (the "Agreement") to be entered into among
NationsCredit Securitization Corporation, as Depositor (the "Depositor"),
NationsCredit Commercial Corporation of America, as Servicer (the "Servicer"),
and Bankers Trust Company, as Trustee and as Collateral Agent (in such
capacities, the "Trustee" and the "Collateral Agent," respectively). The
property of the Trust will be comprised of three separate sub-trusts. The first
sub-trust will include a pool of marine retail installment sale contracts,
secured by new and used boats, boat motors and boat trailers (the "Marine
Contract Group" and each marine retail installment sale contract included in the
Marine Contract Group being a "Marine Receivable"), all payments received or due
thereunder after September 30, 1997 (the "Cutoff Date"), security interests in
the boats and marine equipment financed by the Marine Receivables and certain
other property as described under "The Trust." The second sub-trust will include
a pool of recreational vehicle retail installment sale contracts secured by new
and used recreational vehicles (the "RV Contract Group" and each recreational
vehicle retail installment sale contract included in the RV Contract Group being
a "RV Receivable" and each of the RV Receivables and the Marine Receivables
being, the "Receivables"), all payments received or due thereunder after the
Cutoff Date, security interests in the recreational vehicles financed by the RV
Receivables and certain other property as described under "The Trust". The third
sub-trust will include an irrevocable surety bond (the "Surety Bond"),
guaranteeing the Monthly Interest Payment (as defined herein) and the Monthly
Principal Payment (as defined herein), issued by Capital Markets Assurance
Corporation (the "Surety Bond Issuer"). The Certificates will represent
interests in the assets of the Trust as described under "The Trust." Except
under the limited circumstances described under "The
Certificates -- Distributions on Certificates" and "Credit Enhancement,"
payments to the Marine Certificateholders will be based on payments from the
Marine Contract Group and payments to the RV Certificateholders will be based on
payments from the RV Contract Group. The Servicer will be responsible for
servicing and maintaining custody of the Receivables. The aggregate principal
balance of the Marine Receivables (the "Marine Pool Balance") as of the Cutoff
Date was $120,803,719.92 (the "Initial Marine Pool Balance") and the aggregate
principal balance of the RV Receivables (the "RV Pool Balance" and together with
the Marine Pool Balance, the "Pool Balance") as of the Cutoff Date was
$48,386,535.24 (the "Initial RV Pool Balance" and together with the Initial
Marine Pool Balance, the "Initial Pool Balance").
(Continued on following page)
FOR INFORMATION CONCERNING THE RISKS OF AN INVESTMENT IN THE CERTIFICATES,
SEE "RISK FACTORS" COMMENCING ON PAGE 11.
THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST AND DO NOT REPRESENT AN
INTEREST IN OR OBLIGATION OF NATIONSCREDIT SECURITIZATION CORPORATION,
NATIONSCREDIT COMMERCIAL CORPORATION OF AMERICA OR ANY AFFILIATE THEREOF.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT TRUST(1)(2)
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<S> <C> <C> <C>
Per Marine Receivables-Backed Certificate.......... % % %
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Per Recreational Vehicle Receivable-Backed
Certificate...................................... % % %
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Total.............................................. $ $ $
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</TABLE>
(1) Plus interest calculated at the applicable Pass-Through Rate from October
15, 1997.
(2) Before deducting expenses payable by the Depositor estimated at $480,000.00.
The Certificates are offered subject to receipt and acceptance by the
Underwriters, to prior sale, and to the Underwriters' right to reject any order
in whole or in part and to withdraw, cancel or modify the offer without notice.
It is expected that delivery of the Certificates will be made in book-entry form
through the facilities of The Depository Trust Company, on or about October ,
1997.
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NATIONSBANC MONTGOMERY SECURITIES, INC. SALOMON BROTHERS INC
October , 1997
<PAGE> 5
(Continued from preceding page)
The Marine Certificate Balance (as defined herein) as of the Closing Date
(as defined herein) will equal $120,803,719.92 and the RV Certificate Balance
(as defined herein) as of the Closing Date will equal $48,386,535.24. Principal
and interest to the extent of the Pass-Through Rate of (i) % per annum on
the Marine Certificates will be distributed to holders of the Marine
Certificates ("Marine Certificateholders") and (ii) % per annum on the RV
Certificates will be distributed to holders of the RV Certificates ("RV
Certificateholders" and together with the Marine Certificateholders, the
"Certificateholders") as of the day prior to each Distribution Date (each a
"Record Date") on the 15th day of each month (or, if such day is not a business
day, the next following business day), beginning November 17, 1997 (each a
"Distribution Date"). The final scheduled Distribution Date of the Marine
Certificates will be on April 15, 2014 (the "Marine Final Scheduled Distribution
Date") and the final scheduled Distribution Date of the RV Certificates will be
on November 15, 2013 (the "RV Final Scheduled Distribution Date").
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
THE DEPOSITOR HAS FILED A REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") WITH THE SECURITIES AND EXCHANGE
COMMISSION (THE "COMMISSION") WITH RESPECT TO THE CERTIFICATES OFFERED PURSUANT
TO THIS PROSPECTUS. FOR FURTHER INFORMATION REFERENCE IS MADE TO THE
REGISTRATION STATEMENT AND AMENDMENTS THEREOF AND EXHIBITS THERETO, WHICH ARE
AVAILABLE FOR INSPECTION WITHOUT CHARGE AT THE OFFICE OF THE COMMISSION AT 450
FIFTH STREET N.W., WASHINGTON, D.C. 20549; NATWEST REGIONAL OFFICE, 7 WORLD
TRADE CENTER, SUITE 1300, NEW YORK, NEW YORK 10048; AND MIDWEST REGIONAL OFFICE,
CITICORP CENTER, 500 WEST MADISON STREET, SUITE 1400, CHICAGO, ILLINOIS 60661.
COPIES OF THE REGISTRATION STATEMENT AND AMENDMENTS THEREOF AND EXHIBITS THERETO
CAN BE OBTAINED FROM THE PUBLIC REFERENCE SECTION OF THE COMMISSION, 450 FIFTH
STREET, N.W., WASHINGTON, D.C. 20549 AT PRESCRIBED RATES AND ELECTRONICALLY
THROUGH THE COMMISSION'S ELECTRONIC GATHERING AND RETRIEVAL SYSTEM AT THE
COMMISSION'S WEB SITE (HTTP://WWW.SEC.GOV).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All reports and other documents filed by the Servicer on behalf of
NationsCredit Grantor Trust 1997-2, pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")
subsequent to the date of this Prospectus and prior to the termination of the
offering of the Certificates shall be deemed to be incorporated by reference
into this Prospectus and to be part hereof. Any statement contained herein or in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Servicer will provide without charge to each person 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 by reference, except
the exhibits to such documents (unless such exhibits are specifically
incorporated by reference in such documents). Written requests for such copies
should be directed to NationsCredit Commercial Corporation of America, 225 E.
John Carpenter Freeway, Irving, Texas 75062-2731, Attn:
2
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Lawrence Angelilli. Telephone requests for such copies should be directed to
NationsCredit Commercial Corporation of America at (972) 506-5026.
REPORTS TO CERTIFICATEHOLDERS BY THE TRUSTEE
Bankers Trust Company, as Trustee for the Certificateholders under the
Pooling and Servicing Agreement, including the Standard Terms and Conditions of
the Agreement (the "Agreement"), dated as of September 30, 1997, among the
Depositor, the Servicer, the Trustee and the Collateral Agent, will provide to
The Depository Trust Company ("DTC") for distribution to beneficial owners of
the Certificates (each a "Certificate Owner") monthly and annual reports
concerning the Receivables. See "The Certificates -- Statements to
Certificateholders."
3
<PAGE> 7
PROSPECTUS SUMMARY
This Prospectus Summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus. Reference is made
to the Index for the location of the definitions of certain capitalized terms
used herein.
Issuer:....................... NationsCredit Grantor Trust 1997-2 (the
"Trust") will be formed by the Depositor. The
assets of the Trust will include the Marine
Contract Group and the RV Contract Group and
all payments received or due thereunder after
September 30, 1997 (the "Cutoff Date");
security interests in new and used boats, boat
motors and boat trailers financed by the Marine
Contract Group (collectively, "Boats");
security interests in the new and used
recreational vehicles financed by the RV
Contract Group (collectively, "RVs"); certain
bank accounts and the proceeds thereof, the
Surety Bond described below; and certain other
property described under "The Trust." See "The
Trust," "NationsCredit Commercial's Portfolio
of Marine Contracts and Recreational Vehicle
Contracts" and "Risk Factors -- Lack of
Perfected Security Interests in Boats and RVs."
The Depositor shall cause the Trust to purchase
the Receivables directly or indirectly from
NationsCredit Commercial (as defined below) or
its affiliates on or prior to the date of
issuance of the Certificates (the "Closing
Date").
Depositor:.................... NationsCredit Securitization Corporation (the
"Depositor"), a wholly-owned subsidiary of
NationsCredit Commercial Corporation of America
("NationsCredit Commercial"), which in turn is
an indirect wholly-owned subsidiary of
NationsCredit Corporation ("NationsCredit").
See "The Depositor."
Servicer:..................... NationsCredit Commercial (sometimes referred to
herein as the "Servicer"), an indirect
wholly-owned subsidiary of NationsCredit. See
"The Servicer."
Securities Offered:........... Each % Marine Receivable-Backed
Certificate (a "Marine Certificate") and
each % Recreational Vehicle Receivable-
Backed Certificate (a "RV Certificate" and
together with the Marine Certificates, the
"Certificates") represents an interest in the
assets of the Trust, in each case, as described
under "The Trust." Except under the limited
circumstances described under "The
Certificates -- Distributions on Certificates"
and "Credit Enhancement," payments to Marine
Certificateholders will be based on payments
from the Marine Contract Group and payments to
RV Certificateholders will be based on payments
from the RV Contract Group. Except under the
limited circumstances described herein, the
Certificates will be issued pursuant to the
Agreement in book-entry form only and shall be
available in denominations of $1,000 and
integral multiples thereof. See "The
Certificates -- General," "-- Book-Entry
Registration" and "-- Definitive Certificates."
Pass-Through Rate:............ The Pass-Through Rate for the Marine
Certificates shall equal % per annum and
the Pass-Through Rate for the RV Certifi
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<PAGE> 8
cates shall equal % per annum, in each
case payable monthly at one-twelfth of the
applicable annual rate.
Interest:..................... On each Distribution Date, the Trustee shall
provide for a pro rata distribution to the
Certificateholders of record at the close of
business on the Business Day prior to such
Distribution Date (the "Record Date") of
interest in an aggregate amount equal to one-
twelfth of the product of the applicable
Pass-Through Rate and the Marine Certificate
Balance, in the case of the Marine
Certificateholders, or the RV Certificate
Balance, in the case of the RV
Certificateholders, in each case as of the
close of business on the prior Distribution
Date (or in case of the first Distribution
Date, the Marine Certificate Balance or the RV
Certificate Balance, as applicable, as of the
Closing Date). The amount of interest required
to be distributed to the Marine
Certificateholders being, the "Monthly Marine
Interest Payment" and the amount of interest
required to be distributed to the RV
Certificateholders being, the "Monthly RV
Interest Payment." The sum of the Monthly
Marine Interest Payment and the Monthly RV
Interest Payment is referred to herein as the
"Monthly Interest Payment." See "The
Certificates -- Distributions on Certificates."
Principal:.................... The Trustee shall provide for a pro rata
distribution to the Marine Certificateholders
of record as of the related Record Date (x) on
each Distribution Date (except on the Marine
Final Scheduled Distribution Date), an amount
equal to the sum of (a) that portion of all
collections received by the Servicer during the
related Collection Period (as defined herein)
on Marine Receivables allocable to principal
(which shall not include the principal portion
of proceeds from any recoveries or liquidations
in respect of any Defaulted Marine Receivables
(as defined herein) received in any Collection
Period following the Collection Period in which
such Marine Receivable became a Defaulted
Marine Receivable), (b) Purchase Amounts (as
defined herein) in respect of Marine
Receivables allocable to principal and paid by
the Depositor or the Servicer and (c) the
principal balance of Defaulted Marine
Receivables, which became Defaulted Marine
Receivables during the related Collection
Period and (y) on the Marine Final Scheduled
Distribution Date, an amount necessary to
reduce the Marine Certificate Balance to zero
on such Distribution Date, (collectively, the
"Monthly Marine Principal Payment"). See "The
Certificates -- Distributions on
Certificates -- Marine Distributions."
The Trustee shall provide for a pro rata
distribution to the RV Certificateholders of
record as of the related Record Date (x) on
each Distribution Date (except on the RV Final
Scheduled Distribution Date), an amount equal
to the sum of (a) that portion of all
collections received by the Servicer during the
related Collection Period on RV Receivables
allocable to principal (which shall not include
the principal portion of proceeds from any
recoveries or liquidations in respect of any
Defaulted RV Receivables (as defined herein),
received in any Collection Period following the
Collection Period in which such RV Receivable
became a De-
5
<PAGE> 9
faulted RV Receivable), (b) Purchase Amounts in
respect of RV Receivables allocable to
principal and paid by the Depositor or the
Servicer and (c) the principal balance of
Defaulted RV Receivables, which became
Defaulted RV Receivables during the related
Collection Period and (y) on the RV Final
Scheduled Distribution Date, an amount
necessary to reduce the RV Certificate Balance
to zero on such Distribution Date
(collectively, the "Monthly RV Principal
Payment" and together with the Monthly Marine
Principal payment, the "Monthly Principal
Payment"). See "The
Certificates -- Distributions on
Certificates -- RV Distributions."
Certificate Balance:.......... The "Marine Certificate Balance" shall equal on
the Closing Date, $120,803,719.92 and
thereafter shall equal the Marine Certificate
Balance as of the Closing Date reduced by all
principal distributions on the Marine
Certificates. The "RV Certificate Balance"
shall equal on the Closing Date, $48,386,535.24
and thereafter shall equal the RV Certificate
Balance as of the Closing Date reduced by all
principal distributions on the RV Certificates.
The sum of the Marine Certificate Balance and
the RV Certificate Balance shall equal the
"Certificate Balance."
Distribution Date:............ The 15th day of each month (or if such 15th day
is not a business day, the next following
business day) commencing November 17, 1997.
Monthly Marine Servicing
Fee:.......................... On each Distribution Date, the Servicer shall
receive a monthly fee equal to the product of
one-twelfth of 0.75% (the "Servicing Fee Rate")
and the Marine Pool Balance as of the last day
of the prior Collection Period (or in the case
of the first Distribution Date, the Initial
Marine Pool Balance), plus certain late fees,
prepayment charges and other administrative
fees or similar charges. See "The
Certificates -- Distributions on
Certificates -- Marine Distributions."
Monthly RV Servicing Fee:..... On each Distribution Date, the Servicer shall
receive a monthly fee equal to the product of
one-twelfth of 0.75% (the "Servicing Fee Rate")
and the RV Pool Balance as of the last day of
the prior Collection Period (or in the case of
the first Distribution Date, the Initial RV
Pool Balance), plus certain late fees,
prepayment charges and other administrative
fees or similar charges. See "The
Certificates -- Distributions on
Certificates -- RV Distributions."
Surety Bond:.................. The Servicer has obtained, for the benefit of
the Trust, the Surety Bond, which will
unconditionally guarantee the Monthly Interest
Payment and the Monthly Principal Payment and
under certain circumstances the Monthly
Servicing Fee to the extent described herein.
See "The Certificates -- Credit
Enhancement -- The Surety Bond."
Marine Reserve Account:....... The Depositor will establish and maintain with
the Collateral Agent an account (the "Marine
Reserve Account"). The Marine Reserve Account
will not be part of the Trust, but will be
pledged to the Trustee for the benefit of the
Certificateholders and the Surety Bond Issuer.
On the Closing Date an initial deposit will be
made into the Marine Reserve Account and
thereafter on each Distribution Date, the
Marine Reserve Account will be augmented
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<PAGE> 10
from payments in respect of Marine Receivables
(or under certain circumstances, RV
Receivables, as described under "The
Certificates -- Credit Enhancement") allocable
to interest received by the Servicer during the
preceding Collection Period after distributions
thereof in respect of the Monthly Marine
Interest Payment, the Monthly Marine Servicing
Fee (to the extent described herein), the
principal balance of any Defaulted Marine
Receivables (as defined herein), and any
amounts owing to the Surety Bond Issuer
allocable to the Marine Contract Group (as
defined herein) under the Insurance and
Reimbursement Agreement, dated as of September
30, 1997, among the Surety Bond Issuer, the
Depositor and the Servicer (the "Insurance
Agreement") and the Agreement, and not paid,
until the amount on deposit in the Marine
Reserve Account is equal to a specified amount
to be determined by the Surety Bond Issuer and
the Rating Agencies (the "Specified Marine
Reserve Account Requirement"). Amounts, if any,
on deposit in the Marine Reserve Account on any
Distribution Date (after giving effect to all
distributions to be made on such Distribution
Date) in excess of the Specified Marine Reserve
Account Requirement will be released to the
Depositor. The Specified Marine Reserve Account
Requirement and amounts on deposit or to be
deposited into the Marine Reserve Account may
be reduced, including to zero, or distributed
in a different manner than described herein
with the consent of the Surety Bond Issuer, as
long as such reduction or change does not cause
a downgrading or withdrawal of the then-current
rating of any of the Certificates by a Rating
Agency (as defined herein), but without prior
notice to or the consent of any of the
Certificateholders. Prospective purchasers of
the Marine Certificates should not rely on any
amounts being deposited into or available from
the Marine Reserve Account or the RV Reserve
Account (as defined below) in making a decision
as to whether to purchase the Marine
Certificates. See "The Certificates -- Credit
Enhancement -- The Marine Reserve Account" and
"Distributions on Certificates."
RV Reserve Account:........... The Depositor will establish and maintain with
the Collateral Agent an account (the "RV
Reserve Account"). The RV Reserve Account will
not be part of the Trust, but will be pledged
to the Trustee for the benefit of the
Certificateholders and the Surety Bond Issuer.
On the Closing Date an initial deposit will be
made into the RV Reserve Account and thereafter
on each Distribution Date, the RV Reserve
Account will be augmented from payments in
respect of RV Receivables (or under certain
circumstances, Marine Receivables, as described
under "The Certificates -- Credit Enhancement")
allocable to interest received by the Servicer
during the preceding Collection Period after
distributions thereof in respect of the Monthly
RV Interest Payment, the Monthly RV Servicing
Fee (to the extent described herein), the
principal balance of any RV Defaulted
Receivables (as defined herein), and any
amounts owing to the Surety Bond Issuer
allocable to the RV Contract Group (as defined
herein) under the Insurance Agreement and the
Agreement, and not paid, until the amount on
deposit in the RV Reserve Account is equal to a
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<PAGE> 11
specified amount to be determined by the Surety
Bond Issuer and the Rating Agencies (the
"Specified RV Reserve Account Requirement").
Amounts, if any, on deposit in the RV Reserve
Account on any Distribution Date (after giving
effect to all distributions to be made on such
Distribution Date) in excess of the Specified
RV Reserve Account Requirement will be released
to the Depositor. The Specified RV Reserve
Account Requirement and amounts on deposit or
to be deposited into the RV Reserve Account may
be reduced, including to zero, or distributed
in a different manner than described herein
with the consent of the Surety Bond Issuer, as
long as such reduction or change does not cause
a downgrading or withdrawal of the then-current
rating of any of the Certificates by a Rating
Agency (as defined herein), but without prior
notice to or the consent of any of the
Certificateholders. Prospective purchasers of
the Certificates should not rely on any amounts
being deposited into or available from the RV
Reserve Account or the Marine Reserve Account
in making a decision as to whether to purchase
the RV Certificates. See "The
Certificates -- Credit Enhancement -- The RV
Reserve Account" and "Distributions on
Certificates."
Optional Purchase:............ The Servicer may purchase all the Marine
Receivables in the Trust as of any Record Date
on which the Marine Pool Balance shall decline
to 5% or less of the Initial Marine Pool
Balance, at a purchase price equal to the
aggregate Purchase Amount of the Marine
Receivables as of the beginning of the
Collection Period related to such Record Date
less the amount of all collections on the
Receivables received by the Servicer during
such Collection Period; provided, however, that
the Servicer may not make any such purchase on
any date on which there are outstanding draws
under the Surety Bond which have not been
reimbursed to the Surety Bond Issuer. See "The
Certificates -- Termination."
The Servicer may purchase all the RV
Receivables in the Trust as of any Record Date
on which the RV Pool Balance shall decline to
5% or less of the Initial RV Pool Balance, at a
purchase price equal to the aggregate Purchase
Amount of the RV Receivables as of the
beginning of the Collection Period related to
such Record Date less the amount of all
collections on the Receivables received by the
Servicer during such Collection Period;
provided, however, that the Servicer may not
make any such purchase on any date on which
there are outstanding draws under the Surety
Bond which have not been reimbursed to the
Surety Bond Issuer. See "The
Certificates -- Termination."
Surety Bond Issuer:........... Capital Markets Assurance Corporation ("CapMAC"
or the "Surety Bond Issuer"). See "The Surety
Bond Issuer."
Trustee:...................... Bankers Trust Company (the "Trustee").
Lack of Perfected Security
Interests in Boats and RVs:... Pursuant to the Agreement, the Servicer will
represent and warrant that each Receivable
created a first priority perfected security
interest in the Boat or RV, as applicable,
financed thereby in favor of NationsCredit
Commercial. In connection with the sale of the
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Receivables, the security interests of
NationsCredit Commercial in the Boats and RVs
financed by the Receivables will be assigned to
the Trust. Due to the administrative burden and
expense, the certificates of title, in the case
of Boats or RVs financed in states where
security interests in boats or recreational
vehicles are subject to certificate of title
statutes, will not be endorsed to the Trust and
the UCC-1 financing statements, in the case of
Boats or RVs financed in states where security
interests in boats or recreational vehicles are
perfected by filing a UCC-1 financing
statement, will not be amended to reflect the
assignment to the Trust. In most states, an
assignment such as that under the Agreement is
an effective conveyance of a security interest
without making any such endorsement or filing
any such amendment. However, in certain states,
in the absence of such procedures, the Trust
may not have a perfected security interest in
the Boats or RVs, but the failure to make such
endorsements, filings or recordations will not
affect the validity of the original security
interest as against the Obligor (as defined
herein). Moreover, statutory liens for repairs
or unpaid taxes may have priority over security
interests in Boats or RVs perfected under state
law. As a result, the Marine Certificateholders
or RV Certificateholders, as applicable, may be
subject to delays in payments and may incur
losses if any required payments under the
Surety Bond are not made. See "Risk
Factors -- Lack of Perfected Security Interests
in Boats and RVs" and "Certain Legal Aspects of
the Receivables."
Tax Status:................... The Trust will be treated as a grantor trust
for Federal income tax purposes, and will not
be subject to Federal income tax.
Certificateholders will report their pro rata
shares of all income of the Trust, and, subject
to certain limitations in the case of an
individual Certificateholder, may deduct their
pro rata shares of reasonable servicing and
other fees of the Trust. Because tax
consequences may vary based on the status or
tax attributes of the Certificate Owner,
prospective investors should consult their own
tax advisors to determine the Federal, state,
local and other tax consequences of the
purchase, ownership and disposition of
Certificates. See "Certain Federal Income Tax
Consequences."
ERISA Considerations:......... The Certificates may be purchased by employee
benefit plans that are subject to the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA"), upon satisfaction of certain
conditions described herein. Any benefit plan
fiduciary considering the purchase of the
Certificates should, among other things,
consult with counsel in determining whether all
required conditions have been satisfied. See
"ERISA Considerations."
Rating:....................... As a condition of issuance of the Certificates,
the Marine Certificates and the RV Certificates
shall be rated "Aaa" by Moody's Investors
Service, Inc. ("Moody's") and "AAA" by Standard
& Poor's Ratings Services, a Division of The
McGraw-Hill Companies ("S&P") (each a "Rating
Agency" and together, the "Rating Agencies").
The ratings are based primarily on the credit
rating of the Surety Bond Issuer and the value
of the underlying related Receivables. Any
rating assigned to the Certificates by a Rating
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<PAGE> 13
Agency will reflect such Rating Agency's
assessment of the likelihood that
Certificateholders will receive the payments of
interest and principal required to be made
under the Agreement. The ratings take into
consideration the Surety Bond, the
characteristics of the related Receivables and
the structural, legal and tax aspects
associated with the Certificates. The ratings
on the Certificates do not represent any
assessment of the likelihood or rate of
principal prepayments. The ratings are 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. There is no assurance that
the ratings will remain for any given period of
time or that the ratings will not be lowered or
withdrawn entirely by the Rating Agencies if in
their judgment circumstances in the future so
warrant. See "Risk Factors -- Limitation on
Credit Ratings."
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<PAGE> 14
RISK FACTORS
Prospective purchasers of the Certificates should consider carefully the
following discussion of certain risks associated with an investment in the
Certificates, as well as the other information set forth in this Prospectus.
Limited Liquidity. There is currently no market for the Certificates.
NationsBanc Montgomery Securities, Inc. and Salomon Brothers Inc (each, an
"Underwriter") expect, but are not obligated, to make a market in the
Certificates. There can be no assurance that a secondary market will develop or,
if a secondary market does develop, that it will provide holders of the
Certificates with liquidity of investment or that it will continue for the life
of the Certificates.
Limited Obligations. The Certificates will not represent an interest in or
obligation of the Depositor, the Trustee, the Underwriters, NationsCredit
Commercial or any of their respective affiliates. Neither the Receivables nor
the Certificates will be insured or guaranteed by any governmental agency or
instrumentality, the Depositor, the Underwriter, the Servicer, the Trustee or
any of their respective affiliates and the Certificates will be payable only
from assets of the Trust, the Marine Reserve Account or RV Reserve Account, as
applicable, or paid pursuant to the Surety Bond.
The Depositor will not be obligated in any way in respect of the
Certificates. The obligations of the Servicer with respect to the Certificates
will be limited to its contractual servicing obligations. The Depositor and
NationsCredit Commercial will, however, make certain representations and
warranties in respect of the Receivables. In the event of an uncured breach of
any such representation or warranty that materially adversely affects the
interests of the Certificateholders or the Surety Bond Issuer, the Depositor or
NationsCredit Commercial, as applicable, may, under certain circumstances, be
obligated to repurchase such Receivable, as described under "The
Certificates -- Sale and Assignment of Receivables" herein.
Lack of First Priority Security Interests in the Receivables. The sale of
the Receivables to the Trust is subject to the perfection requirements of the
Uniform Commercial Code (the "UCC") in effect in the States of Texas and
Georgia. Under the Texas and Georgia UCC, security interests in the Receivables
may be perfected by possession of the Receivables or by the filing of a UCC-1
financing statement. To facilitate servicing and to minimize administrative
burden and expense, the Trustee will file UCC-1 financing statements to perfect
the Trust's security interests in the receivables and NationsCredit Commercial
as Servicer will maintain possession of all of the Receivables. Therefore, if
NationsCredit Commercial sells and delivers any of the Receivables to another
party, there is a risk that the purchaser could acquire an interest in the
Receivables having priority over the Trust's interest. NationsCredit Commercial
will covenant that it will not sell, pledge, transfer, deliver or otherwise
dispose of any Receivable, except as provided under the Agreement. A security
interest in the Receivables perfected by means of possession under certain
circumstances would generally have priority over a security interest in the
Receivables perfected by the filing of a UCC-1 financing statement. Pursuant to
the Agreement, the Servicer will represent and warrant that the Trust has been
assigned a valid, first priority perfected security or ownership interest in
each Receivable conveyed to the Trust on the Closing Date. But such
representations and warranties relate solely to the Receivables themselves and
do not include the Boats or RVs that secure such Receivables. Also, certain
liens, including certain tax liens, may, as a matter of law, have priority over
perfected, first priority liens. In addition, if another person purchased any of
the Receivables for new value without knowledge of the Trust's security interest
and acquired possession of the Receivables in the ordinary course of such
person's business, the purchaser's interest would be superior to the interest of
the Trust. As provided in the Agreement, any breach of this covenant by
NationsCredit Commercial that materially and adversely affects the Trust's
interest in the Receivables and remains uncured will result in an obligation of
NationsCredit Commercial to repurchase the affected Receivables. Pursuant to the
Agreement, NationsCredit Commercial or the Servicer will be obligated to
purchase any Receivable if there is a breach of a representation and warranty
made by it that materially adversely affects the Trust's interest in such
Receivable, unless such breach is cured as provided in the Agreement by the
second Record Date following the discovery of such breach.
Lack of Perfected Security Interests in Boats and RVs. When originated,
each Marine Receivable and RV Receivable includes a security interest in the
Boat or RV financed thereby, as applicable, and such interest is
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<PAGE> 15
perfected under state law. The Servicer will make certain representations and
warranties to the Trust with respect to the perfection and priority of the
security interests of NationsCredit Commercial in the Boats and RVs, which
representations and warranties will be subject to any statutory liens arising
after the Closing Date. Due to the administrative burden and expense of (i)
endorsing the certificate of title of each Boat and RV to reflect the Trust's
interest therein and delivering each such certificate of title to the Trustee
for filing (and the payment of related filing fees), in the case of Boats or RVs
licensed in states where security interests in boats or recreational vehicles,
as applicable, are subject to certificate of title statutes; and (ii) filing
amendments to UCC-1 financing statements relating to each Boat and RV (and the
payment of related filing fees) to reflect the Trust's interest therein, in the
case of Boats or RVs licensed in states where security interests in boats or
recreational vehicles, as applicable, are perfected by filing a UCC-1 financing
statement; none of such certificates of title will be endorsed, delivered and
filed, or UCC-1 financing statements amended. In most states an assignment such
as that under the Agreement is an effective conveyance of a security interest
without making any such endorsements or filing any such amendments. However, in
certain states, in the absence of such procedures the Trust may not have a
perfected security interest in the Boats or RVs licensed in certificate of title
or UCC states, but the failure to make such endorsements, filings or
recordations will not affect the validity of the original security interest as
against the retail purchaser (the "Obligor") under a Receivable in UCC states.
Additionally, because NationsCredit Commercial will not make the necessary
endorsements, filings or recordations, there is a substantial risk that the
Trust will not have a security interest in Boats registered in California, which
represents 21.10% of the Initial Marine Pool Balance (based on the billing
address of the Obligors), and if the absence of such security interest is
asserted by an Obligor (or its representative), the Trust will not be entitled
to any liquidation proceeds with respect to the related Boat. As a result, the
Marine Certificateholders and RV Certificateholders may be subject to delays in
payments and may incur losses with respect to the Marine Receivables if any
required payments under the Surety Bond are not made. Boats registered in
California may not relate to the geographic concentration of Marine Receivables
in California because the concentration of such Marine Receivables is based
solely on the billing address of the related Obligor. Moreover, statutory liens
for repairs or unpaid taxes may have priority over security interests in Boats
or RVs perfected under state law.
Risk of Defenses and Risk Related to Repossession and Liquidation. Various
Federal and state laws impose requirements and restrictions applicable to the
origination and servicing of the Receivables. Violations of certain of those
laws may give rise to claims and defenses by an Obligor against the Servicer or
the Trust. In addition, an Obligor can assert against the Servicer or the Trust
claims and defenses which the Obligor has against the seller of the Boat or RV,
as applicable (the "Dealer"). The Servicer pursuant to the Agreement, will
represent and warrant as of the Closing Date that no such claims or defenses
have been asserted or threatened with respect to the Receivables and that all
requirements of applicable laws with respect to the Receivables have been
satisfied. State laws and court decisions also impose requirements and
restrictions relating to repossession sales of boats and recreational vehicles
and on obtaining deficiency judgments following such sales. Even if a Boat or RV
securing a Receivable is successfully repossessed and sold, the full amount due
on the Receivable may not be realized because of depreciation of or damage to
the Boat or RV or because the resale value of the Boat or RV may vary
significantly due to the limited markets for used boats or used recreational
vehicles, seasonal factors and other economic and social factors. In sum, the
Trust may not realize the full amount due on a Receivable because of the failure
to endorse the certificate of title or to amend a UCC-1 financing statement, as
the case may be, or the application of requirements and restrictions on
repossession sales and deficiency judgments, or because of depreciation, damage
or loss of a Boat or RV, the application of Federal and state bankruptcy and
insolvency laws, or other factors. As a result, the Certificateholders may be
subject to delays in payments and losses if any required payments under the
Surety Bond are not made. See "Certain Legal Aspects of the Receivables."
Concentration Risk. Based on the Initial Pool Balance, 21.10%, 9.80% and
9.11% of the Marine Receivables are billed to Obligors under Marine Receivables
with billing addresses in California, Texas and Florida, respectively. Based on
the Initial Pool Balance 23.04%, 10.92% and 8.29% of the RV Receivables are
billed to Obligors under RV Receivables with billing addresses in California,
Texas and Florida, respectively. An economic downturn may have an adverse effect
on the ability of Obligors in such states to meet their payment obligations
under the Marine Receivables or RV Receivables, as applicable. Because of the
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<PAGE> 16
concentration of Receivables with Obligors with billing addresses in such
states, losses on the related Receivables may be higher than would be the case
if there were more geographic diversification among the Receivables and thus may
result in accelerated payments of principal and reinvestment risk to the Marine
Certificateholders or RV Certificateholders, as applicable.
Prepayment Considerations. Full or partial prepayments on the Marine
Receivables will have the effect of reducing the weighted average life of the
Marine Certificates, while delinquencies under the Marine Receivables by the
related Obligors and extensions of Marine Receivables by the Servicer will have
the effect of increasing the weighted average life (but not the final maturity)
of the Marine Certificates. Full or partial prepayments on the RV Receivables
will have the effect of reducing the weighted average life of the RV
Certificates, while delinquencies under the RV Receivables by the related
Obligors and extensions of RV Receivables by the Servicer will have the effect
of increasing the weighted average life (but not the final maturity) of the RV
Certificates. The Receivables may be prepaid at any time without penalty.
Prepayments may result from, among other things, the sale, refinancing, insured
loss or other disposition of a Boat or RV, a Marine Receivable or RV Receivable
becoming a Defaulted Receivable, the purchase of Marine Receivables or RV
Receivables due to material breaches of the Depositor's or NationsCredit
Commercial's representations and warranties or the exercise by the Servicer of
its option to purchase all the (x) Marine Receivables as of any Record Date on
which the Marine Pool Balance shall decline to 5% or less of the Initial Marine
Pool Balance or (y) RV Receivables as of any Record Date on which the RV Pool
Balance shall decline to 5% or less of the Initial RV Pool Balance. The actual
maturity of the Marine Certificates or the RV Certificates could occur earlier
than the Marine Final Scheduled Distribution Date and the RV Final Scheduled
Distribution Date, respectively, since the rate of payments on the Marine
Certificates and RV Certificates will depend on the rate of payments on the
Marine Receivables and RV Receivables, respectively. In addition because of the
cross-collateralization between the Marine Contract Group and the RV Contract
Group a more rapid rate of prepayments on one contract group will have the
effect of reducing the amount of excess spread available for
cross-collateralization of the other contract group. No prediction can be made
as to the actual rate of prepayments in respect of the Receivables. Prepayments
are affected by numerous social, economic and other factors, including, for
example, the seasonal nature of the marine and the recreational vehicle retail
financing business. Marine Certificateholders and RV Certificateholders will
bear all reinvestment risk resulting from prepayment of the Marine Receivables
and the RV Receivables, respectively. See "The Receivables Pool -- Maturity and
Prepayment Assumptions."
Commingling Risk. While NationsCredit Commercial or an entity (a) into
which NationsCredit Commercial is merged or consolidated, (b) which succeeds to
the properties and assets of the Servicer substantially as a whole or (c) more
than 50% of the voting stock of which is owned by NationsBank Corporation, which
has executed an agreement of assumption to perform the obligations of the
Servicer under the Insurance Agreement and the Agreement, is the Servicer, the
Servicer may commingle collections held by it and may use such funds for its own
purposes prior to the business day preceding each Distribution Date provided
that all of the following conditions are satisfied: (i) there exists no Event of
Default (as described below), (ii) if the Servicer does not have a short term
debt rating or deposit rating, as applicable, of at least A-1 from S&P and P-1
from Moody's, a guaranty, letter of credit, surety bond or other similar
instrument is issued covering collections held by NationsCredit Commercial or
such successor servicer, which is acceptable to the Rating Agencies and the
Surety Bond Issuer and issued by an entity which has a short term debt or
deposit rating, of at least A-1 from S&P and P-1 from Moody's, and (iii) the
Servicer, the Trustee, the Depositor or the Surety Bond Issuer shall not have
received notice from S&P or Moody's that failure to separate such funds will
result in a reduction or withdrawal of the then current rating on the
Certificates by either S&P or Moody's. If all the conditions contained in the
preceding sentence are not met, the Servicer will deposit all payments on
Receivables (from whatever source) and all proceeds of Receivables collected
during each Collection Period into the Certificate Account not later than the
second business day after receipt. In the event that the Servicer commingles
collections, the Certificateholders will be subject to the risk of loss of such
collections, including as a result of the bankruptcy or insolvency of the
Servicer. It is anticipated that on the Closing Date NationsBank Corporation
will furnish a guaranty that will permit NationsCredit Commercial to commingle
funds.
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Limitation on Credit Ratings. As a condition of issuance of the
Certificates, the Marine Certificates and the RV Certificates shall be rated
"Aaa" by Moody's and "AAA" by S&P. The ratings are based primarily on the credit
rating of the Surety Bond Issuer and the value of the underlying related
Receivables. Any rating assigned to the Certificates by a Rating Agency will
reflect such Rating Agency's assessment of the likelihood that
Certificateholders will receive the timely payments of interest and principal
required to be made under the Agreement. The ratings take into consideration the
Surety Bond, the characteristics of the related Receivables and the structural,
legal and tax aspects associated with the Certificates. The ratings on the
Certificates do not represent any assessment of the likelihood or rate of
principal prepayments. The ratings are not a recommendation to buy, sell or hold
securities and there is no assurance that the ratings will remain for any given
period of time or that the ratings will not be lowered or withdrawn entirely by
the Rating Agencies if in their judgment circumstances in the future so warrant.
Any downgrade of the credit rating of the Surety Bond Issuer will likely result
in a downgrade of the Certificates. None of the Depositor, NationsCredit
Commercial or any of its affiliates have any obligation to maintain the credit
rating of the Certificates. In the event the Surety Bond Issuer's claims paying
ratings have been reduced by any of the Rating Agencies, the Depositor may, but
it is not obligated to, upon payment of all amounts required to be paid to the
Surety Bond Issuer pursuant to the Insurance Agreement and the Agreement either
(i) replace the Surety Bond with a financial guaranty insurance policy issued by
another surety bond issuer, provided that the ratings on the claims paying
ability of such replacement surety bond issuer are higher than those of the
surety bond issuer sought to be replaced (after giving effect to such reduction)
or (ii) eliminate or provide another form of credit enhancement; provided that
in the case of clause (ii), the Rating Agencies consent thereto and confirmation
that the ratings of the Certificates will be increased from their then-current
levels (after giving effect to such reduction) as a result of such action shall
have been obtained.
THE TRUST
The Depositor will establish the Trust prior to the Closing Date and cause
the Trust to directly or indirectly purchase the Receivables from NationsCredit
Commercial or its affiliates with the proceeds of the sale of the Certificates.
The Servicer will initially service the Receivables pursuant to the Agreement,
and will be compensated for acting as the Servicer. See "The
Certificates -- Servicing Compensation." To facilitate servicing and to minimize
any administrative burden and expense, the Servicer will be appointed custodian
for all the Receivables by the Trustee, but will not stamp the Receivables to
reflect the sale and assignment of the Receivables to the Trust, nor amend the
UCC-1 financing statements relating to the Boats or RVs nor amend the
certificates of title of the Boats or RVs. NationsCredit Commercial will,
however, indicate in its computer records that the Receivables have been sold
and assigned to the Trust. See "Risk Factors -- Lack of Perfected Security
Interests in Boats," "--Lack of First Priority Security Interests in the
Receivables" and "Certain Legal Aspects of the Receivables." The Servicer has
obtained the Surety Bond for the benefit of the Trust. The Surety Bond will
unconditionally guarantee the Monthly Interest Payment and the Monthly Principal
Payment and, under certain circumstances, the Monthly Servicing Fee to the
extent described herein. See "The Certificates -- Credit Enhancement -- The
Surety Bond" and "The Certificates -- Distributions on Certificates."
The property of the Trust will be comprised of three separate sub-trusts.
The first sub-trust will include (i) a pool of marine retail installment sale
contracts secured by new and used boats, boat motors and boat trailers (the
"Marine Contract Group" and each marine retail installment sale contract
included in the Marine Contract Group being a "Marine Receivable") and all
payments received or due thereunder after the Cutoff Date, (ii) security
interests in the boats and marine equipment, (iii) such amounts as from time to
time may be held in one or more trust accounts for the benefit of the Marine
Certificateholders (collectively, the "Marine Certificate Account"), (iv) any
proceeds from recourse to dealers on Marine Receivables, (v) any proceeds from
claims on physical damage, credit life or disability insurance policies covering
the Boats or Obligors related to the Marine Receivables, (vi) any property that
shall have secured a Marine Receivable and that shall have been acquired by the
Trustee and (vii) the proceeds of all of the foregoing. The second sub-trust
will include (i) a pool of recreational vehicle retail installment sale
contracts secured by new and used recreational vehicles, (the "RV Contract
Group" and each recreational vehicle retail installment sale
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<PAGE> 18
contract included in the RV Contract Group being a "RV Receivable" and each of
the RV Receivables and the Marine Receivables being, the "Receivables") and all
payments received or due thereunder after the Cutoff Date, (ii) security
interests in the boats and recreational vehicle equipment, (iii) such amounts as
from time to time may be held in one or more trust accounts for the benefit of
the RV Certificateholders (collectively, the "RV Certificate Account"), (iv) any
proceeds from recourse to dealers on RV Receivables, (v) any proceeds from
claims on physical damage, credit life or disability insurance policies covering
the RVs or Obligors related to the RV Receivables, (vi) any property that shall
have secured a RV Receivable and that shall have been acquired by the Trustee
and (vii) the proceeds of all of the foregoing. The third sub-trust will include
the Surety Bond and all its proceeds. The Marine Certificateholders will have a
fractional undivided ownership interest in all the assets of the first and third
sub-trusts, referred to above and the RV Certificateholders will have a
fractional undivided ownership interest in all of the assets of the second and
third sub-trusts referred to above.
The Receivables were originated by the Dealers and purchased by
NationsCredit Commercial pursuant to agreements with the Dealers ("Dealer
Agreements"), are serviced by the Servicer, and evidence indirect financings
made available to the Obligors. During the term of the Agreement, the Servicer
may not substitute any other marine or recreational vehicle retail installment
sale contract for any Receivable sold to the Trust.
NATIONSCREDIT COMMERCIAL'S PORTFOLIO OF MARINE CONTRACTS
AND RECREATIONAL VEHICLE CONTRACTS
GENERAL
The following describes certain general origination, servicing, and
collection policies and procedures applied by NationsCredit Commercial and its
predecessor companies with respect to marine retail installment sale contracts
("marine contracts") and recreational vehicle retail installment sale contracts
("recreational vehicle contracts"). Marine contracts and recreational vehicle
contracts are each referred to herein as "contracts."
NationsCredit Commercial purchases on a regular basis marine contracts and
recreational vehicle contracts directly or indirectly from approximately 1,500
retail boat dealers or finance subsidiaries of manufacturers who regularly
initiate and sell marine contracts to NationsCredit Commercial pursuant to the
terms of approved dealer agreements and approximately 300 retail recreational
vehicle dealers or finance subsidiaries of manufacturers who regularly initiate
and sell recreational vehicle contracts to NationsCredit Commercial pursuant to
the terms of approved dealer agreements, respectively. NationsCredit Commercial
services such contracts. No marine contract or recreational vehicle contract is
purchased from a dealer until the credit application from the obligor is
submitted to NationsCredit Commercial and is reviewed, evaluated, and approved
by one of NationsCredit Commercial's credit analysts in accordance with
NationsCredit Commercial's underwriting policies and procedures. NationsCredit
Commercial's evaluation of credit applicants is intended to assess the
applicant's willingness and ability to repay the amounts due on the contract and
(i) in the case of recreational vehicle contracts, the adequacy of the
recreational vehicle as collateral, or (ii) in the case of marine contracts, the
adequacy of the boat (which may include the boat, motor and trailer) or, in a
small minority of cases, the boat motor or trailer by itself, as collateral.
References to "boats" herein include the boat motor and trailer with respect to
each boat, and the separately financed boat motors or trailers, unless the
context otherwise indicates.
Recreational vehicles are either motor homes, travel trailers, or truck
campers.
Motor homes. Motor Homes are recreational vehicles built on or as an
integral part of a self-propelled motor vehicle chassis. A motor home may
provide kitchen, sleeping and bathroom facilities, may be equipped with the
ability to store and carry fresh water and sewage, and may be one of the
following types:
Motor Home, Class A: The living unit has been entirely constructed on
a bare, specially designed motor vehicle chassis. The unit comes equipped
with all conveniences such as sleeping, kitchen and toilet facilities,
110-volt electrical hookup, and fresh water and sewage storage.
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Van Camper, Class B: A panel-type truck to which the manufacturer adds
two or more of the following conveniences: sleeping, kitchen and toilet
facilities. The manufacturer also may add a 110-volt electrical hookup,
fresh water storage, city water hookup or a top extension to provide more
head room.
Motor Home, Class C: This unit is built on an automotive manufactured
van frame with an attached cab section. The manufacturer completes the body
section containing the living area and attaches it to the cab section.
Travel Trailers. Travel trailers are trailers designed to be towed by a
motorized vehicle (automobile, van or pickup truck) and are of such size and
weight as not to require a special highway movement permit. A travel trailer is
designed to provide temporary living quarters for recreational, camping or
travel use, does not require permanent on-site hookup, and can be one of the
following types:
Conventional Travel Trailer: This unit ranges typically from 12 feet
to 35 feet in length and is towed by means of a bumper or frame hitch
attached to the towing vehicle.
Fifth-Wheel Travel Trailer: This unit can be equipped the same as the
conventional travel trailer, but is constructed with a raised forward
section that allows a bi-level floor plan. This style is designed to be
towed by a pickup truck equipped with a device known as a fifth-wheel
hitch.
Folding Camper Trailer: This unit is smaller than a conventional
travel trailer. The unit, when unfolded, provides sleeping facilities and
sometimes other conveniences.
Truck Campers. Truck campers are units designed to be mounted in the bed of
a pickup truck and provide sleeping quarters and sometimes other conveniences.
UNDERWRITING
The credit application, which requests the liabilities, income, and credit
and employment history of the applicant, is reviewed for completeness and
compliance with NationsCredit Commercial's credit guidelines for marine
contracts and recreational vehicle contracts purchased from Dealers. In response
to recessionary forces that adversely impacted marine and recreational vehicle
collateral values in 1990, 1991 and 1992, NationsCredit Commercial (as its
predecessor company) instituted tighter underwriting criteria in 1992, including
an increase in the downpayment requirements on both new and used boats and
recreational vehicles. Also, in 1992 NationsCredit Commercial (as its
predecessor company) completed a process of reducing the number of its offices
and the number of its employees with credit authority as a means to improve
consistency and control over credit approvals. In December of 1993,
NationsCredit Commercial instituted an upfront scoring system which has resulted
in more consistent underwriting standards and has provided more management
control over decisions affecting credit approvals. NationsCredit Commercial's
current guidelines, which are based primarily on credit scoring criteria, are
intended to provide a basis for credit decisions, but are not meant to supersede
the credit judgment of the credit analysts in both approval and denial
decisions. Consequently, certain contracts may not comply with all NationsCredit
Commercial guidelines, but will be within prescribed limits for which exceptions
to the guidelines are permitted. In all cases, NationsCredit Commercial will
review a current credit report issued by an independent credit reporting agency,
and where deemed necessary, will confirm income and employment data, on each
applicant. Unless otherwise indicated the same servicing and collection
practices are used by NationsCredit Commercial on all marine contracts and
recreational vehicle contracts.
Each contract arises from a credit sale of a new or used boat or
recreational vehicle. In most cases, NationsCredit Commercial will not purchase
a contract relating to a new boat or new recreational vehicle if after at least
a 10% (0% for both marine contracts and recreational vehicle contracts
originated prior to January 1, 1990) downpayment by the obligor the amount
financed under the contract exceeds the sum of (a) (i) 115% of dealer invoice up
to $25,000 and (ii) 110% of dealer invoice over $25,000, plus (b) the cost to
the customer of any dealer-installed options, extended warranty plans, credit
life and disability insurance and sales tax.
16
<PAGE> 20
NationsCredit Commercial will generally not purchase a contract secured by
a used boat or used recreational vehicle after a downpayment by the obligor of
at least 10% if the amount financed under the contract exceeds 100% of the "NADA
(National Automobile Dealers Association) Wholesale Price" or if the amount
financed under the contract exceeds the total sales price to the obligor. While
NationsCredit Commercial reviews the sales price of each used boat or
recreational vehicle financed, resale prices for used boats or recreational
vehicles vary significantly based upon individual circumstances.
Each Dealer from which NationsCredit Commercial purchases marine contracts
or recreational vehicle contracts has been selected by NationsCredit Commercial
based on such Dealer's financial and operating history. Such Dealers have made
representations and warranties to NationsCredit Commercial with respect to the
contracts and the security interests in the boats or recreational vehicles, as
applicable, relating thereto but not to the creditworthiness of the obligors or
the collectibility of such contracts. NationsCredit Commercial has a right of
recourse against such Dealers who breach such representations and warranties to
require them to repurchase such contracts. In determining whether to exercise
such right, NationsCredit Commercial considers the prior performance of the
Dealer and other business and commercial considerations. NationsCredit
Commercial is obligated to enforce such rights with respect to Dealer Agreements
relating to the Marine Receivables or RV Receivables only to the extent of such
customary practices.
Each contract has an original term of 180 payments or less and generally
provides for equal monthly payments which amortize the full amount of such
contract, however, under certain specialized programs the first payment can be
deferred beyond forty-five days. The contracts can be prepaid at any time
without prepayment penalty. All contracts are either simple interest or
precomputed contracts. As payments are received under a simple interest
contract, the finance charges accrued to date are paid first and the remaining
amount of the payment is applied to reduce the unpaid amount financed.
Accordingly, if an obligor pays the fixed monthly payment on a simple interest
contract in advance of the due date, the portion of the payment allocable to
finance charges for the period since the preceding payment will be less than it
would be if the payment were made on the due date, and the portion of the
payment allocable to reduce the amount financed will be correspondingly greater.
Conversely, if the obligor pays the fixed monthly payment on a simple interest
contract after its due date, the portion of the payment allocable to finance
charges for the period since the last payment will be greater than it would be
if the payment were made on the due date, and the portion of the payment
allocable to reduce the amount financed will be correspondingly smaller.
Adjustments are made in the amount of the final scheduled payment with respect
to each simple interest contract to reflect the larger or smaller allocations of
payments to the amount financed under the contract as a result of early or late
payments. On a precomputed contract the allocation of principal and interest is
consistently applied to the obligor's balance in accordance with a
pre-determined schedule regardless of when the payment is received. A late fee
may be charged on both precomputed contracts and simple interest contracts for
each payment received following a grace period after the due date. Precomputed
contracts that are not paid in full by their final scheduled payment date
typically will accrue finance charges thereafter until payment in full, but not
necessarily at the contract annual percentage rate ("APR").
SERVICING
Once NationsCredit Commercial has purchased a contract from a dealer it
may, on a case-by-case basis, permit an extension with respect to the due date
of the marine contract or recreational vehicle contract. NationsCredit
Commercial's policy sets certain guidelines on such extensions which include the
following: (a) generally a contract may not be extended during the first six
months of its term; (b) each extension of a contract shall be for a period not
to exceed one month; (c) a contract may not be extended more than three times in
any twelve-month period; and (d) a contract may not be extended for more than
fourteen one-month periods during its life. Pursuant to the Agreement, the
Servicer will not be permitted to extend, rewrite or otherwise modify the
payment terms of a Marine Receivable or RV Receivable; provided, however, that
the Servicer may, with certain limitations set forth in the Agreement, extend a
Marine Receivable or RV Receivable for credit related reasons that would be
acceptable to the Servicer with respect to comparable marine contracts or
recreational vehicle contracts that it services for itself and others and in
accordance with its customary standards, policies and procedures if the
cumulative extensions with respect to any Marine
17
<PAGE> 21
Receivable or RV Receivable shall not cause the term of any such Receivable to
extend beyond the last day of the Collection Period preceding the Marine Final
Scheduled Distribution Date or the RV Final Scheduled Distribution Date, as
applicable.
Extensions represent the deferral of a monthly payment until the month
after the final maturity date of the marine contracts or recreational vehicle
contract. The fee payable by the obligor which will effect such a deferral
varies by state in accordance with each state's applicable laws. Such fees, if
any, will be included as part of the Trust's assets; provided however that the
Trustee will agree to hold any such amounts for the benefit of the Servicer and
any payments received with respect thereto will not be passed through to
Certificateholders, but will instead be promptly remitted to the Servicer upon
receipt.
NationsCredit Commercial will also permit one deferral known as a
"delinquency cure" over the life of a marine contract or recreational vehicle
contract. A delinquency cure will permit the obligor to postpone the due date of
past-due monthly installments of principal and interest when three consecutive
regularly scheduled payments are received on a timely basis, and will extend the
final maturity date of the contract by the number of months equal to the number
of payments deferred, unless the extended final maturity date goes beyond the
last day of the Collection Period preceding the Marine Final Scheduled
Distribution Date or the RV Final Scheduled Distribution Date, as applicable.
NationsCredit Commercial does not receive a fee from the obligor for a
delinquency cure.
Collection activities with respect to delinquent contracts are performed in
a centralized environment by collection personnel and under current practices,
collection personnel generally initiate contact, by mail, with obligors whose
marine contracts or recreational vehicle contracts have become more than five
days delinquent. In the event that such mail contact fails to resolve the
delinquency, NationsCredit Commercial generally begins to contact the obligor
periodically by telephone after the contract becomes ten days delinquent. After
a marine contract or recreational vehicle contract has been delinquent for 60
days, a process to repossess the collateral is commenced. After repossession,
the obligor generally has an additional 15 days (subject to variance under state
law) to satisfy the obligor's obligations under the marine contract or
recreational vehicle contract before the boat or recreational vehicle, as
applicable, is subject to resale.
Losses may occur in connection with delinquent contracts and can arise in
several ways, such as the inability of NationsCredit Commercial to locate the
boat or recreational vehicle to be repossessed, a decline in the market value of
the boat or recreational vehicle at the time of repossession and liquidation or
the costs incurred by NationsCredit Commercial in effecting repossession and
liquidation. NationsCredit Commercial uses the following rules for recognizing
losses on delinquent marine contracts or recreational vehicle contracts: within
the first 91 days that a contract becomes past due the fair market value of the
boat or recreational vehicle is reviewed and established for management
purposes, to determine the appropriate carrying value, defined as the NADA
Wholesale Price, or the manager's assessment of the collateral value, whichever
is less. At the time of repossession, the boat or recreational vehicle is again
evaluated for its collateral value, and the status of the account is updated to
reflect this valuation. In the event that the valuation of the boat or
recreational vehicle at the time of repossession is less than the total balance
outstanding on the contract, then a charge-off of that difference is incurred at
that time. If a repossessed boat or recreational vehicle that secures a contract
with a balance of $10,000 or less is not resold within 90 days of repossession
or within 180 days, in the case of a contract with a balance of greater than
$10,000, the entire carrying value of the boat or recreational vehicle will be
charged-off, and the contract will be written off in its entirety. If a
repossessed boat or recreational vehicle is resold within 90 or 180 days, as the
case may be, of repossession for less than the carrying value of the boat or
recreational vehicle, then a charge-off of such difference is incurred at that
time. When the boat or recreational vehicle is eventually resold, the proceeds
from the sale, less the expenses associated with collection, repossession, and
sale, where permitted by law, will represent a recovery on the final disposition
of the contract. Upon repossession of the boat or recreational vehicle, any
deficiency remaining will be pursued to the extent deemed practical and to the
extent permitted by law. Prior to January 1996, NationsCredit Commercial's
charge-off policy was to write down marine contracts or recreational vehicle
contracts to fair market value of the collateral at the time of repossession and
charge-off contract balances related to repossessed collateral not sold within
90 days of repossession. The charge-off policies and the
18
<PAGE> 22
servicing and collection practices of NationsCredit Commercial may change again
over time in accordance with NationsCredit Commercial's business judgment.
PHYSICAL DAMAGE INSURANCE
The marine contract or recreational vehicle contract requires the obligor
to maintain insurance covering physical damage to the boat or recreational
vehicle, respectively. Such insurance typically names NationsCredit Commercial
as loss payee and insures the boat or recreational vehicle against loss or
damage due to fire, theft and other physical damage and marine risks. Since
obligors may choose their own insurers to provide the required coverage, the
specific terms and conditions of their policies may vary. Prior to May 1, 1997,
in the event an obligor did not maintain adequate insurance coverage and the
outstanding balance and months remaining to maturity on the marine contract or
recreational vehicle contract were greater than $10,000 and 6 months,
respectively, NationsCredit Commercial may have purchased a collateral
protection insurance policy on behalf of the obligor. Such obligors are billed
monthly by NationsCredit Commercial for such policy. The principal balance of
certain of the Receivables will include the outstanding amount of premiums of
collateral protection insurance purchased by NationsCredit Commercial on behalf
of any Obligors on or prior to the Cutoff Date. Such amounts amortize over a
period of twelve months rather than over the remaining term of the Receivable.
Since May 1, 1997, NationsCredit Commercial has not purchased collateral
protection insurance on behalf of obligors, but NationsCredit Commercial
requires obligors to maintain insurance covering physical damage to the boat or
recreational vehicle. Further, NationsCredit Commercial will not, during the
term of any contract with an outstanding balance of less than $10,000, verify if
insurance has been maintained by the obligor. However, NationsCredit Commercial
may or may not, during the term of any contract with an outstanding balance of
greater than or equal to $10,000, verify if insurance has been maintained by the
obligor. NationsCredit Commercial's practices regarding the purchase of
collateral protection insurance on behalf of obligors and its verification of
insurance maintained by obligors may change over time in accordance with changes
in applicable law or its business judgment.
In accordance with NationsCredit Commercial's normal practices and
procedures, payments by or on behalf of obligors are allocated first to late
payment fees and extension fees, second to interest accrued on the contracts,
third to principal due on the contracts, fourth to collateral protection
insurance premiums and certain other amounts due on physical damage insurance
policies, fifth to administrative charges, if any, and sixth to the remaining
principal balance.
DELINQUENCY AND LOSS EXPERIENCE
The tables set forth below indicate the delinquency and loss experience for
each of the last three calendar years and for each of the six months ended June
30, 1997 and June 30, 1996, for (i) marine contracts that were purchased by
NationsCredit Commercial from Dealers, and prior to January 1, 1993, were not
securitized (the "Marine Contract Portfolio") and (ii) recreational vehicle
contracts that were purchased by NationsCredit Commercial from Dealers (the "RV
Contract Portfolio" and together with the Marine Contract Portfolio, the
"Contract Portfolio"). As of June 30, 1997 there were 37,971 marine contracts in
the Marine Contract Portfolio with an aggregate principal balance of
approximately $427,422,000 and 4,481 recreational vehicle contracts in the RV
Contract Portfolio with an aggregate principal balance of approximately
$59,511,000. The delinquency experience and credit loss experience percentages
may be affected by the size and relative lack of seasoning of the marine
contracts and recreational vehicle contracts originated in 1995 and 1996 and the
first two quarters of 1997. Accordingly, the information should not be
considered as a basis for assessing the likelihood, amount or severity of
delinquency or losses on the Marine Receivables or RV Receivables in the future
and no assurances can be given that the delinquency and loss experience
presented in the tables below will be indicative of such experience of the
Receivables.
19
<PAGE> 23
DELINQUENCY AND LOSS EXPERIENCE FOR THE MARINE CONTRACT PORTFOLIO
<TABLE>
<CAPTION>
MARINE CONTRACT DELINQUENCY EXPERIENCE
(DOLLARS IN THOUSANDS)
---------------------------------------------------------------------
AS OF JUNE 30, AS OF DECEMBER 31,
--------------------------------------------- ---------------------
1997 1996 1996(1)
--------------------- --------------------- ---------------------
NUMBER AGGREGATE NUMBER AGGREGATE NUMBER AGGREGATE
OF MARINE PRINCIPAL OF MARINE PRINCIPAL OF MARINE PRINCIPAL
CONTRACTS BALANCE CONTRACTS BALANCE CONTRACTS BALANCE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Portfolio............................... 37,971 $427,422 32,975 $366,938 34,207 $368,306
Period of Delinquency
30-59 Days.............................. 602 6,227 661 7,016 1,043 11,221
60-89 Days.............................. 125 1,144 104 986 231 2,211
90 Days or More......................... 178 1,920 127 1,162 286 3,275
------ -------- ------ -------- ------ --------
Total Delinquency....................... 905 $ 9,291 892 $ 9,164 1,560 $ 16,707
====== ======== ====== ======== ====== ========
Total Delinquency as a Percent of the
Portfolio............................. 2.17% 2.50% 4.54%
<CAPTION>
MARINE CONTRACT DELINQUENCY EXPERIENCE
(DOLLARS IN THOUSANDS)
---------------------------------------------
AS OF DECEMBER 31,
---------------------------------------------
1995 1994
--------------------- ---------------------
NUMBER AGGREGATE NUMBER AGGREGATE
OF MARINE PRINCIPAL OF MARINE PRINCIPAL
CONTRACTS BALANCE CONTRACTS BALANCE
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Portfolio............................... 31,836 $359,681 32,267 $361,237
Period of Delinquency
30-59 Days.............................. 695 7,962 597 5,674
60-89 Days.............................. 171 1,947 159 1,344
90 Days or More......................... 195 2,178 142 1,197
------ -------- ------ --------
Total Delinquency....................... 1,061 $ 12,087 898 $ 8,215
====== ======== ====== ========
Total Delinquency as a Percent of the
Portfolio............................. 3.36% 2.27%
</TABLE>
- ---------------
(1) A third party vendor error in billing statement distribution contributed to
a one month increase in delinquencies in December 1996.
<TABLE>
<CAPTION>
MARINE CONTRACT CREDIT LOSS EXPERIENCE
(DOLLARS IN THOUSANDS)
----------------------------------------------------
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------- ------------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Average Portfolio During the Period(1)...... $398,737 $362,190 $364,836 $366,736 $322,413
Average Number of Marine Contracts
Outstanding During the Period(2).......... 36,131 32,337 32,975 32,270 27,324
Net Losses.................................. $ 1,928 $ 1,623 $ 3,455 $ 3,645 $ 2,745
Annualized Net Losses as a Percent of
Average Amount Outstanding................ 0.97% 0.90% 0.95% 0.99% 0.85%
</TABLE>
- ---------------
(1) Calculated as the average of the principal balances of the marine contracts
at the end of each month during the period indicated.
(2) Calculated as the average number of outstanding marine contracts at the end
of each month during the period indicated.
DELINQUENCY AND LOSS EXPERIENCE FOR THE RV CONTRACT PORTFOLIO
<TABLE>
<CAPTION>
RV CONTRACT DELINQUENCY EXPERIENCE
(DOLLARS IN THOUSANDS)
---------------------------------------------------------------------
AS OF JUNE 30, AS OF DECEMBER 31,
--------------------------------------------- ---------------------
1997 1996 1996(1)
--------------------- --------------------- ---------------------
NUMBER AGGREGATE NUMBER AGGREGATE NUMBER AGGREGATE
OF RV PRINCIPAL OF RV PRINCIPAL OF RV PRINCIPAL
CONTRACTS BALANCE CONTRACTS BALANCE CONTRACTS BALANCE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Portfolio............................... 4,481 $59,511 4,346 $59,341 3,952 $52,625
Period of Delinquency
30-59 Days.............................. 70 928 121 2,067 126 1,611
60-89 Days.............................. 11 186 19 203 31 615
90 Days or More......................... 25 627 44 706 44 673
----- ------- ----- ------- ----- -------
Total Delinquency....................... 106 $ 1,741 184 $ 2,976 201 $ 2,899
===== ======= ===== ======= ===== =======
Total Delinquency as a Percent of the
Portfolio............................. 2.93% 5.02% 5.51%
<CAPTION>
RV CONTRACT DELINQUENCY EXPERIENCE
(DOLLARS IN THOUSANDS)
---------------------------------------------
AS OF DECEMBER 31,
---------------------------------------------
1995 1994
--------------------- ---------------------
NUMBER AGGREGATE NUMBER AGGREGATE
OF RV PRINCIPAL OF RV PRINCIPAL
CONTRACTS BALANCE CONTRACTS BALANCE
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Portfolio............................... 4,792 $67,579 5,804 $84,661
Period of Delinquency
30-59 Days.............................. 152 2,123 144 1,919
60-89 Days.............................. 43 521 35 408
90 Days or More......................... 28 353 20 150
----- ------- ----- -------
Total Delinquency....................... 223 $ 2,997 199 $ 2,477
===== ======= ===== =======
Total Delinquency as a Percent of the
Portfolio............................. 4.43% 2.93%
</TABLE>
- ---------------
(1) A third party vendor error in billing statement distribution contributed to
a one month increase in delinquencies in December 1996.
20
<PAGE> 24
<TABLE>
<CAPTION>
RV CONTRACT CREDIT LOSS EXPERIENCE
(DOLLARS IN THOUSANDS)
-----------------------------------------------
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
----------------- ---------------------------
1997 1996 1996 1995 1994
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Average Portfolio During the Period(1)........... $55,065 $63,544 $59,749 $76,322 $93,855
Average Number of RV Contracts Outstanding During
the Period(2).................................. 4,147 4,583 4,362 5,305 6,319
Net Losses....................................... $ 592 $ 800 $ 1,490 $ 1,210 $ 2,253
Annualized Net Losses as a Percent of Average
Amount Outstanding............................. 2.15% 2.52% 2.49% 1.58% 2.40%
</TABLE>
- ---------------
(1) Calculated as the average of the principal balances of the recreational
vehicle contracts at the end of each month during the period indicated.
(2) Calculated as the average number of outstanding recreational vehicle
contracts at the end of each month during the period indicated.
THE RECEIVABLES POOL
MARINE CONTRACT GROUP
The Marine Contract Group includes marine contracts from NationsCredit
Commercial's Marine Contract Portfolio (other than marine contracts sold in
prior NationsCredit securitization transactions) meeting the following criteria
as of the Cutoff Date: (i) each Marine Receivable provides for level monthly
payments (provided that the payment in the first or last month in the life of
the Marine Receivable may be minimally different from the level payment) that
fully amortize the principal amount of such Marine Receivable (as long as each
scheduled payment is made when due) by maturity and pay interest at the APR;
(ii) each Marine Receivable provides for, in the event that such contract is
prepaid, a prepayment that fully pays the Principal Balance and includes any
accrued but unpaid interest due pursuant to the terms of the related marine
contract through the date of prepayment in an amount at least equal to the APR;
(iii) each Marine Receivable has an APR of not less than 8.0002% and not greater
than 19.0035%; (iv) each Marine Receivable has an original term of not more than
180 payments; (v) each Marine Receivable has a remaining term of not more than
180 payments; (vi) each Marine Receivable has a remaining principal balance of
not greater than $50,000; (vii) each Marine Receivable has been originated in
the United States by a Dealer for a retail sale of a Boat in the ordinary course
of such Dealer's business, has been fully and properly executed by the parties
thereto and is denominated in U.S. dollars; (viii) with respect to each Marine
Receivable, the related Obligor has obtained physical damage insurance covering
the Boat and such Obligor is required under the terms of the Marine Receivable
to maintain such insurance; (ix) each Marine Receivable constitutes "chattel
paper" under the UCC; and (x) no Boat related to any Marine Receivables shall be
required to be documented under the Ship Mortgage Act of 1920, as amended (the
"Ship Mortgage Act").
The receivable composition, geographic distribution, distribution by APR,
distribution by original term, distribution by remaining term, distribution by
original principal balance, distribution by remaining principal balance,
distribution by age, distribution by quarter of origination, distribution by new
and used collateral, distribution by contract type and distribution by period of
delinquency of the Marine Receivables as of the Cutoff Date are as set forth in
the following tables:
RECEIVABLE COMPOSITION -- MARINE CONTRACT GROUP
<TABLE>
<CAPTION>
WEIGHTED NUMBER OF AVERAGE WEIGHTED WEIGHTED
AVERAGE INITIAL MARINE MARINE PRINCIPAL AVERAGE AVERAGE
APR POOL BALANCE RECEIVABLES BALANCE ORIGINAL TERM REMAINING TERM
- -------- --------------- ----------- ---------- --------------- --------------
<C> <C> <C> <C> <C> <C>
11.552% $120,803,719.92 10,957 $11,025.26 128.71 payments 99.98 payments
</TABLE>
21
<PAGE> 25
GEOGRAPHIC DISTRIBUTION -- MARINE CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF MARINE OF MARINE PRINCIPAL INITIAL MARINE
STATE(1) RECEIVABLES RECEIVABLES(2) BALANCE POOL BALANCE(2)
- -------- ----------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Alabama............................... 393 3.59% $ 4,619,445.27 3.82%
Alaska................................ 14 0.13 93,350.21 0.08
Arizona............................... 434 3.96 6,426,742.71 5.32
Arkansas.............................. 397 3.62 3,331,482.62 2.76
California............................ 1,876 17.12 25,486,225.68 21.10
Colorado.............................. 118 1.08 1,436,646.95 1.19
Connecticut........................... 86 0.78 924,316.71 0.77
Delaware.............................. 26 0.24 182,350.36 0.15
Florida............................... 997 9.10 11,010,470.18 9.11
Georgia............................... 573 5.23 6,012,377.71 4.98
Hawaii................................ 2 0.02 20,341.33 0.02
Idaho................................. 8 0.07 112,597.82 0.09
Illinois.............................. 186 1.70 1,757,778.44 1.46
Indiana............................... 34 0.31 397,964.08 0.33
Iowa.................................. 30 0.27 316,631.94 0.26
Kansas................................ 169 1.54 1,313,979.09 1.09
Kentucky.............................. 70 0.64 663,977.73 0.55
Louisiana............................. 84 0.77 593,263.29 0.49
Maine................................. 50 0.46 472,765.51 0.39
Maryland.............................. 296 2.70 3,308,520.75 2.74
Massachusetts......................... 211 1.93 2,321,477.78 1.92
Michigan.............................. 28 0.26 268,918.11 0.22
Minnesota............................. 32 0.29 236,076.19 0.20
Mississippi........................... 91 0.83 806,755.01 0.67
Missouri.............................. 414 3.78 3,335,392.95 2.76
Montana............................... 11 0.10 85,030.24 0.07
Nebraska.............................. 43 0.39 334,944.64 0.28
Nevada................................ 247 2.25 3,141,227.25 2.60
New Hampshire......................... 38 0.35 285,974.58 0.24
New Jersey............................ 192 1.75 2,027,150.62 1.68
New Mexico............................ 90 0.82 1,148,174.57 0.95
New York.............................. 187 1.71 2,262,243.23 1.87
North Carolina........................ 745 6.80 7,450,878.56 6.17
North Dakota.......................... 2 0.02 24,553.17 0.02
Ohio.................................. 29 0.26 301,213.87 0.25
Oklahoma.............................. 144 1.31 1,435,179.09 1.19
Oregon................................ 229 2.09 2,611,408.47 2.16
Pennsylvania.......................... 181 1.65 1,792,466.42 1.48
Rhode Island.......................... 38 0.35 405,370.40 0.34
South Carolina........................ 206 1.88 1,964,668.29 1.63
South Dakota.......................... 10 0.09 96,072.00 0.08
Tennessee............................. 192 1.75 1,767,843.15 1.46
Texas................................. 1,136 10.37 11,838,703.08 9.80
Utah.................................. 48 0.44 618,100.44 0.51
Vermont............................... 3 0.03 28,648.10 0.02
Virginia.............................. 303 2.77 3,125,661.02 2.59
Washington............................ 182 1.66 1,772,274.39 1.47
Washington, DC........................ 3 0.03 40,725.15 0.03
West Virginia......................... 25 0.23 201,349.65 0.17
Wisconsin............................. 20 0.18 217,371.20 0.18
Wyoming............................... 22 0.20 273,677.43 0.23
Other................................. 12 0.11 102,962.49 0.09
------ ------ --------------- ------
Total....................... 10,957 100.00% $120,803,719.92 100.00%
====== ====== =============== ======
</TABLE>
- ---------------
(1) Based on the current billing addresses of the Obligors on the Marine
Receivables.
(2) The sum of the individual percentages may not add to 100% because of
rounding.
22
<PAGE> 26
DISTRIBUTION BY APR -- MARINE CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF MARINE OF MARINE PRINCIPAL INITIAL MARINE
APR RECEIVABLES RECEIVABLES(1) BALANCE POOL BALANCE(1)
--- ----------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
8.0001% -- 9.0000%.................. 253 2.31% $ 4,286,574.91 3.55%
9.0001% -- 10.0000%.................. 1,143 10.43 18,017,922.36 14.92
10.0001% -- 11.0000%.................. 2,091 19.08 29,770,761.92 24.64
11.0001% -- 12.0000%.................. 2,481 22.64 30,216,208.85 25.01
12.0001% -- 13.0000%.................. 2,209 20.16 20,205,371.31 16.73
13.0001% -- 14.0000%.................. 1,527 13.94 11,381,827.13 9.42
14.0001% -- 15.0000%.................. 944 8.62 5,447,032.62 4.51
15.0001% -- 16.0000%.................. 205 1.87 1,057,074.15 0.88
16.0001% -- 17.0000%.................. 76 0.69 319,953.24 0.26
17.0001% -- 18.0000%.................. 26 0.24 93,659.82 0.08
18.0001% -- 19.0000%.................. 1 0.01 5,123.61 0.00(2)
19.0001% -- 20.0000%.................. 1 0.01 2,210.00 0.00(2)
------ ------ --------------- ------
Total....................... 10,957 100.00% $120,803,719.92 100.00%
====== ====== =============== ======
</TABLE>
- ---------------
(1) The sum of the individual percentages may not add to 100% because of
rounding.
(2) Represents less than .005% but greater than zero.
DISTRIBUTION BY ORIGINAL TERM -- MARINE CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF MARINE OF MARINE PRINCIPAL INITIAL MARINE
ORIGINAL TERM (PAYMENTS) RECEIVABLES RECEIVABLES(1) BALANCE POOL BALANCE(1)
- ------------------------ ----------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
1 -- 12.............................. 68 0.62% $ 940,177.66 0.78%
13 -- 24.............................. 167 1.52 363,588.93 0.30
25 -- 36.............................. 200 1.83 846,089.67 0.70
37 -- 48.............................. 520 4.75 2,248,685.99 1.86
49 -- 60.............................. 364 3.32 2,931,691.65 2.43
61 -- 72.............................. 327 2.98 2,643,233.76 2.19
73 -- 84.............................. 1,500 13.69 10,057,032.55 8.33
85 -- 96.............................. 173 1.58 1,456,657.83 1.21
97 -- 108.............................. 72 0.66 599,172.87 0.50
109 -- 120.............................. 4,233 38.63 40,870,673.72 33.83
121 -- 132.............................. 16 0.15 185,733.98 0.15
133 -- 144.............................. 2,501 22.83 36,609,121.57 30.30
145 -- 156.............................. 4 0.04 98,280.46 0.08
157 -- 168.............................. 3 0.03 58,549.36 0.05
169 -- 180.............................. 809 7.38 20,895,029.92 17.30
------ ------ --------------- ------
Total......................... 10,957 100.00% $120,803,719.92 100.00%
====== ====== =============== ======
</TABLE>
- ---------------
(1) The sum of the individual percentages may not add to 100% because of
rounding.
23
<PAGE> 27
DISTRIBUTION BY REMAINING TERM -- MARINE CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF MARINE OF MARINE PRINCIPAL INITIAL MARINE
REMAINING TERM (PAYMENTS) RECEIVABLES RECEIVABLES(1) BALANCE POOL BALANCE(1)
- ------------------------- ----------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
1 -- 12.............................. 333 3.04% $ 1,343,785.17 1.11%
13 -- 24.............................. 1,194 10.90 3,805,167.03 3.15
25 -- 36.............................. 1,062 9.69 5,341,471.92 4.42
37 -- 48.............................. 782 7.14 4,657,325.33 3.86
49 -- 60.............................. 1,805 16.47 16,256,226.65 13.46
61 -- 72.............................. 453 4.13 4,431,710.01 3.67
73 -- 84.............................. 1,365 12.46 15,633,218.64 12.94
85 -- 96.............................. 381 3.48 6,711,261.06 5.56
97 -- 108.............................. 72 0.66 1,097,744.21 0.91
109 -- 120.............................. 1,913 17.46 27,354,025.20 22.64
121 -- 132.............................. 46 0.42 1,170,444.15 0.97
133 -- 144.............................. 1,120 10.22 21,037,241.24 17.41
145 -- 156.............................. 8 0.07 183,104,36 0.15
157 -- 168.............................. 8 0.07 245,688.33 0.20
169 -- 180.............................. 415 3.79 11,535,306.62 9.55
----- ------ --------------- ------
Total......................... 10,957 100.00% $120,803,719.92 100.00%
===== ====== =============== ======
</TABLE>
- ---------------
(1) The sum of the individual percentages may not add to 100% because of
rounding.
DISTRIBUTION BY ORIGINAL RECEIVABLE PRINCIPAL BALANCE -- MARINE CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF MARINE OF MARINE PRINCIPAL INITIAL MARINE
ORIGINAL RECEIVABLE PRINCIPAL BALANCE RECEIVABLES RECEIVABLES(1) BALANCE POOL BALANCE(1)
- ------------------------------------- ----------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
$ 0.01 -- $ 5,000.00.............. 699 6.38% $ 1,808,053.14 1.50%
$ 5,000.01 -- $10,000.00.............. 1,808 16.50 10,044,342.26 8.31
$10,000.01 -- $15,000.00.............. 4,079 37.23 35,692,681.80 29.55
$15,000.01 -- $20,000.00.............. 2,560 23.36 33,550,604.98 27.77
$20,000.01 -- $25,000.00.............. 986 9.00 17,925,220.56 14.84
$25,000.01 -- $30,000.00.............. 460 4.20 10,613,249.23 8.79
$30,000.01 -- $35,000.00.............. 172 1.57 4,602,919.53 3.81
$35,000.01 -- $40,000.00.............. 93 0.85 2,919,913.50 2.42
$40,000.01 -- $45,000.00.............. 59 0.54 2,036,726.04 1.69
$45,000.01 -- $50,000.00.............. 41 0.37 1,610,008.88 1.33
------ ------ --------------- ------
Total....................... 10,957 100.00% $120,803,719.92 100.00%
====== ====== =============== ======
</TABLE>
- ---------------
(1) The sum of the individual percentages may not add to 100% because of
rounding.
24
<PAGE> 28
DISTRIBUTION BY REMAINING RECEIVABLE PRINCIPAL BALANCE -- MARINE CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF MARINE OF MARINE PRINCIPAL INITIAL MARINE
REMAINING RECEIVABLE PRINCIPAL BALANCE RECEIVABLES RECEIVABLES(1) BALANCE POOL BALANCE(1)
- -------------------------------------- ----------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
$ 0.01 -- $ 5,000.00.............. 2,393 21.84% $ 7,234,802.63 5.99%
$ 5,000.01 -- $10,000.00.............. 3,106 28.35 23,278,986.59 19.27
$10,000.01 -- $15,000.00.............. 2,805 25.60 34,459,188.07 28.52
$15,000.01 -- $20,000.00.............. 1,468 13.40 25,276,794.52 20.92
$20,000.01 -- $25,000.00.............. 687 6.27 15,209,901.45 12.59
$25,000.01 -- $30,000.00.............. 280 2.56 7,648,235.54 6.33
$30,000.01 -- $35,000.00.............. 126 1.15 4,043,388.45 3.35
$35,000.01 -- $40,000.00.............. 53 0.48 1,965,184.93 1.63
$40,000.01 -- $45,000.00.............. 29 0.26 1,218,929.93 1.01
$45,000.01 -- $50,000.00.............. 10 0.09 468,307.81 0.39
------ ------ --------------- ------
Total....................... 10,957 100.00% $120,803,719.92 100.00%
====== ====== =============== ======
</TABLE>
- ---------------
(1) The sum of the individual percentages may not add to 100% because of
rounding.
DISTRIBUTION BY AGE -- MARINE CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF MARINE OF MARINE PRINCIPAL INITIAL MARINE
MONTHS SINCE ORIGINATION RECEIVABLES RECEIVABLES(1) BALANCE POOL BALANCE(1)
- ------------------------ ----------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
0.01 -- 6.00...................... 5,097 46.52% $ 66,296,272.45 54.88%
6.01 -- 12.00...................... 571 5.21 8,822,994.37 7.30
12.01 -- 18.00...................... 43 0.39 471,081.81 0.39
18.01 -- 24.00...................... 43 0.39 366,011.62 0.30
24.01 -- 30.00...................... 83 0.76 687,853.36 0.57
30.01 -- 36.00...................... 57 0.52 537,555.73 0.44
36.01 -- 42.00...................... 102 0.93 872,349.64 0.72
42.01 -- 48.00...................... 44 0.40 562,753.86 0.47
48.01 -- 54.00...................... 123 1.12 1,583,171.27 1.31
54.01 -- 60.00...................... 337 3.08 3,279,022.44 2.71
60.01 -- 66.00...................... 1,519 13.86 14,067,355.39 11.64
66.01 -- 72.00...................... 683 6.23 5,942,292.17 4.92
72.01 -- 78.00...................... 24 0.22 148,462.72 0.12
78.01 -- 84.00...................... 4 0.04 60,606.63 0.05
84.01 -- 90.00...................... 706 6.44 6,060,334.61 5.02
90.01 -- 96.00...................... 642 5.86 5,692,368.98 4.71
96.01 -- 102.00...................... 650 5.93 4,360,459.99 3.61
102.01 -- 108.00...................... 78 0.71 393,458.59 0.33
108.01 -- 114.00...................... 105 0.96 337,661.00 0.28
114.01 -- 120.00...................... 35 0.32 202,346.96 0.17
120.01 -- 126.00...................... 9 0.08 42,818.69 0.04
126.01 -- 132.00...................... 2 0.02 16,487.64 0.01
------ ------ --------------- ------
Total....................... 10,957 100.00% $120,803,719.92 100.00%
====== ====== =============== ======
</TABLE>
- ---------------
(1) The sum of the individual percentages may not add to 100% because of
rounding.
25
<PAGE> 29
DISTRIBUTION BY QUARTER OF ORIGINATION -- MARINE CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF MARINE OF MARINE PRINCIPAL INITIAL MARINE
ORIGINATION QUARTER (QUARTER/YEAR) RECEIVABLES RECEIVABLES(1) BALANCE POOL BALANCE(1)
- ---------------------------------- ----------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
1/87.................................. 2 0.02% $ 16,487.64 0.01%
2/87.................................. 6 0.05 34,174.27 0.03
3/87.................................. 3 0.03 8,644.42 0.01
4/87.................................. 4 0.04 48,594.57 0.04
1/88.................................. 31 0.28 153,752.39 0.13
2/88.................................. 59 0.54 154,865.74 0.13
3/88.................................. 47 0.43 187,490.27 0.16
4/88.................................. 10 0.09 61,703.37 0.05
1/89.................................. 73 0.67 354,180.82 0.29
2/89.................................. 218 1.99 1,173,881.57 0.97
3/89.................................. 429 3.92 3,176,468.94 2.63
4/89.................................. 171 1.56 1,662,796.68 1.38
1/90.................................. 495 4.52 4,239,705.73 3.51
2/90.................................. 579 5.28 5,046,012.22 4.18
3/90.................................. 100 0.91 787,177.83 0.65
4/90.................................. 1 0.01 2,113.18 0.00(2)
1/91.................................. 3 0.03 58,493.45 0.05
2/91.................................. 14 0.13 100,186.19 0.08
3/91.................................. 10 0.09 48,276.53 0.04
4/91.................................. 75 0.68 775,059.57 0.64
1/92.................................. 628 5.73 5,319,999.95 4.40
2/92.................................. 965 8.81 8,942,061.53 7.40
3/92.................................. 536 4.89 5,000,527.14 4.14
4/92.................................. 203 1.85 1,957,052.05 1.62
1/93.................................. 132 1.20 1,293,969.76 1.07
2/93.................................. 70 0.64 876,578.63 0.73
3/93.................................. 53 0.48 706,592.64 0.58
4/93.................................. 17 0.16 285,980.83 0.24
1/94.................................. 27 0.25 276,773.03 0.23
2/94.................................. 66 0.60 564,573.93 0.47
3/94.................................. 36 0.33 307,775.71 0.25
4/94.................................. 10 0.09 112,193.38 0.09
1/95.................................. 51 0.47 443,166.02 0.37
2/95.................................. 62 0.57 600,655.97 0.50
3/95.................................. 17 0.16 69,393.72 0.06
4/95.................................. 8 0.07 47,339.00 0.04
1/96.................................. 35 0.32 318,672.62 0.26
2/96.................................. 35 0.32 420,838.73 0.35
3/96.................................. 8 0.07 50,243.08 0.04
4/96.................................. 128 1.17 1,423,540.65 1.18
1/97.................................. 447 4.08 7,468,175.15 6.18
2/97.................................. 2,888 26.36 37,770,860.92 31.27
3/97.................................. 2,205 20.12 28,456,690.10 23.56
------ ------ --------------- ------
Total....................... 10,957 100.00% $120,803,719.92 100.00%
====== ====== =============== ======
</TABLE>
- ---------------
(1) The sum of the individual percentages may not add to 100% because of
rounding.
(2) Represents less than .005% but greater than zero.
26
<PAGE> 30
DISTRIBUTION BY NEW AND USED COLLATERAL -- MARINE CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF MARINE OF MARINE PRINCIPAL INITIAL MARINE
NEW OR USED COLLATERAL RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
---------------------- ----------- ------------ --------------- --------------
<S> <C> <C> <C> <C>
New..................................... 9,949 90.80% $111,683,571.73 92.45 %
Used.................................... 1,008 9.20 9,120,148.19 7.55
------- ------ --------------- ------
Total......................... 10,957 100.00% $120,803,719.92 100.00 %
======= ====== =============== ======
</TABLE>
DISTRIBUTION BY CONTRACT TYPE -- MARINE CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF MARINE OF MARINE PRINCIPAL INITIAL MARINE
CONTRACT TYPE RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
------------- ----------- ------------ --------------- --------------
<S> <C> <C> <C> <C>
Simple Interest Marine Receivables...... 8,359 76.29% $ 97,240,539.21 80.49 %
Precomputed Marine Receivables.......... 2,598 23.71 23,563,180.71 19.51
------- ------ --------------- ------
Total......................... 10,957 100.00% $120,803,719.92 100.00 %
======= ====== =============== ======
</TABLE>
DISTRIBUTION BY PERIOD OF DELINQUENCY -- MARINE CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF MARINE OF MARINE PRINCIPAL INITIAL MARINE
RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
----------- ------------ --------------- --------------
<S> <C> <C> <C> <C>
Marine Contract Group................... 10,957 100.00% $120,803,719.92 100.00 %
Period of Delinquency
30-59 Days............................ 179 1.63% $ 1,818,680.68 1.51 %
60-89 Days............................ 4 0.04% $ 30,227.50 0.03 %
90 Days or More....................... 1 0.01% $ 12,811.15 0.01 %
</TABLE>
RV CONTRACT GROUP
The RV Contract Group includes recreational vehicle contracts from
NationsCredit Commercial's RV Contract Portfolio meeting the following criteria
as of the Cutoff Date: (i) each RV Receivable provides for level monthly
payments (provided that the payment in the first or last month in the life of
the RV Receivable may be minimally different from the level payment) that fully
amortize the principal amount of such RV Receivable (as long as each scheduled
payment is made when due) by maturity and pay interest at the APR; (ii) each RV
Receivable provides for, in the event that such contract is prepaid, a
prepayment that fully pays the Principal Balance and includes any accrued but
unpaid interest due pursuant to the terms of the related recreational vehicle
contract through the date of prepayment in an amount at least equal to the APR;
(iii) each RV Receivable has a fixed APR of not less than 8.0000% and not
greater than 20.5001%; (iv) each RV Receivable has an original term of not more
than 180 payments; (v) each RV Receivable has a remaining term of not more than
180 payments; (vi) each RV Receivable has been originated in the United States
by a Dealer for the retail sale of a RV in the ordinary course of such Dealer's
business, has been fully and properly executed by the parties thereto and is
denominated in U.S. dollars; (vii) with respect to each RV Receivable, the
related Obligor has obtained physical damage insurance covering the RV and such
Obligor is required under the terms of the RV Receivable to maintain such
insurance; and (viii) each RV Receivable constitutes "chattel paper" under the
UCC.
27
<PAGE> 31
The receivable composition, geographic distribution, distribution by APR,
distribution by original term, distribution by remaining term, distribution by
original principal balance, distribution by remaining principal balance,
distribution by age, distribution by quarter of origination, distribution by new
and used collateral, distribution by contract type and distribution by period of
delinquency of the RV Contract Group as of the Cutoff Date are as set forth in
the following tables:
RECEIVABLE COMPOSITION -- RV CONTRACT GROUP
<TABLE>
<CAPTION>
WEIGHTED NUMBER AVERAGE WEIGHTED WEIGHTED
AVERAGE INITIAL RV OF RV PRINCIPAL AVERAGE AVERAGE
APR POOL BALANCE RECEIVABLES BALANCE ORIGINAL TERM REMAINING TERM
- -------- -------------- ----------- ---------- --------------- --------------
<C> <C> <C> <C> <C> <C>
11.521% $48,386,535.24 3,791 $12,763.53 140.99 payments 98.09 payments
</TABLE>
28
<PAGE> 32
GEOGRAPHIC DISTRIBUTION -- RV CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF RV OF RV PRINCIPAL INITIAL RV
STATE(1) RECEIVABLES RECEIVABLES(2) BALANCE POOL BALANCE(2)
-------- ----------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Alabama................................. 101 2.66% $ 1,189,707.06 2.46%
Alaska.................................. 4 0.11 85,847.51 0.18
Arizona................................. 139 3.67 1,972,056.43 4.08
Arkansas................................ 70 1.85 1,033,048.65 2.13
California.............................. 792 20.89 11,150,012.79 23.04
Colorado................................ 173 4.56 2,370,801.42 4.90
Connecticut............................. 37 0.98 244,455.83 0.51
Delaware................................ 4 0.11 58,980.33 0.12
Florida................................. 241 6.36 4,013,538.15 8.29
Georgia................................. 150 3.96 1,699,710.51 3.51
Idaho................................... 12 0.32 173,750.89 0.36
Illinois................................ 57 1.50 765,598.33 1.58
Indiana................................. 13 0.34 219,075.96 0.45
Iowa.................................... 6 0.16 74,556.19 0.15
Kansas.................................. 35 0.92 452,276.49 0.93
Kentucky................................ 16 0.42 254,269.84 0.53
Louisiana............................... 20 0.53 272,934.39 0.56
Maine................................... 19 0.50 290,110.26 0.60
Maryland................................ 58 1.53 687,425.54 1.42
Massachusetts........................... 19 0.50 276,106.77 0.57
Michigan................................ 66 1.74 1,031,675.97 2.13
Minnesota............................... 47 1.24 646,121.49 1.34
Mississippi............................. 30 0.79 404,523.24 0.84
Missouri................................ 76 2.00 761,190.19 1.57
Montana................................. 6 0.16 72,042.16 0.15
Nebraska................................ 18 0.47 152,186.92 0.31
Nevada.................................. 69 1.82 828,592.55 1.71
New Hampshire........................... 23 0.61 286,329.36 0.59
New Jersey.............................. 16 0.42 323,118.56 0.67
New Mexico.............................. 96 2.53 1,124,988.51 2.33
New York................................ 87 2.29 1,086,653.26 2.25
North Carolina.......................... 232 6.12 2,300,921.68 4.76
North Dakota............................ 3 0.08 21,130.44 0.04
Ohio.................................... 30 0.79 473,176.23 0.98
Oklahoma................................ 17 0.45 191,185.36 0.40
Oregon.................................. 82 2.16 881,077.62 1.82
Pennsylvania............................ 39 1.03 564,609.52 1.17
Rhode Island............................ 3 0.08 58,276.62 0.12
South Carolina.......................... 49 1.29 549,192.76 1.14
South Dakota............................ 1 0.03 13,814.03 0.03
Tennessee............................... 67 1.77 701,829.37 1.45
Texas................................... 481 12.69 5,283,240.99 10.92
Utah.................................... 26 0.69 372,457.17 0.77
Vermont................................. 21 0.55 247,789.37 0.51
Virginia................................ 62 1.64 773,625.25 1.60
Washington.............................. 124 3.27 1,261,167.93 2.61
West Virginia........................... 23 0.61 260,884.76 0.54
Wisconsin............................... 3 0.08 45,902.67 0.09
Wyoming................................. 27 0.71 360,884.13 0.75
Other................................... 1 0.03 23,683.79 0.05
------ ------ -------------- ------
Total......................... 3,791 100.00% $48,386,535.24 100.00%
====== ====== ============== ======
</TABLE>
- ---------------
(1) Based on the current billing addresses of the Obligors on the RV
Receivables.
(2) The sum of the individual percentages may not add to 100% because of
rounding.
29
<PAGE> 33
DISTRIBUTION BY APR -- RV CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF RV OF RV PRINCIPAL INITIAL RV
APR RECEIVABLES RECEIVABLES(1) BALANCE POOL BALANCE(1)
--- ----------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
7.0001% -- 8.0000%................... 1 0.03% $ 39,299.72 0.08%
8.0001% -- 9.0000%................... 160 4.22 3,396,782.76 7.02
9.0001% -- 10.0000%................... 518 13.66 8,224,185.68 17.00
10.0001% -- 11.0000%................... 680 17.94 9,577,945.32 19.79
11.0001% -- 12.0000%................... 720 18.99 9,075,443.24 18.76
12.0001% -- 13.0000%................... 767 20.23 9,486,041.22 19.60
13.0001% -- 14.0000%................... 582 15.35 6,037,364.42 12.48
14.0001% -- 15.0000%................... 237 6.25 1,783,999.14 3.69
15.0001% -- 16.0000%................... 96 2.53 643,401.84 1.33
16.0001% -- 17.0000%................... 22 0.58 96,478.11 0.20
17.0001% -- 18.0000%................... 6 0.16 15,414.14 0.03
18.0001% -- 19.0000%................... 1 0.03 3,727.74 0.01
20.0001% -- 21.0000%................... 1 0.03 6,451.91 0.01
----- ------ -------------- ------
Total........................ 3,791 100.00% $48,386,535.24 100.00%
===== ====== ============== ======
</TABLE>
- ---------------
(1) The sum of the individual percentages may not add to 100% because of
rounding.
DISTRIBUTION BY ORIGINAL TERM -- RV CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF RV OF RV PRINCIPAL INITIAL RV
ORIGINAL TERM (PAYMENTS) RECEIVABLES RECEIVABLES(1) BALANCE POOL BALANCE(1)
------------------------ ----------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
1 -- 12............................. 5 0.13% $ 11,500.33 0.02%
13 -- 24............................. 25 0.66 47,019.03 0.10
25 -- 36............................. 69 1.82 241,015.56 0.50
37 -- 48............................. 227 5.99 831,974.67 1.72
49 -- 60............................. 243 6.41 1,546,005.09 3.20
61 -- 72............................. 95 2.51 727,947.53 1.50
73 -- 84............................. 533 14.06 3,593,387.88 7.43
85 -- 96............................. 69 1.82 747,042.96 1.54
97 -- 108............................. 18 0.47 116,856.13 0.24
109 -- 120............................. 1,145 30.20 11,286,659.07 23.33
121 -- 132............................. 3 0.08 64,024.71 0.13
133 -- 144............................. 701 18.49 10,249,958.23 21.18
145 -- 156............................. 4 0.11 69,327.27 0.14
157 -- 168............................. 2 0.05 27,631.96 0.06
169 -- 180............................. 652 17.20 18,826,184.82 38.91
----- ------ -------------- ------
Total........................ 3,791 100.00% $48,386,535.24 100.00%
===== ====== ============== ======
</TABLE>
- ---------------
(1) The sum of the individual percentages may not add to 100% because of
rounding.
30
<PAGE> 34
DISTRIBUTION BY REMAINING TERM -- RV CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF RV OF RV PRINCIPAL INITIAL RV
REMAINING TERM (PAYMENTS) RECEIVABLES RECEIVABLES(1) BALANCE POOL BALANCE(1)
------------------------- ----------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
1 -- 12............................. 146 3.85% $ 225,708.47 0.47%
13 -- 24............................. 267 7.04 1,033,197.54 2.14
25 -- 36............................. 321 8.47 1,917,298.33 3.96
37 -- 48............................. 344 9.07 2,322,245.58 4.80
49 -- 60............................. 419 11.05 3,756,790.09 7.76
61 -- 72............................. 321 8.47 3,954,630.64 8.17
73 -- 84............................. 589 15.54 8,015,163.22 16.56
85 -- 96............................. 244 6.44 4,949,120.77 10.23
97 -- 108............................. 117 3.09 1,689,605.68 3.49
109 -- 120............................. 488 12.87 6,884,578.35 14.23
121 -- 132............................. 59 1.56 1,409,875.29 2.91
133 -- 144............................. 331 8.73 7,342,664.39 15.18
145 -- 156............................. 21 0.55 792,466.93 1.64
157 -- 168............................. 18 0.47 544,101.97 1.12
169 -- 180............................. 106 2.80 3,549,087.99 7.33
------ ------ -------------- ------
Total........................ 3,791 100.00% $48,386,535.24 100.00%
====== ====== ============== ======
</TABLE>
- ---------------
(1) The sum of the individual percentages may not add to 100% because of
rounding.
DISTRIBUTION BY ORIGINAL RECEIVABLE PRINCIPAL BALANCE -- RV CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF RV OF RV PRINCIPAL INITIAL RV
ORIGINAL RECEIVABLE PRINCIPAL BALANCE RECEIVABLES RECEIVABLES(1) BALANCE POOL BALANCE(1)
- ------------------------------------- ----------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
$ 0.01 -- $ 5,000.00............. 265 6.99% $ 756,946.20 1.56%
$ 5,000.01 -- $ 10,000.00............. 818 21.58 4,627,824.55 9.56
$ 10,000.01 -- $ 15,000.00............. 1,093 28.83 10,352,072.03 21.39
$ 15,000.01 -- $ 20,000.00............. 570 15.04 7,292,407.47 15.07
$ 20,000.01 -- $ 25,000.00............. 257 6.78 4,106,183.84 8.49
$ 25,000.01 -- $ 30,000.00............. 215 5.67 4,078,106.82 8.43
$ 30,000.01 -- $ 35,000.00............. 167 4.41 3,726,834.09 7.70
$ 35,000.01 -- $ 40,000.00............. 138 3.64 3,534,269.67 7.30
$ 40,000.01 -- $ 45,000.00............. 100 2.64 3,066,446.12 6.34
$ 45,000.01 -- $ 50,000.00............. 63 1.66 2,173,778.65 4.49
$ 50,000.01 -- $ 55,000.00............. 42 1.11 1,669,297.21 3.45
$ 55,000.01 -- $ 60,000.00............. 27 0.71 1,099,541.46 2.27
$ 60,000.01 -- $ 65,000.00............. 12 0.32 496,638.66 1.03
$ 65,000.01 -- $ 70,000.00............. 10 0.26 481,475.65 1.00
$ 70,000.01 -- $ 75,000.00............. 5 0.13 274,763.00 0.57
$ 80,000.01 -- $ 85,000.00............. 1 0.03 72,494.91 0.15
$ 85,000.01 -- $ 90,000.00............. 4 0.11 282,407.77 0.58
$ 95,000.01 -- $100,000.00............. 2 0.05 121,141.14 0.25
$100,000.01 -- $105,000.00............. 1 0.03 54,216.95 0.11
$135,000.01 -- $140,000.00............. 1 0.03 119,689.05 0.25
----- ------ -------------- ------
Total........................... 3,791 100.00% $48,386,535.24 100.00%
===== ====== ============== ======
</TABLE>
- ---------------
(1) The sum of the individual percentages may not add to 100% because of
rounding.
31
<PAGE> 35
DISTRIBUTION BY REMAINING RECEIVABLE PRINCIPAL BALANCE -- RV CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF RV OF RV PRINCIPAL INITIAL RV
REMAINING RECEIVABLE PRINCIPAL BALANCE RECEIVABLES RECEIVABLES(1) BALANCE POOL BALANCE(1)
- -------------------------------------- ----------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
$ 0.01 -- $ 5,000.00............. 776 20.47% $ 2,441,095.74 5.04%
$ 5,000.01 -- $ 10,000.00............. 1,076 28.38 7,982,389.75 16.50
$ 10,000.01 -- $ 15,000.00............. 865 22.82 10,657,729.10 22.03
$ 15,000.01 -- $ 20,000.00............. 401 10.58 6,964,386.74 14.39
$ 20,000.01 -- $ 25,000.00............. 258 6.81 5,750,817.41 11.89
$ 25,000.01 -- $ 30,000.00............. 163 4.30 4,454,234.98 9.21
$ 30,000.01 -- $ 35,000.00............. 90 2.37 2,905,376.20 6.00
$ 35,000.01 -- $ 40,000.00............. 66 1.74 2,462,271.68 5.09
$ 40,000.01 -- $ 45,000.00............. 38 1.00 1,616,431.83 3.34
$ 45,000.01 -- $ 50,000.00............. 23 0.61 1,079,890.54 2.23
$ 50,000.01 -- $ 55,000.00............. 17 0.45 888,195.57 1.84
$ 55,000.01 -- $ 60,000.00............. 8 0.21 453,919.36 0.94
$ 60,000.01 -- $ 65,000.00............. 4 0.11 252,465.94 0.52
$ 65,000.01 -- $ 70,000.00............. 2 0.05 134,871.60 0.28
$ 70,000.01 -- $ 75,000.00............. 2 0.05 145,496.93 0.30
$ 75,000.01 -- $ 80,000.00............. 1 0.03 77,272.82 0.16
$115,000.01 -- $120,000.00............. 1 0.03 119,689.05 0.25
------ ------ -------------- ------
Total........................ 3,791 100.00% $48,386,535.24 100.00%
====== ====== ============== ======
</TABLE>
- ---------------
(1) The sum of the individual percentages may not add to 100% because of
rounding.
DISTRIBUTION BY AGE -- RV CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF RV OF RV PRINCIPAL INITIAL RV
MONTHS SINCE ORIGINATION RECEIVABLES RECEIVABLES(1) BALANCE POOL BALANCE(1)
- ------------------------ ----------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
0.01 -- 6.00....................... 1,099 28.99% $$13,812,101.48 28.55%
6.01 -- 12.00....................... 442 11.66 5,511,321,27 11.39
12.01 -- 18.00....................... 209 5.51 1,921,053.31 3.97
18.01 -- 24.00....................... 144 3.80 1,364,299.96 2.82
24.01 -- 30.00....................... 118 3.11 1,291,945.89 2.67
30.01 -- 36.00....................... 128 3.38 1,550,490.81 3.20
36.01 -- 42.00....................... 256 6.75 3,639,318.17 7.52
42.01 -- 48.00....................... 128 3.38 1,766,437.70 3.65
48.01 -- 54.00....................... 112 2.95 1,495,100.28 3.09
54.01 -- 60.00....................... 16 0.42 167,976.85 0.35
60.01 -- 66.00....................... 37 0.98 346,752.66 0.72
66.01 -- 72.00....................... 39 1.03 606,576.30 1.25
72.01 -- 78.00....................... 18 0.47 121,414.09 0.25
78.01 -- 84.00....................... 8 0.21 105,323.85 0.22
84.01 -- 90.00....................... 188 4.96 2,828,973.12 5.85
90.01 -- 96.00....................... 200 5.28 2,924,038.48 6.04
96.01 -- 102.00....................... 249 6.57 3,593,178.49 7.43
102.01 -- 108.00....................... 154 4.06 2,212,923.86 4.57
108.01 -- 114.00....................... 132 3.48 1,711,615.11 3.54
114.01 -- 120.00....................... 86 2.27 1,046,712.51 2.16
120.01 -- 126.00....................... 22 0.58 287,540.43 0.59
126.01 -- 132.00....................... 6 0.16 81,440.62 0.17
------ ------ -------------- ------
Total........................ 3,791 100.00% $48,386,535.24 100.00%
====== ====== ============== ======
</TABLE>
- ---------------
(1) The sum of the individual percentages may not add to 100% because of
rounding.
32
<PAGE> 36
DISTRIBUTION BY QUARTER OF ORIGINATION -- RV CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF RV OF RV PRINCIPAL INITIAL RV
ORIGINATION QUARTER (QUARTER/YEAR) RECEIVABLES RECEIVABLES(1) BALANCE POOL BALANCE(1)
---------------------------------- ----------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
1/87................................... 6 0.16% $ 81,440.62 0.17%
2/87................................... 12 0.32 167,176.10 0.35
3/87................................... 11 0.29 124,664.25 0.26
4/87................................... 26 0.69 265,530.70 0.55
1/88................................... 62 1.64 802,112.87 1.66
2/88................................... 70 1.85 940,323.61 1.94
3/88................................... 61 1.61 782,460.99 1.62
4/88................................... 47 1.24 650,975.62 1.35
1/89................................... 114 3.01 1,660,220.20 3.43
2/89................................... 135 3.56 1,792,561.41 3.70
3/89................................... 109 2.88 1,710,836.45 3.54
4/89................................... 66 1.74 913,238.14 1.89
1/90................................... 135 3.56 2,046,541.51 4.23
2/90................................... 141 3.72 2,029,897.08 4.20
3/90................................... 42 1.11 718,443.07 1.48
4/90................................... 1 0.03 9,743.12 0.02
1/91................................... 7 0.18 95,580.73 0.20
2/91................................... 6 0.16 17,935.65 0.04
3/91................................... 12 0.32 103,478.44 0.21
4/91................................... 11 0.29 165,932.53 0.34
1/92................................... 29 0.76 447,541.25 0.92
2/92................................... 23 0.61 258,806.65 0.53
3/92................................... 13 0.34 81,048.53 0.17
4/92................................... 9 0.24 87,340.34 0.18
1/93................................... 7 0.18 80,636.51 0.17
2/93................................... 32 0.84 444,367.44 0.92
3/93................................... 82 2.16 1,067,396.42 2.21
4/93................................... 50 1.32 721,341.24 1.49
1/94................................... 79 2.08 1,064,022.39 2.20
2/94................................... 161 4.25 2,340,988.37 4.84
3/94................................... 95 2.51 1,323,703.47 2.74
4/94................................... 44 1.16 498,819.88 1.03
1/95................................... 82 2.16 1,043,964.68 2.16
2/95................................... 63 1.66 642,603.20 1.33
3/95................................... 54 1.42 596,085.76 1.23
4/95................................... 37 0.98 449,722.38 0.93
1/96................................... 108 2.85 935,195.47 1.93
2/96................................... 117 3.09 961,877.72 1.99
3/96................................... 91 2.40 938,557.70 1.94
4/96................................... 83 2.19 1,017,565.42 2.10
1/97................................... 371 9.79 4,683,056.57 9.68
2/97................................... 784 20.68 10,347,740.43 21.39
3/97................................... 303 7.99 3,275,060.33 6.77
------ ------ -------------- ------
Total........................ 3,791 100.00% $48,386,535.24 100.00%
====== ====== ============== ======
</TABLE>
- ---------------
(1) The sum of the individual percentages may not add to 100% because of
rounding.
33
<PAGE> 37
DISTRIBUTION BY NEW AND USED COLLATERAL -- RV CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF RV OF RV PRINCIPAL INITIAL RV
NEW OR USED COLLATERAL RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
---------------------- ----------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
New...................................... 3,028 79.87% $39,442,646.38 81.52%
Used..................................... 763 20.13 8,943,888.86 18.48
------ ------ -------------- ------
Total.......................... 3,791 100.00% $48,386,535.24 100.00%
====== ====== ============== ======
</TABLE>
DISTRIBUTION BY CONTRACT TYPE -- RV CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF RV OF RV PRINCIPAL INITIAL RV
CONTRACT TYPE RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
------------- ----------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
Simple Interest RV Receivables........... 3,289 86.76% $42,103,402.97 87.01%
Precomputed RV Receivables............... 502 13.24 6,283,132.27 12.99
------ ------ -------------- ------
Total.......................... 3,791 100.00% $48,386,535.24 100.00%
====== ====== ============== ======
</TABLE>
DISTRIBUTION BY PERIOD OF DELINQUENCY -- RV CONTRACT GROUP
<TABLE>
<CAPTION>
PERCENT OF
NUMBER TOTAL NUMBER AGGREGATE PERCENT OF
OF RV OF RV PRINCIPAL INITIAL RV
RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
----------- ------------ -------------- ------------
<S> <C> <C> <C> <C>
RV Contract Group........................ 3,791 100.00% $48,386,535.24 100.00%
Period of Delinquency
30-59 Days............................. 49 1.29% $ 654,245.82 1.35%
</TABLE>
MATURITY AND PREPAYMENT ASSUMPTIONS
Full and partial prepayments on the Marine Receivables will have the effect
of reducing the weighted average life of the Marine Certificates, while
delinquencies by Obligors under the Marine Receivables, as well as extensions
and deferrals on the Marine Receivables, will have the effect of increasing the
weighted average life of the Marine Certificates. Full and partial prepayments
on the RV Receivables will have the effect of reducing the weighted average life
of the RV Certificates, while delinquencies by Obligors under the RV
Receivables, as well as extensions and deferrals on the RV Receivables will have
the effect of increasing the weighted average life of the RV Certificates. The
Marine Receivables and the RV Receivables may be prepaid at any time without
penalty and the mandatory prepayment of a Receivable may result from, among
other things, the sale, insured loss or other disposition of the Boat or RV, as
applicable, financed by such Receivable or such Receivable becoming a Defaulted
Marine Receivable or Defaulted RV Receivable (as defined herein). While no
assurance can be given as to the rate of prepayments or as to whether there will
be a significant amount of prepayments, NationsCredit Commercial has experienced
substantial levels of prepayments on its portfolios of marine contracts and
recreational vehicle contracts in the past. Based on the historical performance
of NationsCredit Commercial's portfolio of marine contracts, the average
effective term of such contracts is approximately one-third of their scheduled
contractual term. Based on the historical performance of NationsCredit
Commercial's portfolio of recreational vehicle contracts, the average effective
term of such contracts is approximately one-third of their scheduled contractual
term. NationsCredit Commercial's historical prepayment experience on its Marine
Contract Portfolio has also reflected seasonal variations due to the seasonal
nature of the retail marine finance business, with higher levels of prepayments
in the beginning of the boating season during the spring and early summer.
NationsCredit Commercial's historical prepayment experienced on its RV Contract
Portfolio has also reflected seasonal variations due to the seasonal nature of
the retail recreational vehicle finance business, with higher levels of
prepayments in the beginning of the recreational vehicle season during the
spring and early summer. Although NationsCredit
34
<PAGE> 38
Commercial expects significant levels of prepayments to continue, no assurance
can be given as to the level or timing of prepayments because prepayments are
affected by numerous social, economic and other factors and because historical
prepayment experience is not necessarily indicative of future prepayments.
Marine Certificateholders will bear all reinvestment risk resulting from
prepayments on the Marine Receivables and RV Certificateholders will bear all
reinvestment risk resulting from prepayments on the RV Receivables.
CERTIFICATE FACTORS AND TRADING INFORMATION
The "Marine Certificate Factor" is a seven-digit decimal figure, which the
Servicer will compute each month, equal to the Marine Certificate Balance on
such date of determination, divided by the initial Marine Certificate Balance.
The "RV Certificate Factor" is a seven-digit decimal figure, which the Servicer
will compute each month, equal to the RV Certificate Balance on such date of
determination divided by the initial RV Certificate Balance. The Marine
Certificate Factor and the RV Certificate Factor will be 1.0000000 as of the
Cutoff Date; thereafter, the Marine Certificate Factor and the RV Certificate
Factor will decline to reflect reductions in the Marine Certificate Balance and
the RV Certificate Balance, respectively. The amount of a Certificateholder's
pro rata share of the Marine Certificate Balance or the RV Certificate Balance,
as applicable, for a given month can be determined by multiplying the original
denomination of such holder's Certificate by the Marine Certificate Factor or
the RV Certificate Factor, as applicable, for that month. The Marine Certificate
Factor and the RV Certificate Factor will be made available on the eighth
business day of each month (the "Determination Date").
Pursuant to the Agreement, Certificateholders will receive monthly reports
concerning the payments received on the applicable Receivables, the Marine
Certificate Balance and the RV Certificate Balance, the Marine Certificate
Factor and the RV Certificate Factor, and various other items of information.
Certificateholders of record during any calendar year will be furnished
information for tax reporting purposes not later than the latest date permitted
by law. See "The Certificates -- Statements to Certificateholders."
USE OF PROCEEDS
The net proceeds to be received by the Trust from the sale of the
Certificates will be applied to the purchase of the Receivables and to make the
initial deposit in the Marine Reserve Account and the RV Reserve Account.
THE DEPOSITOR
The Depositor, NationsCredit Securitization Corporation, is a wholly-owned
subsidiary of NationsCredit Commercial Corporation of America, which, in turn,
is indirectly wholly-owned by NationsCredit Corporation ("NationsCredit"). The
Depositor was incorporated in Delaware in 1995. The Depositor is organized for
the limited purpose of purchasing, among other things, retail marine installment
sale contracts and recreational vehicle installment sale contracts and
transferring such contracts to third parties and any activities incidental to
and necessary or convenient for the accomplishment of such purposes. The
principal executive offices of the Depositor are located at 225 E. John
Carpenter Freeway, Irving, TX 75062-2731 and its telephone number is (972)
506-5026.
The Depositor has taken and will take steps in structuring the transaction
contemplated hereby that are intended to ensure that the voluntary or
involuntary application for relief by NationsCredit Commercial under the United
States Bankruptcy Code or similar applicable state law ("Insolvency Laws") will
not result in consolidation of the assets and liabilities of the Depositor with
those of NationsCredit Commercial. These steps include or will include the
creation of the Depositor as a separate, limited-purpose subsidiary pursuant to
a certificate of incorporation or an amendment thereto containing certain
limitations, including restricting the nature of the Depositor's business,
requiring the Depositor to maintain records and books of account separate from
those of NationsCredit Commercial, to refrain from commingling its assets with
those of NationsCredit Commercial and to refrain from holding itself out as
having agreed to pay, or being liable for, the debts of NationsCredit
Commercial. In addition, the Depositor's certificate of incorporation will
contain a restriction
35
<PAGE> 39
on the Depositor's ability to commence a voluntary case or proceeding under any
Insolvency Law without the prior unanimous affirmative vote of all of its
directors, including at least one outside director. The Depositor intends to
follow these and other procedures related to maintaining its separate corporate
identity. However, there can be no assurance that a court would not conclude
that the assets and liabilities of the Depositor should be consolidated with
those of NationsCredit Commercial. If a court were to reach such a conclusion,
or a filing were made under any Insolvency Law by or against the Depositor, or
if an attempt were made to litigate any of the foregoing issues, delays in
distributions on the Certificates (and possible reductions in the amount of such
distributions) could occur.
THE SERVICER
The Servicer, NationsCredit Commercial Corporation of America
("NationsCredit Commercial"), was incorporated in 1992 under the laws of the
State of North Carolina. NationsCredit Commercial engages in the financing of
dealer inventory of consumer goods which include such products as boats, boat
motors and trailers, musical instruments, consumer electronics and appliances,
residential heating and air conditioning equipment, lawn and garden equipment,
manufactured housing units, and recreational vehicles. In support of its
inventory financing of boat and recreational vehicle dealers, NationsCredit
Commercial purchases marine retail installment sale contracts and recreational
vehicle retail installment sale contracts. NationsCredit Commercial is an
indirect wholly-owned subsidiary of NationsCredit, which in turn is a
wholly-owned subsidiary of NationsBank Corporation.
On February 1, 1993, NationsBank Corporation, through its subsidiary
NationsBanc Financial Services Corporation, acquired certain of the assets and
assumed certain of the liabilities of Chrysler First Inc., a subsidiary of
Chrysler Financial Corporation. NationsCredit Commercial represents operations
which were formerly subsidiaries of Chrysler First Inc.
The principal office of the Servicer is located at 3350 Cumberland Circle,
N.W., Suite 1000 Atlanta, GA 30339.
THE SURETY BOND ISSUER
CapMAC is a New York-domiciled monoline stock insurance company which
engages only in the business of financial guarantee and surety insurance. CapMAC
is licensed in 50 states in addition to the District of Columbia, the
Commonwealth of Puerto Rico and the territory of Guam. CapMAC insures structured
asset-backed, corporate, municipal and other financial obligations in the U.S.
and international capital markets. CapMAC also provides financial guarantee
reinsurance for structured asset-backed, corporate, municipal and other
financial obligations written by other major insurance companies.
CapMAC's claims-paying ability is rated "Aaa" by Moody's, "AAA" by S&P,
"AAA" by Duff & Phelps Credit Rating Co. ("Duff & Phelps") and "AAA" by Nippon
Investors Service Inc. Such ratings reflect only the views of the respective
rating agencies, are not recommendations to buy, sell or hold securities and are
subject to revision or withdrawal at any time by such rating agencies.
CapMAC is a wholly-owned subsidiary of CapMAC Holdings Inc. ("Holdings").
NEITHER HOLDINGS NOR ANY OF ITS STOCKHOLDERS IS OBLIGATED TO PAY ANY CLAIMS
UNDER ANY SURETY BOND ISSUED BY CAPMAC OR ANY DEBTS OF CAPMAC OR TO MAKE
ADDITIONAL CAPITAL CONTRIBUTIONS.
CapMAC is regulated by the Superintendent of Insurance of the State of New
York. In addition, CapMAC is subject to regulation by the insurance laws and
regulations of the other jurisdictions in which it is licensed. Such insurance
laws regulate, among other things, the amount of net exposure per risk that
CapMAC may retain, capital transfers, dividends, investment of assets, changes
in control, transactions with affiliates and consolidations and acquisitions.
CapMAC is subject to periodic regulatory examinations by the same regulatory
authorities.
CapMAC's obligations under the Surety Bond may be reinsured. Such
reinsurance does not relieve CapMAC of any of its obligations under the Surety
Bond.
36
<PAGE> 40
THE SURETY BOND IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY
FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK STATE INSURANCE LAW.
As of December 31, 1996 and 1995, CapMAC had qualified statutory capital
(which consists of policyholders' surplus and contingency reserve) of
approximately $260 million and $240 million, respectively, and had not incurred
any debt obligations. Article 69 of the New York State Insurance Law requires
CapMAC to establish and maintain the contingency reserve, which is available to
cover claims under surety bonds issued by CapMAC.
The financial statements of CapMAC prepared in accordance with generally
accepted accounting principles as of December 31, 1996 and 1995 and for each of
the years in the three-year period ended December 31, 1996 and the unaudited
financial statements of CapMAC as of and for the six-month periods ended June
30, 1997 and 1996 are made part of this Prospectus beginning at F-1 and F-20,
respectively. Copies of CapMAC's financial statements prepared in accordance
with statutory accounting standards, which differ from generally accepted
accounting principles, are filed with the Insurance Department of the State of
New York and are available upon request from CapMAC.
CapMAC is located at 885 Third Avenue, New York, New York 10022, and its
telephone number is (212) 755-1155.
THE CERTIFICATES
The Certificates offered hereby will be issued pursuant to the Agreement.
Copies of the Agreement (without exhibits) may be obtained by Certificateholders
upon request in writing to the Trustee at Bankers Trust Company, Four Albany
Street, New York, New York 10006; Attention Corporate Trust and Agency Group
Structured Transactions. The following summary does not purport to be complete
and is subject to and qualified in its entirety by reference to the Agreement.
GENERAL
In general, it is intended that Marine Certificateholders receive, on each
Distribution Date, the aggregate payments of principal, consisting of the
aggregate collected principal payments, full and partial prepayments on the
Marine Receivables (other than Marine Receivables for which the Servicer or
NationsCredit Commercial has made a payment of the Purchase Amount in a
Collection Period (as defined below) prior to the related Collection Period)
received by the Servicer during the Collection Period, the principal balance of
Defaulted Marine Receivables which became Defaulted Receivables during the
related Collection Period and interest at one-twelfth the applicable
Pass-Through Rate on the Marine Certificate Balance, as of the close of business
on the prior Distribution Date. Marine Certificateholders shall receive
accelerated payments of principal as a result of (a) the application of certain
insurance proceeds, (b) a repurchase by NationsCredit Commercial or a purchase
by the Servicer of Marine Receivables, (c) payments made in respect of Defaulted
Marine Receivables from (i) excess interest, (ii) amounts on deposit in the
Marine Reserve Account, (iii) amounts on deposit in the RV Reserve Account, (iv)
draws on the Surety Bond, or, (v) if payments are not made as required under the
Surety Bond, upon the repossession and liquidation of the Boat, or other
enforcement measures taken with respect to a Defaulted Marine Receivable and (d)
upon the repossession and liquidation of the Boat, if such repossession and
liquidation is prior to the date the related Marine Receivable becomes a
Defaulted Marine Receivable. Except as described under "-- Distributions on
Certificates -- Marine Distributions," payments of interest and principal on the
Marine Certificates will be based on collections (including liquidation
proceeds) in respect of the Marine Receivables received during the related
Collection Period. See "The Certificates -- Sale and Assignment of Receivables,"
"-- Credit Enhancement -- The Surety Bond," "-- Credit Enhancement -- The Marine
Reserve Account", "-- Credit Enhancement -- The RV Reserve Account " and
"-- Servicing Procedures."
In general, it is intended that RV Certificateholders receive, on each
Distribution Date, the aggregate payments of principal, consisting of the
aggregate collected principal payments, full and partial prepayments on the RV
Receivables (other than RV Receivables for which the Servicer or NationsCredit
Commercial has made a payment of the Purchase Amount in a Collection Period
prior to the related Collection Period)
37
<PAGE> 41
received by the Servicer during the preceding Collection Period, the principal
balance of Defaulted RV Receivables which became Defaulted Receivables during
the related Collection Period and interest at one-twelfth the applicable
Pass-Through Rate on the RV Certificate Balance, as of the close of business on
the prior Distribution Date. RV Certificateholders shall receive accelerated
payments of principal as a result of (a) the application of certain insurance
proceeds, (b) a repurchase by NationsCredit Commercial or a purchase by the
Servicer of RV Receivables, (c) payments made in respect of Defaulted RV
Receivables from (i) excess interest, (ii) amounts on deposit in the RV Reserve
Account, (iii) amounts on deposit in the Marine Reserve Account, (iv) draws on
the Surety Bond, or, (v) if payments are not made as required under the Surety
Bond, upon the repossession and liquidation of the RV, or other enforcement
measures taken with respect to a Defaulted RV Receivable and (d) upon the
repossession and liquidation of the RV, if such repossession and liquidation is
prior to the date the related RV Receivable becomes a Defaulted RV Receivable.
Except as described under "-- Distributions on Certificates -- RV
Distributions," payments of interest and principal on the RV Certificates will
be based on collections (including liquidation proceeds) in respect of the RV
Receivables received during the Collection Period. See "The Certificates -- Sale
and Assignment of Receivables," "-- Credit Enhancement -- The Surety Bond,"
"-- Credit Enhancement -- The RV Reserve Account," "-- Credit Enhancement -- RV
Marine Account," and "-- Servicing Procedures."
"Collection Period" means with respect to any Distribution Date, a period
which is the preceding calendar month.
The Marine Certificates and the RV Certificates will initially be
represented by one or more certificates registered in the name of the nominee of
The Depository Trust Company ("DTC," and together with any successor depository
selected by the Depositor, the "Depository") except as set forth below. The
Depositor has been informed by DTC that DTC's nominee will be Cede & Co.
("Cede"). Accordingly, Cede is expected to be the holder of record of the
Certificates. Unless and until Definitive Certificates are issued under the
limited circumstances described herein, no Certificate Owner will be entitled to
receive a certificate representing such person's interest in the Certificates.
All references herein to action by Certificateholders shall refer to actions
taken by DTC upon instructions from its participating organizations (the
"Participants") and all references herein to distributions, notices, reports and
statements to Certificateholders shall refer to distributions, notices, reports
and statements to DTC or Cede, as the registered holder of the Certificates, as
the case may be, for distribution to Certificate Owners in accordance with DTC
procedures. See "-- Book-Entry Registration" and"-- Definitive Certificates."
BOOK-ENTRY REGISTRATION
The Marine Certificates will be available for purchase in book-entry form
in minimum denominations representing $1,000 of the initial Marine Certificate
Balance and in integral multiples thereof equal to the percentage obtained by
dividing the denomination of the Marine Certificate by the Initial Marine Pool
Balance. The RV Certificates will be available for purchase in book-entry form
in minimum denominations representing $1,000 of the initial RV Certificate
Balance and in integral multiples thereof equal to the percentage obtained by
dividing the denomination of the RV Certificate by the Initial RV Pool Balance.
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 ("Direct Participants") and to facilitate the clearance and
settlement of securities transactions between Direct Participants through
electronic book-entries, thereby eliminating the need for physical movement of
certificates. Direct Participants include securities brokers and dealers, 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 Direct Participant, either directly or
indirectly (the "Indirect Participants").
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Certificate Owners that are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of, or other interests
in, Certificates may do so only through Participants and Indirect Participants.
In addition, Certificate Owners will receive all distributions of principal and
interest from the Trustee through Direct Participants and Indirect Participants.
Under a book-entry format Certificateholders may experience some delay in their
receipt of principal and interest distributions with respect to the Certificates
since distributions with respect to the Certificateholders will be forwarded by
Bankers Trust Company as paying agent, or its successor in such capacity (the
"Paying Agent") to Cede, the nominee of DTC will then forward such distributions
to its Direct Participants who in turn will forward them to Indirect
Participants or Certificate Owners. It is anticipated that the only
"Certificateholder" will be Cede, as nominee of DTC. Certificate Owners will not
be recognized by the Trustee as Certificateholders, as such term is used in the
Agreement and Certificate Owners will be permitted to exercise the rights of
Certificateholders only indirectly through DTC and its Direct Participants and
Indirect Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers among
Direct Participants and is required to receive and transmit distributions of
principal of, and interest on, the Certificates. Direct Participants and
Indirect Participants with which Certificate Owners have accounts with respect
to the Certificates similarly are required to make book-entry transfers and
receive and transmit such payments on behalf of their respective Certificate
Owners.
Because DTC can only act on behalf of Direct Participants, who in turn act
on behalf of Indirect Participants and certain banks, trust companies and other
persons approved by it the ability of a Certificate Owner to pledge Certificates
to persons or entities that do not participate in the DTC system, or otherwise
take actions in respect of such Certificates, may be limited due to the absence
of physical certificates for such Certificates.
DTC has advised the Depositor that it will take any action permitted to be
taken by a Certificateholder under the Agreement only at the direction of one or
more Direct Participants to whose accounts with DTC the Certificates are
credited. Additionally, DTC has advised the Depositor that it will take such
actions with respect to specified percentages of the Certificate Balance only at
the direction of and on behalf of Participants whose holdings include undivided
interests that satisfy such specified percentages. DTC may take conflicting
actions with respect to other undivided interests to the extent that such
actions are taken on behalf of Direct Participants whose holdings include such
undivided interests.
DEFINITIVE CERTIFICATES
The Certificates will be issued in fully registered, certificated form (the
"Definitive Certificates"), to Certificate Owners or their nominees rather than
to DTC or its nominee, only if (i) the Depositor advises the Trustee in writing
that DTC is no longer willing or able to discharge properly its responsibilities
as Depository with respect to the Certificates, and the Trustee or the Depositor
is unable to locate a qualified successor, (ii) the Depositor, at its option,
elects to terminate the book-entry system through DTC, or (iii) after the
occurrence of an Event of Default, Certificate Owners representing in the
aggregate not less than 50% of the Certificate Balance advise the Trustee and
DTC through Direct Participants in writing that the continuation of a book-entry
system through any Depository is no longer in the best interest of the
Certificate Owners.
Upon the occurrence of any events described in the immediately preceding
paragraph, the Trustee shall notify all Certificate Owners through DTC of the
occurrence of any such event and of the availability through DTC of Definitive
Certificates. Upon surrender by DTC of the global certificates representing the
Certificates and instructions for re-registration, the Trustee will issue the
Certificates as Definitive Certificates, and thereafter the Trustee will
recognize the registered holders of such Definitive Certificates as
Certificateholders under the Agreement (the "Holders").
If Definitive Certificates are issued, distributions of principal of, and
interest on, the Definitive Certificates will be made by the Trustee directly to
Holders in accordance with the procedures set forth herein and in the Agreement.
Distributions of principal and interest on each Distribution Date will be made
to Holders in whose names the Definitive Certificates were registered at the
close of business on the preceding
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Record Date. Such distributions will be made by check mailed to the address of
such Holder as it appears on the register maintained by the Trustee. The final
payment on any Definitive Certificate, however, will be made only upon
presentation and surrender of such Definitive Certificate at the office or
agency specified in the notice of final distribution mailed to Holders.
Definitive Certificates will be transferable and exchangeable at the
offices of the Trustee in New York, New York. No service charge will be imposed
for any registration of transfer or exchange, but the Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
imposed in connection therewith. Bankers Trust Company will initially be
designated as the registrar for the Certificates.
Certificates held by the Depositor or the Servicer shall not be counted in
any vote or action requiring the consent of Certificateholders under the
Agreement.
SALE AND ASSIGNMENT OF RECEIVABLES
On the date of issuance of the Certificates (the "Closing Date"), the
Depositor will cause the Trust to purchase the Receivables directly or
indirectly from NationsCredit Commercial or its affiliates. Each Receivable
purchased by the Trust will be identified in a schedule appearing as an exhibit
to the Agreement. The Trustee will, concurrently with such purchase, execute,
authenticate and deliver the Certificates.
The representations and warranties, with respect to the Receivables made by
either NationsCredit Commercial or the Depositor as of the Closing Date shall
include, among others, that such Receivable (a) shall have been originated in
the United States by a Dealer for the retail sale of a Boat, in the case of
Marine Receivables, or a RV, in the case of RV Receivables, in the ordinary
course of such Dealer's business, shall have been fully and properly executed by
the parties thereto, shall be denominated in U.S. dollars, (b) shall have
created or shall create a valid, subsisting and enforceable first priority
perfected security interest in favor of NationsCredit Commercial in the related
Boat (other than in the case of boat motors subject to certificate of title
statutes that provide for perfection of the security interests in such boat
motors by the filing of a UCC-1 financing statement), in the case of Marine
Receivables, or related RV, in the case of RV Receivables, which security
interest has been assigned to the Depositor and shall be validly assignable by
the Depositor to the Trustee, (c) shall contain customary and enforceable
provisions such that the rights and remedies of the holder thereof shall be
adequate for realization against the collateral of the benefits of the security,
(d) shall provide for level monthly payments (provided that the payment in the
first or last month in the life of the Receivable may be minimally different
from the level payment) that fully amortize the Amount Financed by maturity and
yield interest at the APR, (e) shall provide for, in the event that such
contract is prepaid, a prepayment that fully pays the Principal Balance and
includes any accrued but unpaid interest due pursuant to the terms of the
related contract through the date of prepayment in an amount at least equal to
the APR, (f) and the sale of the related Boat, in the case of Marine
Receivables, or the related RV, in the case of RV Receivables, shall have
complied at the time it was originated or made, and at the date of issuance of
the Certificates shall comply, in all material respects with all requirements of
applicable Federal, State, and local laws and regulations thereunder, including,
without limitation, usury laws, the Federal Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit
Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices
Act, the Magnuson-Moss Warranty Act, the Federal Trade Commission Credit
Practices Rule, State unfair and deceptive trade practice laws, and State
adaptations of the National Consumer Act and of the Uniform Consumer Credit
Code, and any other applicable consumer credit, equal credit opportunity and
disclosure laws and (g) shall represent the genuine, legal, valid and binding
payment obligation in writing of the Obligor, enforceable by the holder thereof
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance and similar laws relating to creditors'
rights generally and subject to general principles of equity. As of the second
(or, at the Depositor's or NationsCredit Commercial's option, as applicable, the
first) Record Date following the discovery by or notice to the Depositor or
NationsCredit Commercial of a breach of any representation or warranty made by
the Depositor or NationsCredit Commercial, as applicable, that materially and
adversely affects the interests of the Certificateholders in a Receivable, the
Depositor or NationsCredit Commercial, as applicable, unless it cures the
breach, will repurchase or purchase, as applicable, the Receivable from the
Trustee, at a price equal to the unpaid principal balance owed by the Obligor
plus
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accrued interest calculated at a rate equal to the sum of the applicable
Pass-Through Rate plus the Marine Servicing Fee Rate or the RV Servicing Fee
Rate, as applicable (the "Purchase Amount"). The repurchase and the purchase
obligations are a general and unsecured obligation of the Depositor and
NationsCredit Commercial, respectively, and will constitute the sole remedy
available to the Certificateholders or the Trustee for any such uncured breach.
Any failure on the part of NationsCredit Commercial or the Depositor to pay the
Purchase Amount of any Receivable when required will not be covered by
collections from Receivables or payments under the Surety Bond.
To assure uniform quality in servicing the Receivables and to reduce
administrative costs, the Trustee, on behalf of the Trust, will appoint
NationsCredit Commercial as custodian of all the Receivables. NationsCredit
Commercial's and its applicable affiliate's accounting records and computer
systems will reflect the ultimate sale and assignment of the Receivables to the
Trustee. UCC-1 financing statements reflecting the sale and assignment of the
Receivables to the Trustee will be filed. Because the Receivables will remain in
NationsCredit Commercial's possession and will not be stamped or otherwise
marked to reflect the assignment to the Trustee, if a subsequent purchaser were
able to take physical possession of the Receivables in the ordinary course of
its business without knowledge of the assignment, the Trustee's interest in the
Receivables could be defeated. See "Risk Factors -- Lack of First Priority
Security Interests in the Receivables." Due to the administrative burden and
expense: the certificates of title, in the case of Boats or RVs financed in
states where security interests in boats or recreational vehicles, as
applicable, are subject to certificate of title statutes, will not be endorsed;
and the UCC-1 financing statements, in the case of Boats or RVs financed in
states where security interests in boats or recreational vehicles, as
applicable, are perfected by filing a UCC-1 financing statement, will not be
amended. In the absence of such procedures, the Trust may not have a perfected
security interest in the Boats or RVs, as applicable, financed in certificate of
title or UCC states, but the failure to make such endorsements, filings or
recordations will not affect the validity of the original security interest as
against the Obligor in UCC states. With respect to Boats or RVs documented under
certificate of title states, the validity of the security interest against the
original Obligor is less clear. See "Risk Factors -- Lack of Perfected Security
Interests in Boats and RVs.
ACCOUNTS
The Servicer will establish and maintain with the Trustee one or more
accounts, in the name of the Trustee on behalf of the Certificateholders, into
which all payments made on or with respect to the Marine Contract Group will be
deposited, and from which all distributions with respect to the Marine Contract
Group and the Marine Certificates will be made (collectively, the "Marine
Certificate Account").
The Servicer will establish and maintain with the Trustee one or more
accounts, in the name of the Trustee on behalf of the Certificateholders, into
which all payments made on or with respect to the RV Receivables will be
deposited and from which all distributions with respect to the RV Receivables
and the RV Certificates will be made (collectively, the "RV Certificate
Account").
The Marine Certificate Account and the RV Certificate Account shall be
maintained with the Trustee so long as (i) the Trustee's deposits have a rating
acceptable to each Rating Agency or (ii) each of the Marine Certificate Account
and the RV Certificate Account is maintained as a fully segregated trust
account. If at any time the conditions in clauses (i) or (ii) above are not
satisfied, the Servicer shall, with the Trustee's assistance as necessary, cause
the Marine Certificate Account and the RV Certificate Account to be moved to a
bank which can satisfy such conditions.
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SERVICING PROCEDURES
The Servicer will make reasonable efforts to collect all payments due with
respect to the Receivables and, in a manner consistent with the Agreement, will
perform such collection procedures as it follows with respect to marine
contracts, in the case of Marine Receivables, and recreational vehicle
contracts, in the case of RV Receivables, that it services for itself and
others. See "Certain Legal Aspects of the Receivables." Consistent with the
Agreement, the Servicer may, in its discretion, arrange with the Obligor on a
Receivable to extend, rewrite or otherwise modify the payment terms of a
Receivable; provided, however, that the Servicer may, with certain limitations
set forth in the Agreement, extend a Receivable for credit related reasons that
would be acceptable to the Servicer with respect to comparable marine contracts
and recreational vehicle contracts, as applicable, that it services for itself
and others and in accordance with its customary standards, policies and
procedures if the cumulative extensions with respect to any Receivable shall not
cause the term of such Receivable to extend beyond the last day of the
Collection Period preceding the Final Scheduled Distribution Date. See
"NationsCredit Commercial's Portfolio of Marine Contracts and Recreational
Vehicle Contracts." Such arrangements may result in the Servicer purchasing the
Receivable for its Purchase Amount. If required payments under the Surety Bond
are not made, the Servicer would follow such normal collection practices and
procedures as it deems necessary or advisable to realize upon any Receivable
with respect to which the Servicer determines that eventual payment in full is
unlikely. The Servicer may sell the Boat or RV, as applicable, securing a
Receivable at a public or private sale, or take any other action permitted by
applicable law.
The Servicer will covenant in the Agreement that: (i) the Servicer will not
release a Boat or RV, as applicable, securing a Receivable from the security
interest granted by the related Receivable in whole or in part, except upon
payment in full by the related Obligor; (ii) the Servicer will not impair the
rights of the Certificateholders in any Receivable; (iii) the Servicer will not
increase or decrease the amount of any scheduled payment on a Receivable or the
principal balance of a Receivable (except with respect to a prepayment of a
scheduled payment that does not result in a deferral of any other scheduled
payment) or the APR of any Receivable; (iv) the Servicer will not sell, pledge,
transfer, deliver or otherwise dispose of any Receivable, except as provided in
the Agreement; (v) the Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Receivables as and
when the same shall become due and will follow such collection procedures as it
follows with respect to all comparable marine contracts and recreational vehicle
contracts, as applicable, that it services for itself and others; and (vi) the
Servicer will not extend, rewrite or otherwise modify the payment terms of a
Receivable; provided, however, that the Servicer may, with certain limitations
set forth in the Agreement, extend a Receivable for credit related reasons that
would be acceptable to the Servicer with respect to comparable marine contracts
and recreational vehicle contracts, as applicable, that it services for itself
and others and in accordance with its customary standards, policies and
procedures if the cumulative extensions with respect to any Receivable shall not
cause the term of such Receivable to extend beyond the last day of the
Collection Period preceding the Final Scheduled Marine Distribution Date or
Final Scheduled RV Distribution Date.
In the event of a breach by the Servicer of any covenant described above
that materially and adversely affects the interests of the Certificateholders or
the Surety Bond Issuer in a Receivable, the Servicer, unless such breach has
been cured by the second Record Date (or, at the Servicer's election, the first
Record Date) following the date on which the Servicer becomes aware of, or
receives written notice of such breach or earlier in certain circumstances, will
be required to purchase the Receivable from the Trustee on the business day
prior to the Distribution Date related to such Record Date or earlier under
certain circumstances. The purchase price will be the Purchase Amount as of the
last day of the Collection Period preceding the date of such purchase. The
purchase obligation is a general unsecured obligation of the Servicer and will
constitute the sole remedy available to 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. Any
failure of the Servicer to pay the Purchase Amount of any Receivable when
required will not be covered by collections from Receivables or payments under
the Surety Bond.
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COLLECTIONS ON RECEIVABLES
While NationsCredit Commercial or an entity (a) into which NationsCredit
Commercial is merged or consolidated, (b) which succeeds to the properties and
assets of the Servicer substantially as a whole, or (c) more than 50% of the
voting stock of which is, directly or indirectly, owned by NationsBank
Corporation, which has executed an agreement of assumption to perform the
obligations of the Servicer under the Insurance Agreement and the Agreement, is
the successor to the Servicer, the Servicer may commingle collections held by it
and may use such funds for its own purposes prior to the business day preceding
each Distribution Date provided that all of the following conditions are
satisfied: (i) there exists no Event of Default (as described below); (ii) if
the Servicer does not have a short-term debt rating or deposit rating, as
applicable, of at least A-1 from S&P and P-1 from Moody's, a guaranty, letter of
credit, surety bond or other similar instrument is issued covering collections
held by NationsCredit Commercial or such successor, which is acceptable to the
Rating Agencies and the Surety Bond Issuer and is issued by an entity which has
a short-term debt rating or deposit rating, as applicable, of at least A-1 from
S&P and P-1 from Moody's; and (iii) the Servicer, the Trustee, the Depositor and
the Surety Bond Issuer shall not have received notice from S&P or Moody's that
failure to separate such funds will result in a reduction or withdrawal of the
then-current rating on the Marine Certificates or the RV Certificates by either
S&P or Moody's. If all the conditions contained in the preceding sentence are
not met, (i) the Servicer will deposit all payments on the Marine Contract Group
(from whatever source) and all proceeds of the Marine Contract Group collected
during each Collection Period into the Marine Certificate Account not later than
the second business day after receipt and (ii) the Servicer will deposit all
payments on the RV Contract Group (from whatever source) and all proceeds of the
RV Contract Group collected during each Collection Period into the RV
Certificate Account not later than the second business day after receipt. It is
anticipated that on the Closing Date, NationsBank Corporation will furnish a
guaranty that will permit NationsCredit Commercial to commingle funds. The
Depositor or the Servicer, as applicable, will deposit the aggregate Purchase
Amount of Marine Receivables repurchased by the Depositor or purchased by the
Servicer into the Marine Certificate Account and deposit the aggregate Purchase
Amount of RV Receivables repurchased by the Depositor or purchased by the
Servicer into the RV Certificate Account, in each case, on or before the
business day preceding the applicable Distribution Date. Pending deposit into
the Marine Certificate Account and the RV Certificate Account, as applicable,
collections may be invested by the Servicer at its own risk and for its own
benefit, and will not be segregated from funds of the Servicer. See "Risk
Factors -- Commingling Risk."
In accordance with NationsCredit Commercial's normal practices and
procedures, payments made by or on behalf of an Obligor on a Receivable during a
Collection Period shall be applied first to late payment fees and extension
fees, second to interest accrued on the Receivable, third to principal due on
the Receivable during or prior to the related Collection Period, fourth to
administrative charges, if any, and fifth to the remaining principal balance.
Late payment and extension fees, if any, and other administrative fees will be
included as part of the Trust's assets; provided, however that the Trustee will
agree to hold any such amounts for the benefit of the Servicer and any payments
received with respect thereto will not be passed through to Certificateholders,
but will instead be promptly remitted to the Servicer upon receipt.
SERVICING COMPENSATION
The Servicer will be entitled to receive the Monthly Marine Servicing Fee
and the Monthly RV Servicing Fee with respect to each Distribution Date, equal
to the product of (i) one-twelfth the Marine Servicing Fee Rate multiplied by
the Marine Pool Balance in the case of the Monthly Marine Servicing Fee and (ii)
one-twelfth the RV Servicing Fee Rate multiplied by the RV Pool Balance, in the
case of the Monthly RV Servicing Fee, in each case as of the last day of the
prior Collection Period (or, in the case of the first Distribution Date, the
Initial Marine Pool Balance or the Initial RV Pool Balance, as applicable). The
Trustee, as provided above, will remit to the Servicer any late fees, prepayment
charges and other administrative fees or similar charges allowed by applicable
law with respect to the Receivables. Payments by or on behalf of Obligors will
be allocated to payments of principal, interest and late fees in accordance with
the Servicer's normal practices and procedures.
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The Monthly Marine Servicing Fee and the Monthly RV Servicing Fee will
compensate the Servicer for performing the functions of a third party servicer
of marine retail installment sale contracts and recreational vehicle retail
installment sale contracts 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 statements to
Obligors, reporting tax information to Obligors, paying costs of disposition of
defaults, and monitoring the collateral. The Monthly Marine Servicing Fee and
the Monthly RV Servicing Fee also will compensate the Servicer for administering
the Receivables, including accounting for collections and furnishing monthly and
annual statements to the Trustee with respect to distributions, and providing
information to the appropriate party relating to Federal income taxes. The
Monthly Marine Servicing Fee and the Monthly RV Servicing Fee also will
reimburse the Servicer for certain taxes, accounting fees, outside auditor fees,
data processing costs and other costs incurred in connection with administering
the Receivables. The Trust will not be responsible for fees and expenses of any
subservicer.
DISTRIBUTIONS ON CERTIFICATES
On or before the Determination Date, the Servicer will inform the Trustee
of the amount of aggregate collections on the Marine Receivables in the Marine
Contract Group and the aggregate amount of collections on the RV Receivables in
the RV Contract Group (other than Receivables purchased by the Servicer or
repurchased by NationsCredit Commercial) including all refunds received by the
Servicer with respect to any refunded portion of any extended warranty
protection plan costs, or of physical damage, credit life or disability
insurance premiums included in the principal amount of each of the Marine
Receivables and the RV Receivables; the aggregate Purchase Amount of Marine
Receivables and the aggregate Purchase Amount of RV Receivables required to be
repurchased by NationsCredit Commercial or required to be purchased by the
Servicer; the aggregate amounts to be drawn on the Marine Reserve Account and
the RV Reserve Account; the aggregate payments to be made under the Surety Bond;
the Monthly Marine Servicing Fee and the Monthly RV Servicing Fee; all with
respect to the preceding Collection Period.
Marine Distributions. On the Distribution Date, the Trustee will distribute
from the Marine Certificate Account pro rata to the Marine Certificateholders of
record as of the preceding Record Date, the Servicer, the Surety Bond Issuer,
the Collateral Agent and the Depositor the following amounts in the following
order of priority to the extent of funds available therefor:
(i) to the Marine Certificateholders, an amount equal to one-twelfth
of the product of (x) the applicable Pass-Through Rate and (y) the Marine
Certificate Balance as of the close of business on the prior Distribution
Date (or in the case of the first Distribution Date, the Initial Marine
Pool Balance) (the "Monthly Marine Interest Payment"), and any carry-over
Monthly Marine Interest Payment from prior Distribution Dates;
(ii) if NationsCredit Commercial or an affiliate thereof is not the
Servicer, to the Servicer, an amount equal to one-twelfth of the product of
(x) the Marine Servicing Fee Rate and (y) the Marine Pool Balance as of the
last day of the prior Collection Period (or, in the case of the first
Distribution Date, the Initial Marine Pool Balance) ("Monthly Marine
Servicing Fee") and any carry-over Monthly Marine Servicing Fee from prior
Distribution Dates;
(iii) to the Marine Certificateholders, (x) on any Distribution Date,
except the Marine Final Scheduled Distribution Date, an amount equal to (a)
that portion of all collections received by the Servicer during the related
Collection Period on Marine Receivables allocable to principal (which shall
not include the principal portion of proceeds from any recoveries or
liquidations in respect of Defaulted Marine Receivables), (b) Purchase
Amounts allocable to principal with respect to the Marine Receivables and
paid by the Depositor or the Servicer with respect to the related
Collection Period, (c) the principal balance of Defaulted Marine
Receivables, which became Defaulted Marine Receivables during the related
Collection Period and (d) any amounts specified in clauses (a), (b) and (c)
payable but not paid on a prior Distribution Date and (y) on the Marine
Final Scheduled Distribution Date, an amount necessary to reduce the Marine
Certificate Balance to zero on such Distribution Date (collectively, the
"Monthly Marine Principal Payment");
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(iv) if NationsCredit Commercial or an affiliate thereof is the
Servicer, to the Servicer, the Monthly Marine Servicing Fee for such
Distribution Date and any carry-over Monthly Marine Servicing Fee from
prior Distribution Dates;
(v) to the Surety Bond Issuer, any amounts owing to the Surety Bond
Issuer under the Insurance Agreement and the Agreement allocable to the
Marine Contract Group and not paid;
(vi) to the RV Certificateholders, an amount, if any, up to the
shortfall, between (x) the amount paid to RV Certificateholders on such
Distribution Date pursuant to clause (i) of the definition of "RV
Distributions" and (y) the Monthly RV Interest Payment for such
Distribution Date and any carry-over Monthly RV Interest Payment from prior
Distribution Dates;
(vii) if NationsCredit Commercial or an affiliate thereof is not the
Servicer, to the Servicer, an amount, if any, up to the shortfall between
(x) the amount paid to the Servicer on such Distribution Date pursuant to
clause (ii) of the definition of "RV Distributions," and (y) the Monthly RV
Servicing Fee for such Distribution Date and any carry-over Monthly RV
Servicing Fee from prior Distribution Dates;
(viii) to the RV Certificateholders, an amount, if any, up to the
shortfall between (x) the amount paid to the RV Certificateholders on such
Distribution Date pursuant to clause (iii) of the definition of "RV
Distributions" and (y) the Monthly RV Principal Payment for such
Distribution Date;
(ix) if NationsCredit Commercial or an affiliate thereof is the
Servicer, to the Servicer, an amount, if any, up to the shortfall between
(x) the amount paid to the servicer on such Distribution Date pursuant to
clause (iv) of the definition of "RV Distributions" and (y) the Monthly RV
Servicing Fee for such Distribution Date and any carry-over Monthly RV
Servicing Fee from prior Distribution Dates;
(x) to the Surety Bond Issuer, an amount, if any, up to the shortfall
between (x) the amount paid to the Surety Bond Issuer on such Distribution
Date pursuant to clause (v) of the definition of "RV Distributions," and
(y) amounts owing to the Surety Bond Issuer under the Insurance and
Reimbursement Agreement allocable to the RV Contract Group and not paid;
(xi) to the Collateral Agent, an amount, if any, up to the lesser of
(x) the RV Cross-Support Amount for such Distribution Date and (y) the
shortfall, if any, between the Specified RV Reserve Account Requirement and
the amount on deposit in the RV Reserve Account on such Distribution Date
after giving effect to the distribution set forth in clause (xii) of the
definition of "RV Distributions," for deposit into the RV Reserve Account;
(xii) to the Collateral Agent, an amount up to the shortfall, if any,
between the Specified Marine Reserve Account Requirement for such
Distribution Date and the amount on deposit in the Marine Reserve Account
on such Distribution Date without giving effect to the distributions, if
any, on such Distribution Date set forth in clauses (xi) and (xiii) of the
definition of "RV Distributions;"
(xiii) to the Collateral Agent, an amount up to the shortfall, if any,
between the Specified RV Reserve Account Requirement for such Distribution
Date and the amount on deposit in the RV Reserve Account on such
Distribution Date, after giving effect to the distributions, if any, set
forth in clause (xi) above and clause (xii) of the definition of "RV
Distributions" for deposit into the RV Reserve Account; and
(xiv) to the Depositor, any remaining amounts.
The distributions set forth in clauses (i) through (xiv) above shall be the
"Marine Distributions."
RV Distributions. On the Distribution Date, the Trustee will distribute
from the RV Certificate Account pro rata to the RV Certificateholders of record
as of the preceding Record Date, the Servicer, the Surety Bond Issuer, the
Collateral Agent and the Depositor the following amounts in the following order
of priority to the extent available therefor:
(i) to the RV Certificateholders, an amount equal to one-twelfth of
the product of (x) the applicable Pass-Through Rate and (y) the RV
Certificate Balance as of the close of business on the prior
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<PAGE> 49
Distribution Date (or, in the case of the first Distribution Date, the
Initial RV Pool Balance) (the "Monthly RV Interest Payment"), and any
carry-over Monthly RV Interest Payment from prior Distribution Dates;
(ii) if NationsCredit Commercial or an affiliate thereof is not the
Servicer, to the Servicer, an amount equal to one-twelfth of the product of
(x) the RV Servicing Fee Rate and (y) the RV Pool Balance as of the last
day of the prior Collection Period (or, in the case of the first
Distribution Date, the Initial RV Pool Balance) (the "Monthly RV Servicing
Fee") and any carry-over Monthly RV Servicing Fee from prior Distribution
Dates;
(iii) to the RV Certificateholders, (x) on any Distribution Date,
except the RV Final Scheduled Distribution Date, an amount equal to (a)
that portion of all collections received by the Servicer during the related
Collection Period on RV Receivables allocable to principal (which shall not
include the principal portion of proceeds from any recoveries or
liquidations in respect of Defaulted RV Receivables), (b) Purchase Amounts
allocable to principal with respect to the RV Receivables and paid by the
Depositor or the Servicer with respect to the related Collection Period,
(c) the principal balance of Defaulted RV Receivables, which became
Defaulted RV Receivables during the related Collection Period and (d) any
amounts specified in clauses (a), (b) and (c) payable but not paid on a
prior Distribution Date and (y) on the RV Final Scheduled Distribution
Date, an amount necessary to reduce the RV Certificate Balance to zero on
such Distribution Date (collectively, the "Monthly RV Principal Payment");
(iv) if NationsCredit Commercial or an affiliate thereof is the
Servicer, to the Servicer, the Monthly RV Servicing Fee for such
Distribution Date and any carry-over Monthly RV Servicing Fee from prior
Distribution Dates;
(v) to the Surety Bond Issuer, any amounts owing to the Surety Bond
Issuer under the Insurance Agreement and the Agreement allocable to the RV
Contract Group and not paid;
(vi) to the Marine Certificateholders, an amount, if any, up to the
shortfall between (x) the amount paid to the Marine Certificateholders on
such Distribution Date pursuant to clause (i) of the definition of "Marine
Distributions" and (y) the Monthly Marine Interest Payment for such
Distribution Date and any carry-over Monthly Marine Interest Payment from
prior Distribution Dates;
(vii) if NationsCredit Commercial or an affiliate thereof is not the
Servicer, to the Servicer, an amount, if any, up to the shortfall between
(x) the amount paid to the Servicer on such Distribution Date pursuant to
clause (ii) of the definition of "Marine Distributions" and (y) the Monthly
Marine Servicing Fee for such Distribution Date and any carry-over Monthly
Marine Servicing Fee from prior Distribution Dates;
(viii) to the Marine Certificateholders, an amount, if any, up to the
shortfall between (x) the amount paid to Marine Certificateholders on such
Distribution Date pursuant to clause (iii) of the definition of "Marine
Distributions" and (y) the Monthly Marine Principal Payment for such
Distribution Date;
(ix) if NationsCredit Commercial or an affiliate thereof is the
Servicer, to the Servicer, an amount, if any, up to the shortfall between
(x) the amount paid to the Servicer on such Distribution Date pursuant to
clause (iv) of the definition of "Marine Distributions" and (y) the Monthly
Marine Servicing Fee for such Distribution Date and any carryover Monthly
Marine Servicing Fee from prior Distribution Dates;
(x) to the Surety Bond Issuer, an amount if any up to the shortfall
between (x) the amount paid to the Surety Bond Issuer on such Distribution
Date pursuant to clause (v) of the definition of "Marine Distributions" and
(y) amounts owing to the Surety Bond Issuer under the Insurance and
Reimbursement Agreement allocable to the Marine Contract Group and not
paid;
(xi) to the Collateral Agent, an amount, if any, up to the lesser of
(x) the Marine Cross-Support Amount for such Distribution Date and (y) the
shortfall, if any, between the Specified Marine Reserve
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Account Requirement for such Distribution Date and the amount on deposit in
the Marine Reserve Account on such Distribution Date after giving effect to
the distribution, set forth in clause (xii) of the definition of "Marine
Distributions," for deposit into the Marine Reserve Account;
(xii) to the Collateral Agent, an amount up to the shortfall, if any,
between the Specified RV Reserve Account Requirement for such Distribution
Date and the amount on deposit in the RV Reserve Account on such
Distribution Date without giving effect to the distributions, if any, on
such Distribution Date set forth in clauses (xi) and (xiii) of the
definition of "Marine Distributions;"
(xiii) to the Collateral Agent, an amount up to the shortfall, if any,
between the Specified Marine Reserve Account Requirement for such
Distribution Date and the amount on deposit in the Marine Reserve Account
on such Distribution Date, after giving effect to the distributions for
such Distribution Date, if any, pursuant to in clause (xi) above and clause
(xii) of the definition of "Marine Distributions" for deposit into the
Marine Reserve Account; and
(xiv) to the Depositor, any remaining amounts.
The distributions set forth in clauses (i) through (xiv) above shall be the
"RV Distributions."
Marine Distributions and RV Distributions. The aggregate amount of Monthly
Marine Principal Payments will not exceed the unpaid principal balance of the
Marine Certificates and the aggregate amount of Monthly RV Principal Payments
will not exceed the unpaid principal balance of the RV Certificates.
The Surety Bond Issuer will unconditionally and irrevocably guarantee
payment of the Monthly Marine Interest Payment, the Monthly RV Interest Payment,
the Monthly Marine Principal Payment, the Monthly RV Principal Payment and under
certain circumstances the Monthly Marine Servicing Fee and the Monthly RV
Servicing Fee. See "-- Credit Enhancement -- The Surety Bond."
The Monthly Marine Interest Payment is calculated on the Marine Certificate
Balance, which shall decline by the amount of principal distributions made on
the Marine Certificates. The Monthly RV Interest Payment is calculated on the RV
Certificate Balance, which shall decline by the amount of principal
distributions made on the RV Certificates. To the extent that payments on the
Receivables and amounts on deposit in the Marine Reserve Account and the RV
Reserve Account are not sufficient to cover the entire principal amount of
Defaulted Receivables and payments under the Surety Bond are not made,
Certificateholders will incur a loss and interest will not be paid on the amount
of such loss.
As an administrative convenience, the Servicer will be permitted to make
the deposit of (a) collections and the aggregate Purchase Amount for or with
respect to the Collection Period and (b) the Purchase Amount for any optional
purchase of the Receivables (as described herein) net of distributions to be
made to the Servicer with respect to the Collection Period. The Servicer,
however, will account for the amount of any such purchase to the Trustee and to
the Certificateholders as if all deposits, distributions and transfers were made
individually.
Any amounts released to the Depositor pursuant to clause (xiv) of the
definition of "Marine Distributions" and "RV Distributions" above shall not be
property of the Trust thereafter, and the Depositor shall have no obligation to
return such amounts to the Trust in the event insufficient funds are available
on any subsequent Distribution Date to distribute to Certificateholders the
Monthly Interest Payment, any carry-over Monthly Interest Payment, the Monthly
Principal Payment or any carry-over Monthly Principal Payment.
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The following chart sets forth the application of the foregoing provisions
to the November 1997 Distribution Date:
<TABLE>
<S> <C>
October 1-October 31................. Collection Period. The Servicer receives monthly
payments, prepayments and other proceeds in respect
of the Receivables.
November 11.......................... Determination Date. The Servicer notifies the Trustee
of the amounts to be distributed on the Distribution
Date.
November 14.......................... Record Date. Distributions on the Distribution Date
are made to Certificateholders of record at the close
of business on this date.
November 17.......................... Distribution Date. The Trustee distributes to Marine
Certificateholders amounts payable in respect of the
Marine Certificates as described above and the
Trustee distributes to RV Certificateholders amounts
payable in respect of the RV Certificates as
described above.
</TABLE>
"Defaulted Receivable" means a Marine Receivable or a RV Receivable as to
which either (x) the Servicer has determined, in accordance with its customary
servicing procedures, that eventual payment in full is unlikely or (y) (1) 90 or
more days have elapsed since the related Boat or RV, as applicable, has been
repossessed by the Servicer, in the case of any Marine Receivable or RV
Receivable, as applicable, with a Principal Balance of $10,000 or less as of the
day such Boat or RV, as applicable, was repossessed by the Servicer or (2) 180
or more days have elapsed since the related Boat or RV, as applicable, has been
repossessed by the Servicer, in the case of any Marine Receivable or RV
Receivable, as applicable, with a Principal Balance of greater than $10,000 as
of the day such Boat or RV, as applicable, was repossessed by the Servicer.
"Defaulted Marine Receivable" means a Defaulted Receivable which is a
Marine Receivable.
"Defaulted RV Receivable" means a Defaulted Receivable which is a RV
Receivable.
"Marine Cross-Support Amount" on any Distribution Date shall equal the
amount withdrawn from the Marine Reserve Account to make RV Distributions on
prior Distribution Dates and is payable to the Collateral Agent for deposit into
the Marine Reserve Account under the terms of the Agreement.
"RV Cross-Support Amount" on any Distribution Date shall equal the amount
withdrawn from the RV Reserve Account to make Marine Distributions on prior
Distribution Dates and is payable to the Collateral Agent for deposit into the
RV Reserve Account under the terms of the Agreement.
CREDIT ENHANCEMENT
The credit enhancement provided for the benefit of the Certificateholders
consists of the Surety Bond, the application of excess interest, the Marine
Reserve Account and the RV Reserve Account.
The Surety Bond. On or before the Closing Date, the Depositor will cause
the Surety Bond to be issued by the Surety Bond Issuer pursuant to the
provisions of the Agreement and the Insurance and Reimbursement Agreement (the
"Insurance Agreement") among the Depositor, the Servicer and the Surety Bond
Issuer. The Surety Bond will unconditionally and irrevocably guarantee the
timely payment of (i) the Monthly Interest Payment, (ii) if NationsCredit
Commercial or an affiliate thereof is not the Servicer, the Monthly Marine
Servicing Fee and the Monthly RV Servicing Fee and (iii) the Monthly Principal
Payment.
The Trustee will demand payment under the Surety Bond (or the Surety Bond
Issuer will otherwise make available) for deposit into the Marine Certificate
Account with respect to any Distribution Date to the extent there are not
sufficient amounts available from (a) collections on Marine Receivables, (b)
amounts, if any, to be distributed pursuant to clauses (vi), (vii) and (viii) of
the definition of "RV Distributions," (c) amounts on deposit in the Marine
Reserve Account and (d) after the amounts on deposit in the Marine Reserve
Account have been reduced to zero, amounts on deposit in the RV Reserve Account
to the extent available, to make distributions in respect of (i) the Monthly
Marine Interest Payment, (ii) if NationsCredit
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Commercial or an affiliate thereof is not the Servicer, the Monthly Marine
Servicing Fee and (iii) the Monthly Marine Principal Payment.
Without duplication of any of the foregoing, on the Marine Final Scheduled
Distribution Date, the Surety Bond will unconditionally guarantee the payment of
the outstanding Marine Certificate Balance (after giving effect to all other
amounts distributed and allocable to principal on such Distribution Date).
The Trustee will demand payment under the Surety Bond (or the Surety Bond
Issuer will otherwise make available) for deposit into the RV Certificate
Account with respect to any Distribution Date to the extent there are not
sufficient amounts available from (a) collections on RV Receivables, (b)
amounts, if any, to be distributed pursuant to clauses (vi), (vii) and (viii) of
the definition of "Marine Distributions," (c) amounts on deposit in the RV
Reserve Account and (d) after the amounts on deposit in the RV Reserve Account
have been reduced to zero, amounts on deposit in the Marine Reserve Account to
the extent available, to make distributions in respect of (i) the Monthly RV
Interest Payment, (ii) if NationsCredit Commercial or an affiliate thereof is
not the Servicer, the Monthly RV Servicing Fee and (iii) the Monthly RV
Principal Payment.
Without duplication of any of the foregoing, on the RV Final Scheduled
Distribution Date, the Surety Bond will unconditionally guarantee the payment of
the outstanding RV Certificate Balance (after giving effect to all other amounts
distributed and allocable to principal on such Distribution Date).
In the event the Marine Reserve Account and the RV Reserve Account is
exhausted or otherwise unavailable, in the absence of payments under the Surety
Bond, Certificateholders will directly bear the credit and other risks
associated with their undivided interest in the Trust.
In the event the Surety Bond Issuer's claims paying ratings have been
reduced by any of the Rating Agencies, the Depositor may, but it is not
obligated to, upon payment of all amounts required to be paid to the Surety Bond
Issuer pursuant to the Insurance Agreement and the Agreement either (i) replace
the Surety Bond with a financial guaranty insurance policy issued by another
surety bond issuer, provided that the ratings on the claims paying ability of
such replacement surety bond issuer are higher than those of the surety bond
issuer sought to be replaced (after giving effect to such reduction) or (ii)
eliminate or provide another form of credit enhancement; provided that in the
case of clause (ii), the Rating Agencies consent thereto and confirmation that
the ratings of the Certificates will be increased from their then-current levels
(after giving effect to such reduction) as a result of such action shall have
been obtained.
So long as a Surety Bond Issuer Default has occurred and is continuing, any
provision giving the Surety Bond Issuer the right to direct, appoint or consent
to, approve of, or take any action under the Agreement shall be inoperative
during the period of such Surety Bond Issuer Default and such right shall
instead vest in the Trustee acting at the direction of the Certificateholders
evidencing not less than 51% of the Certificate Balance as of the most recent
Record Date.
"Surety Bond Issuer Default" means the failure of the Surety Bond Issuer to
make a payment required under the Surety Bond in accordance with its terms.
Payment of claims under the Surety Bond will be made by the Surety Bond
Issuer following Receipt by the Surety Bond Issuer of the appropriate notice for
payment on the later to occur of (a) 11:00 a.m., New York City time, on the
second Business Day following Receipt of such notice for payment, and (b) 11:00
a.m., New York City time, on the Business Day immediately preceding the relevant
Distribution Date.
The terms "Receipt" and "Received," with respect to the Surety Bond, means
actual delivery to the Surety Bond Issuer, prior to 2:00 p.m., New York City
time, on a Business Day; delivery either on a day that is not a Business Day or
after 2:00 p.m., New York City time, shall be deemed to be Receipt on the next
succeeding Business Day.
If a payment guaranteed by the Surety Bond Issuer is voided pursuant to a
final and non-appealable order (a "Preference Event") under any applicable
bankruptcy, insolvency, receivership or similar law in an Insolvency Proceeding,
and, as a result of such a Preference Event, the Trustee is required to return
such voided payment, or any portion of such voided payment, made in respect of
the Certificates (an "Avoided
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<PAGE> 53
Payment"), the Surety Bond Issuer will pay an amount equal to such Avoided
Payment, upon receipt by the Surety Bond Issuer from the Trustee of (x) a
certified copy of a final order of a court exercising jurisdiction in such
Insolvency Proceeding to the effect that the Trustee is required to return any
such payment or portion thereof during the term of the Surety Bond because such
payment was voided under applicable law, with respect to which order the appeal
period has expired without an appeal having been filed (the "Final Order"), (y)
an assignment, in form reasonably satisfactory to the Surety Bond Issuer,
irrevocably assigning to the Surety Bond Issuer all rights and claims of the
Trustee relating to or arising under such Avoided Payment and (z) a notice for
payment appropriately completed and executed by the Trustee. Such payment shall
be disbursed to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy named in the Final Order and not to the Trustee directly.
Notwithstanding the foregoing, in no event shall the Surety Bond Issuer be
obligated to make any payment in respect of any Avoided Payment, which payment
represents a payment of the principal amount of the Certificates, prior to the
time the Surety Bond Issuer would have been required to make a payment in
respect of such principal in the absence of such Preference Event.
The Surety Bond Issuer shall make payments due in respect of Avoided
Payments prior to 1:00 p.m., New York City time, on the second Business Day
following the Surety Bond Issuer's Receipt of the documents required under
clauses (x) through (z) of the second preceding paragraph.
Under the Surety Bond, "Business Day" means any day other than (i) a
Saturday or Sunday or (ii) a day on which banking institutions in the City of
New York, New York and the State of Georgia are authorized or obligated by law
or executive order to be closed.
"Insolvency Proceeding" means the commencement, after the Closing Date, of
any bankruptcy, insolvency, readjustment of debt, reorganization, marshaling of
assets and liabilities or similar proceedings by or against any person, or the
commencement, after the Closing Date, of any proceedings by or against any
Person for the winding up or liquidation of its affairs, or the consent after
the date hereof to the appointment of a trustee, conservator, receiver or
liquidator in any bankruptcy, insolvency, readjustment of debt, reorganization,
marshaling of assets and liabilities or similar proceedings of or relating to
any Person.
The terms of the Surety Bond cannot be modified, altered or affected by any
other agreement or instrument, or by the merger, consolidation or dissolution of
the Trust, the Depositor or the Servicer. The Surety Bond may not be canceled or
revoked prior to the time it is terminated in accordance with its express terms.
The Surety Bond is governed by the laws of the State of New York.
THE SURETY BOND IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE FUND
SPECIFIED IN ARTICLE 76 OF THE NEW YORK STATE INSURANCE LAW.
Marine Excess Interest. The weighted average interest rate for the Marine
Receivables will be higher than the Pass-Through Rate on the Marine Certificates
and since the Marine Pool Balance will generally equal the Marine Certificate
Balance, the Marine Contract Group will be generating excess interest relative
to Monthly Marine Interest Payment. To the extent available, excess interest
from the Marine Contract Group will be used to pay the amounts set forth in
clause (ii) of the definition of "Marine Distributions," to pay any amounts
consisting of the principal balance of Defaulted Marine Receivables in clause
(iii) of the definition of "Marine Distributions," to pay the amounts set forth
in clauses (iv) through (xiv) of the definition of "Marine Distributions." See
"-- Distributions on Certificates" and, to the extent necessary, on the Marine
Final Scheduled Distribution Date, to reduce the principal balance of the Marine
Certificates to zero. The amount of excess interest on the Marine Receivables
will depend on the rate and timing of payments on the Marine Receivables
(including prepayments) in respect thereof.
RV Excess Interest. The weighted average interest rate for the RV
Receivables will be higher than the Pass-Through Rate on the RV Certificates and
since the RV Pool Balance will generally equal the RV Certificate Balance, the
RV Contract Group will be generating excess interest relative to Monthly RV
Interest Payment. To the extent available, excess interest from the RV Contract
Group will be used to pay the amounts set forth in clause (ii) of the definition
of "RV Distributions," to pay any amounts consisting of the principal balance of
Defaulted RV Receivables in clause (iii) of the definition of "RV
Distributions," to pay
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<PAGE> 54
the amounts set forth in clauses (iv) through (xiv) of the definition of "RV
Distributions." See "-- Distribution on Certificates" and to the extent
necessary, on the RV Final Scheduled Distribution Date, to reduce the principal
balance of the RV Certificates to zero. The amount of excess interest on the RV
Receivables will depend on the rate and timing of payments on the RV Receivables
(including prepayments) in respect thereof.
The Marine Reserve Account. The Depositor will establish and maintain with
the Collateral Agent an account (the "Marine Reserve Account"). The Marine
Reserve Account will not be part of the Trust, but will be pledged to the
Trustee for the benefit of the Certificateholders and the Surety Bond Issuer. On
the Closing Date an initial deposit will be made into the Marine Reserve Account
and thereafter will be augmented on each Distribution Date first from payments
on Marine Receivables allocable to interest on deposit in the Marine Certificate
Account with respect to the preceding Collection Period after distributions on
such Distribution Date in respect of the amounts set forth in clauses (i)
through (xi) of the definition of "Marine Distributions," until the amount on
deposit in the Marine Reserve Account is equal to a specified amount to be
determined by the Surety Bond Issuer and the Rating Agencies (the "Specified
Marine Reserve Account Requirement") and second, if necessary, from RV
Distributions to the extent described under "-- Distributions, on the
Certificates -- RV Distributions." Amounts, if any, on deposit in the Marine
Reserve Account on any Distribution Date (after giving effect to all
distributions to be made on such Distribution Date) in excess of the Specified
Marine Reserve Account Requirement will be released to the Depositor. The
Specified Marine Reserve Account Requirement and amounts on deposit or to be
deposited into the Marine Reserve Account may be reduced, including to zero, or
distributed in a different manner than described herein with the consent of the
Surety Bond Issuer as long as such reduction or change does not cause a
downgrade or withdrawal of the then-current rating of the Marine Certificates or
the RV Certificates by either Moody's or S&P, but without prior notice to or the
consent of the Marine Certificateholders or the RV Certificateholders.
Prospective purchasers of the Marine Certificates or the RV Certificateholders
should not rely on any amounts being deposited into or being available from the
Marine Reserve Account in making a decision on whether to purchase the Marine
Certificates or the RV Certificateholders.
The RV Reserve Account. The Depositor will establish and maintain with the
Collateral Agent an account (the "RV Reserve Account"). The RV Reserve Account
will not be part of the Trust, but will be pledged to the Trustee for the
benefit of the Certificateholders and the Surety Bond Issuer. On the Closing
Date an initial deposit will be made into the RV Reserve Account and thereafter
will be augmented on each Distribution Date first from payments on RV
Receivables allocable to interest on deposit in the RV Certificate Account with
respect to the preceding Collection Period after distributions on such
Distribution Date in respect of the amounts set forth in clauses (i) through
(xi) of the definition of "RV Distributions," until the amount on deposit in the
RV Reserve Account is equal to a specified amount to be determined by the Surety
Bond Issuer and the Rating Agencies (the "Specified RV Reserve Account
Requirement") and second, if necessary, from Marine Distributions to the extent
described under "-- Distributions on Certificates -- Marine Distributions."
Amounts, if any, on deposit in the RV Reserve Account on any Distribution Date
(after giving effect to all distributions to be made on such Distribution Date)
in excess of the Specified RV Reserve Account Requirement will be released to
the Depositor. The Specified RV Reserve Account Requirement and amounts on
deposit or to be deposited into the RV Reserve Account may be reduced, including
to zero, or distributed in a different manner than described herein with the
consent of the Surety Bond Issuer as long as such reduction or change does not
cause a downgrade or withdrawal of the then-current rating of the Marine
Certificates or the RV Certificates by either Moody's or S&P, but without prior
notice to or the consent of the Marine Certificateholders or the RV
Certificateholders. Prospective purchasers of the Marine Certificates or the RV
Certificates should not rely on any amounts being deposited into or being
available from the RV Reserve Account in making a decision on whether to
purchase the Marine Certificates or the RV Certificates.
STATEMENTS TO CERTIFICATEHOLDERS
On each Distribution Date, the Trustee will include with each distribution
to each Marine Certificateholder of record, a statement to Certificateholders
furnished pursuant to the Agreement, setting forth for the
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related Collection Period relating to such Distribution Date the following
information (stated in the case of items (i), (ii), and (iii) on the basis of
$1,000 initial principal amount) as of such Distribution Date:
(i) the amount of the Marine Certificateholder's distribution which
constitutes the Monthly Marine Principal Payment (including any carry-over
Monthly Marine Principal);
(ii) the amount of the Marine Certificateholder's distribution which
constitutes the Monthly Marine Interest Payment (including any carry-over
Monthly Marine Interest);
(iii) the Marine Certificateholder's pro rata portion of the Monthly
Marine Servicing Fee (including any carry-over Monthly Marine Servicing
Fee);
(iv) the Marine Certificate Balance and the Marine Certificate Factor
as of the close of business on such Distribution Date; and
(v) the Marine Pool Balance as of the last day of the related
Collection Period.
On each Distribution Date, the Trustee will include with each distribution
to each RV Certificateholder of record, a statement to Certificateholders
furnished pursuant to the Agreement, setting forth for the related Collection
Period relating to such Distribution Date the following information (stated in
the case of items (i), (ii), and (iii) on the basis of $1,000 initial principal
amount) as of such Distribution Date:
(i) the amount of the RV Certificateholder's distribution which
constitutes the Monthly RV Principal Payment (including any carry-over
Monthly RV Principal);
(ii) the amount of the RV Certificateholder's distribution which
constitutes the Monthly RV Interest Payment (including any carry-over
Monthly RV Interest);
(iii) the RV Certificateholder's pro rata portion of the Monthly RV
Servicing Fee (including any carry-over Monthly RV Servicing Fee);
(iv) the RV Certificate Balance and the RV Certificate Factor as of
the close of business on such Distribution Date; and
(v) the RV Pool Balance as of the last day of the related Collection
Period.
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year during the term of the Agreement, the Trustee shall
mail to each Person who at any time during such calendar year shall have been a
Marine Certificateholder or RV Certificateholder, a statement containing the
annual total for the amounts set forth in clauses (i), (ii) and (iii) of the two
preceding paragraphs for the purposes of such Marine Certificateholder's or RV
Certificateholder's preparation of Federal income tax returns. See "Certain
Federal Income Tax Consequences."
EVIDENCE AS TO COMPLIANCE
The Agreement will provide that a firm of independent public accountants
will furnish to the Trustee and the Surety Bond Issuer on or before March 31 of
each year, beginning March 31, 1998, a statement as to compliance by the
Servicer during the preceding twelve months ended December 31 of the preceding
year with certain standards relating to the servicing of the Receivables.
The Agreement will also provide for delivery to the Trustee and the Surety
Bond Issuer, on or before March 31 of each year, commencing March 31, 1998 of a
certificate signed by an officer of the Servicer stating that the Servicer has
fulfilled its obligations under the Agreement throughout the preceding twelve
months ended December 31 or, if there has been a default in the fulfillment of
any such obligation, describing each such default. The Servicer has agreed to
give the Trustee notice of certain Events of Default under the Agreement.
Copies of such statements and certificates may be obtained by
Certificateholders by a request in writing addressed to the Trustee.
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CERTAIN MATTERS REGARDING THE SERVICER
The Agreement will provide that NationsCredit Commercial may not resign
from its obligations and duties as Servicer thereunder, except upon
determination that the performance of such duties by NationsCredit Commercial is
no longer permissible under applicable law. No such resignation will become
effective until the Trustee or a successor servicer has assumed NationsCredit
Commercial's servicing obligations and duties under the Agreement. The Servicer
may delegate all or any part of its servicing obligations under the Agreement to
another person provided that no such delegation shall relieve the Servicer of
any of its obligations or liabilities under the Agreement. NationsCredit
Commercial employs NationsCredit Financial Services Corporation to collect on
deficiency balances related to charged-off marine contracts and charged-off
recreational vehicle contracts including in respect of any Receivables.
The Agreement will further provide that neither the Servicer nor any of its
directors, officers, employees or agents shall be under any liability to the
Trust or the Certificateholders for taking any action or for refraining from
taking any action pursuant to the Agreement; provided, however, that neither the
Servicer nor any such person will be protected against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or negligence
in the performance of its duties or by reason of reckless disregard of
obligations and duties thereunder. In addition, the Agreement will provide that
the Servicer is under no obligation to appear in, prosecute or defend any legal
action that is not incidental to its servicing responsibilities under such
Agreement and that, in its opinion, may involve it in any expense or liability.
The Servicer may, however, undertake any reasonable action that it may deem
necessary or desirable in respect of the Agreement and the rights and duties of
the parties thereto and the interests of the Certificateholders thereunder.
Under the circumstances specified in the Agreement, any entity into which
the Servicer may be merged or consolidated, or any entity resulting from any
merger or consolidation to which the Servicer is a party, or any entity
succeeding to the business of the Servicer, or, with respect to its obligations
as Servicer, any corporation 50% or more of the voting stock of which is owned,
directly or indirectly, by NationsBank Corporation, which corporation or other
entity in each of the foregoing cases assumes the obligations of the Servicer,
will be the successor of the Servicer under the Agreement.
EVENTS OF DEFAULT
"Events of Default" under the Agreement will consist of: (i) any failure by
the Servicer to deliver to the Trustee for distribution to the Marine
Certificateholders or the RV Certificateholders any proceeds or payment required
to be delivered under the terms of the Marine Certificates or the RV
Certificates, as applicable, and the Agreement, which failure continues
unremedied for three business days after written notice from the Trustee is
received by the Servicer or after discovery by an officer of the Servicer; or
(ii) any failure by the Servicer or the Depositor, as the case may be, duly to
observe or to perform in any material respect any other covenant or agreement
set forth in the Marine Certificates, the RV Certificates or the Agreement which
failure materially and adversely affects the rights of Marine Certificateholders
or RV Certificateholders and which continues unremedied for 60 days after the
giving of written notice of such failure (1) to the Servicer or the Depositor,
as the case may be, by the Trustee or (2) to the Servicer or the Depositor, as
the case may be, and to the Trustee by the Surety Bond Issuer; or (iii) certain
events of bankruptcy, insolvency, readjustment of debt, marshaling of assets and
liabilities, or similar proceedings with respect to the Servicer or the
Depositor and certain actions by the Servicer or the Depositor indicating its
insolvency, reorganization pursuant to bankruptcy proceedings, or inability to
pay its obligations or (iv) any representation or warranty by the Servicer in
the Agreement shall prove to have been incorrect in any material respect when
made which continues to be incorrect in any material respect for a period of 60
days after the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Servicer by the Trustee, or to the
Servicer and the Trustee by the Surety Bond Issuer, and as a result of which the
interests thereunder of Certificateholders are materially and adversely
affected. The Surety Bond Issuer may give the Trustee and the Servicer notice of
any Event of Default under the Agreement.
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RIGHTS UPON EVENT OF DEFAULT; SERVICER TRANSFER
As long as an Event of Default under the Agreement remains unremedied, the
Surety Bond Issuer may terminate all the rights and obligations of the Servicer
under the Agreement (a "Servicer Transfer"), whereupon a successor servicer
appointed by the Trustee and consented to by the Surety Bond Issuer in writing
or the Trustee will succeed to all the responsibilities, duties and liabilities
of the Servicer under the Agreement and will be entitled to similar compensation
arrangements. In the event that the Trustee is unwilling or unable so to 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 marine and recreational vehicle retail
installment sale contracts. The Trustee, with the consent of the Surety Bond
Issuer, may make such arrangements for compensation to be paid on each
Distribution Date, which shall be negotiated on an arms-length basis, but in no
event may be greater than the product of one-twelfth of 1.0% and the Certificate
Balance as of such Distribution Date.
In addition, the Agreement will also provide that the Surety Bond Issuer,
with notice in writing to the Servicer, may effect a Servicer Transfer upon the
occurrence of any of the following events: (a) the Depositor or Servicer, as the
case may be, shall fail to pay when due any amount payable by it in connection
with the transactions contemplated by the Agreement or the Insurance Agreement
which failure shall have continued for three Business Days after receipt of
notice thereof by the Depositor or the Servicer, as the case may be; (b) an
Event of Default occurs under the Agreement; (c) the Surety Bond Issuer
determines that the performance of the Servicer under the Agreement is not, in
the opinion of the Surety Bond Issuer, in conformity with the Servicing
Standards; (d) if, with respect to any Distribution Date, the Net Credit Loss
Ratio exceeds 3.5%; (e) the Servicer shall enter into any merger, consolidation
or other corporate transaction pursuant to which the debt of the surviving
entity (or if such debt is not rated, the debt of its ultimate parent) is rated
below investment grade by either Rating Agency; (f) NationsBank Corporation
ceases to maintain a majority ownership interest in NationsCredit Corporation
and the debt of the new holder of the majority ownership interest in
NationsCredit Corporation is rated below investment grade by either Rating
Agency; (g) NationsCredit Corporation shall enter into any merger, consolidation
or other corporate transaction pursuant to which the debt of the surviving
entity (or if such debt is not rated, the debt of its ultimate parent) is rated
below investment grade by either Rating Agency; or (h) NationsCredit Corporation
ceases to maintain a direct or indirect majority ownership interest in the
Servicer and the debt of the new holder of the majority ownership interest in
the Servicer is rated below investment grade by either Rating Agency.
"Net Credit Loss Ratio" means, for any Collection Period, a fraction
(expressed as an annualized percentage) (i) the numerator of which is an amount
equal to (A) the sum of the aggregate gross losses with respect to the
Receivables recognized in such Collection Period and the preceding two
Collection Periods, as determined in accordance with the Servicer's normal
practices, less any recoveries received during such Collection Period and the
preceding two Collection Periods, divided by (B) a factor of three, and (ii) the
denominator of which is an amount equal to (A) the sum of the Pool Balance in
effect as of the last day of such Collection Period and the Pool Balances as in
effect as of the last day of each of the preceding three Collection Periods,
divided by (B) a factor of four.
"Servicing Standards" means, at any time, the quality of the Servicer's (or
in the event that a subservicer performs servicing operations on behalf of the
Servicer, such subservicer's) performance with respect to (i) compliance with
the terms and conditions of the Agreement, and (ii) adequacy, measured in
accordance with industry standards and current and historical standards of the
Servicer (or such subservicer) in respect of all marine receivables and
recreational vehicle receivables serviced by the Servicer (or such subservicer),
regardless of whether such receivables are owned by the Servicer (or such
subservicer), of the Servicer's (or such subservicer's) servicing of the
Receivables. The Surety Bond Issuer may audit the Servicer's books, records and
procedures to determine the Servicer's compliance with the Agreement.
WAIVER OF PAST DEFAULTS
So long as no Surety Bond Issuer Default has occurred and is continuing,
the Surety Bond Issuer may, on behalf of all the Certificateholders, waive any
default by the Servicer in the performance of its obligations
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under the Agreement and its consequences, except a default in making any
required deposits to or payments to the respective Certificate Account in
accordance with the Agreement. No such waiver shall impair such
Certificateholders' rights or the Surety Bond Issuer's rights with respect to
subsequent defaults.
AMENDMENT
The Agreement may be amended by the Depositor, the Servicer and the
Trustee, without the consent of the Certificateholders or the Surety Bond
Issuer, to cure any ambiguity, correct or supplement any provision therein, or
to add any other provisions with respect to matters or questions arising under
the Agreement which are not inconsistent with the provisions of the Agreement;
provided that such action will not, in the opinion of counsel satisfactory to
the Trustee, materially and adversely affect the interest of any Marine
Certificateholder or RV Certificateholder or the Surety Bond Issuer. The
Agreement may also be amended by the Depositor, the Servicer and the Trustee
with the consent of the Surety Bond Issuer and Holders of Certificates
evidencing not less than 51% of the Certificate Balance as of the most recent
Record Date for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Agreement or of modifying in
any manner the rights of the Certificateholders or the Surety Bond Issuer;
provided, however, that no such amendment may (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on the Marine Receivables or the RV Receivables or distributions that
are required to be made on any Certificate or (ii) reduce the aforesaid
percentage required to consent to any such amendment, in each case without the
consent of the holders of all Certificates then outstanding. The Marine
Certificateholders will evidence approximately 71.40% of the initial Certificate
Balance and the RV Certificateholders will evidence approximately 28.60% of the
initial Certificate Balance, therefore as of the Closing Date, the Marine
Certificateholders will have the right to consent to amendments of the Agreement
as described above without the approval of any of the RV Certificateholders.
LIST OF CERTIFICATEHOLDERS
Upon written request of the Servicer or the Surety Bond Issuer, the Trustee
will provide to the Servicer or the Surety Bond Issuer within 15 days after
receipt of such request in writing, a list of the names and addresses of all
Certificateholders of record of the Trust as of the most recent Record Date.
Upon written request by three or more Certificateholders or by Holders of
Certificates evidencing not less than 25% of the Certificate Balance as of the
most recent Record Date, and upon compliance by such Certificateholders with
certain other provisions of the Agreement, the Trustee will afford such
Certificateholders access during business hours to the current list of
Certificateholders for purposes of communicating with other Certificateholders
with respect to their rights under the Agreement.
The Agreement will not provide for the holding of any annual or other
meetings of Certificateholders.
TERMINATION
The respective obligations of the Servicer, the Depositor, the Trustee and
the Trust created pursuant to the Agreement will terminate upon (i) the payment
in full or other liquidation of the last Receivable and the disposition of any
amounts received upon liquidation of any remaining Receivables or (ii) the
payment to the Certificateholders of all amounts required to be paid to them
pursuant to the Agreement and the payment to the Surety Bond Issuer of all
amounts required to be paid to it pursuant to the Agreement and the Insurance
Agreement or (iii) disposition of all property held by the Trust. In order to
avoid excessive administrative expense, the Servicer or its successor may
purchase (i) all the Marine Receivables in the Trust as of any Record Date on
which the Marine Pool Balance shall decline to 5% or less of the Initial Marine
Pool Balance, at a purchase price equal to the aggregate Purchase Amount of the
Marine Receivables, as of the beginning of the Collection Period related to such
Record Date plus the appraised value of any other property held by the Trust
allocable to the Marine Contract Group less the amount of all collections on the
Marine Receivables received by the Servicer during such Collection Period and
(ii) all the RV Receivables in the Trust as of any Record Date on which the RV
Pool Balance shall decline to 5% or less of the Initial RV Pool Balance, at a
purchase price equal to the aggregate Purchase Amount of the RV Receivables as
of the beginning of the Collection Period related to such Record Date plus the
appraised value of any other property held by the Trust
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allocable to the RV Contract Group less the amount of all collections on the RV
Receivables received by the Servicer during such Collection Period; provided,
however that in each case the Servicer may not make any such purchase on any
date on which there are outstanding amounts under the Insurance Agreement or the
Agreement, which have not been paid to the Surety Bond Issuer. Exercise of such
rights will effect early retirement of the Marine Certificates or the RV
Certificates, as applicable. The Trustee will give written notice of any
termination of the Trust or repurchased of the Marine Contract Group or the RV
Contract Group to each Certificateholder of record of the Trust. The final
distribution to any Certificateholder will be made only upon surrender and
cancellation of such Holder's Certificate at any office or agency of the Trustee
specified in the notice of termination. After termination, any funds remaining
in the Trust after the Trustee has taken certain measures to locate
Certificateholders and such measures have failed, will be distributed to the
United Way of Metropolitan Dallas.
DUTIES OF THE TRUSTEE
The Trustee makes no representations as to the validity or sufficiency of
the Agreement, the Certificates (other than the authentication of the
Certificates), or any Receivables or related documents, and is not accountable
for the use or application by the Depositor or the Servicer of any funds paid to
the Depositor or the Servicer in respect of the Certificates or the Receivables,
or the investment of any monies by the Servicer before such monies are deposited
into a Certificate Account. The Trustee has not independently verified the
Receivables. If no Event of Default has occurred, the Trustee is required to
perform only those duties specifically required of it under the Agreement.
Generally, those duties are limited to the receipt of the various certificates,
reports or other instruments required to be furnished to the Trustee under the
Agreement, in which case it is only required to examine them to determine
whether they conform to the requirements of the Agreement. The Trustee shall not
be charged with knowledge of a failure by the Servicer to perform its duties
under the Agreement which failure constitutes an Event of Default unless the
Trustee obtains actual knowledge of such failure as specified in the Agreement.
The Trustee is under no obligation to exercise any of the rights or powers
vested in it by the Agreement or to make any investigation of matters arising
thereunder or to institute, conduct or defend any litigation thereunder or in
relation thereto at the request, order or direction of any of the
Certificateholders, unless such Certificateholders have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that may be incurred therein or thereby. No Certificateholder will have any
right under the Agreement to institute any proceeding with respect to the
Agreement, unless such holder previously has given to the Trustee written notice
of default and unless the Certificateholders evidencing not less than 25% of the
Certificate Balance as of the most recent Record Date have made written request
upon the Trustee to institute such proceeding in its own name as Trustee
thereunder and have offered to the Trustee reasonable indemnity and the Trustee
for 30 days has neglected or refused to institute any such proceedings.
THE TRUSTEE
Bankers Trust Company is the Trustee under the Agreement. The Trustee, in
its individual capacity or otherwise, may hold Certificates in its own name or
as pledgee. For the purpose of meeting the legal requirements of certain
jurisdictions, the Servicer and the Trustee acting jointly (or in some
instances, the Trustee acting alone) shall 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 shall be conferred or imposed upon the Trustee
and such separate trustee or co-trustee jointly, or, in any jurisdiction in
which the Trustee shall be incompetent or unqualified to perform certain acts,
singly upon such separate trustee or co-trustee who shall exercise and perform
such rights, powers, duties and obligations solely at the direction of the
Trustee.
The Trustee may resign at any time. The Servicer may also remove the
Trustee if the Trustee ceases to be eligible to continue as such under the
Agreement, becomes legally unable to act, or becomes insolvent. In any such
circumstances, the Servicer will be obligated to appoint a successor trustee.
Any such successor must be an eligible Servicer or an affiliate of an eligible
Servicer, which eligible Servicer is willing to act as Servicer upon a Servicer
Transfer, and such successor or affiliate must have a net worth of at least
$50,000,000 and its
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regular business must include the servicing of marine and recreational vehicle
retail installment sale contracts. Any resignation or removal of the Trustee and
appointment of a successor trustee does not become effective until acceptance of
the appointment by the successor trustee and with the prior written consent of
the Surety Bond Issuer.
The Agreement will provide that the Servicer will pay the Trustee's fees.
The Agreement will further provide that the Trustee will be entitled to
indemnification by the Depositor and the Servicer for, and will be held harmless
against, any loss, liability, fee, disbursement or expense incurred by the
Trustee not resulting from the Trustee's own willful misfeasance, bad faith or
negligence (other than by reason of a breach of any of its representations or
warranties set forth in the Agreement). The Agreement will further provide that
the Depositor and the Servicer will indemnify the Trustee for certain taxes that
may be asserted in connection with the transaction.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
LACK OF FIRST PRIORITY SECURITY INTERESTS IN THE RECEIVABLES
The Receivables are "chattel paper" as defined in the UCC in effect in the
States of Texas and Georgia. 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 Servicer will cause the filing of an
appropriate UCC-1 financing statement to be made with the appropriate
governmental authorities in the States of Texas and Georgia and other
appropriate jurisdictions to give notice of the Trust's purchase of the
Receivables. Certain liens, including certain tax liens, may, as a matter of
law, have priority over perfected, first priority liens.
Pursuant to the Agreement, the Servicer will have custody of the
Receivables following the sale of the Receivables to the Trust. The original
Receivables will not be physically marked to indicate that such Receivables have
been sold to the Trust. If, through inadvertence or otherwise, another party
purchased (including the taking of a security interest in) the Receivables for
new value in the ordinary course of its business, without actual knowledge of
the Trust's interest and took possession of the Receivables, the purchaser may
acquire an interest in the Receivables superior to the interest of the Trust.
The Servicer will, however, indicate in its computer records that the
Receivables have been sold and assigned to the Trust.
Under the Agreement, the Servicer will be obligated from time to time to
take such actions as are necessary to protect and perfect the Trust's interest
in the Receivables and their proceeds. See "Risk Factors -- Lack of First
Priority Security Interests in the Receivables."
LACK OF PERFECTED SECURITY INTERESTS IN BOATS
The Marine Receivables were originated by Dealers. NationsCredit Commercial
acquired the Marine Receivables directly or indirectly from Dealers or finance
subsidiaries of manufacturers and directly or indirectly sold the Marine
Receivables to the Trust. NationsCredit Commercial is the assignee and secured
party under the Marine Receivables. NationsCredit Commercial takes actions as it
deems prudent under the laws of the state in which the Boat is located to
perfect NationsCredit Commercial's security interest in the Boat.
Generally, security interests in boats may be perfected in one of three
ways: in certificate of title states, a security interest is perfected by
notation of the secured party's lien on the certificate of title issued by an
applicable state motor vehicle department or other appropriate state agency; in
other states, a security interest may be perfected by filing a UCC-1 financing
statement, however, a purchase money lien in consumer goods is perfected without
any filing requirement and if a boat is required to be documented under Federal
law, a preferred mortgage may be obtained under the Ship Mortgage Act by filing
the mortgage with the Coast Guard, which is the exclusive method for perfectly
securing interests in documented boats. The Servicer will represent and warrant
in the Agreement that none of the Boats are required to be documented under the
Ship Mortgage Act.
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NationsCredit Commercial takes such measures as it deems prudent to perfect
its security interest in each Boat under the laws of the state in which the Boat
is registered. Typically, a Dealer will make proper and prompt application to
any applicable state motor vehicle department or other appropriate state agency
to have a notation of the lien made on the certificate of title of each Boat at
the time of sale if the Boat is subject to a certificate of title statute. When
a UCC-1 financing statement is filed, the Dealer is required to obtain the
necessary signature on the UCC-1 financing statement to allow filing by
NationsCredit Commercial. Where under state law a filing or other action is
required to perfect a security interest and if NationsCredit Commercial, because
of clerical error or otherwise, has failed to take such action with respect to a
Boat, NationsCredit Commercial will not have a perfected security interest in
the Boat under such law and its security interest may be subordinate to the
interest of, among others, subsequent purchasers of the Boat, holders of
perfected security interests and the bankruptcy trustee of the Obligor.
NationsCredit Commercial's state law security interest may also be subordinate
to such third parties in the event of fraud or forgery by the Obligor or
administrative error by state recording officials. In addition, under certain
certificate of title statutes NationsCredit Commercial must perfect its security
interest in boat motors otherwise subject to certificate of title statutes under
the UCC. NationsCredit Commercial as a general matter does not separately
perfect its interest in such boat motors under the UCC and therefore
NationsCredit Commercial does not generally have a perfected security interest
in motors used on Boats where the perfection of a security interest in the Boats
themselves are otherwise determined under certificate of title statutes.
If the security interest in the Boat is perfected under a certificate of
title statute and an Obligor moves to a state other than the state in which the
Boat is registered, under the laws of most certificate of title states the
perfection of the security interest in the Boat would continue for a brief
period of time after such relocation. A majority of states issuing certificates
of title on boats require surrender of a certificate of title to re-register a
boat. In those states that also provide for possession of the certificate of
title by the secured party, NationsCredit Commercial must surrender possession
of the certificate of title for the Boat to be re-registered. Some states do not
give the secured party possession of the certificate of title, but indicate the
secured party on the certificate of title and provide notice to such secured
party of surrender of the certificate of title by another person. If either
NationsCredit Commercial is in possession of a certificate of title that must be
surrendered to re-register the Boat or NationsCredit Commercial receives notice
of any surrender of the certificate of title by another person, NationsCredit
Commercial would then have the opportunity to continue the perfection of the
security interest in the Boat in the state of registration. If the Obligor moves
to a state which does not require surrender of a certificate of title for
re-registration of a Boat, re-registration could defeat perfection. In the
ordinary course of servicing its portfolio of marine contracts, NationsCredit
Commercial generally takes steps to effect such perfection upon receipt of
notice of surrender or information from the Obligor as to relocation in those
states that require any action to be taken. However, these procedural safeguards
will not protect the secured party if through fraud, forgery or administrative
error, the debtor somehow procures a new certificate of title that does not note
the secured party's lien. Similarly, when an Obligor sells a Boat, under the
laws of many states, the purchaser cannot re-register the Boat unless
NationsCredit Commercial surrenders possession of the certificate of title and
accordingly NationsCredit Commercial will have an opportunity to require
satisfaction of the related Marine Receivable before release of the lien.
If NationsCredit Commercial has perfected NationsCredit Commercial's
security interest by the filing of a UCC-1 financing statement, or the Obligor
moves from a title state to a non-title state, NationsCredit Commercial files a
UCC-1 financing statement in the new state of the Obligor as soon as possible
after receiving notice of the Obligor's change of residence. UCC-1 financing
statements expire after five years. When the term of a loan exceeds five years,
the filing must be continued in order to maintain NationsCredit Commercial's
perfected security interest. NationsCredit Commercial takes steps to effect such
continuation. In the event that an Obligor moves to a state other than the state
in which the UCC-1 financing statement is filed or in certain states to a
different county in such state, under the laws of most states the perfection of
the security interest in the Boat would continue for four months after such
relocation, unless the perfection in the original jurisdiction would have
expired earlier. A new financing statement must be filed in the state of
relocation or, if such state is a title state, a notation on the certificate of
title must be made in order to continue NationsCredit Commercial's security
interest. NationsCredit Commercial generally takes steps to effect such
re-perfection upon notification of an address change. Generally, in both title
states and in non-title states,
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NationsCredit Commercial will not re-perfect a state law security interest which
has expired or where the Obligor has moved if the Marine Receivable has a small
balance, a short remaining term and the Obligor has a good payment record.
Under the laws of many states, liens for storage and repairs performed on a
boat and certain tax liens take priority even over a perfected state law
security interest. The Servicer will represent and warrant in the Agreement with
respect to the Marine Receivables sold to the Trust that, as of the Closing
Date, to the best of the Servicer's knowledge, no such liens or claims are
pending or threatened with respect to a Boat which may be or become prior to or
equal with the lien of the related Marine Receivable. In the event of a material
adverse breach of such warranty, the only recourse of the Trust would be to
require the Servicer to repurchase the Marine Receivable secured by such Boat.
Because NationsCredit Commercial continues to service the Marine
Receivables, the Obligors on the Marine Receivables are not notified of the
purchase of the Marine Receivables by the Trust and no action is taken to record
the transfer of the security interests from NationsCredit Commercial to the
Trust. Due to the administrative burden and expense of (i) endorsing the
certificate of title of each Boat to reflect the Trust's interest therein and
delivering each such certificate of title to the Trustee for filing (and the
payment of related filing fees), in the case of Boats licensed in states where
security interests in boats are subject to certificate of title statutes; and
(ii) filing amendments to UCC-1 financing statements relating to each Boat (and
the payment of related filing fees) to reflect the Trust's interest therein, in
the case of Boats licensed in states where security interests in boats are
perfected by filing a UCC-1 financing statement, none of such certificates of
title will be endorsed, delivered and filed, or UCC-1 financing statements
amended. In most states, such an assignment would be an effective conveyance of
such a security interest and the new secured party would succeed to
NationsCredit Commercial's rights as the secured party. In the absence of fraud
or forgery by the Obligor or administrative error by Federal, state or local
recording officials, the notation of the lien of NationsCredit Commercial's on
the certificate of title will be sufficient to protect the Trust against the
rights of subsequent purchasers of a Boat or subsequent lenders who take a
security interest in the Boat. There exists a risk, however, in not identifying
the Trust as the new secured party on the Certificate of title, that the Trust
may in some states (such as California) be subordinate to claims of creditors or
the receiver of NationsCredit Commercial in the event of the insolvency of
NationsCredit Commercial and that, through fraud or negligence, the security
interest of such Trust could be released by NationsCredit Commercial as security
holder of record.
The Servicer will represent and warrant in the Agreement with respect to
the Trust that there shall exist a valid, subsisting and enforceable first
priority perfected security interest in each Boat in favor of the Trust, as of
the Closing Date, and that such security interest will be assigned to the Trust.
In the event of a material adverse breach of such warranty, the only recourse of
the Trust against the Servicer would be to require the Servicer to repurchase
the Marine Receivable secured by the Boat involved. See "The
Certificates -- Sale and Assignment of Receivables."
LACK OF PERFECTED SECURITY INTERESTS IN RVS
The RV Receivables were originated by Dealers. NationsCredit Commercial
acquired the RV Receivables directly or indirectly from Dealers or finance
subsidiaries of manufacturers and directly or indirectly sold the RV Receivables
to the Trust. NationsCredit Commercial is the assignee and secured party under
the RV Receivables. NationsCredit Commercial takes actions as it deems prudent
under the laws of the state in which the RV is located to perfect NationsCredit
Commercial's security interest in the RV.
Generally, perfection rules relating to security interests in recreational
vehicles are governed under state certificate of title statutes (Alabama,
Connecticut, Georgia, Maine, Massachusetts, Minnesota, Mississippi, New
Hampshire, New York, Rhode Island and Vermont have adopted the Uniform Motor
Vehicle Certificate of Title and Anti-Theft Act) or by the vehicle registration
laws of the state in which each recreational vehicle is located. In states which
have adopted the Uniform Motor Vehicle Certificate of Title and Anti-Theft Act,
security interests in recreational vehicles may be perfected either by notation
of the secured party's lien on the certificate of title or by delivery of the
certificate of title and payment of a fee to the state motor vehicle
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authority, depending on the particular state law. In states in which perfection
of a security interest in a particular motor vehicle is not governed by a
certificate of title statute, perfection is usually accomplished by filing
pursuant to the provisions of the UCC. Notwithstanding the foregoing, in certain
states, folding camping trailers and/or slide-in campers are not subject to
certain titling and vehicle registration laws and a security interest in such
recreational vehicles is perfected by filing pursuant to the provisions of the
UCC. In most states[, including California], a security interest in a
recreational vehicle is perfected by notation of the secured party's lien on the
vehicle's certificate of title.
NationsCredit Commercial takes such measures as it deems prudent to perfect
its security interest in each RV under the laws of the state in which the RV is
registered. Typically, a Dealer will make proper and prompt application to any
applicable state motor vehicle department or other appropriate state agency to
have a notation of the lien made on the certificate of title of each RV at the
time of sale if the RV is subject to a certificate of title statute. When a
UCC-1 financing statement is filed, the Dealer is required to obtain the
necessary signature on the UCC-1 financing statement to allow filing by
NationsCredit Commercial. Where under state law a filing or other action is
required to perfect a security interest and if NationsCredit Commercial, because
of clerical error or otherwise, has failed to take such action with respect to a
RV, NationsCredit Commercial will not have a perfected security interest in the
RV under such law and its security interest may be subordinate to the interest
of, among others, subsequent purchasers of the RV, holders of perfected security
interests and the bankruptcy trustee of the Obligor. NationsCredit Commercial's
state law security interest may also be subordinate to such third parties in the
event of fraud or forgery by the Obligor or administrative error by state
recording officials.
A security interest in a motor vehicle registered in the State of
California (in which the greatest number of RVs are currently registered) may be
perfected only by depositing with the Department of Motor Vehicles a properly
endorsed certificate of title for the vehicle showing the secured party as
"legal owner" thereon or if the vehicle has not been previously registered, an
application in usual form for an original registration together with an
application for registration of the secured party as "legal owner." However,
under the California Vehicle Code, a transferee of a security interest in a
motor vehicle is not required to reapply to the Department of Motor Vehicles for
a transfer of registration when the interest of the transferee arises from the
transfer of a security agreement by the "legal owner" to secure payment or
performance of an obligation. Accordingly, under California law, an assignment
such as under the Agreement is an effective conveyance of NationsCredit
Commercial's perfected security interest without such re-registration, and under
the Agreement the Trust will be assigned NationsCredit Commercial's rights as
secured party.
If the security interest in the RV is perfected under a certificate of
title statute and an Obligor moves to a state other than the state in which the
RV is registered, under the laws of most certificate of title states the
perfection of the security interest in the RV would continue for a brief period
of time after such relocation. A majority of states issuing certificates of
title on recreational vehicles require surrender of a certificate of title to
re-register a recreational vehicle. In those states that also provide for
possession of the certificate of title by the secured party, NationsCredit
Commercial must surrender possession of the certificate of title for the RV to
be re-registered. Some states do not give the secured party possession of the
certificate of title, but indicate the secured party on the certificate of title
and provide notice to such secured party of surrender of the certificate of
title by another person. If either NationsCredit Commercial is in possession of
a certificate of title that must be surrendered to re-register the RV or
NationsCredit Commercial receives notice of any surrender of the certificate of
title by another person, NationsCredit Commercial would then have the
opportunity to continue the perfection of the security interest in the RV in the
state of registration. If the Obligor moves to a state which does not require
surrender of a certificate of title for re-registration of a RV, re-registration
could defeat perfection. In the ordinary course of servicing its portfolio of
recreational vehicle contracts, NationsCredit Commercial generally takes steps
to effect such perfection upon receipt of notice of surrender or information
from the Obligor as to relocation in those states that require any action to be
taken. However, these procedural safeguards will not protect the secured party
if through fraud, forgery or administrative error, the debtor somehow procures a
new certificate of title that does not note the secured party's lien. Similarly,
when an Obligor sells a RV, under the laws of many states, the purchaser cannot
re-register the RV unless NationsCredit Commercial surrenders possession of the
certificate of title and accordingly NationsCredit
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Commercial will have an opportunity to require satisfaction of the related RV
Receivable before release of the lien.
If NationsCredit Commercial has perfected NationsCredit Commercial's
security interest in an RV by the filing of a UCC-1 financing statement, or the
Obligor moves from a title state to a non-title state, NationsCredit Commercial
files a UCC-1 financing statement in the new state of the Obligor as soon as
possible after receiving notice of the Obligor's change of residence. UCC-1
financing statements expire after five years. When the term of a loan exceeds
five years, the filing must be continued in order to maintain NationsCredit
Commercial's perfected security interest. NationsCredit Commercial takes steps
to effect such continuation. In the event that an Obligor moves to a state other
than the state in which the UCC-1 financing statement is filed or in certain
states to a different county in such state, under the laws of most states the
perfection of the security interest in the RV would continue for four months
after such relocation, unless the perfection in the original jurisdiction would
have expired earlier. A new financing statement must be filed in the state of
relocation or, if such state is a certificate of title state, a notation on the
certificate of title must be made in order to continue NationsCredit
Commercial's security interest. NationsCredit Commercial generally takes steps
to effect such re-perfection upon notification of an address change. In the
ordinary course of servicing the RV Receivables, NationsCredit Commercial will
take steps to effect re-perfection upon receipt of notice of re-registration or
information from the Obligor as to relocation. Similarly, when an Obligor sells
a RV, NationsCredit Commercial 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 RV
Receivable before release of the lien. Under the Agreement, the Servicer will be
obligated to take appropriate steps, at its own expense, to maintain perfection
of a security interest in the RVs. Generally, in both title states and in
non-title states, NationsCredit Commercial will not re-perfect a state law
security interest which has expired or where the Obligor has moved if the RV
Receivable has a small balance, a short remaining term and the Obligor has a
good payment record.
Under the laws of many states, liens for repairs performed on a
recreational vehicle and certain tax liens take priority even over a perfected
state law security interest. The Internal Revenue Code of 1986, as amended, also
grants priority to certain federal tax liens over the lien of a secured party.
The laws of certain states and federal law permit the confiscation of motor
vehicles by government authorities under certain circumstances if used in
unlawful activities, which may result in the loss of a secured party's perfected
security interest in a confiscated recreational vehicle. The Servicer will
represent and warrant in the Agreement with respect to the RV Receivables sold
to the Trust that, as of the Closing Date, to the best of the Servicer's
knowledge, no such liens or claims are pending or threatened with respect to a
RV which may be or become prior to or equal with the lien of the related RV
Receivable. However, liens for repairs or taxes could arise at any time during
the term of a RV Receivable. No notice will be given to the Trustee or RV
Certificateholders in the event such a lien or confiscation arises and any such
lien or confiscation arising after the date of initial issuance of the RV
Certificates could not give rise to an obligation of the Servicer to purchase
the RV Receivables under the Agreement. In the event of a material adverse
breach of such warranty, the only recourse of the Trust would be to require the
Servicer to repurchase the RV Receivable secured by such RV.
Because NationsCredit Commercial continues to service the RV Receivables,
the Obligors on the RV Receivables are not notified of the purchase of the RV
Receivables by the Trust and no action is taken to record the transfer of the
security interests from NationsCredit Commercial to the Trust. Due to the
administrative burden and expense of (i) endorsing the certificate of title of
each RV to reflect the Trust's interest therein and delivering each such
certificate of title to the Trustee for filing (and the payment of related
filing fees), in the case of RVs licensed in states where security interests in
RVs are subject to certificate of title statutes; and (ii) filing amendments to
UCC-1 financing statements relating to each RV (and the payment of related
filing fees) to reflect the Trust's interest therein, in the case of RVs
licensed in states where security interests in RVs are perfected by filing a
UCC-1 financing statement, none of such certificates of title will be endorsed,
delivered and filed, or UCC-1 financing statements amended. In most states, such
an assignment would be an effective conveyance of such a security interest and
the new secured party would succeed to NationsCredit Commercial's rights as the
secured party. In the absence of fraud or forgery by the Obligor or
administrative error by Federal, state or local recording officials, the
notation of the lien of
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NationsCredit Commercial's on the certificate of title will be sufficient to
protect the Trust against the rights of subsequent purchasers of a RV or
subsequent lenders who take a security interest in the RV. There exists a risk,
however, in not identifying the Trust as the new secured party on the
certificate of title, that the Trust may in some states be subordinate to claims
of creditors or the receiver of NationsCredit Commercial in the event of the
insolvency of NationsCredit Commercial and that, through fraud or negligence,
the security interest of such Trust could be released by NationsCredit
Commercial as security holder of record.
The Servicer will represent and warrant in the Agreement with respect to
the Trust that there shall exist a valid, subsisting and enforceable first
priority perfected security interest in each RV in favor of the Trust, as of the
Closing Date, and that such security interest will be assigned to the Trust. In
the event of a material adverse breach of such warranty, the only recourse of
the Trust against the Servicer would be to require the Servicer to repurchase
the RV Receivable secured by the RV involved. See "The Certificates -- Sale and
Assignment of Receivables."
ENFORCEMENT OF SECURITY INTEREST IN BOATS AND RECREATIONAL VEHICLES
In the event that required payments under the Surety Bond are not made, the
Servicer on behalf of such Trust may take action to enforce the security
interest in Boats and RVs securing Defaulted Receivables by repossession and
resale of the Boats and RVs, as applicable. Under the UCC and consumer
protection laws applicable in most states, a creditor can, without prior notice
to the debtor, repossess a boat or recreational vehicle securing a defaulted
contract by the obligor's voluntary surrender, by "self-help" repossession that
does not involve a breach of the peace and by judicial process. However, some
jurisdictions require that the obligor be notified of the default and be given a
time period within which the obligor may cure the default prior to repossession.
Generally, this right to cure may be exercised a limited number of times in any
one-year period.
The UCC and other state laws place restrictions on repossession sales,
including requirements that the secured party 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 and that any such
sale be conducted in a commercially reasonable manner.
The obligor has the right to redeem the collateral prior to actual sale by
paying the secured party the delinquent payments of the obligation plus
reasonable expenses for repossessing, holding and preparing the collateral for
disposition and arranging for its sale, plus in some jurisdictions, reasonable
attorneys' fees, or in some states, by payment of the unpaid balance.
In the event of such a repossession and resale of a Boat or RV, the
Servicer, on behalf of the Trust, would be entitled to be paid the full amount
of the Obligor's indebtedness out of the sale proceeds before such proceeds
could be applied to the payment of the claims of the holders of junior security
interests in the Boats and RVs, as applicable, unsecured creditors, or
thereafter, to the debtor.
Under the UCC and laws applicable in most states, a creditor is entitled to
obtain a deficiency judgment from an obligor for any deficiency on repossession
and resale of the boat or recreational vehicle securing the unpaid balance of
such obligor's contract. However, some states may impose prohibitions or
limitations on deficiency judgments. If a deficiency judgment were granted, the
judgment would be a personal judgment against the obligor for the shortfall, and
a defaulting obligor may have very little capital or sources of income available
following repossession. Therefore, in many cases it may not be useful to seek a
deficiency judgment or, if one is obtained, it may be settled at a significant
discount.
Certain statutory provisions, including Federal and state bankruptcy and
insolvency laws, may also limit the ability of the Servicer to repossess and
resell collateral or obtain a deficiency judgment. Certain other factors,
including the value of a repossessed Boat or RV, may limit the amount realized
on the sale of the collateral to less than the amount due on a Receivable.
CONSUMER PROTECTION LAWS
Numerous Federal and state consumer protection laws and related regulations
impose requirements upon creditors and servicers involved in consumer financing
applicable to the origination and servicing of the
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Receivables. These laws and regulations include the Truth-in-Lending Act, the
Equal Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit
Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices
Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B
and Z, the Federal Trade Commission Credit Practices Rule, state unfair and
deceptive trade practice laws, state adaptations of the National Consumer Act
and of the Uniform Consumer Credit Code and state motor and recreational vehicle
retail installment sales acts, retail installment sales acts, and other similar
laws. Also, state laws may impose finance charge ceilings and other restrictions
on consumer credit transactions and require contract disclosures in addition to
those required under Federal law. These requirements impose specific statutory
liabilities upon creditors who fail to comply with their provisions. In some
cases, this liability could affect the ability of an assignee such as the
Trustee to enforce consumer finance contracts such as the Receivables.
The so-called "Holder-in-Due-Course-Rule" of the Federal Trade Commission
(the "FTC Rule"), has the effect of subjecting any assignee of the seller in a
consumer credit transaction to all claims and defenses which the obligor in the
credit sale 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. The FTC Rule is generally
duplicated by the Uniform Consumer Credit Code, other state statutes or the
common law in certain states. Most of the Receivables will be subject to the
requirements of the FTC Rule. Accordingly, NationsCredit Commercial, as assignee
of the Dealers, and the Trust, as indirect assignee of NationsCredit Commercial
and as holder of the Receivables, will be subject to any claims or defenses that
the Obligor who purchased the related financed Boat or RV may assert against the
Dealer who sold such financed Boat or RV.
Courts have applied general equitable principles to secured parties
pursuing repossession or litigation involving deficiency balances. These
equitable principles may have the effect of relieving an obligor from some or
all the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies of
secured parties under the UCC and related laws violate the due process
protections of the 14th Amendment to the Constitution of the United States.
Courts have generally either upheld the notice provisions of the UCC and related
laws as reasonable or have found that the creditor's repossession and resale do
not involve sufficient state action to afford constitutional protection to
consumers.
NationsCredit Commercial will represent and warrant that each Receivable
complies with all requirements of law in all material respects. Accordingly, if
an Obligor has a claim against the Trustee for violation of any law and such
claim materially and adversely affects the Trustee's interest in a Receivable,
such violation would constitute a breach of warranty under the related Agreement
and would create an obligation of NationsCredit Commercial to repurchase the
Receivable unless the breach were cured. In the event of such a material adverse
breach of warranty, the only recourse of a Trust against NationsCredit
Commercial would be to require NationsCredit Commercial to repurchase each
Receivable involved. See "The Certificates -- Sale and Assignment of
Receivables."
OTHER MATTERS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including Federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a creditor 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
creditor from repossessing a boat or recreational vehicle and, as a part of the
rehabilitation plan, reduce the amount of the secured indebtedness to the market
value of the boat or recreational vehicle at the time of bankruptcy (as
determined by the court), leaving the party providing financing as a general
unsecured creditor for the remainder of the indebtedness. A bankruptcy court may
also reduce the monthly payments due under an installment sale contract or
change the rate of interest and time of repayment of the indebtedness.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material Federal income tax consequences
of the purchase, ownership, and disposition of Certificates. This summary is
based upon laws, regulations, rulings, and decisions currently in effect, all of
which are subject to change. The discussion does not deal with all Federal tax
consequences applicable to all categories of investors, some of which may be
subject to special rules. In addition, this summary is generally limited to
investors who will hold the Certificates as "capital assets" (generally,
property held for investment) within the meaning of Section 1221 of the Internal
Revenue Code of 1986, as amended (the "Code"). Prospective investors should note
that no rulings have been or will be sought from the Internal Revenue Service
(the "IRS") with respect to any of the Federal income tax consequences discussed
below, and no assurance can be given that the IRS will not take contrary
positions. However, Special Federal Tax Counsel (as defined below) is of the
opinion that the statements in this Prospectus under the headings "Prospectus
Summary -- Tax Status" and "Certain Federal Income Tax Consequences," accurately
describe the material federal income tax consequences generally applicable to
investors.
BECAUSE TAX CONSEQUENCES MAY VARY BASED ON THE STATUS OR TAX ATTRIBUTES OF
THE CERTIFICATE OWNER, INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISERS TO
DETERMINE THE FEDERAL, STATE, LOCAL, AND FOREIGN TAX CONSEQUENCES OF THE
PURCHASE, OWNERSHIP, AND DISPOSITION OF THE CERTIFICATES RESULTING FROM
INDIVIDUAL CHARACTERISTICS OR CIRCUMSTANCES.
TAX STATUS OF THE TRUST; SCOPE OF TAX OPINION
In the opinion of Stroock & Stroock & Lavan LLP, special federal tax
counsel to the Depositor ("Special Federal Tax Counsel"), the Trust will not be
classified as an association taxable as a corporation for Federal income tax
purposes, but will be classified as a grantor trust, and each Certificate Owner
will be subject to Federal income taxation as if it owned directly its interest
in each asset owned by the Trust and paid directly its share of reasonable
expenses paid by the Trust.
TREATMENT OF CERTIFICATE OWNERS' INTEREST IN TRUST ASSETS
Each Certificate Owner could be considered to own either (i) an undivided
interest in a single debt obligation held by the Trust and having a principal
amount equal to the total stated principal amount of the Receivables and an
interest rate equal to the Pass-Through Rate, or (ii) an interest in each of the
Receivables and in the other assets of the Trust. The Agreement will express the
intent of the Depositor to cause the Trust to purchase the Receivables (other
than the Retained Yield (as defined below)) and the Depositor, the
Certificateholders, and each Certificate Owner, by accepting a beneficial
interest in a Certificate, will agree to treat the Certificates as ownership
interests in the Receivables.
Treatment as Debt Obligation. If a Certificate Owner were considered to own
an undivided interest in a single debt obligation, rather than reporting its
share of the interest accrued on each Receivable it would, in general, be
required to include in income interest accrued or received on the principal
amount of its Certificates at the Pass-Through Rate in accordance with its usual
method of accounting.
The Certificates would be subject to the original issue discount ("OID")
rules, generally in the manner discussed below. However, in determining whether
such OID is de minimis, the weighted average life of the Certificates would be
determined using a reasonable assumption regarding anticipated prepayments (a
"Prepayment Assumption"). OID includible in income for any accrual period
(generally, the period between payment dates) would generally be calculated
using a Prepayment Assumption and an anticipated yield established as of the
date of initial sale of the Certificates, and would increase or decrease to
reflect prepayments at a faster or slower rate than anticipated. The
Certificates would also be subject to the market discount provisions of the
Code, to the extent that a Certificate Owner purchased such Certificates at a
discount from the initial issue price (as adjusted to reflect prior accruals of
original issue discount).
Income on Receivables. The remainder of the discussion herein assumes and
Special Federal Tax Counsel is of the opinion that a Certificate Owner will be
treated as owning an interest in each Receivable (and the proceeds thereof).
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For Federal income tax purposes, the Depositor will be treated as having
retained a fixed portion of the interest due on each Receivable equal to the
difference between (x) the APR of the Receivable and (y) the sum of the
Pass-Through Rate and the Servicing Fee (the "Retained Yield"). The Retained
Yield will be treated as "stripped coupons" within the meaning of section 1286
of the Code, and the Receivables will be treated as "stripped bonds."
Accordingly, each Certificate Owner will be treated as owning its pro rata
percentage interest of the principal payable on each Receivable (the "Receivable
Principal") and its pro rata percentage interest of the interest payable on each
Receivable minus the Retained Yield (the "Receivable Interest," and as to each
Receivable, the respective Receivable Principal and Receivable Interest referred
to herein as a "Stripped Receivable"). Accordingly, each Certificate Owner will
be treated as owning its pro rata percentage interest in the principal of, and
interest payable on, each Stripped Receivable (minus the Retained Yield).
Each Certificate Owner will be required to report on its Federal income tax
return its share of the gross income of the Trust, including interest and
certain other charges accrued on the Stripped Receivables, original issue
discount, investment earnings on amounts held pending distribution, and any gain
upon collection or disposition of the Stripped Receivables. Such income (other
than original issue discount) would be includible in income in accordance with a
Certificate Owner's usual method of accounting. Accordingly, interest would be
includible in a Certificate Owner's gross income at the time it accrues on the
Stripped Receivables, or, in the case of Certificate Owners who are cash basis
taxpayers, when received by the Servicer on behalf of Certificate Owners.
Because (i) interest accrues on the Stripped Receivables over differing monthly
periods and is paid in arrears and (ii) interest collected on a Stripped
Receivable is generally paid to Certificate Owners in the following month, the
amount of interest accruing to or received by the Servicer on behalf of a
Certificate Owner during any month will not equal the interest distributed in
that month. Any amounts received by a Certificate Owner from the Surety Bond or
the Reserve Account will be treated, for Federal income tax purposes, as having
the same characteristics as the payments they replace.
A Certificate Owner will be entitled to deduct, consistent with its method
of accounting, its pro rata share of reasonable servicing fees and other fees
paid or incurred by the Trust as provided in Section 162 or 212 of the Code. If
a Certificate Owner is an individual, estate or trust, the deduction for such
holder's share of such fees will be allowed only to the extent that all of such
holder's miscellaneous itemized deductions, including such holder's share of
such fees, exceed 2% of such holder's adjusted gross income. In addition, in the
case of Certificate Owners who are individuals, certain otherwise allowable
itemized deductions will be reduced, but not by more than 80%, by an amount
equal to 3% of such holder's adjusted gross income in excess of a statutorily
defined threshold. The Servicer will not report to Certificate Owners the amount
of income or deductions attributable to interest earned on collections (which is
includible in gross income, but deduction of which is subject to the foregoing
limitations) and, accordingly, such a holder will not have sufficient
information from the report itself to accurately reflect the holder's net
taxable income.
For administrative convenience, the Servicer intends to report information
with respect to the Certificates on an aggregate basis (as though all of the
Stripped Receivables were a single obligation), rather than on an asset-by-asset
basis. The amount and, in some instances, character, of the income reported to a
Certificate Owner may differ under this method for a particular period from that
which would be reported if income were reported on a precise asset-by-asset
basis. Accordingly, the IRS could require that a Certificate Owner calculate its
income either (i) on an asset-by-asset basis, accounting separately for each
Receivable or (ii) aggregating all Stripped Receivables under the aggregation
rule described below. See Original Issue Discount.
The remainder of the disclosure generally describes the Code provisions
governing reporting of income on the Stripped Receivables on a separate basis.
DISCOUNT AND PREMIUM
In determining whether a Certificate Owner has purchased a Receivable with
OID or market discount, a portion of the purchase price of a Certificate should
be allocated to the Certificate Owner's undivided interest in accrued but unpaid
interest and to amounts collected at the time of purchase but not distributed.
As a
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result, the portion of the purchase price allocable to a Certificate Owner's
undivided interest in the Stripped Receivables (the "Purchase Price") will be
decreased and the potential OID on the Receivables could be increased.
Original Issue Discount. Because the Stripped Receivables represent
stripped bonds, Stripped Receivables will be subject to the OID rules of the
Code. Under Treasury Regulations issued under Section 1286 of the Code (the
"Section 1286 Regulations"), it appears that the portion of the interest on each
Stripped Receivable payable to the Certificate Owners may be treated as
"qualified stated interest." As a result, the amount of OID on a Stripped
Receivable (or Stripped Receivables) will equal the amount by which the Purchase
Price is less than the portion of the remaining principal balance of the
Stripped Receivable (or Stripped Receivables) allocable to the interest
acquired.
The Underwriters will calculate OID, if any, on all of the Stripped
Receivables on an aggregate basis and without the use of a prepayment
assumption. Regulations issued under the OID provisions of the Code (the "OID
Regulations"), suggest that all payments on each Stripped Receivable allocable
to the Certificates may be aggregated in determining whether each Stripped
Receivable will be treated as having OID. In addition, under recently passed
legislation the use of a prepayment assumption will be required in computing
OID. If the Servicer were to require that OID be computed on a Stripped
Receivable-by-Stripped Receivable basis, the character and timing of a
Certificate Owner's income could be adversely affected. Because under the
stripped bond rules, each sale of a Certificate results in a recalculation of
OID, a Certificate Owner will not be subject to the market discount provisions
of the Code with respect to Stripped Receivables.
The tax treatment of a Stripped Receivable (or the Stripped Receivables in
the aggregate) will depend upon whether the amount of OID on the Stripped
Receivable or Stripped Receivables in the aggregate is less than a statutorily
defined de minimis amount. In general, under the Section 1286 Regulations the
amount of OID on a Stripped Receivable (or Receivables in the aggregate) will be
de minimis if it is less than 1/4 of one percent for each full year of weighted
average maturity remaining after the purchase date until the maturity of the
Stripped Receivable (or Receivables in the aggregate) (probably taking into
account expected prepayments). If the amount of OID is de minimis under this
rule, a Stripped Receivable (or Receivables in the aggregate) would not be
treated as having OID. The actual amount of discount on a Stripped Receivable
would be includible in income as principal payments are received on the Stripped
Receivable, in the proportion that each principal payment bears to the total
principal amount of the Stripped Receivable.
If the OID on a Stripped Receivable (or Receivables in the aggregate) is
not treated as being de minimis, in addition to the amounts described above, a
Certificate Owner will be required to include in income any OID as it accrues on
a daily basis, regardless of when cash payments are received, using a method
reflecting a constant yield to maturity on the Stripped Receivable (or
Receivables in the aggregate). Accrued OID would increase a Certificate Owner's
tax basis in the Certificate (and the applicable Stripped Receivables).
Distributions of principal and other items attributable to accrued OID would
reduce a Certificate Owner's tax basis. Application of the OID rules,
particularly if Stripped Receivables are not aggregated, would be complex and
could significantly affect the timing of inclusion of income on a Certificate.
The Underwriters intend to account for OID, if any, reportable by
Certificateholders by reference to the price paid for a Certificate by an
initial purchaser, although the amount of OID will differ for subsequent
purchasers. Such subsequent purchasers should consult their tax advisors
regarding the proper calculation of OID on the interest in the Stripped
Receivables represented by the Certificates.
Premium. In the event that a Stripped Receivable is treated as purchased at
a premium (i.e., its Purchase Price exceeds the portion of the remaining
principal balance of such Receivable allocable to the Certificate Owner), such
premium will be amortizable by the Certificate Owner as an offset to interest
income (with a corresponding reduction in the Certificate Owner's basis) under a
constant yield method over the term of the Stripped Receivable if an election
under Section 171 of the Code is made with respect to the interests in the
Stripped Receivables represented by the Certificates or was previously in
effect. Any such election will also apply to all debt instruments held by the
Certificate Owner during the year in which the election is made and all debt
instruments acquired thereafter.
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RULE OF 78'S RECEIVABLES
The annual statement regularly furnished to Certificateholders for Federal
income tax purposes will include information based on the actuarial method of
accounting for interest and principal on certain of the Stripped Receivables,
and for a portion of the amount of the fees paid to the Servicer and others.
Certificate Owners should generally be permitted to account for interest on such
Stripped Receivables using the actuarial method. However, these Stripped
Receivables provide that, upon a prepayment in full, the amount payable by the
Obligor will be determined under the Rule of 78's (the "Rule of 78's
Receivables"). Prospective investors should consult their tax advisors as to
whether they may be required or permitted to use the Rule of 78's method to
account for interest on the Rule of 78's Receivables. A Certificateholder will
be furnished information for Federal income tax purposes enabling him to report
interest on the Stripped Receivables under the Rule of 78's method of accounting
only upon written request to the Trustee, and payment of the actual costs of
producing the same.
If a Rule of 78's Receivable is prepaid, any amount received by the Trust
upon prepayment in excess of the account balance using the actuarial method
would constitute income to a Certificate Owner who had reported income with
respect to such Rule of 78's Receivable on the actuarial method, and an amount
equal to such excess will be paid to the Servicer and will be deductible only to
the extent described above.
SALE OF A CERTIFICATE
If a Certificate is sold, gain or loss will be recognized equal to the
difference between the amount realized on the sale and the Certificate Owner's
adjusted basis in the Stripped Receivables and any other assets held by the
Trust. A Certificate Owner's adjusted basis will equal the Certificate Owner's
cost for the 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 (or accrued OID) previously received on
the Stripped Receivables. Any gain or loss not attributable to accrued interest
will be capital gain or loss if the Certificate was held as a capital asset.
FOREIGN CERTIFICATE OWNERS
Interest attributable to Stripped Receivables which is payable to a foreign
Certificate Owner will generally not be subject to the 30% withholding tax
generally imposed with respect to such payments, provided that such Certificate
Owner is not engaged in a trade or business in the United States and that such
Certificate Owner fulfills certain certification requirements. Under such
certification requirements, the Certificate Owner must certify, under penalties
of perjury, that it is not a "United States person" and that it is the
beneficial owner of the Certificates, and must provide its name and address. For
this purpose, "United States person" means a citizen or resident of the United
States, a corporation, partnership, or other entity created or organized in or
under the laws of the United States or any political subdivision thereof, or an
estate or trust treated as a U.S. person under Code Section 7701.
BACKUP WITHHOLDING
In general, if the Certificate Owner fails to comply with certain reporting
procedures and is not an exempt recipient under applicable provisions of the
Code, payments made on the Certificates and proceeds from the sale of
Certificates will be subject to a "backup" withholding tax of 31%.
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ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code impose certain requirements on employee benefit plans and certain
other retirement plans and arrangements, including individual retirement
accounts and annuities, Keogh plans and collective investment funds and separate
accounts in which such plans, accounts or arrangements are invested that are
subject to ERISA and the Code (all of which are hereinafter referred to as a
"Plan") and on persons who are fiduciaries with respect to such Plans. Moreover,
based on the reasoning of the United States Supreme Court in John Hancock Life
Ins. Co. v. Harris Trust and Sav. Bank, 114 S. Ct. 517 (1993), an insurance
company's general account may be deemed to include assets of the Plans investing
in the general account (e.g., through the purchase of an annuity contract), and
the insurance company might be treated as a fiduciary with respect to such plans
by virtue of such investment. In accordance with ERISA's general fiduciary
standards, before investing in a Certificate, a Plan fiduciary should determine
whether such an investment is permitted under the governing Plan instruments and
is appropriate for the Plan in view of its overall investment policy and the
composition and diversification of its portfolio. Other provisions of ERISA and
the Code prohibit certain transactions involving the assets of a Plan and
persons who have certain specified relationships to the Plan ("parties in
interest" within the meaning of ERISA or "disqualified persons" within the
meaning of the Code). Thus, a Plan fiduciary considering an investment in
Certificates should also consider whether such an investment might constitute or
give rise to a prohibited transaction under ERISA or the Code.
An investment in Certificates by a Plan might result in the assets of the
Trust being deemed to constitute Plan assets, which in turn might mean that
certain aspects of such investment, including the operation of the Trust, might
be prohibited transactions under ERISA and the Code. There may also be an
improper delegation of the responsibility to manage Plan assets if Plans that
purchase the Certificates are deemed to own an interest in the underlying assets
of the Trust. Neither ERISA nor the Code defines the term "plan assets." Under
Section 2510.3-101 of the United States Department of Labor ("DOL") regulations
(the "Regulation"), a Plan's assets may include an interest in the underlying
assets of an entity (such as a trust) for certain purposes, including the
prohibited transaction provisions of ERISA and the Code, if the Plan acquires an
"equity interest" in such entity.
EXEMPTION FOR CERTIFICATES
The DOL has issued an individual exemption, Prohibited Transaction
Exemption 93-31, to NationsBank Corporation and its affiliates (the
"Exemption"). Pursuant to the Exemption a Plan may purchase, hold and transfer
the Certificates. The Exemption generally exempts from the application of the
prohibited transaction provisions of Section 406 of ERISA and the excise taxes
imposed on such prohibited transactions pursuant to Section 4975(a) and (b) of
the Code and Section 502(i) of ERISA certain transactions relating to the
initial purchase, holding and subsequent resale by Plans of certificates in
pass-through trusts that consist of certain receivables, loans and other
obligations that meet the conditions and requirements set forth in the
Exemption. The receivables covered by the Exemption include fixed rate simple
interest retail marine installment sale contracts and retail marine installment
loans such as the Receivables. The Exemption will apply to the acquisition,
holding and resale of the Certificates by a Plan, provided that specified
conditions (certain of which are described below) are met. The Depositor
believes that the Exemption will apply to the acquisition and holding of the
Certificates by a Plan and that all conditions of the Exemption other than those
within the control of the investors have been or will be met.
The Exemption sets forth six general conditions that must be satisfied for
a transaction involving the acquisition of the Certificates by a Plan to be
eligible for the exemptive relief thereunder:
(1) the acquisition of the Certificates by a Plan is on terms
(including the price for the 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 Certificates acquired by
a Plan are not subordinated to the rights and interests evidenced by other
certificates of the Trust;
68
<PAGE> 72
(3) the 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 of S&P, Moody's, Duff & Phelps or Fitch Investors
Service, L.P.;
(4) the Trustee is not an affiliate of any other member of the
"Restricted Group," which consists of the Underwriter, the Depositor, the
Servicer, the Trustee, the Surety Bond Issuer and any Obligor with respect
to the Receivables included in the Trust constituting more than 5% of the
aggregate unamortized principal balance of the assets of the Trust as of
the date of initial issuance of the Certificates, and any affiliate of such
parties;
(5) the sum of all payments made to and retained by the Underwriter in
connection with the distribution or placement of the Certificates
represents not more than reasonable compensation for underwriting or
placing the Certificates. The sum of all payments made to and retained by
the Depositor pursuant to the sale of the Receivables to the Trust
represents not more than the fair market value of such Receivables. The sum
of all payments made to and retained by the Servicer represents not more
than reasonable compensation for the Servicer's services under the
Agreement and reimbursement of the Servicer's reasonable expenses in
connection therewith; and
(6) the Plan investing in the Certificates must be an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the Commission
under the Securities Act.
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 S&P,
Moody's, Duff & Phelps or Fitch Investors Service, L.P. for at least one
year prior to the Plan's acquisition of the 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 the Certificates.
If the general conditions of the Exemption are satisfied, the Exemption may
provide relief from the restrictions imposed by Sections 406(a) and 407(a) of
ERISA as well as the excise taxes imposed by Sections 4975(a) and (b) of the
Code by reason of Sections 4975(c)(1)(A) through (D) of the Code, in connection
with the direct or indirect sale, exchange, transfer or holding of the
Certificates by a Plan. However, no exemption is provided from the restrictions
of Sections 406(a)(1)(E), 406(a)(2) and 407 of ERISA for the acquisition or
holding of a 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 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 the Certificates
in the initial issuance of the Certificates between the Depositor or Underwriter
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 Certificates is (a) an Obligor with respect to 5% or less of the
fair market value of the Receivables or (b) an affiliate of such person.
The Exemption also applies to transactions in connection with the
servicing, management and operation of the Trust, provided that, in addition to
the general requirements described above, (a) such transactions are carried out
in accordance with the terms of a binding pooling and servicing agreement and
(b) the pooling and servicing agreement is provided to, or described in all
material respects in the prospectus provided to, investing Plans before their
purchase of the 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 "The Certificates."
69
<PAGE> 73
The Exemption also may provide relief from the restrictions imposed by
Sections 406(a) and 407(a) of ERISA and the taxes imposed by Sections
4975(c)(1)(A) through (D) of the Code if such restrictions are deemed to
otherwise apply merely because a person is deemed to be a party in interest or a
disqualified person with respect to an investing Plan by virtue of providing
services to a Plan (or by virtue of having certain specified relationships to
such a person) solely as a result of such Plan's ownership of the Certificates.
Any Plan fiduciary considering whether to purchase a Certificate on behalf
of a Plan should consult with experienced legal counsel regarding the
applicability of the Exemption and other applicable issues and whether the
Certificates are an appropriate investment for a Plan under ERISA and the Code.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
(the "Underwriting Agreement") dated October , 1997 between the Depositor and
the Underwriters, the Depositor has agreed to sell to the Underwriters, and the
Underwriters have agreed to purchase, the principal amount of the Certificates
set forth opposite its name:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
MARINE CERTIFICATES
-------------------
<S> <C>
NationsBanc Montgomery Securities, Inc. .................... $ 60,401,859.96
Salomon Brothers Inc........................................ $ 60,401,859.96
Total............................................. $120,803,719.92
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
RV CERTIFICATES
-------------------
<S> <C>
NationsBanc Montgomery Securities, Inc. .................... $24,193,267.62
Salomon Brothers Inc........................................ $24,193,267.62
Total............................................. $48,386,535.24
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all the Certificates offered
hereby if any Certificates are purchased. The Depositor has been advised by the
Underwriters that the Underwriters propose initially to offer the Certificates
to the public at the public offering price set forth on the cover page of this
Prospectus, and to certain dealers at such price less a concession not in excess
of % of the principal amount of the Certificates. The Underwriters may
allow and such dealers may reallow a concession not in excess of % of such
principal amount. After the initial public offering, the public offering price
and such concessions may be changed.
The Underwriting Agreement provides that the Depositor will indemnify the
Underwriters against certain liabilities, including liabilities under applicable
securities laws, or contribute to payments the Underwriters may be required to
make in respect thereof.
NationsBanc Montgomery Securities, Inc. ("NMSI"), one of the Underwriters,
is an affiliate of the Depositor. Under Section 2720 of the National Association
of Securities Dealers Conduct Rules ("Section 2720"), when a National
Association of Securities Dealers, Inc. (the "NASD") member, such as NMSI,
participates in the distribution of an affiliated company's securities, the
offering must be conducted in accordance with the applicable provisions of
Section 2720. The Depositor is considered to be an "affiliate" (as such term is
defined in Section 2720) of NMSI. The offer and sale of any Certificates by NMSI
will comply with the requirements of Section 2720 regarding the underwriting of
securities of affiliates. Pursuant to such compliance, it is contemplated that
only securities rated "investment grade" by a rating service acceptable to the
NASD will be offered hereby. In addition, such offers and sales will comply with
any restrictions as may be imposed on NMSI by the Federal Reserve Board. Under
Section 2720, no NASD member participating in offers and sales of the
Certificates may execute a transaction in the Certificates in a discretionary
account without the specific prior written approval of the member's customer.
70
<PAGE> 74
While NMSI is an affiliate of the Depositor, NMSI is a registered
broker/dealer. Any obligations of NMSI are the sole responsibility of NMSI and
do not create any obligation or guarantee on the part of any affiliate of NMSI.
EXPERTS
The financial statements of Capital Markets Assurance Corporation as of
December 31, 1996 and 1995 and for each of the years in the three-year period
ended December 31, 1996 are included herein beginning on page F-2 and have been
audited by KPMG Peat Marwick LLP independent certified public accountants, as
set forth in their report thereon and are included in reliance upon the
authority of such firm as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed upon for
the Depositor and the Underwriters by Stroock & Stroock & Lavan LLP, Special
Counsel of the Depositor and the Underwriters. Certain legal matters relating to
the Federal tax consequences of the issuance and ownership of the Certificates
will be passed upon by Stroock & Stroock & Lavan LLP.
71
<PAGE> 75
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
accredited investor......................................... 68
APR......................................................... 16
Agreement................................................... 1
Avoided Payment............................................. 49
Boats....................................................... 3
Business Day................................................ 49
CapMAC...................................................... 7
Cede........................................................ 38
Certificates................................................ 1
Certificate Account......................................... 13
Certificate Balance......................................... 5
Certificateholders.......................................... 1
Certificate Owner........................................... 2
Closing Date................................................ 3
Code........................................................ 63
Collateral Agent............................................ 1
Collection Period........................................... 38
Contract Portfolio.......................................... 18
contracts................................................... 14
Commission.................................................. 2
Cutoff Date................................................. 1
Dealer...................................................... 11
Dealer Agreements........................................... 13
Defaulted Marine Receivable................................. 48
Defaulted Receivable........................................ 47
Defaulted RV Receivable..................................... 48
Definitive Certificates..................................... 39
delinquency cure............................................ 17
Depositor................................................... 1
Depository.................................................. 38
Determination Date.......................................... 35
Direct Participants......................................... 38
disqualified persons........................................ 67
Distribution Date........................................... 1
DOL......................................................... 67
DTC......................................................... 2
Duff & Phelps............................................... 36
ERISA....................................................... 8
Events of Default........................................... 53
Exchange Act................................................ 2
Excluded Plan............................................... 68
Exemption................................................... 67
Final Order................................................. 49
FTC Rule.................................................... 62
Holders..................................................... 39
Holdings.................................................... 36
Indirect Participants....................................... 38
Initial Marine Pool Balance................................. 1
Initial Pool Balance........................................ 1
</TABLE>
72
<PAGE> 76
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Initial RV Pool Balance..................................... 1
Insolvency Laws............................................. 35
Insolvency Proceeding....................................... 49
Insurance Agreement......................................... 6
IRS......................................................... 63
Marine Certificate Account.................................. 13
Marine Certificate Balance.................................. 5
Marine Certificate Factor................................... 35
Marine Certificateholders................................... 1
Marine Certificates......................................... 1
Marine Contract Portfolio................................... 18
Marine Cross-Support Amount................................. 48
Marine Distributions........................................ 45
Marine Final Scheduled Distribution Date.................... 1
Marine Contract Group....................................... 1
marine contracts............................................ 14
Marine Pool Balance......................................... 1
Marine Receivable........................................... 1
Marine Reserve Account...................................... 5
Marine Contracts............................................ 14
Monthly Interest Payment.................................... 4
Monthly Marine Interest Payment............................. 4
Monthly Marine Principal Payment............................ 4
Monthly Marine Servicing Fee................................ 44
Monthly RV Interest Payment................................. 4
Monthly RV Principal Payment................................ 5
Monthly RV Servicing Fee.................................... 45
Monthly Principal Payment................................... 5
Moody's..................................................... 8
NASD........................................................ 70
NMSI........................................................ 70
NationsCredit............................................... 3
NationsCredit Commercial.................................... 3
Net Credit Loss Ratio....................................... 54
Obligor..................................................... 11
OID......................................................... 64
OID Regulations............................................. 65
Participants................................................ 38
parties in interest......................................... 67
Paying Agent................................................ 39
Plan........................................................ 67
Pool Balance................................................ 1
Preference Event............................................ 49
Prepayment Assumption....................................... 64
Purchase Amount............................................. 41
Purchase Price.............................................. 65
Rating Agencies............................................. 8
Rating Agency............................................... 8
Receipt..................................................... 49
Received.................................................... 49
Receivable Interest......................................... 64
</TABLE>
73
<PAGE> 77
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Receivable Principal........................................ 64
Receivables................................................. 1
Record Date................................................. 1
recreational vehicle contracts.............................. 14
Regulation.................................................. 67
Restricted Group............................................ 68
Retained Yield.............................................. 64
Rule of 78's Receivables.................................... 66
Rules....................................................... 39
RV Certificate Account...................................... 13
RV Certificate Balance...................................... 5
RV Certificate Factor....................................... 35
RV Certificateholders....................................... 1
RV Certificates............................................. 1
RV Contract Portfolio....................................... 18
RV Cross-Support Amount..................................... 48
RV Distribution............................................. 44
RV Final Scheduled Distribution Date........................ 1
RV Contract Group........................................... 1
RV Pool Balance............................................. 1
RV Receivable............................................... 1
RV Reserve Account.......................................... 6
RVs......................................................... 3
S&P......................................................... 8
Section 2720................................................ 70
Securities Act.............................................. 2
Section 1286 Regulations.................................... 65
Servicer.................................................... 1
Servicer Transfer........................................... 53
Servicing Fee Rate.......................................... 5
Servicing Standards......................................... 54
Ship Mortgage Act........................................... 20
Special Federal Tax Counsel................................. 63
Specified Marine Reserve Account Requirement................ 6
Stripped Receivable......................................... 64
Specified RV Reserve Account Requirement.................... 7
Surety Bond................................................. 1
Surety Bond Issuer.......................................... 1
Surety Bond Issuer Default.................................. 49
Trust....................................................... 1
Trustee..................................................... 1
UCC......................................................... 10
Underwriter(s).............................................. 10
Underwriting Agreement...................................... 69
United States person........................................ 67
</TABLE>
74
<PAGE> 78
[KPMG PEAT MARWICK LLP LETTERHEAD]
Independent Auditors' Report
The Board of Directors
Capital Markets Assurance Corporation:
We have audited the accompanying balance sheets of Capital Markets Assurance
Corporation as of December 31, 1996 and 1995 and the related statements of
income, stockholder's equity and cash flows for each of the years in the
three-year period ended December 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Capital Markets Assurance
Corporation as of December 31, 1996 and 1995 and the results of its operations
and its cash flows for each of the years in the three-year period ended
December 31, 1996 in conformity with generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
January 29, 1997
F-1
<PAGE> 79
CAPITAL MARKETS ASSURANCE CORPORATION
BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
December 31 December 31
1996 1995
------------ -----------
<S> <C> <C>
INVESTMENTS:
Bonds at fair value (amortized cost $294,861 at December 31, 1996
and $210,651 at December 31, 1995) $ 297,893 215,706
Short-term investments (at amortized cost which approximates
fair value) 16,810 68,646
------------ -----------
Total investments 314,703 284,352
------------ -----------
Cash 371 344
Accrued investment income 3,807 3,136
Deferred acquisition costs 45,380 35,162
Premiums receivable 5,141 3,540
Prepaid reinsurance 18,489 13,171
Other assets 6,424 3,428
------------ -----------
TOTAL ASSETS $ 394,315 343,133
============ ===========
</TABLE>
LIABILITIES AND STOCKHOLDER'S EQUITY
<TABLE>
<S> <C> <C>
LIABILITIES:
Unearned premiums $ 68,262 45,767
Reserve for losses and loss adjustment expenses 10,985 6,548
Ceded reinsurance 1,738 2,469
Accounts payable and other accrued expenses 8,019 10,844
Current income taxes 679 136
Deferred income taxes 15,139 11,303
------------ -----------
Total liabilities 104,822 77,067
------------ -----------
STOCKHOLDER'S EQUITY:
Common stock - $1.00 par value per share; 15,000,000 shares are
authorized, issued and outstanding at December 31, 1996 15,000 15,000
and 1995
Additional paid-in capital 208,475 205,808
Unrealized appreciation on investments, net of tax 1,970 3,286
Retained earnings 64,048 41,972
------------ -----------
Total stockholder's equity 289,493 266,066
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 394,315 343,133
============ ===========
</TABLE>
See accompanying notes to financial statements.
F-2
<PAGE> 80
CAPITAL MARKETS ASSURANCE CORPORATION
STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, 1996 December 31, 1995 December 31, 1994
----------------- ----------------- -----------------
<S> <C> <C> <C>
REVENUES:
Direct premiums written $ 71,752 56,541 43,598
Assumed premiums written 1,086 935 1,064
Ceded premiums written (15,104) (15,992) (11,069)
----------- ----------- ------------
Net premiums written 57,734 41,484 33,593
Increase in unearned premiums (17,177) (12,242) (10,490)
----------- ----------- ------------
Net premiums earned 40,557 29,242 23,103
Net investment income 16,992 11,953 10,072
Net realized capital gains 236 1,301 92
Other income 146 2,273 120
----------- ----------- ------------
Total revenues 57,931 44,769 33,387
----------- ----------- ------------
EXPENSES:
Losses and loss adjustment expenses 4,815 3,141 1,429
Underwriting and operating expenses 14,613 13,808 11,833
Policy acquisition costs 7,824 7,203 4,529
----------- ----------- ------------
Total expenses 27,252 24,152 17,791
----------- ----------- ------------
Income before income taxes 30,679 20,617 15,596
----------- ----------- ------------
INCOME TAXES:
Current income tax 5,235 2,113 865
Deferred income tax 3,368 3,102 2,843
----------- ----------- ------------
Total income taxes 8,603 5,215 3,708
----------- ----------- ------------
Net Income $ 22,076 15,402 11,888
=========== =========== ============
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE> 81
CAPITAL MARKETS ASSURANCE CORPORATION
STATEMENTS OF STOCKHOLDER'S EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
1996 1995 1994
----------- ------------ ------------
<S> <C> <C> <C>
COMMON STOCK:
Balance at beginning of year $ 15,000 15,000 15,000
----------- -------- --------
Balance at end of year 15,000 15,000 15,000
----------- -------- --------
ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of year 205,808 146,808 146,808
Capital contribution 2,667 59,000 -
----------- -------- --------
Balance at end of year 208,475 205,808 146,808
----------- -------- --------
UNREALIZED APPRECIATION (DEPRECIATION)
ON INVESTMENTS, NET OF TAX:
Balance at beginning of year 3,286 (5,499) 3,600
Unrealized appreciation (depreciation)
on investments (1,316) 8,785 (9,099)
----------- -------- --------
Balance at end of year 1,970 3,286 (5,499)
----------- -------- --------
RETAINED EARNINGS:
Balance at beginning of year 41,972 26,570 14,682
Net income 22,076 15,402 11,888
----------- -------- --------
Balance at end of year 64,048 41,972 26,570
----------- -------- --------
TOTAL STOCKHOLDER'S EQUITY $ 289,493 266,066 182,879
=========== ======== ========
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE> 82
CAPITAL MARKETS ASSURANCE CORPORATION
STATEMENTS OF CASH FLOWS
(DOLLAR IN THOUSANDS)
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, 1996 December 31, 1995 December 31, 1994
----------------- ----------------- -----------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 22,076 15,402 11,888
----------- ----------- -----------
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED (USED) BY OPERATING ACTIVITIES:
Reserve for losses and loss adjustment expenses 4,437 1,357 1,429
Unearned premiums, net 22,496 19,862 15,843
Deferred acquisition costs (10,218) (10,302) (9,611)
Premiums receivable (1,601) (161) (2,103)
Accrued investment income (671) (390) (848)
Income taxes payable 3,911 3,621 2,611
Net realized capital gains (236) (1,301) (92)
Accounts payable and other accrued expenses 1,020 472 3,726
Prepaid reinsurance (5,318) (7,620) (5,352)
Other, net (3,396) 992 689
----------- ----------- -----------
Total adjustments 10,424 6,530 6,292
----------- ----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 32,500 21,932 18,180
=========== =========== ===========
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments (199,989) (158,830) (77,980)
Proceeds from sales of investments 57,210 49,354 39,967
Proceeds from maturities of investments 110,306 28,803 19,665
----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (32,473) (80,673) (18,348)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contribution - 59,000 -
----------- ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES - 59,000 -
----------- ----------- -----------
Net increase (decrease) in cash 27 259 (168)
Cash balance at beginning of year 344 85 253
----------- ----------- -----------
CASH BALANCE AT END OF YEAR $ 371 344 85
----------- ----------- -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Income taxes paid $ 4,525 1,450 1,063
=========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE> 83
CAPITAL MARKETS ASSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
1) BACKGROUND
Capital Markets Assurance Corporation ("CapMAC" or "the Company") is a
New York-domiciled monoline stock insurance company which engages only
in the business of financial guarantee and surety insurance. CapMAC
is a wholly owned subsidiary of CapMAC Holdings Inc. ("Holdings").
CapMAC is licensed in all 50 states in addition to the District of
Columbia, the Commonwealth of Puerto Rico and the territory of Guam.
CapMAC insures structured asset-backed, corporate, municipal and other
financial obligations in the U.S. and international capital markets.
CapMAC also provides financial guarantee reinsurance for structured
asset-backed, corporate, municipal and other financial obligations
written by other major insurance companies.
CapMAC's claims-paying ability is rated "Aaa" by Moody's Investors
Service, Inc. ("Moody's"), "AAA" by Standard & Poor's Ratings Group
("S&P"), "AAA" by Duff & Phelps Credit Rating Co. ("Duff & Phelps"),
and "AAA" by Nippon Investors Service, Inc., a Japanese rating agency.
Such ratings reflect only the views of the respective rating agencies,
are not recommendations to buy, sell or hold securities and are
subject to revision or withdrawal at any time by such rating agencies.
2) SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies used in the preparation of the
accompanying financial statements are as follows:
a) BASIS OF PRESENTATION
The accompanying financial statements are prepared on the
basis of generally accepted accounting principles ("GAAP").
Such accounting principles differ from statutory reporting
practices used by insurance companies in reporting to state
regulatory authorities.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Management believes the most
significant estimates relate to deferred acquisition costs,
reserve for losses and loss adjustment expenses and
disclosures of financial guarantees outstanding. Actual
results could differ from those estimates.
b) INVESTMENTS
As of December 31, 1996 and 1995, all of the Company's
securities have been classified as available- for-sale.
Available-for-sale securities are recorded at fair value.
Fair value is generally based upon quoted market prices.
Unrealized holding gains and losses, net of the related tax
effect, on available-for-sale securities are excluded from
earnings and are reported as a separate component of
stockholder's equity until realized. Transfers of securities
between categories are recorded at fair value at the date of
transfer. A decline in the fair value of any
available-for-sale security below cost that is deemed other
than temporary is charged to earnings resulting in the
establishment of a new cost basis for the security.
F-6
<PAGE> 84
CAPITAL MARKETS ASSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
Short-term investments are those investments having a maturity
of less than one year at purchase date. Short-term
investments are carried at amortized cost which approximates
fair value.
Premiums and discounts are amortized or accreted over the life
of the related security as an adjustment to yield using the
effective interest method. Dividend and interest income are
recognized when earned. Realized gains and losses are
included in earnings and are derived using the FIFO (first-in,
first-out) method for determining the cost of securities sold.
c) PREMIUM REVENUE RECOGNITION
Premiums which are payable monthly to CapMAC are reflected in
income when due, net of amounts payable to reinsurers.
Premiums which are payable quarterly, semi-annually or
annually are reflected in income, net of amounts payable to
reinsurers, on an equal monthly basis over the corresponding
policy term. Premiums that are collected as a single premium
at the inception of the policy and have a term longer than one
year are earned, net of amounts payable to reinsurers, by
allocating premium to each bond maturity based on the
principal amount and earning it straight-line over the term of
each bond maturity. For the years ended December 31, 1996 and
1995, 91% of net premiums earned were attributable to premiums
payable in installments and 9% were attributable to premiums
collected on an up-front basis.
d) DEFERRED ACQUISITION COSTS
Certain costs incurred by CapMAC, which vary with and are
primarily related to the production of new business, are
deferred. These costs include direct and indirect expenses
related to underwriting, marketing and policy issuance, rating
agency fees and premium taxes, net of reinsurance ceding
commissions. The deferred acquisition costs are amortized
over the period in proportion to the related premium earnings.
The actual amount of premium earnings may differ from
projections due to various factors such as renewal or early
termination of insurance contracts or different run-off
patterns of exposure resulting in a corresponding change in
the amortization pattern of the deferred acquisition costs.
e) RESERVE FOR LOSSES AND LOSS ADJUSTMENT EXPENSES
The reserve for losses and loss adjustment expenses consists
of a supplemental loss reserve ("SLR") and a case basis loss
reserve. The SLR is established for expected levels of losses
resulting from credit failures on currently insured issues and
reflects the estimated portion of earned premiums required to
cover those losses.
A case basis loss reserve is established for insured
obligations when, in the judgment of management, a default in
the timely payment of debt service is imminent. For defaults
considered temporary, a case basis loss reserve is established
in an amount equal to the present value of the anticipated
defaulted debt service payments over the expected period of
default. If the default is judged not to be temporary, the
present value of all remaining defaulted debt service payments
is recorded as a case basis loss reserve. Anticipated salvage
recoveries are considered in establishing case basis loss
reserves when such amounts are reasonably estimable. Case
basis loss reserves may be allocated from any SLR outstanding
at the time the case basis reserves are established.
F-7
<PAGE> 85
CAPITAL MARKETS ASSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
Management believes that the current level of reserves is
adequate to cover the ultimate net cost of claims and the
related expenses with respect to financial guarantees issued
by CapMAC. The establishment of the appropriate level of loss
reserves is an inherently uncertain process involving
estimates and subjective judgments by management, and
therefore there can be no assurance that ultimate losses in
CapMAC's insured portfolio will not exceed the current
estimate of loss reserves.
f) DEPRECIATION
Leasehold improvements, furniture, fixtures and electronic
data processing equipment are being amortized or depreciated
over the lease term or useful life, whichever is shorter,
using the straight- line method.
g) INCOME TAXES
Deferred income taxes are provided with respect to temporary
differences between the financial statement and tax basis of
assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse.
The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in the period that includes the
enactment date.
F-8
<PAGE> 86
CAPITAL MARKETS ASSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
3) INSURED PORTFOLIO
At December 31, 1996 and 1995, the principal amount of financial
obligations insured by CapMAC was $24.5 billion and $16.9 billion,
respectively, and net of reinsurance (net principal outstanding), was
$19.7 billion and $12.6 billion, respectively, with a weighted average
life of 6.4 years and 6.0 years, respectively. CapMAC's insured
portfolio was broadly diversified by geographic distribution and type
of insured obligations, with no single insured obligation in excess of
statutory single risk limits, after giving effect to any reinsurance
and collateral, which are a function of CapMAC's statutory qualified
capital (the sum of statutory capital and surplus and mandatory
contingency reserve). At December 31, 1996 and 1995, the statutory
qualified capital was approximately $260 million and $240 million,
respectively.
<TABLE>
<CAPTION>
Net Principal Outstanding
December 31, 1996 December 31, 1995
--------------------- ---------------------
Type of Obligations Insured ($ in millions) Amount % Amount %
-------- ----- -------- -----
<S> <C> <C> <C> <C>
Consumer receivables $ 10,362 52.8 $ 6,959 55.1
Trade and other corporate obligations 8,479 43.1 4,912 38.9
Municipal/government obligations 814 4.1 757 6.0
-------- ----- -------- -----
TOTAL $ 19,655 100.0 $ 12,628 100.0
======== ===== ======== =====
</TABLE>
At December 31, 1996 and 1995, the principal and interest amount of
financial obligations insured by CapMAC was $29.8 billion and $20.3
billion, respectively, and net of reinsurance (net principal and
interest outstanding) was $23.3 billion and $15.1 billion,
respectively. At December 31, 1996, approximately 93% of CapMAC's
insured portfolio was comprised of structured asset-backed
transactions. Under these structures, a pool of assets covering at
least 100% of the principal amount guaranteed under its insurance
contract is sold or pledged to a special purpose bankruptcy remote
entity. CapMAC's primary risk from such insurance contracts is the
impairment of cash flows due to delinquency or loss on the underlying
assets. CapMAC, therefore, evaluates all the factors affecting past
and future asset performance by studying historical data on losses,
delinquencies and recoveries of the underlying assets. Each
transaction is reviewed to ensure that an appropriate legal structure
is used to protect against the bankruptcy risk of the originator of
the assets. Along with the legal structure, an additional level of
first loss protection is also created to protect against losses due to
credit or dilution. This first level of loss protection is usually
available from reserve funds, excess cash flows,
overcollateralization, or recourse to a third party. The level of
first loss protection depends upon the historical losses and dilution
of the underlying assets, but is typically several times the normal
historical loss experience for the underlying type of assets.
During 1995, the Company sold without recourse its interest in
potential cash flows from transactions included in its insured
portfolio and recognized $2,200,000 of income which has been included
in other income in the accompanying financial statements.
The following entities each accounted for, through referrals and
otherwise, 10% or more of total revenues for each of the periods
presented:
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, 1996 December 31, 1995 December 31, 1994
----------------- ----------------- -----------------
% of % of % of
Revenues Revenues Revenues
----------------- ----------------- -----------------
<S> <C> <C> <C>
Citicorp 14.5 15.2 16.3
</TABLE>
F-9
<PAGE> 87
CAPITAL MARKETS ASSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
4) INVESTMENTS
The amortized cost, gross unrealized gains, gross unrealized losses
and estimated fair value for available-for- sale securities by major
security type at December 31, 1996 and 1995 were as follows ($ in
thousands):
<TABLE>
<CAPTION>
December 31, 1996
- -----------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Securities Available-for-sale Cost Gains Losses Value
- ----------------------------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
U.S. Treasury obligations $ 4,059 10 - 4,069
Mortgage-backed securities of
U.S. government instrumentalities
and agencies 109,436 265 1,160 108,541
Obligations of states, municipalities
and political subdivisions 177,811 4,602 555 181,858
Corporate and asset-backed securities 20,365 23 153 20,235
------------ ---------- -------- ---------
TOTAL $ 311,671 4,900 1,868 314,703
============ ========== ======== =========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
- -----------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Securities Available-for-sale Cost Gains Losses Value
- ----------------------------- ------------ ---------- ---------- ---------
<S> <C> <C> <C> <C>
U.S. Treasury obligations $ 4,153 55 - 4,208
Mortgage-backed securities of
U.S. government instrumentalities and
agencies 100,628 313 79 100,862
Obligations of states, municipalities
and political subdivisions 166,010 4,809 82 170,737
Corporate and asset-backed securities
8,506 45 6 8,545
------------ ---------- -------- --------
TOTAL $ 279,297 5,222 167 284,352
============ ========== ======== ========
</TABLE>
F-10
<PAGE> 88
CAPITAL MARKETS ASSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
The amortized cost and estimated fair value of investments in debt
securities at December 31, 1996 by contractual maturity are shown below ($
in thousands):
<TABLE>
<CAPTION>
December 31, 1996
-----------------
Amortized Estimated
Securities Available-for-sale Cost Fair Value
---------- ----------
<S> <C> <C>
Due in one year or less $ 11,627 11,644
Due after one year through five years 31,821 32,815
Due after five years through ten years 76,450 78,200
Due after ten years 82,337 83,503
---------- ---------
Sub-total 202,235 206,162
Mortgage-backed securities 109,436 108,541
---------- ---------
TOTAL $ 311,671 314,703
========== =========
</TABLE>
Actual maturities may differ from contractual maturities because borrowers
may call or prepay obligations with or without call or prepayment penalties.
Proceeds from sales of investment securities were approximately $57.2
million, $49.3 million and $39.9 million in 1996, 1995 and 1994,
respectively. Gross realized capital gains of $772,000, $1,320,000 and
$714,000, and gross realized capital losses of $536,000, $19,000 and
$622,000 were realized on those sales for the years ended December 31, 1996,
1995 and 1994, respectively.
Investments include bonds having a fair value of approximately $3,884,000
and $3,985,000 which are on deposit at December 31, 1996 and 1995,
respectively, with state regulators as required by law.
Investment income is comprised of interest and dividends, net of related
expenses, and is applicable to the following sources:
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
$ in thousands December 31, 1996 December 31, 1995 December 31, 1994
-------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
Bonds $ 15,726 11,105 9,193
Short-term investments 1,534 1,245 484
Mutual funds - (162) 579
Investment expenses (268) (235) (184)
-------- ------- ------
TOTAL $ 16,992 11,953 10,072
======== ======= ======
</TABLE>
F-11
<PAGE> 89
CAPITAL MARKETS ASSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
The change in unrealized appreciation (depreciation) on available-for-sale
securities is included as a separate component of stockholder's equity as
shown below:
<TABLE>
<CAPTION>
Year Ended Year Ended
$ in thousands December 31, 1996 December 31, 1995
-------------- ----------------- -----------------
<S> <C> <C>
Balance at beginning of year $ 3,286 (5,499)
Change in unrealized (depreciation) appreciation (2,024) 13,386
Income tax effect 708 (4,601)
--------- -------
Net change (1,316) 8,785
--------- -------
BALANCE AT END OF YEAR $ 1,970 3,286
========= =======
</TABLE>
No single issuer, except for investments in U.S. Treasury and U.S.
government agency securities, exceeds 2% of stockholder's equity as of
December 31, 1996 and 1995, respectively.
5) Deferred Acquisition Costs
The following table reflects acquisition costs deferred by CapMAC and
amortized in proportion to the related premium earnings:
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
$ in thousands December 31, 1996 December 31, 1995 December 31, 1994
-------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
Balance at beginning of year $ 35,162 24,860 15,249
Additions 18,042 17,505 14,140
Amortization (policy acquisition costs) (7,824) (7,203) (4,529)
------------ -------- --------
BALANCE AT END OF YEAR $ 45,380 35,162 24,860
============ ======== ========
</TABLE>
6) EMPLOYEE BENEFITS
CapMAC has a service agreement with CapMAC Financial Services, Inc. ("CFS").
Under the service agreement, CFS has agreed to provide various services,
including underwriting, reinsurance, marketing, data processing and other
services to CapMAC in connection with the operation of CapMAC's insurance
business. CapMAC pays CFS a fee for providing such services, but not in
excess of CFS's cost for such services. CFS incurred, on behalf of CapMAC,
total compensation expenses, excluding bonuses, of $13,374,000, $13,484,000
and $11,081,000 in 1996, 1995 and 1994, respectively.
The Company, through CFS, maintains an incentive compensation plan for its
employees. The plan is an annual discretionary bonus award. For the years
ended December 31, 1996, 1995 and 1994, the Company had provided
approximately $8,810,000, $7,804,000 and $5,253,000, respectively, for the
plan. CFS also provides health and welfare benefits to substantially all of
its employees. The Company incurred $551,943, $598,530, and $562,508 of
expense for the years ended December 31, 1996, 1995 and 1994, respectively,
for such plan. The Company also has a defined contribution retirement plan
which allows participants to make voluntary contributions by salary
reduction pursuant to section 401 (k) of the Internal Revenue Code. The
Company provides for the administrative cost for the 401 (k) plan.
F-12
<PAGE> 90
CAPITAL MARKETS ASSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
On June 25, 1992, certain officers of CapMAC were granted 182,633 restricted
stock units ("RSU") at $13.33 a share in respect of certain deferred
compensation. On December 7, 1995, the RSU's were converted to cash in the
amount of approximately $3.7 million, and such officers agreed to defer
receipt of such cash amount in exchange for receiving the same number of new
shares of restricted stock of Holdings as the number of RSU's such officers
previously held. During 1995 and 1994, the expense was $1.3 million and
$0.1 million, respectively. During 1996, Holdings assumed the liability of
$3.7 million less the related deferred tax asset of $1.1 million as capital
contribution. The cash amount is held by Holdings and invested in
accordance with certain guidelines. Such amount, including the investment
earnings thereon, will be paid to each officer upon the occurrence of
certain events but no later than December 2000.
7) EMPLOYEE STOCK OWNERSHIP PLAN
Holdings maintains an Employee Stock Ownership Plan ("ESOP") to provide its
employees the opportunity to obtain beneficial interests in the stock of
Holdings through a trust (the "ESOP Trust"). Compensation expense related
to the ESOP and allocated to CapMAC was approximately $2,764,000, $2,087,000
and $2,086,000 for the years ended December 31, 1996, 1995 and 1994,
respectively.
F-13
<PAGE> 91
CAPITAL MARKETS ASSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
8) RESERVE FOR LOSSES AND LOSS ADJUSTMENT EXPENSES
The reserve for losses and loss adjustment expenses consists of a case basis
loss reserve and the SLR.
In 1995, CapMAC incurred its first claim on a financial guarantee policy.
Based on its current estimate, the Company expects the aggregate amount of
claims and related expenses not to exceed $2.7 million, although no
assurance can be given that such claims and related expenses will not exceed
that amount. Such loss amount was covered through a recovery under a quota
share reinsurance agreement of $0.2 million and a reduction in the SLR of
$2.5 million. The portion of such claims and expenses not covered under the
quota share agreement is being funded through payments to CapMAC from the
Lureco Trust Account (see note 12).
The following is a summary of the activity in the case basis loss reserve
account and the components of the reserve for losses and loss adjustment
expenses ($ in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
----------- --------- -------
CASE BASIS LOSS RESERVE:
<S> <C> <C> <C>
Net balance at January 1 $ 620 - -
----------- ------ -----
INCURRED RELATED TO:
Current year - 2,473 -
Prior years - - -
----------- ------ -----
Total incurred - 2,473 -
----------- ------ -----
PAID RELATED TO:
Current year - 1,853 -
Prior years 309 - -
----------- ------ -----
Total paid 309 1,853 -
----------- ------ -----
Net balance at December 31 311 620 -
Reinsurance recoverable - 69 -
----------- ------ -----
GROSS BALANCE AT DECEMBER 31 311 689 -
----------- ------ -----
SUPPLEMENTAL LOSS RESERVE
Balance at January 1 5,859 5,191 3,762
----------- ------ -----
Additions to supplemental loss reserve 4,815 3,141 1,429
Allocated to case basis reserve - (2,473) -
----------- ------ -----
BALANCE AT DECEMBER 31 10,674 5,859 5,191
----------- ------ -----
TOTAL RESERVE FOR LOSSES AND LOSS ADJUSTMENT
EXPENSES $ 10,985 6,548 5,191
=========== ====== =====
</TABLE>
F-14
<PAGE> 92
CAPITAL MARKETS ASSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
9) INCOME TAXES
Pursuant to a tax sharing agreement with Holdings, the Company is included
in Holdings' consolidated U.S. Federal income tax return. The Company's
annual Federal income tax liability is determined by computing its pro rata
share of the consolidated group Federal income tax liability.
Total income tax expense differed from the amount computed by applying the
U.S. Federal income tax rate of 35% in 1996 and 1995 and 34% in 1994:
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, 1996 December 31, 1995 December 31, 1994
$ in thousands Amount % Amount % Amount %
-------------- ---------- ----- ---------- ----- --------- -----
<S> <C> <C> <C> <C> <C> <C>
Expected tax expense computed at
the statutory rate $ 10,738 35.0 $7,216 35.0 $5,303 34.0
Increase (decrease) in tax
resulting from:
Tax-exempt interest (2,916) (9.5) (2,335) (11.3 ) (1,646) (10.6)
Other, net 781 2.5 334 1.6 51 0.4
--------- ----- ------- ------- ------ -----
TOTAL INCOME TAX EXPENSE $ 8,603 28.0 $ 5,215 25.3 $3,708 23.8
========= ===== ======= ======= ====== =====
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of the deferred Federal income tax liability are as follows:
<TABLE>
<CAPTION>
$ in thousands December 31, 1996 December 31, 1995
-------------- ----------------- -----------------
<S> <C> <C>
DEFERRED TAX ASSETS:
Deferred compensation $ 200 1,901
Losses and loss adjustment expenses 1,527 1,002
Unearned premiums 866 852
Other, net 96 98
---------- -------
Total gross deferred tax assets 2,689 3,853
---------- -------
DEFERRED TAX LIABILITIES:
Deferred acquisition costs 15,883 12,307
Unrealized capital gains on investments 1,061 1,769
Other, net 884 1,080
---------- -------
Total gross deferred tax liabilities 17,828 15,156
---------- -------
NET DEFERRED TAX LIABILITY $ 15,139 11,303
========== =======
</TABLE>
A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax assets will not be realized. Management
believes that the deferred tax assets will be fully realized in the future.
F-15
<PAGE> 93
CAPITAL MARKETS ASSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
10) INSURANCE REGULATORY RESTRICTIONS
CapMAC is subject to insurance regulatory requirements of the State of New
York and other states in which it is licensed to conduct business.
Generally, New York insurance laws require that dividends be paid from
earned surplus and restrict the amount of dividends in any year that may be
paid without obtaining approval for such dividends from the Superintendent
of Insurance to the lower of (i) net investment income as defined or (ii)
10% of statutory surplus as of December 31 of the preceding year. No
dividends were paid by CapMAC to Holdings during the years ended December
31, 1996, 1995 and 1994. No dividends could be paid during these periods
because CapMAC had negative earned surplus. Statutory surplus at December
31, 1996 and 1995 was approximately $193,726,000 and $195,018,000,
respectively. Statutory surplus differs from stockholder's equity
determined under GAAP principally due to the mandatory contingency reserve
required for statutory accounting purposes and differences in accounting
for investments, deferred acquisition costs, SLR and deferred taxes
provided under GAAP. Statutory net income was $18,737,000, $9,000,000 and
$4,543,000 for the years ended December 31, 1996, 1995 and 1994,
respectively. Statutory net income differs from net income determined
under GAAP principally due to deferred acquisition costs, SLR and deferred
income taxes.
11) COMMITMENTS AND CONTINGENCIES
The Company's lease agreement for the space occupied in New York expires on
November 20, 2008. CapMAC has a lease agreement for its London office,
which expires on October 1, 2002. As of December 31, 1996, future minimum
payments under the lease agreements are as follows:
<TABLE>
<CAPTION>
$ in thousands Payment
-------------- ----------
<S> <C>
1997 $ 2,647
1998 2,715
1999 3,077
2000 3,152
2001 and thereafter 28,660
----------
TOTAL $ 40,251
==========
</TABLE>
Rent expense, commercial rent taxes and electricity for the years ended
December 31, 1996, 1995 and 1994 amounted to $1,618,000, $1,939,000 and
$2,243,000, respectively.
CapMAC has available a $150,000,000 standby corporate liquidity facility
(the "Liquidity Facility") scheduled to terminate in September 1999. The
Liquidity Facility is provided by a consortium of banks, headed by Bank of
Montreal, as agent, which is rated "A-1+" and "P-1" by S&P and Moody's,
respectively. Under the Liquidity Facility, CapMAC will be able, subject
to satisfying certain conditions, to borrow funds from time to time in
order to enable it to fund any claim payments or payments made in
settlement or mitigation of claim payments under its insurance contracts.
There have been no draws under the Liquidity Facility.
CapMAC has agreed to make an investment of 50 million French Francs
(approximately $10 million U.S. dollars) in CapMAC Assurance, S.A., an
insurance subsidiary to be established in Paris, France. This investment
is anticipated to be made in 1997.
F-16
<PAGE> 94
CAPITAL MARKETS ASSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
12) REINSURANCE
In the ordinary course of business, CapMAC cedes exposure under various
treaty and facultative reinsurance contracts, both on a pro rata and excess
of loss basis, primarily designed to minimize losses from large risks and
protect the capital and surplus of CapMAC.
The effect of reinsurance on premiums written and earned was as follows:
<TABLE>
<CAPTION>
Years Ended December 31
1996 1995 1994
--------------------- ------------------ --------------------
$ in thousands Written Earned Written Earned Written Earned
-------------- ---------- ------ ------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Direct $ 71,752 48,835 56,541 36,853 43,598 28,561
Assumed 1,086 1,508 935 761 1,064 258
Ceded (15,104) (9,786) (15,992) (8,372) (11,069) (5,716)
---------- ------ ------- ------ ------- ------
NET PREMIUMS $ 57,734 40,557 41,484 29,242 33,593 23,103
========== ====== ======= ====== ======= ======
</TABLE>
The reinsurance of risk does not relieve the ceding insurer of its original
liability to its policyholders. A contingent liability exists with respect
to the aforementioned reinsurance arrangements, which may become a
liability of CapMAC in the event the reinsurers are unable to meet
obligations assumed by them under the reinsurance contracts. At December
31, 1996 and 1995, CapMAC had ceded loss reserves of $0 and $69,000,
respectively, and had ceded unearned premiums of $18,489,000 and
$13,171,000, respectively.
In 1994, CapMAC entered into a reinsurance agreement (the "Lureco Treaty")
with Luxembourg European Reinsurance LURECO S.A. ("Lureco"), a
European-based reinsurer. The agreement is renewable annually at the
Company's option, subject to satisfying certain conditions. The agreement
reinsured and indemnified the Company for any loss incurred by CapMAC
during the agreement period up to the limits of the agreement. The Lureco
Treaty provides that the annual reinsurance premium payable by CapMAC to
Lureco, after deduction of the reinsurer's fee payable to Lureco, be
deposited in a trust account (the "Lureco Trust Account") to be applied by
CapMAC, at its option, to offset losses and loss expenses incurred by
CapMAC in connection with incurred claims. Amounts on deposit in the
Lureco Trust Account which have not been applied against claims are
contractually due to CapMAC at the termination of the treaty.
The premium deposit amounts in the Lureco Trust Account have been reflected
as assets by CapMAC during the term of the agreement. Premiums in excess
of the deposit amounts have been recorded as ceded premiums in the
statements of income. For the 1996 policy year, the agreement provides $7
million of loss coverage in excess of the premium deposit amount of $5
million retained in the Lureco Trust Account. Additional coverage is
provided for losses incurred in excess of 200% of the net premiums earned
up to $4 million for any one agreement year. In September 1995, a claim of
approximately $2.5 million on an insurance policy was applied against the
Lureco Trust Account.
F-17
<PAGE> 95
CAPITAL MARKETS ASSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
In addition to its capital (including statutory contingency reserves),
CapMAC has other reinsurance available to pay claims under its insurance
contracts. Effective November 30, 1995, CapMAC entered into a Stop-loss
Reinsurance Agreement with Mitsui Marine and Fire Insurance Co. (the
"Mitsui Stop-loss Agreement"). Under the Mitsui Stop-loss Agreement,
Mitsui Marine and Fire Insurance Co. ("Mitsui") will be required to pay any
losses in excess of $100 million in the aggregate incurred by CapMAC during
the term of the Mitsui Stop-loss Agreement on the insurance policies in
effect on December 1, 1995 and written during the one-year period
thereafter, up to an aggregate limit payable under the Mitsui Stop-loss
Agreement of $50 million. The Mitsui Stop-loss Agreement has a term of
seven years and is subject to early termination by CapMAC in certain
circumstances. Effective January 1, 1997 the stop- loss reinsurance
coverage increased to $75 million in excess of incurred losses of $150
million increasing annually based on increases in CapMAC's statutory
qualified capital. The new stop-loss reinsurance is provided by Mitsui,
AXA Re Finance S.A. ("AXA Re") and Munchener Ruckversicherungs-Gesellschaft
("Munich Re").
On November 30, 1995, CapMAC canceled the quota share reinsurance agreement
with Winterthur Swiss Insurance Company ("Winterthur") pursuant to which
Winterthur had the right to reinsure on a quota share basis 10% of each
policy written by CapMAC. As a result, CapMAC reassumed approximately $1.4
billion of principal insured by Winterthur on January 1, 1996. In
connection with the commutation, Winterthur returned $2.0 million of
unearned premiums, net of ceding commission and Federal excise tax.
13) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The following table presents the carrying amounts and estimated fair values
of the Company's financial instruments at December 31, 1996 and 1995. The
fair value amounts were determined by the Company using independent market
information when available, and appropriate valuation methodologies when
market information was not available. Such valuation methodologies require
significant judgment and are not necessarily indicative of the amount the
Company could recognize in a current market exchange.
<TABLE>
<CAPTION>
December 31, 1996 December 31, 1995
Carrying Estimated Carrying Estimated
$ in thousands Amount Fair Value Amount Fair Value
-------------- ------------ ---------- -------- ----------
<S> <C> <C> <C> <C>
FINANCIAL ASSETS:
Available-for-sale securities $ 314,703 314,703 284,352 284,352
------------ ------- ------- -------
OFF-BALANCE-SHEET INSTRUMENTS:
Financial guarantees outstanding $ - 219,989 - 147,840
Less: ceding commission - 65,997 - 44,352
------------ ------- ------- -------
Net financial guarantees outstanding $ - 153,992 103,488
============ ======= ======= =======
</TABLE>
F-18
<PAGE> 96
CAPITAL MARKETS ASSURANCE CORPORATION
NOTES TO FINANCIAL STATEMENTS
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments summarized above:
AVAILABLE-FOR-SALE SECURITIES
THE fair values of fixed maturities are based upon quoted market prices.
The fair value of short-term investments approximates amortized cost.
FINANCIAL GUARANTEES OUTSTANDING
The fair value of financial guarantees outstanding consists of (1) the
current unearned premium reserve, net of prepaid reinsurance and (2) the
fair value of installment revenue which is derived by calculating the
present value of the estimated future cash inflow to CapMAC of policies in
force having installment premiums, net of amounts payable to reinsurers, at
a discount rate of 7% at December 31, 1996 and 1995. The amount calculated
is assumed to be equivalent to the consideration that would be paid by
CapMAC under market conditions prevailing at the reporting dates to
transfer CapMAC's financial guarantee business to a third party under
reinsurance and other agreements. Ceding commission represents the
expected amount that would be paid to CapMAC to compensate CapMAC for
originating and servicing the insurance contracts. In constructing
estimated future cash inflows, management makes assumptions regarding
prepayments for amortizing asset-backed securities which are consistent
with relevant historical experience. For revolving programs, assumptions
are made regarding program utilization based on discussions with program
users. The amount of future installment revenue actually realized by the
Company could be reduced in the future due to factors such as early
termination of insurance contracts, accelerated prepayments of underlying
obligations or lower than anticipated utilization of insured structured
programs, such as commercial paper conduits. Although increases in future
installment revenue earnings due to renewals of existing insurance
contracts historically have been greater than reductions in future
installment revenue due to factors such as those described above, there can
be no assurance that future circumstances might not cause a material net
reduction in the future installment revenue.
14) CAPITALIZATION
In 1995, $59.0 million of the proceeds received by Holdings from the sale
of shares in connection with an initial public offering and private
placements were contributed to CapMAC.
F-19
<PAGE> 97
CAPITAL MARKETS ASSURANCE CORPORATION AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(UNAUDITED)
F-20
<PAGE> 98
CAPITAL MARKETS ASSURANCE CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
June 30, 1997 December 31,1996
(Unaudited)
------------- ----------------
<S> <C> <C>
INVESTMENTS:
Bonds at fair value (amortized cost $307,166 at June 30,
1997 and $294,861 at December 31, 1996) $ 307,821 297,893
Short-term investments (at amortized cost which
approximates fair value) 17,053 16,810
---------- ----------
Total investments 324,874 314,703
---------- ----------
Cash 4,506 371
Accrued investment income 3,835 3,807
Deferred acquisition costs 50,327 45,380
Premiums receivable 5,826 5,141
Prepaid reinsurance 20,787 18,489
Other assets 10,464 6,424
---------- ----------
TOTAL ASSETS $ 420,619 394,315
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES:
Unearned premiums $ 71,800 68,262
Reserve for losses and loss adjustment expenses 13,861 10,985
Ceded reinsurance 2,766 1,738
Accounts payable and other accrued expenses 14,433 8,019
Current income taxes 203 679
Deferred income taxes 15,700 15,139
---------- ----------
Total liabilities 118,763 104,822
---------- ----------
STOCKHOLDER'S EQUITY:
Common stock - $1.00 par value per share;
15,000,000 shares are authorized,
issued and outstanding at June 30,
1997 and December 31, 1996 15,000 15,000
Additional paid-in capital 208,475 208,475
Unrealized appreciation on investments, net of tax 425 1,970
Retained earnings 77,956 64,048
---------- ----------
Total stockholder's equity 301,856 289,493
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 420,619 394,315
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-21
<PAGE> 99
CAPITAL MARKETS ASSURANCE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Direct premiums written $ 18,726 18,622 35,180 32,777
Assumed premiums written 655 150 916 1,024
Ceded premiums written (6,272) (5,103) (10,621) (7,013)
---------- ---------- ---------- ----------
Net premiums written 13,109 13,669 25,475 26,788
Increase in unearned premiums (877) (3,681) (1,240) (7,972)
---------- ---------- ---------- ----------
Net premiums earned 12,232 9,988 24,235 18,816
Net investment income 4,684 4,112 9,386 7,989
Net realized capital gains 506 19 2,549 168
Other income 45 25 88 79
---------- ---------- ---------- ----------
Total revenues 17,467 14,144 36,258 27,052
---------- ---------- ---------- ----------
EXPENSES:
Losses and loss adjustment expenses 1,333 1,109 2,876 2,184
Underwriting and operating expenses 4,208 3,385 8,879 7,362
Policy acquisition costs 2,472 2,059 5,053 4,123
---------- ---------- ---------- ----------
Total expenses 8,013 6,553 16,808 13,669
---------- ---------- ---------- ----------
Income before income taxes 9,454 7,591 19,450 13,383
---------- ---------- ---------- ----------
INCOME TAXES:
Current income tax 2,277 1,316 4,150 1,981
Deferred income tax 473 1,148 1,392 1,971
---------- ---------- ---------- ----------
Total income taxes 2,750 2,464 5,542 3,952
---------- ---------- ---------- ----------
NET INCOME $ 6,704 5,127 13,908 9,431
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-22
<PAGE> 100
CAPITAL MARKETS ASSURANCE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1997
----------------
<S> <C>
COMMON STOCK:
Balance at beginning of period $ 15,000
----------
Balance at end of period 15,000
----------
ADDITIONAL PAID-IN CAPITAL:
Balance at beginning of period 208,475
----------
Balance at end of period 208,475
UNREALIZED APPRECIATION (DEPRECIATION)
ON INVESTMENTS, NET OF TAX:
Balance at beginning of period 1,970
Unrealized depreciation on investments (1,545)
----------
Balance at end of period 425
----------
RETAINED EARNINGS:
Balance at beginning of period 64,048
Net income 13,908
----------
Balance at end of period 77,956
----------
TOTAL STOCKHOLDER'S EQUITY $ 301,856
==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-23
<PAGE> 101
CAPITAL MARKETS ASSURANCE CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 1997 June 30, 1996
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 13,908 9,431
---------- ----------
ADJUSTMENTS TO RECONCILE NET INCOME TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Reserve for losses and loss adjustment expenses 2,876 1,821
Unearned premiums, net 3,538 10,977
Deferred acquisition costs (4,947) (4,742)
Premiums receivable (685) 308
Accrued investment income (28) (579)
Income taxes payable 916 2,113
Net realized capital gains (2,549) (168)
Accounts payable and other accrued expenses 6,414 2,581
Prepaid reinsurance (2,298) (3,004)
Other, net (2,765) (183)
---------- ----------
Total adjustments 472 9,124
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 14,380 18,555
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments (112,743) (121,115)
Proceeds from sales of investments 74,768 19,875
Proceeds from maturities of investments 27,730 82,800
NET CASH USED IN INVESTING ACTIVITIES (10,245) (18,440)
---------- ----------
Net increase in cash 4,135 115
Cash balance at beginning of period 371 344
---------- ----------
CASH BALANCE AT END OF PERIOD $ 4,506 459
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Income taxes paid $ 4,550 1,725
Tax and loss bonds purchased $ 76 112
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
F-24
<PAGE> 102
CAPITAL MARKETS ASSURANCE CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
1. BACKGROUND
Capital Markets Assurance Corporation ("CapMAC") is a New
York-domiciled monoline stock insurance company which engages only in
the business of financial guaranty and surety insurance. CapMAC is a
wholly owned subsidiary of CapMAC Holdings Inc. ("Holdings"). In early
1997, CapMAC made an investment of 50 million French francs
(approximately 10 million U.S. dollars) in CapMAC Assurance, S.A., an
insurance subsidiary to be established in Paris, France. CapMAC
Assurance, S.A., is licensed to write financial guarantee insurance in
the European Union member states.
CapMAC is licensed in all 50 states in addition to the District of
Columbia, the Commonwealth of Puerto Rico and the territory of Guam.
CapMAC insures structured asset-backed, corporate, municipal and other
financial obligations in the U.S. and international capital markets.
CapMAC also provides financial guaranty reinsurance for structured
asset-backed, corporate, municipal and other financial obligations
written by other major insurance companies.
CapMAC's claims-paying ability is rated triple-A by Moody's Investors
Service, Inc., Standard & Poor's Ratings Services, Duff & Phelps
Credit Rating Co., and Nippon Investors Service, Inc., a Japanese
rating agency. Such ratings reflect only the views of the respective
rating agencies, are not recommendations to buy, sell or hold
securities and are subject to revision or withdrawal at any time by
such rating agencies.
2. BASIS OF PRESENTATION
CapMAC's consolidated unaudited interim financial statements have been
prepared on the basis of generally accepted accounting principles and,
in the opinion of management, reflect all adjustments necessary for a
fair presentation of the CapMAC's financial condition, results of
operations and cash flows for the periods presented. The results of
operations for the six months ended June 30, 1997 may not be
indicative of the results that may be expected for the full year
ending December 31, 1997. These consolidated financial statements and
notes should be read in conjunction with the financial statements and
notes included in the audited financial statements of CapMAC as of
December 31, 1996 and 1995, and for each of the years in the
three-year period ended December 31, 1996.
3. RECLASSIFICATIONS
Certain prior period balances have been reclassified to conform to the
current period presentation.
F-25
<PAGE> 103
======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON. NEITHER THE
DELIVERY OF THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE DEPOSITOR OR THE RECEIVABLES SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................. 3
Incorporation of Certain Documents by
Reference............................ 3
Reports to Certificateholders by the
Trustee.............................. 3
Prospectus Summary..................... 4
Risk Factors........................... 10
The Trust.............................. 13
NationsCredit Commercial's Portfolio of
Marine Contracts and Recreational
Vehicle Contracts.................... 14
The Receivables Pool................... 20
Certificate Factors and Trading
Information.......................... 29
Use of Proceeds........................ 30
The Depositor.......................... 30
The Servicer........................... 30
The Surety Bond Issuer................. 31
The Certificates....................... 32
Certain Legal Aspects of the
Receivables.......................... 50
Certain Federal Income Tax
Consequences......................... 57
ERISA Considerations................... 61
Underwriting........................... 64
Experts................................ 64
Legal Matters.......................... 65
Index of Defined Terms................. 66
Financial Statements................... F-1
</TABLE>
---------------------
UNTIL , 1997, ALL DEALERS EFFECTING TRANSACTIONS IN THE
CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND
WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
======================================================
======================================================
NATIONSCREDIT LOGO
$169,190,255.16
NATIONSCREDIT
GRANTOR TRUST 1997-2
$120,803,719.92 % MARINE
RECEIVABLE-BACKED CERTIFICATES
$48,386,535.24 % RECREATIONAL
VEHICLE RECEIVABLE-BACKED CERTIFICATES
NATIONSCREDIT
SECURITIZATION CORPORATION
DEPOSITOR
NATIONSCREDIT COMMERCIAL
CORPORATION OF AMERICA
SERVICER
----------------
PROSPECTUS
-----------------
NATIONSBANC MONTGOMERY
SECURITIES, INC.
SALOMON BROTHERS INC
DATED OCTOBER , 1997
======================================================
<PAGE> 104
[ALTERNATE PAGE]
NATIONSCREDIT LOGO
$169,190,255.16
NATIONSCREDIT GRANTOR TRUST 1997-2
$120,803,719.92 % MARINE RECEIVABLE-BACKED CERTIFICATES
$48,386,535.24 % RECREATIONAL VEHICLE RECEIVABLE-BACKED CERTIFICATES
NATIONSCREDIT SECURITIZATION CORPORATION
DEPOSITOR
NATIONSCREDIT COMMERCIAL CORPORATION OF AMERICA
SERVICER
The certificates issued by NationsCredit Grantor Trust 1997-2 (the "Trust")
and offered hereby will consist of (i) % Marine Receivable-Backed
Certificates (the "Marine Certificates") and (ii) % Recreational Vehicle
Receivable-Backed Certificates (the "RV Certificates" and together with the
Marine Certificates, the "Certificates"), which will represent an interest in
the assets of the Trust described under "The Trust." The Trust will be formed
pursuant to a Pooling and Servicing Agreement (the "Agreement") to be entered
into among NationsCredit Securitization Corporation, as Depositor (the
"Depositor"), NationsCredit Commercial Corporation of America, as Servicer (the
"Servicer"), and Bankers Trust Company, as Trustee and as Collateral Agent (in
such capacities, the "Trustee" and the "Collateral Agent," respectively). The
property of the Trust will be comprised of three separate sub-trusts the first
of which will include a pool of marine retail installment sale contracts secured
by new and used boats, boat motors and boat trailers (the "Marine Contract
Group" and each marine retail installment sale contract included in the Marine
Contract Group being a "Marine Receivable"), all payments received or due
thereunder after September 30, 1997 (the "Cutoff Date"), security interests in
the boats and marine equipment financed by the Marine Receivables an certain
other property as described in "The Trust," the second sub-trust will include
and a pool of recreational vehicle retail installment sale contracts secured by
new and used recreational vehicles (the "RV Contract Group" and each
recreational vehicle retail installment sale contract included in the RV
Contract Group being a "RV Receivable" and each of the RV Receivables and
certain other property as described in "The Trust," and the Marine Receivables
being, the "Receivables"), all payments received or due thereunder after the
Cutoff Date, security interests in the recreational vehicles financed by the RV
Receivables and the third sub-trust will include an irrevocable surety bond (the
"Surety Bond"), guaranteeing the Monthly Interest Payment (as defined herein)
and the Monthly Principal Payment (as defined herein), issued by Capital Markets
Assurance Corporation (the "Surety Bond Issuer"). The Certificates will
represent interests in the assets of the Trust as described under "The Trust."
Except under the limited circumstances described under "The
Certificates -- Distributions on Certificates" and "Credit Enhancement,"
payments to the Marine Certificateholders will be based on payments from the
Marine Contract Group and payments to the RV Certificateholders will be based on
payments from the RV Contract Group. The Servicer will be responsible for
servicing and maintaining custody of the Receivables. The aggregate principal
balance of the Marine Receivables (the "Marine Pool Balance") as of the Cutoff
Date was $120,803,719.92 (the "Initial Marine Pool Balance") and the aggregate
principal balance of the RV Receivables (the "RV Pool Balance" and together with
the Marine Pool Balance, the "Pool Balance") as of the Cutoff Date was
$48,386,535.24 (the "Initial RV Pool Balance" and together with the Initial
Marine Pool Balance, the "Initial Pool Balance").
The Marine Certificate Balance (as defined herein) as of the Closing Date
(as defined herein) will equal $120,803,719.92 and the RV Certificate Balance
(as defined herein) as of the Closing Date will equal $48,386,535.24. Principal
and interest to the extent of the Pass-Through Rate of (i) % per annum on the
Marine Certificates will be distributed to holders of the Marine Certificates
("Marine Certificateholders") and (ii) % per annum on the RV Certificates
will be distributed to holders of the RV Certificates ("RV Certificateholders"
and together with the Marine Certificateholders, the "Certificateholders") as of
the day prior to each Distribution Date (each a "Record Date") on the 15th day
of each month (or, if such day is not a business day, the next following
business day), beginning November 17, 1997 (each a "Distribution Date"). The
final scheduled Distribution Date of the Marine Certificates will be on (the
"Marine Final Scheduled Distribution Date") and the final scheduled Distribution
Date of the RV Certificates will be on (the "RV Final Scheduled
Distribution Date").
FOR INFORMATION CONCERNING THE RISKS OF AN INVESTMENT IN THE CERTIFICATES, SEE
"RISK FACTORS" COMMENCING ON PAGE 10.
---------------------
THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST AND DO NOT REPRESENT AN
INTEREST IN OR OBLIGATION OF NATIONSCREDIT SECURITIZATION CORPORATION,
NATIONSCREDIT COMMERCIAL CORPORATION OF AMERICA OR ANY AFFILIATE THEREOF.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS IS TO BE USED BY NATIONSBANC MONTGOMERY SECURITIES, INC.
("NMSI") AN AFFILIATE OF THE DEPOSITOR IN CONNECTION WITH OFFERS AND SALES
RELATED TO MARKET-MAKING TRANSACTIONS IN THE CERTIFICATES IN WHICH NMSI ACTS AS
PRINCIPAL. NMSI MAY ALSO ACT AS AGENT IN SUCH TRANSACTIONS. SALES WILL BE MADE
AT PRICES RELATED TO THE PREVAILING PRICES AT THE TIME OF SALE.
---------------------
October , 1997
<PAGE> 105
[ALTERNATE PAGE]
UNDERWRITING
This Prospectus is to be used by the Underwriter, an affiliate of the
Depositor, in connection with offers and sales related to market-making
transactions in the Certificates in which the Underwriter acts as principal. The
Underwriter may also act as agent in such transactions. Sales will be made at
prices related to the prevailing prices at the time of sale. Any obligations of
the Underwriter are the sole obligations of the Underwriter and do not create
any obligations on the part of any affiliate of the Underwriter.
EXPERTS
The financial statements of Capital Markets Assurance Corporation as of
December 31, 1996 and 1995 and for each of the years in the three-year period
ended December 31, 1996 are included herein beginning on page F-2 and have been
audited by KPMG Peat Marwick LLP, independent certified public accountants, as
set forth in their report thereon and are included in reliance upon the
authority of such firm as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed upon for
the Depositor and the Underwriters by Stroock & Stroock & Lavan LLP, Special
Counsel of the Depositor and the Underwriters. Certain legal matters relating to
the Federal tax consequences of the issuance and ownership of the Certificates
will be passed upon by Stroock & Stroock & Lavan LLP.
<PAGE> 106
[ALTERNATE PAGE]
======================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON. NEITHER THE
DELIVERY OF THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE DEPOSITOR OR THE RECEIVABLES SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................. 3
Incorporation of Certain Documents by
Reference............................ 3
Reports to Certificateholders by the
Trustee.............................. 3
Prospectus Summary..................... 4
Risk Factors........................... 10
The Trust.............................. 13
NationsCredit Commercial's Portfolio of
Marine Contracts and Recreational
Vehicle Contracts.................... 14
The Receivables Pool................... 20
Certificate Factors and Trading
Information.......................... 29
Use of Proceeds........................ 30
The Depositor.......................... 30
The Servicer........................... 30
The Surety Bond Issuer................. 31
The Certificates....................... 32
Certain Legal Aspects of the
Receivables.......................... 50
Certain Federal Income Tax
Consequences......................... 57
ERISA Considerations................... 61
Underwriting........................... 64
Experts................................ 64
Legal Matters.......................... 65
Index of Defined Terms................. 66
Financial Statements................... F-1
</TABLE>
---------------------
UNTIL , 1997, ALL DEALERS EFFECTING TRANSACTIONS IN THE
CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND
WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
======================================================
======================================================
NATIONSCREDIT LOGO
$169,190,255.16
NATIONSCREDIT
GRANTOR TRUST 1997-2
$120,803,719.92 % MARINE
RECEIVABLE-
BACKED CERTIFICATES
$48,386,535.24 % RECREATIONAL
VEHICLE RECEIVABLE-
BACKED CERTIFICATES
NATIONSCREDIT
SECURITIZATION CORPORATION
DEPOSITOR
NATIONSCREDIT COMMERCIAL
CORPORATION OF AMERICA
SERVICER
----------------
PROSPECTUS
-----------------
NATIONSBANC MONTGOMERY
SECURITIES, INC.
DATED OCTOBER , 1997
======================================================
<PAGE> 107
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses to be incurred in
connection with the offering of the Certificates, other than underwriting
discounts and commissions:
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 51,269.78
Printing and Engraving...................................... $ 50,000.00
Legal Fees and Expenses..................................... $205,000.00
Blue Sky Fees............................................... $ 15,000.00
Accounting Fees and Expenses................................ $ 40,000.00
Trustee Fees and Expenses................................... $ 5,500.00
Rating Agency Fees.......................................... $ 95,000.00
Miscellaneous............................................... $ 18,230.22
-----------
Total............................................. $480,000.00
===========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware provides as follows:
145. Indemnification of Officers, Directors, Employees and Agents;
Insurance --
(a) A Corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or 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 corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit 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
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
II-1
<PAGE> 108
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by a majority vote of the
directors who are not parties to such action, suit or proceeding, event though
less than a quorum, or (2) if there are no such directors, or if such directors
so direct, by independent legal counsel in a written opinion, or (3) by the
stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or director
in defending any civil, criminal, administrative or investigative action, suit
or proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including attorneys' fees) incurred
by other employees and agents may be so paid upon such terms and conditions, if
any, as the board of directors deems appropriate.
(f) The indemnification and advancement of expenses provided by, or granted
pursuant to, the other subsections of this section shall not be deemed exclusive
of any other rights to which those seeking indemnification or advancement of
expenses may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was a serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under this section with respect to the resulting or
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
(j) The indemnification and advancement of expenses provided by, or granted
pursuant to, this section shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
II-2
<PAGE> 109
(k) The Court of Chancery is hereby vested with exclusive jurisdiction to
hear and determine all actions for advancement of expenses or indemnification
brought under this section or under any bylaw, agreement, vote of stockholders
or disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation's obligation to advance expenses (including attorneys'
fees).
Article 11 of the Certificate of Incorporation of the Registrant provides as
follows:
No director shall have any personal liability to the Corporation or its
stockholders for any monetary damages for breach of fiduciary duty as a
director, except that this Article 11 shall not eliminate or limit the liability
of each director:
(i) for any breach of such director's duty of loyalty to the
corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the Delaware General Corporation Law, or
(iv) for any transaction from which such director derived an improper
personal benefit.
If the Delaware Corporate law is amended to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
furthest extent of the Delaware Corporate Law, as so amended. Any repeal or
modification of this provision shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.
Article VI of the Registrant's Bylaws provides that:
The Registrant will indemnify any person who was a director, officer,
employee or agent of the Registrant to the fullest extent and in the manner set
forth in and as provided by the General Corporation Law of Delaware.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S>
1.1 -- Form of Underwriting Agreement
3.1 -- Second Amended and Restated Certificate of Incorporation
of the Depositor.
3.2 -- Amended and Restated By-Laws of the Depositor.
4.1 -- Form of Pooling and Servicing Agreement among the
Depositor, the Servicer and the Trustee.
4.2 -- Form of Standard Terms and Conditions of Agreement
between the Depositor and the Servicer.
4.3 -- Form of Surety Bond.
4.4 -- Form of Marine Dealer Agreement.
4.5 -- Form of RV Dealer Agreement.
4.6 -- Form of Assignment and Release Agreement
5.1 -- Opinion of Stroock & Stroock & Lavan LLP with respect to
legality.
8.1 -- Opinion of Stroock & Stroock & Lavan LLP with respect to
tax matters (included as part of Exhibit 5.1).
23.1 -- Consent of Stroock & Stroock & Lavan LLP (included as
part of Exhibit 5.1).
23.2 -- Consent of KPMG Peat Marwick.
24.1 -- Power of Attorney.*
</TABLE>
- ---------------
* Previously filed.
II-3
<PAGE> 110
(b) Financial Statement Schedules:
Not applicable.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change
to such information in the registration statement;
(2) 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;
(3) 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;
(4) 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 foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer,
or controlling person in connection with the securities being registered,
such 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 such Act and will be governed by the final
adjudication of such issue;
(5) to provide to the Underwriter at the closing specified in the
Underwriting Agreement certificates in such denominations and registered in
such names as required by the Underwriter to permit prompt delivery to each
purchaser;
(6) that for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared
effective; and
(7) that for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE> 111
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing of Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Irving and State of Texas, on the 10th
day of October, 1997.
NATIONSCREDIT SECURITIZATION
CORPORATION
(Registrant)
By: /s/ LAWRENCE ANGELILLI
----------------------------------
Name: Lawrence Angelilli
Title: Chief Executive Officer and
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
* Chief Executive Officer, October 10, 1997
- ----------------------------------------------------- President and Director
Lawrence Angelilli (principal executive officer)
* Treasurer and Director October 10, 1997
- ----------------------------------------------------- (principal financial officer)
John E. Mack
* Director October 10, 1997
- -----------------------------------------------------
James H. Luther
* Senior Vice President and October 10, 1997
- ----------------------------------------------------- Chief Accounting Officer
Karin Hirtler-Garvey (principal accounting
officer)
*By: /s/ LAWRENCE ANGELILLI
------------------------------------------------
Lawrence Angelilli
Attorney-in-fact
</TABLE>
II-5
<PAGE> 112
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
NUMBER DESCRIPTION
------ -----------
<C> <S>
1.1 -- Form of Underwriting Agreement
3.1 -- Second Amended and Restated Certificate of Incorporation
of the Depositor.
3.2 -- Amended and Restated By-Laws of the Depositor.
4.1 -- Form of Pooling and Servicing Agreement among the
Depositor, the Servicer and the Trustee.
4.2 -- Form of Standard Terms and Conditions of Agreement
between the Depositor and the Servicer.
4.3 -- Form of Surety Bond.
4.4 -- Form of Marine Dealer Agreement.
4.5 -- Form of RV Dealer Agreement.
4.6 -- Form of Assignment and Release Agreement
5.1 -- Opinion of Stroock & Stroock & Lavan LLP with respect to
legality.
8.1 -- Opinion of Stroock & Stroock & Lavan LLP with respect to
tax matters (included as part of Exhibit 5.1).
23.1 -- Consent of Stroock & Stroock & Lavan LLP (included as
part of Exhibit 5.1).
23.2 -- Consent of KPMG Peat Marwick.
24.1 -- Power of Attorney.*
</TABLE>
- ---------------
* Previously filed.
<PAGE> 1
EXHIBIT 1.1
NATIONSCREDIT SECURITIZATION CORPORATION
DEPOSITOR
NATIONSCREDIT GRANTOR TRUST 1997-2
FORM OF
UNDERWRITING AGREEMENT
New York, New York
_____________, 1997
NationsBanc Capital Markets, Inc.,
as Representative of the several underwriters
NationsBank Corporate Center
100 North Tryon Street, NC1-007-10-07
Charlotte, North Carolina 28255
Ladies and Gentlemen:
NationsCredit Securitization Corporation, a Delaware corporation (the
"Company"), proposes to form a trust entitled the NationsCredit Grantor Trust
1997-2 (the "Trust") pursuant to the terms of a proposed Pooling and Servicing
Agreement, including the Standard Terms and Conditions of Agreement, to be
dated as of __________, 1997, among the Company, as Depositor, NationsCredit
Commercial Corporation of America, as Servicer (the "Servicer" or
"NationsCredit Commercial"), and Bankers Trust Company, as Trustee and
Collateral Agent (the "Pooling and Servicing Agreement"), pursuant to which
certain _____% Marine Receivable-Backed Certificates (the "Marine
Certificates") and certain _____% RV Receivable-Backed Certificates (the "RV
Certificates" and together with the Marine Certificates, the "Certificates")
will be issued. Each Certificate will evidence a fractional, undivided
percentage interest in the Trust. The property of the Trust includes a pool of
marine retail installment sale contracts secured by new and used boats, boat
motors and boat trailers (the "Marine Receivables"), recreational vehicle
retail installment sale contracts secured by new and used recreational vehicles
(the "RV Receivables" and together with the Marine Receivables, the
"Receivables"), certain monies received under the Simple Interest Receivables
and certain monies due under the
<PAGE> 2
Precomputed Receivables, in each case, on or after ________, 1997, security
interests in the boats and marine equipment financed by the Marine Contract
Group, security interests in the recreational vehicles financed by the RV
Contract Group, an irrevocable surety bond, guaranteeing payments of interest
and principal on the Certificates (the "Surety Bond"), issued by Capital
Markets Assurance Corporation (the "Surety Bond Issuer"), such amounts as from
time to time may be held in one or more trust accounts which will be
established and maintained by the Servicer pursuant to the Pooling and
Servicing Agreement, the rights of the Company under that certain Purchase
Agreement, dated as of _____, 1997, between the Company and NationsCredit
Commercial, the rights of NationsCredit Marine Funding Corporation ("NCMF") to
cause NationsCredit Commercial to repurchase the NCMF Receivables upon the
breach of certain representations and warranties, the proceeds from any
recourse rights of NCMF or the Company against any seller of new and used
boats, boat motors and boat trailers financed by the Marine Receivables
pursuant to any agreement with a Dealer, the right to proceeds from claims on
physical damage, credit life and disability insurance policies relating to the
Receivables, and any property that shall have secured a Receivable and that
shall have been acquired by the Trustee. To the extent not defined herein,
capitalized terms used herein shall have the meanings specified in the Pooling
and Servicing Agreement.
The Company proposes to sell to the underwriters identified on
Schedule I hereto (the "Underwriters") for whom you are acting as
representative (the "Representative") the principal amount of the Certificates
identified in Schedule I hereto.
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, each Underwriter that:
(a) The Certificates are eligible for registration on Form S-3
under the Securities Act of 1933, as amended (the "Act"), and the
Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on such form, registration
number 333-33441, under the Act, which has become effective, for the
registration under the Act of the Certificates. The Company proposes
to file with the Commission pursuant to Rule 424 under the Act a final
prospectus relating to the Certificates and the plan of distribution
thereof and has previously advised the Representative of all further
information (financial and other) with respect to the Company to be
set forth therein. Such registration statement, including the
exhibits thereto, as amended to the date of this agreement, is
hereinafter called the "Registration Statement;" such prospectus in
the form in which it appears in the Registration Statement is
hereinafter called the "Preliminary Prospectus;" and such final form
of prospectus, in the form in which it shall be filed with the
Commission pursuant to Rule 424 under the Act, is hereinafter called
the "Final Prospectus."
(b) As of the date hereof, when the Final Prospectus is first
filed pursuant to Rule 424 under the Act, when, prior to the Closing
Date (as hereinafter defined in Section 3), any amendment to the
Registration Statement becomes effective (including the filing of any
document incorporated by reference in the Registration Statement),
when any supplement to the Final Prospectus is filed with the
Commission and at the Closing Date,
-2-
<PAGE> 3
(i) the Registration Statement, as amended as of any such time, and
the Final Prospectus, as amended or supplemented as of any such time,
will comply in all material respects with the applicable requirements
of the Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the respective rules thereunder, (ii) the
Registration Statement, as amended as of any such time, will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading, and (iii) the Final
Prospectus as amended or supplemented as of any such time, will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the
Company makes no representations or warranties as to the information
contained in or omitted from the Registration Statement or the Final
Prospectus or any amendment thereof or supplement thereto in reliance
upon and in conformity with information furnished in writing to the
Company by or on behalf of any information furnished in writing to the
Company by or on behalf of any Underwriter through the Representative
specifically for use in connection with the preparation of the
Registration Statement and the Final Prospectus.
(c) The Company has been duly incorporated and is validly existing
as a corporation under the laws of the State of Delaware and has
corporate and other power and authority to own its properties and
conduct its business, as now conducted by it, and to enter into and
perform its obligations under this Agreement and each of the Purchase
Agreement, the Reimbursement Agreement and the Pooling and Servicing
Agreement.
(d) The Company is not aware of (i) any request by the Commission
for any further amendment of the Registration Statement or for any
additional information or (ii) the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement.
(e) (i) This Agreement and each of the Purchase Agreement, the
Reimbursement Agreement and the Pooling and Servicing Agreement have
been duly authorized by the Company, and this Agreement and each of
the Purchase Agreement, the Reimbursement Agreement and the Pooling
and Servicing Agreement have been duly executed and delivered by the
Company, and each of this Agreement, the Purchase Agreement, the
Reimbursement Agreement and the Pooling and Servicing Agreement, when
executed and delivered by the Company, does or will, as the case may
be, constitute a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, subject,
as to the enforcement of remedies, to applicable bankruptcy,
insolvency, reorganization, moratorium, receivership and similar laws
affecting creditors' rights generally and to general principles of
equity (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law); and (ii) the
Certificates have been duly authorized by the Company, and when duly
executed by the Trustee on behalf of the Trust, authenticated by the
Trustee and delivered in accordance with the Pooling and Servicing
Agreement and delivered and paid for as
-3-
<PAGE> 4
provided herein, will be validly issued and outstanding and entitled
to the benefits and security afforded by the Pooling and Servicing
Agreement.
2. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties set forth herein, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, the principal amount of the
Certificates set forth opposite such Underwriter's name in Schedule I hereto at
the purchase price of _______% of the principal amount of such Certificates,
plus, in each case, interest calculated from and including _______, 1997
through and including the date prior to the Closing Date.
3. Delivery and Payment. Delivery of and payment for the
Certificates shall be made at the offices of Stroock & Stroock & Lavan LLP, 180
Maiden Lane, New York, New York 10038, at 10:00 a.m. New York time on _______,
1997 or such other place as shall be agreed by the Company and the
Underwriters, and which date and time may be postponed by agreement between the
Representative and the Company or as provided in Section 9 hereof (such date
and time of delivery and payment for the Certificates being herein called the
"Closing Date"). Delivery of the Certificates shall be made to the
Representative for the respective accounts of the several Underwriters against
payment by the several Underwriters through the Representative of the purchase
price thereof by one or more wires of immediately available funds to an account
designated by the Company. Delivery of the Certificates shall be made through
the facilities of The Depository Trust Company.
4. Representations, Warranties and Covenants of the Underwriters.
The Underwriters agree with the Company that:
(a) Each Underwriter represents and warrants to the Company that
it will not, in connection with the offering and sale of the
Certificates, use (i) any "Computational Materials" within the meaning
of the no- action letter, dated May 20, 1994, issued by the Division
of Corporation Finance of the Commission to Kidder, Peabody Acceptance
Corporation I, Kidder, Peabody & Co. Incorporated, and Kidder
Structured Asset Corporation and the no-action letter, dated May 27,
1994, issued by the Division of Corporation Finance of the Commission
to the Public Securities Association or (ii) any "ABS Term Sheets"
within the meaning of the no-action letter, dated February 17, 1995,
issued by the Division of Corporation Finance of the Commission to the
Public Securities Association; and
(b) None of the Underwriters will institute against, or join any
other Person in instituting against, the Company any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or
other proceeding under any federal or state bankruptcy or similar law,
until August 16, 2014.
5. Agreements. The Company agrees with the several Underwriters
that:
-4-
<PAGE> 5
(a) Prior to the termination of the offering of the Certificates,
the Company will not file any amendment to the Registration Statement
or supplement to the Final Prospectus unless the Company has furnished
the Representative a copy of such amendment or supplement for their
review prior to filing and will not file any such proposed amendment
or supplement to which the Representative reasonably objects. Subject
to the foregoing sentence, the Company will cause the Final Prospectus
to be filed with the Commission pursuant to Rule 424. The Company
will advise the Representative promptly (i) when the Final Prospectus
shall have been filed with the Commission pursuant to Rule 424, (ii)
when any amendment to the Registration Statement relating to the
Certificates shall have become effective, (iii) of any request by the
Commission for any amendment of the Registration Statement or
amendment of or supplement to the Final Prospectus or for any
additional information, (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement
or the institution or threatening of any proceeding for that purpose,
and (v) of the receipt by the Company of any notification with respect
to the suspension of the qualification of the Certificates for sale in
any jurisdiction or the initiation or threatening of any proceeding
for such purpose. The Company will use its best efforts to prevent
the issuance of any such stop order and, if issued, to obtain as soon
as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Certificates
is required to be delivered under the Act, any event occurs as a
result of which the Final Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
or if it shall be necessary to amend or supplement the Final
Prospectus to comply with the Act or the Exchange Act or the
respective rules thereunder, the Company promptly will prepare and
file with the Commission, subject to the first sentence of paragraph
(a) of this Section 5, an amendment or supplement which will correct
such statement or omission or an amendment which will effect such
compliance and will use its best efforts to cause any required
post-effective amendment to the Registration Statement containing such
amendment to be made effective as soon as possible.
(c) The Company will furnish to the Representative and counsel for
the Underwriters, without charge, executed copies of the Registration
Statement (including exhibits thereto) and each amendment thereto
which shall become effective on or prior to the Closing Date and, so
long as delivery of a prospectus by an Underwriter or dealer may be
required by the Act, as many copies of any Preliminary Prospectus and
the Final Prospectus and any amendments thereof and supplements
thereto as the Representative may reasonably request. The Company
will pay the expenses of printing all documents relating to the
initial offering, provided that any additional expenses incurred in
connection with the requirement of delivery of a market-making
prospectus will be borne by the Representative.
-5-
<PAGE> 6
(d) The Company will make available to the Representative the
Marine Certificate Factor and the RV Certificate Factor for each month
as soon as possible after the Company has received each such
Certificate Factor from the Servicer pursuant to Section 13.9 of the
Pooling and Servicing Agreement.
(e) The Company will arrange for the qualification of the
Certificates for sale under the laws of such jurisdictions as the
Representative may reasonably designate, will maintain such
qualifications in effect so long as required for the distribution of
the Certificates and will arrange for the determination of the
legality of the Certificates for purchase by institutional investors;
provided, however, that the Company shall not be required to qualify
to do business in any jurisdiction where it is not now so qualified or
to take any action which would subject it to general or unlimited
service of process in any jurisdiction where it is not now so subject.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Certificates shall be subject
to the accuracy of the representations and warranties on the part of the
Company contained herein as of the date hereof, as of the date of the
effectiveness of any amendment to the Registration Statement filed prior to the
Closing Date (including the filing of any document incorporated by reference
therein) and as of the Closing Date, to the accuracy of the statements of the
Company made in any certificates delivered pursuant to the provisions hereof,
to the performance by the Company of its obligations hereunder and to the
following additional conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued, and
no proceedings for that purpose shall have been instituted or
threatened; and the Final Prospectus shall have been filed or mailed
for filing with the Commission within the time period prescribed by
the Commission.
(b) The Company shall have furnished to the Representative the
opinion of Stroock & Stroock & Lavan LLP, special counsel for the
Company, dated the Closing Date, to the effect of paragraphs (i),
(ii), (v), (vi), (vii) and (viii) below, and the opinion of a member
of the office of the General Counsel of NationsCredit Corporation,
special counsel for the Company, dated the Closing Date, to the effect
of paragraph (iii) below:
(i) the Certificates, the Purchase Agreement and
the Pooling and Service Agreement conform in all material
respects to the description thereof contained in the Final
Prospectus;
(ii) assuming due authorization, execution and
delivery by the other parties thereto, each of this Agreement,
the Purchase Agreement, the Reimbursement Agreement and the
Pooling and Servicing Agreement constitutes a legal, valid and
binding agreement of the Company, enforceable in accordance
with their respective terms against the Company, as the case
may be, subject (a) to the effect of bankruptcy, insolvency,
reorganization, moratorium and similar laws
-6-
<PAGE> 7
relating to or affecting creditors' rights generally and court
decisions with respect thereto, (b) to the understanding that
no opinion is expressed as to the application of equitable
principles in any proceeding, whether at law or in equity, and
(c) to limitations of public policy under applicable
securities laws as to rights of indemnity and contribution
thereunder;
(iii) to the knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any
court or governmental agency, authority or body or any
arbitrator involving the Company of a character required to be
disclosed in the Registration Statement which is not
adequately disclosed therein and in the Final Prospectus;
(iv) to the best knowledge of such counsel, there
is no franchise, contract or other document of a character
required to be described in the Registration Statement or
Final Prospectus, or to be filed as an exhibit, which is not
described or filed as required;
(v) the Registration Statement has become
effective under the Act; to the best knowledge of such counsel
no stop order suspending the effectiveness of the Registration
Statement has been issued, and no proceedings for that purpose
have been instituted or threatened; the Registration
Statement, the Final Prospectus and each amendment thereof or
supplement thereto (other than (i) financial, numerical,
statistical and quantitative information contained therein and
(ii) the information under the heading "The Surety Bond
Issuer," as to which such counsel need express no view) comply
as to form in all material respects with the applicable
requirements of the Act and the Exchange Act and the
respective rules thereunder;
(vi) no consent, approval, authorization or order
of any court or governmental agency or body is required, with
respect to the Company, for the consummation of the
transactions contemplated herein, or in the Purchase
Agreement, the Reimbursement Agreement or the Pooling and
Servicing Agreement, except such as have been obtained under
the Act and such as may be required under the blue sky laws of
any jurisdiction in connection with the purchase and
distribution of the Certificates by the Underwriters and such
other a approvals (specified in such opinion) as have been
obtained;
(vii) the Pooling and Servicing Agreement will not
be required to be qualified under the Trust Indenture Act of
1939, as amended, and the Trust is not, and immediately
following the sale of the Certificates pursuant hereto, will
not, be required to be registered under the Investment Company
Act of 1940, as amended; and
-7-
<PAGE> 8
(viii) the issuance, offer and sale of the
Certificates have been duly authorized by the Company, and
when issued, authenticated in accordance with the Pooling and
Servicing Agreement and paid for pursuant to this Agreement,
the Certificates will be validly issued and entitled to the
benefits of the Pooling and Servicing Agreement.
Stroock & Stroock & Lavan LLP, special counsel for the Company, shall
also state that it has no reason to believe that the Registration Statement or
any amendment thereof at the time it became effective contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not misleading or
that the Final Prospectus, as amended or supplemented, as of its date and as of
the Closing Date, contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading (other
than (i) financial, numerical, statistical and quantitative information
contained therein and (ii) the information under the heading "The Surety Bond
Issuer," as to which such counsel need express no view).
In rendering such opinions, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than (i) the United
States or the general corporation laws of the State of Delaware, and (ii) with
respect to Stroock & Stroock & Lavan LLP, the State of New York, to the extent
deemed proper and specified in such opinion, upon the opinion of other counsel
of good standing believed to be reliable and who are satisfactory to counsel
for the Underwriters; and (B) as to matters of fact, to the extent deemed
proper, on certificates of responsible officers of the Company or its
affiliates and public officials.
(c) NationsCredit Commercial shall have furnished to the
Representative the opinion of a member of the office of the General
Counsel of NationsCredit Corporation, special counsel for
NationsCredit Commercial, dated the Closing Date, to the effect of
paragraphs (i), (ii), (iv), (v) and (vi) below, and the opinion of
Stroock & Stroock & Lavan LLP, special counsel for NationsCredit
Commercial, dated the Closing Date, to the effect of paragraph (iii)
below:
(i) NationsCredit Commercial is a duly organized
and validly existing corporation in good standing under the
laws of the State of North Carolina and has the corporate
power and authority to perform its obligations under the
Pooling and Servicing Agreement, the Purchase Agreement and
the Indemnification Agreement;
(ii) each of the Pooling and Servicing Agreement,
the Purchase Agreement and the Indemnification Agreement has
been duly authorized, executed and delivered by NationsCredit
Commercial;
(iii) assuming due authorization, execution and
delivery by the other parties thereto, each of the Pooling and
Servicing Agreement, the Purchase
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<PAGE> 9
Agreement and the Indemnification Agreement constitutes a
legal, valid and binding agreement of NationsCredit
Commercial, enforceable in accordance with their respective
terms against NationsCredit Commercial, as the case may be,
subject (a) to the effect of bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or
affecting creditors' rights generally and court decisions with
respect thereto, (b) to the understanding that no opinion is
expressed as to the application of equitable principles in any
proceeding, whether at law or in equity, and (c) to
limitations of public policy under applicable securities laws
as to rights of indemnity and contribution thereunder;
(iv) to the best knowledge of such counsel, there
is no pending or threatened action, suit or proceeding before
any court or governmental agency, authority or body or any
arbitrator involving NationsCredit Commercial of a character
required to be disclosed in the Registration Statement which
is not adequately disclosed therein and in the Final
Prospectus;
(v) neither the consummation of any of the
transactions contemplated in the Pooling and Servicing
Agreement, the Purchase Agreement or the Indemnification
Agreement, nor the fulfillment of the terms thereof will
conflict with, result in a breach of, or constitute a default
under the articles of incorporation or by-laws of
NationsCredit Commercial; and
(vi) neither the consummation of any of the
transactions contemplated in the Pooling and Servicing
Agreement, the Purchase Agreement or the Indemnification
Agreement, nor the fulfillment of the terms thereof will
conflict with, result in a breach of, or constitute a default
under the terms of any indenture or other agreement or
instrument known to such counsel and to which NationsCredit
Commercial is a party or bound, or any order or regulation
known to such counsel to be applicable to NationsCredit
Commercial of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction
over NationsCredit Commercial.
In rendering such opinions, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than (i)
the United States or the general corporation laws of the State of Delaware.
(ii) with respect to the office of the General Counsel of NationsCredit
Corporation, the general corporation law of the State of North Carolina, and
(iii) with respect to Stroock & Stroock & Lavan LLP, the State of New York, to
the extent deemed proper and specified in such opinion, upon the opinion of
other counsel of good standing believed to be reliable and who are satisfactory
to counsel for the Underwriters; and (B) as to matters of fact, to the extent
deemed proper, on certificates of responsible officers of NationsCredit
Commercial or its affiliates and public officials.
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<PAGE> 10
(d) The Company shall have furnished to the Representative an
opinion of Stroock & Stroock & Lavan LLP, special counsel for the
Company, dated the Closing Date, to the effect that:
(i) the statements in the Final Prospectus under
the heading "Certain Federal Income Tax Consequences" and the
summary thereof under the heading "Prospectus Summary--Tax
Status," to the extent they constitute matters of Federal law
or legal conclusions with respect thereto, have been reviewed
by such counsel and are correct in all material respects; and
(ii) the statements in the Final Prospectus under
the headings "Certain Legal Aspects of the Receivables" and
"ERISA Considerations," to the extent they constitute matters
of Federal law or legal conclusions with respect thereto, have
been reviewed by such counsel and are correct in all material
respects.
(e) The Company shall have furnished to the Representative an
opinion or opinions of Stroock & Stroock & Lavan LLP, special counsel
for the Company, dated the Closing Date, to the effect that (A) the
separate corporate existence of the Company would not be disregarded
so as to include the assets and liabilities of the Company in the
bankruptcy estate of NationsCredit Commercial in the event of a
bankruptcy proceeding with respect thereto; and (B) the Depositor
Receivables were sold and transferred from NationsCredit Commercial to
the Company in a manner such that the Depositor Receivables would not
be considered to be property of the bankruptcy estate of NationsCredit
Commercial in the event of a bankruptcy proceeding with respect
thereto. In addition, the Representative shall have received a
reliance letter with respect to any opinion that the Company is
required to deliver to each Rating Agency.
(f) NCMF shall have furnished to the Representative the opinion of
a member of the office of the General Counsel of NationsCredit
Corporation, special counsel for NCMF, dated the Closing Date, to the
effect of paragraphs (i), (ii), (iv) and (v) below, and the opinion of
Stroock & Stroock & Lavan LLP, special counsel for NCMF, dated the
Closing Date, to the effect of paragraph (iii) below:
(i) NCMF is a duly organized and validly existing
corporation in good standing under the laws of the State of
Delaware and has the corporate power and authority to perform
its obligations under the Assignment Agreement, dated as of
_____, 1997, between NCMF and the Trustee (the "Assignment
Agreement") and the Agreement, dated as of _____, 1997 between
NCMF and Receivables Capital Corporation (the "NCMF
Agreement");
(ii) each of the Assignment Agreement and the NCMF
Agreement has been duly authorized, executed and delivered by
NCMF;
(iii) assuming due authorization, execution and
delivery by the other parties thereto, each of the Assignment
Agreement and the NCMF Agreement
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<PAGE> 11
constitutes a legal, valid and binding agreement of NCMF,
enforceable in accordance with their respective terms against
NCMF, as the case may be, subject (a) to the effect of
bankruptcy, insolvency, reorganization, moratorium and similar
laws relating to or affecting creditors' rights generally and
court decisions with respect thereto, (b) to the understanding
that no opinion is expressed as to the application of
equitable principles in any proceeding, whether at law or in
equity, and (c) to limitations of public policy under
applicable securities laws as to rights of indemnity and
contribution thereunder;
(iv) neither the consummation of any of the
transactions contemplated in the Assignment Agreement and the
NCMF Agreement, nor the fulfillment of the terms thereof will
conflict with, result in a breach of, or constitute a default
under the articles of incorporation or by-laws of NCMF; and
(v) neither the consummation of any of the
transactions contemplated in the Assignment Agreement and the
NCMF Agreement, nor the fulfillment of the terms thereof will
conflict with, result in a breach of, or constitute a default
under the terms of any indenture or other agreement or
instrument known to such counsel and to which NCMF is a party
or bound, or any order or regulation known to such counsel to
be applicable to NCMF of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over NCMF.
In rendering such opinions, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other than (i)
the United States or the general corporation laws of the States of Delaware,
and (ii) with respect to Stroock & Stroock & Lavan LLP, the State of New York,
to the extent deemed proper and specified in such opinion, upon the opinion of
other counsel of good standing believed to be reliable and who are satisfactory
to counsel for the Underwriters; and (B) as to matters of fact, to the extent
deemed proper, on certificates of responsible officers of NationsCredit
Commercial or its affiliates and public officials.
(g) The Representative shall have received an opinion from Jenkens
& Gilchrist, a Professional Corporation, special counsel to the
Company, dated the Closing Date, to the effect that:
(i) the Receivables, including the security
interests in the boats and the recreational vehicles, as
applicable, securing the Receivables evidenced by the related
certificates of title, constitute chattel paper pursuant to
the Uniform Commercial Code as in effect in the State of Texas
(the "Texas UCC");
(ii) the UCC-1 financing statement to evidence
sale and assignment of the Depositor Receivables from the
Company to the Trustee (the "Financing Statement") is in
appropriate form for filing in the Office of the Secretary of
State of the State of Texas (the "Filing Office") under the
Texas UCC. Upon the filing
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<PAGE> 12
of the Financing Statement in the filing office by the
Company, the sale of the Depositor Receivables to the Trustee
will be completed. In the event that a court concludes that
the transactions contemplated by the Pooling and Servicing
Agreement do not constitute a sale of such Depositor
Receivables, then to the extent that a security interest is
created under the Pooling and Servicing Agreement in favor of
the Trustee in the Depositor Receivables, upon the filing of
the Financing Statement in the Filing Office, the security
interest in favor of the Trustee in the Depositor Receivables
and the proceeds thereof will be perfected and, under the
Texas UCC, no other security interest of any creditor of the
Company will be equal or prior to the security interest in the
Depositor Receivables of the Trustee on behalf of the Trust
for the benefit of the Certificateholders; and
(iii) the UCC-1 financing statement to evidence
sale and assignment of the NCMF Receivables from the Company
to the Trustee (the "NCMF Financing Statement") is in
appropriate form for filing in the Office of the Secretary of
State of the State of Texas under the Texas UCC. Upon the
filing of the NCMF Financing Statement in the filing office by
the Company, the sale of the NCMF Receivables to the Trustee
will be completed. In the event that a court concludes that
the transactions contemplated by the Assignment Agreement do
not constitute a sale of such NCMF Receivables, then to the
extent that a security interest is created under the
Assignment Agreement in favor of the Trustee in the NCMF
Receivables, upon the filing of the NCMF Financing Statement
in the Filing Office, the security interest in favor of the
Trustee in the NCMF Receivables and the proceeds thereof will
be perfected and, under the Texas UCC, no other security
interest of any creditor of the Company will be equal or prior
to the security interest in the NCMF Receivables of the
Trustee on behalf of the Trust for the benefit of the
Certificateholders.
(h) The Representative shall have received an opinion from Hunton
& Williams, special counsel to the Company, dated the Closing Date, to
the effect that:
(i) the Depositor Receivables, including the
security interests in the boats and recreational vehicles, as
applicable, securing the Depositor Receivables evidenced by
the related certificates of title, constitute chattel paper
pursuant to the Uniform Commercial Code as in effect in the
State of Georgia (the "Georgia UCC"); and
(ii) the UCC-1 financing statement to evidence
sale and assignment of the Depositor Receivables from
NationsCredit Commercial to the Company (the "Financing
Statement") is in appropriate form for filing in the Office of
the Secretary of State of the State of Georgia (the "Filing
Office") under the Georgia UCC. Upon the filing of the
Financing Statement in the filing office by the Company, the
sale of the Depositor Receivables to the Trustee will be
completed.
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<PAGE> 13
In the event that a court concludes that the transactions
contemplated by the Pooling and Servicing Agreement do not
constitute a sale of such Depositor Receivables, then to the
extent that a security interest is created under the Pooling
and Servicing Agreement in favor of the Trustee in the
Depositor Receivables, upon the filing of the Financing
Statement in the Filing Office, the security interest in favor
of the Trustee in the Depositor Receivables and the proceeds
thereof will be perfected and, under the Georgia UCC, no other
security interest of any creditor of the Company will be equal
or prior to the security interest in the Depositor Receivables
of the Trustee on behalf of the Trust for the benefit of the
Certificateholders.
(i) The Representative shall have received an opinion of counsel
to the Trustee, dated the Closing Date, to the effect that:
(i) the Trustee has been duly incorporated and is
validly existing as a banking corporation under the laws of
the State of New York and has the power and authority to enter
into and to perform all actions required of it under the
Pooling and Servicing Agreement;
(ii) the Pooling and Servicing Agreement has been
duly authorized, executed and delivered by the Trustee, and
constitutes a legal, valid and binding obligation of the
Trustee, enforceable against the Trustee in accordance with
its terms except as such enforceability may be limited by (A)
bankruptcy, insolvency, liquidation, reorganization,
moratorium, conservatorship, receivership or other similar
laws now or hereafter in effect relating to the enforcement of
creditors' rights in general, as such laws would apply in the
event of a bankruptcy, insolvency, liquidation,
reorganization, moratorium, conservatorship, receivership or
similar occurrence affecting the Trustee, and (B) general
principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law) as well as concepts of reasonableness, good faith and
fair dealing;
(iii) the Certificates have been duly executed on
behalf of the Trust, authenticated and delivered by the
Trustee;
(iv) the execution and delivery of the Pooling and
Servicing Agreement and, on behalf of the Trust, the
Certificates, by the Trustee and the performance by the
Trustee of the terms thereof do not conflict with or result in
a violation of (A) any law or regulation of the United States
or the State of New York governing the banking or trust powers
of the Trustee, or (B) the certificate of incorporation or
articles of association or by-laws of the Trustee; and
(v) no approval, authorization or other action
by, or filing with, any governmental authority of the United
States or the State of New York having jurisdiction over the
banking or trust powers of the Trustee is required in
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<PAGE> 14
connection with the execution and delivery by the Trustee of
the Pooling and Servicing Agreement and, on behalf of the
Trust, the Certificates, or the performance by the Trustee
thereunder.
(j) The Representative shall have received an opinion of Shaw,
Pittman, Potts & Trowbridge, special counsel for the Surety Bond
Issuer, dated the Closing Date, to the effect that:
(i) the Surety Bond Issuer is a New York
domiciled monoline stock insurance company which engages only
in the business of financial guaranty insurance and is duly
incorporated, validly existing, in good standing and licensed
to transact business under the laws of the State of New York
and has the full power and authority (corporate and otherwise)
to issue, and to take all action required of it under, the
Surety Bond;
(ii) the execution, delivery and performance by
the Surety Bond Issuer of the Surety Bond have been duly
authorized by all necessary corporate action on the part of
the Surety Bond Issuer;
(iii) the execution, delivery and performance by
the Surety Bond Issuer of the Surety Bond do not require the
consent or approval of, the giving of notice to, the prior
registration with, or the taking of any other action in
respect of any state or other governmental agency or authority
which has not previously been obtained or effected; provided,
however, the New York State Insurance Law requires that policy
forms and any amendments thereto shall be filed with the
Superintendent of the New York State Insurance Department
within thirty (30) days of their use by the insurer if not
previously so filed;
(iv) the Surety Bond has been duly authorized,
executed and delivered by the Surety Bond Issuer and
constitutes the legally valid and binding obligation of the
Surety Bond Issuer, enforceable in accordance with its terms
subject, as to enforcement, to (a) bankruptcy, reorganization,
insolvency, moratorium and other laws relating to or affecting
the enforcement of creditors' rights generally, including,
without limitation, laws relating to fraudulent transfers or
conveyances, preferences and equitable subordination,
presently or from time to time in effect and general
principles of equity (regardless of whether such enforcement
is considered in a proceeding in equity or at law) and (b) the
qualification that the remedy of specific performance may be
subject to equitable defenses and to the discretion of the
court before which any proceedings with respect thereto may be
brought; and
(v) the Surety Bond is not required to be
registered under the Securities Act of 1933, as amended, in
connection with the offer and sale of the Certificates in the
manner contemplated by the Final Prospectus.
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<PAGE> 15
(k) The Surety Bond Issuer shall have furnished to the
Representative a certificate of the Surety Bond Issuer, signed by any
of a Managing Director or General Counsel, dated the Closing Date, to
the effect that the signer of such certificate has carefully examined
the Registration Statement (excluding any documents incorporated by
reference therein), the Final Prospectus and this Agreement and that,
to the best of his knowledge:
(i) any information with respect to the Surety
Bond Issuer in the Registration Statement or any amendment
thereof at the time it became effective did not contain any
untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading;
(ii) any information with respect to the Surety
Bond Issuer in the Final Prospectus, as amended or
supplemented, as of its date and as of the Closing Date, did
not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading; and
(iii) there has been no change in the financial
condition of the Surety Bond Issuer since December 31, 1996
which would have a material adverse effect on the Surety Bond
Issuer's ability to meet its obligations under the Surety
Bond.
(l) The Company shall have furnished to the Representative a
certificate of the Company, signed by (i) any of the Chairman of the
Board, the President or any Vice President, and (ii) any of the
principal treasury officer, the principal financial officer or the
principal accounting officer of the Company, dated the Closing Date,
to the effect that the signers of such certificate have carefully
examined the Registration Statement (excluding any documents
incorporated by reference therein), the Final Prospectus and this
Agreement and that, to the best of their knowledge:
(i) the representations and warranties of the
Company in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as
if made on the Closing Date and the Company has complied with
all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing
Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement, as amended, has been issued, and
no proceedings for that purpose have been instituted or
threatened; and
(iii) since the respective dates as of which
information is given in the Final Prospectus, there has been
no material adverse change in the condition
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<PAGE> 16
(financial or other), earnings, business or properties of the
Company, whether or not arising from transactions in the
ordinary course of business, except as set forth in or
contemplated in the Final Prospectus.
(m) On the date hereof and on the Closing Date, Price Waterhouse
LLP and/or any other firm of certified independent public accountants
acceptable to the Representative shall have furnished to the
Representative a letter, dated the date hereof and the date of the
Closing Date, respectively, in form and substance satisfactory to the
Representative, confirming that they are independent accountants
within the meaning of the Act and the Exchange Act and the respective
applicable published rules and regulations thereunder, and stating in
effect that using the assumptions and methodology used by the Company,
all of which shall be described in such letter, they have recalculated
such numbers and percentages set forth in the Final Prospectus as the
Representative may reasonably request and agreed to by Price
Waterhouse LLP, compared the results of their calculations to the
corresponding items in the Final Prospectus, and found each such
number and percentage set forth in the Final Prospectus to be in
agreement with the results of such calculations. To the extent
historical financial information with respect to the Company and/or
historical financial, delinquency or related information with respect
to one or more Servicers is included in the Final Prospectus, such
letter or letters shall also relate to such information.
(n) The Certificates shall have received the rating of "AAA" from
Standard & Poor's Rating Services and "Aaa" from Moody's Investors
Service, Inc.
(o) On or prior to the Closing Date, NationsCredit Commercial
shall have executed the Indemnification Agreement, substantially in
the form of Exhibit A hereto.
(p) Prior to the Closing Date, the Company shall have furnished to
the Representative such further information, certificates and
documents as the Representative may reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representative and its counsel, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representative. Notice of
such cancellation shall be given to the Company in writing or by telephone or
telegraph confirmed in writing.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Certificates provided for herein is not consummated because any condition to
the obligations of the Underwriters set forth in Section 6 hereof is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters severally upon demand for all out-of-pocket expenses
(including reasonable fees and
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<PAGE> 17
disbursements of counsel) that shall have been incurred by them in connection
with the proposed purchase and sale of the Certificates.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person who controls any Underwriter within the meaning of
either the Act or the Exchange Act against any and all losses, claims, damages
or liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other Federal or state statutory law
or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement for the registration of the
Certificates as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Final Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to
reimburse each such indemnified party for any legal or other expenses
reasonably incurred by it in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that (i) the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished
to the Company by or on behalf of any Underwriter through the Representative
specifically for use in connection with the preparation thereof and (ii) such
indemnity with respect to any Preliminary Prospectus shall not inure to the
benefit of any Underwriter (or any person controlling such Underwriter) from
whom the person asserting any such loss, claim, damage or liability purchased
the Certificates which are the subject thereof if such person did not receive a
copy of the Final Prospectus (or the Final Prospectus as amended or
supplemented) at or prior to the confirmation of the sale of such Certificates
to such person in any case where such delivery is required by the Act and the
untrue statement or omission of a material fact contained in any Preliminary
Prospectus was corrected in the Final Prospectus (or the Final Prospectus as
amended or supplemented). This indemnity agreement will be in addition to any
liability which the Company may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold
harmless the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity from the Company to each Underwriter, but only with
reference to written information relating to such Underwriter furnished to the
Company by or on behalf of such Underwriter through the Representative
specifically for use in the preparation of the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which any Underwriter may otherwise have. The Company acknowledges
that the statements set forth under the heading "Underwriting" constitute the
only information furnished in writing by or on behalf of the several
Underwriters
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<PAGE> 18
for inclusion in the documents referred to in the foregoing indemnity, and you,
as the Representative, confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under this Section 8. In case any such action is brought
against any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and, to the extent that it may elect by written notice delivered to
the indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with counsel satisfactory to
such indemnified party; provided, however, that if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assert such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of its election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party
under this Section 8 for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate counsel,
approved by the Representative in the case of subparagraph (a), representing
the indemnified parties under subparagraph (a) who are parties to such action),
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense
of the indemnifying party; and except that if clause (i) or (iii) is
applicable, such liability shall be only in respect of the counsel referred to
in such clause (i) or (iii). After such notice from the indemnifying party to
such indemnified party, the indemnifying party will not be liable for the costs
and expenses of any settlement of such action effected by such indemnified
party without the consent of the indemnifying party, which will not be
unreasonably withheld, unless such indemnifying party waived its rights under
this Section 8 in writing in which case the indemnified party may effect such a
settlement without such consent. No indemnifying party may avoid its duty to
indemnify under this Section 8 if such indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement or
compromise of or consent to the entry of any judgment in, any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on all claims that
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<PAGE> 19
are the subject matter of such action. An indemnifying party shall not be
liable for any settlement of any claim effected without its consent unless its
right to consent under this Section 8 has been waived in writing
(d) To provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph (a) or (b)
of this Section 8 is due in accordance with its terms but is for any reason
held by a court to be unavailable from the Company or the Underwriters on the
grounds of policy or otherwise, the Company and the Underwriters shall
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) to which the Company and one or more of the Underwriters may be
subject, in such proportion so that the Underwriters are responsible for that
portion represented by the percentage that the underwriting discount bears to
the sum of such discount and the purchase price of the Certificates specified
in Schedule I hereto and the Company is responsible for the balance; provided,
however, that in no case shall any Underwriter (except as may be provided in
any agreement among underwriters relating to the offering of the Certificates)
be responsible for any amount in excess of the underwriting discount applicable
to the Certificates purchased by such Underwriter hereunder.
Notwithstanding anything to the contrary in this paragraph (d), no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 8,
each person who controls an Underwriter within the meaning of either the Act or
the Exchange Act shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
preceding sentence of this paragraph (d). Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this paragraph (d), notify such
party or parties from whom contribution may be, sought, but the omission to so
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this paragraph (d).
9. Default by an Underwriter. If any one or more Underwriters
shall fail to purchase and pay for any of the Marine Certificates agreed to be
purchased by such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the
amount of Marine Certificates set forth opposite their names in Schedule I
hereto bear to the aggregate amount of Marine Certificates set forth opposite
the names of all the remaining Underwriters) the Marine Certificates which the
defaulting Underwriter or Underwriters agreed but failed to purchase; provided,
however, that in the event that the aggregate amount of Marine Certificates
which the defaulting Underwriter or Underwriters agreed but failed to purchase
shall exceed 10% of the
-19-
<PAGE> 20
aggregate amount of Marine Certificates set forth in Schedule I hereto, the
remaining Underwriters shall have the right to purchase all, but shall not be
under any obligation to purchase any, of the Marine Certificates, and if such
nondefaulting Underwriters do not purchase all the Marine Certificates, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Company. If any one or more Underwriters shall fail to purchase and pay
for any of the RV Certificates agreed to be purchased by such Underwriter or
Underwriters hereunder and such failure to purchase shall constitute a default
in the performance of its or their obligations under this Agreement, the
remaining Underwriters shall be obligated severally to take up and pay for (in
the respective proportions which the amount of RV Certificates set forth
opposite their names in Schedule I hereto bear to the aggregate amount of RV
Certificates set forth opposite the names of all the remaining Underwriters)
the RV Certificates which the defaulting Underwriter or Underwriters agreed but
failed to purchase; provided, however, that in the event that the aggregate
amount of RV Certificates which the defaulting Underwriter or Underwriters
agreed but failed to purchase shall exceed 10% of the aggregate amount of RV
Certificates set forth in Schedule I hereto, the remaining Underwriters shall
have the right to purchase all, but shall not be under any obligation to
purchase any, of the RV Certificates, and if such nondefaulting Underwriters do
not purchase all the RV Certificates, this Agreement will terminate without
liability to any nondefaulting Underwriter or the Company. In the event of a
default by any Underwriter as set forth in this Section 9, the Closing Date
shall be postponed for such period, not exceeding seven days, as the
Representative shall determine in order that the required changes in the
Registration Statement and the Final Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall
relieve any defaulting Underwriter of its liability, if any, to the Company and
any nondefaulting Underwriter for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination
in the absolute discretion of the Representative, by notice given to the
Company prior to delivery of and payment for the Certificates, if prior to such
time (i) trading in securities generally on the New York Stock Exchange shall
have been suspended or limited or minimum prices shall have been established on
such Exchange, or (ii) there shall have occurred any outbreak or material
escalation of hostilities or other calamity or crisis the effect of which on
the financial markets of the United States is such as to make it, in the
judgment of the Representative, impracticable to market the Certificates.
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of
the Company or its officers and of the Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of any Underwriter or the Company or any
of the officers, directors or controlling persons referred to in Section 8
hereof, and will survive delivery of and payment for the Certificates. The
provisions of Section 7 and 8 hereof and this Section 11 shall survive the
termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representative, will be mailed,
delivered or telegraphed to
-20-
<PAGE> 21
NationsBanc Capital Markets, Inc., NationsBank Corporate Center, NC1-007-10-07,
100 North Tryon Street, Charlotte, North Carolina 28255, Attention: Russell C.
Albers, Managing Director, and to any other Representative at such address, if
any, as is specified in writing to the Company for notices hereunder; or, if
sent to the Company, will be mailed, delivered or telegraphed and confirmed to
NationsCredit Commercial Corporation of America, 225 E. John Carpenter Freeway,
Irving, Texas 75062-2731, Attention: Lawrence Angelilli, Vice President, with a
copy to: NationsCredit Corporation, One Canterbury Green, 201 Broad Street,
Stamford, Connecticut 06901, Attention: John Stockton, General Counsel.
13. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8 hereof,
and no other person will have any right or obligation hereunder.
14. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICT OF LAWS.
-21-
<PAGE> 22
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company and the several Underwriters.
Very truly yours,
NATIONSCREDIT SECURITIZATION
CORPORATION
By:
---------------------------------
Lawrence Angelilli
Vice President
The foregoing Agreement is
hereby confirmed and accepted
as of the date first written
above.
NATIONSBANC CAPITAL MARKETS, INC.,
as Representative
By: NATIONSBANC CAPITAL MARKETS, INC.
By:
----------------------------------
Russell C. Albers
Managing Director
For themselves and as Representative
for the other several Underwriters,
if any named in Schedule I to the
foregoing Agreement
-22-
<PAGE> 23
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount
of Marine Certificates
Underwriter to be Purchased
- ----------- -----------------------
<S> <C>
NationsBanc Capital Markets, Inc. . . . . . . . . $
____________________ . . . . . . . . . . . . . . . $
Total . . . . . . . . . . . . . . . . . . $
<CAPTION>
Principal Amount
of RV Certificates
Underwriter to be Purchased
- ----------- -----------------------
<S> <C>
NationsBanc Capital Markets, Inc. . . . . . . . . . $
____________________. . . . . . . . . . . . . . . . $
Total . . . . . . . . . . . . . . . . . . $
</TABLE>
-23-
<PAGE> 24
EXHIBIT A
INDEMNIFICATION AGREEMENT
This Indemnification Agreement is entered into between
NationsCredit Commercial Corporation of America, a North Carolina corporation
("NationsCredit"), and NationsBanc Capital Markets, Inc., in its individual
capacity and as representative of the underwriters identified on Schedule I
hereto (collectively, the "Underwriters"), dated as of _________, 1997.
The Underwriters and NationsCredit Securitization
Corporation, a Delaware corporation (the "Company"), have entered into an
Underwriting Agreement (the "Underwriting Agreement"), dated as of _________,
1997, providing for the sale by the Company to the Underwriters of the _____%
Marine Receivable-Backed Certificates (the "Marine Certificates") and the
_____% RV Receivable-Backed Certificates (the "RV Certificates" and together
with the Marine Certificates, the "Certificates") of the NationsCredit Grantor
Trust 1997-2 (the "Trust"). The Marine Certificates represent beneficial
interests in a pool of marine retail installment sale contracts secured by new
and used boats, boat motors and boat trailers (the "Marine Receivables") and
the RV Certificates represent beneficial interests in a pool of recreational
vehicle installment sale contracts secured by new and used recreational
vehicles (the "RV Receivables" and together with the Marine Receivables, the
"Receivables"), sold by NationsCredit to the Company pursuant to the Purchase
Agreement (the "Purchase Agreement"), dated as of _____, 1997, and certain
monies received under the Simple Interest Receivables and certain monies due
under the Precomputed Receivables, in each case, on or after _________, 1997,
security interests in the boats and marine equipment financed by the Marine
Contract Group, security interests in the recreational vehicles financed by the
RV Contract Group, an irrevocable surety bond, limited in amount, covering
certain payments under the Receivables (the "Surety Bond"), issued by Capital
Markets Assurance Corporation (the "Surety Bond Issuer"), such amounts as from
time to time may be held in one or more trust accounts which will be
established and maintained by the Servicer pursuant to the Pooling and
Servicing Agreement, the fights of the Company under that certain Purchase
Agreement dated as of _____, 1997 between the Company and NationsCredit, the
rights of NationsCredit Marine Funding Corporation ("NCMF") to cause
NationsCredit to repurchase the NCMF Receivables upon the breach of certain
representations and warranties, the proceeds from any recourse rights of NCMF
or the Company against any seller of new and used boats, boat motors and boat
trailers financed by the Receivables pursuant to any agreement with a Dealer,
the right to proceeds from claims on physical damage, credit life and
disability insurance policies relating to the Receivables, and any property
that shall have secured a Receivable and that shall have been acquired by the
Trustee. The Certificates will be issued pursuant to a Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement"), dated as of _____, 1997,
among the Company as Depositor, NationsCredit as Servicer and Bankers Trust
Company as Trustee. This Indemnification Agreement is being entered into by
the parties hereto as a condition to the execution of
<PAGE> 25
Underwriting Agreement and to induce the Underwriters to execute the same.
Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in the Underwriting Agreement.
1. Indemnification. (a) NationsCredit agrees to indemnify and
hold harmless each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement for the registration of
the Certificates as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Final Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to
reimburse each such indemnified party for any legal or other expenses
reasonably incurred by it in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that (i)
NationsCredit will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished
to the Company or NationsCredit by or on behalf of any Underwriter through the
Representatives specifically for use in connection with the preparation thereof
and (ii) such indemnity with respect to any Preliminary Prospectus shall not
inure to the benefit of any Underwriter (or any person controlling such
Underwriter) from whom the person asserting any such loss, claim. damage or
liability purchased the Certificates which are the subject thereof if such
person did not receive a copy of the Final Prospectus (or the Final Prospectus
as amended or supplemented) at or prior to the confirmation of the sale of such
Certificates to such person in any case where such delivery is required by the
Act and the untrue statement or omission of a material fact contained in any
Preliminary Prospectus was corrected in the Final Prospectus (or the Final
Prospectus as amended or supplemented). This indemnity agreement will be in
addition to any liability which NationsCredit may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold
harmless NationsCredit, each of its directors, and each person who controls
NationsCredit within the meaning of either the Act or the Exchange Act, to the
same extent as the foregoing indemnity from NationsCredit to each Underwriter,
but only with reference to written information relating to such Underwriter
furnished to the Company or NationsCredit by or on behalf of such Underwriter
through the Representatives specifically for use in the preparation of the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any Underwriter may otherwise have.
NationsCredit acknowledges that the statements set forth under the heading
"Underwriting" constitute the only information furnished in writing by or on
behalf of the several Underwriters for inclusion in the documents referred to
in the foregoing indemnity, and the Representatives confirm that such
statements are correct.
-25-
<PAGE> 26
(c) Promptly after receipt by an indemnified party under
this Indemnification Agreement of notice of the commencement of any action,
such indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Indemnification Agreement, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party otherwise than under this Indemnification
Agreement. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and, to the extent
that it may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel satisfactory to such indemnified party; provided,
however, that if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall
have the light to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to assume the defense of
such action and approval by the indemnified party of counsel, the indemnifying
party will not be liable to such indemnified party under this Indemnification
Agreement for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the indemnifying party
shall not be liable for the expenses of more than one separate counsel,
approved by the Representatives in the case of subparagraph (a) and approved by
NationsCredit in the case of subparagraph (b), representing the indemnified
parties under Subparagraph (a) who are parties to such action), (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense
of the indemnifying party; and except that if clause (i) or (iii) is
applicable, such liability shall be only in respect of the counsel referred to
in such clause (i) or (iii). After such notice from the indemnifying party to
such indemnified party, the indemnifying party will not be liable for the costs
and expenses of any settlement of such action effected by such indemnified
party without the consent of the indemnifying party, which will not be
unreasonably withheld, unless such indemnifying party waived its rights under
this Indemnification Agreement in writing in which case the indemnified party
may effect such a settlement without such consent. No indemnifying party may
avoid its duty to indemnify under this Indemnification Agreement if such
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of any
judgment in, any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on all
claims that are the subject matter of such action.
-26-
<PAGE> 27
An indemnifying party shall not be liable for any settlement of any claim
effected without its consent unless its right to consent under this
Indemnification Agreement has been waived in writing.
2. Contribution. To provide for just and equitable contribution
in circumstances in which the indemnification provided for in Section l (a) or
l (b) of this Indemnification Agreement is due in accordance with its terms but
is for any a reason held by a court to be unavailable from NationsCredit or the
Underwriters on the grounds of policy or otherwise, NationsCredit and the
Underwriters shall a contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) to which NationsCredit and one
or more of the Underwriters may be subject, in such proportion so that the
Underwriters are responsible for that portion represented by the percentage
that the underwriting discount bears to the sum of such discount and the
purchase price of the Certificates specified in Schedule I hereto and
NationsCredit is responsible for the balance; provided, however, that in no
case shall any Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Certificates) be responsible for
any amount in excess of the underwriting discount applicable to the
Certificates purchased by such Underwriter hereunder.
Notwithstanding anything to the contrary in this Section 2, no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. For purposes of this Indemnification
Agreement, each person who controls an Underwriter within the meaning of either
the Act or the Exchange Act shall have the same rights to contribution as such
Underwriter, and each person who controls NationsCredit within the meaning of
either the Act or the Exchange Act and each director of NationsCredit shall
have the same rights to contribution as NationsCredit, subject in each case to
the preceding sentence of this Section 2. Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section 2, notify such
party or parties from whom contribution may be sought, but the omission to so
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this Section 2.
3. No Termination. NationsCredit agrees that it shall not
terminate, amend or modify the Purchase Agreement or the Pooling and Servicing
Agreement or in each case any portion thereof without the prior written consent
of each Underwriter.
4. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telegraphed to NationsBanc Capital Markets, Inc., NationsBank
Corporate Center, NC1-007-10-07, 100 North Tryon Street, Charlotte, North
Carolina 28255, Attention: Russell C. Albers, Managing Director, and to any
other Representative at such address, if any, as is specified in writing to
NationsCredit for notices hereunder; or, if sent to NationsCredit, will be
mailed, delivered or telegraphed and
-27-
<PAGE> 28
confirmed to it at NationsCredit Commercial Corporation of America, 225 E. John
Carpenter Freeway, Irving, Texas 75062- 2731, Attention: Lawrence Angelilli,
Vice President, with a copy to: NationsCredit Corporation, One Canterbury
Green, 201 Broad Street, Stamford, Connecticut 06901, Attention: John Stockton,
General Counsel.
5. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 1 hereof,
and no other person will have any right or obligation hereunder.
6. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND
CONSTRUED WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICT OF LAWS.
7. Counterparts. This Indemnification Agreement may be executed
in any number of counterparts, each of which when so executed shall be deemed
to be an original, but all of such counterparts shall together constitute one
instrument.
-28-
<PAGE> 29
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among NationsCredit and the several Underwriters.
NATIONSCREDIT COMMERCIAL
CORPORATION OF AMERICA
By:
--------------------------------
Lawrence Angelilli
Vice President
NATIONSBANC CAPITAL MARKETS, INC.,
as Representative
By: NATIONSBANC CAPITAL MARKETS,
INC.
By:
--------------------------------
Russell C. Albers
Managing Director
-29-
<PAGE> 30
SCHEDULE I
Underwriters
NationsBanc Capital Markets, Inc.
-30-
<PAGE> 1
Exhibit 3.1
SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
NATIONSCREDIT SECURITIZATION CORPORATION
------------------------------------------------
Adopted in accordance with the provisions
of Section 245 of the
Delaware General Corporation Law
------------------------------------------------
NATIONSCREDIT SECURITIZATION CORPORATION, a corporation organized and
existing under the laws of the State of Delaware, hereby certifies as
follows:
Pursuant to the provisions of Section 245 of Chapter 1, Title 8 of
the Delaware Code (known, identified and referred to as the "General
Corporation Law of the State of Delaware", which for purposes of this Amended
and Restated Certificate of Incorporation shall include the acts amendatory
thereof and supplemental thereto.
1. The name of the corporation is NationsCredit Securitization
Corporation (the "Corporation"). The date of filing of its original
Certificate of Incorporation with the Secretary of State was December 21,
1995. The date of filing of its Amended and Restated Certificate of
Incorporation with the Secretary of State was February 14, 1996.
2. This Second Amended and Restated Certificate of
Incorporation restates and integrates and further amends the Amended and
Restated Certificate of Incorporation of this Corporation by adding a
provision to further ensure that the Corporation is a special purpose
corporation and by eliminating all requirements that each trustee under any
pooling and servicing agreement, indenture or similar agreement (each, an
"Agreement") consent to certain actions of the Corporation and amendments to
certain provisions of this Second Amended and Restated Certificate of
Incorporation.
3. The Amended and Restated Certificate of Incorporation is
hereby amended and restated in its entirety as follows:
1. The name of the corporation is NationsCredit
Securitization Corporation (the "Corporation").
1
<PAGE> 2
2. The address of the registered office of the Corporation
in the State of Delaware is 1209 Orange Street, City of Wilmington, County
of New Castle, 19801. The name of the registered agent at such registered
office is The Corporation Trust Company.
3. The purpose for which the Corporation is organized is
to engage in the following activities:
(a) to acquire, issue, cause to be issued, dispose of and
or hold certificates or other evidences of interests (the "Certificates")
in, or to issue, cause to be issued, disposed of and or hold notes or
other evidences of indebtedness ("Notes," and together with the
Certificates, the "Securities") that may be secured by certain payment
obligations of dealers in consumer, commercial and capital products
("Dealers") or payment obligations of buyers of such products or of
obligors under any notes, mortgages, installment contracts or other
payment obligations (collectively, "Obligors") secured by such products,
including but not limited to, new and used automobiles and trucks,
recreational vehicles, new and used boats, boat motors, boat trailers,
manufactured housing, industrial machinery, musical instruments,
agricultural, household and garden equipment, or payment obligations under
notes, mortgages, installment contracts, or other payment obligations,
including but not limited to, leases, home equity lines of credit, second
mortgages, unsecured credit cards, or other installment obligations
(collectively, "Receivables");
(b) to acquire, own, hold, service, sell, assign, pledge
and otherwise deal with Receivables, related insurance policies and
insurance certificates, the group of writings evidencing payment
obligations of Dealers or Obligors and the security interests created in
connection therewith and agreements with Dealers, Obligors and other
originators or services of Receivables; and
(c) to engage in any activity and to exercise any powers
permitted to corporations under the Laws of the State of Delaware that are
incident to the foregoing and necessary or convenient to accomplish the
foregoing.
4. The total number of shares of stock that the
Corporation shall have authority to issue is 1,000 shares of Common Stock,
$.01 par value.
5. Election of directors need not be by ballot
unless the By-Laws of the Corporation shall so provide. The books of the
Corporation may (subject to any statutory requirements) be kept at such
place whether within or
2
<PAGE> 3
outside the State of Delaware as may be designated by the Board of
Directors or in the By-Laws of the Corporation.
6. (a) The affairs of the Corporation shall be
managed by a Board of Directors (the "Board" or the "Board of
Directors"), which shall at all times include at least one Outside
Director. The number of directors of the Corporation shall be from
time to time fixed by, or in the manner provided in, the By-Laws of
the Corporation with the initial Board consisting of three members.
Notwithstanding anything to the contrary contained herein or in the
Corporation's By-Laws, as promptly as practicable but in any event
within thirty (30) days following the occurrence of a Rating Event,
the authorized number of directors shall be increased by the excess,
if any, of two over the number of directors who are then Outside
Directors and any such vacancy shall be filled by an additional
Outside Director. At all times during the existence of any Rating
Event, the Board shall include at least two Outside Directors. A
rating event (a "Rating Event") shall be deemed to have occurred upon
the earlier to occur of (a) the downgrading of the short-term
unsecured debt of NationsBank Corporation ("NationsBank") to or below
(i) A-2 by Standard & Poor's Corporation ("S&P") or (ii) P-2 by
Moody's Investors Service, Inc. ("Moody's" and together with S&P, the
"Rating Agencies"), or (b) the downgrading of NationsBank's senior
long-term debt to or below (i) A- by S&P or (ii) A3 by Moody's, and
shall be deemed to exist as long as NationsBank's short-term unsecured
debt or senior long-term debt is rated at or below any such rating by
either Rating Agency. In the event and at the time that a Rating Event
is no longer continuing, the Board may include only one Outside
Director. An "Outside Director" shall be an individual who, for at
least eighteen (18) months prior to being appointed by the Board,
shall not have been, a director, officer or employee of, or indirect
beneficial owner of 5% or more of the voting securities of, or member
of the immediate family of any such director, officer, employee or
beneficial owner of, NationsCredit Corporation ("NationsCredit"), or
any corporate affiliate of NationsCredit. Notwithstanding the
foregoing, an Outside Director may be a director or officer of one or
more other corporations that is an affiliate or are affiliates of
NationsCredit, provided that (i) each such corporation is or was
formed with limited purposes similar to the Corporation and (ii) such
person does not earn, in the aggregate, material compensation for
serving in such positions. For the purposes of the foregoing, an
"affiliate" of an entity is an entity controlling, controlled by, or
under common control with such entity. Notwithstanding any other
provision of this Certificate of Incorporation or any other provision
of law that so
3
<PAGE> 4
empowers the Corporation, in the event of the death, incapacity, or
resignation of an Outside Director or such position is otherwise vacated,
a successor Outside Director shall be appointed by the remaining directors
of the Corporation and no action requiring the unanimous affirmative vote
of the Board of Directors of the Corporation shall be taken until a
successor Outside Director is elected and qualified and approves such
action.
(b) The Corporation shall maintain a separate
principal office through which its business shall be conducted, which
office may be located in identifiable space within the headquarters of
NationsBank of Texas, National Association at 225 E. John Carpenter
Freeway, Irving, Texas pursuant to a lease on commercially reasonable
terms.
(c) The Corporation shall maintain corporate
records and books of account and shall not commingle its corporate records
and books of account with the corporate records and books of account of
NationsCredit or any other entity.
(d) The Board of Directors of the Corporation
shall hold appropriate meetings to authorize all of its corporate actions.
(e) The funds and other assets of the
Corporation shall not be commingled with those of any other entity.
(f) The Corporation shall pay its own expenses
and shall not guarantee or hold itself out as being liable for the debts
of any other party.
(g) The Corporation shall not form,
or cause to be formed, any subsidiaries.
(h) The Corporation shall act solely in its
corporate name and through its duly authorized officers or agents in the
conduct of its business, and shall conduct its business so as not to
mislead others as to the identity of the entity with which they are
concerned.
(i) Meetings of the stockholders of the
Corporation shall be held not less frequently than one time per annum.
(j) The Corporation shall operate in such
a manner that it would not be substantively consolidated with any other
entity.
4
<PAGE> 5
(k) The Corporation shall not issue any
debt securities if the issuance of such debt securities will result in
the lowering of the then current rating of any outstanding Securities
issued by the Corporation pursuant to any Agreement by any one of the
Rating Agencies which have been requested by the Corporation or an
underwriter to rate such Securities.
7. In furtherance and not in limitation of the
powers conferred upon the Board of Directors by law, the Board of
Directors shall have the power to adopt, amend and repeal from time to
time the By-Laws of the Corporation.
8. Notwithstanding any other provision of this
Certificate of Incorporation and any provision of law that otherwise
so empowers the Corporation, the Corporation shall not, without the
unanimous approval of the Board of Directors of the Corporation
(which, following the occurrence and during the continuation of a
Rating Event, shall include the approval of at least two Outside
Directors), do any of the following:
i) engage in any business or activity
other than in connection with or relating to
facilitating the issuance of Certificates principally
representing an interest in Receivables or Notes
principally secured by Receivables;
ii) incur any indebtedness, or assume or
guaranty any indebtedness of any other entity, other
than in connection with the issuance of Securities
pursuant to Agreements;
iii) dissolve or liquidate, in whole or in
part;
iv) merge or consolidate with or into any
other entity or convey or transfer its properties and
assets substantially as an entirety to an entity,
unless:
(a) the entity (if other than the
Corporation) formed or surviving the
consolidation or merger or which acquires the
properties and assets of the Corporation is
organized under the laws of the State of
Delaware, expressly assumes the due and
punctual payment of, and all obligations of
the Corporation in connection with the
indebtedness of the
5
<PAGE> 6
Corporation, and has a Certificate of
Incorporation containing provisions identical to
the provisions of Articles 3, 6, 10 and this
Article 8; and
(b) immediately after giving effect to
the transaction, no default or event of default
has occurred and is continuing under any
indebtedness of the Corporation or any
agreements relating to such indebtedness;
v) sell all or substantially all of the
assets of the Corporation other than in connection with
the issuance of Securities pursuant to Agreements;
vi) institute proceedings to be
adjudicated a bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings
against it, or file a petition or answer or consent
seeking reorganization or relief under the Federal
bankruptcy laws, or consent to the filing of any such
petition or to the appointment of a receiver, liquidator,
assignee, trustee, conservator, sequestrator (or other
similar official) of the Corporation or of any
substantial part of the Corporation's property, or make
an assignment for the benefit of creditors, or admit in
writing its inability to pay its debts generally as they
become due, or take corporate action in furtherance of
any such action; or
vii) amend this Certificate of
Incorporation to alter in any manner or delete Article 3,
Article 6, Article 10 or this Article 8.
9. The Corporation is to have perpetual existence.
10. The Corporation shall not, without the prior
written confirmation of each nationally recognized rating agency which has
rated the Securities issued pursuant to an Agreement at the request of the
Corporation or an underwriter of the Securities that such rating agency
will not lower the then current rating of the Securities, alter, change or
repeal Articles 3, 6, 8 or this Article 10 of the Certificate of
Incorporation. Subject to the foregoing limitation, the Corporation
reserves the right to amend, alter, change or repeal any provision
contained in this Certificate of Incorporation,
6
<PAGE> 7
in the manner now or hereafter prescribed by statute, and all rights
conferred upon stockholders herein are granted subject to this
reservation.
11. No director shall have any personal
liability to the Corporation or its stockholders for any monetary
damages for breach of fiduciary duty as a director, except that this
Article 11 shall not eliminate or limit the liability of each director
(i) for any breach of such director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the Delaware General
Corporation Law, or (iv) for any transaction from which such director
derived an improper personal benefit. If the Delaware General
Corporation Law is amended to authorize corporate action further
eliminating or limiting the personal liability of directors, then the
liability of a director of the corporation shall be eliminated or
limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended. Any repeal or modification of this
provision shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or
modification.
12. The incorporator of the Corporation is
Michael A. Golden, whose mailing address is c/o Stroock & Stroock &
Lavan LLP, 180 Maiden Lane, New York, New York 10038.
4. This Amended and Restated Certificate of
Incorporation was duly adopted by the Board of Directors and by the
stockholder in accordance with Sections 242 and 245 of the General
Corporation Law of the State of Delaware.
5. This Restated Certificate of Incorporation shall be
effective upon filing.
7
<PAGE> 8
IN WITNESS WHEREOF, said NationsCredit Securitization Corporation has
caused this Certificate to be signed by Lawrence Angelilli, Chief Executive
Officer and President, this 1st day of October, 1997.
By: /s/ LAWRENCE ANGELILLI
-----------------------------------
Name: Lawrence Angelilli
Title: Chief Executive Officer
and President
8
<PAGE> 1
EXHIBIT 3.2
AMENDED AND RESTATED
BY-LAWS
OF
NATIONSCREDIT SECURITIZATION CORPORATION
(A Delaware corporation)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK.
(a) Every holder of stock in the Corporation shall be entitled to have a
certificate signed by, or in the name of, the Corporation by the Chairman or
Vice-Chairman of the Board of Directors, if any, or by the President or a
Vice-President and by the Treasurer or an Assistant Treasurer or the Secretary
or an Assistant Secretary of the Corporation representing the number of shares
owned by such person in the Corporation. If such certificate is countersigned
by a transfer agent other than the Corporation or its employee or by a
registrar other than the Corporation or its employee, any other signature on
the certificate may be a facsimile. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature
<PAGE> 2
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if such person were such officer,
transfer agent or registrar at the date of issue.
(b) Whenever the Corporation shall be authorized to issue more than one
class of stock or more than one series of any class of stock, and whenever the
Corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
(c) The Corporation may issue a new certificate of stock in place of any
certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the Board of Directors may require the owner of any lost, stolen
or destroyed certificate, or such person's legal representative, to give the
Corporation a bond sufficient to indemnify the Corporation against any claim
that may be made against it on account of the
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<PAGE> 3
alleged loss, theft or destruction of any such certificate or the issuance of
any such new certificate.
2. FRACTIONAL SHARE INTERESTS.
The Corporation may, but shall not be required to, issue fractions of a
share.
3. STOCK TRANSFERS.
Upon compliance with provisions restricting the transfer or registration
of transfer of shares of stock, if any, transfers or registration of transfer
of shares of stock of the Corporation shall be made only on the stock ledger of
the Corporation by the registered holder thereof, or by such person's attorney
thereunto authorized by power of attorney duly executed and filed with the
Secretary of the Corporation or with a transfer agent or a registrar, if any,
and on surrender of the certificate or certificates for such shares of stock
properly endorsed and the payment of all taxes due thereon.
4. RECORD DATE FOR STOCKHOLDERS.
(a) In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of
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stockholders or any adjournment thereof, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which record date shall not be more than sixty nor less than ten days before
the date of such meeting. If no record date has been fixed by the Board of
Directors, the record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day on which notice is given, or, if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of
the meeting; provided, however, that the Board of Directors may fix a new
record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix a record
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<PAGE> 5
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted, and which record date shall be not more than
sixty days prior to such action. If no record date has been fixed, the record
date for determining stockholders for any such purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto.
5. MEANING OF CERTAIN TERMS.
As used herein in respect of the right to notice of a meeting of
stockholders or a waiver thereof or to participate or vote thereat or to
consent or dissent in writing in lieu of a meeting, as the case may be, the
term "share" or "shares" or "share of stock" or "shares of stock" or
"stockholder" or "stockholders" refers to an outstanding share or shares of
stock and to a holder or holders of record of outstanding shares of stock when
the Corporation is authorized to issue only one class of shares of stock, and
said reference is also intended to include any outstanding share or shares of
stock and any holder or holders of record of outstanding shares of stock of any
class upon which or upon whom the Certificate of Incorporation confers such
rights where there are two or more classes or series of
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<PAGE> 6
shares of stock or upon which or upon whom the General Corporation Law confers
such rights notwithstanding that the Certificate of Incorporation may provide
for more than one class or series of shares of stock, one or more of which are
limited or denied such rights thereunder; provided, however, that no such right
shall vest in the event of an increase or a decrease in the authorized number
of shares of stock of any class or series which is otherwise denied voting
rights under the provisions of the Certificate of Incorporation, including any
preferred stock which is denied voting rights under the provisions of the
resolution or resolutions adopted by the Board of Directors with respect to the
issuance thereof.
6. STOCKHOLDER MEETINGS.
(a) TIME. The annual meeting shall be held on the date and at the time
fixed, from time to time, by the Board of Directors. A special meeting shall be
held on the date and at the time fixed by the Board of Directors.
(b) PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of Delaware, as the Board of Directors may,
from time to time, fix. Whenever the Board of Directors shall fail to fix such
place, the meeting
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<PAGE> 7
shall be held at the registered office of the Corporation in the State of
Delaware.
(c) CALL. Annual meetings and special meetings may be called by the
Board of Directors or by any officer instructed by the Board of Directors to
call the meeting.
(d) NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, stating the place, date and hour of the meeting. The notice of an
annual meeting shall state that the meeting is called for the election of
Directors and for the transaction of other business which may properly come
before the meeting, and shall (if any other action which could be taken at a
special meeting is to be taken at such annual meeting), state such other action
or actions as are known at the time of such notice. The notice of a special
meeting shall in all instances state the purpose or purposes for which the
meeting is called. If any action is proposed to be taken which would, if taken,
entitle stockholders to receive payment for their shares of stock, the notice
shall include a statement of that purpose and to that effect. Except as
otherwise provided by the General Corporation Law, a copy of the notice of any
meeting shall be given, personally or by mail, not less than ten days nor more
than sixty days before the date of the meeting, unless the lapse
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<PAGE> 8
of the prescribed period of time shall have been waived, and directed to each
stockholder at such person's address as it appears on the records of the
Corporation. Notice by mail shall be deemed to be given when deposited, with
postage thereon prepaid, in the United States mail. If a meeting is adjourned
to another time, not more than thirty days hence, and/or to another place, and
if an announcement of the adjourned time and place is made at the meeting, it
shall not be necessary to give notice of the adjourned meeting unless the Board
of Directors, after adjournment, fixes a new record date for the adjourned
meeting. Notice need not be given to any stockholder who submits a written
waiver of notice before or after the time stated therein. Attendance of a
person at a meeting of stockholders shall constitute a waiver of notice of such
meeting, except when the stockholder attends a meeting for the express purpose
of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special
meeting of the stockholders need be specified in any written waiver of notice.
(e) STOCKHOLDER LIST. There shall be prepared and made,
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<PAGE> 9
at least ten days before every meeting of stockholders, a complete list of the
stockholders, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or if not so specified, at the place where the meeting
is to be held. The list shall also be produced and kept at the time and place
of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present. The stock ledger shall be the only evidence as to
who are the stockholders entitled to examine the stock ledger, the list
required by this section or the books of the Corporation, or to vote at any
meeting of stockholders.
(f) CONDUCT OF MEETING. Meetings of the stockholders shall be presided
over by one of the following officers in the order of seniority and if present
and acting: the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, the President, a Vice President, a chairman for the meeting chosen
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<PAGE> 10
by the Board of Directors or, if none of the foregoing is in office and present
and acting, by a chairman to be chosen by the stockholders. The Secretary of
the Corporation or, in such person's absence, an Assistant Secretary, shall act
as secretary of every meeting, but if neither the Secretary nor an Assistant
Secretary is present the chairman for the meeting shall appoint a secretary of
the meeting.
(g) PROXY REPRESENTATION. Every stockholder may authorize another person
or persons to act for such stockholder by proxy in all matters in which a
stockholder is entitled to participate, whether by waiving notice of any
meeting, voting or participating at a meeting, or expressing consent or dissent
without a meeting. Every proxy must be signed by the stockholder or by such
person's attorney-in-fact. No proxy shall be voted or acted upon after three
years from its date unless such proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and,
if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power. A proxy may be made irrevocable regardless of
whether the interest with which it is coupled is an interest in the stock
itself or an interest in the Corporation generally.
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<PAGE> 11
(h) INSPECTORS AND JUDGES. The Board of Directors, in advance of any
meeting, may, but need not, appoint one or more inspectors of election or
judges of the vote, as the case may be, to act at the meeting or any
adjournment thereof. If an inspector or inspectors or judge or judges are not
appointed by the Board of Directors, the person presiding at the meeting may,
but need not, appoint one or more inspectors or judges. In case any person who
may be appointed as an inspector or judge fails to appear or act, the vacancy
may be filled by appointment made by the person presiding thereat. Each
inspector or judge, if any, before entering upon the discharge of such person's
duties, shall take and sign an oath faithfully to execute the duties of
inspector or judge at such meeting with strict impartiality and according to
the best of his ability. The inspectors or judges, if any, shall determine the
number of shares of stock outstanding and the voting power of each, the shares
of stock represented at the meeting, the existence of a quorum and the validity
and effect of proxies, receive votes, ballots or consents, hear and determine
all challenges and questions arising in connection with the right to vote,
count and tabulate all votes, ballots or consents, determine the result, and do
such other acts as are proper to conduct the election or vote
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<PAGE> 12
with fairness to all stockholders. On request of the person presiding at the
meeting, the inspector or inspectors or judge or judges, if any, shall make a
report in writing of any challenge, question or matter determined by such
person or persons and execute a certificate of any fact so found.
(i) QUORUM. Except as the General Corporation Law or these By-Laws may
otherwise provide, the holders of a majority of the outstanding shares of stock
entitled to vote shall constitute a quorum at a meeting of stockholders for the
transaction of any business. The stockholders present may adjourn the meeting
despite the absence of a quorum. When a quorum is once present to organize a
meeting, it is not broken by the subsequent withdrawal of any shareholders.
(j) VOTING. Each stockholder entitled to vote in accordance with the
terms of the Certificate of Incorporation and of these By-Laws, or, with
respect to the issuance of preferred stock, in accordance with the terms of a
resolution or resolutions of the Board of Directors, shall be entitled to one
vote, in person or by proxy, for each share of stock entitled to vote held by
such stockholder. In the election of Directors, a plurality of the votes
present at the meeting shall elect. Any other action shall be authorized by a
majority of the votes cast
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<PAGE> 13
except where the Certificate of Incorporation or the General Corporation Law
prescribes a different percentage of votes and/or a different exercise of
voting power.
Voting by ballot shall not be required for corporate action except as
otherwise provided by the General Corporation Law.
7. STOCKHOLDER ACTION WITHOUT MEETINGS.
Any action required to be taken, or any action which may be taken, at any
annual or special meeting of stockholders, may be taken without a meeting,
without prior notice and without a vote, if a consent or consents in writing,
setting forth the action so taken, shall be signed by the holders of the
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice of the taking
of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing
and shall be delivered to the Corporation by delivery to its registered office
in Delaware, its principal place of business or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
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stockholders are recorded. Delivery made to the Corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION.
The business and affairs of the Corporation shall be managed by or under
the direction of the Board of Directors of the Corporation. The use of the
phrase "whole Board" herein refers to the total number of Directors which the
Corporation would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER.
A Director need not be a stockholder, a citizen of the United States, or a
resident of the State of Delaware. The initial Board of Directors shall
consist of three persons. Thereafter the number of Directors constituting the
whole board shall be at least one. Subject to the foregoing limitation and
except for the first Board of Directors, such number may be fixed from time to
time by action of the stockholders or of the
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Board of Directors, or, if the number is not fixed, the number shall be three.
The number of Directors may be increased or decreased by action of the
stockholders or of the Board of Directors. At least one director of the
Corporation (the "Outside Director") shall not be, and for at least eighteen
months prior thereto shall not have been, a director, officer or employee of,
or direct or indirect beneficial owner of 5% or more of the voting securities
of, or member of the immediate family of any such director, officer, employee
or beneficial owner of, NationsCredit Corporation (formerly Nations Financial
Holdings Corporation) ("NationsCredit"), or any corporate affiliate of
NationsCredit. Notwithstanding the foregoing, an Outside Director may be a
director of one or more other corporations that is an affiliate or are
affiliates of NationsCredit, provided that (i) each such corporation is or was
formed with limited purposes similar to the Corporation and (ii) such person
does not earn, in the aggregate, material compensation for serving in such
positions. For the purposes of the foregoing, an "affiliate" of an entity is
an entity controlling, controlled by, or under common control with such entity.
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3. ELECTION AND TERM.
The first Board of Directors, unless the members thereof shall have been
named in the Certificate of Incorporation, shall be elected by the incorporator
or incorporators and shall hold office until the first annual meeting of
stockholders and until their successors have been elected and qualified or
until their earlier resignation or removal. Any Director may resign at any
time upon written notice to the Corporation. Thereafter, Directors who are
elected at an annual meeting of stockholders, and Directors who are elected in
the interim to fill vacancies and newly created Directorships, shall hold
office until the next annual meeting of stockholders and until their successors
have been elected and qualified or until their earlier resignation or removal.
In the interim between annual meetings of stockholders or of special meetings
of stockholders called for the election of Directors and/or for the removal of
one or more Directors and for the filling of any vacancies in the Board of
Directors, including vacancies resulting from the removal of Directors for
cause or without cause, any vacancy in the Board of Directors may be filled by
the vote of a majority of the remaining Directors then in office, although less
than a quorum, or by the sole remaining Director. Should any Outside Director
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resign, die, become disabled or incapacitated, or be prevented from acting, the
affairs of the Corporation shall and may be managed by the remaining directors,
who shall promptly replace the aforementioned Outside Director with a person
meeting the requirement set forth above.
4. MEETINGS.
(a) TIME. Regular meetings shall be held at such time as the Board shall
fix. Special meetings may be called upon notice.
(b) FIRST MEETING. The first meeting of each newly elected Board may be
held immediately after each annual meeting of the stockholders at the same
place at which the meeting is held, and no notice of such meeting shall be
necessary to call the meeting, provided a quorum shall be present. In the
event such first meeting is not so held immediately after the annual meeting of
the stockholders, it may be held at such time and place as shall be specified
in the notice given as provided for special meetings of the Board of Directors,
or at such time and place as shall be fixed by the consent in writing of all of
the Directors.
(c) PLACE. Meetings, both regular and special, shall be held at such
place within or without the State of Delaware as
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shall be fixed by the Board.
(d) CALL. No call shall be required for regular meetings for which the
time and place have been fixed. Special meetings may be called by or at the
direction of the Chairman of the Board, if any, the Vice-Chairman of the Board,
if any, or the President, or of a majority of the Directors.
(e) NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required
for regular meetings for which the time and place have been fixed. Written,
oral or any other mode of notice of the time and place shall be given for
special meetings at least twenty-four hours prior to the meeting; notice may be
given by telephone or telecopy (in which case it is effective when given) or by
mail (in which case it is effective seventy-two hours after mailing by prepaid
first class mail). The notice of any meeting need not specify the purpose of
the meeting. Any requirement of furnishing a notice shall be waived by any
Director who signs a written waiver of such notice before or after the time
stated therein. Attendance of a Director at a meeting of the Board shall
constitute a waiver of notice of such meeting, except when the Director attends
a meeting for the express purpose of objecting, at the beginning of the
meeting, to the transaction of any business because the meeting is not
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lawfully called or convened.
(f) QUORUM AND ACTION. A majority of the whole Board shall constitute a
quorum except when a vacancy or vacancies prevent such majority, whereupon a
majority of the Directors in office shall constitute a quorum, provided that
such majority shall constitute at least one-third (1/3) of the whole Board.
Any Director may participate in a meeting of the Board by means of a conference
telephone or similar communications equipment by means of which all Directors
participating in the meeting can hear each other, and such participation in a
meeting of the Board shall constitute presence in person at such meeting. A
majority of the Directors present, whether or not a quorum is present, may
adjourn a meeting to another time and place. Except as herein otherwise
provided, and except as otherwise provided by the General Corporation Law, the
act of the Board shall be the act by vote of a majority of the Directors
present at a meeting, a quorum being present. The quorum and voting provisions
herein stated shall not be construed as conflicting with any provisions of the
General Corporation Law and these By-Laws which govern a meeting of Directors
held to fill vacancies and newly created Directorships in the Board.
(g) CHAIRMAN OF THE MEETING. The Chairman of the Board,
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if any and if present and acting, shall preside at all meetings. Otherwise,
the Vice-Chairman of the Board, if any and if present and acting, or the
President, if present and acting, or any other Director chosen by the Board,
shall preside.
5. REMOVAL OF DIRECTORS.
Any or all of the Directors may be removed for cause or without cause by
the stockholders.
6. COMMITTEES.
The Board of Directors may, by resolution passed by a majority of the
whole Board, designate one or more committees, each committee to consist of one
or more of the Directors of the Corporation. The Board may designate one or
more Directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. Any such
committee, to the extent provided in the resolution of the Board, shall have
and may exercise the powers of the Board of Directors in the management of the
business and affairs of the Corporation, and may authorize the seal of the
Corporation to be affixed to all papers which may require it. In the absence
or disqualification of any member of any such committee or
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committees, the members thereof present at any meeting and not disqualified
from voting, whether or not they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member.
7. ACTION IN WRITING.
Any action required or permitted to be taken at any meeting of the Board
of Directors or any committee thereof may be taken without a meeting if all
members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board or committee.
ARTICLE III
OFFICERS
1. EXECUTIVE OFFICERS.
The Board of Directors may elect or appoint a Chairman of the Board of
Directors, a President, one or more Vice Presidents (which may be denominated
with additional descriptive titles), a Secretary, one or more Assistant
Secretaries, a Treasurer, one or more Assistant Treasurers and such other
officers as it may
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determine. Any number of offices may be held by the same person.
2. TERM OF OFFICE: REMOVAL.
Unless otherwise provided in the resolution of election or appointment,
each officer shall hold office until the meeting of the Board of Directors
following the next annual meeting of stockholders and until such officer's
successor has been elected and qualified or until the earlier resignation or
removal of such officer. The Board of Directors may remove any officer for
cause or without cause.
3. AUTHORITY AND DUTIES.
All officers, as between themselves and the Corporation, shall have such
authority and perform such duties in the management of the Corporation as may
be provided in these By-Laws, or, to the extent not so provided, by the Board
of Directors.
4. THE CHAIRMAN OF THE BOARD OF DIRECTORS.
The Chairman of the Board of Directors, if present and acting, shall
preside at all meetings of the Board of Directors,
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otherwise, the President, if present, shall preside, or if the President does
not so preside, any other Director chosen by the Board shall preside.
5. THE PRESIDENT.
The President shall be the chief executive officer of the Corporation.
6. VICE PRESIDENTS.
Any Vice President that may have been appointed, in the absence or
disability of the President, shall perform the duties and exercise the powers
of the President, in the order of their seniority, and shall perform such other
duties as the Board of Directors shall prescribe.
7. THE SECRETARY.
The Secretary shall keep in safe custody the seal of the Corporation and
affix it to any instrument when authorized by the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors. The
Secretary (or in such officer's absence, an Assistant Secretary, but if neither
is present another person selected by the Chairman for
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the meeting) shall have the duty to record the proceedings of the meetings of
the stockholders and Directors in a book to be kept for that purpose.
8. THE TREASURER.
The Treasurer shall have the care and custody of the corporate funds, and
other valuable effects, including securities, and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Corporation
and shall deposit all moneys and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the
Board of Directors. The Treasurer shall disburse the funds of the Corporation
as may be ordered by the Board, taking proper vouchers for such disbursements,
and shall render to the President and Directors, at the regular meetings of the
Board, or whenever they may require it, an account of all transactions as
Treasurer and of the financial condition of the Corporation. If required by
the Board of Directors, the Treasurer shall give the Corporation a bond for
such term, in such sum and with such surety or sureties as shall be
satisfactory to the Board for the faithful performance of the duties of such
office and for the restoration to the
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<PAGE> 25
Corporation, in case of such person's death, resignation, retirement or removal
from office, of all books, papers, vouchers, money and other property of
whatever kind in such person's possession or under such person's control
belonging to the Corporation.
ARTICLE IV
CORPORATE SEAL
AND
CORPORATE BOOKS
The corporate seal shall be in such form as the Board of Directors shall
prescribe. The books of the Corporation may be kept within or without the
State of Delaware, at such place or places as the Board of Directors may, from
time to time, determine.
ARTICLE V
FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and shall be subject to
change, by the Board of Directors.
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<PAGE> 26
ARTICLE VI
INDEMNITY
(a) Any person who was or is a party or threatened to be made a party to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he or she is or was a
Director, officer, employee or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
(including employee benefit plans) (hereinafter an "indemnitee"), shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to the extent that
such amendment permits the Corporation to provide broader indemnification than
permitted prior thereto), against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by such indemnitee in connection with such action, suit or proceeding,
if the indemnitee acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the Corporation, and
with respect to any criminal action or proceeding, had no reasonable
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<PAGE> 27
cause to believe such conduct was unlawful. The termination of the proceeding,
whether by judgment, order, settlement, conviction or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a presumption that
the person did not act in good faith and in a manner which he or she reasonably
believed to be in or not opposed to the best interests of the Corporation and,
with respect to any criminal action or proceeding, had reasonable cause to
believe such conduct was unlawful.
(b) Any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit by or in the right of
the Corporation to procure a judgment in its favor by reason of the fact that
he or she is or was a Director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a director, officer,
employee or agent of another Corporation, partnership, joint venture, trust or
other enterprise (including employee benefit plans) shall be indemnified and
held harmless by the Corporation to the fullest extent authorized by the
General Corporation Law, as the same exists or may hereafter be amended (but,
in the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide
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<PAGE> 28
broader indemnification than permitted prior thereto), against expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection with the defense or settlement of such action or suit if he or she
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court in which such suit or action was
brought, shall determine, upon application, that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such court
shall deem proper.
(c) All reasonable expenses incurred by or on behalf of the indemnitee in
connection with any suit, action or proceeding, may be advanced to the
indemnitee by the Corporation.
(d) The rights to indemnification and to advancement of expenses
conferred in this article shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, the Certificate of
Incorporation, a By-Law of the
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<PAGE> 29
Corporation, agreement, vote of stockholders or disinterested Directors or
otherwise.
(e) The indemnification and advancement of expenses provided by this
article shall continue as to a person who has ceased to be a Director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such person.
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<PAGE> 1
Exhibit 4.1
NATIONSCREDIT SECURITIZATION CORPORATION,
Depositor,
NATIONSCREDIT COMMERCIAL CORPORATION OF AMERICA,
Servicer,
and
BANKERS TRUST COMPANY,
Trustee and Collateral Agent.
FORM OF
POOLING AND SERVICING AGREEMENT
Dated as of __________, 1997
$_____________
NationsCredit Grantor Trust 1997-2
$_____________
____% Marine Receivable-Backed Certificates
$_____________
____% RV Receivable-Backed Certificates
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
SECTION 1.1. CREATION OF TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
SECTION 2.1. CONVEYANCE OF DEPOSITOR RECEIVABLES AND NCMF RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE III
SECTION 3.1. SURETY BOND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE IV
SECTION 4.1. ACCEPTANCE BY TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE V
SECTION 5.1. INCORPORATION OF STANDARD TERMS AND CONDITIONS OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE VI
SECTION 6.1. SPECIAL DEFINITIONS AND TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE VII
SECTION 7.1. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE VIII
SECTION 8.1. NATIONSCREDIT COMMERCIAL NOT TO RESIGN AS SERVICER . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IX
SECTION 9.1. AGENTS FOR SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE X
[RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SCHEDULE A-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SCHEDULE A-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SCHEDULE B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE XI
DEFINITIONS
SECTION 11.1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 11.2. USAGE OF TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 11.3. CUTOFF DATE AND RECORD DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 11.4. SECTION REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE XII
THE RECEIVABLES
SECTION 12.1. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 12.2. REPURCHASE UPON BREACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 12.3. CUSTODY OF RECEIVABLE FILES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
<PAGE> 3
<TABLE>
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SECTION 12.4. DUTIES OF SERVICER AS CUSTODIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 12.5. INSTRUCTIONS; AUTHORITY TO ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 12.6. CUSTODIAN'S INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 12.7. EFFECTIVE PERIOD AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE XIII
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 13.1. DUTIES OF SERVICER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 13.2. COLLECTION OF RECEIVABLES PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 13.3. REALIZATION UPON RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 13.4. PHYSICAL DAMAGE INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 13.5. MAINTENANCE OF SECURITY INTERESTS IN BOATS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 13.6. COVENANTS OF SERVICER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 13.7. PURCHASE OF RECEIVABLES UPON BREACH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 13.8. MARINE MARINE SERVICING FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 13.8A. MONTHLY RV SERVICING FEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 13.9. SERVICER'S CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 13.10. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 13.11. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT . . . . . . . . . . . . . . . . . . . . . 26
SECTION 13.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING RECEIVABLES . . . . . . . . . . . . . . 26
SECTION 13.13. SERVICER EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 13.14. APPOINTMENT OF SUB-SERVICER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 13.15. REPRESENTATIONS AND WARRANTIES OF THE SERVICER WITH RESPECT TO THE RECEIVABLES . . . . . . . . . . 27
ARTICLE XIV
DISTRIBUTIONS: STATEMENTS TO CERTIFICATEHOLDERS
SECTION 14.1B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 14.2. MARINE COLLECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 14.2A. RV COLLECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 14.3. APPLICATION OF MARINE COLLECTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 14.4. ADDITIONAL DEPOSITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 14.5. DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 14.5A. RV DISTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 14.6. NET DEPOSITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 14.7. STATEMENTS TO MARINE CERTIFICATEHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 14.7A. STATEMENTS TO RV CERTIFICATEHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE XIV A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
THE SURETY BOND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 14A.1 THE SURETY BOND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 14A.2 PREFERENCE EVENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 14A.3 SURRENDER OF SURETY BOND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 14A.4 REPLACEMENT SURETY BOND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE XV
THE CERTIFICATES
SECTION 15.1. THE CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 15.2. AUTHENTICATION OF CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 15.3. REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . 46
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
SECTION 15.4. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 15.5. PERSONS DEEMED OWNERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 15.6. ACCESS TO LIST OF CERTIFICATEHOLDERS NAMES AND ADDRESSES . . . . . . . . . . . . . . . . . . . . . 47
SECTION 15.7. MAINTENANCE OF OFFICE OR AGENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 15.8. BOOK-ENTRY CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 15.9. NOTICES TO CLEARING AGENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 15.10. DEFINITIVE CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE XVI
THE DEPOSITOR
SECTION 16.1. REPRESENTATIONS OF DEPOSITOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 16.2. LIABILITY OF DEPOSITOR; INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 16.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF DEPOSITOR . . . . . . . . . . . . . 52
SECTION 16.4. LIMITATION ON LIABILITY OF DEPOSITOR AND OTHERS . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 16.5. DEPOSITOR MAY OWN CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 16.6. DEPOSITOR'S INTEREST IN RESERVE ACCOUNTS; NO TRANSFER . . . . . . . . . . . . . . . . . . . . . . . 53
ARTICLE XVII
THE SERVICER
SECTION 17.1. REPRESENTATIONS OF SERVICER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 17.2. LIABILITY OF SERVICER; INDEMNITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 17.3. MERGER OR CONSOLIDATION OF. OR ASSUMPTION OF THE OBLIGATIONS OF THE SERVICER . . . . . . . . . . . 56
SECTION 17.4. LIMITATION ON LIABILITY OF SERVICER AND OTHERS . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE XVIII
DEFAULT
SECTION 18.1. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 18.2. APPOINTMENT OF SUCCESSOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 18.3. NOTIFICATION TO CERTIFICATEHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 18.4. WAIVER OF PAST DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE XIX
THE TRUSTEE
SECTION 19.1. DUTIES OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 19.2 TRUSTEE'S CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 19.3. TRUSTEE'S ASSIGNMENT OF PURCHASED RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 19.4. CERTAIN MATTERS AFFECTING TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 19.5. TRUSTEE NOT LIABLE FOR CERTIFICATES OR RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 19 .6. TRUSTEE MAY OWN CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 19.7. TRUSTEE'S FEES AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 19.8. REPRESENTATIONS AND WARRANTIES OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 19.9. ELIGIBILITY REQUIREMENTS FOR TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 19.10. RESIGNATION OR REMOVAL OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 19.11. SUCCESSOR TRUSTEE AND COLLATERAL AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 19.12. MERGER OR CONSOLIDATION OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 19.13. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . 69
</TABLE>
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<TABLE>
ARTICLE XX
<S> <C>
TERMINATION
SECTION 20.1. TERMINATION OF THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 20.2. OPTIONAL PURCHASE OF ALL MARINE RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 20.2A. OPTIONAL PURCHASE OF ALL RV RECEIVABLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE XXI
MISCELLANEOUS PROVISIONS
SECTION 21.1. AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 21.2. PROTECTION OF TITLE TO TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 21.3. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 21.4. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 21.5. NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 21.6. SEVERABILITY OF PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 21.7. ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 21.8. CERTIFICATES NONASSESSABLE AND FULLY PAID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 21.9. NO PETITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 21.10. SURETY BOND ISSUER AS CONTROLLING PARTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
EXHIBIT A: FORM OF SURETY BOND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
EXHIBIT B-1: FORM OF MARINE CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
EXHIBIT B-2: FORM OF RV CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
EXHIBIT C: FORM OF DEPOSITORY AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
EXHIBIT D-1: MONTHLY SERVICER REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
EXHIBIT D-2: MONTHLY SERVICER REPORT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
EXHIBIT E-1: MARINE CERTIFICATEHOLDER STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
EXHIBIT E-2: RV CERTIFICATEHOLDER STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
EXHIBIT F: TRUSTEE'S CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
</TABLE>
<PAGE> 6
This Pooling and Servicing Agreement, dated as of __________,
1997, is made with respect to the formation of the NationsCredit Grantor Trust
1997-2, among NATIONSCREDIT SECURITIZATION CORPORATION, a Delaware corporation,
as Depositor (the "Depositor"), NATIONSCREDIT COMMERCIAL CORPORATION OF
AMERICA, a North Carolina corporation, as Servicer ("NationsCredit Commercial"
or the "Servicer"), and BANKERS TRUST COMPANY, as Trustee (the "Trustee") and
as Collateral Agent (the "Collateral Agent").
WITNESSETH THAT: In consideration of the premises and of the
mutual agreements herein contained, the parties hereto agree as follows:
ARTICLE I
SECTION 1.1. Creation of Trust. Upon the execution of this
Agreement by the parties hereto, there is hereby created the NationsCredit
Grantor Trust 1997-2.
ARTICLE II
SECTION 2.1. Conveyance of Depositor Receivables and NCMF
Receivables. (a) In consideration of the Trustee's delivery, on behalf of the
Trust, to or upon the order of the Depositor, of Certificates (the
"Certificates") in an aggregate principal amount equal to $_____________ (the
"Purchase Price"'), the Depositor does hereby sell, transfer, assign and
otherwise convey to the Trustee, in trust for the benefit of the
Certificateholders and the Surety Bond Issuer, without recourse:
(i) all right, title and interest of the
Depositor in and to the Depositor Receivables and all payments
received thereunder, in the case of Simple Interest
Receivables which are Depositor Receivables and due thereunder
in the case of Precomputed Receivables which are Depositor
Receivables, in each case, after the Cutoff Date;
(ii) the interest of the Depositor in the security
interests in the Boats or RVs related to Depositor Receivables
granted by Obligors pursuant to the Depositor Receivables;
(iii) the Purchase Agreement, including the right
of the Depositor to cause NationsCredit Commercial to
repurchase Depositor Receivables from the Depositor under
certain circumstances;
(iv) the interest of the Depositor in any proceeds
from claims on any physical damage, credit life or disability
insurance policies covering Boats or RVs or Obligors related
to Depositor Receivables;
<PAGE> 7
(v) the interest of the Depositor in any proceeds
from recourse to Dealers on Depositor Receivables; and
(vi) any proceeds of the foregoing.
The Depositor intends that the assignment and transfer herein
contemplated constitute a sale of the Depositor Receivables, conveying good
title thereto free and clear of any liens and encumbrances, from the Depositor
to the Trustee and that such property not be part of the Depositor's estate or
property of the Depositor in the event of any insolvency by the Depositor and
the Trustee acquiesces in such characterization. In the event that such
conveyance is deemed to be, or to be made as security for, a loan, the
Depositor hereby grants to the Trustee a first priority perfected security
interest in all of the Depositor's right, title and interest in and to the
Receivables and the other property conveyed hereby, and this Agreement shall
constitute a security agreement under applicable law.
(b) As additional consideration for the payment of the
Purchase Price, the Depositor shall (i) pay on behalf of the Trust to
NationsCredit Marine the Purchase Price (as defined in the Assignment) in
immediately available funds and (ii) cause NationsCredit Marine, pursuant to
the Assignment, on the date hereof to sell, transfer, assign and otherwise
convey to the Trustee, in trust for the benefit of the Certificateholders and
the Surety Bond Issuer, without recourse:
(i) all right, title and interest of
NationsCredit Marine in and to the NCMF Receivables and all
payments received thereunder, in the case of Simple Interest
Receivables which are NCMF Receivables and due thereunder in
the case of Precomputed Receivables which are NCMF
Receivables, in each case, after the Cutoff Date,
(ii) the interest of NationsCredit Marine in the
security interests in the Boats related to NCMF Receivables
granted by Obligors pursuant to the NCMF Receivables,
(iii) the right of NationsCredit Marine pursuant to
Section 1.7 of the Purchase and Sale Agreement to cause
NationsCredit Commercial to repurchase NCMF Receivables from
NationsCredit Marine for breaches of the representations and
warranties contained in paragraphs (h) or (i) of Exhibit III
to the Purchase and Sale Agreement; provided that paragraph
(i) shall be limited to paragraphs (iii), (vi), (xiii) and
(xxiii) of the definition of Eligible Receivable (as such term
is defined in the Purchase and Sale Agreement),
(iv) any interest of NationsCredit Marine in any
proceeds from claims on any physical damage, credit life or
disability insurance policies covering Boats related to NCMF
Receivables or Obligors related to NCMF Receivables,
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<PAGE> 8
(v) any interest of NationsCredit Marine in any
proceeds from recourse to Dealers on NCMF Receivables, and
(vi) any proceeds of the foregoing.
The payment of the Purchase Price (as defined in the Assignment) by
the Depositor as set forth in Section 2.1 (b) shall be at the direction of the
Trustee on behalf of the Trust.
SECTION 2.2 The Trustee agrees to hold any amounts received
in respect of the Receivables and allocable to late payment and extension fees,
administrative charges and the premiums of collateral protection insurance
purchased by the Servicer in trust for the benefit of the Depositor and agrees
to promptly remit any such amounts to the Depositor upon receipt thereof as
directed in writing in the relevant Servicer's Certificate.
ARTICLE III
SECTION 3.1. Surety Bond. The Servicer shall, simultaneously
with the execution and delivery of this Agreement, obtain the Surety Bond for
the benefit of the Trust in accordance with the respective terms thereof and
deliver it to the Trustee.
ARTICLE IV
SECTION 4.1. Acceptance by Trustee. The Trustee does hereby
accept all consideration conveyed by the Depositor pursuant to Section 2.1 and
by NationsCredit Marine pursuant to the Assignment, and declares that the
Trustee shall hold such consideration and the Surety Bond and any proceeds of
any draws thereunder upon the trusts herein set forth for the benefit of all
present and future Certificateholders, subject to the terms and provisions of
this Agreement.
ARTICLE V
SECTION 5.1. Incorporation of Standard Terms and Conditions
of Agreement. This Agreement does hereby incorporate by reference the Standard
Terms and Conditions of Agreement for the NationsCredit Grantor Trust dated as
of __________, 1997 (the "Standard Terms and Conditions of Agreement"), in the
form attached hereto.
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<PAGE> 9
ARTICLE VI
SECTION 6.1. Special Definitions and Terms. Whenever used in
the Standard Terms and Conditions of Agreement and in this Agreement, the
following words and phrases shall have the following meanings:
"Avoided Payment" shall have the meaning set forth in Section
14A.2 of the Standard Terms and Conditions.
The "Assignment" is the Assignment Agreement dated as of
__________, 1997 between among RCC, NationsCredit Marine and the Trustee,
substantially in the form of Exhibit G.
The "Corporate Trust Office" at the date of the execution
hereof is located at: Bankers Trust Company, Four Albany Street, 10th Floor,
New York, New York 10006, Attn: Corporate Trust and Agency Group.
The "Cutoff Date" shall be the close of business on
__________, 1997.
The first "Distribution Date" shall be __________, 1997.
"Final Order" shall have the meaning set forth in Section
14A.2 of the Standard Terms and Conditions.
"Final Scheduled Marine Distribution Date" means __________,
201_.
"Final Scheduled RV Distribution Date" means __________, 201_.
"Insolvency Proceeding" means the commencement, after the
Closing Date, of any bankruptcy, insolvency, readjustment of debt,
reorganization, marshalling of assets and liabilities or similar proceedings by
or against any person, or the commencement, after the Closing Date, of any
proceedings by or against any Person for the winding up or liquidation of its
affairs, or the consent after the date hereof to the appointment of a trustee,
conservator, receiver or liquidator in any bankruptcy, insolvency, readjustment
of debt, reorganization, marshalling of assets and liabilities or similar
proceedings of or relating to any Person.
The "Marine Pass--Through Rate" is __% per annum.
The "Marine Reserve Account" means the account designated as
such, established and maintained pursuant to Section 14.1(b) of the Standard
Terms and Conditions of Agreement.
"Notice for Payment" shall have the meaning set forth in the
Surety Bond.
The "Optional Purchase Percentage" shall be 5%.
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<PAGE> 10
The "Original Certificate Balance" means the sum of the
Original Marine Certificate Balance and the Original RV Certificate Balance.
The "Original Marine Certificate Balance" is $ ______________.
The "Original RV Certificate Balance" is $______________.
The "Original Marine Pool Balance" is $ _________________.
The "Original Pool Balance" means the sum of the Original
Marine Pool Balance and the Original RV Pool Balance.
The "Original RV Pool Balance" is $ _______________.
The "Permitted Investments" shall be, at anytime, any one or
more of the obligations and securities set forth in Schedule CB hereto.
The "Purchase Price" has the meaning set forth in Section
2.1(a).
The "Reimbursement Agreement" is the Insurance and
Reimbursement Agreement dated as of __________, 1997, among the Surety Bond
Issuer, the Depositor and the Servicer.
The "Required Deposit Rating" shall be a rating on short-term
deposits of "Prime-l" by Moody's and "A-1" by S & P or any other rating
acceptable to each of the Rating Agencies; and any requirement that deposits
have the "Required Deposit Rating" shall mean that such deposits have the
foregoing ratings from each of such rating agencies or such other rating which
is acceptable to the Rating Agencies.
The "RV Pass--Through Rate" is __% per annum.
The "RV Reserve Account" means the account designated as such,
established and maintained pursuant of Section 14.1A(b) of the Standard Terms
and Conditions of Agreement.
The "Servicing Fee Rate'' shall be [.75]% per annum.
The "Surety Bond" means the unconditional, irrevocable surety
bond, substantially in the form attached hereto as Exhibit A, to be issued by
the Surety Bond Issuer and naming the Trustee as beneficiary.
The "Surety Bond Issuer" shall be Capital Markets Assurance
Corporation.
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<PAGE> 11
ARTICLE VII
SECTION 7.1. Additional Representations and Warranties of the
Depositor. The Depositor does hereby make the following representations and
warranties on which the Trustee, on behalf of the Trust, relies in accepting
the Depositor Receivables in trust and executing and authenticating the
Certificates:
(i) Original Maturity of Depositor Receivables.
Each Depositor Receivable shall have an original maturity of
not more than 180 months.
(ii) Remaining Maturity of Depositor Receivables.
As of the Cutoff Date, each Depositor Receivable shall have a
remaining maturity of not more than 180 months.
(iii) Annual Percentage Rate. Each Marine
Receivable shall have a fixed Annual Percentage Rate of not
less than _____% and not greater than ______%. Each RV
Receivable shall have a fixed Annual Percentage Rate of not
less than __% and not greater than ___%.
(iv) Location of Receivable Files. The Depositor
Receivable Files shall be kept at the offices of NationsCredit
Commercial at 1000 Holcomb Woods Parkway, Roswell, Georgia
30076 and at 2260 Douglas Boulevard, Suite 100, Roseville,
California 95061.
(v) Maximum Balance. No Marine Depositor
Receivable has a Principal Balance greater than $50,000.
(vi) No Repossessions. As of the Cutoff Date, no
Boat securing any Marine Depositor Receivable is in
repossession status.
(vii) No Bankruptcies. As of the Cutoff Date, no
Obligor on a Marine Depositor Receivable was noted in the
related Marine Receivable file as the subject of any
bankruptcy proceeding.
(viii) Delinquencies. As of the Cutoff Date, no
Marine Depositor Receivable shall have a payment that is 60 or
more days delinquent.
The foregoing representations and warranties shall (i) speak
as of the Closing Date, but shall survive the sale, transfer and assignment of
the Depositor Receivables to the Trustee, on behalf of the Trust and (ii) be
subject to the notice and repurchase provisions set forth in Section 12.2 of
the Standard Terms and Conditions of Agreement in the same manner and to the
same extent as if they were set forth in Section 12.1 thereof.
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<PAGE> 12
ARTICLE VIII
SECTION 8.1. NationsCredit Commercial Not to Resign as
Servicer. Except as a result of the operation of Section 17.3 of the Standard
Terms and Conditions of Agreement, NationsCredit Commercial shall not resign
from the obligations and duties hereby imposed on it as Servicer under this
Agreement except upon determination that the performance of its duties under
this Agreement shall no longer be permissible under applicable law. Notice of
any such determination permitting the resignation of NationsCredit Commercial
shall be communicated to the Trustee at the earliest practicable time (and, if
such communication is not in writing, shall be confirmed in writing at the
earliest practicable time) and any such determination shall be evidenced by an
Opinion of Counsel to such effect delivered to the Trustee concurrently with or
promptly after such notice. No such resignation shall become effective until
the Trustee or a successor Servicer shall have assumed the responsibilities and
obligations of NationsCredit Commercial in accordance with Section 18.2 of the
Standard Terms and Conditions of Agreement.
ARTICLE IX
SECTION 9.1. Agents for Service. The agent for service for
the Depositor shall be John B. Stockton, NationsCredit Management Corporation,
1 Canterbury Green, 201 Broad Street, Stamford, Connecticut 06901.
ARTICLE X
[RESERVED]
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<PAGE> 13
IN WITNESS WHEREOF, the Depositor, the Servicer, the Trustee
and the Collateral Agent have caused this Agreement to be duly executed by
their respective officers as of the day and year first above written.
NATIONSCREDIT SECURITIZATION
CORPORATION, as Depositor
By: ______________________
Name:
Title:
NATIONSCREDIT COMMERCIAL
CORPORATION OF AMERICA, as Servicer
By: _______________________
Name:
Title:
BANKERS TRUST COMPANY, as Trustee
and as Collateral Agent
By: _______________________
Name:
Title:
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<PAGE> 14
SCHEDULE A-1
Schedule of Marine Depositor Receivables
(Delivered on[NationsCredit to fill in])
A-1
<PAGE> 15
SCHEDULE A-2
Schedule of RV Depositor Receivables
(Delivered on [NationCredit to fill in])
B-1
<PAGE> 16
SCHEDULE B
Schedule of Marine NCMF Receivables
(Delivered on [NationsCredit to fill in])
C-1
<PAGE> 17
SCHEDULE C
Schedule of Permitted Investments
"Permitted Investments" are any of the following, which shall mature on or
prior to the next succeeding Deposit Date:
(i) any direct obligations of, and obligations fully guaranteed by,
the United States of America, the Federal Home Loan Mortgage Corporation, the
Federal National Mortgage Association, or any agency or instrumentality of the
United States of America the obligations of which are backed by the full faith
and credit of the United States of America;
(ii) (A) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by, or Federal funds sold by any depository
institution or trust company incorporated under the laws of the United States
of America or any state thereof and subject to supervision and examination by
Federal and/or state authorities or under the laws of any other jurisdiction,
so long as at the time of such investment or contractual commitment providing
for such investment the commercial paper or other short-term debt obligations
of such depository institution or trust company have the highest credit rating
available from each Rating Agency or (B) any other demand or time deposit or
certificate of deposit which is fully insured by the Federal Deposit Insurance
Corporation;
(iii) repurchase obligations with respect to (A) any security described
in clause (i) above or (B) any other security issued or guaranteed by an agency
or instrumentality of the United States of America, in either case entered into
with a depository institution or trust company (acting as principal) described
in clause (ii) (A) above or with any money market funds maintained by a broker
which has, at the time of such investment, the highest credit rating from each
Rating Agency;
(iv) commercial paper having a rating of at least "A-1" by S&P and
"Prime-l" by Moody's at the time of such investment, including commercial paper
having such rating issued by the Trustee, NationsBank Corporation or
NationsCredit Corporation;
(v) money market funds or money market mutual funds (other than
closed-end funds), including funds for which Bankers Trust Company is
investment manager or advisor, which (A) maintain a constant net asset value
and (B) have at the time of such investment a rating by AAAm or AAAmg by S&P or
Aaa by Moody's;
(vi) if the Trustee does not receive written investment instructions,
the investments referred to in (v) above; or
(vii) any other investment approved in writing by each Rating Agency.
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<PAGE> 1
Exhibit 4.2
NATIONSCREDIT SECURITIZATION CORPORATION,
Depositor,
and
NATIONSCREDIT COMMERCIAL CORPORATION OF AMERICA,
Servicer.
FORM OF
STANDARD TERMS AND CONDITIONS OF AGREEMENT
Dated as of __________, 1997
$_____________
NationsCredit Grantor Trust 1997-2
$_____________
____% Marine Receivable-Backed Certificates
$_____________
____% RV Receivable-Backed Certificates
<PAGE> 2
NATIONSCREDIT GRANTOR TRUST 1997-2
STANDARD TERMS AND CONDITIONS OF AGREEMENT
DATED AS OF __________, 1997
INTRODUCTION
These Standard Terms and Conditions of Agreement shall be
applicable to NationsCredit Grantor Trust 1997-2 formed on the date hereof,
with respect to which a Pooling and Servicing Agreement incorporating by
reference these Standard Terms and Conditions of Agreement shall have been
executed.
ARTICLE XI
Definitions
SECTION 11.1. Definitions. Whenever used in the Agreement
(including these Standard Terms and Conditions of Agreement) the following
words and phrases, unless the context otherwise requires, shall have the
following meanings:
"Account Property" means all amounts and investments held from
time to time in the Marine Reserve Account and the RV Reserve Account , as the
case may be (whether in the form of deposit accounts, Physical Property,
book-entry securities, uncertificated securities, securities entitlements,
investment property or otherwise), and all proceeds of the foregoing.
"Agreement" means the Pooling and Servicing Agreement executed
by the Depositor, the Servicer, the Trustee and the Collateral Agent as of the
Cutoff Date, into which these Standard Terms and Conditions of Agreement shall
be incorporated by reference, and all amendments and supplements thereto.
"Amount Financed" with respect to a Marine Receivable means
the original amount advanced under the Marine Receivable, and with respect to a
RV Receivable means the original amount advanced under the RV Receivable,
toward the purchase price of the Boat, in the case of Marine Receivables, or
toward the purchase price of the RV, in the case of RV Receivables, and any
cost to the related Obligor of any dealer installed options, extended warranty
plans and credit life and disability insurance, including any amount allocable
to the premium of collateral protection insurance purchased by NationsCredit
Commercial prior to the Cutoff Date.
"Annual Percentage Rate" or "APR" of a Receivable means the
annual rate of finance charges stated in the Receivable.
"Boat" means a new or used boat, boat motor or boat trailer,
securing an Obligor's indebtedness under the respective Marine Receivable.
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<PAGE> 3
"Book-Entry Certificates" shall mean beneficial interests in
the Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 15.8.
"Business Day" means any day other than (i) a Saturday or a
Sunday or (ii) a day on which banking institutions in the City of New York, New
York shall be authorized or obligated by law or executive order to be closed.
"Carry-Over Monthly Marine Interest" means, for any
Distribution Date, the aggregate Monthly Marine Interest Payments for prior
Distribution Dates which have not been paid, after giving effect to any
payments or distributions made pursuant to clauses (ii) through (iv) of Section
14.5(a).
"Carry-Over Monthly Marine Principal" means, for any
Distribution Date, the aggregate Monthly Marine Principal Payments for prior
Distribution Dates which have not been paid, after giving effect to any
payments or distributions made pursuant to clauses (ii) through (iv) of Section
14.5(a).
"Carry-Over Monthly Marine Servicing Fee" means, for any
Distribution Date, the aggregate Monthly Marine Servicing Fees for prior
Distribution Dates which have not been paid after giving effect to any payments
or distributions made pursuant to clauses (ii) through (iv) of Section 14.5(a).
"Carry-Over Monthly RV Interest" means, for any Distribution
Date, the aggregate Monthly RV Interest Payments for prior Distribution Dates
which have not been paid, after giving effect to any payments or distributions
made pursuant to clauses (ii) through (iv) of Section 14.5A(a).
"Carry-Over Monthly RV Principal" means, for any Distribution
Date, the aggregate Monthly RV Principal Payments for prior Distribution Dates
which have not been paid, after giving effect to any payments or distributions
made pursuant to clauses (ii) through (iv) of Section 14.5A(a).
"Carry-Over Monthly RV Servicing Fee" means, for any
Distribution Date, the aggregate Monthly RV Servicing Fees for prior
Distribution Dates which have not been paid after giving effect to any payments
or distributions made pursuant to clauses (ii) through (iv) of Section
14.5A(a).
"Certificate" means a Marine Certificate or an RV Certificate.
"Certificate Balance" means as of any date of determination,
the Marine Certificate Balance and the RV Certificate Balance.
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<PAGE> 4
"Certificate Owner" shall mean, with respect to a Book-Entry
Certificate, the Person who is the owner of such Book-Entry Certificate, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly or as an indirect
participant, in accordance with the rules of such Clearing Agency).
"Certificate Register" and "Certificate Registrar" mean the
register maintained and the registrar appointed pursuant to Section 15.3.
"Certificateholder" or "Holder" means the Person in whose name
the respective Certificate shall be registered in the Certificate Register,
except that, solely for the purposes of giving any consent, waiver, request or
demand pursuant to the Agreement, the interest evidenced by any Certificate
registered in the name of the Depositor or the Servicer, or any Person
controlling, controlled by, or under common control with the Depositor or the
Servicer, shall not be taken into account in determining whether the requisite
percentage necessary to effect any such consent, waiver, request or demand
shall have been obtained.
"Clearing Agency" shall mean an organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended.
"Clearing Agency Participant" shall mean a broker, dealer,
bank, other financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of securities
deposited with the Clearing Agency.
"Collateral Agent" means the Person acting as Collateral Agent
under this Agreement, its successor in interest, and any successor Collateral
Agent appointed pursuant to Section 19.10.
"Collection Period" means each calendar month.
"Corporate Trust Office" means the office of the Trustee at
which its corporate trust business shall be administered, which office at the
date of the Agreement is 4 Albany Street, New York, New York 10006.
"Cutoff Date" means the date specified as such in Section 6.1 of the Agreement.
"Dealer" means the dealer who sold a Boat or RV, as
applicable, and who originated and assigned the respective Marine Receivable or
respective RV Receivable, as applicable, to NationsCredit Commercial under an
existing agreement between such dealer and NationsCredit Commercial.
"Defaulted Receivable" means a Marine Receivable or RV
Receivable as to which either (x) the Servicer has determined, in accordance
with its customary servicing procedures, that eventual payment in full is
unlikely or (y) (1) 90 or more days have elapsed since the related
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<PAGE> 5
Boat or RV, as applicable, has been repossessed by the Servicer, in the case of
any Marine Receivable or RV Receivable with a Principal Balance of $10,000 or
less as of the day such Boat or RV, as applicable, was repossessed by the
Servicer or (2) 180 or more days have elapsed since the related Boat or RV, as
applicable, has been repossessed by the Servicer, in the case of any Marine
Receivable or RV Receivable, as applicable, with a Principal Balance of greater
than $10,000 as of the day such Boat or RV, as applicable, was repossessed by
the Servicer.
"Defaulted Marine Receivable" means a Defaulted Receivable
which is a Marine Receivable.
"Defaulted RV Receivable" means a Defaulted Receivable which
is a RV Receivable.
"Definitive Certificates" means the Certificates specified in
Section 15.8.
"Delivery" or "Deliver" when used with respect to Account
Property means:
(a) with respect to bankers' acceptances,
commercial paper, negotiable certificates of deposit and other
obligations that constitute "instruments" within the meaning
of Section 9-105(1)(i) of the Relevant UCC and are susceptible
to physical delivery, transfer thereof to the Trustee or its
nominee, agent or custodian by physical delivery to the
Trustee or its nominee, agent or custodian endorsed to, or
registered in the name of, the Trustee, as trustee for the
benefit of the Certificateholders, or its nominee, agent or
custodian or endorsed in blank, and, with respect to a
certificated security (as defined in Section 8-102 of the
Relevant UCC) transfer thereof (i) by delivery of such
certificated security endorsed to, or registered in the name
of, the Trustee, as trustee for the benefit of the
Certificateholders, or its nominee, agent or custodian or
endorsed in blank to a financial intermediary (as defined in
Section 8-313 of the Relevant UCC) and the making by such
financial intermediary of entries on its books and records
identifying such certificated securities as belonging to the
Trustee, as trustee for the benefit of the Certificateholders,
or its nominee, agent or custodian and the sending by such
financial intermediary of a confirmation of the purchase of
such certificated security by the Trustee or its nominee,
agent or custodian, or (ii) by delivery thereof to a "clearing
corporation" (as defined in Section 8-102(3) of the Relevant
UCC) and the making by such clearing corporation of
appropriate entries on its books reducing the appropriate
securities account of the transferor and increasing the
appropriate securities account of a financial intermediary by
the amount of such certificated security, the identification
by the clearing corporation of the certificated securities for
the sole and exclusive account of the financial intermediary,
the maintenance of such certificated securities by such
clearing corporation or a "custodian bank" (as defined in
Section 8102(4) of the Relevant UCC) or the nominee of either
subject to the clearing corporation's exclusive
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<PAGE> 6
control, the sending of a confirmation by the financial
intermediary of the purchase by the Trustee, as trustee for
the benefit of the Certificateholders, or its nominee, agent
or custodian of such securities and the making by such
financial intermediary of entries on its books and records
identifying such certificated securities as belonging to the
Trustee, as trustee for the benefit of the Certificateholders,
as applicable, or its respective nominee, agent or custodian
(all of the foregoing, "Physical Property"), and, in any
event, any such Physical Property in registered form shall be
in the name of the Trustee, as trustee for the benefit of the
Certificateholders, or its nominee, agent or custodian; and
such additional or alternative procedures as may hereafter
become appropriate to effect the complete transfer of
ownership of any such Account Property (as defined herein) to
the Trustee, as trustee for the benefit of the
Certificateholders, or its nominee, agent or custodian,
consistent with changes in applicable law or regulations or
the interpretation thereof;
(b) with respect to any securities issued by the
U.S. Treasury, the Federal Home Loan Mortgage Corporation or
by the Federal National Mortgage Association that is a
book-entry security held through the Federal Reserve System
pursuant to Federal book-entry regulations, the following
procedures, all in accordance with applicable law, including
applicable federal regulations and Articles 8 and 9 of the
Relevant UCC: book-entry registration of such Account Property
to an appropriate book-entry account maintained with a Federal
Reserve Bank by a financial intermediary which is also a
"depository" pursuant to applicable federal regulations and
issuance by such financial intermediary of a deposit advice or
other written confirmation of such book-entry registration to
the Trustee or its nominee, agent or custodian of the purchase
by the Trustee, as trustee for the benefit of the
Certificateholders, or its nominee or custodian of such
book-entry securities; the making by such financial
intermediary of entries in its books and records identifying
such book-entry security held through the Federal Reserve
System pursuant to federal book-entry regulations as belonging
to the Trustee, as trustee for the benefit of the
Certificateholders, or its nominee, agent or custodian and
indicating that such custodian holds such Account Property
solely as agent for the Trustee, as trustee for the benefit of
the Certificateholders, or its nominee, agent or custodian;
and such additional or alternative procedures as may hereafter
become appropriate to effect complete transfer of ownership of
any such Account Property to the Trustee or its nominee, agent
or custodian, consistent with changes in applicable law or
regulations or the interpretation thereof; and
(c) with respect to any item of Account Property
that is an uncertificated security under Article 8 of the
Relevant UCC and that is not governed by clause (b) above,
registration on the books and records of the issuer thereof in
the name of the financial intermediary, the sending of a
confirmation by
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<PAGE> 7
the financial intermediary of the purchase by the Trustee, as
trustee for the benefit of the Certificateholders, or its
nominee, agent or custodian of such uncertificated security,
and the making by such financial intermediary of entries on
its books and records identifying such uncertificated
certificates as belonging to the Trustee, as trustee for the
benefit of the Certificateholders, or its nominee, agent or
custodian.
"Deposit Date" means the Business Day preceding each
Distribution Date.
"Depositor" means NationsCredit Securitization Corporation, a
corporation organized under the laws of the State of Delaware, as the depositor
of the Depositor Receivables under the Agreement, and each successor to
NationsCredit Securitization Corporation (in the same capacity) pursuant to
Section 16.3.
"Depositor Receivables" means the marine retail installment
sales contracts listed on Schedule A-1 and all of the RV Receivables.
"Depositor Receivables Files" means the documents specified in
Section 12.3 that relate to Depositor Receivables.
"Depository Agreement" means the agreement among the
Depositor, the Trustee and the initial Clearing Agency, dated ___________,
1997, substantially in the form attached hereto as Exhibit C.
"Determination Date" means the earlier of the eighth Business
Day or the eleventh calendar day of each month.
"Distribution Date" means, for each Collection Period, the
15th of the following month, or if the 15th is not a Business Day, the next
following Business Day, commencing with the date specified in the Agreement.
"Event of Default" means an event specified in Section 18.1.
"Lien" means a security interest, lien, charge, pledge, equity
or encumbrance of any kind other than tax liens, mechanics' liens and any liens
which attach to the respective Receivable by operation of law.
"Liquidation Proceeds" means, with respect to any Collection
Period, the monies (including recoveries) collected from whatever source,
during such Collection Period on a Defaulted Marine Receivable or Defaulted RV
Receivable, as applicable, net of the sum of any amounts expended by the
Servicer for the account of the Obligor plus any amounts required by law to be
remitted to the Obligor.
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"Marine Available Funds" means, for any Distribution Date, the
sum of (i) all Marine Collections received by the Servicer during the related
Collection Period, (ii) all refunds received by the Servicer with respect to
any refunded portion of extended warranty protection plan costs, or of physical
damage, credit life or disability insurance premiums included in the Amount
Financed with respect to Marine Receivables unless such refund must be paid to
the Obligor, (iii) the Purchase Amount of all Marine Receivables purchased or
repurchased under the Agreement on the Business Day prior to the Distribution
Date, (iv) Liquidation Proceeds with respect to the Marine Receivables received
by the Servicer during the related Collection Period and (v) all net income and
gain realized on funds deposited into the Marine Collection Account or the
Marine Certificate Account and invested in Permitted Investments during the
related Collection Period.
"Marine Certificate" means a certificate executed by the Trust
and authenticated by the Trustee substantially in the form of Exhibit B-1
hereto.
"Marine Certificate Account" means the account designated as
such, established and maintained pursuant to Section 14.1(a).
"Marine Certificate Balance" means, as of any date of
determination, the Original Marine Certificate Balance, as specified in the
Agreement, reduced by all principal distributions on the Marine Certificates.
"Marine Certificate Factor" means, as of the close of business
on a Distribution Date, a seven-digit decimal figure equal to the Marine
Certificate Balance as of such Distribution Date divided by the Original Marine
Certificate Balance.
"Marine Collections" shall mean, with respect to a Collection
Period, all payments by or on behalf of the Obligors made during such
Collection Period other than Liquidation Proceeds on the Marine Receivables, as
applicable (other than a Purchased Receivable).
"Marine Collection Account" means the account designated as
such, established and maintained pursuant to Section 14.1(a).
"Marine Depositor Receivables" means the marine retail
installment sales contracts listed on Schedule A-1.
"Marine Distributions" shall have the meaning set forth in
Section 14.5(b).
"Marine NCMF Receivables" means the marine retail installment
sales contracts listed on Schedule B.
"Marine Pass--Through Rate" means the interest rate payable to
Marine Certificateholders, as specified in the Agreement.
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"Marine Pool Balance" means as the last day of any Collection
Period, the aggregate Principal Balance of the Marine Receivables. For
purposes of this definition only the Principal Balance of a Defaulted Marine
Receivable shall equal zero.
"Marine Priority Distributions" shall have the meaning set
forth in Section 14.5(a)(ii).
"Marine Receivables" means the Marine Depositor Receivables
and the Marine NCMF Receivables.
"Marine Reserve Account Initial Deposit" shall equal
$_________________.
"Marine Reserve Account Cross Collateral Withdrawal Amount"
shall have the meaning set forth in Section 14.5A(a)(iii).
"Marine Reserve Account Withdrawal Amount" shall have the
meaning set forth in Section 14.5(a)(ii).
"Marine Surety Drawing Amount" shall have the meaning set
forth in Section 14.5(a)(iv).
"Monthly Marine Interest Payment" means, as of any
Distribution Date, one-twelfth of the product of the Marine Pass--Through Rate
and the Marine Certificate Balance as of the close of business on the prior
Distribution Date or, in the case of the first Distribution Date, the Marine
Certificate Balance as of the Closing Date.
"Monthly Marine Servicing Fee" means the fee payable to the
Servicer for services rendered during each Collection Period, determined
pursuant to Section 13.8.
"Monthly Marine Principal Payment" means, (x) as of any
Distribution Date (except for the Final Scheduled Marine Distribution Date), an
amount equal to the sum of (i) that portion of all collections received by the
Servicer during the related Collection Period on Marine Receivables allocable
to principal (which shall not include the principal portion of proceeds from
any recoveries or liquidations in respect of any Defaulted Marine Receivable in
any Collection Period following the Collection Period in which such Marine
Receivable became a Defaulted Marine Receivable), (ii) Purchase Amounts with
respect to Marine Receivables allocable to principal and paid by the Depositor
to the Servicer or by the Servicer and (iii) the Principal Balance of Defaulted
Marine Receivables, which became Defaulted Marine Receivables during the
related Collection Period and (y) as of the Final Scheduled Marine Distribution
Date, after giving effect to the distribution of the amounts set forth in (i)
through (iii) of clause (x) above, an amount necessary to reduce the Marine
Certificate Balance to zero on such Distribution Date.
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"Monthly RV Interest Payment" means, as of any Distribution
Date, one-twelfth of the product of the RV Pass-Through Rate and the RV
Certificate Balance as of the close of business on the prior Distribution Date
or, in the case of the first Distribution Date, the RV Certificate Balance as
of the Closing Date.
"Monthly RV Principal Payment" means, (x) as of any
Distribution Date (except for the Final Scheduled RV Distribution Date), an
amount equal to the sum of (i) that portion of all collections received by the
Servicer during the related Collection Period on RV Receivables allocable to
principal (which shall not include the principal portion of proceeds from any
recoveries or liquidations in respect of any Defaulted RV Receivable in any
Collection Period following the Collection Period in which such RV Receivable
became a Defaulted RV Receivable), (ii) Purchase Amounts allocable to principal
and paid by the Depositor to the Servicer or by the Servicer and (iii) the
Principal Balance of Defaulted RV Receivables, which became Defaulted RV
Receivables during the related Collection Period and (y) as of the Final RV
Scheduled Distribution Date, after giving effect to the distribution of the
amounts set forth in (i) through (iii) of clause (x) above, an amount necessary
to reduce the RV Certificate Balance to zero on such Distribution Date.
"Monthly RV Servicing Fee" means the fee payable to the
Servicer for services rendered during each Collection Period, determined
pursuant to Section 13.8A.
"Moody's" means Moody's Investors Service, Inc.
"NationsCredit Commercial" means NationsCredit Commercial
Corporation of America, a corporation organized under the laws of North
Carolina, or its successors.
"NationsCredit Marine" means NationsCredit Marine Funding
Corporation, a Delaware corporation.
"NCMF Receivable Files" means the documents specified in
Section 12.3 that relate to NCMF Receivables.
"NCMF Receivables" means the marine retail installment sales
contracts listed on Schedule B.
"Obligor" on a Receivable means the purchaser or the
co-purchasers of the Boat or RV, as applicable, or any other Person who owes
payments under the related Receivable.
"Officer's Certificate" means a certificate signed by the
chairman of the board, the president, any vice chairman of the board, any vice
president, the treasurer, any assistant treasurer or the controller of the
Depositor, the Servicer or the Surety Bond Issuer, as appropriate.
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"Opinion of Counsel" means a written opinion of counsel who
may but need not be counsel to the Depositor or Servicer, which opinion shall
be acceptable to the Trustee, and provided that any opinion relating to the tax
status of the Trust shall be rendered by Stroock & Stroock & Lavan LLP or such
other independent outside counsel acceptable to the Trustee.
"Optional Purchase Percentage" means the percentage specified
as such in the Agreement.
"Original Certificate Balance" means the sum of the Original
Marine Certificate Balance and the Original RV Certificate Balance.
"Original Marine Certificate Balance" means the Marine
Certificate Balance as of the Closing Date, as specified in the Agreement.
"Original Marine Pool Balance" means the Pool Balance as of
the Cutoff Date, as specified in the Agreement.
"Original Pool Balance" means the sum of the Original Marine
Pool Balance and the Original RV Pool Balance.
"Original RV Certificate Balance" means the Certificate
Balance as of the Closing Date, as specified in the Agreement.
"Original RV Pool Balance" means the RV Pool Balance as of the
Cutoff Date, as specified in the Agreement.
"Permitted Investments" means those investments specified in
Schedule C of the Agreement.
"Person" means any individual, corporation, estate,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof.
"Physical Property" has the meaning assigned to such term in
the definition of "Delivery" above.
"Pool Balance" means the sum of the Marine Pool Balance and
the RV Pool Balance.
"Precomputed Receivable" means any Receivable under which the
portion of a payment allocable to earned interest (which may be referred to in
the Receivable as an add-on finance charge) and the portion allocable to the
related Amount Financed is determined
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according to the sum of periodic balances or the sum of monthly balances or any
equivalent method or are monthly actuarial receivables.
"Principal Balance" of a Receivable, as of the last day of a
Collection Period, means the Amount Financed minus the sum of (a) that portion
of all Collections received on or prior to such day by the Servicer allocable
as a payment of principal pursuant to Section 14.3 hereof, (b) any refunded
portion of extended warranty protection plan costs, or of physical damage,
credit life or disability insurance premiums included in the Amount Financed
which is applied during the related Collection Period unless such refund must
be paid to the Obligor, and (c) the principal portion of all Purchase Amounts
paid by the Depositor or the Servicer, in respect of such Receivable, after the
preceding Distribution Date but prior to the related Distribution Date.
"Purchase Agreement" means the Purchase Agreement executed by
the Depositor and NationsCredit Commercial as of the Cutoff Date.
"Purchase Amount" means with respect to a Marine Receivable or
a RV Receivable the amount, as of the last day of a Collection Period, required
to prepay in full the Principal Balance of a Marine Receivable or a RV
Receivable, as applicable, plus accrued interest thereon at one-twelfth the sum
of the Marine Pass-Through Rate, in the case of the Marine Receivables or the
RV Pass--Through Rate, in the case of the RV Receivables plus the Servicing Fee
Rate to the last day of the month of purchase.
The "Purchase and Sale Agreement" means the Purchase and Sale
Agreement, dated December 18, 1996 between NationsCredit Commercial and
NationsCredit Marine.
"Purchased Receivable" means a Marine Receivable or a RV
Receivable purchased as of the last day of a Collection Period by the Servicer
pursuant to Section 13.7, or 20.2 or 20.2A or by the Depositor pursuant to
Section 12.2.
"Rating Agency" means S&P, Moody's or any other nationally
recognized rating agency initially contracted by the Depositor to rate the
Certificates.
"RCC" means Receivables Capital Corporation, a Delaware
corporation.
"Receivables" means the Depositor Receivables and the NCMF
Receivables.
"Receivables Files" means the Depositor Receivable Files and
the NCMF Receivable Files.
"Receivables Purchase Agreement" means the Receivables
Purchase Agreement, dated as of December 18, 1996 among NationsCredit Marine,
RCC, NationsCredit Commercial and Bank of America National Trust and Savings
Association, as Administrator.
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"Record Date" means for any Distribution Date the close of
business on the Business Day prior to such Distribution Date.
"Reimbursement Agreement" means the agreement relating to the
Surety Bond, which agreement is further defined in Section 6.1 of the
Agreement.
"Residual Certificate" means the Certificate specified in
Section 15.1.
"Required Deposit Rating" means the rating specified in
Section 6.1 of the Agreement.
"RV" means a new or used recreational vehicle securing an
Obligor's indebtedness under the respective RV Receivable.
"RV Available Funds" means, for any Distribution Date, the sum
of (i) all RV Collections received by the Servicer during the related
Collection Period, (ii) all refunds received by the Servicer with respect to
any refunded portion of extended warranty protection plan costs, or of physical
damage, credit life or disability insurance premiums included in the Amount
Financed with respect to the RV Receivables unless such refund must be paid to
the Obligor, (iii) the Purchase Amount of all RV Receivables purchased or
repurchased under the Agreement on the Business Day prior to the Distribution
Date, (iv) Liquidation Proceeds with respect to the RV Receivables received by
the Servicer during the related Collection Period and (v) all net income and
gain realized on funds deposited into the RV Collection Account or the RV
Certificate Account and invested in Permitted Investments during the related
Collection Period.
"RV Certificate" means a certificate executed by the Trust and
authenticated by the Trustee substantially in the form of Exhibit B-2 hereto.
"RV Certificate Account" means the account designated as
such, established and maintained pursuant to Section 14.1A(a).
"RV Certificate Balance" means, as of any date of
determination, the Original RV Certificate Balance, as specified in the
Agreement, reduced by all principal distributions on the RV Certificates.
"RV Certificate Factor" means, as of the close of business on
a Distribution Date, a seven-digit decimal figure equal to the RV Certificate
Balance as of such Distribution Date divided by the Original RV Certificate
Balance.
"RV Collections" means, with respect to a Collection Period,
all payments by or on behalf of the Obligors made during such Collection Period
other than Liquidation Proceeds on the RV Receivables, as applicable, (other
than a Purchased Receivable).
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"RV Collection Account" means the account designated as such,
established and maintained pursuant to Section 14.1A(a).
"RV Depositor Receivables" means the recreational vehicle
retail installment sale contracts listed on Schedule A-2.
"RV Pass--Through Rate" means the interest rate payable to RV
Certificateholders, as specified in the Agreement.
"RV Pool Balance" means as of the last day of any related
Collection Period, the aggregate Principal Balance of the RV Receivables. For
purposes of this definition only the Principal Balance of a Defaulted RV
Receivable shall equal zero.
"RV Priority Distributions" means the distributions to the RV
Certificateholders as set forth in Section 14.5A(ii).
"RV Receivables" means the RV Depositor Receivables.
"RV Reserve Account Initial Deposit" shall equal $
_________________.
"RV Reserve Account Cross Collateral Withdrawal Amount" shall
have the meaning set forth in Section 14.5(a)(iii).
"RV Reserve Account Withdrawal Amount" shall have the meaning
in Section 14.5A(a)(ii).
"RV Surety Drawing Amount" shall have the meaning set forth in
Section 14.5A(a)(iv).
"Scheduled Payment" on a Receivable means that portion of the
payment required to be made by the Obligor on the related due date during the
respective Collection Period sufficient to amortize at level monthly payments
the Principal Balance and to provide interest at the APR.
"Servicer" means NationsCredit Commercial and each successor
to NationsCredit Commercial (in the same capacity) pursuant to Section 17.3.
"Servicer's Certificate" means a certificate completed and
executed by the Servicer by its chairman of the board, its president, any vice
chairman of the board, any vice president, the treasurer, any assistant
treasurer or the controller of the Servicer pursuant to Section 13.9,
substantially in the form of Exhibit D.
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"Servicing Standards" means, at any time, the quality of the
Servicer's (or in the event that a subservicer performs servicing operations on
behalf of the Servicer, such subservicer's) performance with respect to (i)
compliance with the terms and conditions of the Agreement, and (ii) adequacy,
measured in accordance with industry standards and current and historical
standards of the Servicer (or such subservicer) in respect of all receivables
serviced by the Servicer (or such subservicer), regardless of whether such
receivables are owned by the Servicer (or such subservicer), of the Servicer's
(or such subservicer's) servicing of the Receivables.
"Ship Mortgage Act" means the Ship Mortgage Act of 1920, as
amended.
"Simple Interest Method" means the method of allocating a
fixed level payment to principal and interest, pursuant to which the portion of
such payment that is allocated to interest is equal to the product of the fixed
rate of interest multiplied by the unpaid principal balance multiplied by the
number of days elapsed since the preceding payment of interest was made.
"Simple Interest Receivable" means any Receivable under which
the portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"Specified Marine Reserve Account Requirement" with respect to
any Distribution Date, shall equal the greater of (i) $___________, or (ii) __%
of the Marine Pool Balance as of the last day of the related Collection Period.
The Specified Marine Reserve Account Requirement may be reduced without the
consent of the Marine Certificateholders to a lesser amount, including to zero,
as determined by the Depositor; provided that such reduction is consented to in
writing by the Surety Bond Issuer and does not adversely affect the rating of
the Marine Certificates assigned by any Rating Agency. Upon the occurrence and
continuance of the event specified in Section 18.1(b)(iv), the Specified Marine
Reserve Account Requirement shall equal the sum of the Marine Certificate
Balance, accrued interest thereon and the Monthly Marine Servicing Fee and any
Carry-Over Monthly Marine Servicing Fee payable pursuant to Section 14.5 (b)
(ii) and all amounts available under Section 14.5(b)(ii) shall be deposited in
the Marine Reserve Account up to such amount.
"Specified RV Reserve Account Requirement" with respect to any
Distribution Date, shall equal the greater of (i) $___________, or (ii) __% of
the RV Pool Balance as of the last day of the related Collection Period. The
Specified RV Reserve Account Requirement may be reduced without the consent of
the RV Certificateholders to a lesser amount, including to zero, as determined
by the Depositor; provided that such reduction is consented to in writing by
the Surety Bond Issuer and does not adversely affect the rating of the RV
Certificates assigned by any Rating Agency. Upon the occurrence and
continuance of the event specified in Section 18.1(b)(iv), the Specified RV
Reserve Account Requirement shall equal the sum of the RV Certificate Balance,
accrued interest thereon and the Monthly RV Servicing Fee and any Carry-Over
Monthly RV Servicing Fee payable pursuant to Section 14.5A(b) (ii) and all
amounts
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available under Section 14.5A(b)(xii) shall be deposited in the RV Reserve
Account up to such amount.
"S&P" means Standard & Poor's Ratings Services, a Division of
The McGraw-Hill Companies.
"State" means any state of the United States of America or the
District of Columbia.
"Statement to Certificateholders" means a certificate
completed and executed by the Servicer by its the chairman of the board, its
president, any vice chairman of the board, any vice president, the treasurer,
any assistant treasurer or the controller of the Servicer pursuant to Section
14.7, substantially in the form of Exhibit E.
"Surety Bond" means the unconditional, irrevocable surety bond
designated as such in the Agreement.
"Surety Bond Issuer" means the Person specified as such in
Section 6.1 of the Agreement.
"Surety Bond Issuer Default" means the failure of the Surety
Bond Issuer to make a payment required under the Surety Bond in accordance with
its terms.
"Trust" means the trust created by the Agreement, the estate
of which shall consist of (i) the Receivables (other than Purchased
Receivables), and all payments received in the case of Simple Interest
Receivables and all payments due thereunder, in the case of Precomputed
Receivables, in each case, after the Cutoff Date; (ii) funds deposited into the
Marine Collection Account and the RV Collection Account or the Marine
Certificate Account and the RV Certificate Account; (iii) any interest of the
Depositor in the security interests in the Boats and RVs granted by the
Obligors or NationsCredit Marine in the security interests in the Boats granted
by the Obligors; (iv) the Surety Bond; (v) the Purchase Agreement; (vi) the
right of NationsCredit Marine pursuant to the Purchase and Sale Agreement to
cause NationsCredit Commercial to repurchase NCMF Receivables as a result of a
breach of representations and warranties contained in paragraph (h) or (i) of
Exhibit III of the Purchase and Sale Agreement; provided that paragraph (i)
shall be limited to paragraphs (iii), (iv), (xiii) and (xxiii) of the
definition of "Eligible Receivables" (as such term is defined in the Purchase
and Sale Agreement); (vii) any interest of the Depositor in any proceeds from
claims on physical damage, credit life or disability insurance policies
covering the Boats and RVs or NationsCredit Marine in any proceeds from claims
on physical damage, credit life or disability insurance policies covering the
Boats or the Obligors, as the case may be; (viii) any property (including the
right to receive future Liquidation Proceeds) that shall have secured a
Receivable and that shall have been acquired by or on the behalf of the
Trustee; and (ix) the proceeds of all of the foregoing.
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"Trustee" means the Person acting as Trustee under the
Agreement, its successor in interest, and any successor trustee pursuant to
Section 19.11.
"Trustee Officer" means any officer assigned to the Corporate
Trust Office, including any managing director, vice president, any assistant
vice president, any assistant secretary, any assistant treasurer, any trust
officer or any other officer of the Corporate Trust Office of the Trustee
customarily performing functions similar to those performed by persons who at
the time shall be such officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Trustee's Certificate" means a certificate completed and
executed by the Trustee by a Trustee Officer pursuant to Section 19.2,
substantially in the form of, in the case of an assignment to the Depositor,
Exhibit F-1, and in the case of an assignment to the Servicer, Exhibit F-2.
"UCC" means the Uniform Commercial Code as in effect in the
respective jurisdiction.
"Unsold Contract" means any retail installment contract
serviced by NationsCredit Commercial other than the Marine Receivables or the
RV Receivables.
SECTION 11.2. Usage of Terms. With respect to all terms in
the Agreement, the singular includes the plural and the plural the singular;
words importing any gender include the other gender; references to "writing"
include printing, typing, lithography and other means of reproducing words in a
visible form; references to agreements and other contractual instruments
include all subsequent amendments thereto or changes therein entered into in
accordance with their respective terms and not prohibited by the Agreement;
references to Persons include their permitted successors and assigns; and the
term "including" means "including without limitation."
SECTION 11.3. Cutoff Date and Record Date. All references to
the Record Date prior to the first Record Date in the life of the Trust shall
be to the Cutoff Date.
SECTION 11.4. Section References. All section references
shall be to Sections in these Standard Terms and Conditions of Agreement.
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ARTICLE XII
The Receivables
SECTION 12.1. Representations and Warranties of Depositor.
The Depositor makes the following representations and warranties as to the
Depositor Receivables on which the Trustee relies in accepting the Depositor
Receivables in trust and executing and authenticating the Certificates. Such
representations and warranties speak as of the Closing Date, but shall survive
the sale, transfer and assignment of the Depositor Receivables to the Trustee.
(i) Characteristics of Depositor Receivables.
Each Depositor Receivable (a) shall have been originated in
the United States by a Dealer for the retail sale of a Boat or
RV in the ordinary course of such Dealer's business, shall
have been fully and properly executed by the parties thereto,
shall be denominated in U.S. dollars, (b) shall have created
or shall create a valid, subsisting and enforceable first
priority perfected security interest in favor of NationsCredit
Commercial in the related Boat or RV, as applicable (other
than in the case of boat motors subject to certificate of
title statutes that provide for perfection of the security
interests in such boat motors by the filing of a UCC-1
financing statement), which security interest has been
assigned to the Depositor and shall be validly assignable by
the Depositor to the Trustee, (c) shall contain customary and
enforceable provisions such that the rights and remedies of
the holder thereof shall be adequate for realization against
the collateral of the benefits of the security, (d) shall
provide for level monthly payments (provided that the payment
in the first or last month in the life of the Receivable may
be minimally different from the level payment) that fully
amortize the Amount Financed by maturity and yield interest at
the Annual Percentage Rate, and (e) shall provide for, in the
event that such contract is prepaid, a prepayment that fully
pays the Principal Balance and includes any accrued but unpaid
interest due pursuant to the terms of the related contract
through the date of prepayment in an amount at least equal to
the Annual Percentage Rate.
(ii) Schedule of Depositor Receivables. The
information set forth in Schedule A to the Agreement shall be
true and correct in all material respects as of the close of
business on the Cutoff Date, and no selection procedures
believed to be adverse to the Certificateholders shall have
been utilized in selecting the Depositor Receivables.
(iii) Compliance with Law. Each Depositor
Receivable and the sale of the related Boat or RV, as
applicable, shall have complied at the time it was originated
or made, and at the date of issuance of the Certificates shall
comply, in all material respects with all requirements of
applicable Federal, State, and local laws and regulations
thereunder, including, without limitation, usury laws, the
Federal Truth-in-Lending Act, the Equal Credit Opportunity
Act, the Federal
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Trade Commission Act, the Fair Credit Billing Act, the Fair
Credit Reporting Act, the Fair Debt Collection Practices Act,
the Magnuson-Moss Warranty Act, the Federal Trade Commission
Credit Practices Rule, State unfair and deceptive trade
practice laws, and State adaptations of the National Consumer
Act and of the Uniform Consumer Credit Code, and any other
applicable consumer credit, equal credit opportunity and
disclosure laws.
(iv) Binding Obligation. Each Depositor
Receivable shall represent the genuine, legal, valid and
binding payment obligation in writing of the Obligor,
enforceable by the holder thereof in accordance with its
terms, subject to applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance and similar laws
relating to creditors' rights generally and subject to general
principles of equity.
(v) No Government Obligor. None of the Depositor
Receivables shall be due from the United States of America or
any State or local government or from any agency, department
or instrumentality of the United States of America, any State
or local government.
(vi) Depositor Receivables in Force. No Depositor
Receivable shall have been satisfied, subordinated or
rescinded, nor shall any Boat or RV, as applicable, have been
released from the security interest granted by the related
Depositor Receivable in whole or in part.
(vii) No Waiver. No provision of a Depositor
Receivable shall have been waived.
(viii) No Defenses. Except for the security
interests in favor of the Depositor and the Trustee, the
Depositor Receivables are free and clear of all security
interests, liens, charges, and encumbrances and to the best
knowledge of the Depositor no right of rescission, setoff,
counterclaim or defense shall have been asserted or threatened
with respect to any Depositor Receivable.
(ix) No Liens. No liens or claims shall have been
filed for work, labor or materials relating to a Boat or RV,
as applicable, that shall be liens prior to, or equal to the
security interest in the Boat or RV, as applicable, granted by
the Depositor Receivable.
(x) Insurance. The Obligor has obtained physical
damage insurance covering the Boat or RV, as applicable, and
the Obligor is required under the terms of the Depositor
Receivable to maintain such insurance.
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(xi) Title. It is the intention of the Depositor
that the sale and assignment herein contemplated constitute a
sale of the Depositor Receivables from the Depositor to the
Trust and that the beneficial interest in and title to the
Depositor Receivables not be part of the debtor's estate in
the event of the filing of a bankruptcy petition by or against
the Depositor under any bankruptcy law. No Depositor
Receivable has been sold, transferred, assigned or pledged by
the Depositor to any Person other than the Trustee.
Immediately prior to the sale and assignment herein
contemplated, the Depositor had good and marketable title to
each Depositor Receivable free and clear of all Liens, and,
immediately upon the sale and assignment contemplated hereby,
the Trustee for the benefit of the Certificateholders and the
Surety Bond Issuer shall have good and marketable title to
each Depositor Receivable, free and clear of all Liens,
encumbrances, security interests and rights of others; and the
sale and assignment has been perfected under the UCC.
(xiii) Lawful Assignment. No Depositor Receivable
shall have been originated in, or shall be subject to the laws
of any jurisdiction under which the sale, transfer and
assignment of such Depositor Receivable under the Agreement or
pursuant to transfers of the Certificates shall be unlawful,
void or voidable.
(xiv) Security Interest. Upon the Depositor
Receivables being conveyed to the Trust pursuant to Section
2.1(a) of the Agreement, the Trust shall have a perfected
security interest under the UCC in the Depositor Receivables.
(xv) One Original. There shall be in existence
one, and only one, original executed copy of each Depositor
Receivable.
(xvi) UCC Characterization. Each Depositor
Receivable constitutes "Chattel Paper" under the UCC.
(xvii) Ship Mortgage Act. No Boat related to any
Depositor Receivable which is a Marine Receivable shall be
required to be documented under the Ship Mortgage Act.
(xviii) No Default. Except for payment defaults
continuing for a period of less than 60 days as of the Cutoff
Date, no default, breach, violation or event permitting
acceleration under the terms of any Depositor Receivable shall
have occurred and neither NationsCredit Commercial nor the
Depositor shall have waived any of the foregoing.
SECTION 12.2. Repurchase Upon Breach. The Depositor or the
Servicer, as the case may be, shall inform the other parties and the Trustee
promptly, in writing, upon the discovery of any breach of the Depositor's
representations and warranties pursuant to Section
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12.1. Unless the breach shall have been cured by the second Record Date
following the discovery, the Depositor shall repurchase any Depositor
Receivable, which as a result of such breach would materially and adversely
affect the interests of the Certificateholders or the Surety Bond Issuer, as of
such Record Date (or, at the Depositor's option, the first Record Date
following the discovery). In consideration of the purchase of the Depositor
Receivables, the Depositor shall remit the Purchase Amount in the manner
specified in Section 14.4(a) on the Deposit Date. The sole remedy of the
Trustee, the Trust or the Certificateholders with respect to a breach of the
Depositor's representations and warranties pursuant to Section 12.1 shall be to
require the Depositor to repurchase Depositor Receivables pursuant to this
Section 12.2.
SECTION 12.3. Custody of Receivable Files. To assure uniform
quality in servicing the Receivables and to reduce administrative costs, the
Trustee, on behalf of the Trust, upon the execution and delivery of the
Agreement, hereby revocably appoints the Servicer, and the Servicer hereby
accepts such appointment, to act as the agent of the Trustee as custodian of
the following documents or instruments which are hereby constructively
delivered to the Trust on behalf of the Trust, with respect to each Receivable:
(i) The original of the Receivable fully executed
by the Obligor.
(ii) The original credit application fully
executed by the Obligor.
(iii) The original certificate of title or such
documents that the Servicer or the Depositor shall keep on
file, in accordance with its customary procedures, evidencing
the security interest of NationsCredit Commercial in the Boat
or RV, as applicable.
(iv) Any and all other documents that the Servicer
shall keep on file, in accordance with its customary
procedures, relating to a Receivable, an Obligor or a Boat or
RV, as applicable.
The Trustee shall have no duty to monitor the performance of
the Servicer and shall have no liability in connection with the Servicer's
performance hereunder.
SECTION 12.4. Duties of Servicer as Custodian. (a)
Safekeeping. The Servicer shall hold the Receivable Files on behalf of the
Trust for the use and benefit of all Certificateholders and the Surety Bond
Issuer, and maintain such accurate and complete accounts, records and computer
systems pertaining to each Receivable File as shall enable the Servicer to
comply with these Standard Terms and Conditions of Agreement. In performing
its duties as custodian the Servicer shall act with reasonable care, using that
degree of skill and attention that the Servicer exercises with respect to the
receivable files relating to all comparable receivables that the Servicer
services for itself or others. The Servicer shall conduct, or cause to be
conducted, periodic audits of the Receivable Files held by it under the
Agreement, and of the related accounts, records and computer systems, in such a
manner as would enable the Trustee to
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verify the accuracy of the Servicer's record keeping. The Servicer shall
promptly report to the Trustee any failure on its part to hold the Receivable
Files and maintain its accounts, records and computer systems as herein
provided and promptly take appropriate action to remedy any such failure.
Nothing herein shall be deemed to require an initial review or any periodic
review by the Trustee of the Receivable Files.
(b) Maintenance of and Access to Records. The Servicer
shall maintain each Receivable File at one of its offices specified in Section
7.1(iv) of the Agreement, or at such other office as shall be specified to the
Trustee by written notice not later than 90 days after any change in location.
The Servicer shall make available to the Trustee or its duly authorized
representatives, attorneys or auditors a list of locations of the Receivable
Files, and shall also so make available the Receivable Files themselves, and
the related accounts, records and computer systems maintained by the Servicer,
at such times as the Trustee shall reasonably instruct.
(c) Release of Documents. Upon instruction from the
Trustee, the Servicer shall release any Receivable File to the Trustee, the
Trustee's agent or the Trustee's designee, as the case may be, at such place or
places as the Trustee may designate, as soon as practicable.
SECTION 12.5. Instructions; Authority to Act. The Servicer
shall be deemed to have received proper instructions with respect to the
Receivable Files upon its receipt of written instructions signed by a Trustee
Officer.
SECTION 12.6. Custodian's Indemnification. The Servicer as
custodian shall indemnify the Trustee (which shall include for purposes of this
section it directors, officers, employees and agents) for any and all
liabilities, obligations, losses, compensatory damages, payments, costs or
expenses of any kind whatsoever that may be imposed on, incurred or asserted
against the Trustee as the result of any improper act or omission in any way
relating to the maintenance and custody by the Servicer as custodian of the
Receivable Files; provided, however, that the Servicer shall not be liable for
any portion of any such amount resulting from the willful misfeasance, bad
faith or negligence of the Trustee. This indemnity shall survive the
termination of this Agreement and the resignation and removal of the Trustee.
SECTION 12.7. Effective Period and Termination. The
Servicer's appointment as custodian shall become effective as of the Cutoff
Date and shall continue in full force and effect until terminated pursuant to
this Section 12.7. If NationsCredit Commercial shall resign as Servicer in
accordance with the provisions of the Agreement or if all the rights and
obligations of the Servicer shall have been terminated under Section 18.1, the
appointment of the Servicer as custodian may be terminated by the Surety Bond
Issuer, in the same manner as the Surety Bond Issuer may terminate the rights
and obligations of the Servicer under Section 18.1. The Trustee shall, if
required by the Surety Bond Issuer following the occurrence and during the
continuation of an Event of Default or the Trustee, on behalf of the Trust, may
terminate the Servicer's appointment as custodian, with cause or as required by
law at any time upon written notification to the Servicer. As soon as
practicable after any termination of such appointment, the Servicer
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shall deliver the Receivable Files to the Trustee or the Trustee's agent at
such place or places as the Trustee may reasonably designate.
ARTICLE XIII
Administration and Servicing of Receivables
SECTION 13.1. Duties of Servicer. The Servicer shall manage,
service, administer and make collections on the Receivables (other than
Purchased Receivables) with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to all comparable
receivables that it services for itself or others. The Servicer's duties shall
include collection and posting of all payments, responding to inquiries of
Obligors on such Receivables, investigating delinquencies, sending payment
statements to Obligors, reporting tax information to Obligors, accounting for
collections and furnishing monthly and annual statements to the Trustee with
respect to distributions. The Servicer shall follow its customary standards,
policies and procedures in performing its duties as Servicer. Without limiting
the generality of the foregoing, the Servicer is authorized and empowered by
the Trustee to execute and deliver, on behalf of itself, the Trust, the
Certificateholders, or the Trustee or any of them, any and all instruments of
satisfaction or cancellation, or partial or full release or discharge, and all
other comparable instruments, with respect to such Receivables or to the Boats
or RVs, as applicable, securing such Receivables. If the Servicer shall
commence a legal proceeding to enforce a Receivable, the Trustee (in the case
of a Receivable other than a Purchased Receivable) shall thereupon be deemed to
have automatically assigned, solely for the purpose of collection on behalf of
the party retaining an interest in such Receivable, such Receivable to the
Servicer. If in any enforcement suit or legal proceeding it shall be held that
the Servicer may not enforce a Receivable on the ground that it shall not be a
real party in interest or a holder entitled to enforce the Receivable, the
Trustee shall, at the Servicer's expense and direction, take steps to enforce
the Receivable, including bringing suit in its name or the name of the
Certificateholders or the Surety Bond Issuer. To enable the Servicer to carry
out its servicing and administrative duties hereunder, the Trustee hereby
irrevocably appoints the Servicer as its attorney-in-fact, such appointment
being coupled with an interest, to execute on its behalf such documents or
instruments as are necessary to accomplish the foregoing.
SECTION 13.2. Collection of Receivables Payments. The
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the Receivables as and when the same shall become
due and shall follow such collection procedures as it follows with respect to
all comparable receivables that it services for itself or others. The Servicer
may grant extensions, rebates or adjustments on a Receivable subject to the
provisions of Section 13.6. The Servicer may in its discretion waive any late
payment charge or any other fees that may be collected in the ordinary course
of servicing a Receivable.
SECTION 13.3. Realization Upon Receivables. On behalf of the
Trust, the Servicer shall use its best efforts, consistent with its customary
servicing procedures, to repossess or otherwise convert the ownership of the
Boat or RV, as applicable, securing any Receivable as
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to which the Servicer shall have determined eventual payment in full is
unlikely. The Servicer shall follow such customary and usual practices and
procedures as it shall deem necessary or advisable in its servicing of marine
receivables and recreational vehicle receivables, which may include reasonable
efforts to realize upon any recourse to Dealers and selling the Boat or RV, as
applicable, at public or private sale. The foregoing shall be subject to the
provision that, in any case in which the Boat or RV, as applicable, shall have
suffered damage, the Servicer shall not expend funds in connection with the
repair or the repossession of such Boat or RV, as applicable, unless it shall
determine in its discretion that such repair and/or repossession will increase
the related Liquidation Proceeds by an amount greater than the amount of such
expenses.
SECTION 13.4. Physical Damage Insurance. The Servicer, in
accordance with its customary servicing procedures, shall require that each
Obligor shall have obtained physical damage insurance covering the related Boat
or RV, as applicable, as of the date of execution of the related Receivable.
SECTION 13.5. Maintenance of Security Interests in Boats and
RVs . Subject to Article X of the Agreement, the Servicer shall, in accordance
with its customary servicing procedures, take such steps as are necessary to
maintain perfection of NationsCredit Commercial's security interest created by
each Receivable in the related Boat or RV, as applicable. The Trustee, on
behalf of the Trust, hereby authorizes the Servicer to take such steps as are
necessary to perfect such security interest on behalf of the Trust in the event
of the relocation of a Boat or RV, as applicable, or for any other reason.
SECTION 13.6. Covenants of Servicer. The Servicer shall make
within the required time periods under the UCC all filings necessary in any
jurisdiction to give the Trustee a first priority perfected ownership interest
in the Receivables. The Servicer shall not release the Boat or RV, as
applicable, securing each Receivable from the security interest granted by such
Receivable in whole or in part except in the event of payment in full by the
Obligor thereunder. The Servicer shall not impair the rights of the
Certificateholders in any Receivable. The Servicer shall make reasonable
efforts to collect all payments called for under the terms and provisions of
the Receivables as and when the same shall become due and shall follow such
collection procedures as it follows with respect to all comparable marine
receivables or recreational vehicle receivables that it services for itself and
others. The Servicer shall not sell, pledge, transfer, deliver or otherwise
dispose of any Receivable, except as provided in the Agreement. The Servicer
will not increase or decrease the number or amount of any Scheduled Payment, or
the Principal Balance of a Receivable (except with respect to a prepayment of a
Scheduled Payment that does not result in a deferral of any other Scheduled
Payment) or the APR of a Receivable, or extend, rewrite or otherwise modify the
payment terms of a Receivable; provided, however, that the Servicer may extend
a Receivable for credit related reasons that would be acceptable to the
Servicer with respect to comparable marine receivables or recreational vehicle
receivables, as applicable, that it services for itself and others and in
accordance with its customary standards, policies and procedures if the
cumulative extensions with respect to any Receivable shall not cause the term
of such Receivable to extend beyond the last day of the Collection Period which
is
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related to the Final Scheduled Marine Distribution Date or Final Scheduled RV
Distribution Date, as applicable; provided, further, that such extensions will
not be made if, in the reasonable opinion of the Servicer, the extensions would
modify the terms of such Receivable in such a manner as to constitute a
cancellation of such Receivable and the creation of a new receivable for
federal income tax purposes. In the event that the Servicer fails to comply
with the provisions of the preceding sentence or with respect to the second
proviso of the preceding sentence, notwithstanding having acted according to
its reasonable opinion, or if there is a final determination that the Servicer
has modified the terms of a Receivable in such a manner as to constitute a
cancellation of such Receivable and the creation of a new Receivable for
federal income tax purposes, the Servicer shall be required to purchase the
Receivable or Receivables affected thereby, for the Purchase Amount, in the
manner specified in Section 13.7 as of the first day of the Collection Period
following the Collection Period in which such failure occurs.
SECTION 13.7. Purchase of Receivables Upon Breach. The
Servicer or the Trustee shall inform the other party promptly, in writing, upon
the discovery (or, in the case of the Trustee, receipt of written notice by a
Trust Officer) of any breach pursuant to Section 13.6 or Section 13.15. Notice
of any breach pursuant to Section 13.6 or Section 13.15 may be given to the
Servicer and the Trustee by the Surety Bond Issuer. Unless the breach shall
have been cured by the second Record Date following such discovery (or, at the
Servicer's election, the first following Record Date), the Servicer shall
purchase any Receivable (or in the case of any representation and warranty set
forth in clause (xiv) of Section 13.15, the Servicer shall purchase Receivables
such that, after giving effect to such purchase, such representation and
warranty or covenant would be complied with), which as a result of such breach
would materially and adversely affect the interests of the Certificateholders
or the Surety Bond Issuer, as of such Record Date. In consideration of the
purchase of such Receivable, the Servicer shall remit the Purchase Amount in
the manner specified in Section 14.4 on the Deposit Date. The sole remedy of
the Trustee, the Trust or the Certificateholders with respect to a breach
pursuant to Section 13.6 or Section 13.15 shall be to require the Servicer to
repurchase Receivables pursuant to this Section 13.7.
SECTION 13.8. Marine Monthly Servicing Fee. The Monthly
Marine Servicing Fee for a Collection Period shall equal the product of one
twelfth times the Servicing Fee Rate times the Original Marine Pool Balance, in
the case of the initial Collection Period, and thereafter, the Marine Pool
Balance as of the last day of the prior Collection Period (except that in the
case of a successor Servicer, the Monthly Marine Servicing Fee shall equal such
amount as is arranged in accordance with Section 18.2). The Servicer shall
also be entitled to all late payment and extension fees, prepayment charges and
other administrative fees or similar charges allowed by applicable law with
respect to Marine Receivables, collected (from whatever source) on the Marine
Receivables; provided, however, such late payment and other fees shall not form
a part of the Monthly Marine Servicing Fee and the Servicer shall be entitled
to such fees as and when collected.
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SECTION 13.8A. Monthly RV Servicing Fee. The Monthly RV
Servicing Fee for a Collection Period shall equal the product of one twelfth
times the Servicing Fee Rate times the Original RV Pool Balance, in the case of
the initial Collection Period, and thereafter, the RV Pool Balance as of the
last day of the prior Collection Period (except that in the case of a successor
Servicer, the Monthly RV Servicing Fee shall equal such amount as is arranged
in accordance with Section 18.2). The Servicer shall also be entitled to all
late payment and extension fees, prepayment charges and other administrative
fees or similar charges allowed by applicable law with respect to RV
Receivables, collected (from whatever source) on the RV Receivables; provided,
however, such late payment and other fees shall not form a part of the Monthly
RV Servicing Fee and the Servicer shall be entitled to such fees as and when
collected.
SECTION 13.9. Servicer's Certificate. On or before 10:00
a.m. New York time on the Determination Date, the Servicer shall deliver to the
Trustee and the Surety Bond Provider a Servicer's Certificate, containing all
information necessary to make the transfers and distributions pursuant to
Section 14.5 for the Collection Period immediately preceding the date of such
Servicer's Certificate. If on any Deposit Date there is a default by the
Depositor or the Servicer in respect of any Purchase Amounts to be deposited
into the Marine Collection Account or RV Collection Account pursuant to Section
14.4 hereof, the Servicer shall recalculate all of the amounts described in the
Servicer's Certificate to reflect such default and deliver to the Trustee a
revised Servicer's Certificate reflecting such recalculations on such Deposit
Date.
SECTION 13.10. Annual Statement as to Compliance; Notice of
Default. (a) The Servicer shall deliver to the Trustee and the Surety Bond
Issuer, on or before March 31 of each year, beginning March 31, 1998, an
Officer's Certificate, dated as of December 31 of the preceding year, stating
that (i) a review of the activities of the Servicer during the preceding
12-month period (or such shorter period from the date of initial issuance of
the Certificates to December 31 of such year) and of its performance under the
Agreement has been made under such officer's supervision and (ii) to the best
of such officer's knowledge, based on such review, the Servicer has fulfilled
all its obligations under the Agreement throughout such year (or such shorter
period, as the case may be), or, if there has been a default in the fulfillment
of any such obligation, specifying each such default known to such officer and
the nature and status thereof. A copy of such certificate and the report
referred to in Section 13.11 may be obtained by any Certificateholder by a
request in writing to the Trustee addressed to the Corporate Trust Office.
(b) The Servicer shall deliver to the Trustee and the
Surety Bond Issuer promptly after having obtained knowledge thereof, but in no
event later than 5 Business Days thereafter, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of time, or
both, would become an Event of Default under clause (i) or (ii) of Section
18.1. The Depositor shall deliver to the Trustee and the Surety Bond Issuer
promptly after having obtained knowledge thereof, but in no event later than 5
Business Days thereafter, written notice in an Officer's Certificate of any
event which with the giving of notice or lapse of time, or both, would become
an Event of Default under clause (ii) of Section 18.1.
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SECTION 13.11. Annual Independent Certified Public
Accountant's Report. The Servicer shall cause a firm of independent certified
public accountants (who may also render other services to the Servicer and the
Depositor) to deliver to the Trustee on or before March 31 of each year
commencing March 31, 1998, a report to the effect that such firm has conducted
an examination, substantially in compliance with attestation standards
established by the American Institute of Certified Public Accountants, of
certain documents and records relating to the servicing procedures under this
Agreement and that, on the basis of such examination, such firm is of the
opinion that such servicing was conducted in compliance with the sections of
this Agreement with which independent public accountants generally possess
adequate professional knowledge and which are reasonably subject to positive
assurance by them, except for such exceptions as they believe to be immaterial
and such other exceptions as shall be set forth in such report. In the event
such firm requires Trustee to agree to the procedures performed by such firm,
Servicer shall direct Trustee in writing to so agree; it being understood and
agreed that Trustee will deliver such letter of agreement in conclusive
reliance upon the direction of Servicer, and Trustee makes no independent
inquiry or investigation as to, and shall have no obligation or liability in
respect of, the sufficiency, validity or correctness of such procedures.
SECTION 13.12. Access to Certain Documentation and
Information Regarding Receivables. The Servicer shall provide to the
Certificateholders access to the Receivables Files in such cases where the
Certificateholder shall be required by applicable statutes or regulations to
review such documentation. Access shall be afforded without charge, but only
upon reasonable request and during the normal business hours at the respective
offices of the Servicer. Nothing in this Section 13.12 shall affect the
obligation of the Servicer to observe any applicable law prohibiting disclosure
of information regarding the Obligors, and the failure of the Servicer to
provide access to information as a result of such obligation shall not
constitute a breach of this Section 13.12.
SECTION 13.13. Servicer Expenses. The Servicer shall be
required to pay all expenses incurred by it in connection with its activities
hereunder, including fees and disbursements of independent accountants, taxes
imposed on the Servicer and expenses incurred in connection with distributions
and reports to Certificateholders.
SECTION 13.14. Appointment of Sub-servicer. The Servicer may
at any time appoint a sub-servicer to perform all or any portion of its
obligations as Servicer hereunder; provided however, that the Servicer shall
remain obligated and be liable to the Trustee and the Certificateholders for
the servicing and administering of the Receivables in accordance with the
provisions hereof without diminution of such obligation and liability by virtue
of the appointment of such sub-servicer and to the same extent and under the
same terms and conditions as if the Servicer alone were servicing and
administering the Receivables. The fees and expenses of the sub-servicer shall
be as agreed between the Servicer and its sub-servicer from time to time and
neither the Trust, the Trustee nor the Certificateholders shall have any
responsibility therefor.
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SECTION 13.15. Representations and Warranties of the Servicer
with respect to the Receivables. The Servicer does hereby make the following
representations and warranties on which the Trustee, on behalf of the Trust,
relies in accepting the Receivables pursuant to this Agreement and the
Assignment and executing and authenticating the Certificates. Such
representations and warranties speak as of the Closing Date, but shall survive
the sale, transfer and assignment of the Receivables to the Trustee on behalf
of the Trust and any termination of the Servicer pursuant to Section 18.1.
(i) Characteristics of NCMF Receivables. Each
NCMF Receivable (a) shall be denominated in U.S. dollars, (b)
shall have an original maturity of not more than 180 months,
(c) as of the Cutoff Date, shall have a remaining maturity of
not more than 180 months, (d) shall contain customary and
enforceable provisions such that the rights and remedies of
the holder thereof shall be adequate for realization against
the collateral of the benefits of the security, (e) shall be
kept at the offices of NationsCredit Commercial at 1000
Holcolmb Woods Parkway, Roswell, Georgia 30076 and at 2260
Douglas Boulevard, Suite 100, Roseville, California 95061,
(f) shall be adequate for realization against the collateral
of the benefits of the security, (g) shall provide for level
monthly payments (provided that the payment in the first or
last month in the life of the Marine Receivable may be
minimally different from the level payment) that fully
amortize the Amount Financed by maturity and yield interest at
the Annual Percentage Rate, and (h) shall provide for, in the
event that such contract is prepaid, a prepayment that fully
pays the Principal Balance and includes accrued but unpaid
interest due through the date of prepayment in an amount at
least equal to the Annual Percentage Rate.
(ii) Schedule of NCMF Receivables. The
information set forth in Schedule B to the Agreement shall be
true and correct in all material respects as of the close of
business on the Cutoff Date, and no selection procedures
believed to be adverse to the Certificateholders shall have
been utilized in selecting the NCMF Receivables.
(iii) No Government Obligor. None of the NCMF
Receivables shall be due from the United States of America or
any State or local government or from any agency, department
or instrumentality of the United States of America, any State
or local government.
(iv) NCMF Receivables in Force. No NCMF
Receivable shall have been satisfied, subordinated or
rescinded, nor shall any Boat have been released from the
security interests granted by the related NCMF Receivable in
whole or in part.
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(v) No Waiver. No provision of a NCMF Receivable
shall have been waived.
(vi) No Defenses. Immediately following the
conveyance of the NCMF Receivables pursuant to the Assignment,
except for the security interests in favor of the Depositor
and the Trustee, the NCMF Receivables are free and clear of
all security interests, liens, charges, and encumbrances and
to the best knowledge of the Servicer no right of rescission,
setoff, counterclaim or defense shall have been asserted or
threatened with respect to any NCMF Receivable.
(vii) No Liens. No liens or claims shall have been
filed for work, labor or materials relating to a Boat that
shall be liens prior to, or equal to the security interest in
the Boat granted by the NCMF Receivable.
(viii) Insurance. The Obligor has obtained physical
damage insurance covering the Boat and the Obligor is required
under the terms of the NCMF Receivable to maintain such
insurance.
(ix) Lawful Assignment. No NCMF Receivable shall
have been originated in, or shall be subject to the laws of
any jurisdiction under which the sale, transfer and assignment
of such NCMF Receivable under the Assignment or pursuant to
transfers of the Certificates shall be unlawful, void or
voidable.
(x) Security Interest. Upon the NCMF Receivables
being conveyed to the Trust pursuant to the Assignment, the
Trust shall have a perfected security interest under the UCC
in the NCMF Receivables.
(xi) Ship Mortgage Act. No Boat related to any
NCMF Receivable shall be required to be documented under the
Ship Mortgage.
(xii) Compliance with Law. Each NCMF Receivable
complies in all material respects with all requirements of
applicable Federal, State, and local laws and regulations
thereunder, including, without limitation, usury laws, the
Federal Truth-in-Lending Act, the Equal Credit Opportunity
Act, the Federal Trade Commission Act, the Fair Credit Billing
Act, the Fair Credit Reporting Act, the Fair Debt Collection
Practices Act, the Magnuson-Moss Warranty Act, the Federal
Trade Commission Credit Practices Rule, State unfair and
deceptive trade practice laws, and State adaptations of the
National Consumer Act and of the Uniform Consumer Credit Code,
and any other applicable consumer credit, equal credit
opportunity and disclosure laws.
(xiii) Title. Immediately upon the sale and
assignment contemplated by the Assignment, the Trustee for the
benefit of the Certificateholders and the
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Surety Bond Issuer shall have good and marketable title to
each NCMF Receivable, free and clear of all Liens,
encumbrances, security interests and rights of others; and the
sale and assignment has been perfected under the UCC.
(xiv) As of the Cutoff Date, not more than (a)
approximately ___% of the number of Marine Receivables,
constituting approximately ___% of the Original Marine Pool
Balance are related to Boats which have been repossessed by
the Servicer, (b) approximately ___% of the number of Marine
Receivables, constituting approximately ___% of the Original
Marine Pool Balance are 30 to 59 days delinquent, (c)
approximately ___% of the number of Marine Receivables,
constituting approximately ___% of the Original Marine Pool
Balance are related to Boats which are 60 to 89 days
delinquent and (d) approximately ___% of the number of Marine
Receivables, constituting approximately ___% of the Original
Marine Pool Balance are related to Boats which are 90 or more
days delinquent.
(xv) As of the Cutoff Date, not more than (a)
approximately ___% of the number of RV Receivables,
constituting approximately ___% of the Original Pool Balance
are related to RVs which have been repossessed by the
Servicer, (b) approximately ___% of the number of RV
Receivables, constituting approximately ___% of the Original
Pool RV Balance are 30 to 59 days delinquent, (c)
approximately ___% of the number of RV Receivables,
constituting approximately ___% of the Original Pool Balance
are related to RVs which are 60 to 89 days delinquent and (d)
approximately ___% of the number of RV Receivables,
constituting approximately ___% of the Original Pool RV
Balance are related to RVs which are 90 or more days
delinquent.
(xvi) Each Receivable creates a first priority
perfected security interest in the Boat or RV, as applicable,
financed thereby in favor of NationsCredit Commercial (other
than in the case of boat motors subject to certificate of
title statutes that provide for perfection of the security
interests in such boat motors by the filing of a UCC-1
financing statement).
(xvii) To the best of the Servicer's knowledge, no
Liens or claims are pending or threatened with respect to a
Boat or RV, as applicable, which may be or become prior to or
equal with the Lien of the related Receivable.
ARTICLE XIV
Distributions; Statements to
Certificateholders
SECTION 14.1. Marine Accounts. (a) The Servicer shall
establish and maintain an account (the "Marine Collection Account") in the name
of the Trustee for the benefit of the
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Certificateholders and, to the extent herein provided, for the benefit of the
Surety Bond Issuer. The Marine Collection Account shall be a segregated,
non-interest-bearing trust account initially established with the Trustee and
maintained with the Trustee so long as (i) the deposits of the Trustee have the
Required Deposit Rating or (ii) the Marine Collection Account is maintained as
a fully segregated trust account. All amounts held in the Marine Collection
Account (other than Purchase Amounts) shall be invested in Permitted
Investments by the Trustee, at the written direction of the Servicer, in each
case such investments maturing not later than the Deposit Date following the
Collection Period in which such amounts are so invested. Purchase Amounts
deposited on a Deposit Date shall not be invested. Such written direction
shall certify that any such investment is authorized by this Section 14.1 and
complies with the requirements of Permitted Investments as set forth in
Schedule C. The Servicer shall establish and maintain an account (the "Marine
Certificate Account") in the name of the Trustee for the benefit of
Certificateholders and, to the extent provided herein, for the benefit of the
Surety Bond Issuer. The Marine Certificate Account shall be a segregated,
non-interest-bearing trust account initially established with the Trustee and
maintained with the Trustee for so long as (x) the deposits of the Trustee have
the Required Deposit Rating or (y) the Marine Certificate Account is maintained
as a fully segregated trust account. The amounts in the Marine Certificate
Account shall not be invested. Should the deposits of the Trustee no longer
have the Required Deposit Rating and the Marine Collection Account or the
Marine Certificate Account, as applicable, shall not be maintained as a fully
segregated trust account, then the Servicer shall, with the Trustee's
assistance as necessary, cause the Marine Certificate Account and/or the Marine
Collection Account to be moved, within 60 days after the occurrence of the
later of the loss of the Required Deposit Rating or the cessation of such
accounts being maintained as fully segregated trust accounts, to a bank or
trust company organized under the laws of the United States of any state
thereof, the deposits of which shall have the Required Deposit Rating.
(b) (i) The Depositor shall establish the Marine
Reserve Account in the name of the Depositor which shall be
pledged to the Collateral Agent for the benefit of the
Certificateholders and the Surety Bond Issuer. The Marine
Reserve Account shall be a segregated, non-interest-bearing
trust account initially established and maintained with the
Trustee for so long as (x) the deposits of the Trustee have
the Required Deposit Rating or (y) the Marine Reserve Account
is maintained as a fully segregated trust account. The Marine
Reserve Account shall not be property of the Trust. All
amounts held in the Marine Reserve Account shall be invested
in Permitted Investments by the Collateral Agent, at the
written direction of the Depositor, in each case such
investments maturing not later than the Deposit Date following
the Collection Period in which such amounts are so invested.
Such written direction shall certify that any such investment
is authorized by this Section 14.1 and comply with the
requirements of Permitted Investments as set forth in Schedule
C. Should the deposits of the Collateral Agent no longer have
the Required Deposit Rating or the Marine Reserve Account
shall not be maintained as a fully segregated trust account,
then the Depositor shall, with the Collateral Agent's
assistance as necessary, cause the
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Marine Reserve Account to be moved, within 60 days after the
occurrence of the later of the loss of the Required Deposit
Rating or the cessation of such accounts being maintained as
fully segregated trust accounts, to a bank or trust company
organized under the laws of the United States or any state
thereof, the deposits of which shall have the Required Deposit
Rating.
(ii) On the date of the issuance of the Marine
Certificates, the Depositor shall cause the Marine Reserve
Account Initial Deposit to be deposited into the Marine
Reserve Account. The Depositor hereby grants to the
Collateral Agent for the benefit of the Certificateholders and
the Surety Bond Issuer a security interest in and to the
Marine Reserve Account and any and all Account Property
credited thereto from time to time, including, but not limited
to, Permitted Investments, to secure payment of the
Certificates according to their terms. Amounts held from time
to time in the Marine Reserve Account will continue to be held
by the Collateral Agent for the benefit of the
Certificateholders and the Surety Bond Issuer, but the Marine
Reserve Account shall not be an asset of the Trust. Funds
held in the Marine Reserve Account shall be remitted to the
Depositor upon the Depositor's written request upon the
termination of the Trust.
SECTION 14.1A. RV AccountsERROR! BOOKMARK NOT DEFINED.. (a)
The Servicer shall establish and maintain an account (the "RV Collection
Account") in the name of the Trustee for the benefit of the Certificateholders
and, to the extent herein provided, for the benefit of the Surety Bond Issuer.
The RV Collection Account shall be a segregated, non-interest-bearing trust
account initially established with the Trustee and maintained with the Trustee
so long as (i) the deposits of the Trustee have the Required Deposit Rating or
(ii) the RV Collection Account is maintained as a fully segregated trust
account. All amounts held in the RV Collection Account (other than Purchase
Amounts) shall be invested in Permitted Investments by the Trustee, at the
written direction of the Servicer, in each case such investments maturing not
later than the Deposit Date following the Collection Period in which such
amounts are so invested. Purchase Amounts deposited on a Deposit Date shall
not be invested. Such written direction shall certify that any such investment
is authorized by this Section 14.1 and complies with the requirements of
Permitted Investments as set forth in Schedule C. The Servicer shall establish
and maintain an account (the "RV Certificate Account") in the name of the
Trustee for the benefit of Certificateholders and, the extent provided herein,
for the benefit of the Surety Bond Issuer. The RV Certificate Account shall be
a segregated, non-interest-bearing trust account initially established with the
Trustee and maintained with the Trustee for so long as (x) the deposits of the
Trustee have the Required Deposit Rating or (y) the RV Certificate Account is
maintained as a fully segregated trust account. The amounts in the RV
Certificate Account shall not be invested. Should the deposits of the Trustee
no longer have the Required Deposit Rating and the RV Collection Account or the
RV Certificate Account, as applicable, shall not be maintained as a fully
segregated trust account, then the Servicer shall, with the Trustee's
assistance as necessary, cause the RV Certificate Account and/or the RV
Collection Account to
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be moved, within 60 days after the occurrence of the later of the loss of the
Required Deposit Rating or the cessation of such accounts being maintained as
fully segregated trust accounts, to a bank or trust company organized under the
laws of the United States of any state thereof, the deposits of which shall
have the Required Deposit Rating.
(b) (i) The Depositor shall establish the RV Reserve
Account in the name of the Depositor which shall be pledged to
the Collateral Agent for the benefit of the Certificateholders
and the Surety Bond Issuer. The RV Reserve Account shall be a
segregated, non-interest-bearing trust account initially
established and maintained with the Trustee for so long as (x)
the deposits of the Trustee have the Required Deposit Rating
or (y) the RV Reserve Account is maintained as a fully
segregated trust account. The RV Reserve Account shall not be
property of the Trust. All amounts held in the RV Reserve
Account shall be invested in Permitted Investments by the
Collateral Agent, at the written direction of the Depositor,
in each case such investments maturing not later than the
Deposit Date following the Collection Period in which such
amounts are so invested. Such written direction shall certify
that any such investment is authorized by this Section 14.1
and comply with the requirements of Permitted Investments as
set forth in Schedule C. Should the deposits of the
Collateral Agent no longer have the Required Deposit Rating or
the RV Reserve Account shall not be maintained as a fully
segregated trust account, then the Depositor shall, with the
Collateral Agent's assistance as necessary, cause the RV
Reserve Account to be moved, within 60 days after the
occurrence of the later of the loss of the Required Deposit
Rating or the cessation of such accounts being maintained as
fully segregated trust accounts, to a bank or trust company
organized under the laws of the United States or any state
thereof, the deposits of which shall have the Required Deposit
Rating.
(ii) On the date of the issuance of the RV
Certificates, the Depositor shall cause the RV Reserve
Account Initial Deposit to be deposited into the RV Reserve
Account. The Depositor hereby grants to the Collateral Agent
for the benefit of the Certificateholders and the Surety Bond
Issuer a security interest in and to the RV Reserve Account
and any and all Account Property credited thereto from time to
time, including, but not limited to, Permitted Investments, to
secure payment of the Certificates according to their terms.
Amounts held from time to time in the RV Reserve Account will
continue to be held by the Collateral Agent for the benefit of
the Certificateholders and the Surety Bond Issuer, but the RV
Reserve Account shall not be an asset of the Trust. Funds
held in the RV Reserve Account shall be remitted to the
Depositor upon the Depositor's written request upon the
termination of the Trust.
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SECTION 14.1B. Account Property. (a) With respect to the
Account Property in respect of the Marine Reserve Account and the RV Reserve
Account, the Collateral Agent agrees that:
A. any Account Property that is held in
deposit accounts shall be held solely in a bank with the
Required Deposit Rating; and each such bank with the Required
Deposit Rating shall be subject to the exclusive custody and
control of the Collateral Agent, and the Collateral Agent
shall have sole signature authority with respect thereto;
B. any Account Property that
constitutes Physical Property shall be delivered to the
Collateral Agent in accordance with paragraph (a) of the
definition of "Delivery" and shall be held, pending maturity
or disposition, solely by the Collateral Agent, or a financial
intermediary (as such term is defined in Section 8-313(4) of
the Relevant UCC) acting solely for the benefit of the
Certificateholders;
C. any Account Property that is a
book-entry security held through the Federal Reserve System
pursuant to Federal book-entry regulations shall be delivered
to the Collateral Agent in accordance with paragraph (b) of
the definition of "Delivery" and shall be maintained by the
Collateral Agent, pending maturity or disposition, through
continued book-entry registration of such Account Property as
described in such paragraph; and
D. any Account Property that is an
"uncertificated security" under Article 8 of the Relevant UCC
and that is not governed by clause (C) above shall be
delivered to the Collateral Agent in accordance with paragraph
(c) of the definition of "Delivery" and shall be maintained by
the Collateral Agent, pending maturity or disposition, through
continued registration of the Collateral Agent's (or its
nominee's) ownership of such security.
(b) Effective upon Delivery of any Account Property
in the form of Physical Property, book-entry securities or
uncertificated securities, the Collateral Agent shall be
deemed to have purchased such Account Property for value, in
good faith and without notice of any adverse claim thereto.
(c) By acceptance of the Marine Certificates or
interests therein or the RV Certificates or interests therein
and by execution and delivery of the Reimbursement Agreement
by the Surety Bond Issuer, the Marine Certificateholders and
the related Certificate Owners, the RV Certificateholders and
the related Certificate Owners and the Surety Bond Issuer,
respectively, shall be deemed to have appointed Bankers Trust
Company as Collateral Agent. Bankers Trust Company hereby
accepts such appointment as Collateral Agent.
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(d) The Depositor and the Servicer agree to take or
cause to be taken such further actions, to execute, deliver
and file or cause to be executed, delivered and filed such
further documents and instruments (including, without
limitation, any financing statements under the Relevant UCC or
this Agreement) as may be determined to be necessary, in order
to perfect the interests created by Section 14.1(b) and
Section 14.1A(b) and otherwise effectuate the purposes, terms
and conditions of Section 14.1(b) and Section 14.1A(b).
SECTION 14.2. Marine Collections. The Servicer shall remit
to the Marine Collection Account within two Business Days after receipt thereof
all Marine Collections, any amounts referred to in clauses (ii) and (iv) of the
definition of Marine Available Funds, each as collected during the Marine
Collection Period; provided, however, that so long as NationsCredit Commercial
is acting as the Servicer, the Servicer shall be permitted to make remittances
of Marine Collections, any amounts referred to in clause (ii) of the definition
of Marine Available Funds and Liquidation Proceeds to the Collection Account in
next-day funds or immediately available funds by 12:30 p.m. New York City time
on the Deposit Date immediately following such Collection Period if the
specific terms and conditions set forth below in this Section 14.2 are
satisfied and only for so long as such terms and conditions are satisfied:
(i) the Servicer shall be NationsCredit
Commercial or any other Successor Servicer pursuant to Section
17.3;
(ii) there exists no Event of Default (as
described below);
(iii) if the Servicer does not have a short term
debt rating or deposit rating, as applicable, of at least A-1
from S&P and P-1 from Moody's, a guaranty, letter of credit,
surety bond or other similar instrument is issued covering
Marine Collections and RV Collections, any amounts referred to
in clause (ii) of the definitions of Marine Available Funds
and RV Available Funds and Liquidation Proceeds held by
NationsCredit Commercial or its successor, which is acceptable
to the Rating Agencies and the Surety Bond Issuer and issued
by an entity, which has a short-term debt or deposit rating,
as applicable, of at least A-1 from S&P and P-1 from Moody's;
and
(iv) the Servicer, the Trustee, the Depositor and
the Surety Bond Issuer shall not have received any notice from
S&P or Moody's that failure to deposit such funds more
frequently will result in a reduction or withdrawal of the
then current rating on the Marine Certificates or the RV
Certificates by either S&P or Moody's.
The Trustee shall not be deemed to have knowledge of any event
or circumstance under clause (ii) above that would require remittance by the
Servicer of Marine Collections or
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RV Collections, and Liquidations Proceeds to the Marine Collection Account or
RV Collection Account, as applicable, two Business Days after receipt thereof
unless the Trustee has received notice of such event or circumstance from the
Depositor, the Servicer or the Surety Bond Issuer in an Officer's Certificate
or from the Holders of Certificates evidencing not less than 25% of the
Certificate Balance.
SECTION 14.2A. RV Collections. The Servicer shall remit to
the RV Collection Account within two Business Days after receipt thereof all RV
Collections, any amounts referred to in clauses (ii) and (iv) of the definition
of RV Available Funds, each as collected during the RV Collection Period;
provided, however, that so long as NationsCredit Commercial is acting as the
Servicer, the Servicer shall be permitted to make remittances of RV
Collections, any amounts referred to in clause (ii) of the definition of RV
Available Funds and Liquidation Proceeds to the Collection Account in next-day
funds or immediately available funds by 12:30 p.m. New York City time on the
Deposit Date immediately following such Collection Period if the specific terms
and conditions set forth below in clauses (i) through (iv) of Section 14.2 are
satisfied and only for so long as such terms and conditions are satisfied.
SECTION 14.3. Application of Marine Collections and RV
Collections. As of each Determination Date, all Marine Collections and RV
Collections for the related Collection Period shall be applied as follows:
With respect to each Marine Receivable and RV Receivable
(other than a Purchased Receivable), payments thereon by or on behalf of the
Obligor shall be applied first to late payment and extension fees, second to
interest accrued on the Marine Receivable or RV Receivable, as applicable,
third to principal due on the Marine Receivable or RV Receivable, as
applicable, during the related Collection Period, fourth to insurance premiums
or amounts due on loans to the Obligors to finance the payment of insurance
premiums for collateral protection insurance purchased by the Servicer, and
fifth to administrative charges, if any. Last, any excess shall be applied to
prepay the Principal Balance of the Marine Receivable, in the case of Marine
Certificates, or RV Receivables in the case of RV Certificates.
SECTION 14.4. Additional Deposits. (a) The Servicer and/or
the Depositor shall deposit (i) in the Marine Collection Account the aggregate
Purchase Amount with respect to Purchased Receivables that are Marine
Receivables and the Servicer shall deposit therein all amounts to be paid under
Sections 12.2, 13.7 and 20.2 which relate to the Marine Receivables and (ii) in
the RV Collection Account the aggregate Purchase Amount with respect to
Purchased Receivables that are RV Receivables and the Servicer shall deposit
therein all amounts to be paid under Sections 12.2, 13.7 and 20.2A which relate
to the RV Receivables. All such deposits shall be made in immediately
available funds by 12:30 p.m. New York City Time on the Deposit Date relating
to the Collection Period during which such repurchase, purchase or other
obligation arose. The Trustee shall deposit in the Marine Certificate Account
the aggregate of any amounts received from the Surety Bond Issuer pursuant to
Section 14.5(a)(iv) on the date of receipt thereof. The Trustee shall deposit
in the RV Certificate Account the aggregate of any amounts
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received from the Surety Bond Issuer pursuant to Section 14.5A(a)(iv) on the
date of receipt thereof.
(b) If the Servicer shall be required pursuant to Section
14.2 or Section 14.2A to remit Marine Collections to the Marine Collection
Account or RV Collections to the RV Collection Account, two Business Days after
receipt rather than on a monthly basis, then, if the Servicer is NationsCredit
Commercial or an affiliate thereof is the servicer it may remit payments
collected on Unsold Contracts as well as payments collected on Marine
Receivables and Liquidation Proceeds to the Marine Collection Account or RV
Receivables and Liquidation Proceeds to the RV Collection Account, as
applicable. Upon receipt of an Officer's Certificate of the Servicer
identifying the amount of funds in the Marine Collection Account representing
Marine Collections and in the RV Collection Account representing RV Collections
attributable to Unsold Contracts, the Trustee shall transfer such funds in
accordance with the instructions contained in such Officer's Certificate.
SECTION 14.5. Marine Distributions. (a) (i) On each
Deposit Date, the Trustee shall transfer all amounts on deposit in the Marine
Collection Account to the Marine Certificate Account, in immediately available
funds, less any funds identified in an Officer's Certificate of the Servicer as
proceeds of (x) Unsold Contracts and (y) Marine Collections allocable to late
payment and extension fees, and administrative charges, provided, however, that
in the event that the Servicer is required to make deposits to the Marine
Collection Account two Business Days after receipt pursuant to Section 14.2,
the amount of Marine Available Funds transferred from the Marine Collection
Account to the Marine Certificate Account will include only those funds that
were deposited into the Marine Collection Account in the Collection Period
relating to such Distribution Date. The amount of the transfer from the Marine
Collection Account to the Marine Certificate Account shall be set forth in the
Servicer's Certificate for such Distribution Date.
(ii) On each Deposit Date, the Trustee shall
transfer from the Marine Reserve Account to the Marine
Certificate Account an amount equal to (A) the lesser of (x)
the amount on deposit in the Marine Reserve Account and (y) an
amount equal to the shortfall, if any, between, (1) Marine
Available Funds for such Collection Period and (2) the sum of
(a) the Monthly Marine Interest Payment and any Carry-Over
Monthly Marine Interest, (b) the Monthly Marine Servicing Fee
and any Carry-Over Monthly Marine Servicing Fee to be
distributed to the Servicer pursuant to Section 14.5(b)(ii)
and (c) the Monthly Marine Principal Payment and any
Carry-Over Monthly Marine Principal, each for the related
Distribution Date (collectively "Marine Priority
Distributions") reduced by (B) the amount of any distributions
made pursuant to clauses (vi) through (viii) of Section
14.5A(b) (the amount transferred pursuant to this clause (ii)
is the "Marine Reserve Account Withdrawal Amount" for such
Deposit Date).
The "Marine Reserve Account Withdrawal Amount" shall be set
forth in the Servicer's Certificate with respect to each Distribution Date.
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(iii) On each Deposit Date, the Trustee shall
transfer from the RV Reserve Account, an amount equal to the
lesser of (x) the amount on deposit in the RV Reserve Account
(after giving effect to any RV Reserve Account Withdrawal
Amount to be withdrawn from the RV Reserve Account on such
date) to the Marine Certificate Account and (y) an amount
equal to the shortfall between (A) the sum of (l) Marine
Available Funds for the related Collection Period, (2) amounts
distributed pursuant to clauses (vi) through (viii) of Section
14.5A(b) and (3) the Marine Reserve Account Withdrawal
Amounts, if any, and (B) the Marine Priority Distributions
(the amount transferred pursuant to this clause (iii) is the
"RV Reserve Account Cross Collateral Withdrawal Amount" for
such Deposit Date). Any Marine Reserve Account Cross
Collateral Withdrawal Amount distributed pursuant to this
clause (iii) shall be deemed to be outstanding until repaid
pursuant to Section 14.5(b)(xi) or Section 14.5(d).
(iv) If on any Determination Date the Servicer has
reported to the Trustee in the Servicer's Certificate that the
Servicer has determined that Marine Available Funds for the
related Distribution Date together with any Marine Reserve
Account Withdrawal Amount for such Distribution Date and any
amount in the RV Reserve Account after giving effect to any
Marine Reserve Account Cross Collateral Withdrawal Amount are
insufficient to provide for the Marine Priority Distribution
on such Distribution Date (the amount of such insufficiency is
referred to as the "Marine Surety Drawing Amount" for such
Distribution Date, then, after receipt of such Servicer's
Certificate, the Trustee shall promptly (and in any event not
later than 2:00 p.m. on the second Business Day prior to the
Distribution Date) deliver a completed demand for payment
under the Surety Bond to the Surety Bond Issuer requesting
payment in an amount equal to the Surety Drawing Amount for
such Distribution Date. The Surety Bond Issuer shall pay or
cause to be paid the amount of such demand for payment to the
Marine Trustee for credit to the Marine Certificate Account no
later than the later of 11:00 a.m. on the related Deposit Date
and the second Business Day after the Surety Bond Issuer
receives a demand for payment.
(b) On each Distribution Date, as set forth in the
Servicer's Certificate for such Distribution Date, the Trustee will make the
following distributions from the Marine Certificate Account in the following
order of priority:
(i) to the Marine Certificateholders of record as
of the related Record Date, the Monthly Marine Interest
Payment and any Carry-Over Marine Monthly Interest;
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(ii) if the Servicer is not NationsCredit
Commercial or an affiliate thereof, to the Servicer, the
Monthly Marine Servicing Fee and any Carry-Over Monthly Marine
Servicing Fee;
(iii) to the Marine Certificateholders of record as
of the related Record Date, the Monthly Marine Principal
Payment and any Carry-Over Marine Monthly Principal;
(iv) if NationsCredit Commercial or an affiliate
thereof is the Servicer, to the Servicer, the Monthly Marine
Servicing Fee and any Carry-Over Monthly Marine Servicing Fee;
(v) to the Surety Bond Issuer, any amounts owing
to the Surety Bond Issuer hereunder and pursuant to the
Reimbursement Agreement and allocable to the Marine Contract
Group and not paid;
(vi) to the RV Certificateholders an amount up to the
shortfall, between (x) the amount paid to RV
Certificateholders on such Distribution Date pursuant to
Section 14.5A(b)(i), and the Monthly RV Interest Payment and
any Carry-Over Monthly RV Interest Payment from prior
Distribution Dates;
(vii) if NationsCredit Commercial or an affiliate
thereof is not the Servicer, to the Servicer, an amount up to
the shortfall between (x) the amount paid to the Servicer on
such Distribution Date pursuant to Section 14.5A(b)(ii), and
(y) the Monthly RV Servicing Fee and any Carry-Over Monthly RV
Servicing Fee from prior Distribution Dates;
(viii) to the RV Certificateholders, an amount up to
the shortfall between (x) the amount paid to the RV
Certificateholders on such Distribution Date pursuant to
Section 14.5A(b)(iii), and (y) the Monthly RV Principal
Payment and any Carry-Over RV Principal Payments from prior
Distribution Dates;
(ix) if NationsCredit Commercial or an affiliate
thereof is the Servicer, to the Servicer, an amount up to the
shortfall between (x) the amount paid to the Servicer on such
Distribution Date pursuant to Section 14.5A(b)(iv), and (y)
the Monthly RV Servicing Fee and any Carry-Over Monthly RV
Servicing Fee from prior Distribution Dates;
(x) to the Surety Bond Issuer, an amount up to the
shortfall between (x) the amount paid to the Surety Bond
Issuer on such Distribution Date pursuant to Section
14.5A(b)(v), and (y) amounts owing to the Surety Bond Issuer
under the Reimbursement Agreement allocable to the RV Contract
Group and not paid without giving effect to any distributions
made on such Distribution Date pursuant
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to clause (v) of Section 14.5A(b);
(xi) to the Collateral Agent, an amount up to the
lesser of (x) the sum of any outstanding RV Reserve Account
Cross Collateral Withdrawal Amounts from prior Distribution
Dates which have not been repaid pursuant to this clause (xi)
or Section 14.5(d) and (y) the shortfall between the Specified
RV Reserve Account Requirement and the amount on deposit in
the RV Reserve Account on such Distribution Date after giving
effect to the distribution set forth in clause (xii) of
Section 14.5A(b), for deposit into the RV Reserve Account;
(xii) to the Collateral Agent, an amount up to the
shortfall between the Specified Marine Reserve Account
Requirement and the amount on deposit in the Marine Reserve
Account on such Distribution Date without giving effect to any
distributions on such date for deposit into the Marine Reserve
Account;
(xiii) to the Collateral Agent, an amount up to the
shortfall between the Specified RV Reserve Account Requirement
and the amount on deposit in the RV Reserve Account, after
giving effect to the distribution, set forth in clause (xi)
above and clause (xii) of Section 14.5A(b), for deposit into
the RV Reserve Account; and
(xiv) to the Depositor, any remaining amounts.
(c) On each Distribution Date as set forth in the
Servicer's Certificate for such Distribution Date, the Trustee shall withdraw
from the Marine Reserve Account and distribute to the Depositor an amount equal
to the excess, if any, of the (x) amount on deposit in the Marine Reserve
Account over (y) the Specified Marine Reserve Account Requirement.
(d) On any date where the amount on deposit in the RV
Reserve Account equals the Specified RV Reserve Account Balance, all
outstanding RV Reserve Account Cross Collateral Withdrawal Amounts from prior
Distribution Dates shall be deemed to have been repaid on such date.
Distributions to Certificateholders, except in the case of
distributions under Section 20.1, shall be made by check mailed by the Trustee
to each Certificateholder's respective address of record on the Certificate
Register (or, where a Clearing Agency is the Certificateholder, by delivery of
immediately available funds) and distributions to the Servicer, the Surety Bond
Issuer, the Collateral Agent or the Depositor shall be made by wire transfer of
immediately available funds.
SECTION 14.5A. RV Distributions. (a) (i) On each Deposit
Date, the Trustee shall transfer all amounts on deposit in the RV Collection
Account to the RV Certificate Account, in immediately available funds, less any
funds identified in an Officer's Certificate of the Servicer as proceeds of (x)
Unsold Contracts and (y) RV Collections allocable to late
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payment and extension fees, and administrative charges, provided, however, that
in the event that the Servicer is required to make deposits to the RV
Collection Account two Business Days after receipt pursuant to Section 14.2,
the amount of RV Available Funds transferred from the RV Collection Account to
the RV Certificate Account will include only those funds that were deposited
into the Collection Account in the Collection Period relating to such
Distribution Date. The amount of the transfer from the RV Collection Account
to the RV Certificate Account shall be set forth in the Servicer's Certificate
for such Distribution Date.
(ii) On each Deposit Date, the Trustee shall
transfer from the RV Reserve Account to the RV Certificate
Account an amount equal to (A) the lesser of (x) the amount on
deposit in the RV Reserve Account and (y) an amount equal to
the shortfall, if any, between, (1) RV Available Funds for
such Collection Period and (2) the sum of (a) the Monthly RV
Interest Payment and any Carry-Over Monthly RV Interest, (b)
the Monthly RV Servicing Fee and any Carry-Over Monthly RV
Servicing Fee to be distributed to the Servicer pursuant to
Section 14.5A(b)(ii) and (c) the Monthly RV Principal Payment
and any Carry-Over Monthly Principal Payment, each for the
related Distribution Date (collectively "RV Priority
Distributions") reduced by (B) the amount of any distributions
made pursuant to clauses (vi) through (viii) of Section
14.5(b) (the amount transferred pursuant to this clause (ii)
is the " RV Reserve Account Withdrawal Amount" for such
Deposit Date).
The RV Reserve Account Withdrawal Amount shall be set forth in
the Servicer's Certificate with respect to each Distribution Date.
(iii) On each Deposit Date, the Trustee shall
transfer from the Marine Reserve Account (after giving effect
to any Marine Reserve Account Withdrawal Amount to be
withdrawn from the Marine Reserve Account on such date) to the
RV Certificate Account, an amount equal to the lesser of (x)
the amount on deposit in the Marine Reserve Account and (y) an
amount equal to the shortfall between (A) the sum of (1) RV
Available Funds for the related Collection Period, (2) amounts
distributed pursuant to clauses (vi) through (viii) of Section
14.5(b) and (3) the RV Reserve Account Withdrawal Amount, if
any, and (B) the RV Priority Distributions (the amount
transferred pursuant to this clause (iii) is the "Marine
Reserve Account Cross Collateral Amount"). Any Marine Reserve
Account Cross Collateral Withdrawal Amount distributed
pursuant to this clause (iii) shall be deemed to be
outstanding until repaid pursuant to Section 14.5A(b)(xi) or
Section 14.5A(d).
(iv) If on any Determination Date the Servicer has
reported to the Trustee in the Servicer's Certificate that the
Servicer has determined that RV Available Funds for the
related Distribution Date together with any RV Reserve Account
Withdrawal Amount for such Distribution Date and any amount in
the
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Marine Reserve Account after giving effect to any Marine
Reserve Account Withdrawal Amount are insufficient to provide
for the RV Priority Distribution on such Distribution Date
(the amount of such insufficiency is referred to as the "RV
Surety Drawing Amount" for such Distribution Date, then, after
receipt of such Servicer's Certificate, the Trustee shall
promptly (and in any event not later than 2:00 p.m. on the
second Business Day prior to the Distribution Date) deliver a
completed demand for payment under the Surety Bond to the
Surety Bond Issuer requesting payment in an amount equal to
the Surety Drawing Amount for such Distribution Date. The
Surety Bond Issuer shall pay or cause to be paid the amount of
such demand for payment to the RV Trustee for credit to the
Certificate Account no later than the later of 11:00 a.m. on
the related Deposit Date and the second Business Day after the
Surety Bond Issuer receives a demand for payment.
(b) On each Distribution Date, as set forth in the
Servicer's Certificate for such Distribution Date, the Trustee will make the
following distributions from the RV Certificate Account in the following order
of priority:
(i) to the RV Certificateholders of record as of
the related Record Date, the Monthly RV Interest Payment and
any Carry-Over RV Monthly Interest;
(ii) if the Servicer is not NationsCredit
Commercial or an affiliate thereof, to the Servicer, the
Monthly RV Servicing Fee and any Carry-Over Monthly RV
Servicing Fee;
(iii) to the RV Certificateholders of record as of
the related Record Date, the Monthly RV Principal Payment and
any Carry-Over RV Monthly Principal;
(iv) if NationsCredit Commercial or an affiliate
thereof is the Servicer, to the Servicer, the Monthly RV
Servicing Fee and any Carry-Over Monthly RV Servicing Fee;
(v) to the Surety Bond Issuer, any amounts owing
to the Surety Bond Issuer hereunder and pursuant to the
Reimbursement Agreement and this Agreement allocable to the RV
Contract Group and not paid;
(vi) to the Marine Certificateholders an amount up to
the shortfall between (x) the amount paid to the Marine
Certificateholders pursuant to Section 14.5(b)(i), and (y) the
Monthly Marine Interest Payment and any Carry-Over Monthly
Marine Interest Payment from prior Distribution Dates;
(vii) if NationsCredit Commercial or an affiliate
thereof is not the Servicer,
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to the Servicer, an amount up to the shortfall between (x) the
amount paid to the Servicer on such Distribution Date pursuant
to Section 14.5(b)(ii), and (y) the Monthly Marine Servicing
Fee and any Carry-Over Monthly Marine Servicing Fee from prior
Distribution Dates;
(viii) to the Marine Certificateholders, an amount up
to the shortfall between (x) the amount paid to the Marine
Certificateholders on such Distribution Date pursuant to
Section 14.5(b)(iii), and (y) the Monthly Marine Principal
Payment and any Carry-Over Marine Principal Payments from
prior Distribution Dates;
(ix) if NationsCredit Commercial or an affiliate
thereof is the Servicer, to the Servicer, an amount up to the
shortfall between (x) the amount paid to the Servicer on such
Distribution Date pursuant to Section 14.5(b)(iv), and (y) the
Monthly Marine Servicing Fee and any Carry-Over Monthly Marine
Servicing Fee from prior Distribution Dates;
(x) to the Surety Bond Issuer, an amount up to the
shortfall between (x) the amount paid to the Surety Bond
Issuer on such Distribution Date pursuant to Section
14.5(b)(v), and (y) amounts owing to the Surety Bond Issuer
under the Reimbursement Agreement allocable to the Marine
Contract Group and not paid without giving effect to any
distributions made on such Distribution Date pursuant to
clause (v) of Section 14.5(b);
(xi) to the Collateral Agent, an amount up to the
lesser of (x) the sum of any outstanding Marine Reserve
Account Cross Collateral Withdrawal Amounts form prior
Distribution Dates which have not been repaid pursuant to this
clause (xi) or Section 14.5A(d) and (y) the shortfall, if any,
between the Specified Marine Reserve Account Requirement and
the amount on deposit in the Marine Reserve Account on such
Distribution Date after giving effect to the distribution set
forth in clause (xii) of Section 14.5(b), for deposit into the
Marine Reserve Account;
(xii) to the Collateral Agent, an amount up to the
shortfall between the Specified RV Reserve Account Requirement
and the amount on deposit in the RV Reserve Account on such
Distribution Date without giving effect to any distributions
on such date for deposit into the RV Reserve Account;
(xiii) to the Collateral Agent, an amount up to the
shortfall between the Specified Marine Reserve Account
Requirement and the amount on deposit in the Marine Reserve
Account, after giving effect to the distribution set forth in
clause (xi) and (xii) of Section 14.5(b) for deposit into the
Marine Reserve Account; and
(xiv) to the Depositor, any remaining amounts.
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(c) On each Distribution Date as set forth in the
Servicer's Certificate for such Distribution Date, the Trustee shall withdraw
from the RV Reserve Account and distribute to the Depositor an amount equal to
the excess, if any, of the (x) amount on deposit in the RV Reserve Account over
(y) the Specified RV Reserve Account Requirement.
(d) On any date where the amount on deposit in the Marine
Reserve Account equals the Specified Marine Reserve Account Balance, all
outstanding Marine Reserve Account Cross Collateral Withdrawal Amounts from
prior Distribution Dates shall be deemed to have been repaid on such date.
Distributions to Certificateholders, except in the case of
distributions under Section 20.1, shall be made by check mailed by the Trustee
to each Certificateholder's respective address of record on the Certificate
Register (or, where a Clearing Agency is the Certificateholder, by delivery of
immediately available funds) and distributions to the Servicer, the Surety Bond
Issuer, the Collateral Agent or the Depositor shall be made by wire transfer of
immediately available funds.
SECTION 14.6. Net Deposits. For so long as the Servicer
shall be entitled pursuant to Section 14.2 to remit Marine Collections on a
monthly basis rather than more frequently, the Servicer may make the
remittances pursuant to Sections 14.2 and 14.4 above net of amounts to be
distributed to the Servicer pursuant to Section 14.5(b). Nonetheless, the
Servicer shall account for all the above described remittances and
distributions in the Servicer's Certificate as if the amounts were deposited
and/or transferred separately. For so long as Servicer shall be entitled
pursuant to Section 14.2A to remit RV Collections on a monthly basis rather
than more frequently, the Servicer may make the remittances pursuant to
Sections 14.2A and 14.4A above net of amounts to be distributed to the Servicer
pursuant to Section 14.5A(b). Nonetheless, the Servicer shall account for all
the above described remittances and distributions in the Servicer's Certificate
as if the amounts were deposited and/or transferred separately.
SECTION 14.7. Statements to Marine Certificateholders. (a)
On each Distribution Date, the Servicer shall provide to the Trustee the
Statement to Certificateholders, setting forth for the Collection Period
relating to such Distribution Date the following information (stated in the
case of items (i), (ii) and (iii), on the basis of $1,000 initial principal
amount) as of such Distribution Date a copy of which shall be forwarded by the
Trustee to each Certificateholder on such Distribution Date:
(i) The amount of the Marine Certificateholder's
distribution which constitutes the Monthly Marine Principal
Payment (including any Carry-Over Marine Monthly Principal);
(ii) The amount of the Marine Certificateholder's
distribution which constitutes the Monthly Marine Interest
Payment (including any Carry-Over Monthly Marine Interest);
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(iii) The Marine Certificateholder's pro rata
portion of the Monthly Marine Servicing Fee (including any
Carry-Over Monthly Marine Servicing Fee);
(iv) The Marine Certificate Balance and the Marine
Certificate Factor as of the close of business on such
Distribution Date; and
(v) The Marine Pool Balance as of the last day of
the related Collection Period.
(b) Within the prescribed period of time for tax
reporting purposes after the end of each calendar year during the term of the
Agreement, the Trustee shall mail, to each Person who at any time during such
calendar year shall have been a Marine Certificateholder, a statement
containing the sum of the amounts determined in each of clauses (i) and (ii),
for such calendar year or, in the event such Person shall have been a Marine
Certificateholder during a portion of such calendar year, for the applicable
portion of such year.
SECTION 14.7A. Statements to RV Certificateholders. (a) On
each Distribution Date, the Servicer shall provide to the Trustee the Statement
to Certificateholders, setting forth for the Collection Period relating to such
Distribution Date the following information (stated in the case of items (i),
(ii) and (iii), on the basis of $1,000 initial principal amount) as of such
Distribution Date a copy of which shall be forwarded by the Trustee to each
Certificateholder on such Distribution Date:
(i) The amount of the RV Certificateholder's
distribution which constitutes the Monthly RV Principal
Payment (including any Carry-Over RV Monthly Principal);
(ii) The amount of the RV Certificateholder's
distribution which constitutes the Monthly RV Interest Payment
(including any Carry-Over RV Monthly Interest);
(iii) The RV Certificateholder's pro rata portion
of the Monthly RV Servicing Fee (including any Carry-Over
Monthly RV Servicing Fee);
(iv) The RV Certificate Balance and the RV
Certificate Factor as of the close of business on such
Distribution Date; and
(v) The RV Pool Balance as of the last day of the
related Collection Period.
(b) Within the prescribed period of time for tax
reporting purposes after the end of each calendar year during the term of the
Agreement, the Trustee shall mail, to each
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Person who at any time during such calendar year shall have been a RV
Certificateholder, a statement containing the sum of the amounts determined in
each of clauses (i) and (ii), for such calendar year or, in the event such
Person shall have been a RV Certificateholder during a portion of such calendar
year, for the applicable portion of such year.
ARTICLE XIV A
The Surety Bond
SECTION 14A.1. The Surety Bond. The Servicer and the
Transferor agree, simultaneously with the execution and delivery of this
Agreement, to cause the Surety Bond Issuer to issue the Surety Bond to the
Trustee for the benefit of the Trust in accordance with the terms thereof.
SECTION 14A.2. Preference Events. If the payment guaranteed by
the Surety Bond Issuer under the Surety Bond is voided pursuant to a final and
non-appealable order (a "Preference Event") under any applicable bankruptcy,
insolvency, receivership or similar law in an Insolvency Proceeding and, as a
result of such a Preference Event, the Trustee is required to return such
voided payment, or any portion of such voided payment, made in respect of the
Certificates (an "Avoided Payment"), the Trustee shall furnish to the Surety
Bond Issuer: (x) a certified copy of a final order of a court exercising
jurisdiction in such Insolvency Proceeding to the effect that the Trustee is
required to return any such payment or portion thereof during the term of the
Surety Bond because such payment was voided under applicable law, with respect
to which order the appeal period has expired without an appeal having been
filed (the "Final Order"), (y) an assignment, in form reasonably satisfactory
to the Surety Bond Issuer, irrevocably assigning to the Surety Bond Issuer all
rights and claims of the Trustee relating to or arising under such Avoided
Payment and (z) a Notice for Payment appropriately completed and executed by
the Trustee.
SECTION 14A.3. Surrender of Surety Bond. The Trustee shall
surrender the Surety Bond to the Surety Bond Issuer for cancellation upon its
expiration in accordance with the terms thereof.
SECTION 14A.4. Replacement Surety Bond. In the event of a
Surety Bond Issuer Default or the rating of the Surety Bond Issuer is
downgraded by any Rating Agency such that the rating of the Certificates is
reduced, suspended or withdrawn, the Servicer shall be permitted, in accordance
with the terms of the Reimbursement Agreement, but shall not be obligated, to
substitute a new surety bond for the Surety Bond or may arrange for any other
form of credit enhancement; provided, however, that, in each case, the rating
of the Certificates following any such substitution shall be the highest rating
available for each of the Rating Agencies and provided further that the Surety
Bond Issuer is reimbursed for all amounts due under this Agreement and the
Reimbursement Agreement. It shall be a condition to substitution of any such
new surety bond or other form of credit enhancement that there be delivered to
the Trustee (i) an Officer's Certificate by the Servicer stating that the
conditions to such substitution set forth in this Section 14A.4 (other than in
clause (ii)) have been satisfied and (ii) a legal opinion, acceptable in form
to the Trustee,
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from counsel to the provider of such surety bond or other form of credit
enhancement with respect to the enforceability thereof and such other matters
as the Trustee may require. Upon receipt of written notice of any such
substitution from the Servicer and the taking of physical possession of the
replacement surety bond or other form of credit enhancement, the Trustee shall,
within five (5) Business Days following receipt of such notice and such taking
of physical possession, deliver the Surety Bond marked "Cancelled" to the
Surety Bond Issuer, and the Surety Bond Issuer will have no further liability
under the Surety Bond.
ARTICLE XV
The Certificates
SECTION 15.1. The Certificates. The Certificates shall be
issued in book-entry form in minimum denominations representing $1,000 of
initial principal balance of the Receivables and in integral multiples thereof;
provided, however, that one Certificate may be issued in a denomination that
includes any residual amount and that such Certificate shall be retained by the
Depositor (the "Residual Certificate"). The Certificates shall be executed by
the Trustee on behalf of the Trust solely in its capacity as Trustee by manual
or facsimile signature of a Trustee Officer. Certificates bearing the manual
or facsimile signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of the Trust,
shall be valid and binding obligations of the Trust, notwithstanding that such
individuals or any of them shall have ceased to be so authorized prior to the
authentication and delivery of such Certificates or did not hold such offices
at the date of such Certificates.
SECTION 15.2. Authentication of Certificates. The Trustee
shall cause the Certificates to be executed on behalf of the Trust,
authenticated and delivered to or upon the written order of the Depositor,
signed by the Depositor's chairman of the board, the president, any vice
chairman of the board, any vice president, the treasurer, any assistant
treasurer or the controller of the Depositor, without further corporate action
by the Depositor, in authorized denominations, pursuant to the Agreement. No
Certificate shall entitle its holder to any benefit under the Agreement, or
shall be valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication substantially in the form set forth in Exhibit B
hereto executed by the Trustee by manual signature; such authentication shall
constitute conclusive evidence that such Certificate shall have been duly
authenticated and delivered hereunder. All Certificates shall be dated the
date of their authentication.
SECTION 15.3. Registration of Transfer and Exchange of
Certificates. (a) The Certificate Registrar shall keep or cause to be kept,
at the office or agency maintained pursuant to Section 15.7, a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Trustee shall provide for the registration of Certificates and of transfers
and exchanges of Certificates as herein provided. The Trustee shall be the
initial Certificate Registrar.
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(b) Upon surrender for registration of transfer of any
Certificate at the Corporate Trust Office, the Trustee shall execute,
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates in authorized denominations of a like
aggregate amount dated the date of authentication by the Trustee. At the
option of a Holder, Certificates may be exchanged for other Certificates of
authorized denominations of a like aggregate amount upon surrender of the
Certificates to be exchanged at the Corporate Trust Office.
(c) Every Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the Holder or his attorney duly authorized in
writing. Each Certificate surrendered for registration of transfer and
exchange shall be canceled and subsequently disposed of by the Trustee.
(d) No service charge shall be made for any registration
of transfer or exchange of Certificates, but the Trustee may require payment of
a sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
SECTION 15.4. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate shall be surrendered to the
Certificate Registrar, or if the Certificate Registrar shall receive evidence
to its satisfaction of the destruction, loss or theft of any Certificate and
(b) there shall be delivered to the Certificate Registrar or the Trustee such
security or indemnity as may be required by them to save each of them harmless,
then in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, the Trustee on behalf of the Trust shall execute and the
Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and denomination. In connection with the issuance of any new Certificate
under this Section 15.4, the Trustee and the Certificate Registrar may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection therewith. Any duplicate Certificate issued
pursuant to this Section 15.4 shall Constitute conclusive evidence of ownership
in the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
SECTION 15.5. Persons Deemed Owners. Prior to due
presentation of a Certificate for registration of transfer, the Trustee or the
Certificate Registrar may treat the Person in whose name any Certificate shall
be registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Section 14.5 and for all other purposes whatsoever,
and neither the Trustee nor the Certificate Registrar shall be bound by any
notice to the contrary.
SECTION 15.6. Access to List of Certificateholders Names and
Addresses. At such time as the Certificates exist as Definitive Certificates,
the Trustee shall furnish or cause to be furnished to the Servicer and the
Surety Bond Issuer, within 15 days after receipt by the
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Trustee of a request therefor from the Servicer or the Surety Bond Issuer in
writing, a list, of the names and addresses of the Certificateholders as of the
most recent Record Date. If three or more Certificateholders, or one or more
Holders of Certificates aggregating not less than 25% of the Certificate
Balance, apply in writing to the Trustee, and such application states that the
applicants desire to communicate with other Certificateholders with respect to
their rights under the Agreement or under the Certificates and such application
shall be accompanied by a copy of the communication that such applicants
propose to transmit, then the Trustee shall promptly after the receipt of such
application, afford such applicants access during normal business hours to the
current list of Certificateholders. Each Holder, by receiving and holding a
Certificate, shall be deemed to have agreed to hold neither the Servicer nor
the Trustee accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 15.7. Maintenance of Office or Agency. The Trustee
shall maintain in the Borough of Manhattan, the City of New York, an office or
offices or agency or agencies where Certificates may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Trustee in respect of the Certificates and the Agreement may be served.
The Trustee initially designates the Corporate Trust Office as specified in the
Agreement as its office for such purposes. The Trustee shall give prompt
written notice to the Servicer and to Certificateholders of any change in the
location of the Certificate Register or any such office or agency.
SECTION 15.8. Book-Entry Certificates. The Certificates,
upon original issuance (except for the Residual Certificate), will be issued in
the form of one or more global Certificates registered in the name of the
nominee of The Depository Trust Company, the initial Clearing Agency, by or on
behalf of the Depositor. The Certificates delivered to The Depository Trust
Company shall initially be registered on the Certificate Register in the name
of CEDE & CO., the nominee of the initial Clearing Agency, and no Certificate
Owner will receive a physical certificate representing such Certificate Owner's
interest in the Certificates, except as provided in Section 15.10. Unless and
until definitive, fully registered Certificates (the "Definitive Certificates")
have been issued to Certificate Owners pursuant to Section 15.10:
(i) the provisions of this Section 15.8 shall be
in full force and effect;
(ii) the Depositor, the Servicer, the Certificate
Registrar and the Trustee may deal with the Clearing Agency
for all purposes (including the making of distributions on the
Certificates) as the authorized representative of the
Certificate Owners;
(iii) to the extent that the provisions of this
Section 15.8 conflict with any other provisions of the
Agreement, the provisions of this Section 15.8 shall control;
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(iv) the rights of Certificate Owners shall be
exercised only through the Clearing Agency and shall be
limited to those established by law and agreements between
such Certificate Owners and the Clearing Agency and/or the
Clearing Agency Participants. Pursuant to the Depository
Agreement, unless and until Definitive Certificates are issued
pursuant to Section 15.10, the initial Clearing Agency will
make book-entry transfers among the Clearing Agency
Participants and receive and transmit distributions of
principal and interest on the Certificates to such Clearing
Agency Participants; and
(v) whenever the Agreement requires or permits
actions to be taken based upon instructions or directions of
Holders of Certificates evidencing a specified percentage of
the Pool Balance the Clearing Agency will take such actions
with respect to specified percentages of the Pool Balance only
at the direction of and on behalf of Clearing Agency
Participants whose holdings include undivided interests that
satisfy such specified percentages. DTC may take conflicting
actions with respect to other undivided interests to the
extent that such actions are taken on behalf of Clearing
Agency Participants whose holdings include such undivided
interests.
SECTION 15.9. Notices to Clearing Agency. Whenever notice or
other communication to the Certificateholders is required under the Agreement,
other than to the Holder of the Residual Certificate, unless and until
Definitive Certificates shall have been issued to Certificate Owners pursuant
to Section 15.10, the Trustee and the Servicer shall give all such notices and
communications specified herein to be given to Holders of the Certificates to
the Clearing Agency.
SECTION 15.10. Definitive Certificates. If (i) the Depositor
advises the Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities as Depository with respect to
the Certificates and the Trustee or the Depositor is unable to locate a
qualified successor, (ii) the Depositor, at its option, elects to terminate the
book-entry system through the Clearing Agency, or (iii) after the occurrence of
an Event of Default, Certificate owners representing beneficial interests
aggregating not less than 51% of the Certificate Balance advise the Trustee and
the Clearing Agency through the Clearing Agency Participants in writing that
the continuation of a book-entry system through the Clearing Agency is no
longer in the best interests of the Certificate Owners, then the Trustee
through the Clearing Agency shall notify all Certificate Owners of the
occurrence of any such event and of the availability through the Clearing
Agency of Definitive Certificates. Upon surrender by the Clearing Agency of
the global Certificates representing the Certificates and instructions for
re-registration, the Trustee shall issue the Definitive Certificates and
deliver such Definitive Certificates in accordance with the instructions of the
Clearing Agency. Neither the Depositor, the Certificate Registrar nor the
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates, the Trustee shall recognize the
Holders of the
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Definitive Certificates as Certificateholders hereunder. The Trustee shall not
be liable if the Trustee or the Depositor is unable to locate a qualified
successor Clearing Agency.
ARTICLE XVI
The Depositor
SECTION 16.1. Representations of Depositor. The Depositor
makes the following representations on which the Trustee relies in accepting
the Receivables in trust and executing and authenticating the Certificates.
(i) Organization and Good Standing. The
Depositor shall have been duly organized and shall be validly
existing as a corporation in good standing under the laws of
the State of Delaware, with power and authority to own its
properties and to conduct its business as such properties
shall be currently owned and such business is now conducted,
and had at all relevant times, and shall have, power,
authority and legal right to acquire and own the Receivables.
(ii) Due Qualification. The Depositor shall be
duly qualified to do business as a foreign corporation in good
standing, and shall have obtained all necessary licenses and
approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business shall require
such qualifications.
(iii) Principal Place of Business. The Depositor's
principal place of business is located in the State of Texas.
(iv) Power and Authority. The Depositor shall
have the power and authority to execute and deliver the
Agreement and to carry out its terms; the Depositor shall have
full power and authority to sell and assign the property to be
sold and assigned to and deposited with the Trustee as part of
the Trust and shall have duly authorized such sale and
assignment to the Trustee by all necessary corporate action;
and the execution, delivery and performance of the Agreement
shall have been duly authorized by the Depositor by all
necessary corporate action.
(v) Valid Sale; Binding Obligations. The
Agreement shall evidence (A) a valid sale, transfer and
assignment of the Receivables, enforceable against creditors
of and purchasers from the Depositor, and (B) a legal, valid
and binding obligation of the Depositor enforceable in
accordance with its terms.
(vi) No Violation. The consummation of the
transactions contemplated by the Agreement and the fulfillment
of the terms hereof shall not conflict with, result in any
breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time or both) a default
under, the articles of
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incorporation or by-laws of the Depositor, or any indenture,
agreement or other instrument to which the Depositor is a
party or by which it shall be bound; nor result in the
creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or
other instrument (other than the Agreement); nor violate any
law or, to the best of the Depositor's knowledge, any order,
rule or regulation applicable to the Depositor of any court or
of any Federal or State regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over
the Depositor or its properties.
(vii) No Proceedings. There are no proceedings or
investigations pending, or to the Depositor's best knowledge,
threatened, before any court, regulatory body, administrative
agency or other governmental instrumentality having
jurisdiction over the Depositor or its properties: (A)
asserting the invalidity of the Agreement or the Certificates;
(B) seeking to prevent the issuance of the Certificates or the
consummation of any of the transactions contemplated by the
Agreement; (C) seeking any determination or ruling that might
materially and adversely affect the performance by the
Depositor of its obligations under, or the validity or
enforceability of, the Agreement or the Certificates; or (D)
relating to the Depositor and which might adversely affect the
Federal income tax attributes of the Certificates.
(viii) All Consents Required. All approvals,
authorizations, consents, orders or other actions of any
Person or of any governmental body or official required in
connection with the execution and delivery by the Depositor of
the Agreement, the Reimbursement Agreement and the
Certificates, the performance by the Depositor of the
transactions contemplated by the Agreement, the Reimbursement
Agreement and the Certificates, and the fulfillment by the
Depositor of the terms hereof, have been obtained; provided,
however, that the Depositor makes no representation or
warranty regarding State securities or "blue sky" laws in
connection with the distribution of the Certificates.
SECTION 16.2. Liability of Depositor; Indemnities. The
Depositor shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Depositor under the Agreement:
(i) The Depositor shall indemnify, defend and
hold harmless the Trustee (which for purposes of this Section
16.2 shall include its directors, employees, officers and
agents) and the Trust from and against any taxes that may at
any time be asserted against the Trustee or the Trust with
respect to, and as of the date of, the sale of the Receivables
to the Trustee or the issuance and original sale of the
Certificates, including any sales, gross receipts, general
corporation, tangible personal property, privilege or license
taxes (but, in the case of the Trust, not including any taxes
asserted with respect to ownership of the Receivables or
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Federal or other income taxes arising out of the transactions
contemplated by the Agreement) and costs and expenses in
defending against the same.
(ii) The Depositor shall indemnify, defend and
hold harmless the Trustee (which for purposes of this Section
16.2 shall include its directors, employees, officers and
agents) and the Trust from and against any loss, liability or
expense incurred by reason of (a) the Depositor's willful
misfeasance, bad faith or negligence in the performance of its
duties under the Agreement, or by reason of reckless disregard
of its obligations and duties under the Agreement, (b) the
Depositor's violation of Federal or State securities laws in
connection with the registration of the sale of the
Certificates or (c) any action taken by the Trustee at the
direction of the Servicer pursuant to Section 13.1 or
otherwise.
Indemnification under this Section 16.2 shall survive the
termination of the Agreement and the resignation or removal of the Trustee, and
shall include, without limitation, reasonable fees and expenses of counsel and
expenses of litigation. If the Depositor shall have made any indemnity
payments to the Trustee pursuant to this Section 16.2 and the Trustee
thereafter shall collect any of such amounts from others, the Trustee shall
repay such amounts to the Depositor, without interest.
SECTION 16.3. Merger or Consolidation of, or Assumption of
the Obligations of Depositor. Any Person (a) into which the Depositor may be
merged or consolidated, (b) which may result from any merger or consolidation
to which the Depositor shall be a party, or (c) which may succeed to the
properties and assets of the Depositor substantially as a whole, which Person
in any of the foregoing cases executes an agreement of assumption to perform
every obligation of the Depositor under the Agreement and the Reimbursement
Agreement, shall be the successor to the Depositor hereunder without the
execution or filing of any document or any further act by any of the parties to
the Agreement; provided, however, that (i) immediately after giving effect to
such transaction, no representation or warranty made pursuant to Section 12.1
shall have been breached and no Event of Default, and no event that, after
notice or lapse of time or both, would become an Event of Default, shall have
happened and be continuing, (ii) the Depositor shall have delivered to the
Trustee an Officer's Certificate and an Opinion of Counsel each stating that
such consolidation, merger or succession and such agreement of assumption
comply with this Section 16.3 and (iii) the Depositor shall have delivered an
Opinion of Counsel either (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary fully to preserve and protect the
interest of the Trustee in the Receivables, and reciting the details of such
filings, or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interest. The Depositor shall
provide notice of any merger, consolidation or succession pursuant to this
Section 16.3 to each Rating Agency and the Surety Bond Issuer. Notwithstanding
anything herein to the contrary, the Depositor shall not consummate any
transaction of a type referred to in clauses (a), (b) or (c) above unless at
such time or prior thereto
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the foregoing agreement of assumption shall have been executed and the
conditions described in clauses (i), (ii) and (iii) shall have been satisfied.
SECTION 16.4. Limitation on Liability of Depositor and
Others. The Depositor and any director or officer or employee or agent of the
Depositor may rely in good faith on the advice of counsel or on any document of
any kind, prima facie properly executed and submitted by any Person respecting
any matters arising hereunder. The Depositor shall not be under any obligation
to appear in, prosecute or defend any legal action that shall not be incidental
to its obligations under the Agreement, and that in its opinion may involve it
in any expense or liability.
SECTION 16.5. Depositor May Own Certificates. The Depositor
and any Person controlling, controlled by or under common control with, the
Depositor may in its individual or any other capacity become the owner or
pledgee of Certificates with the same rights as it would have if it were not
the Depositor or an affiliate thereof, except as otherwise provided in the
definition of "Certificateholder" specified in Section 11.1. Certificates so
owned by or pledged to the Depositor or such controlling or commonly controlled
Person shall have an equal and proportionate benefit under the provisions of
the Agreement, without preference, priority or distinction as among all the
Certificates.
SECTION 16.6. Depositor's Interest in Reserve Accounts; No
Transfer. The Depositor hereby acknowledges that the Marine Reserve Account
and the RV Reserve Account shall not be a part of the Trust. The Depositor
hereby acknowledges that any amounts on deposit in the Marine Reserve Account
and the RV Reserve Account (and any investment earnings thereon) is owned
directly by it, and the Depositor agrees to treat the same as its assets (and
earnings) for federal tax and all other purposes. Funds deposited therein
shall be distributable to the Marine Collection Account or the RV Collection
Account, as applicable, the Surety Bond Issuer and the Depositor as described
in this Agreement and in the Reimbursement Agreement.
ARTICLE XVII
The Servicer
SECTION 17.1. Representations of Servicer. The Servicer
makes the following representations on which the Trustee relies in accepting
the Receivables in trust and executing and authenticating the Certificates.
The representations speak as of the execution and delivery of the Agreement and
shall survive the sale of the Receivables to the Trustee.
(i) Organization and Good Standing. The Servicer
shall have been duly organized and shall be validly existing
as a corporation in good standing under the laws of the State
of its incorporation, with power and authority to own its
properties and to conduct its business as such properties
shall be currently owned and such business is now conducted,
and had at all relevant times, and shall have, power,
authority and legal right to acquire, own, sell and service
the
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Receivables and to hold the Receivable Files as custodian on
behalf of the Trustee.
(ii) Due Qualification. The Servicer shall be
duly qualified to do business as a foreign corporation in good
standing, and shall have obtained all necessary licenses and
approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business (including
the servicing of the Receivables as required by the Agreement)
shall require such qualifications.
(iii) Power and Authority. The Servicer shall have
the power and authority to execute and deliver the Agreement
and to carry out its terms; and the executions delivery and
performance of the Agreement shall have been duly authorized
by the Servicer by all necessary corporate action.
(iv) Valid Sale; Binding Obligations. The
Agreement shall constitute a legal, valid and binding
obligation of the Servicer enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance and similar laws
relating to creditors' rights generally and subject to general
principals of equity.
(v) No Violation. The consummation of the
transactions contemplated by this Agreement and the
fulfillment of the terms hereof shall not conflict with,
result in any breach of any of the terms and provisions of,
nor constitute (with or without notice or lapse of time or
both) a default under, the articles of incorporation or
by-laws of the Servicer, or any indenture, agreement or other
instrument to which the Servicer is a party or by which it
shall be bound; nor result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of
any such indenture, agreement or other instrument (other than
the Agreement); nor violate any law or, any order, rule or
regulation applicable to the Servicer of any court or of any
Federal or State regulatory body, administrative agency, or
other governmental instrumentality having jurisdiction over
the Servicer or its properties.
(vi) No Proceedings. There are no proceedings or
investigations pending, or, to the Servicer's knowledge,
threatened, before any court, regulatory body, administrative
agency or other governmental instrumentality having
jurisdiction over the Servicer or its properties: (A)
asserting the invalidity of the Agreement or the Certificates;
(B) seeking to prevent the issuance of the Certificates or the
consummation of any of the transactions contemplated by the
Agreement; (C) seeking any determination or ruling that might
materially and adversely affect the performance by the
Servicer of its obligations under, or the validity or
enforceability of, the Agreement or the Certificates; or (D)
relating to
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the Servicer and which might adversely affect the Federal
income tax attributes of the Certificates.
(vii) All Consents Required. All approvals,
authorizations, consents, orders or other actions of any
Person or of any governmental body or official required in
connection with the execution and delivery by the Servicer of
the Agreement and the Reimbursement Agreement, the performance
by the Servicer of the transactions contemplated by the
Agreement, the Reimbursement Agreement and the Certificates,
and the fulfillment by the Servicer of the terms hereof, have
been obtained; provided, however, that the Servicer makes no
representation or warranty regarding State securities or "blue
sky" laws in connection with the distribution of the
Certificates.
SECTION 17.2. Liability of Servicer; Indemnities. The
Servicer shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Servicer under the Agreement:
(i) The Servicer shall defend, indemnify and hold
harmless the Trustee (which for purposes of this Section 17.2
shall include its directors, officers, employees and agents),
the Trust, the Certificateholders and the Surety Bond Issuer
from and against any and all costs, expenses, losses, damages,
claims and liabilities, arising out of or resulting from the
use, ownership or operation by the Servicer or any affiliate
thereof of a Boat or RV.
(ii) The Servicer shall indemnify, defend and hold
harmless the Trustee, (which for purposes of this Section 17.2
shall include its directors, officers, employees and agents),
the Trust and the Surety Bond Issuer from and against any
taxes that may at any time be asserted against the Trustee,
the Trust or the Surety Bond Issuer with respect to the
transactions contemplated herein or in the Reimbursement
Agreement, including, without limitation, any sales, gross
receipts, general corporation, tangible personal property,
privilege or license taxes (but, in the case of the Trust, not
including any taxes asserted with respect to, and as of the
date of, the sale of the Receivables to the Trust or the
issuance and original sale of the Certificates, or asserted
with respect to ownership of the Receivables, or Federal or
other income taxes arising out of distributions on the
Certificates) and costs and expenses in defending against the
same.
(iii) The Servicer shall indemnify, defend and hold
harmless the Trustee (which for purposes of this Section 17.2
shall include its directors, officers, employees and agents),
the Trust, and the Certificateholders from and against any and
all costs, expenses, losses, claims, damages and liabilities
to the extent that such cost, expense, loss, claim, damage or
liability arose out of, or was imposed upon the Trustee, the
Trust, the Surety Bond Issuer or the
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Certificateholders through, the negligence, willful
misfeasance or bad faith of the Servicer in the performance of
its duties under the Agreement or the Reimbursement Agreement
or by reason of reckless disregard of its obligations and
duties under the Agreement or the Reimbursement Agreement.
(iv) The Servicer shall indemnify, defend and hold
harmless the Trustee (which for purposes of this Section 17.2
shall include its directors, officers, employees and agents),
from and against all costs, expenses, losses, claims, damages
and liabilities arising out of or incurred in connection with
the acceptance or performance of the trusts and duties,
including any action by the Trustee at the direction of the
Servicer taken pursuant to Section 13.1, herein contained and
the trusts and duties contained in the Reimbursement
Agreement, except to the extent that such cost, expense, loss,
claim, damage or liability: (a) shall be due to the willful
misfeasance, bad faith or negligence (except for errors in
judgment) of the Trustee; (b) relates to any tax other than
the taxes with respect to which either the Depositor or the
Servicer shall be required to indemnify the Trustee; (c) shall
arise from Trustee's breach of any of its representation or
warranties set forth in Section 19.8; (d) shall be one as to
which the Depositor is required to indemnify the Trustee; or
(e) shall arise out of or be incurred in connection with the
acceptance or performance by the Trustee of the duties of
successor Servicer hereunder unless such cost, expense, loss,
claim, damage or liability was caused by the act or omission
of the predecessor Servicer.
For purposes of this Section 17.2, in the event of the
termination of the rights and obligations of NationsCredit Commercial (or any
successor thereto pursuant to Section 17.3) as Servicer pursuant to Section
18.1, or a resignation by such Servicer pursuant to the Agreement, such
Servicer shall be deemed to be the Servicer pending appointment of a successor
Servicer (other than the Trustee) pursuant to Section 18.2.
Indemnification under this Section 17.2 shall survive
termination of the Agreement and the resignation or removal of the Trustee and
shall include, without limitation, reasonable fees and expenses of counsel and
expenses of litigation. If the Servicer shall have made any indemnity payments
pursuant to this Section 17.2 and the recipient thereafter collects any of such
amounts from others, the recipient shall promptly repay such amounts to the
Servicer, without interest.
SECTION 17.3. Merger or Consolidation of, or Assumption of
the Obligations of the Servicer. Any Person (a) into which the Servicer may be
merged or consolidated, (b) which may result from any merger or consolidation
to which the Servicer shall be a party, or (c) which may succeed to the
properties and assets of the Servicer substantially as a whole, or any Person,
more than 50% of the voting stock of which is, directly or indirectly, owned by
NationsBank Corporation, which Person in each of the foregoing cases executed
an agreement of assumption to perform every obligation of the Servicer
hereunder and under the Reimbursement
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Agreement, shall be the successor to the Servicer under the Agreement without
further act on the part of any of the parties to the Agreement; provided,
however, that (i) immediately after giving effect to such transaction, no Event
of Default, and no event which, after notice or lapse of time or both, would
become an Event of Default shall have happened and be continuing, (ii) the
Servicer shall have delivered to the Trustee an Officer's Certificate and an
Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section 17.3, and (iii) the
Servicer shall have delivered to the Trustee an Opinion of Counsel either (A)
stating that, in the opinion of such counsel, all financing statements and
continuation statements and amendments thereto have been executed and filed
that are necessary fully to preserve and protect the interest of the Trustee in
the Receivables, and reciting the details of such filings, or (B) stating that,
in the opinion of such counsel, no such action shall be necessary to preserve
and protect such interest. The Servicer shall provide notice of any merger,
consolidation or succession pursuant to this Section 17.3 to each Rating Agency
and the Surety Bond Issuer. Notwithstanding anything herein to the contrary,
the Servicer shall not consummate any transaction of a type referred to in
clauses (a), (b) or (c) above unless at or prior thereto the foregoing
agreement of assumption shall have been executed and the conditions described
in clauses (i), (ii) and (iii) shall have been satisfied.
SECTION 17.4. Limitation on Liability of Servicer and Others.
(a) Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer shall be under any liability to the Trust or the
Certificateholders, except as provided under the Agreement, for any action
taken or for refraining from the taking of any action pursuant to the
Agreement; provided, however, that this provision shall not protect the
Servicer or any such person against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties under the Agreement. The Servicer and any director or officer or
employee or agent of the Servicer may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person respecting any
matters arising under the Agreement.
(b) Except as provided in the Agreement, the Servicer
shall not be under any obligation to appear in, prosecute, or defend any legal
action that shall not be incidental to its duties to service the Receivables in
accordance with the Agreement, and that in its opinion may involve it in any
expense or liability; provided, however, that the Servicer may undertake any
reasonable action that it may deem necessary or desirable in respect of the
Agreement and the rights and duties of the parties to the Agreement and the
interests of the Certificateholders under the Agreement.
ARTICLE XVIII
Default
SECTION 18.1. Events of Default. (a) If any one of the
following events (each an "Event of Default") shall occur and be continuing:
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(i) Any failure by the Servicer to deliver to the
Trustee for distribution to Certificateholders any proceeds or
payment required to be so delivered under the terms of the
Certificates and the Agreement that shall continue unremedied
for a period of three Business Days after written notice from
the Trustee is received by the Servicer as specified in the
Agreement or after discovery of such failure by an officer of
the Servicer; or
(ii) any failure on the part of the Servicer or
the Depositor duly to observe or to perform in any material
respect any other covenants or agreements of the Servicer or
the Depositor (as the case may be) set forth in the
Certificates or in the Agreement, which failure shall (a)
materially adversely affects the rights of Certificateholders
as determined by the Holders of Certificates evidencing not
less than a majority of the Certificate Balance and (b)
continue unremedied for a period of 60 days after the date on
which written notice of such failure, requiring the same to be
remedied, shall have been given (1) to the Servicer or the
Depositor (as the case may be), by the Trustee, or (2) to the
Servicer or the Depositor (as the case may be) and to the
Trustee by the Surety Bond Issuer; or
(iii) The entry of a decree or order by a court or
agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver or
liquidator for the Servicer or the Depositor in any
bankruptcy, insolvency, readjustment of debt, marshaling of
assets and liabilities, or similar proceedings, or for the
winding up or liquidation of their respective affairs, and the
continuance of any such decree or order unstayed and in effect
for a period of 60 consecutive days; or
(iv) The consent by the Servicer or the Depositor
to the appointment of a conservator or receiver or liquidator
in any bankruptcy, insolvency, readjustment of debt,
marshaling of assets and liabilities, or similar proceedings
of or relating to the Servicer or the Depositor or relating to
substantially all their property; or the Servicer or the
Depositor shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization
statute, make an assignment for the benefit of its creditors,
or voluntarily suspend payment of its obligations; or
(v) Any representation or warranty by the
Servicer in the Agreement shall prove to have been incorrect
in any material respect when made, which continues to be
incorrect in any material respect for a period of 60 days
after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to
the Servicer by the Trustee, or to the Servicer and the
Trustee by the Surety Bond Issuer and as a result of which the
interests hereunder of Certificateholders are materially and
adversely affected;
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then, and in each and every case, so long as an Event of Default shall not have
been remedied, the Surety Bond Issuer, by notice then given in writing to the
Servicer may terminate all the rights and obligations of the Servicer under the
Agreement (a "Servicer Transfer").
(b) In addition to a Servicer Transfer effected pursuant
to clause (a) of this Section 18.1, the Surety Bond Issuer with notice in
writing to the Servicer, may effect a Servicer Transfer upon the occurrence of
any of the following events: (i) the Depositor or the Servicer, as the case may
be, shall fail to pay when due any amount payable by it hereunder or under the
Reimbursement Agreement which failure shall have continued for three (3)
Business Days after receipt of notice thereof by the Depositor or the Servicer,
as the case may be or (ii) the Surety Bond Issuer determines that the
performance of the Servicer is not, in the opinion of the Surety Bond Issuer,
in conformity with the Servicing Standards.
(c) On or after the receipt by the Servicer of such
written notice which effects a Servicing Transfer, all authority and power of
the Servicer under the Agreement, whether with respect to the Certificates or
the Receivables or otherwise, shall, without further action, pass to and be
vested in the Trustee or such successor Servicer as may be appointed under
Section 18.2 pursuant to and under this Section 18.1; and, without limitation,
the Trustee is hereby authorized and empowered to execute and deliver, on
behalf of the predecessor Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the
Receivables and related documents, or otherwise. The predecessor Servicer
shall cooperate with the successor Servicer and the Trustee in effecting the
termination of the responsibilities and rights of the predecessor Servicer
under the Agreement, including the transfer to the successor Servicer for
administration by it of all cash amounts that shall at the time be held by the
predecessor Servicer for deposit, or shall thereafter be received with respect
to a Receivable. All reasonable costs and expenses (including attorneys' fees
and disbursements) incurred in connection with transferring the Receivable
Files to the successor Servicer and amending the Agreement and the
Reimbursement Agreement to reflect such succession as Servicer pursuant to this
Section 18.1 shall be paid by the predecessor Servicer upon presentation of
reasonable documentation of such costs and expenses.
SECTION 18.2. Appointment of Successor. (a) Upon the
Servicer's receipt of notice of termination pursuant to Section 18.1 or the
Servicer's resignation in accordance with the terms of the Agreement, the
predecessor Servicer shall continue to perform its functions as Servicer under
the Agreement, in the case of termination, only until the date specified in
such termination notice or, if no such date is specified in a notice of
termination, until receipt of such notice and, in the case of resignation,
until the later of (x) the date 45 days from the delivery to the Trustee of
written notice of such resignation (or written confirmation of such notice of
resignation) in accordance with the terms of the Agreement and (y) the date
upon which the predecessor Servicer shall become unable to act as Servicer, as
specified in the notice of resignation and an accompanying Opinion of Counsel.
In the event of the Servicer's resignation or termination hereunder, a
successor Servicer appointed by the Trustee and consented to by the
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Surety Bond Issuer in writing which consent shall not be unreasonably withheld
or the Trustee (unless it is unwilling or legally unable to do so) will succeed
to all the responsibilities, duties and liabilities of the Servicer under the
Agreement and will be entitled to similar compensation arrangements. The
successor Servicer shall accept its appointment by a written assumption in form
acceptable to the Trustee and the Surety Bond Issuer. Notwithstanding the
above, the Trustee, if it is unwilling or unable so to act, shall appoint or
petition a court of competent jurisdiction to appoint, an established
institution, having a net worth of at least $50,000,000 and whose regular
business shall include the servicing of marine retail installment sale
contracts, as the successor to the Servicer under the Agreement.
(b) Upon appointment, the successor Servicer shall be the
successor in all respects to the predecessor Servicer and shall be subject to
all the responsibilities, duties and liabilities arising thereafter relating
thereto placed on the predecessor Servicer, and shall be entitled to the
Monthly Marine Servicing Fee and the Monthly RV Servicing Fee and other fees
payable to the Servicer pursuant to Sections 13.8 and 13.8A hereof, and all the
rights granted to the predecessor Servicer, by the terms and provisions of the
Agreement. No such appointment shall make the successor Servicer responsible
for any liabilities of the predecessor Servicer incurred prior to such
appointment or for any acts, omissions or misrepresentations of such
predecessor Servicer.
(c) In connection with such appointment, the Trustee may,
with the consent of the Surety Bond Issuer, make such arrangements for the
compensation of such successor Servicer out of payments on Receivables as it
and such successor Servicer shall negotiate on an arms-length basis, but in no
event shall the Servicing Fee Rate be greater than __% per annum.
SECTION 18.3. Notification to Certificateholders. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article XVIII, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register and to each Rating Agency.
SECTION 18.4. Waiver of Past Defaults. So long as no Surety
Bond Issuer Default shall have occurred and be continuing, the Surety Bond
Issuer may, on behalf of all the Holders of Certificates, waive any default by
the Servicer in the performance of its obligations hereunder and its
consequences, except a default in making any required deposits to or payments
from the Certificate Account in accordance with the Agreement. Upon any such
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of the Agreement. No such waiver shall impair such Certificateholders'
rights or the Surety Bond Issuer's rights with respect to subsequent defaults.
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ARTICLE XIX
The Trustee
SECTION 19.1. Duties of Trustee. (a) The Trustee, both
prior to the occurrence of an Event of Default and after an Event of Default
shall have been cured or waived, shall undertake to perform only such duties as
are specifically set forth in the Agreement. If an Event of Default shall have
occurred and shall not have been cured or waived and, the Trustee has received
notice of such Event of Default pursuant to Section 13.10(b), the Trustee shall
exercise such of the rights and powers vested in it by the Agreement, and shall
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs;
provided, however, that if the Trustee shall assume the duties of the Servicer
pursuant to Section 18.2, the Trustee in performing such duties shall use the
degree of skill and attention customarily exercised by a servicer with respect
to comparable receivables that it services for itself or others. For purposes
of this Article XIX, an Event of Default shall be deemed to have been cured
upon the appointment of a successor Servicer (including the Trustee in such
capacity).
(b) The Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports, documents, orders or other
instruments furnished to the Trustee that shall be specifically required to be
furnished pursuant to any provision of the Agreement, shall examine them to
determine whether they conform to the requirements of the Agreement.
(c) The Trustee shall take and maintain custody of the
Schedule of Receivables included as an exhibit to the Agreement and shall
retain all Servicer's Certificates identifying Receivables that become
Purchased Receivables.
(d) No provision of the Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act (other than errors in judgment) or its own bad faith;
provided, however, that:
(i) Prior to the occurrence of an Event of
Default (or in the case of an Event of Default described in
clause (i) of Section 18.1, before the Trustee has received
notice of such Event of Default pursuant to Section 13.10(b)),
and after the curing or waiving of all such Events of Default
that may have occurred, the duties and obligations of the
Trustee shall be determined solely by the express provisions
of the Agreement, the Trustee shall not be liable except for
the performance of such duties and obligations as shall be
specifically set forth in the Agreement, no implied covenants
or obligations shall be read into the Agreement against the
Trustee and, in the absence of bad faith or willful
misfeasance on the part of the Trustee, the Trustee may
conclusively rely on the truth of the statements and the
correctness of the opinions expressed in any certificates or
opinions furnished to the Trustee and conforming to the
requirements of the Agreement;
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(ii) The Trustee shall not be liable for an error
of judgment made in good faith by a Trustee Officer, unless
it shall be proved that the Trustee shall have been negligent
in ascertaining the pertinent facts;
(iii) The Trustee shall not be liable with respect
to any action taken, suffered or omitted to be taken in good
faith in accordance with the Agreement or at the direction of
the Holders of Certificates evidencing not less than 25% of
the Certificate Balance relating to the time, method and place
of continuing any proceeding for any remedy available to the
Trustee, or relating to the exercise of any trust power
conferred upon the Trustee, under the Agreement;
(iv) The Trustee shall not be charged with
knowledge of any failure by the Servicer to comply with the
obligations of the Servicer referred to in clauses (i) or (ii)
of Section 18.1, or of any failure by the Depositor to comply
with the obligations of the Depositor referred to in clause
(ii) of Section 18.1, or of any incorrect representation or
warranty referred to in clause (v) of Section 18.1, unless a
Trustee Officer assigned to the Corporate Trust Office
receives written notice of such failure or incorrectness from
the Servicer or the Depositor, as the case may be, from the
Surety Bond Issuer or from the Holders of Certificates
evidencing not less than 25% of the Certificate Balance, it
being understood that knowledge of the Servicer or the
Servicer as custodian is not attributable to the Trustee;
(v) Without limiting the generality of this
Section 19.1 or Section 19.4, the Trustee shall have no duty
(i) to see to any recording, filing or depositing of the
Agreement or any agreement referred to therein or any
financing statement or continuation statement evidencing a
security interest in the Receivables or the Boats or RVs, as
applicable, or to see to the maintenance if any such recording
or filing or depositing or to any rerecording, refiling or
redepositing of any thereof, (ii) to see to any insurance of
the Boats or RVs, as applicable, or Obligors or to effect or
maintain any such insurance, (iii) to see to the payment or
discharge of any tax, assessment or other governmental charge
or any Lien or encumbrance of any kind owing with respect to,
assessed or levied against, any part of the Trust, (iv) to
confirm or verify the contents of any reports or certificates
of the Servicer delivered to the Trustee pursuant to the
Agreement believed by the Trustee to be genuine and to have
been signed or presented by the proper party or parties, (v)
to inspect the Boats or RVs, as applicable, at any time or
ascertain or inquire as to the performance or observance of
any of the Depositor's or the Servicer's representations,
warranties or covenants or the Servicer's duties and
obligations as Servicer and as custodian of the Receivable
Files under the Agreement, or (vi) to prepare or make any
filings with the Securities and Exchange Commission with
respect to the Trust; and
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(vi) The Trustee shall not be deemed to be a
fiduciary for the Surety Bond Issuer in its capacity as such,
and the Trustee's sole responsibility with respect to the
Surety Bond Issuer, in its capacity as such, shall be to
perform those duties with respect to the Surety Bond Issuer as
are specifically set forth herein and no implied covenants
shall be read into the Agreement against the Trustee with
respect to the Surety Bond Issuer.
(e) Neither the Trustee nor the Collateral Agent shall be
required to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder, and the Trustee shall have
no liability in connection with losses on Permitted Investments made pursuant
to this Agreement or in the exercise of any of its rights or powers, and none
of the provisions contained in the Agreement shall in any event require the
Trustee to perform, or be responsible for the manner of performance of, any of
the obligations of the Servicer under the Agreement except during such time, if
any, as the Trustee shall be the successor to, and be vested with the rights,
duties, powers and privileges of, the Servicer in accordance with the terms of
the Agreement.
(f) Notwithstanding anything to the contrary contained
herein, the Collateral Agent shall have the same rights, indemnities and
protections afforded the Trustee.
SECTION 19.2 Trustee's Certificate. On or as soon as
practicable after each Distribution Date on which Receivables shall be assigned
to the Depositor or the Servicer, as applicable, pursuant to Section 19.3, the
Trustee shall execute a Trustee's Certificate, based on the information
contained in the Servicer's Certificate for the related Collection Period,
amounts deposited to the Marine Collection Account and RV Collection Account
and notices received pursuant to the Agreement, identifying the Receivables
repurchased by the Depositor pursuant to Section 12.2, purchased by the
Servicer pursuant to Sections 13.7, 20.2 or 20.2A during such Collection
Period, and shall deliver such Trustee's Certificate, accompanied by a copy of
the Servicer's Certificate for such Collection Period to the Depositor or the
Servicer, as the case may be. The Trustee's Certificate submitted with respect
to such Distribution Date shall operate, as of such Distribution Date, as an
assignment, without recourse, representation or warranty, to the Depositor or
the Servicer, as the case may be, of all the Trustee's right, title and
interest in and to such repurchased Receivable, and all security and documents
relating thereto, such assignment being an assignment outright and not for
security.
SECTION 19.3. Trustee's Assignment of Purchased Receivables.
With respect to all Receivables repurchased by the Depositor pursuant to
Section 12.2 or purchased by the Servicer pursuant to Sections 13.7, 20.2 or
20A, the Trustee shall by a Trustee's Certificate assign, without recourse,
representation or warranty, to the Depositor or the Servicer (as the case may
be) all the Trustee's right, title and interest in and to such Receivables, and
all security interests and documents relating thereto.
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SECTION 19.4. Certain Matters Affecting Trustee. Except as
otherwise provided in Section 19.1:
(i) The Trustee may rely conclusively and shall
be protected in acting or refraining from acting upon any
resolution, Officer's Certificate, Servicer's Certificate,
certificate of auditors, or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order,
appraisal, bond, or other paper or document believed by it to
be genuine and to have been signed or presented by the proper
party or parties.
(ii) The Trustee may consult with counsel and any
advice or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or
suffered or omitted by it under the Agreement in good faith
and in accordance with such advice or Opinion of Counsel.
(iii) The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by the
Agreement, or to institute, conduct or defend any litigation
under the Agreement or in relation to the Agreement, at the
request, order or direction of any of the Certificateholders
pursuant to the provisions of the Agreement, unless such
Certificateholders shall have offered to the Trustee security
or indemnity satisfactory to it against the costs, expenses
and liabilities that may be incurred therein or thereby.
(iv) The Trustee shall not be liable for any
action taken, suffered or omitted by it in good faith and
believed by it to be authorized or within the discretion or
rights or powers conferred upon it by the Agreement.
(v) Prior to the occurrence of an Event of
Default (or in the case of an Event of Default described in
clause (i) of Section 18.1, before the Trustee has received
notice of such Event of Default pursuant to Section 13.10(b)),
and after the curing or waiving of all Events of Default that
may have occurred, the Trustee shall not be bound to make any
investigation into the facts of matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond, or
other paper or document, unless requested in writing so to do
by the Surety Bond Issuer or by Holders of Certificates
evidencing not less than 25% of the Certificate Balance;
provided, however, that if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such
investigation shall be, in the opinion of the Trustee, not
assured to the Trustee by the security afforded to it by the
terms of the Agreement, the Trustee may require indemnity
satisfactory to it against such cost, expense or liability as
a condition to so proceeding. The expense of every such
examination shall be paid by the Servicer or, if paid by the
Trustee, shall be reimbursed by the Servicer upon demand.
Nothing in this clause
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(v) shall affect the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding
the Obligors.
(vi) The Trustee may execute any of the trusts or
powers hereunder or perform any duties under the Agreement
either directly or by or through agents or attorneys or a
custodian. The Trustee shall not be responsible for any
misconduct or negligence of any such agent or custodian
appointed with due care by it hereunder or of the Servicer in
its capacity as Servicer or custodian.
(vii) Subsequent to the sale of the Receivables by
the Depositor to the Trustee, on behalf of the Trust, the
Trustee shall have no duty of independent inquiry, except as
may be required by Section 19.1, and the Trustee may rely upon
the representations and warranties and covenants of the
Depositor and the Servicer contained in the Agreement with
respect to the Receivables and the Receivable Files.
SECTION 19.5. Trustee Not Liable for Certificates or
Receivables. (a) The recitals contained herein and in the Certificates (other
than the certificate of authentication on the Certificates) shall be taken as
the statements of the Depositor or the Servicer, as the case may be, and the
Trustee assumes no responsibility for the correctness thereof. The Trustee
shall make no representations as to the validity or sufficiency of the
Agreement or of the Certificates (other than the certificate of authentication
on the Certificates), or of any Receivable or related document.
(b) The Trustee shall at no time have any responsibility
or liability for or with respect to the legality, validity and enforceability
of any security interest in any Boat or RV or any Receivable, or the perfection
and priority of such a security interest or the maintenance of any such
perfection and priority, or for or with respect to the efficacy of the Trust or
its ability to generate the payments to be distributed to Certificateholders
under the Agreement, including, without limitation: the existence, condition,
location and ownership of any Boat or RV; the review of any Receivable File;
the existence and enforceability of any physical damage insurance thereon; the
existence and contents of any Receivable or Receivable File or any computer or
other record thereof; the validity of the assignment of any Receivable to the
Trust or of any intervening assignment; the completeness of any Receivable or
Receivable File; the performance or enforcement of any Receivable; the
compliance by the Depositor or the Servicer with any warranty or representation
made under the Agreement or in any related document and the accuracy of any
such warranty or representation prior to the Trustee's receipt of notice or
other discovery of any noncompliance therewith or any breach thereof; any
investment of monies by the Servicer or any loss resulting therefrom; the acts
or omissions of the Depositor, the Servicer or any Obligor; any action of the
Servicer taken in the name of the Trustee; or any action by the Trustee taken
at the instruction of the Servicer; provided, however, that the foregoing shall
not relieve the Trustee of its obligation to perform its duties under the
Agreement.
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(c) Except with respect to a claim based on the failure
of the Trustee to perform its duties under the Agreement or based on the
Trustee's negligence or willful misconduct, no recourse shall be had for any
claim based on any provision of the Agreement, the Certificates or any
Receivable or assignment thereof against the Trustee in its individual
capacity, the Trustee shall not have any personal obligation, liability or duty
whatsoever to any Certificateholder or any other Person with respect to any
such claim, and any such claim shall be asserted solely against the Trust or
any indemnitor who shall furnish indemnity as provided in the Agreement.
(d) The Trustee shall not be accountable for the use or
application by the Depositor of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Servicer in respect of the Receivables.
(e) Any obligation of the Trustee to give any notice or
statement to any rating agency hereunder shall constitute only a best efforts
obligation and such notice or statement shall be so provided only as a matter
of courtesy and accommodation, the Trustee having no liability to any rating
agency or any other Person for any failure to so provide such notice or
statement. The Depositor hereby certifies to the Trustee that each Rating
Agency is rating the Certificates and that each Rating Agency's address is as
set forth in Section 21.5. The Trustee may rely on the accuracy of such
certification until it receives from the Depositor an Officer's Certificate
superseding such certification.
SECTION 19 .6. Trustee May Own Certificates. The Trustee in
its individual or any other capacity may become the owner or pledgee of
Certificates and may deal with the Depositor and the Servicer in banking
transactions with the same rights as it would have if it were not Trustee.
SECTION 19.7. Trustee's Fees and Expenses. (a) The Servicer
shall pay to the Trustee, and the Trustee shall be entitled to, reasonable
compensation (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) for all services rendered by
it and in the execution of the trusts created by the Agreement, and in the
exercise and performance of any of the Trustee's powers and duties under the
Agreement. The Servicer shall pay or reimburse the Trustee upon its request
for all reasonable expenses, disbursements and advances (including the
reasonable compensation and the expenses and disbursements of its counsel and
of all persons not regularly in its employ) incurred or made by the Trustee in
accordance with any provisions of the Agreement except any such expense,
disbursement or advance as may be attributable to its willful misfeasance,
negligence or bad faith.
(b) The Depositor shall indemnify the Trustee (which for
purposes of this subsection (b) shall include its directors, officers,
employees and agents) for, and shall hold it harmless against, any loss,
liability or expense incurred without willful misfeasance, negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of
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the Agreement and the Trust and the trusts created by the Reimbursement
Agreement, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties under the Agreement or the Reimbursement Agreement.
Additionally, the Depositor, pursuant to Section 16.2, and the Servicer,
pursuant to Section 17 .2, respectively, shall indemnify the Trustee with
respect to certain matters, and Certificateholders, pursuant to Section 19.4,
shall upon the circumstances therein set forth, indemnify the Trustee under
certain circumstances. In the event that the Depositor fails to pay the
amounts it is obligated to pay to the Trustee pursuant to this Section 19.7(b),
the Trustee shall be entitled to receive such amounts from the Monthly Marine
Servicing Fee and the Monthly RV Servicing Fee prior to the payment thereof to
the Servicer. The indemnification provided under this Section 19.7 shall
survive termination of the Agreement and removal or resignation of the Trustee.
SECTION 19.8. Representations and Warranties of Trustee. The
Trustee shall make the following representations and warranties on which the
Depositor and Certificateholders shall rely:
(i) The Trustee is a banking corporation duly
organized, validly existing and in good standing under the
laws of the State of New York.
(ii) The Trustee has full corporate power,
authority and legal right to execute, deliver and perform its
duties and obligations under the Agreement, and shall have
taken all necessary action to authorize the execution,
delivery and performance by it of the Agreement.
(iii) The Agreement shall have been duly executed
and delivered by the Trustee.
SECTION 19.9. Eligibility Requirements for Trustee. The
Trustee under the Agreement shall at all times: be a banking corporation having
an office in the same State as the location of the Corporate Trust Office as
specified in the Agreement; be organized and doing business under the laws of
such State or the United States of America; be authorized under such laws to
exercise corporate trust powers; have a combined capital and surplus of at
least $50,000,000; and be subject to supervision or examination by Federal or
State authorities.
If the Trustee shall publish reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising
or examining authority, then for the purpose of this Section 19.9, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section l9.9, the Trustee shall resign
immediately in the manner and with the effect specified in Section 19.10.
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SECTION 19.10. Resignation or Removal of Trustee. (a) The
Trustee and the Collateral Agent may at any time resign and be discharged from
the trusts hereby created by giving not less than 60 days' prior written notice
thereof to the Servicer; provided, however, that any such resignation in either
capacity shall be deemed a resignation as both Trustee and Collateral Agent.
In the event the Trustee and Collateral Agent resigns, the resigning Trustee
and Collateral Agent shall pay the initial costs and fees of the successor
Trustee and Collateral Agent. Upon receiving notice of resignation, the
Servicer with the consent of the Surety Bond Issuer (unless a Surety Bond
Issuer Default shall have occurred and be continuing) shall promptly appoint a
successor Trustee and Collateral Agent by written instrument, in duplicate, one
copy of which instrument shall be delivered to the resigning Trustee and
Collateral Agent and one copy to the successor Trustee and Collateral Agent.
If no successor Trustee and Collateral Agent shall have been so appointed and
have accepted appointment within 60 days after the giving of such notice of
resignation, the resigning Trustee and Collateral Agent may petition any court
of competent jurisdiction for the appointment of a successor Trustee and
Collateral Agent.
(b) If at any time the Trustee shall cease to be eligible
in accordance with the provisions of Section 19.9 and shall fail to resign
after written request there for by the Servicer, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged as bankrupt or insolvent,
or a receiver of the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its property
or affairs for the purpose of rehabilitation, conservation or liquidation, then
the Servicer may remove the Trustee and Collateral Agent. If it shall remove
the Trustee and Collateral Agent under the authority of the immediately
preceding sentence, the Servicer shall promptly appoint a successor trustee and
collateral agent acceptable to the Surety Bond Issuer by written instrument, in
duplicate, one copy of which instrument shall be delivered to the Trustee and
Collateral Agent so removed and one copy to the successor Trustee and
Collateral Agent.
(c) Any resignation or removal of the Trustee and
Collateral Agent and appointment of a successor Trustee and Collateral Agent
pursuant to any of the provisions of this Section 19.10 shall not become
effective until acceptance of appointment by the successor Trustee pursuant and
Collateral Agent pursuant to Section 19.11 and payment of all fees and expenses
owed to the outgoing Trustee and Collateral Agent. The Servicer shall provide
notice of such resignation or removal of the Trustee to each Rating Agency.
SECTION 19.11. Successor Trustee and Collateral Agent. (a)
Any successor Trustee or Collateral Agent appointed pursuant to Section 19.10
be approved as both Trustee and Collateral Agent and shall execute, acknowledge
and deliver to the Servicer and to its predecessor Trustee and Collateral Agent
an instrument accepting such appointment under the Agreement, and thereupon the
resignation or removal of the predecessor Trustee and Collateral Agent shall
become effective and such successor Trustee and Collateral Agent, without any
further act, deed or conveyance, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor under the Agreement, with
like effect as if originally named as
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Trustee and Collateral Agent. The predecessor Trustee and Collateral Agent
shall deliver to the successor Trustee and Collateral Agent all documents,
statements and monies held by it under the Agreement; and the Servicer and the
predecessor Trustee and Collateral Agent shall execute and deliver such
instruments and do such other things as may reasonably be required for fully
and certainly vesting and confirming in the successor Trustee and Collateral
Agent all such rights, powers, duties and obligations.
(b) No successor Trustee and Collateral Agent shall
accept appointment as provided in this Section 19.11, unless at the time of
such acceptance such successor Trustee shall be eligible pursuant to Section
19.9.
(c) Upon acceptance of appointment by a successor Trustee
and Collateral Agent pursuant to this Section 19.11, the Servicer shall mail
notice of the successor of such Trustee and Collateral Agent under the
Agreement to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Servicer shall fail to mail such notice within 10
days after acceptance of appointment by the successor Trustee and Collateral
Agent, the successor Trustee and Collateral Agent shall cause such notice to be
mailed at the expense of the Servicer.
SECTION 19.12. Merger or Consolidation of Trustee. Any
corporation into which the Trustee may be merged or converted or with which it
may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible pursuant to Section 19.9, without the execution
or filing of any instrument or any further act on the part of any of the
parties hereto; anything herein to the contrary notwithstanding.
SECTION 19.13. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of the Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust or any Boat may at the time be located, the Servicer and the
Trustee acting jointly shall have the power and shall execute and deliver all
instruments to appoint one or more Persons approved by the Trustee to act as
co-trustee, jointly with the Trustee, or separate trustee or separate trustees,
of all or any part of the Trust, and to vent in such Person, in such capacity
and for the benefit of the Certificateholders, such title to the Trust, or any
part thereof, and, subject to the other provisions of this Section 19.13, such
powers, duties, obligations, rights and trusts as the Servicer and the Trustee
may consider necessary or desirable. If the Servicer shall not have joined in
such appointment within 15 days after the receipt by it of a request so to do,
or in the case an Event of Default shall have occurred and be continuing, the
Trustee alone shall have the power to make such appointment. No co-trustee or
separate trustee under the Agreement shall be required to meet the terms of
eligibility as a successor trustee pursuant to Section 19.9 and no notice of a
successor trustee pursuant to Section 19.11 and no notice to Certificateholders
of the appointment of any co-trustee or separate trustee shall be required
pursuant to Section 19.11.
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(b) Each separate trustee and co-trustee shall, to the
extent permitted by law, be appointed and act subject to the following
provisions and conditions:
(i) All rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred upon
and exercised or performed by the Trustee and such separate
trustee or co-trustee jointly (it being understood that such
separate trustee or co trustee is not authorized to act
separately without the Trustee joining in such act), except to
the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee
under the Agreement or as successor to the Servicer under the
Agreement), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the
Trust or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or
co-trustee, but solely at the direction of the Trustee;
(ii) No trustee under the Agreement shall be
personally liable by reason of any act or omission of any
other trustee under the Agreement; and
(iii) The Servicer and the Trustee acting jointly
may at any time accept the resignation of or remove any
separate trustee or co-trustee.
(c) Any notice, request or other writing given to the
Trustee shall be deemed to have been given to each of the then separate
trustees and co-trustees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee shall refer to the
Agreement and the conditions of this Article XIX. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trusts or separately, as may be provided therein, subject to
all the provisions of the Agreement, specifically including every provision of
the Agreement relating to the conduct of, affecting the liability of, or
affording protection to the Trustee. Each such instrument shall be filed with
the Trustee and a copy thereof given to the Servicer.
(d) Any separate trustee or co-trustee may at any time
appoint the Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or
in respect of the Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall become incapable of acting, resign or be removed,
all its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee. Notwithstanding anything to the
contrary in the Agreement, the appointment of any separate trustee or
co-trustee shall not relieve the Trustee of its obligations and duties
hereunder.
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ARTICLE XX
Termination
SECTION 20.1. Termination of the Trust. (a) The respective
obligations and responsibilities of the Depositor, the Servicer, the Trustee
and the Trust created hereby shall terminate upon (i) the payment in full or
other liquidation of the last Receivable and the disposition of any amounts
received upon liquidation of any remaining Receivables, including Defaulted
Receivables, (ii) the payment to the Certificateholders of all amounts required
to be paid to them pursuant to the Agreement and the payment to the Surety Bond
Issuer of all amounts required to be paid to it pursuant to the Agreement and
the Reimbursement Agreement and disposition of all property held by the Trust
or (iii) the purchase as of the last day of any Collection Period by the
Servicer at its option, pursuant to Section 20.2 or 20.2A of the remaining
corpus of the Trust; provided, however, that in no event shall the trust
created by the Agreement continue beyond the expiration of 21 years from the
date hereof. The Servicer shall promptly notify the Trustee of any prospective
termination pursuant to this Section 20.1.
(b) Notice of any termination, specifying the
Distribution Date upon which the Certificateholders may surrender their
Certificates to the Trustee for payment of the final distribution and
cancellation, shall be given promptly by the Trustee by letter to
Certificateholders mailed not earlier than the 15th day and not later than the
25th day of the month next preceding the specified Distribution Date stating
(A) the Distribution Date upon which final payment of the Certificates shall be
made upon presentation and surrender of the Certificates at the office of the
Trustee therein designated, (B) the amount of any such final payment, and (C)
if applicable, that the Record Date otherwise applicable to such Distribution
Date is not applicable, payments being made only upon presentation and
surrender of the Certificates at the office of the Trustee therein specified.
The Trustee shall give such notice to the Certificate Registrar (if other than
the Trustee) at the time such notice is given to Certificateholders. Upon
presentation and surrender of the Certificates, the Trustee shall cause to be
distributed to Certificateholders amounts distributable on such Distribution
Date pursuant to Section 14.5.
(c) In the event that all the Certificateholders shall
not surrender their Certificates for cancellation within six months after the
date specified in the above-mentioned written notice, the Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Trustee may take appropriate
steps, or may appoint an agent to take appropriate steps, to contact the
remaining Certificateholders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds and other assets that shall
remain subject to the Agreement. Any funds remaining in the Trust after
exhaustion of such remedies shall be distributed by the Trustee upon written
direction of the Servicer delivered to the Trustee to the United Way of
Metropolitan Dallas.
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As soon as practicable after the Distribution Date specified
for the final distribution or upon such other date upon which all amounts to be
paid to Certificateholders pursuant to the Agreement have been paid, the
Trustee shall deliver a letter to the Surety Bond Issuer in substantially the
form of Exhibit C to the Surety Bond.
SECTION 20.2. Optional Purchase of All Marine Receivables.
On the last day of any Collection Period as of which the Pool Balance shall
decline to __% or less of the Original Marine Pool Balance, the Servicer shall
have the option to purchase the corpus of the Trust. To exercise such option,
the Servicer shall deposit pursuant to Section 14.4 in the Marine Collection
Account, an amount equal to the aggregate Purchase Amount for the Marine
Receivables, as of the beginning of the Collection Period related to such
Record Date plus the appraised value of any other property held by the Trust
less the amount of all Collections, any amounts referred to in clause (ii) of
the definition of Marine Available Funds, and Liquidation Proceeds received by
the Servicer during such Collection Period, and shall succeed to all interests
in and to the Trust; provided, however, that without the consent of the Surety
Bond Issuer the Servicer may not make any such purchase if, after giving effect
to such purchase and the distributions on the related Distribution Date there
would be outstanding amounts under the Reimbursement Agreement and the
Agreement, which have not been paid to the Surety Bond Issuer.
SECTION 20.2A. Optional Purchase of All RV Receivables. On
the last day of any Collection Period as of which the Pool Balance shall
decline to __% or less of the Original RV Pool Balance, the Servicer shall have
the option to purchase the corpus of the Trust. To exercise such option, the
Servicer shall deposit pursuant to Section 14.4A in the RV Collection Account,
an amount equal to the aggregate Purchase Amount for the RV Receivables, as of
the beginning of the Collection Period related to such Record Date plus the
appraised value of any other property held by the Trust less the amount of all
Collections, any amounts referred to in clause (ii) of the definition of RV
Available Funds, and Liquidation Proceeds received by the Servicer during such
Collection Period, and shall succeed to all interests in and to the Trust;
provided, however, that without the consent of the Surety Bond Issuer the
Servicer may not make any such purchase if, after giving effect to such
purchase and the distributions on the related Distribution Date there would be
outstanding amounts under the Reimbursement Agreement and the Agreement, which
have not been paid to the Surety Bond Issuer.
ARTICLE XXI
Miscellaneous Provisions
SECTION 21.1. Amendment. (a) The Agreement may be amended
by the Depositor, the Servicer and the Trustee, without the consent of the
Certificateholders or the Surety Bond Issuer, to cure any ambiguity, to correct
or supplement any provisions in the Agreement, or to add any other provisions
with respect to matters or questions arising under the Agreement that shall not
be inconsistent with the provisions of the Agreement; provided,
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however, that such action will not, in the opinion of counsel satisfactory to
the Trustee, materially and adversely affect the interest of any
Certificateholder or the Surety Bond Issuer.
(b) The Agreement may also be amended by the Depositor,
the Servicer and the Trustee, with the consent of the Surety Bond Issuer and
the Holders of Certificates (which consent of any Holder of a Certificate given
pursuant to this Section 21.1 or pursuant to any other provision of the
Agreement shall be conclusive and binding on such Holder and on all future
Holders of such Certificate and of any Certificate issued upon the transfer
thereof or in exchange thereof or in lieu thereof whether or not notation of
such consent is made upon the Certificate) evidencing not less than 51% of the
Certificate Balance as of the most recent Record Date, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Agreement, or of modifying in any manner the rights of the
Certificateholders or the Surety Bond Issuer; provided, however, that no such
amendment may (i) increase or reduce in any manner the amount of, or accelerate
or delay the timing of, Collections of payments on the Marine Receivables or
the RV Receivables or distributions that are required to be made on any
Certificate, or (ii) reduce the aforesaid percentage required to consent to any
such amendment, in each case without the consent of the holders of all
Certificates then outstanding.
(c) Prior to the execution of any such amendment or
consent, the Servicer shall furnish written notification of the substance of
such amendment or consent to each Rating Agency. Promptly after the execution
of any such amendment or consent, the Trustee shall forward such written
notification provided to the Trustee by the Servicer of the substance of such
amendment or consent to each Certificateholder.
(d) It shall not be necessary for the consent of
Certificateholders pursuant to this Section 21.1 to approve the particular form
of any proposed amendment or consent, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of obtaining such
consents and of evidencing the authorization of the execution thereof by
Certificateholders shall be subject to such reasonable requirements as the
Trustee may prescribe, including the establishment of record dates pursuant to
the Depository Agreement.
(e) Prior to the execution of any amendment to the
Agreement, the Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by the Agreement and the Opinion of Counsel referred to in Section
21.2(h)(i)(1). The Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Trustees own rights, duties or immunities
under the Agreement or otherwise.
(f) The provisions combined in clauses (a) and (b) of
this Section 21.1 shall not apply to an amendment to the definition of
"Specified Marine Reserve Account Requirement" or "Specified RV Reserve Account
Requirement."
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SECTION 21.2. Protection of Title to Trust. (a) The
Depositor shall execute and file such financing statements and cause to be
executed and filed such continuation statements, all in such manner and in such
places as may be required by law fully to preserve, maintain and protect the
interest of the Certificateholders and the Trustee in the Receivables and in
the proceeds thereof. The Depositor shall deliver (or cause to be delivered)
to the Trustee file-stamped copies of, or filing receipts for, any document
filed as provided above, as soon as available following such filing.
(b) Neither the Depositor nor the Servicer shall change
its name, identity or corporate structure in any manner that would, could or
might make any financing statement or continuation statement filed by the
Depositor in accordance with paragraph (a) above seriously misleading within
the meaning of Section 9-402(7) of the UCC, unless it shall have given the
Trustee at least 30 days' prior written notice thereof and shall have promptly
filed appropriate amendments to all previously filed financing statements or
continuation statements.
(c) The Depositor and the Servicer shall give the Trustee
at least 30 days' prior written notice of any relocation of its principal
executive office if, as a result of such relocation, the applicable provisions
of the UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement, and
shall promptly file any such amendment. The Servicer shall at all times
maintain each office from which it shall service Receivables, and its principal
executive office, within the United States of America.
(d) The Servicer shall maintain accounts and records as
to each Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including payments
and recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Marine Collection
Account or RV Collection Account, as applicable, in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so
that, from and after the time of sale under the Agreement of the Receivables to
the Trustee, the Servicer's master computer records (including any back-up
archives) that refer to a Receivable shall indicate clearly with reference to
the particular grantor trust that such Receivable is owned by the Trustee.
Indication of the Trustee's ownership of a Receivable, on behalf of the Trust,
shall be deleted from or modified on the Servicer's computer systems when, and
only when, the Receivable shall have been paid in full or repurchased.
(f) If at any time the Depositor or the Servicer shall
propose to sell, grant a security interest in, or otherwise transfer any
interest in marine receivables to any prospective purchaser, lender or other
transferee, the Servicer shall give to such prospective purchaser, lender or
other transferee computer tapes, records or print-outs (including any restored
from back-up
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archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been sold and is owned by the
Trustee.
(g) The Servicer shall permit the Trustee and its agents
at any time during normal business hours to inspect, audit and make copies of
and abstracts from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the
Trustee, within five Business Days, a list of all Receivables (by contract
number and name of Obligor) then held as part of the Trust, together with a
reconciliation of such list to the Schedule of Receivables and to each of the
Servicer's Certificates furnished before such request indicating removal of
Receivables from the Trust.
(i) The Servicer shall deliver to the Trustee:
(1) promptly after the execution and delivery of
the Agreement and of each amendment thereto, an Opinion of
Counsel either (a) stating that, in the opinion of such
counsel, all financing statements and continuation statements
have been executed and filed that are necessary fully to
preserve and protect the interest of the Trustee in the
Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details
are given, or (b) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and
protect such interest; and
(2) within 90 days after the beginning of each
calendar year beginning with the first calendar year beginning
more than three months after the Cutoff Date, an Opinion of
Counsel, dated as of a date during such 90-day period, either
(a) stating that, in the opinion of such counsel, all
financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and
protect the interest of the Trustee, on behalf of the Trust,
in the Receivables, and reciting the details of such filings
or referring to prior Opinions of Counsel in which such
details are given, or (b) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and
protect such interest.
Each Opinion of Counsel referred to in clause (i)(l) or (i)(2)
above shall specify any action necessary (as of the date of such opinion) to be
taken in the following year to preserve and protect such interest.
(j) The Depositor shall, to the extent required by
applicable law, cause the Certificates to be registered with the Securities and
Exchange Commission pursuant to Section 12(b) or Section 12(g) of the
Securities Exchange Act of 1934, as amended, within the time
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periods specified in such sections, and shall prepare and make all filings
required by such Act with respect to the Trust.
(k) For the purpose of facilitating the execution of the
Agreement and for other purposes, the Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and all of which counterparts shall constitute but one and the
same instrument.
SECTION 21.3. Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not operate to
terminate the Agreement or the Trust, nor entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the
Trust, nor otherwise affect the rights, obligations and liabilities of the
parties to the Agreement or any of them.
(b) No Certificateholder shall have any right to vote
(except as provided in Section 21.1 or 18.4) or in any manner otherwise control
the operation and management of the Trust, or the obligations of the parties to
the Agreement, nor shall anything in the Agreement set forth or contained in
the terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association;
nor shall any Certificateholder be under any liability to any third person by
reason of any action taken pursuant to any provision of the Agreement.
(c) No Certificateholder shall have any right by virtue
or by availing itself of any provisions of the Agreement to institute any suit,
action or proceeding in equity or at law upon or under or with respect to the
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of default and of the continuance thereof, as hereinbefore
provided, and unless also the Holders of Certificates evidencing not less than
25% of the Certificate Balance shall have made written request upon the Trustee
to institute such action, suit or proceeding in its own name as Trustee under
the Agreement and shall have offered to the Trustee such reasonable indemnity
as it may require against the costs, expenses and liabilities to be incurred
therein or thereby, and the Trustee, for 30 days after its receipt of such
notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding and during such 30-day period no
direction inconsistent with such written request has been given to the Trustee
pursuant to this Section 21.3 or Section 18.4; no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing itself or them selves of any provisions of the Agreement to affect,
disturb or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right, under the Agreement except in the
manner provided in the Agreement and for the equal, ratable and common benefit
of all Certificateholders. For the protection and enforcement of the
provisions of this Section 21.3, each Certificateholder and the Trustee shall
be entitled to such relief as can be given either at law or in equity.
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<PAGE> 78
SECTION 21.4. GOVERNING LAW. THE AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES UNDER THE AGREEMENT SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 21.5. Notices. All demands, notices and
communications under the Agreement shall be in writing, personally delivered or
mailed by certified mail, return receipt requested, or by overnight courier or
telecopied (with the original followed by mail within 24 hours) and shall be
deemed to have been duly given upon receipt (a) in the case of the Depositor,
to the agent for service as specified in the Agreement, at the following
address: NationsCredit Securitization Corporation, 225 E. John Carpenter
Freeway, Irving, Texas 75062, Telecopy (972) 506-5096, or at such other address
as shall be designated by the Depositor in a written notice to the Trustee, (b)
in the case of the Servicer, to the agent for service as specified in the
Agreement, at the following address: NationsCredit Commercial Corporation of
America, 225 E. John Carpenter Freeway, Irving, Texas 75062, Telecopy (972)
506-5096, or at such other address as shall be designated by the Servicer in a
written notice to the Trustee, (c) in the case of the Trustee, at the Corporate
Trust Office, Telecopy (212) 250-6439 and (d) in the case of the Surety Bond
Issuer, at the following address: Capital Markets Assurance Corporation, 885
Third Avenue, New York, New York 10022, Attention: Managing Director-Credit
Enhancement, Telecopy (212) 755-5462. Any notice required or permitted to be
mailed to a Certificateholder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Certificate Register.
Any notice so mailed within the time prescribed in the Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder shall receive such notice. All communications and copies of
all notices and reports from the Trustee or the Servicer shall be mailed to
each Rating Agency at the following addresses:
Moody's Investors Services, Inc.
99 Church Street (4th Floor)
New York, New York 10007
Telephone No.: (212) 553-0300
Telecopy No.: (212) 553-0881
Attention: ABS Monitoring Department
Standard & Poor's Ratings Services
26 Broadway (l0th Floor)
New York, New York 10004
Telephone No.: (212) 208-8925
Telecopy No.: (212) 208-8208
Attention: Asset-Backed Surveillance Group
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<PAGE> 79
SECTION 21.6. Severability of Provisions. If any or more of
the covenants, agreements, provisions or terms of the Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of the Agreement and shall in no way affect the validity or
enforceability of the other provisions of the Agreement or of the Certificates
or the rights of the Holders thereof.
SECTION 21.7. Assignment. Notwithstanding anything to the
contrary contained herein, except as provided in Sections 16.3 and 17.3 and as
provided in the provisions of the Agreement concerning the resignation of the
Servicer, the Agreement may not be assigned by the Depositor or the Servicer
without the prior written consent of the Trustee, the Holders of Certificates
evidencing not less than 66% of the Certificate Balance and the Surety Bond
Issuer, provided that the consent of Surety Bond Issuer shall not be
unreasonably withheld.
SECTION 21.8. Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the Trust.
The interests represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever, and, upon
authentication thereof by the Trustee pursuant to Section 15.2 or 15.3,
Certificates shall be deemed fully paid.
SECTION 21.9. No Petition. Neither the Trustee nor the
Servicer will not institute against, or join any other Person in instituting
against, the Depositor or the Trust any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding, or other proceeding under
any federal or state bankruptcy or similar law, until August 16, 2014.
SECTION 21.10. Surety Bond Issuer as Controlling Party. Each
Certificateholder by purchase of the Certificates held by it acknowledges that
the Trustee on behalf of the Trust, as partial consideration of the issuance of
the Surety Bond, has agreed that the Surety Bond Issuer shall have certain
rights hereunder for so long as no Surety Bond Issuer Default shall have
occurred and be continuing. Notwithstanding anything to the contrary contained
herein, but subject to the last sentence of this Section 21.10, so long as a
Surety Bond Issuer Default has occurred and is continuing, any provision giving
the Surety Bond Issuer the right to direct, appoint or consent to, approve of,
or take any action under this Agreement shall be inoperative during the period
of such Surety Bond Issuer Default and such right (other than any rights
pursuant to Section 18.1 (b)) shall instead vest in the Trustee acting at the
direction of Certificateholders evidencing in the aggregate not less than a
majority of the Certificate Balance as of the most recent Record Date. The
Surety Bond Issuer may disclaim any of its rights and powers under this
Agreement (but not its duties and obligations under the Surety Bond or the
Reimbursement Agreement) upon delivery of a written notice to the Trustee. The
Surety Bond Issuer may give or withhold any consent hereunder in its reasonable
discretion. In the event that the Servicer substitutes a new surety bond for
the Surety Bond pursuant to Section 14A.4, the new surety bond issuer shall
have all of the rights to direct, appoint or consent to, approve of, or
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<PAGE> 80
take any action under this Agreement vested in the Surety Bond Issuer
immediately prior to the occurrence of the downgrading of the Surety Bond
Issuer as set forth in Section 14A.4
SECTION 21.11. Indemnification. With respect to any requirements
for indemnification under this Agreement, promptly after receipt by an
indemnified party of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party, notify the indemnifying party in writing of the
commencement thereof; but the omission to so notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party.
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<PAGE> 81
EXHIBIT A - FORM OF SURETY BOND_
A-1
<PAGE> 82
EXHIBIT B-1: FORM OF MARINE CERTIFICATE
[Front]
NATIONSCREDIT GRANTOR TRUST 1997-2
NATIONSCREDIT GRANTOR TRUST 1997-2 ____% MARINE
RECEIVABLE-BACKED CERTIFICATE
evidencing a fractional undivided interest in the
Trust, as defined below, the property of which
includes a pool of retail installment sale contracts
secured by new and used boats, boat motors and boat
trailers, and sold or caused to be sold to the Trust
by NationsCredit Securitization Corporation.
(This Certificate does not represent an interest in
or obligation of NationsCredit Commercial Corporation
of America, NationsCredit Securitization Corporation
or any affiliate thereof, except to the extent
described below.)
NUMBER CUSIP
FINAL SCHEDULED DISTRIBUTION
DATE: $________________
THIS CERTIFIES THAT _________________is the registered owner
of a $________ dollars nonassessable, fully-paid, fractional undivided interest
in the NationsCredit Grantor Trust 1997-2 (the "Trust") formed by NationsCredit
Securitization Corporation, a Delaware corporation (the "Depositor"). The
Trust was created pursuant to a Pooling and Servicing Agreement, including the
Standard Terms and Conditions of Agreement incorporated by reference therein,
dated as of __________, 1997 (the "Agreement") among the Depositor,
NationsCredit Commercial Corporation of America, as Servicer, and Bankers Trust
Company, as Trustee (the "Trustee") and as Collateral Agent (the "Collateral
Agent"), a summary of certain of the pertinent provisions of which is set forth
below. To the extent not otherwise defined herein, the capitalized terms used
herein have the meanings assigned to them in the Agreement. This Certificate
is one of the duly authorized Certificates designated as "NationsCredit Grantor
Trust 1997-2 ____% Marine Receivable-Backed Certificates" (herein called the
"Certificates"). This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement, as amended from
time to time, the holder of this Certificate by virtue of the acceptance hereof
assents and by which such holder is bound. The property of the
B-1
<PAGE> 83
Trust includes a pool of retail installment sale contracts (the "Receivables")
secured by new and used boats, boat motors and boat trailers ("Boats"), all
payments (other than late fees and certain other amounts) received thereunder,
in the case of Simple Interest Receivables, and due thereunder, in the case of
Precomputed Receivables after __________, 1997, the interest of the Depositor
in the security interests in the Boats, such amounts as may be held from time
to time in certain trust accounts, the Surety Bond, any property that shall
have secured a Receivable and that shall have been acquired by the Trustee, the
Purchase Agreement, proceeds from claims on physical damage, credit life and
disability insurance policies covering Boats, or the Obligors as the case may
be, the interests of the Depositor in any proceeds from recourse to Dealers on
the Receivables, and the proceeds of all of the foregoing.
Under the Agreement, there will be distributed on the 15th day
of each month or, if such 15th day is not a Business Day, the next Business Day
(the "Distribution Date"), commencing on ________________, to the person in
whose name this Certificate is registered at the close of business on the
Business Day prior to such Distribution Date (the "Record Date"), such
Certificateholder's fractional undivided interest in the Monthly Interest
Payment, any Carry-Over Monthly Interest, the Monthly Principal Payment and any
Carry-Over Monthly Principal, all as more specifically set forth in the
Agreement. On the Final Scheduled Distribution Date, each Certificateholder
shall be entitled to receive an amount equal to the Monthly Interest Payment
and an amount necessary to reduce the Certificate Balance to zero.
Distributions on this Certificate will be made by the Trustee
by check mailed to the Person entitled thereto without the presentation or
surrender of this Certificate or the making of any notation hereon. Except as
otherwise provided in the Agreement and notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee
of the pendency of such distribution and only upon presentation and surrender
of this Certificate at the office or agency maintained for that purpose by the
Trustee in the Borough of Manhattan, The City of New York.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
[Unless this Certificate is presented by an authorized
representative of The Depository Trust Company to the Trustee or its agent for
registration of transfer, exchange or payment, and any certificate issued is
registered in the name of CEDE & CO. or such other name as requested by an
authorized representative of The Depository Trust Company and any payment is
made to CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof,
CEDE & CO., has an interest herein.]
B-2
<PAGE> 84
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Trustee, by manual or facsimile
signature, this Certificate shall not entitle the holder hereof to any benefit
under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not
in its individual capacity has caused this Certificate to be duly executed.
DATED: NATIONSCREDIT GRANTOR
TRUST 1997-2
By: BANKERS TRUST COMPANY,
as Trustee
By:
--------------------------
Name:
Title:
Authenticated:
BANKERS TRUST COMPANY,
as Trustee
By:
--------------------------
Name:
Title:
B-3
<PAGE> 85
[Reverse]
The Certificates do not represent an obligation of, or an
interest in, the Depositor, the Servicer, the Trustee or any affiliate of any
of them. The Certificates are limited in right of payment as more specifically
set forth in the Agreement. A copy of the Agreement may be examined during
normal business hours at the principal office of the Depositor, and at such
other places, if any, designated by the Depositor, by any Certificateholder
upon request.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor and the rights of the Certificateholders under the
Agreement at any time by the Depositor and the Trustee with the consent of the
Surety Bond Issuer and without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies maintained by the Trustee in its
capacity as Certificate Registrar, or by any successor Certificate Registrar,
in the Borough of Manhattan, The City of New York, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new certificates of authorized
denominations evidencing the same aggregate interest in the Trust will be
issued to the designated transferee. The Certificates are issuable only as
registered Certificates without coupons in denominations of $1,000 and integral
multiples hereof. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but the
Trustee may require payment of a sum sufficient to cover any tax or
governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar and any agent of the
Trustee or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Agreement
and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and the disposition of all property held as part of the Trust. The
Servicer may at its option purchase the corpus of the Trust at a price
specified in the Agreement, and such purchase of the Receivables and other
property of the Trust will effect early retirement of the Certificates;
however, such right of purchase is exercisable only as of the last day of a
Collection Period as of which the Pool Balance is equal to or less than 5% of
the Original Pool Balance.
B-4
<PAGE> 86
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
(Please print or typewrite name and address, including postal
zip code, and taxpayer I.D. or Social Security Number of assignee)
the within certificate, and all rights thereunder, hereby irrevocably
constituting and appointing __________________________ Attorney to transfer
said Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated: *
Signature Guaranteed:
*
* NOTICE: The signature to this assignment must correspond with the name
as it appears upon the face of the within Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank or
trust company.
B-5
<PAGE> 87
EXHIBIT B-2: FORM OF RV CERTIFICATE
[Front]
NATIONSCREDIT GRANTOR TRUST 1997-2
NATIONSCREDIT GRANTOR TRUST 1997-2 ____% RV
RECEIVABLE-BACKED CERTIFICATE
evidencing a fractional undivided interest in the
Trust, as defined below, the property of which
includes a pool of retail installment sale contracts
secured by new and used recreational vehicles, and
sold or caused to be sold to the Trust by
NationsCredit Securitization Corporation.
(This Certificate does not represent an interest in
or obligation of NationsCredit Commercial Corporation
of America, NationsCredit Securitization Corporation
or any affiliate thereof, except to the extent
described below.)
NUMBER CUSIP
FINAL SCHEDULED DISTRIBUTION
DATE: $________________
THIS CERTIFIES THAT _________________is the registered owner
of a $________ dollars nonassessable, fully-paid, fractional undivided interest
in the NationsCredit Grantor Trust 1997-2 (the "Trust") formed by NationsCredit
Securitization Corporation, a Delaware corporation (the "Depositor"). The
Trust was created pursuant to a Pooling and Servicing Agreement, including the
Standard Terms and Conditions of Agreement incorporated by reference therein,
dated as of __________, 1997 (the "Agreement") among the Depositor,
NationsCredit Commercial Corporation of America, as Servicer, and Bankers Trust
Company, as Trustee (the "Trustee") and as Collateral Agent (the "Collateral
Agent"), a summary of certain of the pertinent provisions of which is set forth
below. To the extent not otherwise defined herein, the capitalized terms used
herein have the meanings assigned to them in the Agreement. This Certificate
is one of the duly authorized Certificates designated as "NationsCredit Grantor
Trust 1997-2 ____% Marine Receivable-Backed Certificates" (herein called the
"Certificates"). This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement, as amended from
time to time, the holder of this Certificate by virtue of the acceptance hereof
assents and by which such holder is bound. The property of the Trust includes
a pool of retail installment sale contracts (the "Receivables") secured by
B-6
<PAGE> 88
recreational vehicles ("RVs"), all payments (other than late fees and certain
other amounts) received thereunder, in the case of Simple Interest Receivables,
and due thereunder, in the case of Precomputed Receivables after __________,
1997, the interest of the Depositor in the security interests in the RVs, such
amounts as may be held from time to time in certain trust accounts, the Surety
Bond, any property that shall have secured a Receivable and that shall have
been acquired by the Trustee, the Purchase Agreement, proceeds from claims on
physical damage, credit life and disability insurance policies covering RVs, or
the Obligors as the case may be, the interests of the Depositor in any proceeds
from recourse to Dealers on the Receivables, and the proceeds of all of the
foregoing.
Under the Agreement, there will be distributed on the 15th day
of each month or, if such 15th day is not a Business Day, the next Business Day
(the "Distribution Date"), commencing on June 16, 1997, to the person in whose
name this Certificate is registered at the close of business on the Business
Day prior to such Distribution Date (the "Record Date"), such
Certificateholder's fractional undivided interest in the Monthly Interest
Payment, any Carry-Over Monthly Interest, the Monthly Principal Payment and any
Carry-Over Monthly Principal, all as more specifically set forth in the
Agreement. On the Final Scheduled Distribution Date, each Certificateholder
shall be entitled to receive an amount equal to the Monthly Interest Payment
and an amount necessary to reduce the Certificate Balance to zero.
Distributions on this Certificate will be made by the Trustee
by check mailed to the Person entitled thereto without the presentation or
surrender of this Certificate or the making of any notation hereon. Except as
otherwise provided in the Agreement and notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee
of the pendency of such distribution and only upon presentation and surrender
of this Certificate at the office or agency maintained for that purpose by the
Trustee in the Borough of Manhattan, The City of New York.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
[Unless this Certificate is presented by an authorized
representative of The Depository Trust Company to the Trustee or its agent for
registration of transfer, exchange or payment, and any certificate issued is
registered in the name of CEDE & CO. or such other name as requested by an
authorized representative of The Depository Trust Company and any payment is
made to CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof,
CEDE & CO., has an interest herein.]
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Trustee, by manual or facsimile
signature, this Certificate shall not entitle the holder hereof to any benefit
under the Agreement or be valid for any purpose.
B-7
<PAGE> 89
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not
in its individual capacity has caused this Certificate to be duly executed.
DATED: NATIONSCREDIT GRANTOR
TRUST 1997-2
By: BANKERS TRUST COMPANY,
as Trustee
By:
--------------------------
Name:
Title:
Authenticated:
BANKERS TRUST COMPANY,
as Trustee
By:
--------------------------
Name:
Title:
B-8
<PAGE> 90
[Reverse]
The Certificates do not represent an obligation of, or an
interest in, the Depositor, the Servicer, the Trustee or any affiliate of any
of them. The Certificates are limited in right of payment as more specifically
set forth in the Agreement. A copy of the Agreement may be examined during
normal business hours at the principal office of the Depositor, and at such
other places, if any, designated by the Depositor, by any Certificateholder
upon request.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor and the rights of the Certificateholders under the
Agreement at any time by the Depositor and the Trustee with the consent of the
Surety Bond Issuer and without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies maintained by the Trustee in its
capacity as Certificate Registrar, or by any successor Certificate Registrar,
in the Borough of Manhattan, The City of New York, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new certificates of authorized
denominations evidencing the same aggregate interest in the Trust will be
issued to the designated transferee. The Certificates are issuable only as
registered Certificates without coupons in denominations of $1,000 and integral
multiples hereof. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but the
Trustee may require payment of a sum sufficient to cover any tax or
governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar and any agent of the
Trustee or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities created by the Agreement
and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Agreement and the disposition of all property held as part of the Trust. The
Servicer may at its option purchase the corpus of the Trust at a price
specified in the Agreement, and such purchase of the Receivables and other
property of the Trust will effect early retirement of the Certificates;
however, such right of purchase is exercisable only as of the last day of a
Collection Period as of which the Pool Balance is equal to or less than __% of
the Original Pool Balance.
B-9
<PAGE> 91
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
(Please print or typewrite name and address, including postal
zip code, and taxpayer I.D. or Social Security Number of assignee)
the within certificate, and all rights thereunder, hereby irrevocably
constituting and appointing __________________________ Attorney to transfer
said Certificate on the books of the Certificate Registrar, with full power of
substitution in the premises.
Dated: *
Signature Guaranteed:
*
* NOTICE: The signature to this assignment must correspond with the name
as it appears upon the face of the within Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank or
trust company.
B-10
<PAGE> 92
EXHIBIT C - FORM OF DEPOSITORY AGREEMENT
C-1
<PAGE> 93
EXHIBIT D-1
NATIONSCREDIT COMMERCIAL CORPORATION OF AMERICA
MONTHLY SERVICER REPORT
CURRENT DATE:
<TABLE>
<S> <C> <C>
I. Monthly Marine Principal Payment:
(A) Principal received from Obligors:
(1) Total principal collected $ __________
(2) Percent relating to Unsold Contracts $ __________
(3) Principal owed to Trust $ __________
(B) Purchased Receivables $ __________
(C) Liquidation Proceeds $ __________
II. Principal to Investors:
(A) Principal Balance at beginning of month $ __________
(B) Marine Certificate Factor at beginning of month $ __________
(C) Principal Balance at end of month $ __________
(D) Monthly Marine Principal due investors $ __________
(E) Carry-Over Monthly Marine Principal $ __________
III. Monthly Marine Interest Payment:
(A) Principal Balance at beginning of month $ __________
(B) Pass-Through Rate % $ __________
(C) Monthly Marine Interest Payment $ __________
(D) Carry-Over Monthly Marine Interest $ __________
IV. Draw on Marine Reserve Account and Surety Bond:
(A) Total Marine Available Funds equals:
(1) Principal received from Obligors
(or Dealers and insurers on non-Defaulted
Marine Receivables), plus $ __________
(2) Interest received from Obligors, plus $ __________
(3) Cash received from Depositor/Servicer on
Purchased Receivables, plus $ __________
(5) Interest on Marine Collection Account $ __________
</TABLE>
D-1
<PAGE> 94
<TABLE>
<S> <C> <C>
(6) Total Marine Available Funds $
==========
(B) Total Marine Distributions equal:
(1) Monthly Marine Interest Payment and any
carry-over Monthly Marine Interest Payment, plus $ __________
(2) Monthly Marine Servicing Fee and any carry-over
Monthly Marine Servicing Fee (if NationsCredit
Commercial is not the Servicer), plus $ __________
(3) Monthly Marine Principal Payment and any
carry-over Monthly Principal Payment $ __________
(4) Total Marine Distributions $
==========
(C) Total Surplus/(Deficiency) (IV(A)-IV(B)) $ __________
(D) Marine Reserve Account balance $ __________
(E) Marine Reserve Account withdrawal $ __________
(F) Surety Bond demand $ __________
V. Monthly Marine Servicing Fee and any carry-over Monthly Marine
Servicing Fee (if NationsCredit Commercial is the Servicer) $ __________
VI. Reconciliation of Marine Reserve Account:
(A) Beginning Marine Reserve Account balance $ __________
(B) Interest on Marine Reserve Account $ __________
(C) Amounts paid to Marine Reserve Account under
the Pooling and Servicing Agreement $ __________
(D) Marine Reserve Account withdrawal $ __________
(E) Marine Reserve Account prior to release of excess $ __________
(F) Required Marine Reserve Account balance:
(1) As percent of Principal Balance $ __________
(2) Minimum Marine Reserve Account balance $ __________
(3) Required amount $ __________
(G) Release of excess $ __________
(H) Ending Marine Reserve Account balance $ __________
VII. Delinquency/Charge-off Experience:
(A) Principal Balance at end of month $ __________
(B) Number of Units $ __________
(C) Delinquency $ #
30-59 Days $0.00 0
60-89 Days $0.00 0
90+ Days $0.00 0
TOTAL $0.00 0
</TABLE>
D-2
<PAGE> 95
<TABLE>
<S> <C> <C>
(D) As % of EOM Outstanding
(E) Marine Receivables charged-off
during month $0.00 0
(F) Recoveries of Marine Receivables previously charged-off $ __________
(G) Net loss during month $ __________
(H) Annualized monthly net loss rate $ __________
</TABLE>
D-3
<PAGE> 96
EXHIBIT D-2
NATIONSCREDIT COMMERCIAL CORPORATION OF AMERICA
MONTHLY SERVICER REPORT
<TABLE>
<S> <C> <C>
CURRENT DATE:
I. Monthly RV Principal Payment:
(A) Principal received from Obligors:
(1) Total principal collected $ __________
(2) Percent relating to Unsold Contracts $ __________
(3) Principal owed to Trust $ __________
(B) Purchased Receivables $ __________
(C) Liquidation Proceeds $ __________
II. Principal to Investors:
(A) Principal Balance at beginning of month $ __________
(B) RV Certificate Factor at beginning of month $ __________
(C) Principal Balance at end of month $ __________
(D) Monthly RV Principal due investors $ __________
(E) Carry-Over Monthly RV Principal $ __________
III. Monthly RV Interest Payment:
(A) Principal Balance at beginning of month $ __________
(B) Pass-Through Rate % $ __________
(C) Monthly RV Interest Payment $ __________
(D) Carry-Over Monthly RV Interest $ __________
IV. Draw on RV Reserve Account and Surety Bond:
(A) Total RV Available Funds equals:
(1) Principal received from Obligors
(or Dealers and insurers on non-Defaulted
RV Receivables), plus $ __________
(2) Interest received from Obligors, plus $ __________
(3) Cash received from Depositor/Servicer on
Purchased Receivables, plus $ __________
(4) Liquidation Proceeds, plus $ __________
(5) Interest on RV Collection Account $ __________
</TABLE>
D-4
<PAGE> 97
<TABLE>
<S> <C> <C>
(6) Total RV Available Funds $
==========
(B) Total RV Distributions equal:
(1) Monthly RV Interest Payment and any
carry-over Monthly RV Interest Payment, plus $ __________
(2) Monthly RV Servicing Fee and any carry-over
Monthly RV Servicing Fee (if NationsCredit
Commercial is not the Servicer), plus $ __________
(3) Monthly RV Principal Payment and any
carry-over Monthly Principal Payment $ __________
(4) Total RV Distributions $
==========
(C) Total Surplus/(Deficiency) (IV(A)-IV(B)) $ __________
(D) RV Reserve Account balance $ __________
(E) RV Reserve Account withdrawal $ __________
(F) Surety Bond demand $ __________
V. Monthly RV Servicing Fee and any carry-over Monthly RV
Servicing Fee (if NationsCredit Commercial is the Servicer) $ __________
VI. Reconciliation of RV Reserve Account:
(A) Beginning RV Reserve Account balance $ __________
(B) Interest on RV Reserve Account $ __________
(C) Amounts paid to RV Reserve Account under
the Pooling and Servicing Agreement $ __________
(D) RV Reserve Account withdrawal $ __________
(E) RV Reserve Account prior to release of excess $ __________
(F) Required RV Reserve Account balance:
(1) As percent of Principal Balance $ __________
(2) Minimum RV Reserve Account balance $ __________
(3) Required amount $ __________
(G) Release of excess $ __________
(H) Ending RV Reserve Account balance $ __________
VII. Delinquency/Charge-off Experience:
(A) Principal Balance at end of month $ __________
(B) Number of Units $ __________
(C) Delinquency $ #
30-59 Days $0.00 0
60-89 Days $0.00 0
90+ Days $0.00 0
TOTAL $0.00 0
</TABLE>
D-5
<PAGE> 98
<TABLE>
<S> <C> <C>
(D) As % of EOM Outstanding
(E) RV Receivables charged-off
during month $0.00 0
(F) Recoveries of RV Receivables previously charged-off $ __________
(G) Net loss during month $ __________
(H) Annualized monthly net loss rate $ __________
</TABLE>
D-6
<PAGE> 99
EXHIBIT E-1
NATIONSCREDIT COMMERCIAL CORPORATION OF AMERICA
MARINE CERTIFICATEHOLDER STATEMENT
<TABLE>
<S> <C> <C>
A-C (Per $1,000 Initial Balance):
(A) The amount of the Marine Certificateholder's
distribution which constitutes the Monthly Marine
Principal Payment (including any Carry-
Over Monthly Marine Principal) . . . . . . . . . . . . . . . . . . . . . . $________
(B) The amount of the Marine Certificateholder's
distribution which constitutes the Monthly
Marine Interest Payment (including any Carry-
Over Monthly Marine Interest) . . . . . . . . . . . . . . . . . . . . . . $________
(C) The Marine Certificateholder's pro rata portion of
the Monthly Marine Servicing Fee (including any Carry-
Over Monthly Marine Servicing Fee) . . . . . . . . . . . . . . . . . . . . $________
(D) Marine Certificate Balance as of Record Date . . . . . . . . . . . . . . . $________
(E) Marine Certificate Factor as of Record Date . . . . . . . . . . . . . . . $________
</TABLE>
E-1
<PAGE> 100
EXHIBIT E-2
NATIONSCREDIT COMMERCIAL CORPORATION OF AMERICA
RV CERTIFICATEHOLDER STATEMENT
<TABLE>
<S> <C> <C>
A-C (Per $1,000 Initial Balance):
(A) The amount of the RV Certificateholder's
distribution which constitutes the Monthly RV
Principal Payment (including any Carry-
Over Monthly RV Principal) . . . . . . . . . . . . . . . . . . . . . . . . $________
(B) The amount of the RV Certificateholder's
distribution which constitutes the Monthly
RV Interest Payment (including any Carry-
Over Monthly RV Interest) . . . . . . . . . . . . . . . . . . . . . . . . $________
(C) The RV Certificateholder's pro rata portion of
the Monthly RV Servicing Fee (including any Carry-
Over Monthly RV Servicing Fee) . . . . . . . . . . . . . . . . . . . . . . $________
(D) RV Certificate Balance as of Record Date . . . . . . . . . . . . . . . . . $________
(E) RV Certificate Factor as of Record Date . . . . . . . . . . . . . . . . . $________
</TABLE>
E-2
<PAGE> 101
EXHIBIT F-1
Trustee's Certificate
pursuant to Section 19.3 of
the Pooling and Servicing Agreement
Bankers Trust Company, as trustee (the "Trustee") of the
NationsCredit Grantor Trust 1997-2 created pursuant to the Pooling and
Servicing Agreement (including the Standard Terms and Conditions of Agreement
incorporated by reference therein, the "Agreement") dated as of __________,
1997, among NationsCredit Securitization Corporation, as Depositor (the
"Depositor"), NationsCredit Commercial Corporation of America, as Servicer, and
the Trustee, does hereby sell, transfer, assign and otherwise convey to the
Depositor, without recourse, representation or warranty, all the Trustee's
right, title and interest in and to all the Receivables (as defined in the
Agreement) identified in the attached Servicer's Certificate as "Purchased
Receivables," which are to be repurchased by the Depositor pursuant to Section
12.2 of the Agreement and all security and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this
________day of 199_.
---------------------------------
Title:
F-1-1
<PAGE> 102
EXHIBIT F-2
Trustee's Certificate
pursuant to Section 19.3 of
the Pooling and Servicing-Agreement
Bankers Trust Company, as trustee (the "Trustee") of the
NationsCredit Grantor Trust 1996-1 created pursuant to the Pooling and
Servicing Agreement (including the Standard Terms and Conditions of Agreement
incorporated by reference therein, the "Agreement") dated as of __________,
1997, among NationsCredit Securitization Corporation, as Depositor,
NationsCredit Commercial Corporation of America, as Servicer (the "Servicer"),
and the Trustee, does hereby sell, transfer, assign and otherwise convey to the
Servicer, without recourse, representation or warranty, all the Trustee's
right, title and interest in and to all the Receivables (as defined in the
Agreement) identified in the attached Servicer's Certificate as "Purchased
Receivables," which are to be purchased by the Servicer pursuant to Sections
13.7, Section 20.2 or 20.2A of the Agreement, and all security and documents
relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this
__________day of 19_.
---------------------------------
Title:
F-2-1
<PAGE> 1
EXHIBIT 4.3
FORM OF SURETY BOND
[DATE]
SURETY BOND NO. SB _____
RE: NATIONSCREDIT GRANTOR TRUST 1997-2 (THE "TRUST")
$________________ ___% MARINE RECEIVABLE-BACKED
CERTIFICATES, (THE "MARINE CERTIFICATES") AND
$________________ ___% RV RECEIVABLE-BACKED
CERTIFICATES, (THE "RV CERTIFICATES") (THE MARINE
CERTIFICATES AND THE RV CERTIFICATES ARE
SOMETIMES COLLECTIVELY REFERRED TO HEREIN AS THE
"CERTIFICATES").
INSURED OBLIGATION OBLIGATION OF THE TRUST TO PAY INTEREST ON AND
PRINCIPAL OF THE CERTIFICATES AND THE MONTHLY
SERVICING FEE IN THE EVENT NATIONSCREDIT
COMMERCIAL CORPORATION OF AMERICA OR AN AFFILIATE
THEREOF IS NOT THE SERVICER.
BENEFICIARY BANKERS TRUST COMPANY, AS TRUSTEE OF THE TRUST,
TOGETHER WITH ANY SUCCESSOR TRUSTEE DULY
QUALIFIED UNDER THE POOLING AND SERVICING
AGREEMENT (AS DEFINED HEREIN) (THE "TRUSTEE"),
FOR THE BENEFIT OF THE HOLDERS OF THE
CERTIFICATES.
CAPITAL MARKETS ASSURANCE CORPORATION ("CapMAC"), for consideration
received and subject to the terms of this surety bond (the "Surety Bond"), does
hereby unconditionally and irrevocably guarantee to the Beneficiary, payment of
the Insured Obligation. CapMAC agrees to pay to the Beneficiary, in respect of
each Distribution Date, an amount equal to the sum of (A) the amount, if and,
by which (i) the Marine Priority Distributions exceeds (ii) the sum of the
Marine Available Funds, the amount on deposit in the Marine Reserve Account on
such Distribution Date, the amount of any distribution to be made from the RV
Certificate Account on such Distribution Date in respect of Marine Priority
Distributions, and the amount on deposit in the RV Reserve Account (after
giving effect to any Marine Reserve Account Cross Collateral Withdrawal
Amount), provided, however, that in no event shall the aggregate amount of
payments made under this clause (A) in respect of principal of the Marine
Certificates exceed the Marine Insured Principal Amount, plus (B) the amount,
if and, by which (i) the RV Priority Distributions exceeds (ii) the sums of RV
Available Funds, the amount on deposit in the RV Reserve Account on such
Distribution Date, the amount of any distribution to be made from the Marine
Certificate Account on such Distribution Date in respect of RV Priority
Distributions, and the amount on deposit in the Marine Reserve Account (after
giving effect to any RV Reserve Account Cross Collateral Withdrawal Amount),
provided, however, that in no event shall the aggregate amount of payments made
under this clause (B) in respect of principal of the RV Certificates exceed the
RV Insured Principal Amount.
<PAGE> 2
Capitalized terms used herein and not otherwise defined herein shall have
the meanings assigned to them in the Pooling and Servicing Agreement dated as
of ________, 1997 (the "Pooling and Servicing Agreement") by and among
NationsCredit Securitization Corporation, as "Depositor", NationsCredit
Commercial Corporation of America, as "Servicer", the Trustee and the
Collateral Agent.
"Marine Insured Principal Amount" means $_______________.
"RV Insured Principal Amount" means $_______________.
CapMAC will pay or cause to be paid to the Beneficiary, irrevocably and
unconditionally and without the prior assertion of any defenses to payment,
including fraud in inducement or fact, the amount demanded in a Notice for
Payment in the form of Exhibit A hereto ("Notice for Payment") appropriately
completed and executed by the Beneficiary, not to exceed the sum of the amount
calculated pursuant to the first paragraph of this Surety Bond for the
Distribution Date relating to the Notice for Payment, in immediately available
funds on the later of (a) 11:00 a.m. New York City time on the second Business
Day following Receipt of such Notice for Payment and (b) 11:00 a.m. New York
City time on the Business Day preceding the related Distribution Date.
A Notice for Payment under this Surety Bond must be received by CapMAC by
2:00 p.m. New York City time on any Business Day by (i) delivery of the
original Notice for Payment to CapMAC at its address set forth below, or (ii)
facsimile transmission of the original Notice for Payment to CapMAC at its
facsimile number set forth below. If presentation is made by facsimile
transmission, the Beneficiary shall (i) simultaneously confirm transmission by
telephone to CapMAC at its telephone number set forth below, and (ii) as soon
as reasonably practicable, deliver the original Notice for Payment to CapMAC at
its address set forth below.
The terms "Receipt" and "Received" with respect to the Surety Bond, mean
actual delivery to CapMAC, prior to 2:00 p.m., New York City time, on a
Business Day; delivery either on a day that is not a Business Day or after 2:00
p.m., New York City time, shall be deemed to be Received on the next succeeding
Business Day.
Subject to the foregoing, if any payments guaranteed by the first
paragraph above or any portion thereof are voided (a "Preference Event")
pursuant to a final and non-appealable order under any applicable bankruptcy,
insolvency, receivership or similar law in an Insolvency Proceeding (as defined
herein), and, if as a result of such a Preference Event, the Beneficiary is
required to return such voided payment, or any portion of such voided payment,
made in respect of the Certificates (the "Avoided Payment"), CapMAC will pay on
the guarantee described in the first paragraph hereof, an amount equal to such
Avoided Payment, irrevocably, absolutely and unconditionally and without the
assertion of any defenses to payment, including fraud in the inducement or fact
or any other circumstances that would have the effect of discharging a surety
in law or in equity, upon receipt by CapMAC from the Beneficiary of (x) a
certified copy of a final order of a court exercising jurisdiction in such
Insolvency Proceeding to the effect that the Beneficiary is required to return
any such payment or portion thereof prior to the Surety Bond
<PAGE> 3
Termination Date (as defined below) because such payment was voided under
applicable law with respect to which order the appeal period has expired
without an appeal having been filed (the "Final Order") (y) an assignment in
form reasonably satisfactory to CapMAC, irrevocably assigning to CapMAC all
rights and claims of such Beneficiary relating to or arising under such Avoided
Payment and (z) a Notice for Payment in form of Exhibit A hereto appropriately
completed and executed by the Trustee. Such payment shall be disbursed to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Final Order and not to the Beneficiary directly.
Notwithstanding the foregoing, in no event shall CapMAC be obligated to
make any payment in respect of any Avoided Payment, which payment represents a
payment of principal amount of the Certificates, prior to the time CapMAC would
have been required to make a payment in respect of principal pursuant to the
first paragraph hereof.
CapMAC shall make payments due in respect of Avoided Payments prior to
1:00 p.m., New York City time on the second Business Day following CapMAC's
Receipt of the documents required under clauses (x) through (z) of the second
preceding paragraph.
Under the Surety Bond, "Business Day" means any day other than (i) a
Saturday or Sunday or (ii) a day on which banking institutions in the City of
New York, New York and the State of Georgia are authorized or obligated by law
or executive order to be closed.
"Insolvency Proceeding" means the commencement, after the Closing Date,
of any bankruptcy, insolvency, readjustment of debt, reorganization, marshaling
of assets and liabilities or similar proceedings by or against any Person, or
the commencement, after the Closing Date, of any proceedings by or against any
Person for the winding up or liquidation of its affairs, or the consent after
the date hereof to the appointment of a trustee, conservator, receiver or
liquidator in any bankruptcy, insolvency, readjustment of debt, reorganization,
marshaling of assets and liabilities or similar proceedings of or relating to
any Person.
CapMAC hereby waives and agrees not to assert any and all rights to
require the Beneficiary to make demand on or to proceed against any person,
party or security prior to demanding payment under this Surety Bond.
No defenses, set-offs and counterclaims of any kind available to CapMAC
so as to deny payment of any amount due in respect of this Surety Bond will be
valid and CapMAC hereby waives and agrees not to assert any and all such
defenses, set-offs and counterclaims, including, without limitation, any such
rights acquired by subrogation, assignment or otherwise.
Any rights of subrogation acquired by CapMAC as a result of any payment
made under this Surety Bond shall, in all respects, be subordinate and junior
in right of payment to the prior indefeasible payment in full of all amounts
due the Trustee on account of payments due under the Certificates.
<PAGE> 4
This Surety Bond is neither transferable nor assignable except, in whole
but not in part, to a successor Trustee duly appointed and qualified under the
Pooling and Servicing Agreement. Such transfer and assignment shall be
effective upon receipt by CapMAC of a copy of the instrument effecting such
transfer and assignment signed by the transferor and the transferee, and a
certificate, properly completed and signed by the transferor and the
transferee, in the form of Exhibit B hereto (which shall be conclusive evidence
of such transfer and assignment) and, in such case, the transferee instead of
the transferor shall, without the necessity of further action, be entitled to
all the benefits of and rights under this Surety Bond in the transferor's
place, provided that, in such case, the Notice for Payment presented hereunder
shall be a certificate of the transferee and shall be signed by one who states
therein that he is a duly authorized officer of the transferee.
All notices, presentations, transmissions, deliveries and communications
made by the Beneficiary to CapMAC with respect to this Surety Bond shall
specifically refer to the number of this Surety Bond and shall be made to
CapMAC at:
Capital Markets Assurance Corporation
885 Third Avenue, 14th Floor
New York, New York 10022
Attention: Managing Director,
Credit Enhancement
Telephone: (212) 891-4271
Facsimile: (212) 755-5462
or such other address, officer, telephone number or facsimile number as CapMAC
may designate to the Beneficiary in writing from time to time. Each such
notice, presentation, delivery and communication shall be effective only upon
actual receipt by CapMAC.
The obligations of CapMAC under this Surety Bond are irrevocable,
primary, absolute and unconditional (except as expressly provided herein) and
neither the failure of the Trustee, the Depositor, the Servicer or any other
person, to perform any covenant or obligation in favor of CapMAC (or
otherwise), nor the failure or omission to make a demand permitted hereunder,
nor the commencement of any bankruptcy, debtor or other insolvency proceeding
by or against the Trustee, the Depositor, the Servicer or any other person
shall in any way affect or limit CapMAC's obligations under this Surety Bond.
If an action or proceeding to enforce this Surety Bond is brought, the
Beneficiary shall be entitled to recover from CapMAC costs and expenses
reasonably incurred, including without limitation reasonable fees and expenses
of counsel.
There shall be no acceleration payment due under this Surety Bond unless
such acceleration is at the sole option of CapMAC.
The obligations of CapMAC hereunder with respect to the Marine
Certificates shall terminate upon the payment in full of all amounts payable to
the Holders of the Marine Certificates. The obligations of CapMAC hereunder
with respect to the RV Certificates shall terminate upon the payment in full of
all amounts payable to the Holders of the RV Certificates.
<PAGE> 5
This Surety Bond shall terminate on the earlier to occur of (a) the termination
of the obligations of CapMAC hereunder with respect to the Marine Certificates
and the RV Certificates in accordance with the foregoing two sentences and (b)
the date that CapMAC receives written notice from the Trustee, substantially in
the form of Exhibit C hereto, stating that the termination of the Trust has
occurred (the "Surety Bond Termination Date").
This Surety Bond shall be returned to CapMAC on the Surety Bond
Termination Date.
THIS SURETY BOND IS NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE FUND
SPECIFIED IN ARTICLE SEVENTY-SIX OF THE NEW YORK STATE INSURANCE LAW.
This Surety Bond sets forth in full the undertaking of CapMAC, and shall
not be modified, altered or affected by any other agreement or instrument,
including any modification or amendment to any other agreement or instrument,
or by the merger, consolidation or dissolution of the Trust or any other Person
and may not be canceled or revoked prior to the time it is terminated in
accordance with the express terms hereof.
THE SURETY BOND SHALL BE CONSTRUED, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED, IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES OR
THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION.
IN WITNESS WHEREOF, CapMAC has caused this Surety Bond to be executed on
the date first written above.
CAPITAL MARKETS ASSURANCE CORPORATION
By:
-----------------------------
Name:
Title:
<PAGE> 6
EXHIBIT A TO SURETY BOND NO.___________
Capital Markets Assurance Corporation
885 Third Avenue, 14th Floor
New York, New York 10022
Attention: Managing Director,
Credit Enhancement
NOTICE FOR PAYMENT
UNDER SURETY BOND NO. _________
The undersigned individual, a duly authorized officer of , as Trustee (the
"Trustee"), hereby certifies to Capital Markets Assurance Corporation
("CapMAC"), with reference to the Surety Bond dated ____________, 1997 (the
"Surety Bond"), as follows:
1. The Trustee is the Trustee under the Pooling and Servicing Agreement,
dated as of ________________, 1997, by and among NationsCredit Securitization
Corporation, as depositor, NationsCredit Commercial Corporation of America as
servicer, and the Trustee (the "Pooling and Servicing Agreement") and the
Beneficiary under the Surety Bond.
2. The Trustee is entitled to make a demand under the Surety Bond
pursuant to the provisions of the Pooling and Servicing Agreement.
[For a Notice for Payment in respect of a Distribution Date use the
following paragraphs 3, 4 and 5].
3. This notice relates to the [insert date] Distribution Date.
4. The Beneficiary demands payment of $, which is the amount calculated
pursuant to clauses (A) and (B) of the first paragraph of the Surety Bond for
such Distribution Date. Such amount is the amount the Trustee is entitled to
demand pursuant to the Pooling and Servicing Agreement.
<PAGE> 7
5. The amount demanded is to be paid in immediately available funds to
____________________ Account No. ___________________.
[For a Notice for Payment in respect of an Avoided Payment use the
following paragraphs 3 and 4].
3. The Trustee hereby represents and warrants, based upon information
available to it, that (i) the amount entitled to be drawn under the Surety Bond
on the date hereof in respect of Avoided Payments is the amount paid or to be
paid simultaneously with such draw on the Surety Bond, by all
Certificateholders on account of a Preference Event [$] (the "Avoided Payment
Amount"), (ii) each Certificateholder with respect to which the drawing is
being made under the Surety Bond has paid or simultaneously with such draw on
the Surety Bond will pay such Avoided Payment, and (iii) the documents required
by the Surety Bond to be delivered in connection with such Avoided Payment and
Avoided Payment Amount have previously been presented to CapMAC or are attached
hereto.
4. The amount demanded is to be paid in immediately available funds to
____________________ Acct. No. ___________________.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to them in the Pooling and Servicing Agreement and the Surety
Bond, as the case may be.
IN WITNESS WHEREOF, this notice has been executed this ____________ day of
____________________, ______.
___________________, as Trustee
-------------------------------
Name:
Title:
<PAGE> 8
EXHIBIT B TO SURETY BOND NO. _____________
Capital Markets Assurance Corporation
885 Third Avenue, 14th Floor
New York, New York 10022
Attention: Managing Director,
Credit Enhancement
Dear Sirs:
Reference is made to that certain Surety Bond No. _______ dated
____________, 1997 (the "Surety Bond") which has been issued by Capital Markets
Assurance Corporation in favor of ______________________________, as Trustee.
The undersigned [Name of Transferor] has transferred and assigned (and
hereby confirms to you said transfer and assignment) all of its rights in and
under said Surety Bond to [Name of Transferee] and confirms that [Name of
Transferor] no longer has any rights under or interest in said Surety Bond.
Transferor and Transferee have indicated on the face of said Surety
Bond that it has been transferred and assigned to Transferee.
Transferee hereby certifies that it is a duly authorized transferee
under the terms of said Surety Bond and is accordingly entitled, upon
presentation of the document(s) called for therein, to receive payment
thereunder.
[Name of Transferor]
By:
-------------------------------------------------
[Name and Title of Authorized Officer of Transferor]
[Name of Transferee]
By:
-------------------------------------------------
[Name and Title of Authorized Officer of Transferee]
<PAGE> 9
EXHIBIT C TO SURETY BOND NO. _____________
Capital Markets Assurance Corporation
885 Third Avenue, 14th Floor
New York, New York 10022
Attention: Managing Director,
Credit Enhancement
Dear Sirs:
Reference is made to that certain Surety Bond No. __________ dated
_________, 1997 which has been issued by Capital Markets Assurance Corporation
in favor of __________________________, as Trustee.
The undersigned hereby certifies and confirms that the Trust has
terminated in accordance with the terms of the Pooling and Servicing Agreement
and the date of such termination has occurred on __________________________.
The original of the Surety Bond is enclosed herewith.
[Name of Trustee or Transferee]
By:
-------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 4.4
FORM OF
MARINE RETAIL SALES FINANCING AGREEMENT
THIS AGREEMENT, between NATIONSCREDIT ______________________________________,
("NationsCredit") and the undersigned marine product dealer ("Dealer"), whose
names and addresses are set forth herein, sets forth the terms under which
NationsCredit may purchase Contracts (as hereinafter defined) from Dealer and
the rights and obligations between NationsCredit and Dealer with regard to such
Contracts.
1. SALE AND PURCHASE OF CONTRACTS.
a. NationsCredit may, from time to time, purchase from Dealer such
Contracts (as hereinafter defined) offered by Dealer as shall be
written on forms satisfactory to NationsCredit and otherwise
acceptable to NationsCredit. All such purchases shall be at purchase
prices to be determined as provided in Paragraph (c) below. For
purposes of this Agreement, the term "Contract" shall mean any retail
installment contract, security agreement or other document providing
for the payment by a Buyer (as hereinafter defined) to Dealer of
monies in connection with a retail credit sale by Dealer to such Buyer
and the term "Buyer" shall mean any person (including an individual or
another legal entity) which purchases a marine product from Dealer,
including any co-purchaser.
b. To the extent permitted by applicable law, Dealer shall communicate to
NationsCredit or its designee all such credit information concerning a
Buyer (and any other person named by a Buyer in his credit application)
as Dealer may have. NationsCredit will make a decision as to whether
NationsCredit will purchase each Contract offered to it by Dealer if
documentation (including credit information) satisfactory to
NationsCredit has been received. If NationsCredit decides that
NationsCredit will purchase such a Contract after receipt of such
documentation, Dealer shall (i) execute an assignment of the Contract
to NationsCredit, (ii) deliver the original executed Contract (and
counterparts thereof), to NationsCredit, (iii) file and record all
such documents, and take all such action, as may be necessary, under
the Uniform Commercial Code and other applicable law, to convey to
NationsCredit (and to record such conveyance of) the Contract, and to
perfect a valid and enforceable first priority security interest in
favor of NationsCredit in the marine product to which the Contract
relates and (iv) if required by applicable law, send to the Buyer a
notice that such Dealer has assigned the Contract to NationsCredit.
c. NationsCredit shall only purchase Contracts which comply with the
criteria announced from time to time by NationsCredit with respect to
the amounts which NationsCredit will finance, the aggregate of which
amounts shall not exceed the "amount financed," as set forth in any
Contract. If NationsCredit determines to purchase any Contract, it
will do so at a price equal to such "amount financed." Such price
shall be paid to Dealer upon NationsCredit's receipt of satisfactory
documentation. In addition, NationsCredit shall credit to a
non-interest-earning accounting record established by NationsCredit in
respect of Dealer (the "Dealer Reserve Account") an amount equal to
the "finance charge" set forth in the Contract in excess of the amount
of NationsCredit's then applicable buy rate/sell rate. Dealer hereby
grants a security interest in favor of NationsCredit in all amounts
credited to the Dealer Reserve Account to secure all obligations of
Dealer to NationsCredit. All amounts so credited to the Dealer Reserve
Account shall be held by NationsCredit. The Dealer Reserve Account
shall from time to time be debited, and amounts held therein shall
from time to time be paid, as follows:
(i) at NationsCredit's discretion, the Dealer Reserve Account
shall be debited by an amount equal to the amount of any
indebtedness of Dealer to NationsCredit arising under this
Agreement or otherwise;
(ii) upon prepayment of a Contract, the Dealer Reserve Account
shall be debited by an amount equal to the same percentage of
the original credit to the Dealer Reserve Account in respect
of the Contract as the amount of NationsCredit's finance
charge refund under the Contract to the Buyer bears to the
original finance charge; and debited by the full amount of any
refunds NationsCredit must give to the Buyer for unearned
insurance premiums, charges for extended warranty, mechanical
breakdown protection, or similar items; and
(iii) to pay Dealer at such time or times as NationsCredit shall
determine, any then remaining balance of the Dealer Reserve
Account in excess of $__________.
Notwithstanding anything to the contrary set forth herein, Dealer shall be
responsible for Dealer's proportionate share of any unearned finance
charges, insurance premiums and/or charges for extended warranty,
mechanical breakdown or comparable programs, whether or not the amount of
the Dealer Reserve Account is sufficient to cover such share and whether or
not this Agreement has theretofore been terminated.
2. INSURANCE
Dealer will provide NationsCredit or its agent with written evidence that
there is insurance acceptable to NationsCredit covering each marine product
which is the subject of a Contract purchased by NationsCredit hereunder
(together with all related accessories and equipment, a "Boat"), against
fire and theft at the time the Contract is purchased by NationsCredit and
that NationsCredit is named as the loss payee. If such written evidence is
provided to NationsCredit or its agent, NationsCredit will assume
responsibility for Buyer's compliance with insurance requirements
thereafter.
3. PAYMENTS FROM BUYER
After purchase of a Contract by NationsCredit, Dealer shall forward to
NationsCredit any payments on the Contract received by Dealer. In the event
such payment is made by check or other instrument payable to Dealer, Dealer
shall endorse such check or other instrument to NationsCredit. Dealer shall
not make any payment in respect of any Contract on behalf of any Buyer
without the prior written consent of NationsCredit.
4. DEALER'S REPRESENTATIONS AND WARRANTIES
As to each Contract sold by Dealer to NationsCredit, Dealer warrants and
represents that, as of the time of such sale:
a. Dealer will have satisfied all requirements of the Federal Truth in
Lending Act, the Federal Equal Credit Opportunity Act and all other
federal, state, local and other laws, regulations or rules including,
but not limited to, consumer protection laws, regulations or rules
applicable to the extension of credit or otherwise applicable to the
Contract;
b. Dealer will have the right to make such sales;
c. Dealer will have received the down payment specified in the Contract
and will not have made a loan to the Buyer, or assisted the Buyer in
obtaining a loan from any third party, to be used as a part or all of
such down payment or any other payment on a Contract, except (in any
such case) as may be specifically indicated on the face of the
Contract;
d. The Boat sold under the Contract will have been actually delivered to
Buyer and will be free from all liens and encumbrances except those in
favor of NationsCredit;
<PAGE> 2
e. The Contract will be valid and enforceable according to its terms; and
f. All owners of the Boat will have signed the Contract either as Buyers
or as parties agreeing to the security interest in favor of Dealer or
its assignee;
provided, however, that the foregoing warranties and representations shall
not be deemed to constitute warranties or representations as to any act or
omission of Dealer in accordance with any written instruction of
NationsCredit.
5. REPRESENTATIONS, WARRANTIES AND INDEMNIFICATIONS
a. If any Dealer representation, warranty or covenant made in connection
with a Contract is breached or is untrue, or if Dealer has failed to
perform any obligation it may have under a Contract or this Agreement,
or if the Buyer asserts any claim arising out of the purchase of a
Boat from Dealer under a Contract sold to NationsCredit, then Dealer
shall promptly pay NationsCredit any or all of the following amounts
at the election of NationsCredit: (i) the unpaid balance, as
determined by NationsCredit, of all Contracts affected by such breach
or misrepresentation or claim; (ii) Dealer's portion of any unearned
finance charges; (iii) all losses and expenses incurred by
NationsCredit as a result of such breach or misrepresentation or
claim; and (iv) all out-of-pocket expenses (including, but not limited
to, attorney's fees and costs) paid or incurred by NationsCredit in
connection with the collection of any amount due under any such
Contract. If Dealer breaches this Agreement in any other respect,
Dealer shall reimburse NationsCredit for all losses and expenses
incurred by NationsCredit as a result of such breach. In addition,
Dealer shall indemnify and hold NationsCredit harmless for all losses
or expenses, including reasonable attorneys' fees and legal costs,
suffered or incurred by NationsCredit in any judicial, administrative,
or any other proceeding because of any claim or defense asserted
against NationsCredit as a result of any act or omission on the part
of Dealer, including, at the election of NationsCredit, the unpaid
balance of the Contract, as determined by NationsCredit.
b. Notwithstanding anything to the contrary set forth herein, Dealer
hereby guarantees to NationsCredit the payment in full of all amounts
owing to NationsCredit from time to time under any Contract purchased
by NationsCredit from Dealer in respect of which the Buyer was, at the
time of such purchase, an officer, director, partner or employee of
Dealer (or a member of the immediate family of any such person
associated with the Dealership.)
6. DEALER LIABILITY
Dealer liability under the retail program will be on a non-recourse basis.
7. BOOKS AND RECORDS
Dealer agrees to maintain complete and accurate books and records in
accordance with generally accepted accounting principles concerning the
sale of each Boat, including but not limited to records of all other
transactions affecting the Boat. Dealer will, upon request by
NationsCredit, promptly deliver any such books and records or furnish a
copy thereof or abstracts therefrom to NationsCredit or its agent.
NationsCredit's representatives may from time to time inspect Dealer's
books and records. Dealer shall furnish to NationsCredit such information
concerning Dealer's financial and business affairs as NationsCredit may
request.
8. AGENCY
Neither this Agreement nor any action pursuant hereto shall make Dealer the
agent, representative or employee of NationsCredit for any purpose. Dealer
is not granted any express or implied right to bind NationsCredit in any
manner whatsoever. Wherever in this Agreement reference is made to an agent
of NationsCredit, such reference is intended to mean any third party that
NationsCredit may from time to time appoint to fulfill any of its
obligations under this Agreement.
9. FAILURE TO EXERCISE REMEDIES
The exercise of any right or remedy available to NationsCredit shall not
operate as a waiver of any other right or remedy. The failure of
NationsCredit to exercise or a delay by NationsCredit in exercising any
right or remedy shall not operate as a waiver of such right or any other
right. All of NationsCredit's rights and remedies shall be cumulative and
may be exercised singularly or concurrently.
10. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and shall inure to the benefit of the
parties to this Agreement and their respective successors and assigns,
provided, however, that this Agreement and all rights and obligations under
this Agreement may not be assigned or transferred by Dealer without
NationsCredit's prior written consent and any purported assignment or
transfer without such consent shall be void and without effect. Any
obligation of NationsCredit, or any function to be performed by
NationsCredit, under this Agreement may, at the sole option of
NationsCredit, be delegated to, and performed by, an agent of
NationsCredit, which agent shall have such power and authority as
NationsCredit shall delegate to it. Any right or remedy granted to
NationsCredit under this Agreement may be assigned to an agent of
NationsCredit.
11. TERMINATION
NationsCredit or Dealer may terminate this Agreement upon written notice to
the other party, such termination to be effective on the date set out in
such notice. The termination of this Agreement shall not release
NationsCredit or Dealer from any obligations incurred with regard to any
Contracts purchased prior to the effective date of such notice, and all
such obligations shall remain in full force and effect until fully
satisfied in accordance with the terms and conditions of this Agreement.
12. VALIDITY, COMPLETE AGREEMENT, AMENDMENTS
Any invalidity, in whole or in part, of any provision of this Agreement
shall not affect the validity of any other provision hereof. This Agreement
constitutes the complete understanding between the parties and supersedes
all prior oral, written or implied discussions or understandings with
respect to the subject matter hereof between the parties. No alteration,
amendment or modification of any of the terms and provisions hereof shall
be valid unless made pursuant to an instrument in writing signed by both of
said parties.
13. NOTICE
Except as otherwise provided in this Agreement, all notices and other
communications hereunder shall be in writing and shall be deemed duly given
if and when personally delivered or mailed by registered or certified mail,
return receipt requested, postage prepaid, to the address of the party
shown below. Either party may change the address to which each such notice
or communication shall be sent by giving written notice of such address
in the manner provided herein to the other party.
<PAGE> 3
14. GENDER, NUMBER, PARAGRAPH HEADINGS
Unless the context of this Agreement otherwise requires, the masculine,
feminine or neuter gender each shall include the other genders, and the
singular shall include the plural. The paragraph headings contained in this
Agreement are for convenience of reference only and shall not limit or
define the text hereof.
NATIONSCREDIT
------------------------ ---------------------------------------
DEALER
- ------------------------------------- ---------------------------------------
PRINTED NAME AND TITLE PRINTED NAME AND TITLE
DATE: BY DATE: BY
--------- -------------------- ---------- ---------------------
AUTHORIZED SIGNATURE AUTHORIZED SIGNATURE
---------------------------------------
STREET ADDRESS OF DEALER
NATIONSCREDIT COMMERCIAL CORP.
1000 HOLCOMB WOODS PARKWAY, SUITE 240
ROSWELL, GA 30076 ---------------------------------------
CITY AND STATE
- -------------------------------------
(INSERT BRANCH ADDRESS STAMP ABOVE)
<PAGE> 1
EXHIBIT 4.5
FORM OF
RECREATIONAL VEHICLE RETAIL SALES FINANCING AGREEMENT
THIS AGREEMENT, between NATIONSCREDIT ___________________, ("NationsCredit")
and the undersigned recreational vehicle dealer ("Dealer"), whose names and
addresses are set forth herein, sets forth the terms under which
NationsCredit may purchase Contracts (as hereinafter defined) from Dealer
and the rights and obligations between NationsCredit and Dealer with regard
to such Contracts.
1. SALE AND PURCHASE OF CONTRACTS
a. NationsCredit may, from time to time, purchase from Dealer such
Contracts (as hereinafter defined) offered by Dealer as shall be written
on forms satisfactory to NationsCredit and otherwise acceptable to
NationsCredit. All such purchases shall be at purchase prices to be
determined as provided in Paragraph (c) below. For purposes of this
Agreement, the term "Contract" shall mean any retail installment
contract, security agreement or other document providing for the payment
by a Buyer (as hereinafter defined) to Dealer of monies in connection
with a retail credit sale by Dealer to such Buyer and the term "Buyer"
shall mean any person (including an individual or another legal entity)
which purchases a recreational vehicle from Dealer, including any
co-purchaser.
b. To the extent permitted by applicable law, Dealer shall communicate to
NationsCredit or its designee all such credit information concerning a
Buyer (and any other person named by a Buyer in his credit application)
as Dealer may have, NationsCredit will make a decision as to whether
NationsCredit will purchase each Contract offered to it by Dealer if
documentation (including credit information) satisfactory to
NationsCredit has been received. If NationsCredit decides that
NationsCredit will purchase such a Contract after receipt of such
documentation, Dealer shall (i) execute an assignment of the Contract to
NationsCredit, (ii) deliver the original executed Contract (and
counterparts thereof), to NationsCredit, (iii) file and record all such
documents, and take all such action, as may be necessary, under the
Uniform Commercial Code and other applicable law, to convey to
NationsCredit (and to record such conveyance of) the Contract, to
perfect a valid and enforceable first priority security interest in
favor of NationsCredit in the recreational vehicle to which the Contract
relates and to comply with all related provisions of applicable motor
vehicle laws and (iv) if required by applicable law, send to the Buyer a
notice that such Dealer has assigned the Contract to NationsCredit.
c. NationsCredit shall only purchase Contracts which comply with the
criteria announced from time to time by NationsCredit with respect to
the amounts which NationsCredit will finance, the aggregate of which
amounts shall not exceed the "amount financed," as set forth in any
Contract. If NationsCredit determines to purchase any Contract, it will
do so at a price equal to such "amount financed." Such price shall be
paid to Dealer upon NationsCredit's receipt of satisfactory
documentation. In addition, NationsCredit shall credit to a
non-interest-earning accounting record established by NationsCredit in
respect of Dealer (the "Dealer Reserve Account") an amount equal to the
"finance charge" set forth in the Contract in excess of the amount of
NationsCredit's then applicable buy rate/sell rate. Dealer acknowledges
that the Dealer Reserve Account shall be and remain the sole property of
NationsCredit, and the Dealer shall have no vested interest therein
until such time as any amounts become payable to it as provided below.
Dealer further acknowledges that NationsCredit's right to charge the
Dealer Reserve Account is solely within NationsCredit's discretion. All
amounts so credited to the Dealer Reserve Account shall be held by
NationsCredit. The Dealer Reserve Account shall from time to time be
debited, and amounts held therein shall from time to time be paid, as
follow:
(i) at NationsCredit's discretion, the Dealer Reserve Account shall be
debited by an amount equal to the amount of any indebtdness of
Dealer to NationsCredit arising under this Agreement or otherwise;
(ii) upon prepayment of a Contract, the Dealer Reserve Account shall be
debited by an amount equal to the same percentage of the original
credit to the Dealer Reserve Account in respect of the Contract as
the amount of NationsCredit's finance charge refund under the
Contract to the Buyer bears to the original finance charge; and
debited by the full amount of any refunds NationsCredit must give
to the Buyer for unearned insurance premiums, charges for extended
warranty, mechanical breakdown protection, or similar items; and
(iii) to pay Dealer at such time or times as NationsCredit shall
determine, any then remaining balance of the Dealer Reserve
Account in excess of 3% of the total net outstanding balance of
Contracts purchased.
Notwithstanding anything to the contrary set forth herein, Dealer shall be
responsible for Dealer's proportionate share of any unearned finance
charges, insurance premiums and/or charges for extended warranty, mechanical
breakdown or comparable programs, whether or not the amount of the Dealer
Reserve Account is sufficient to cover such share and whether or not this
Agreement has theretofore been terminated.
2. INSURANCE
Dealer will provide NationsCredit or its agent with written evidence that
there is insurance acceptable to NationsCredit covering each recreational
vehicle which is the subject of a Contract purchased by NationsCredit
hereunder (together with all related accessories and equipment, a
"Vehicle"), against fire, theft and collision at the time the Contract is
purchased by NationsCredit and that NationsCredit is named as the loss
payee. If such written evidence is provided to NationsCredit or its agent,
NationsCredit will assume responsibility for Buyer's compliance with
insurance requirements thereafter.
3. PAYMENTS FROM BUYER
After purchase of a Contract by NationsCredit, Dealer shall forward to
NationsCredit any payments on the Contract received by Dealer. In the event
such payment is made by check or other instrument payable to Dealer, Dealer
shall endorse such check or other instrument to NationsCredit. Dealer shall
not make any payment in respect of any Contract on behalf of any Buyer
without the prior written consent of NationsCredit.
4. DEALER'S REPRESENTATIONS AND WARRANTIES
As to each Contract sold by Dealer to NationsCredit, Dealer warrants and
represents that, as of the time of such sale:
a. Dealer will have satisfied all requirements of the Federal Truth in
Lending Act, the Federal Equal Credit Opportunity Act and all other
federal, state, local and other laws, regulations or rules including,
but not limited to, consumer protection laws, regulations or rules
applicable to the extension of credit or otherwise applicable to the
Contract;
b. Dealer will have the right to make such sales;
c. Dealer will have received the down payment specified in the Contract and
will not have made a loan to the Buyer, or assisted the Buyer in
obtaining a loan from any third party, to be used as a part or all of
such down payment or any other payment on a Contract, except (in any
such case) as may be specifically indicated on the face of the Contract;
<PAGE> 2
d. the Vehicle sold under the Contract will have been actually delivered
to Buyer and will be free from all liens and encumbrances except those
in favor of NationsCredit.
e. the Contract will be valid and enforceable according to its terms;
and
f. all registered owners of the Vehicle will have signed the Contract
either as Buyers or as parties agreeing to the security interest in
favor of Dealer or its assignee.
5. REPRESENTATIONS, WARRANTIES AND INDEMNIFICATIONS
a. If any Dealer representation, warranty or covenant made in connection
with a Contract is breached or is untrue, or if Dealer has failed to
perform any obligation it may have under a Contract or this Agreement,
or if Buyer asserts any claim arising out of the purchase of a Vehicle
from Dealer under a Contract sold to NationsCredit, then Dealer shall
promptly pay NationsCredit any or all of the following amounts at the
election of NationsCredit: (i) the unpaid balance, as determined by
NationsCredit, of all Contracts affected by such breach or
misrepresentation or claim; (ii) Dealer's portion of any unearned
finance charges; (iii) all losses and expenses incurred by
NationsCredit as a result of such breach or misrepresentation or
claim; and (iv) all out-of-pocket expenses (including, but not
limited to, attorneys' fees and costs) paid or incurred by
NationsCredit in connection with the collection of any amount due
under any such Contract. If Dealer breaches this Agreement in any
other respect, Dealer shall reimburse NationsCredit for all losses
and expenses incurred by NationsCredit as a result of such breach. In
addition, Dealer shall indemnify and hold NationsCredit harmless for
all losses or expenses, including reasonable attorneys' fees and
legal costs, suffered or incurred by NationsCredit in any judicial,
administrative, or any other proceeding because of any claim or
defense asserted against NationsCredit as a result of any act or
omission on the part of Dealer, including, at the election of
NationsCredit, the unpaid balance of the Contract, as determined by
NationsCredit.
b. Notwithstanding anything to the contrary set forth herein, Dealer
hereby guarantees to NationsCredit the payment in full of all amounts
owing to NationsCredit from time to time under any Contract purchased
by NationsCredit from Dealer in respect of which the Buyer was, at
the time of such purchase, an officer, director, partner or employee
of Dealer (or a member of the immediate family of any such person
associated with the Dealership.)
6. ORIGINATION FEE
a. For all motorized units, the dealer proceeds will be reduced by $100.
b. For all non-motorized units, the dealer proceeds will be reduced by
$80.
7. BOOKS AND RECORDS
Dealer agrees to maintain complete and accurate books and records in
accordance with generally accepted accounting principles concerning the
sale of each Vehicle, including but not limited to records of all other
transactions affecting the Vehicle. Dealer will, upon request by
NationsCredit, promptly deliver any such books and records or furnish a
copy thereof or abstracts therefrom to NationsCredit or its agent.
NationsCredit's representatives may from time to time inspect Dealer's
books and records. Dealer shall furnish to NationsCredit such information
concerning Dealer's financial and business affairs as NationsCredit may
request.
8. AGENCY
Neither this Agreement nor any action pursuant hereto shall make Dealer
the agent, representative or employee of NationsCredit for any purpose.
Dealer is not granted any express or implied right to bind NationsCredit
in any manner whatsoever. Wherever in this Agreement reference is made to
an agent of NationsCredit, such reference is intended to mean any third
party that NationsCredit may from time to time appoint to fulfill any of
its obligations under this Agreement.
9. FAILURE TO EXERCISE REMEDIES
The exercise of any right or remedy available to NationsCredit shall not
operate as a waiver of any other right or remedy. The failure of
NationsCredit to exercise or a delay by NationsCredit in exercising any
right or remedy shall not operate as a waiver of such right or any other
right. All of NationsCredit's rights and remedies shall be cumulative and
may be exercised singularly or concurrently.
10. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and shall inure to the benefit of the
parties to this Agreement and their respective successors and assigns,
provided, however, that this Agreement and all rights and obligations
under this Agreement may not be assigned or transferred by Dealer without
NationsCredit's prior written consent and any purported assignment or
transfer without such consent shall be void and without effect. Any
obligation of NationsCredit, or any function to be performed by
NationsCredit, under this Agreement may, at the sole option of
NationsCredit, be delegated to, and performed by, an agent of
NationsCredit, which agent shall have such power and authority as
NationsCredit shall delegate to it.
11. TERMINATION
NationsCredit or Dealer may terminate this Agreement upon written notice
to the other party, such termination to be effective on the date set out
in such notice. The termination of this Agreement shall not release
NationsCredit or Dealer from any obligations incurred with regard to any
Contracts purchased prior to the effective date of such notice, and all
such obligations shall remain in full force and effect until fully
satisfied in accordance with the terms and conditions of this Agreement.
12. VALIDITY, COMPLETE AGREEMENT, AMENDMENTS
Any invalidity, in whole or in part, or any provision of this Agreement
shall not affect the validity of any other provision hereof. This
Agreement constitutes the complete understanding between the parties and
supersedes all prior oral, written or implied discussions or
understandings with respect to the subject matter hereof between the
parties. No alteration, amendment or modification of any of the terms and
provisions hereof shall be valid unless made pursuant to an instrument in
writing signed by both of said parties.
13. NOTICE
Except as otherwise provided in this Agreement, all notices and other
communications hereunder shall be in writing and shall be deemed duly
given if and when personally delivered or mailed by registered or
certified mail, return receipt requested, postage prepaid, to the address
of the party shown below. Either party may change the address to which
each such notice or communication shall be sent by giving written notice
of such address in the manner provided herein to the other party.
<PAGE> 3
14. GENDER, NUMBER, PARAGRAPH HEADINGS
Unless the context of this Agreement otherwise requires, the masculine,
feminine or neuter gender each shall include the other genders, and the
singular shall include the plural. The paragraph headings contained in
this Agreement are for convenience of reference only and shall not limit
or define the text hereof.
NATIONSCREDIT
-------------------- -------------------------------------
DEALER
---------------------------------- -------------------------------------
PRINTED NAME AND TITLE PRINTED NAME AND TITLE
---------------------------------- -------------------------------------
DATE: BY DATE: BY:
------ -------------------- ------- --------------------
AUTHORIZED SIGNATURE AUTHORIZED SIGNATURE
-------------------------------------
STREET ADDRESS OF DEALER
-------------------------------------
CITY AND STATE
-----------------------------------
(INSERT BRANCH ADDRESS STAMP ABOVE)
<PAGE> 1
Exhibit 4.6
FORM OF
This ASSIGNMENT AGREEMENT, dated as of ___________, 1997, is
made between NATIONSCREDIT MARINE FUNDING CORPORATION, a Delaware corporation
("NCMF") and BANKERS TRUST COMPANY, as Trustee of the NationsCredit Grantor
Trust 1997-2 (the "Trustee").
WITNESSETH THAT: In consideration of the premises and of the
mutual agreements herein contained, the parties hereto agree as follows:
Capitalized but undefined terms shall have the meanings set
forth in the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of _______, 1997, among NationsCredit Securitization
Corporation, a Delaware corporation, as Depositor (the "Depositor"),
NationsCredit Commercial Corporation of America, a North Carolina corporation,
as Servicer ("NationsCredit Commercial" or the "Servicer"), and Bankers Trust
Company, as Trustee and as Collateral Agent.
SECTION 1. Conveyance of NCMF Receivables. (a) In
consideration of the payment of $______________ (the "Purchase Price") on the
Closing Date by the Trustee, on behalf of the Certificateholders and the Surety
Bond Issuer, NCMF does hereby sell, transfer, assign and otherwise convey on
the Closing Date to the Trustee, in trust for the benefit of the
Certificateholders and the Surety Bond Issuer, without recourse:
(i) all right, title and interest of NCMF in and
to the NCMF Receivables and all payments received thereunder,
in the case of Simple Interest Receivables which are NCMF
Receivables and due thereunder in the case of Precomputed
Receivables which are NCMF Receivables, in each case, after
the Cutoff Date;
(ii) the interest of NCMF in the security interests
in the Boats related to NCMF Receivables granted by Obligors
pursuant to the NCMF Receivables;
(iii) the right of NCMF pursuant to
Section 1.7 of the Purchase and Sale Agreement to cause
NationsCredit Commercial to repurchase NCMF Receivables from
NCMF for breaches of the representations and warranties
contained in paragraphs (h) or (i) of Exhibit III to the
Purchase and Sale Agreement (provided that paragraph (i) shall
be limited to paragraphs (iii), (vi), (xiii) and (xxiii) of
the definition of Eligible Receivable (as such term is defined
in the Purchase and Sale Agreement));
<PAGE> 2
(iv) the interest of NCMF in any proceeds from
claims on any physical damage, credit life or disability
insurance policies covering Boats related to NCMF Receivables
or Obligors related to NCMF Receivables;
(v) the interest of NCMF in any proceeds from
recourse to Dealers on NCMF Receivables; and
(vi) any proceeds of the foregoing.
"NCMF Receivables" means the marine retail
installment contracts listed on Schedule A.
The interests set forth in clauses (i)-(vi) of this
Section 1(a) are hereinafter referred to as the "NCMF
Interests."
(b) NCMF intends that the assignment and transfer herein
contemplated constitute a sale of the NCMF Receivables, conveying good title
thereto free and clear of any liens and encumbrances, from NCMF to the Trust
and that such property not be part of tNCMF's estate or property of NCMF in the
event of any insolvency by NCMF, and the Trustee acquiesces in such
characterization. In the event that such conveyance is deemed to be, or to be
made as security for, a loan, NCMF hereby grants to the Trust a first priority
perfected security interest in all of NCMF's right, title and interest in and
to the NCMF Receivables, and this Assignment Agreement shall constitute a
security agreement under applicable law.
SECTION 2. Deliveries at Closing. On the Closing Date NCMF
shall deliver to the Trustee the following:
(i) A Certificate of Good Standing of NCMF in
the State of Delaware;
(ii) A Secretary's Certificate of NCMF, which has
as exhibits thereto the Certificate of Incorporation and
By-laws of NCMF and resolutions of the Board of Directors of
NCMF authorizing the transactions contemplated by this
Assignment Agreement;
(iii) An Officer's Certificate of NCMF relating to
the incumbency of officers of NCMF;
(iv) UCC-1 Financing Statements executed by NCMF
with respect to the grant of the security interest set forth
in Section 1(a)(ii)(b)(ii) to be filed with the Secretary of
State of the State of Texas; _______________; and
(v) An opinion of Counsel with respect to certain
corporate matters of NCMF in form and substance reasonably
satisfactory to the Trustee.
- 2 -
<PAGE> 3
SECTION 3. Representations and Warranties of NCMF. NCMF
hereby makes the following representations and warranties to the Trustee on
behalf of the Certificateholders and the Surety Bond Issuer:
(a) Organization and Good Standing. NCMF has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware, with power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is now conducted, and had at all relevant times, and shall have,
power, authority and legal right to acquire, own and sell the NCMF Receivables.
NCMF's principal place of business as of the Closing Date is in Texas.
(b) Due Qualification. NCMF is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or lease of
property or the conduct of its business requires such qualifications, licenses
or approvals, except where the lack of such qualifications or approvals would
not have a material adverse effect on the business or properties of NCMF.
(c) Power and Authority. NCMF has the power and authority to
execute and deliver this Assignment Agreement and to carry out its terms; and
the execution, delivery, and performance of this Assignment Agreement has been
duly authorized by NCMF by all necessary corporate action.
(d) Valid Sale; Binding Obligations. The sale, transfer and
assignment of the NCMF Interests by NCMF to the Trust, pursuant to Section 1,
constitutes (a) a valid sale, transfer and assignment of the NCMF Interests,
enforceable against creditors of and purchasers from NCMF and (b) a legal valid
and binding obligation of NCMF enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance and similar laws relating to creditors' rights generally and subject
to general principles of equity.
(e) No Violation. The consummation of the transactions
contemplated by this Assignment Agreement and the fulfillment of the terms
hereof does not and will not conflict with, result in any breach of any of the
terms and provisions of, nor constitute (with or without notice or lapse of
time or both) a default under, the articles of incorporation or by-laws of
NCMF, or any indenture, agreement, or other instrument to which NCMF is a party
or by which it shall be bound; nor result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any such indenture,
agreement, or other instrument; nor violate any law or any order, rule, or
regulation applicable to NCMF of any court or of any Federal or state
regulatory body, administrative agency, or other governmental instrumentality
having jurisdiction over NCMF or its properties.
(f) No Proceedings. There are no proceedings or
investigations pending or threatened, before any court, regulatory body,
administrative agency, or other governmental instrumentality having
jurisdiction over NCMF or its properties: (A) asserting the invalidity of
this Assignment Agreement; (B) seeking to prevent the consummation of any of
the transactions
- 3 -
<PAGE> 4
contemplated by this Assignment Agreement; or (C) seeking any
determination or ruling that might materially and adversely affect the
performance by NCMF of its obligations under, or the validity or enforceability
of this Assignment Agreement.
(g) All Consents Required. All approvals, authorizations,
consents, orders or other actions of any Person or of any governmental body or
official required in connection with the execution and delivery by; and NCMF of
this Assignment Agreement, the performance by NCMF of the transactions
contemplated by this Assignment Agreement, and the fulfillment by NCMF of the
terms hereof, have been obtained.
(h) Title. It is the intention of NCMF that the sale,
transfer and assignment of the NCMF Interests contemplated by Section 1
constitute a sale, transfer and assignment of the NCMF Interests from NCMF to
the Trust and that the beneficial interest in and title to the NCMF Interests
not be part of the debtor's estate in the event of the filing of a bankruptcy
petition by or against NCMF under any bankruptcy law. In the event that such
sale, transfer and assignment is deemed to be made as security for a loan, NCMF
hereby grants to the Trustee a first priority security interest in all of
NCMF's right title and interest in and to the NCMF Interests and this
Assignment Agreement shall constitute a security agreement under applicable
law. No Interest in any portion of the NCMF Interests has been sold,
transferred, assigned, or pledged by NCMF to any person other than the Trust.
Immediately prior to the sale, transfer and assignment contemplated by Section
1, NCMF had good and marketable title to each NCMF Receivable, free and clear
of all Liens, encumbrances, security interests and rights of others; and the
sale and assignment has been perfected under the Uniform Commercial Code in
affect in Texas.
SECTION 4. Payment Instructions. The Trustee shall deposit,
or cause to be deposited, the Purchase Price into an account specified by NCMF.
SECTION 5. Governing Law. THIS ASSIGNMENT AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK.
SECTION 6. Counterparts. This Assignment Agreement may be
executed in two or more counterparts and by different parties on separate
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
SECTION 7. No Petition. The Trust will not institute
against, or join any other person in instituting against, NCMF, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or other
proceeding under any federal or state bankruptcy or similar law, until August
16, 2014.
SECTION 8. Further Assurances. Consistent with the terms and
conditions hereof, each party hereto will execute and deliver such instruments,
certificates and other documents and take such other action as any party may
reasonably require in order to carry out this Agreement and the transactions
contemplated hereby.
- 4 -
<PAGE> 5
IN WITNESS WHEREOF, the parties hereby have caused this
Assignment Agreement to be executed by their respective officers thereunto duly
authorized as of the date and year first above written.
NATIONSCREDIT MARINE FUNDING
CORPORATION
By:
--------------------------------
Title: Vice President and
Treasurer
BANKERS TRUST COMPANY, as Trustee
of NationsCredit Grantor Trust
1997-2
By:
--------------------------------
Name:
Title:
Acknowledged and agreed to:
NationsCredit Commercial Corporation
of America
By:
------------------------------------
Name: Lawrence Angelilli
Title: Vice President and Treasurer
- 5 -
<PAGE> 1
Exhibit 5.1
STROOCK & STROOCK & LAVAN LLP
180 Maiden Lane
New York, N.Y. 10038
October 10, 1997
NationsCredit Securitization Corporation
225 E. John Carpenter Freeway
Irving, Texas 75062-2731
Re: NationsCredit Grantor Trust 1997-2
Ladies and Gentlemen:
We have been asked to deliver this opinion in connection with the preparation
of the registration statement on Form S-3 (No. 333-33441) (the "Registration
Statement") relating to the issuance by NationsCredit Grantor Trust 1997-2 (the
"Trust") of a class of Marine Receivable-Backed Certificates and RV
Receivable-Backed Certificates (collectively, the "Certificates") pursuant to a
Pooling and Servicing Agreement, including the Standard Terms and Conditions of
Agreement, dated as of September 30, 1997 (the "Agreement"), among
NationsCredit Securitization Corporation, as depositor (the "Depositor"),
NationsCredit Commercial Corporation of America ("NationsCredit Commercial"),
as servicer, and Bankers Trust Company, as trustee (in such capacity, the
"Trustee") and collateral agent. The Registration Statement has been filed
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"). All capitalized terms used but
not specifically defined herein have the meaning assigned to such terms in the
Agreement.
In connection with this opinion, we have examined original, reproduced or
certified copies of the Certificate of Incorporation and By-Laws of the
Depositor, each as amended to date, the Registration Statement, records of
actions taken by the Board of Directors of the Depositor and a form of the
Agreement. We have also examined such other documents, papers, statutes and
authorities as we have deemed necessary as a basis for the opinions hereinafter
set forth. In all such examinations made by us in connection with this
opinion, we have assumed the genuineness of all signatures, the completeness
and authenticity of all records and all documents submitted to
<PAGE> 2
NationsCredit Securitization Corporation
October 10, 1997
Page 2
us as originals, and the conformity with the originals of all documents
submitted to us as copies thereof. As to various matters of fact relevant to
the opinions hereinafter expressed, we have relied, to the extent we deemed
appropriate, upon representations, statements and certificates of officers and
representatives of NationsCredit Commercial, the Depositor and others.
Attorneys involved in the preparation of this opinion are admitted to practice
law in the State of New York and we do not express any opinion herein
concerning any law other than the federal laws of the United States of America
and the laws of the State of New York.
Based upon and subject to the foregoing, we are of the opinion that:
1. When the Certificates have been duly executed and delivered,
authenticated by the Trustee and sold as described in the Registration
Statement, such Certificates (i) will constitute valid and binding obligations
of the Trust in accordance with their terms and the terms of the Agreement and
(ii) will be legally issued, fully paid and non- assessable. This opinion is
subject to the effect of bankruptcy, insolvency, moratorium, fraudulent
conveyance and similar laws relating to or affecting creditors' rights
generally and court decisions with respect thereto and we express no opinion
with respect to the application of equitable principles or remedies in any
proceeding, whether at law or in equity.
2. Assuming compliance with the Agreement, the Trust will be
classified for federal income tax purposes as a grantor trust under subpart E,
part I of subchapter J of the Internal Revenue Code of 1986, as amended (the
"Code"), and not as a partnership or an association taxable as a corporation.
3. Each Marine Certificateholder and RV Certificateholder will be
treated for federal income tax purposes as the owner of an undivided pro rata
interest in each of the assets owned by the Trust.
4. The statements set forth in the Registration Statement under
the headings "Prospectus Summary--Tax Status" and "Certain Federal Income Tax
Consequences," to the extent that they constitute statements of matters of law
or legal conclusions with respect thereto, are correct.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this firm under the captions
"Certain Federal Income Tax Consequences" and "Legal Matters" in the Prospectus
which forms a part of the Registration Statement. In giving such consent, we
do not admit hereby that we come within the category of persons whose consent
is required under Section 7 of the Act or the Rules and Regulations of the
Commission thereunder.
Very truly yours,
/s/ Stroock & Stroock & Lavan LLP
STROOCK & STROOCK & LAVAN LLP
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Capital Markets Assurance Corporation:
We consent to the use of our report included in the NationsCredit
Securitization Corporation Form S-3 and to the reference to our firm under the
heading "Experts" in the prospectus filed in connection with the registration
of the NationsCredit Grantor Trust 1997-2.
/s/ KPMG PEAT MARWICK LLP
New York, New York
October 8, 1997
