AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 12, 1997
REGISTRATION NO. 333-
- - - ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------------
NATIONSCREDIT GRANTOR TRUST 1997-2
(Issuer with respect to the Certificates)
NATIONSCREDIT SECURITIZATION CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 75-2655744
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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
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. | |
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==================================================================================================================================
PROPOSED PROPOSED
TITLE OF SECURITIES AMOUNT TO MAXIMUM MAXIMUM AMOUNT OF
TO BE REGISTERED BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED PER UNIT (2) OFFERING FEE
(1) PRICE (2)
- - - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NationsCredit
Grantor Trust Marine $1,000,000 100.00% $1,000,000 $303.03
Receivable-Backed Certificates
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NationsCredit
Grantor Trust
Recreational Vehicle
Receivable- Backed
Certificates................. $1,000,000 100.00% $1,000,000 $303.03
==================================================================================================================================
</TABLE>
(1) This Registration Statement also relates to market-making transactions
that will be made by NationsBanc Capital Markets, Inc., an affiliate of
the Registrant.
(2) Estimated solely for purposes of calculating the registration fee.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1993 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
EXPLANATORY NOTE
THIS REGISTRATION STATEMENT CONTAINS (I) A PROSPECTUS RELATING TO A
PUBLIC OFFERING BY NATIONSCREDIT GRANTOR TRUST 1997-2 (THE "TRUST") OF
$____________ AGGREGATE PRINCIPAL AMOUNT OF __% MARINE RECEIVABLE-BACKED
CERTIFICATES (THE "MARINE CERTIFICATES") AND $____________ 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>
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.
<PAGE>
SUBJECT TO COMPLETION, DATED , 1997
PROSPECTUS
[LOGO]
$----------------
NATIONSCREDIT GRANTOR TRUST 1997-2
$--------------
____% MARINE RECEIVABLE-BACKED CERTIFICATES
$--------------
____% 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"), which will represent an interest in
the assets of the Trust described under "The Trust" 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." 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
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 , as Trustee and as Collateral Agent (in such
capacities, the "Trustee" and the "Collateral Agent," respectively). The
property of the 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") 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
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 ________, 1997
(the "Cutoff Date"), security interests in the boats and marine equipment
financed by the Marine Receivables, security interests in the recreational
vehicles financed by the RV Receivables, 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 _______________ (the
"Surety Bond Issuer") and certain other property as described in "The Trust."
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 $______________ (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 $_______________ (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 $______________ and the RV Certificate
Balance (as defined herein) as of the Closing Date will equal $____________.
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 _______, 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 __.
<PAGE>
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.
-------------------
<TABLE>
<CAPTION>
==================================================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC (1) DISCOUNT TRUST (1)(2)
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<S> <C> <C> <C>
Per Marine % % %
Receivables-Backed
Certificate......................
- - - ----------------------------------------------------------------------------------------------------------------------------------
Per Recreational % % %
Vehicle
Receivable-Backed Certificate.....
==================================================================================================================================
Total............................. $ $ $
==================================================================================================================================
</TABLE>
(1) Plus interest calculated at the applicable Pass-Through
Rate from _______ __, 1997.
(2) Before deducting expenses payable by the Depositor
estimated at $___________.
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 _________
__, 1997.
NATIONSBANC CAPITAL MARKETS, INC.
[ ]
_________ __, 1997
<PAGE>
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: 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
___________________, 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 ______ __, 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".
<PAGE>
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 _____ __, 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 RV
Contracts" and "Certain Legal
Aspects of the Receivables--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") represents an
interest in the assets of the Trust
described under "The Trust." 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
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. The Certificates will be
issued pursuant to the Agreement in
book-entry form and shall be
available in denominations of
$1,000 and integral multiples
thereof. The Certificates will be
represented initially by global
certificates registered in the name
of Cede & Co., as nominee of DTC.
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
Certificates 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 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 shall equal 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 Defaulted 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
" shall equal on the Closing
Date, $____________________
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, $______________
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 ________
__, 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
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 Interest Payment, the
Monthly Servicing Fee (to the
extent described herein), the
principal balance of any Defaulted
Receivables (as defined herein),
and any amounts owing to the Surety
Bond Issuer under the Insurance and
Reimbursement Agreement, dated as
of _______________, 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 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 Interest Payment, the
Monthly Servicing Fee (to the
extent described herein), the
principal balance of any Defaulted
Receivables (as defined herein),
and any amounts owing to the Surety
Bond Issuer under the Insurance
Agreement and the Agreement, and
not paid, 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"). 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:......................... ______________________
("___________" or the "Surety Bond
Issuer"). See "The Surety Bond
Issuer."
Trustee:....................................__________________ (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 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). As a result, the
Marine 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. Moreover,
statutory liens for repairs or
unpaid taxes may have priority over
security interests in Boats or RVs
perfected under state law. 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 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
Rating".
<PAGE>
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 Capital Markets, Inc. and [ ] (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 Reserve Account 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. 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.
Moreover, such representations and warranties relate solely to the Receivables
themselves and do not include the Boats or RVs that secure such Receivables.
Certain liens, including landlords', warehousemens' and materialmens' liens and
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. To
facilitate servicing and to minimize administrative burden and expense, the
Servicer will maintain possession of all of the Receivables. 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. 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
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 ________________,
which in the case of Boats represents ____% 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 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
________________ may not relate to the geographic concentration of Marine
Receivables _____________ 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 may be entitled to 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, ______% and
_____% of the Receivables are billed to Obligors with billing addresses in
__________ and __________, respectively. An economic downturn in __________ may
have an adverse effect on the ability of _____ Obligors in such states to meet
their payment obligations under the Receivables. Because of the concentration of
Receivables with Obligors with billing addresses in this state, 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
Certificateholders.
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 Certificates
will depend on the rate of payments on the Receivables. 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.
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 assets of the Trust include, among other things, the Receivables
and all payments received thereunder, in the case of simple interest
Receivables, and all payments due thereunder, in the case of precomputed
Receivables, after the Cutoff Date. 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 retail installment
sale contract for any Receivable sold to the Trust. The assets of the Trust also
include (i) such amounts as from time to time may be held in (a) one or more
trust accounts for the benefit of the Marine Certificateholders (collectively,
the "Marine Certificate Account") and (b) one or more trust accounts for the
benefit of the RV Certificateholders (collectively, the RV Certificate Account
and together with the Marine Certificate Account (the "Certificate Account")
which in each case will be established and maintained by the Servicer pursuant
to the Agreement, as described below; (ii) the interest of NationsCredit
Commercial in the security interests in the Boats and RVs; (iii) the Surety
Bond; (iv) the interest of NationsCredit Commercial in any proceeds from
recourse to Dealers on Receivables; (v) the interest of NationsCredit Commercial
in any proceeds from claims on physical damage, credit life or disability
insurance policies covering the Boats, RVs or the Obligors, as the case may be;
(vi) any property that shall have secured a Receivable and that shall have been
acquired by the Trustee and (vii) the proceeds of all of the foregoing.
Payments on each Marine Certificate shall be based on (i) the Marine
Contract Group and all payments received on each Marine Receivable, in the case
of simple interest Marine Receivables, and all payments due on each Marine
Receivable, in the case of precomputed Marine Receivables; (ii) such amounts as
from time to time may be held in the Marine Certificate Account; (iii) the
interest of NationsCredit Commercial in the security interests in the Boats;
(iv) the rights to any proceeds from draws on the Surety Bond; (v) the interest
of NationsCredit Commercial in any proceeds from recourse to Dealer on Marine
Receivables; (vi) the interest of NationsCredit Commercial in any proceeds from
claims or physical damage, credit life or disability insurance policies covering
the Boats or the related Obligors, as the case may be; (vii) any property that
shall have secured a Marine Receivable and shall have been acquired by the
Trustee; and (viii) the proceeds of all of the foregoing.
Payments on each RV Certificate shall be based on (i) the RV
Receivables and all payments received thereunder, in the case of simple interest
RV Receivables, and all payments due thereunder, in the case of precomputed RV
Receivables; (ii) such amounts as from time to time may be held in the RV
Certificate Account; (iii) the interest of NationsCredit Commercial in the
security interests in the RVs; (iv) the rights to any proceeds from draws on the
Surety Bond; (v) the interest of NationsCredit Commercial in any proceeds from
recourse to Dealer on RV Receivables; (vi) the interest of NationsCredit
Commercial in any proceeds from claims or physical damage, credit life or
disability insurance policies covering the RVs or the related Obligors, as the
case may be; (vii) any property that shall have secured an RV Receivable and
shall have been acquired by the Trustee; and (viii) the proceeds of all of the
foregoing.
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 _____
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 contracts 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 usually includes 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, Type 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.
Van Camper, Type 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, Type 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. Occasionally the vehicle that pulls the trailer will be
financed as a package along with the trailer.
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.
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 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 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 recreational vehicle if the amount financed
under the contract exceeds the sum of (a) 110% (115% for marine contracts prior
to January 1, 1990) of the manufacturer's invoice price to the dealer, plus (b)
the cost to the customer of any dealer-installed options, extended warranty
plans and credit life and disability insurance, less a 10% (0% for both marine
contracts and recreational vehicle contracts prior to January 1, 1990)
downpayment by the obligor.
NationsCredit Commercial will generally not purchase a contract secured
by a used boat or recreational vehicle if the amount financed under the contract
exceeds 100% of the "NADA (National Automobile Dealers Association) Wholesale
Price" less a downpayment by the obligor of at least 10% 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. These representations and warranties
do not relate 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.
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 an RV Receivable for credit related reasons that would be
acceptable to the Servicer with respect to comparable marine 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 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
Distribute Date, as applicable.
Extensions represent the deferral of a monthly payment until the month
after the final maturity date of the marine 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 RV contract before the boat or RV, 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 or costs incurred by
NationsCredit Commercial in effecting repossession. 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
contract 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 servicing and collection practices of NationsCredit
Commercial may change again over time in accordance with NationsCredit
Commercial's business judgment.
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 are greater than $10,000 and 6 months,
respectively, NationsCredit Commercial will purchase a collateral protection
insurance policy on behalf of the obligor. The obligor is 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. On or after
May 1, 1997, NationsCredit Commercial will not purchase 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'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 marine or
recreational vehicle 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. Late payment and extension fees, if
any, and other administrative fees will be recorded to the credit of the
Servicer.
Each contract generally provides for equal monthly payments which
amortize the full amount of such contract in accordance with a pre-determined
amortization schedule. The first payment can be deferred beyond forty-five days
under certain specialized programs. Generally, each contract has an origination
term of up to 15 years. 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 a precomputed contract 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").
As of the Cutoff Date approximately __% of the number of Receivables,
constituting approximately __% of the Initial Pool Balance, represents
Receivables that are part of NationsCredit Commercial's Fixed Payment Variable
Rate and Term Program (the "Variable Rate Program"). At the time that a contract
in the Variable Rate Program is purchased by NationsCredit Commercial, the
monthly payment due from the related obligor is determined by amortizing the
principal balance over the initial term of such contract at the initial interest
rate. The interest rate on each contract on the Variable Rate Program is reset
every six months commencing six months from origination. The interest rate index
used is the weekly average for the month three months prior of the six-month CD
in the secondary market as quoted in the Federal Reserve Bulletin. Each contract
is subject to a maximum rate of interest which can be charged. See the charts
entitled "Distribution by APR - Marine Contract Group" and "Distribution of APR
- - - - RV Contract Group" under "The Receivables Pool." If interest rates generally
decline, the monthly payment on each contract in the Variable Rate Program
remains constant; however, a smaller portion of the monthly payment is allocated
to interest and a larger portion is allocated to principal. Accordingly, in the
case of a decrease in the rate of interest on a particular contract, principal
paydown will be accelerated resulting in a shorter maturity than that which
would have resulted if such contract fully amortized at the rate set at the
previous interest rate adjustment date. Conversely, if interest rates generally
increase, the monthly payment on each contract in the Variable Rate Program
remains constant and a larger proportion of the monthly payment is allocated to
interest and less is allocated to principal. If interest rates increase, the
final maturity of the contracts is extended to compensate for the reduced
allocation to principal.
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 [and
__________] (the "RV Contract Portfolio" and together with the Marine Contract
Portfolio, the "Contract Portfolio"). As of June 30, 1997 there were _____
marine contracts in the Marine Contract Portfolio with an aggregate principal
balance of $_____ and ______ recreational vehicle contracts in the RV Contract
Portfolio with an aggregate principal balance of $_______. 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 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.
<TABLE>
<CAPTION>
DELINQUENCY AND LOSS EXPERIENCE FOR THE MARINE CONTRACT PORTFOLIO
Marine Contract Delinquency Experience (Dollars in Thousands)
---------------------------------------------------------------------------------------------------------
As of June 30, As of December 31,
1997 1996 1996(1) 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Number Aggregate Number Aggregate Number Aggregate Number Aggregate Number Aggregate
of Principal of Principal of Principal of Principal of Principal
Marine Balance Marine Balance Marine Balance Marine Balance Marine Balance
Contracts Contracts Contracts Contracts Contracts
Portfolio $ $
Period of
Delinquency $ $
30-59 Days
60-89 Days
90 Days or $ $ $ $
More $
_________ _______ _________ ______ ______ ______ ______ ______ ______ ______
Total Delinquency
Total Delinquency
as a Percent of the
Portfolio........... % % % % %
</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...................................... $ $ $ $ $
Average Number of Marine Contracts Outstanding
During the Period...........................
Net Losses............................. $ $ $
Annualized Net Losses
as a Percent of Average % % % % %
Amount Outstanding...................
</TABLE>
<TABLE>
<CAPTION>
DELINQUENCY AND LOSS EXPERIENCE FOR THE RV CONTRACT PORTFOLIO
RV Contract Delinquency Experience (Dollars in Thousands)
---------------------------------------------------------------------------------------------------------
As of June 30, As of December 31,
1997 1996 1996(1) 1995 1994
Number Aggregate Number Aggregate Number Aggregate Number Aggregate Number Aggregate
Of Rv Principal Of Rv Principal Of Rv Principal Of Rv Principal Of Rv Principal
Contracts Balance Contracts Balance Contracts Balance Contracts Balance Contracts Balance
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio..... $ $ $ $ $
Period of
Delinquency... $ $ $ $ $
30-59 Days...
60-89 Days...
90 Days or $ $ $ $ $
More........
_________ _______ _________ ______ ______ ______ ______ ______ ______ ______
Total Delinquency...
Total Delinquency
as a Percent of the
Portfolio...... % % % % %
</TABLE>
- - - --------------
(1) A third party vendor error in billing statement distribution contributed
to a one month increase in delinquencies in December 1996.
<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........................ $ $ $ $ $
Average Number of Marine
Contracts Outstanding
During the Period................
Net Losses.................. $ $ $ $ $
Annualized Net Losses
as a Percent of
Average Amount Outstanding... % % % % %
</TABLE>
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 accrued
but unpaid interest 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 _____% and
not greater than ______%; (iv) each Marine Receivable has an original maturity
of not more than 180 months; (v) each Marine Receivable has a remaining maturity
of not more than 180 months; (vi) each Marine Receivable has a remaining
principal balance of not greater than $________; (vii) each Marine Receivable is
denominated in U.S. dollars in the United States; (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 composition, geographic distribution, distribution by APR,
distribution by original term, distribution by remaining term, distribution by
original principal balances, distribution by remaining principal balances,
distribution by age, distribution by quarter of origination, distribution by new
and used collateral, distribution by contract type and distribution by
delinquency and repossession experience of the Marine Contract Group as of the
Cutoff Date are as set forth in the following tables:
<TABLE>
<CAPTION>
COMPOSITION OF THE MARINE CONTRACT GROUP
Aggregate Average Weighted
Weighted Principal Number Principal Average Weighed
Average Balance Of Balance Original Term Average
APR Receivables Remaining Term
<S> <C> <C> <C> <C> <C>
% $ $ mos. mos.
</TABLE>
<TABLE>
<CAPTION>
GEOGRAPHIC DISTRIBUTION - MARINE CONTRACT GROUP
Percent Percent
Number Of Aggregate Of
Of Total Principal Initial
State(1) Marine Number Balance Marine
Receivables Of Marine Pool
Receivables(2) Balance(2)
<S> <C> <C> <C> <C>
% $ %
Total................................... ----- ------% $----------- ------%
====== ====== ============= ======
- - - --------------
</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.
<TABLE>
<CAPTION>
DISTRIBUTION BY APR - MARINE CONTRACT GROUP
Percent Percent Of
Number Of Aggregate Initial
Of Total Principal Marine
APR(%) Marine Number Balance Pool
Receivables Of Marine Balance(1)
Receivables(1)
<S> <C> <C> <C> <C> <C> <C>
% % $ %
%
----- -------- ----
Total................................... % $ %
====== ====== ============= ======
</TABLE>
- - - ------------
(1) The sum of the individual percentages may not add to 100%
because of rounding.
<TABLE>
<CAPTION>
DISTRIBUTION BY ORIGINAL TERM - MARINE CONTRACT GROUP
Percent Of Percent Of
Number Total Aggregate Initial
Of Number Principal Marine
Original Term (Months) Marine Of Marine Balance Pool
Receivables Receivables(1) Balance(1)
<S> <C> <C> <C> <C>
% $ %
---- ---- -------- ----%
Total % $ %
====== ====== ======== ======
- - - ----------
</TABLE>
(1) The sum of the individual percentages may not add to 100%
because of rounding.
<TABLE>
<CAPTION>
DISTRIBUTION BY REMAINING TERM - MARINE CONTRACT GROUP
Percent Percent Of
Number Of Aggregate Initial
Of Total Principal Marine
Remaining Term (Months) Marine Number Balance Pool
Receivables Of Marine Balance(1)
Receivables(1)
<S> <C> <C> <C> <C>
% $ %
%
Total................................... % $ %
====== ====== =============== ======
- - - -----------
(1) The sum of the individual percentages may not add to 100%
because of rounding.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY ORIGINAL RECEIVABLE PRINCIPAL BALANCE - MARINE CONTRACT GROUP
Number of Percent of Percent of
Marine Receivables Total Number of Aggregate Principal Initial Marine
Original Receivable Principal Marine Receivables(1) Balance Pool Balance(1)
Balance ($)
<S> <C> <C> <C> <C>
% $ %
---- ----- ------- ----%
Total.............................. ==== ====% $====== ====%
- - - ----------------------
(1) The sum of the individual percentages may not add to 100%
because of rounding.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY REMAINING RECEIVABLE PRINCIPAL BALANCE - MARINE
CONTRACT GROUP
Number Percent of Aggregate Percent of
of Marine Total Number Principal Initial Marine
Receivables of Marine Receivables Balance Pool Balance
Remaining Receivable Principal Balance($)
<S> <C> <C> <C> <C>
Total............................... % $ %
---- ---- ------- -----%
==== ====% $======= =====%
(1) The sum of the individual percentages may not add to 100%
because of rounding.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY AGE - MARINE CONTRACT GROUP
Percent
Number Of Aggregate Percent Of
Of Total Principal Initial
Months Since Origination Marine Number Balance Marine
Receivables Of Marine --------- Pool
----------- Receivables(1) Balance(1)
-------------- ----------
<S> <C> <C> <C> <C>
% $ %
%
Total.................... % $ %
====== ====== =============== ======
- - - ---------
(1) The sum of the individual percentages may not add to 100%
because of rounding.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY QUARTER OF ORIGINATION - MARINE CONTRACT GROUP
Percent Percent Of
Number Of Aggregate Initial
Of Total Principal Marine
Origination Quarter Marine Number Balance Pool
(Year/quarter) Receivables Of Marine Balance(1)
Receivables(1)
<S> <C> <C> <C> <C>
Total....................
===== ======% $====== =====%
- - - -------------
(1) The sum of the individual percentages may not add to 100%
because of rounding.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY NEW AND USED COLLATERAL - MARINE CONTRACT GROUP
Percent
Number Of Aggregate Percent Of
Of Total Principal Initial
New Or Used Collateral Marine Number Balance Marine
Receivables Of Marine Pool
Receivables(1) Balance(1)
<S> <C> <C> <C> <C>
New....................... ------- -----% $-------- %
Used...................... ------ %
Total..................... ======= =====% $========= ====== %
- - - ---------
(1) The sum of the individual percentages may not add to 100%
because of rounding.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY CONTRACT TYPE - MARINE CONTRACT GROUP
Percent
Number Of Initial Percent Of
Of Total Pool Initial
Contract Type Marine Number Balance Marine
Receivables Of Marine Pool
Receivables(1) Balance(1)
<S> <C> <C> <C> <C>
Simple Interest Marine
Receivables...............................
Precomputed Marine ______ _____% ______ _____%
Receivables...............................
Total
======= =====% ====== =====%
(1) The sum of the individual percentages may not add to 100% because of rounding.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTIONS BY PERIOD OF DELINQUENCY - MARINE CONTRACT GROUP
Percent
Number Of Aggregate Percent Of
Of Total Principal Aggregate
Marine Number Balance Principal
Receivables Of Marine Balance
Receivables
<S> <C> <C> <C> <C>
%
Marine Contract Group...........................
%
Period of Delinquency
30-59 Days...................................... % %
60-89 Days..................................... % %
90 Days or More................................ % %
Repossessions.................................. % %
% %
</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 accrued but unpaid
interest 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 _____% and not greater
than ______%; (iv) each RV Receivable has an original maturity of not more than
180 months; (v) each RV Receivable has a remaining maturity of not more than 180
months; (vi) each RV Receivable is denominated in U.S. dollars in the United
States; (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.
The composition, geographic distribution, distribution by APR,
distribution by original term, distribution by remaining term, distribution by
original principal balances, distribution by remaining principal balances,
distribution by age, distribution by quarter of origination, distribution by new
and used collateral, distribution by contract type and distribution by
delinquency and repossession experience of the RV Contract Group as of the
Cutoff Date are as set forth in the following tables:
<TABLE>
<CAPTION>
COMPOSITION OF THE RV CONTRACT GROUP
Weighted Aggregate Average Weighted
Rv Average Principal Number Principal Average Weighed
Receivables APR Balance Of Balance Original Average
Receivables Term Remaining Term
<S> <C> <C> <C> <C> <C> <C>
% $ $ mos. mos.
</TABLE>
<TABLE>
<CAPTION>
GEOGRAPHIC DISTRIBUTION - RV CONTRACT GROUP
Percent Percent
Number Of Aggregate Of
Of RV Total Principal Initial
State(1) Receivables Number Balance RV
Of RV Pool
Receivables(2) Balance(2)
<S> <C> <C> <C> <C>
% $ %
----- ---- ------
Total.............................. ====== ====% $====== ======%
- - - --------------
(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.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY APR - RV CONTRACT GROUP
Percent Percent
Number Of Aggregate Of
Of RV Total Principal Initial
APR(%) Receivables Number Balance RV
Of RV Pool
Receivables(1) Balance(1)
<S> <C> <C> <C> <C>
% % $ %
----- ---- ------ ------%
Total.............................. ====== ====% $====== ======%
(1) The sum of the individual percentages may not add to 100%
because of rounding.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY ORIGINAL TERM - RV CONTRACT GROUP
Percent Percent
Original Number Of Aggregate Of
Term Of RV Total Principal Initial
(months) Receivables Number Balance RV
Of RV Pool
Receivables(2) Balance(1)
<S> <C> <C> <C> <C>
% $ %
----- ---- ------ ------%
Total.............................. ====== ====% $====== ======%
(1) The sum of the individual percentages may not add to 100%
because of rounding.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY REMAINING TERM - RV CONTRACT GROUP
Percent Percent
Number Of Aggregate Of
Of Total Principal Initial
Remaining Term (Months) Rv Number Balance RV
Receivables Of RV Pool
Receivables(1) Balance(1)
<S> <C> <C> <C> <C>
% $ %
------ ----- ------- -----%
Total.................................. ====== =====% $======= =====%
- - - -----------
(1) The sum of the individual percentages may not add to 100%
because of rounding.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY ORIGINAL RECEIVABLE PRINCIPAL BALANCE - RV
CONTRACT GROUP
Percent Percent
Number Of Aggregate Of
Of Total Principal Initial
Original Receivable Princial Balance($) Rv Number Balance RV
Receivables Of RV Pool
Receivables(1) Balance(1)
<S> <C> <C> <C> <C>
% $ %
------ ----- ------- -----%
Total.................................. ====== =====% $======= =====%
(1) The sum of the individual percentages may not add to 100%
because of rounding.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY REMAINING RECEIVABLE PRINCIPAL BALANCE - RV
CONTRACT GROUP
Percent Percent
Number Of Aggregate Of
Of Total Principal Initial
Remaining Receivable Principal Balance($) Rv Number Balance RV
Receivables Of RV Pool
Receivables(1) Balance(1)
<S> <C> <C> <C> <C>
% $ %
------ ----- ------- -----%
Total.................................. ====== =====% $======= =====%
- - - ---------
(1) The sum of the individual percentages may not add to 100%
because of rounding.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY AGE - RV CONTRACT GROUP
Percent Percent
Number Of Aggregate Of
Of Total Principal Initial
Months Since Origination Rv Number Balance RV
Receivables Of RV Pool
Receivables(1) Balance(1)
<S> <C> <C> <C> <C>
% $ %
------ ----- ------- -----%
Total.................................. ====== =====% $======= =====%
(1) The sum of the individual percentages may not add to 100%
because of rounding.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY QUARTER OF ORIGINATION - RV CONTRACT GROUP
Percent Percent
Number Of Aggregate Of
Of Total Principal Initial
Origination Quarter (Year/Quarter) Rv Number Balance RV
Receivables Of RV Pool
Receivables(1) Balance(1)
<S> <C> <C> <C> <C>
Total.................................. ====== =====% $======= =====%
(1) The sum of the individual percentages may not add to 100%
because of rounding.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY NEW AND USED COLLATERAL - RV CONTRACT GROUP
Percent Percent
Number Of Aggregate Of
New Or Used Collateral Of RV Total Principal Initial
Receivables Number Balance RV Pool
Of RV Balance(1)
Receivables(1)
<S> <C> <C> <C> <C>
RV Receivables
New.............................................. ------ -----% $------- %
Used............................................. ----%
Total.................................... ====== =====% $======= =====%
- - - ---------
(1) The sum of the individual percentages may not add to 100%
because of rounding.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTION BY CONTRACT TYPE - RV CONTRACT GROUP
Percent
Of
Total Initial Percent
Number Of Number Pool Of
Contract Type Rv Of Balance Initial Rv
Receivables Rv Pool
Receivables(1) Balance(1)
<S> <C> <C> <C> <C>
Simple Interest RV
Receivables...............................
Precomputed RV
Receivables............................... ------- ------% ------ -----%
Total..................................... ======= ======% ====== =====%
(1) The sum of the individual percentages may not add to 100% because of rounding.
</TABLE>
<TABLE>
<CAPTION>
DISTRIBUTIONS BY PERIOD OF DELINQUENCY - RV CONTRACT GROUP
Percent
Number Percent Aggregate Of
Of RV Of Total Principal Aggregate
Receivables Number Of Balance Principal
RV Balance
Receivables
<S> <C> <C> <C> <C>
RV Contract Group................. $
Period of Delinquency
30-59 Days........................ $
60-89 Days........................
90 Days or More...................
Repossessions.....................
</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 _________ 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 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.
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 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 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
[TO COME]
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 ____________
[address]. The following summary does not purport to be complete and is subject
to and qualified in its entirety by reference to the Agreement.
GENERAL
The Marine Certificates will be available for purchase in book-entry
form in minimum denominations representing $1,000 of the Initial Marine Pool
Balance and in integral multiples thereof, and will represent an undivided
fractional interest in the Marine Contract Group and certain other assets of the
Trust described under "The Trust" equal to the percentage obtained by dividing
the denomination of the Marine Certificate by the Initial Marine Pool Balance.
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. A prepayment of a Marine Receivable may be made
by or on behalf of the respective Obligor by application of certain insurance
proceeds, as a result of a repurchase by NationsCredit Commercial or a purchase
by the Servicer, as a result of payments made in respect of Defaulted Marine
Receivables under the Marine Reserve Account, the RV Reserve Account, the Surety
Bond, or, if payments are not made as required under the Surety Bond, upon the
repossession of the Boat, or other enforcement measure taken with respect to a
Defaulted Marine Receivable. 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."
The RV Certificates will be available for purchase in book-entry form
in minimum denominations representing $1,000 of the Initial RV Pool Balance and
in integral multiples thereof, and will represent an undivided fractional
interest in the RV Contract Group and certain other assets of the Trust
described under "The Trust" equal to the percentage obtained by dividing the
denomination of the RV Certificate by the Initial RV Pool Balance.
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) 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. A
prepayment of a RV Receivable may be made by or on behalf of the respective
Obligor by application of certain insurance proceeds, as a result of a
repurchase by NationsCredit Commercial or a purchase by the Servicer, as a
result of payments made in respect of Defaulted RV Receivables under the RV
Reserve Account, the Marine Reserve Account, the Surety Bond, or, if payments
are not made as required under the Surety Bond, upon the repossession of the RV,
or other enforcement measure taken with respect to a Defaulted RV Receivable.
See "The Certificates--Sale and Assignment of Receivables," "--Credit
Enhancement--The Surety Bond," "--Credit Enhancement --The RV Reserve 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
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").
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 _____________ 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 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. ____________ 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) which provides for the payment of interest at a fixed rate 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 accrued but unpaid
interest due through the date of prepayment in an amount at least equal to the
Annual Percentage Rate, (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, (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 and (h) no more
than ____%, of the Initial Pool Balance shall consist of Receivables which are
part of the Variable Rate Program. 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 the Receivable from the Trustee, at a price equal to the
unpaid principal balance owed by the Obligor plus 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.
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, secure the
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, 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 Receivables; (iii) the Servicer will not increase or
decrease the amount of any scheduled payment on a Receivable or the principal
amount 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); (iv)
the Servicer will not change the APR of any Receivable; (v) the Servicer will
not sell, pledge, transfer, deliver or otherwise dispose of any Receivable,
except as provided in the Agreement; (vi) 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
contracts and recreational vehicle contracts, as applicable, that it services
for itself and others; and (vii) 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
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 and 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.
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 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 rating or deposit rating 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 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, 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.
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:
(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 (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, (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") and any carry-over Monthly Marine Principal Payment from
prior Distribution Dates;
(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 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 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, 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 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 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, 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 and any carry-over Monthly 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 without giving effect to any distributions made on
such Distribution Date pursuant to clause (v) of the definition of "RV
Distributions;"
(xi) to the Collateral Agent, an amount, if any, up to the
lesser of (x) the RV Cross Collateral Amount 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 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,
if any, between the Specified RV Reserve Account Requirement and the
amount on deposit in the RV Reserve Account, after giving effect to the
distribution, 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:
(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
Distribution Date (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, (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 any carry-over Monthly RV
Principal Payment from prior Distribution Dates;
(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 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 pursuant to clause (i) of the definition of "Marine
Distributions" 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, 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 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 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, 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 and any carry-over 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 without giving effect to any distributions
pursuant to clause (v) of the definition of "Marine Distributions,"
(xi) to the Collateral Agent, an amount, if any, up to the
lesser of (x) the Marine Cross Collateral Amount 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 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 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,
if any, between the Specified Marine Reserve Account Requirement and
the amount on deposit in the Marine Reserve Account, after giving
effect to the distribution, if any, set forth 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.
The following chart sets forth the application of the foregoing
provisions to the _______ 1997 distribution:
[ ]............... Collection Period. The Servicer receives
monthly payments, prepayments and other proceeds
in respect of the Receivables.
[ ]............... Determination Date. The Servicer
notifies the Trustee of the amounts to be
distributed on the Distribution Date.
[ ]................ Record Date. Distributions on the
Distribution Date are made to Certificateholders
of record at the close of business on this date.
[ ]................ Distribution Date. The Trustee
distributes to Marine Certificateholders amounts
payable in respect of the Marine Certificates as
described in clauses (i) and (iii) of the
definition of "Marine Distributions" and (vi) and
(viii) of the definition of "RV Distributions,"
the Trustee distributes to RV Certificateholders
amounts payable in respect of the RV Certificates
as described in clauses (i) and (iii) of the
definition of "RV Distributions" and (vi) and
(viii) of the definition of "Marine
Distributions," and transfers the balance to the
Depositor as described in clause (xiv) of the
definitions of "Marine Distributions" and "RV
Distributions."
"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 Collateral Amount" on any Distribution Date shall equal
the amount withdrawn from the Marine Reserve Account to make RV Distributors 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 Collateral 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 Marine Interest Payment, (ii) the Monthly RV
Interest Payment, (iii) if NationsCredit Commercial or an affiliate thereof is
not the Servicer, the Monthly Marine Servicing Fee and the Monthly RV Servicing
Fee, and (iv) the Monthly Marine Principal Payment and (v) the Monthly RV
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 (i) collections on Marine Receivables,
(ii) amounts, if any, to be distributed pursuant to clauses (vi), (vii) and
(viii) of the definition of "RV Distributions," (iii) amounts on deposit in the
Marine Reserve Account and (iv) after the amounts on deposit in the Marine
Reserve Account have been reduced to zero, amounts on deposit in RV Reserve
Account, to make distributions in respect of (i) the Monthly Marine Interest
Payment, (ii) if NationsCredit 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 (i) collections on RV Receivables, (ii)
amounts, if any, to be distributed pursuant to clauses (vi), (vii) and (viii) of
the definition of "Marine Distributions," (iii) amounts on deposit in the RV
Reserve Account and (iv) after the amounts on deposit in the RV Reserve Account
have been reduced to zero, amounts on deposit in the Marine Reserve Account, 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 this 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 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 by its
terms 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. 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," any amounts consisting of the
principal balance of Defaulted Marine Receivables in clause (iii) of the
definition of "Marine Distributions" and the amounts set forth in clauses (iv)
through (xiv) of the definition of "Marine Distributions." See "--Distributions
on Certificates."
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. 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,"
any amounts consisting of the principal balance of Defaulted RV Receivables in
clause (iii) of the definition of "RV Distributions" and the amounts set forth
in clauses (iv) through (xiv) of the definition of "RV Distributions." See
"--Distribution on Certificates."
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
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 Principal Payment);
(ii) the amount of the Marine Certificateholder's distribution
which constitutes the Monthly Marine Interest Payment (including any
carry-over Monthly Marine Interest Payment);
(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 Payment);
(ii) the amount of the RV Certificateholder's distribution
which constitutes the Monthly RV Interest Payment (including any
carry-over Monthly RV Interest Payment);
(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 of record a statement
containing the annual total for the applicable amounts described above 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.
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
charged-off marine contracts including in respect of any Receivables.
The Agreement will further provide that neither the Servicer nor any of
its directors, officers, employees and agents shall be under any liability to
the Trust or the Certificateholders for taking any action or for refraining from
taking any action pursuant to the Agreement, or for errors in judgment;
provided, however, that neither the Servicer nor any such person will be
protected against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of its duties or
by 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; (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; (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 and (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 hereunder of Certificateholders are materially and adversely affected.
The Surety Bond Issuer may give the Trustee notice of any Event of Default under
the Agreement.
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 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 or for the benefit of the Surety Bond Issuer; (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 average of the Net Credit Loss Ratio for the three
preceding calendar months exceeds ____%; (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, an amount
expressed as an annualized percentage equal to (i) the aggregate gross losses
with respect to the Receivables recognized in such Collection Period, as
determined in accordance with the Servicer's normal practices, less any
recoveries received during such Collection Period, divided by (ii) the average
of the Pool Balances as of the last day of the prior Collection Period and as of
the last day of such Collection Period.
"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. 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 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
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 Certificateholders 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 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.
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, 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
Reimbursement 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
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 and
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
_______________ 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 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 a lien arising prior in time to the
recording and endorsement of a preferred mortgage on a vessel, landlords',
warehousemens' and materialmens' liens and 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.
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. 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, 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 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.
[Additionally, in states that do not require a certificate of title for
registration of a vehicle, re-registration could defeat perfection.] 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 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 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 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.
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).
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 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, it is not clear whether
use of a prepayment assumption is required in computing OID. If the Servicer
were to require that OID be computed on a Stripped Receivable-by-Stripped
Receivable basis, or that a prepayment assumption be used, 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) (although it is not clear
whether expected prepayments are taken into account). 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 (other
than payments of interest on the Stripped Receivables at the sum of the
Pass-Through Rate and the Servicing Fee) would reduce a Certificate Owner's tax
basis. Application of the OID rules, particularly if a prepayment assumption is
required and the 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.
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 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%.
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 Depositors
believe 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;
(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."
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 _____ __, 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:
Principal Amount Of
Marine Certificates
NationsBanc Capital Markets, Inc.................. $
[ ].................................. $
Total......................................... $
Principal Amount of
RV Certificates
NationsBanc Capital Markets, Inc................. $
[ ]................................. $
Total....................................... $
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 Capital Markets, Inc. ("NCMI"), 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 NCMI, 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 NCMI. The offer and sale of any Certificates by NCMI 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 NCMI 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.
While NCMI is an affiliate of the Depositor, NCMI is a registered
broker/dealer. Any obligations of NCMI are the sole responsibility of NCMI and
do not create any obligation or guarantee on the part of any affiliate of NCMI.
EXPERTS
The financial statements of _____________________ 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 ____ and have been audited by
___________________, 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>
INDEX
PAGE
accredited investor..........................................................63
APR..........................................................................17
Agreement.....................................................................1
Avoided Payment..............................................................44
Boats.........................................................................4
Business Day.................................................................44
Cede.........................................................................33
Certificates..................................................................1
Certificate Account..........................................................13
Certificate Balance...........................................................6
Certificateholders............................................................1
Certificate Owner.............................................................3
Closing Date.................................................................25
Code.........................................................................58
Collateral Agent..............................................................1
Collection Period............................................................33
Contract Portfolio...........................................................17
Commission....................................................................3
Cutoff Date...................................................................1
Dealer.......................................................................11
Dealer Agreements............................................................13
Defaulted Marine Receivable..................................................41
Defaulted Receivable.........................................................41
Defaulted RV Receivable......................................................41
Definitive Certificates......................................................34
delinquency cure.............................................................15
Depositor.....................................................................1
Depository...................................................................33
Determination Date...........................................................30
Direct Participants..........................................................33
disqualified persons.........................................................62
Distribution Date.............................................................1
DOL..........................................................................62
DTC...........................................................................3
Duff & Phelps................................................................31
ERISA.........................................................................9
Events of Default............................................................47
Exchange Act..................................................................3
Excluded Plan................................................................63
Exemption....................................................................62
Final Order..................................................................44
FTC Rule.....................................................................57
Holders......................................................................34
Holdings.....................................................................31
Indirect Participants........................................................33
Initial Marine Pool Balance...................................................1
Initial Pool Balance..........................................................1
Initial RV Pool Balance.......................................................1
Insolvency Laws..............................................................30
Insolvency Proceeding........................................................44
Insurance Agreement...........................................................7
IRS..........................................................................58
Marine Certificate Account....................................................1
Marine Certificate Balance....................................................2
Marine Certificate Factor....................................................29
Marine Certificateholders.....................................................1
Marine Certificates...........................................................1
Marine Contract Portfolio....................................................13
Marine Cross Collateral Amount...............................................41
Marine Distributions.........................................................39
Marine Final Scheduled Distribution Date.......................................
Marine Contract Group.........................................................1
Marine Pool Balance...........................................................1
Marine Receivable.............................................................1
Marine Reserve Account........................................................1
Marine Contracts.............................................................14
Monthly Interest Payment......................................................5
Monthly Marine Interest Payment...............................................5
Monthly Marine Principal Payment..............................................5
Monthly Marine Servicing Fee.................................................38
Monthly RV Interest Payment...................................................5
Monthly RV Principal Payment..................................................6
Monthly RV Servicing Fee.....................................................40
Monthly Principal Payment.....................................................6
Moody's.......................................................................9
NASD.........................................................................64
NCMI.........................................................................64
NationsCredit.................................................................5
NationsCredit Commercial......................................................5
Net Credit Loss Ratio........................................................48
Obligor......................................................................11
OID..........................................................................58
OID Regulations..............................................................60
Participants.................................................................33
parties in interest..........................................................62
Paying Agent.................................................................33
Plan.........................................................................61
Pool Balance..................................................................1
Preference Event.............................................................43
Prepayment Assumption........................................................58
Purchase Amount..............................................................35
Purchase Price...............................................................59
Rating Agencies...............................................................9
Rating Agency.................................................................9
Receipt......................................................................43
Received.....................................................................43
Receivable Interest..........................................................59
Receivable Principal.........................................................59
Receivables...................................................................1
Record Date...................................................................1
Regulation...................................................................62
Restricted Group.............................................................62
Retained Yield...............................................................59
Rule of 78's Receivables.....................................................61
Rules........................................................................33
RV Certificate Account.......................................................13
RV Certificate Balance........................................................6
RV Certificate Factor........................................................29
RV Certificateholders.........................................................1
RV Certificates...............................................................1
RV Contract Portfolio........................................................17
RV Cross Collateral Amount...................................................41
RV Distribution..............................................................39
RV Final Scheduled Distribution Date..........................................1
RV Contract Group.............................................................1
RV Pool Balance...............................................................1
RV Receivable.................................................................1
RV Reserve Account............................................................7
RVs...........................................................................4
S&P...........................................................................6
Section 2720.................................................................33
Securities Act................................................................4
Section 1286 Regulations.....................................................60
Servicer......................................................................1
Servicer Transfer............................................................47
Servicing Fee Rate............................................................6
Servicing Standards..........................................................48
Ship Mortgage Act............................................................20
Special Federal Tax Counsel..................................................58
Specified Marine Reserve Account Requirement..................................7
Stripped Receivable..........................................................59
Specified RV Reserve Account Requirement......................................7
Surety Bond...................................................................1
Surety Bond Issuer............................................................1
Surety Bond Issuer Default...................................................43
Trust.........................................................................1
Trustee.......................................................................1
UCC..........................................................................10
Underwriter(s)...............................................................10
Underwriting Agreement.......................................................64
United States person.........................................................61
<PAGE>
INDEX TO FINANCIAL STATEMENTS
PAGE
FINANCIAL STATEMENTS:
Independent Auditors' Report..............................................F-2
Consolidated Balance Sheets as of December 31, 1996 and
December 31, 1995...........................................................F-3
Consolidated Statements of Income for each of the years in the
three-year period ended December 31, 1996...................................F-4
Consolidated Statements of Stockholder's Equity for each of
the years in the three-year period ended December 31, 1996.................F-5
Consolidated Statements of Cash Flows for each of the years in
the three-year period ended December 31, 1996...............................F-6
Notes to Financial Statements.............................................F-7
<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
PAGE
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
Index to Financial Statements....................F-1
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
GRANTOR TRUST 1997-2
$--------------------
___% MARINE RECEIVABLE-
BACKED CERTIFICATES
$--------------------
___% RECREATIONAL VEHICLE RECEIVABLE-
BACKED CERTIFICATES
NATIONSCREDIT
SECURITIZATION CORPORATION
DEPOSITOR
NATIONSCREDIT COMMERCIAL
CORPORATION OF AMERICA
SERVICER
-------------
PROSPECTUS
-------------
NATIONSBANC CAPITAL MARKETS, INC.
[ ]
Dated _____________, 1997
<PAGE>
[ALTERNATE PAGE]
[LOGO]
$----------------
NATIONSCREDIT GRANTOR TRUST 1997-2
$--------------
____% MARINE RECEIVABLE-BACKED CERTIFICATES
$--------------
____% 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"), which will represent an interest in
the assets of the Trust described under "The Trust" 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." 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
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 , as Trustee and as Collateral Agent (in such
capacities, the "Trustee" and the "Collateral Agent," respectively). The
property of the 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") 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
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 ________, 1997
(the "Cutoff Date"), security interests in the boats and marine equipment
financed by the Marine Receivables, security interests in the recreational
vehicles financed by the RV Receivables, 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 _______________ (the
"Surety Bond Issuer") and certain other property as described in "The Trust."
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 $______________ (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 $_______________ (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 $______________ and the RV Certificate
Balance (as defined herein) as of the Closing Date will equal $____________.
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 _______, 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 ___.
---------------
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 CAPITAL MARKETS,
INC. ("NCMI") AN AFFILIATE OF THE DEPOSITOR
IN CONNECTION WITH OFFERS AND SALES RELATED TO MARKET-MAKING
TRANSACTIONS IN THE CERTIFICATES IN
WHICH NCMI ACTS AS PRINCIPAL. NCMI MAY ALSO ACT AS AGENT IN
SUCH TRANSACTIONS. SALES WILL
BE MADE AT PRICES RELATED TO THE PREVAILING PRICES AT THE TIME
OF SALE.
---------------
______________, 1997
<PAGE>
[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 _____________________ 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 ____ and have been audited by
___________________, 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>
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
PAGE
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
Index to Financial Statements....................F-1
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.
[ALTERNATE PAGE]
$--------------------
NATIONSCREDIT
GRANTOR TRUST 1997-2
$--------------------
___% MARINE RECEIVABLE-
BACKED CERTIFICATES
$--------------------
___% RECREATIONAL VEHICLE RECEIVABLE-
BACKED CERTIFICATES
NATIONSCREDIT
SECURITIZATION CORPORATION
DEPOSITOR
NATIONSCREDIT COMMERCIAL
CORPORATION OF AMERICA
SERVICER
-------------
PROSPECTUS
-------------
NATIONSBANC CAPITAL MARKETS, INC.
Dated _____________, 1997
<PAGE>
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:
SEC Registration Fee.............................. $
Printing and Engraving............................ $
Legal Fees and Expenses........................... $
Blue Sky Fees..................................... $
Accounting Fees and Expenses...................... $
Trustee Fees and Expenses......................... $
Rating Agency Fees................................ $
Miscellaneous..................................... $
Total....................................
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
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.
(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:
NUMBER DESCRIPTION
1.1 -- Form of Underwriting Agreement
3.1 -- Amended and Restated Certificate of Incorporation
of the Seller.
3.2 -- Amended and Restated By-Laws of the Seller.
4.1 -- Form of Pooling and Servicing Agreement among the
Seller, the Servicer and the Trustee.
4.2 -- Form of Standard Terms and Conditions of
Agreement between the Seller and the Servicer.
4.3 -- Form of Surety Bond.
4.4 -- Form of Dealer Agreement.
4.5 -- 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 [ ].
24.1 -- Power of Attorney.
-------------------
(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.
<PAGE>
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 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 12th day of August,
1997.
NATIONSCREDIT SECURITIZATION CORPORATION
(Registrant)
By: /S/ LAWRENCE ANGELILLI
Name: Lawrence Angelilli
Title: Chief Executive Officer
and President
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints Lawrence Angelilli such person's true and lawful attorney-in-fact with
full power of substitution and resubstitution for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement and to cause the same
to be filed, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby granting to said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing whatsoever requisite or desirable to be
done in and about the premises, as fully to all intents and purposes as the
undersigned might or could do in person, hereby ratifying and confirming all
acts and things that said attorneys-in-fact and agents, or either of them, or
their substitutes or substitute, may lawfully do or cause to be done by virtue
hereof.
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.
SIGNATURE TITLE DATE
/S/ LAWRENCE ANGELILLI Chief Executive August 12, 1997
- - - ---------------------------- Officer, President
Lawrence Angelilli and Director
(principal executive
officer)
/S/ JOHN E. MACK Treasurer and August 12, 1997
John E. Mack Director (principal
financial officer)
/S/ JAMES H. LUTHER Director August 12, 1997
- - - ----------------------------
James H. Luther
/S/ KARIN HIRTLER-GARVEY Senior Vice President August 12, 1997
- - - ---------------------------- and Chief Accounting
Karin Hirtler-Garvey Officer (principal
accounting officer)
<PAGE>
INDEX TO EXHIBITS
NUMBER DESCRIPTION
1.1 -- Form of Underwriting Agreement.
3.1 -- Amended and Restated Certificate of Incorporation
of the Seller.
3.2 -- Amended and Restated By-Laws of the Seller.
4.1 -- Form of Pooling and Servicing Agreement among the
Seller, the Servicer and the Trustee.
4.2 -- Form of Standard Terms and Conditions of
Agreement between the Seller and the Servicer.
4.3 -- Form of Surety Bond.
4.4 -- Form of Dealer Agreement.
4.5 -- 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 [ ].
24.1 -- Power of Attorney.
