<PAGE>
As filed with the Securities and Exchange Commission on October 11, 1996
Registration No. 333-7961
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
_______________
NORWEST AUTO RECEIVABLES CORPORATION
as Seller to the Trusts described herein
(Exact name of Registrant as specified in its charter)
Delaware Not Available
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
NORWEST CENTER
SIXTH AND MARQUETTE
MINNEAPOLIS, MINNESOTA 55479
(612) 667-1234
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
Stanley S. Stroup
Executive Vice President and General Counsel
Norwest Corporation
Norwest Center
Sixth and Marquette
Minneapolis, Minnesota 55479-1026
(612) 667-8858
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
Mary E. Schaffner, Esq. Stuart M. Litwin, Esq.
Norwest Corporation Mayer, Brown & Platt
Sixth and Marquette 190 South La Salle Street
Minneapolis, Minnesota 55479-1026 Chicago, Illinois 60603
(612) 667-2367 (312) 782-0600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after this Registration Statement becomes effective as
determined by market conditions.
_______________
If any of the 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, 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, 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. [ ]
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=============================================================================
Proposed Proposed
Title of maximum maximum
each class of offering aggregate
securities to Amount to be price per offering Amount of
be registered registered unit price registration
(2) (1)(2) (1)(2) fee
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Backed
Notes and
Certificates(2) $1,000,000 100% $1,000,000 $344.83(3)
==============================================================================
<FN>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Also registered hereby are secondary market sales in Asset Backed Notes
and Asset Backed Certificates to be effected by Norwest Investment
Services, Inc., the volume of which cannot be determined.
(3) Previously paid.
</TABLE>
_____________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.
<PAGE>
INTRODUCTORY STATEMENT
This Registration Statement contains (i) the form of Prospectus
relating to the offering of series of Asset Backed Notes and/or Asset
Backed Certificates by various Norwest Auto Trusts created from time to
time by Norwest Auto Receivables Corporation, (ii) two forms of Prospectus
Supplement relating to the offering by Norwest Auto Trust 199__-__ of the
particular series of Asset Backed Certificates (such form of Prospectus
Supplement is identified on the outside front cover page thereof as the
"Form of Grantor Trust Prospectus Supplement") or of Asset Backed Notes and
Asset Backed Certificates (such form of Prospectus Supplement is identified on
the outside front cover page thereof as the "Form of Owner Trust Prospectus
Supplement" and, together with the form of Grantor Trust Prospectus
Supplement, the "Prospectus Supplement Forms") described therein and (iii)
the form of Owner Trust Prospectus Supplement relating to the offering by
Norwest Auto Trust 1996-A of the particular series of Asset Backed Notes and
Asset Backed Certificates described therein (such form of Prospectus
Supplement is identifiable by the reference to Norwest Auto Trust 1996-A on
the outside front cover page thereof). Each Prospectus Supplement Form
relates only to the securities described therein and is a form which may be
used by the Seller to offer Asset Backed Notes and/or Asset Backed
Certificates under this Registration Statement. Because an affiliate of the
Seller intends to make a market in the Securities for which it acts as an
underwriter, immediately following the form of the Owner Trust Prospectus
Supplement relating to the offering of Securities by Norwest Auto Trust
1996-A there follow (a) alternate pages of the form of Owner Trust Prospectus
Supplement relating to the offering of Asset Backed Notes and Asset Backed
Certificates by Norwest Auto Trust 1996-A, (b) alternate pages of the
Prospectus, (c) alternate pages of the form of Owner Trust Prospectus
Supplement and (d) alternate pages of the form of Grantor Trust Prospectus
Supplement, which will be used by such affiliate in connection with any
offers and sales relating to market-making transactions in the Asset Backed
Notes and/or Asset Backed Certificates. All other pages of the form of
Grantor Trust Prospectus Supplement, the form of Owner Trust Prospectus
Supplement and the Prospectus are also to be used for the market-making
Prospectus Supplement and Prospectus.
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 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>
PROSPECTUS
SUBJECT TO COMPLETION, DATED OCTOBER 11, 1996
NORWEST AUTO TRUSTS
Asset Backed Notes
Asset Backed Certificates
[NORWEST LOGO]
NORWEST AUTO RECEIVABLES CORPORATION
Seller
NORWEST BANK MINNESOTA, N.A.
Servicer
The Asset Backed Notes (the "Notes") and the Asset Backed Certificates
(the "Certificates" and, together with the Notes, the "Securities")
described herein may be sold from time to time in one or more series, in
amounts, at prices and on terms to be determined at the time of sale and to
be set forth in a supplement to this Prospectus (a "Prospectus
Supplement"). Each series of Securities, which may include one or more
classes of Notes or one or more classes of Certificates (or both), will be
issued by a trust to be formed on or before the issuance date for that
series (each, a "Trust"). Each Trust will be formed pursuant to either a
Trust Agreement to be entered into among Norwest Auto Receivables
Corporation, a Delaware corporation, as seller (the "Seller"), Norwest Bank
Minnesota, N.A., in its capacity as servicer (in such capacity, the
"Servicer"), and the trustee specified in the related Prospectus Supplement
(the "Trustee") or a Pooling and Servicing Agreement to be entered into
among the Trustee, the Seller and the Servicer. If a series of Securities
includes Notes, such Notes of a series will be issued and secured pursuant
to an Indenture between the Trust and the indenture trustee specified in
the related Prospectus Supplement (the "Indenture Trustee") and will
represent indebtedness of the related Trust. The Certificates of a series
will represent fractional undivided interests in the related Trust.
Certain capitalized terms used in this Prospectus are defined in this
Prospectus on the pages indicated in the "Index of Terms" on page 73 of
this Prospectus.
The related Prospectus Supplement will specify which class or classes
of Notes, if any, and which class or classes of Certificates, if any, of
the related series are being offered thereby. The property of each Trust
will include a pool of promissory notes and security agreements and/or
retail installment sales contracts secured by new or used automobiles and
light duty trucks (collectively, the "Receivables"), payments received
thereunder on and after the applicable Cutoff Date set forth in the related
Prospectus Supplement, security interests in the vehicles financed thereby,
rights under dealer agreements, rights with respect to deposit accounts in
which collections are held or that serve as credit enhancement, any other
credit enhancements, the proceeds of the foregoing and any proceeds from
claims on insurance policies with respect to the Financed Vehicles, all as
described herein and in the related Prospectus Supplement. See "The
Trusts." Each class of Securities of any series other than any Strip Notes
and Strip Certificates will represent the right to receive a specified
amount of payments of principal and interest on the related Receivables, at
the rates, on the dates and in the manner described herein and in the
related Prospectus Supplement. See "Description of the Notes,"
"Description of the Certificates" and "Description of the Securities"
herein and in the related Prospectus Supplement.
Prospective investors should consider the "Risk Factors" set forth at page
16 herein.
____________________
ANY NOTES OF A SERIES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES OF A
SERIES REPRESENT BENEFICIAL INTERESTS IN, THE RELATED TRUST ONLY AND DO
NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN NORWEST AUTO RECEIVABLES
CORPORATION, NORWEST BANK MINNESOTA, N.A., ANY OTHER NORWEST BANK,
NORWEST CORPORATION OR ANY OF THEIR AFFILIATES. NONE OF THE
NOTES, THE CERTIFICATES OR THE RECEIVABLES ARE GUARANTEED
OR INSURED BY, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
ANY OTHER GOVERNMENT AGENCY OR INSTRUMENTALITY, NORWEST
AUTO RECEIVABLES CORPORATION, NORWEST BANK MINNESOTA,
N.A., ANY OTHER NORWEST BANK, NORWEST INVESTMENT
SERVICES, INC., NORWEST CORPORATION OR ANY OF
THEIR AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Prospectus may not be used to consummate sales of Securities offered
hereby unless accompanied by a Prospectus Supplement.
The date of this Prospectus is _______ __, 1996.
If a series includes multiple classes of Securities, the rights of
one or more classes of Securities to receive payments may be senior or
subordinate to the rights of one or more of the other classes of
such series. Distributions on Certificates of a series may be
subordinated in priority to payments due on any related Notes or any
other Certificates to the extent described herein and in the related
Prospectus Supplement. See "Risk Factors-Subordination" herein and in
the related Prospectus Supplement. A series may include one or more
classes of Notes and/or Certificates which differ as to the timing
and priority of payment, interest rate or amount of distributions in
respect of principal or interest or both. A series may include one or
more classes of Notes or Certificates entitled to distributions in
respect of principal with disproportionate, nominal or no interest
distributions, or to interest distributions, with disproportionate,
nominal or no distributions in respect of principal. The rate of
payment in respect of the principal of any class of Notes and
distributions in respect of the Certificate Balance of any class of the
Certificates will depend on the priority of payment of such class
and the rate and timing of payments (including prepayments, defaults,
liquidations and repurchases of Receivables) on the related Receivables.
A rate of payment lower or higher than that anticipated may affect the
weighted average life of each class of Securities in the manner described
herein and in the related Prospectus Supplement. See "Weighted Average
Life of the Securities."
If the Securities are Strip Notes or Strip Certificates, they will be
extremely sensitive to the rate and timing of principal payments, including
prepayments, on the Receivables. Prospective investors should fully
consider the associated risk, including the risk that an extremely rapid
rate of principal prepayments could result in the failure of investors in
the Strip Notes or the Strip Certificates to recoup their initial
investment.
AVAILABLE INFORMATION
The Seller, as originator of each Trust, has filed with the Securities
and Exchange Commission (the "Commission") a Registration Statement
(together with all amendments and exhibits thereto, referred to herein as
the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the Notes and the Certificates
offered pursuant to this Prospectus. For further information, reference is
made to the Registration Statement, which may be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549; and at the Commission's regional
offices at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511 and 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies of the Registration Statement may be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. In addition, the Commission
maintains a public access site on the Internet through the World Wide Web
at which site reports, information statements and other information,
including all electronic filings, may be viewed. The Internet address of
such World Wide Web site is http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Seller, as originator of any Trust,
pursuant to Section 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
Securities shall be deemed to be incorporated by reference in this
Prospectus. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or 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. See "Certain Information Regarding the Securities-Reports to
Securityholders."
The Seller will provide without charge to each person, including any
beneficial owner of Securities, to whom a copy of this Prospectus is
delivered, on the written or oral request of such person, a copy of any or
all of the documents incorporated herein or in any related Prospectus
Supplement by reference, except the exhibits to such documents (unless such
exhibits are specifically incorporated by reference in such documents).
Requests for such copies should be directed to the Seller, in care of
_____________________, Norwest Corporation, Norwest Center, Sixth and
Marquette, Minneapolis, Minnesota, 55479-____ (Telephone: (612) 667-____).
The Servicer intends to continue to file with respect to each Trust
periodic reports pursuant to the requirements of the Securities Exchange
Act of 1934, as amended, for the period after such filings could be
discontinued in reliance on Section 15(d) thereof until the Securities
issued by such Trust are no longer outstanding.
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and by
reference to the information with respect to the Securities of any series
contained in the related Prospectus Supplement to be prepared and delivered
in connection with the offering of such Securities. Certain capitalized
terms used in this summary are defined elsewhere in this Prospectus on the
pages indicated in the "Index of Terms" beginning on page 73.
Issuer................... The issuer (the "Issuer") with respect to
each series of Securities shall be the Trust
to be formed pursuant to either a Trust
Agreement (as amended and supplemented from
time to time, a "Trust Agreement") among the
Trustee for such Trust (the "Trustee"), the
Seller and the Servicer, or a Pooling and
Servicing Agreement (as amended and
supplemented from time to time, the "Pooling
and Servicing Agreement") among the Trustee,
the Seller and the Servicer.
Seller................... Norwest Auto Receivables Corporation, a
Delaware corporation (the "Seller"). See
"The Seller."
Servicer................. Norwest Bank Minnesota, N.A., a national
banking association (the "Bank" or, in its
capacity as servicer, the "Servicer").
Trustee.................. With respect to each series of Securities,
the Trustee specified in the related
Prospectus Supplement.
Indenture Trustee ....... With respect to each series of Securities
that includes any Notes, the Indenture
Trustee specified in the related Prospectus
Supplement.
The Notes................ The terms of the Notes generally are
described below.
A. General.............. A series of Securities may include one or
more classes of Notes, which will be issued
pursuant to an Indenture between the Trust
and the Indenture Trustee (as amended and
supplemented from time to time, an
"Indenture"). The related Prospectus
Supplement will specify which class or
classes, if any, of Notes of the related
series are being offered thereby.
B. Denomination; Book-Entry Notes will be available for purchase in
denominations specified in the related
Prospectus Supplement or, if not so
specified, in original denominations of
$1,000 and integral multiples thereof.
Notes may be issued in book-entry form or as
Definitive Notes as specified in the related
Prospectus Supplement. If Notes are issued
in book-entry form, beneficial owners of
Notes ("Note Owners") will be able to
receive Definitive Notes only in the limited
circumstances described herein or in the
related Prospectus Supplement. See "Certain
Information Regarding the
Securities-Definitive Securities."
C. Note Interest Rates.. Each class of Notes other than Strip Notes
will have a stated principal amount and will
bear interest at a specified rate or rates
(with respect to each class of Notes, the
"Interest Rate"). Each class of Notes may
have a different Interest Rate, which may be
a fixed, variable or adjustable Interest
Rate, or any combination of the foregoing.
The related Prospectus Supplement will
specify the Interest Rate for each class of
Notes, or the method for determining the
Interest Rate. See "Description of the
Notes" herein and in the related Prospectus
Supplement for any Trust that issues Notes.
D. Characteristics...... With respect to a series that includes two or
more classes of Notes, each class may differ
as to the timing and priority of payments,
seniority, Interest Rate or amount of
payments of principal or interest, or
payments of principal or interest in respect
of any such class or classes may or may not
be made upon the occurrence of specified
events or on the basis of collections from
designated portions of the Receivables Pool.
To the extent provided in the related
Prospectus Supplement, a series may include
one or more classes of Notes designated as
fixed payment notes, short term notes,
targeted amortization classes,
planned amortization classes or companion
classes. See "Description of the Notes--
Principal and Interest on the Notes."
E. Strip Notes.......... In addition, a series may include one or more
classes of Notes ("Strip Notes") entitled to
(i) principal payments with
disproportionate, nominal or no interest
payments or (ii) interest payments with
disproportionate, nominal or no principal
payments.
F. Subordination to
Securities of the
Same Trust......... If the series of Securities issued by a Trust
includes classes of Notes, all such
classes of Notes will be entitled
to receive payments and distributions
from the same Trust property, and
distributions in respect of certain
classes of the Notes may be subordinated
in priority of payment to payments on other
classes of Notes to the extent specified in
the related Prospectus Supplement.
G. Clean-Up Call; Redemption If the Seller or Servicer exercises its
option to purchase the Receivables of a
Trust in the event the outstanding Pool
Balance is 5% or less of the Initial Pool
Balance, in the manner and on the respective
terms and conditions described under
"Description of the Transfer and Servicing
Agreements--Termination," the outstanding
Notes of such series will be redeemed as set
forth in the related Prospectus Supplement.
H. Pre-Funding Account;
Redemption......... If the related Prospectus Supplement provides
that the property of a Trust will include a
Pre-Funding Account (as such term is defined
in the related Prospectus Supplement, the
"Pre-Funding Account"), one or more classes
of the outstanding Notes of such series will
be subject to partial redemption on or
immediately following the end of the
applicable Funding Period (as such term is
defined in the related Prospectus Supplement,
the "Funding Period") in an amount and manner
specified in the related Prospectus
Supplement.
The Certificates......... The terms of the Certificates generally are
described below.
A. General.............. A series may include one or more classes of
Certificates and may or may not include any
Notes. The related Prospectus Supplement
will specify which class or classes, if any,
of the Certificates are being offered
thereby.
B. Denominations; Book-Entry Certificates will be available for purchase
in denominations specified in the related
Prospectus Supplement or, if not so
specified, minimum denominations of $1,000
and integral multiples of $1,000 in excess
thereof. Certificates may be issued in
book-entry form or as Definitive
Certificates, as specified in the related
Prospectus Supplement. If the Certificates
are issued in book-entry form, the
beneficial owners of Certificates
("Certificate Owners") will be able to
receive Definitive Certificates only in the
limited circumstances described herein or in
the related Prospectus Supplement. See
"Certain Information Regarding the
Securities-Definitive Securities".
C. Certificate Rate..... Each class of Certificates other than any
Strip Certificates will have a stated
Certificate Balance specified in the related
Prospectus Supplement (the "Certificate
Balance") and will accrue interest on such
Certificate Balance at a specified rate
(with respect to each class of Certificates,
the "Certificate Rate"). Each such class of
Certificates may have a different
Certificate Rate, which may be a fixed,
variable or adjustable Certificate Rate, or
any combination of the foregoing. The
related Prospectus Supplement will specify
the Certificate Rate for each class of
Certificates or the method for determining
the Certificate Rate. See "Description of
the Certificates" herein and in the related
Prospectus Supplement.
D. Characteristics...... With respect to a series that includes two or
more classes of Certificates, each class may
differ as to timing and priority of
distributions, seniority, allocations of
losses, Certificate Rate or amount of
distributions in respect of principal or
interest, or distributions in respect of
principal or interest in respect of any such
class or classes may or may not be made upon
the occurrence of specified events or on the
basis of collections from designated
portions of the Receivables Pool. In
addition, a series may include one or more
classes of Certificates ("Strip
Certificates") entitled to (i) distributions
in respect of principal with
disproportionate, nominal or no interest
distributions or (ii) interest distributions
with disproportionate, nominal or no
distributions in respect of principal.
E. Subordination to Securities
of the Same Trust.. If the series of Securities issued by a Trust
includes classes of Notes or more than one
class of Certificates, all of the Notes and
Certificates will be entitled to receive
payments and distributions from the same
Trust property, and distributions in respect
of the Certificates may be subordinated in
priority of payment to payments on the Notes
or to other classes of Certificates to the
extent specified in the related Prospectus
Supplement.
F. Clean-Up Call; Prepayment If the Seller or Servicer exercises its
option to purchase the Receivables of a
Trust in the event the outstanding Pool
Balance is 5% or less of the Initial Pool
Balance, in the manner and on the respective
terms and conditions described under
"Description of the Transfer and Servicing
Agreements--Termination," Certificateholders
will receive as a prepayment an amount in
respect of the Certificates of such series as
specified in the related Prospectus Supplement.
G. Pre-Funding Account; Partial
Prepayment......... If the related Prospectus Supplement provides
that the property of a Trust will include a
Pre-Funding Account, Certificateholders may
receive a partial prepayment of principal on
or immediately following the end of the
applicable Funding Period in an amount and
manner specified in the related Prospectus
Supplement.
The Trust Property....... The property of each Trust will include a
pool of motor vehicle promissory notes and
security agreements and/or retail
installment sales contracts secured by new
or used automobiles or light duty trucks
(collectively, the "Receivables"), including
rights to receive payments received under
such Receivables after the applicable Cutoff
Date, security interests in the vehicles
financed thereby (the "Financed Vehicles"),
rights under agreements with automobile or
light duty truck dealers ("Dealer
Agreements"), rights with respect to
Eligible Deposit Accounts, which will include
the Collection Account and may include a
Reserve Account and/or a Yield Supplement
Account, rights under the related Purchase
Agreements and any other credit enhancement
and the proceeds thereof and any proceeds from
claims on or rebates of premiums and other
amounts relating to insurance policies with
respect to the Financed Vehicles. On or
before the Closing Date specified in the
related Prospectus Supplement with respect
to a Trust, the Seller will sell or transfer
Receivables (the "Initial Receivables")
having an aggregate principal balance
specified in the related Prospectus
Supplement as of the dates specified therein
to such Trust pursuant to either a Sale and
Servicing Agreement among the Seller, the
Servicer and the Trust (as amended and
supplemented from time to time, the "Sale
and Servicing Agreement") or, if the Trust
is to be treated as a grantor trust for
federal income tax purposes, the related
Pooling and Servicing Agreement among the
Seller, the Servicer and the Trustee. The
property of each Trust will also include
amounts on deposit in certain trust
accounts, including the related Collection
Account, any Pre-Funding Account, any
Revolving Account, any Reserve Account and
any other account identified in the related
Prospectus Supplement. See "The Trusts"
herein and "The Trust" in the related
Prospectus Supplement.
In addition, to the extent provided in the
related Prospectus Supplement, from time to
time during the related Revolving Period
and/or Pre-Funding Period, as the case may
be, the Seller will purchase from Affiliates
additional Receivables ("Subsequent
Receivables") having an aggregate principal
balance approximately equal to the amount of
principal collections on the related
Receivables deposited in the Revolving
Account from time to time during the
Revolving Period and/or the amount deposited
in the Pre-Funding Account on the related
Closing Date (the "Pre-Funded Amount"), and
will transfer and assign such Subsequent
Receivables to the related Trust in exchange
for the payment to the Seller of funds on
deposit in such Revolving Account or
Pre-Funding Account equal to the aggregate
outstanding principal balance of the
Subsequent Receivables so transferred as of
the applicable subsequent cut-off date. See
"Pre-Funding Account" and "Revolving
Account" below in this summary and "Certain
Information Regarding the Securities-Funding
Period and Revolving Period."
The Receivables ......... The Receivables will generally consist of (i)
motor vehicle promissory notes and security
agreements executed by an Obligor in favor
of an Originator ("Direct Loans") and/or
(ii) motor vehicle retail installment sales
contracts between an Obligor and a dealer
that has signed a Dealer Agreement with an
Originator (a "Dealer"). "Originator"
means, with respect to any Direct Loan or
retail installment sales contract, the
Affiliate that was the lender with respect
to such Direct Loan or that acquired such
retail installment sales contract from a
Dealer. "Affiliate" means a bank or other
nonbank entity owned or acquired by Norwest
Corporation or by its subsidiaries.
Receivables that are to be included in any
Receivables Pool will be transferred by an
Affiliate to the Seller for purposes of sale
to the applicable Trust. In addition, the
related Receivables Pool may include
Receivables acquired by an Affiliate through
acquisitions. The Receivables for any given
Receivables Pool will be selected from the
contracts owned or to be owned by the Seller
based on the criteria specified in the Sale
and Servicing Agreement or Pooling and
Servicing Agreement, as applicable, and
described herein and in the related
Prospectus Supplement. See "The Receivables
Pools" herein and "The Receivables Pool" in
the related Prospectus Supplement.
Credit and Cash
Flow Enhancement......... The form and amount of any credit enhancement
will be specified in the related Prospectus
Supplement. Credit enhancement with respect
to a Trust or any class or classes of
Securities may include any one or more of
the following: subordination of one or more
other classes of Securities, a reserve
account, over-collateralization, letters of
credit, credit or liquidity facilities,
surety bonds, guaranteed investment
contracts, swaps or other interest rate
protection agreements, repurchase
obligations, yield supplement agreements,
other agreements with respect to third party
payments or other support, cash deposits or
other arrangements. Certain forms of credit
enhancement may contain limitations on, and
exclusions from, coverage thereunder, which
will be described in the related Prospectus
Supplement. See "Description of the
Transfer and Servicing Agreements-Credit and
Cash Flow Enhancement" herein and in the
related Prospectus Supplement.
Pre-Funding Account...... If specified in the related Prospectus
Supplement, during a Funding Period until
the earliest of (a) the Determination Date
on which the amount on deposit in the
Pre-Funding Account is less than the minimum
amount specified in the related Prospectus
Supplement, (b) the occurrence of an Event
of Default under the Indenture or a Servicer
Termination Event under the Sale and
Servicing Agreement or the Pooling and
Servicing Agreement, as applicable, (c) the
occurrence of certain events of insolvency
with respect to the Seller or the Servicer
or (d) the close of business on a business
day not later than one year after the
applicable Closing Date, in the case of a
Trust that issues Notes, and 90 days after
the applicable Closing Date for any other
Trust, the Pre-Funding Account will be
maintained as a trust account in the name of
the Applicable Trustee. The Pre-Funded
Amount will initially equal the amount
specified in the related Prospectus
Supplement, which may be up to 100% of the
aggregate principal amount of the series of
Securities offered thereunder. During the
Funding Period, the Pre-Funded Amount will
be reduced by the amount thereof used to
purchase Subsequent Receivables in
accordance with the Sale and Servicing
Agreement or the Pooling and Servicing
Agreement, as applicable, and the amounts
thereof deposited in the Reserve Account in
connection with the purchase of such
Subsequent Receivables. Prior to being used
to purchase Subsequent Receivables or paid
to the Noteholders and Certificateholders,
the Pre-Funded Amount will be invested from
time to time in Eligible Investments other
than money market funds. See "Description
of the Transfer and Servicing
Agreements-Accounts" herein and in the
related Prospectus Supplement.
Revolving Account........ If specified in the related Prospectus
Supplement for anyTrust that issues Notes,
all principal collections received on the
related Receivables during the Revolving
Period (as such term is defined in the
related Prospectus Supplement, the
"Revolving Period") for such Trust and, on
each Distribution Date during such Revolving
Period, such other amounts described in the
related Prospectus Supplement, will be
deposited in the Revolving Account (as such
term is defined in such Prospectus
Supplement, the "Revolving Account") for
such Trust and, except as provided below, no
principal collections under the Receivables
will be distributed to the holders of a
series of Securities issued by such Trust on
any Distribution Date occurring during such
Revolving Period. If the amount on deposit
in a Revolving Account at the close of
business on the last day of a calendar month
during the Revolving Period exceeds the
maximum permitted Revolving Account balance
specified in the related Prospectus
Supplement, the holders of such series of
Securities will receive a distribution of
principal on their Securities on the next
Distribution Date in an amount equal to the
amount of such excess.
In addition, if the related Trust includes a
Revolving Account, a principal payment equal
to the sum of (a) the amount, if any, on
deposit in such Revolving Account as of the
close of business on the first business day
following the applicable Revolving Period
and (b) such other amounts described in the
related Prospectus Supplement for the next
Distribution Date thereafter will be
distributed to the holders of the related
series of Securities on such next
Distribution Date and thereafter principal
distributions will be made to the holders of
the related series of Securities in the
manner otherwise specified herein and in the
related Prospectus Supplement.
Reserve Account.......... If specified in the related Prospectus
Supplement, a Reserve Account will be
created for each Trust with an initial
deposit of cash or certain investments
having a value equal to the amount specified
in the related Prospectus Supplement. To
the extent specified in the related
Prospectus Supplement, funds in the Reserve
Account will thereafter be supplemented by
the deposit of amounts remaining on any
Distribution Date after making all other
distributions required on such date and any
amounts deposited from time to time from the
Pre-Funding Account and/or Revolving Account
in connection with a purchase of Subsequent
Receivables. Amounts in the Reserve Account
will be available to cover shortfalls in
amounts due to the holders of those classes
of Securities specified in the related
Prospectus Supplement in the manner and
under the circumstances specified therein.
The related Prospectus Supplement will also
specify to whom and the manner and
circumstances under which amounts on deposit
in the Reserve Account (after giving effect
to all other required distributions to be
made by the applicable Trust) in excess of
the Specified Reserve Account Balance (as
defined in the related Prospectus
Supplement, the "Specified Reserve Account
Balance") will be distributed. See
"Description of the Transfer and Servicing
Agreements-Accounts" herein and in the
related Prospectus Supplement.
Transfer and
Servicing Agreements..... With respect to each Trust, the Seller will
sell the related Receivables to such Trust
pursuant to a Sale and Servicing Agreement
or a Pooling and Servicing Agreement. The
rights and benefits of any Trust under a
Sale and Servicing Agreement will be
assigned to the Indenture Trustee as
collateral for the Notes of the related
series. The Servicer will agree with each
Trust to be responsible for servicing,
managing, maintaining custody of and making
collections on the related Receivables. The
Bank intends to delegate to certain Affiliates
responsibilities and obligations as Servicer
with respect to Receivables acquired by the
Seller from such Affiliates. Notwithstanding
any such delegation, the Servicer will
continue to be liable for all its servicing
obligations as if the Servicer alone were
servicing the Receivables. The Bank will
undertake certain administrative duties under
an Administration Agreement with respect to
any Trust that has issued Notes.
The Seller will be obligated to repurchase
any Receivable if the interest of the
applicable Trust in such Receivable is
materially and adversely affected by a
breach of any representation or warranty
made by the Seller with respect to the
Receivable, if such breach has not been
cured following the discovery by or notice
to the Seller of the breach.
The Servicer will be obligated to purchase
any Receivable if, among other things, it
extends the date for final payment by the
Obligor of such Receivable beyond the
applicable Final Scheduled Maturity Date (as
defined in the related Prospectus
Supplement, the "Final Scheduled Maturity
Date"), changes the annual percentage rate
("APR") or principal balance of such
Receivable (except for Add-On Balances on
Receivables owned by a Trust that issues
Notes) or fails to maintain a perfected
security interest in the related Financed
Vehicle. See "The Receivables
Pool-Insurance."
The Servicer will be entitled to receive a
fee for servicing the Receivables of each
Trust equal to a specified percentage of the
aggregate principal balance of the related
Receivables Pool, as set forth in the
related Prospectus Supplement, and, in
addition to such fee, is entitled to receive
certain late fees, extension fees,
prepayment charges, non-sufficient funds
charges and other administrative fees or
similar charges. See "Description of the
Transfer and Servicing Agreements-Servicing
Compensation and Payment of Expenses."
Advances................. To the extent provided in the related
Prospectus Supplement, on or before the
business day prior to each applicable
Distribution Date or Payment Date, the
Servicer will advance (an "Advance") an
amount generally equal to the lesser of (a)
the excess, if any, of (i) the amount of
interest that would be expected to be
received on the Receivables (other than
Non-Advance Receivables) over (ii) (A) the
actual interest collected by the Servicer
during such Collection Period minus (B)
unreimbursed prior Advances and (b) the
amount (if any) by which (i) the sum of any
unpaid Servicing Fees for the related
Collection Period and prior Collection
Periods and the amount of interest
distributable to Securityholders on the
following Distribution Date exceeds (ii) (A)
an amount equal to the actual interest
collected by the Servicer during such
Collection Period minus (B) unreimbursed
prior Advances. Advances will be made by
the Servicer only to the extent that the
Servicer, in its sole discretion, expects to
recoup the Advance from the following
month's collections of interest and the
funds in the Reserve Account, if any, or
other credit enhancement. The Servicer will
be entitled to be reimbursed for outstanding
Advances from subsequent payments on or with
respect to the Receivables to the extent
described herein and in the related
Prospectus Supplement. See "Description of
the Transfer and Servicing
Agreements-Advances" herein and in the
related Prospectus Supplement. As used
herein, "Non-Advance Receivables" means,
with respect to any Distribution Date, any
Receivables which became Defaulted
Receivables during the related Collection
Period or which the Servicer, in its sole
discretion, believes are likely to become
Defaulted Receivables. See "Description of
the Transfer and Servicing
Agreements-Advances" herein and in the
related Prospectus Supplement.
Material Legal Risks
of the Receivables;
Repurchase Obligations... Risk of Unenforceable Security Interest. In
connection with the sale of Receivables to a
Trust, security interests in the Financed
Vehicles securing such Receivables will be
assigned by the Seller to such Trust. Due
to administrative burden and expense, the
certificates of title to the Financed
Vehicles will not be amended to reflect the
assignment to such Trust. In the absence of
such an amendment, such Trust may not have a
perfected security interest in the Financed
Vehicles securing the Receivables in some
states. The Seller will be obligated to
repurchase any Receivable sold to a Trust as
to which the Seller has represented that it
has a first perfected security interest in
the name of the Seller in the Financed
Vehicle securing such Receivable, if a
breach of such representation materially and
adversely affects the interest of such Trust
in such Receivable and if a breach of such
representation has not been cured by the
last day of the month that includes the
sixtieth day (or, if the Seller elects, the
thirtieth day) following the discovery by or
notice to the Seller of such breach. If
such Trust does not have a perfected
security interest in a Financed Vehicle, its
ability to realize on such Financed Vehicle
in the event of a default may be adversely
affected.
Risk of Non-Priority. To the extent the
security interest is perfected, such Trust
will have a prior claim over subsequent
purchasers of such Financed Vehicles and
holders of subsequently perfected security
interests. However, as against liens for
repairs of Financed Vehicles or for taxes
unpaid by an Obligor under a Receivable, or
because of fraud or negligence (for example,
if an Originator or the Seller were to sell
or grant a security interest in Receivables
in violation of the applicable Transfer and
Servicing Agreements), such Trust could lose
the priority of its security interest or its
security interest in Financed Vehicles.
Neither the Seller nor the Servicer will
have any obligation to repurchase a
Receivable as to which any of the
aforementioned occurrences result in a
Trust's losing the priority of its security
interest or its security interest in such
Financed Vehicle after the Closing Date.
See "Certain Legal Aspects of the
Receivables."
Consumer Protection Laws. Federal and state
consumer protection laws impose requirements
upon creditors in connection with extensions
of credit and collections of retail
installment loans, and certain of these laws
make an assignee of such a loan liable to
the obligor thereon for any violation by the
lender. The Seller will be obligated to
repurchase any Receivable which fails to
comply with such requirements. Such
repurchase obligation would not protect the
Trust from expenses associated with a legal
action alleging a violation of such laws in
which the Trust is the prevailing party.
See "Certain Legal Aspects of the
Receivables-Consumer Protection Laws."
Material Risks........... There are material risks associated with an
investment in the Securities. Prospective
investors should consider the factors set
forth under "Risk Factors" on pages 16 to
24, and as are provided in the related
Prospectus Supplement.
No Recourse to Seller,
Originators or Servicer... The Receivables sold and assigned to the
applicable Trust will be sold and assigned
by the Seller to such Trust without recourse
to the Seller, the Servicer or any of their
respective affiliates for credit losses on
such Receivables. The Notes of any series
will represent obligations solely of, and
the Certificates of any series will
represent interests solely in, the related
Trust and, except as may be set forth in an
applicable Prospectus Supplement in
connection with any credit enhancement,
neither the Notes nor the Certificates of
any series will be insured or guaranteed by
the Seller, the Servicer, the applicable
Trustee, any Indenture Trustee or any other
person or entity.
Tax Status............... Unless the Prospectus Supplement specifies
that the related Trust will be treated as a
grantor trust, upon the issuance of the
related series of Securities, Federal Tax
Counsel to such Trust will deliver an
opinion to the effect that, for federal
income tax purposes: (i) any Notes of such
series will be characterized as debt and
(ii) such Trust will not be classified as
an association (or a publicly traded
partnership) taxable as a corporation. In
respect of any such series, each Note Owner,
by the acceptance of a beneficial interest
in a Note of such series, will agree to
treat such Note as indebtedness, and each
Certificate Owner, by the acceptance of a
beneficial interest in a Certificate of such
series, will agree to treat such Trust as a
partnership in which such Certificate Owner
is a partner for federal, state and local
tax purposes.
If the Prospectus Supplement specifies that
the related Trust will be treated as a
grantor trust, upon the issuance of the
related series of Certificates, Federal Tax
Counsel to such Trust will deliver an
opinion to the effect that such Trust will
be treated as a grantor trust for federal
income tax purposes and will not be subject
to federal income tax. Accordingly, the
Certificate Owners would be treated as
owners of the Receivables for federal income
tax purposes.
See "Federal Income Tax Consequences" and
"State Tax Consequences" herein and
in the related Prospectus Supplement for
additional information concerning the
application of federal and state tax laws.
ERISA Considerations..... The related Prospectus Supplement will set
forth certain information as to whether each
class of Securities issued by the related
Trust will be eligible for purchase by
employee benefit plans subject to the
Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or by any
individual retirement account. See "ERISA
Considerations" herein and in the related
Prospectus Supplement.
Rating of Securities..... It is a condition to the issuance of each
class of Securities offered hereby that they
are rated by at least one nationally
recognized statistical rating agency in one
of its generic rating categories which
signifies investment grade. The ratings
of the Securities address the likelihood
of the timely payment of interest on and
the ultimate payment of principal of
the Securities pursuant to their terms.
There can be no assurance that such ratings
will not be lowered or withdrawn by a Rating
Agency if circumstances so warrant. See
"Risk Factors-Ratings of the Securities."
<PAGE>
RISK FACTORS
Limited Liquidity
There is currently no secondary market for the Securities. Each
Underwriter (as defined in the related Prospectus Supplement, an
"Underwriter") currently intends to make a market in the Securities for
which it is an Underwriter, but it is under no obligation to do so. There
can be no assurance that a secondary market will develop or, if a secondary
market does develop, that it will provide the Securityholders with
liquidity of investment or that it will continue for the life of the
Securities.
Risk of Prepayment and Possible Adverse Effect on Yield
All the Receivables are prepayable at any time without penalty to the
Obligor. (For this purpose the term "prepayments" includes prepayments in
full, partial prepayments and liquidations due to default, as well as receipts
of proceeds from physical damage, credit life and disability insurance
policies and certain other Receivables repurchased for administrative reasons).
The weighted average life (i.e., the average time in which each dollar of
principal is paid on the Securities) of the Securities may be reduced by full
or partial prepayments on the Receivables. The rate of prepayments on the
Receivables may be influenced by a variety of economic, social and other
factors, including the fact that an Obligor generally may not sell or transfer
the Financed Vehicle securing a Receivable without the payment in full of
such Receivable. In addition, under certain circumstances, the Seller will be
obligated to repurchase Receivables pursuant to a Sale and Servicing
Agreement or Pooling and Servicing Agreement as a result of uncured breaches
of representations and warranties and, under certain circumstances, the
Servicer will be obligated to purchase Receivables pursuant to such Sale
and Servicing Agreement or Pooling and Servicing Agreement as a result of
uncured breaches of certain covenants. See "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables" and "--Servicing
Procedures". Holders of Securities should also consider, in the case of
Securities purchased at a discount, the risk that a slower than anticipated
rate of principal payments on the Receivables could result in an actual
yield (i.e., the effective interest rate) that is less than the anticipated
yield and, in the case of Securities purchased at a premium, the risk that
a faster than anticipated rate of principal payments on the Receivables
could result in an actual yield that is less than the anticipated yield.
Any reinvestment risks (i.e., risks that amounts received will not be able
to be invested at interest rates that are greater than or equal to the
applicable Note Interest Rate or Certificate Rate) resulting from a faster
or slower incidence of prepayment of Receivables held by a given Trust will
be borne entirely by the Securityholders of the related series of
Securities. See also "Description of the Transfer and Servicing
Agreements-Termination" regarding the option of the Servicer and Seller to
purchase the remaining Receivables of a given Receivables Pool, "-Insolvency
Event" regarding the sale of the Receivables owned by a Trust that is not a
grantor trust if an Insolvency Event with respect to the Seller occurs and
"Risk Factors-Financial Institution Insolvency Risks" regarding the right
of the FDIC to prepay Securities in certain circumstances.
Risk of Non-Priority of Trust's Interest in Receivables
The Seller will cause financing statements to be filed with the
appropriate governmental authorities to perfect the interest of the related
Trust in its purchase of Receivables from the Seller and in the appropriate
jurisdictions in which the Affiliates are located to perfect the interest
of the Seller in its purchase of Receivables from the Affiliates in
accordance with the UCC in effect in the relevant jurisdiction. The
Servicer will hold the Receivables, either directly or through
subservicers, as custodian for the Applicable Trustee following the sale
and assignment of the Receivables to the related Trust. The Receivables
will not be segregated, stamped or otherwise marked to indicate that they
have been sold to the related Trust. If through inadvertence or otherwise
(for example, if an Affiliate or the Seller were to sell or grant a
security interest in Receivables in violation of the applicable Transfer
and Servicing Agreements), another party purchases (or takes a security
interest in) the Receivables for new value in the ordinary course of
business and takes possession of the Receivables without actual knowledge
of the related Trust's interest, the purchaser (or secured party) will
acquire an interest in the Receivables superior to the interest of the
related Trust. The Seller believes that it is customary for Receivables to
not be segregated or stamped or otherwise marked in connection with asset
securitizations of the type contemplated hereby.
Risk of Unenforceable Security Interest in Financed Vehicles
In connection with the sale of Receivables by each Affiliate to the
Seller and by the Seller to a Trust, security interests in the Financed
Vehicles securing such Receivables will be assigned by such Affiliate to the
Seller and by the Seller to such Trust simultaneously with the sale of such
Receivables by such Affiliate to the Seller and by the Seller to such Trust.
Due to administrative burden and expense, the certificates of title to the
Financed Vehicles will not be amended to reflect either the assignments
to the Seller or to the Trust. The Seller believes that it is customary
for certificates of title or ownership to not be endorsed or amended
in connection with asset securitizations of the type contemplated hereby.
In the absence of such amendments, however, the Seller and such Trust
may not have a perfected security interest in the Financed Vehicles
securing the Receivables in some states. If such Trust does not have a
perfected security interest in a Financed Vehicle, its ability to realize
on such Financed Vehicle in the event of a default may be adversely
affected, which could result in delays in payments on the related
Notes (if any) and Certificates and possible reductions in the amount
of those payments. The Seller will be obligated to repurchase any
Receivable sold to such Trust as to which the Seller has breached its
representation that it has a perfected security interest in the
Financed Vehicle securing such Receivable as of the date such Receivable
is transferred to such Trust, if such breach shall materially and
adversely affect the interest of such Trust in such Receivable and if a breach
of such representation shall not have been cured by the last day of the month
that includes the sixtieth day (or, if the Seller elects, the thirtieth day)
following the discovery by or notice to the Seller of such breach. The
applicable Affiliate will be obligated, pursuant to the Purchase Agreement
to which it is a party, to repurchase from the Seller any Receivable sold
by it thereunder that the Seller has repurchased as a result of such a breach.
The Seller will also assign its rights under each Purchase Agreement to the
related Trust.
Risk of Non-Priority of Trust's Security Interest in Financed Vehicles
To the extent the security interest in the Financed Vehicles is
perfected, such Trust will have a prior claim over subsequent purchasers of
such Financed Vehicles and holders of subsequently perfected security
interests. However, as against liens for repairs of Financed Vehicles or for
taxes unpaid by an Obligor under a Receivable, or through fraud or negligence,
such Trust could lose the priority of its security interest or its security
interest in a Financed Vehicle, which could result in delays in payments on
the related Notes (if any) and Certificates and possible reductions in the
amount of those payments. Neither the Seller nor the Servicer will have an
obligation to repurchase a Receivable as to which any of the aforementioned
occurrences result in such Trust's losing the priority of its security
interest or its security interest in such Financed Vehicle after the date
such security interest was conveyed to such Trust. See "Certain Legal
Aspects of the Receivables-Security Interest in Vehicles".
Risk of Substantive Consolidation
Seller has taken steps in structuring the transactions described
herein and in the related Prospectus Supplement that are intended to ensure
that the voluntary or involuntary application for relief by Norwest
Corporation or any Affiliate subject to the United States Bankruptcy Code
(the "Bankruptcy Code") under the Bankruptcy Code or similar applicable
state laws ("Insolvency Laws") will not result in consolidation of the
assets and liabilities of the Seller with those of Norwest Corporation or
such Affiliate. These steps include the creation of the Seller as a
separate, limited-purpose subsidiary pursuant to a certificate of
incorporation containing certain limitations (including restrictions on the
nature of the Seller's business and a restriction on the Seller's ability
to commence a voluntary case or proceeding under any Insolvency Law without
the prior unanimous affirmative vote of all of its independent directors).
However, there can be no assurance that the activities of the Seller would
not result in a court's concluding that the assets and liabilities of the
Seller should be consolidated with those of Norwest Corporation or any
Affiliate in a proceeding under any Insolvency Law. See "The Seller."
Risk of No "True Sale"
The Seller and each Affiliate subject to the Bankruptcy Code each
intend that the transfer of Receivables by it to the Trust, in the case of
the Seller, and to the Seller, in the case of such Affiliates, will
constitute a "true sale" of such Receivables. Notwithstanding the
foregoing, if the Seller or such an Affiliate were to become a debtor in a
bankruptcy case and a creditor or trustee in bankruptcy of the Seller or
such Affiliate or the Seller or such Affiliate itself were to take the
position that the transfer of Receivables by the Seller to the Trust, or by
such Affiliate to the Seller, as the case may be, should instead be treated
as a pledge of the Receivables to secure a borrowing of the Seller or such
Affiliate, as the case may be, then delays in payments of collections of
the Receivables could occur or (should the court rule in favor of any such
trustee, debtor or creditor) reductions in the amount of such payments
could result. If the transfer of the Receivables by the Seller to the Trust
or by an Affiliate subject to the Bankruptcy Code to the Seller is treated
as a pledge instead of a sale, a tax or government lien on the property of
the Seller or such Affiliate, as the case may be, arising before the
transfer of the Receivables to the Trust may have priority over the Trust's
or the Seller's interest in the Receivables. If the conveyance by the
Seller or such an Affiliate of the Receivables is treated as a sale, the
Receivables would not be part of the bankruptcy estate of the Seller or
such Affiliate and would not be available to the creditors of the Seller or
such Affiliate, as the case may be.
In Octagon Gas Systems, Inc. v. Rimmer, 995 F.2d 948 (10th Cir.
1993), cert. denied 114 S.Ct 554 (1993), the United States Court of Appeals
for the 10th Circuit suggested that even where a transfer of accounts from
a seller to a buyer constitutes a "true sale," the accounts would
nevertheless constitute property of the seller's bankruptcy estate in a
bankruptcy of the seller. If the Seller were to become subject to a
bankruptcy proceeding and a court were to follow the Octagon court's
reasoning, Securityholders might experience delays in payment or possibly
losses on their investment in the Securities. The Permanent Editorial
Board of the UCC has issued an official commentary (PEB Commentary No. 14)
which characterizes the Octagon court's interpretation of Article 9 of the
UCC as erroneous. Such commentary states that nothing in Article 9 is
intended to prevent the transfer of ownership of accounts or chattel paper.
However, such commentary is not legally binding on any court.
Financial Institution Insolvency Risks
Each Affiliate subject to the Financial Institutions Reform, Recovery
and Enforcement Act of 1989 ("FIRREA"), intends that the transfer of the
Receivables by it to the Seller constitutes a sale. In the event that an
Affiliate subject to FIRREA were to become insolvent, FIRREA sets forth
certain powers that the Federal Deposit Insurance Corporation (the "FDIC")
could exercise if it were appointed as receiver of such Affiliate. Subject
to certain qualifications, to the extent that the Seller or related Trust
has a valid perfected security interest in the Receivables, such security
interest should be enforceable (to the extent of the "actual direct
compensatory damages" of the Seller or such Trust) notwithstanding the
insolvency of, or the appointment of a receiver or conservator for, any
Affiliate, and payments to such Trust with respect to the Receivables
transferred to it from the Seller (up to the amount of such damages) should
not be subject to recovery by such a conservator or receiver. See "Certain
Legal Aspects of the Receivables-Other Limitations." If, however, the FDIC
were to assert a contrary position, such as by requiring the Seller or
related Trust to establish its right to those payments by submitting to and
completing the administrative claims procedure established under FIRREA,
delays in payments on the related Notes (if any) and the Certificates and
possible reductions in the amount of those payments could occur.
Alternatively, in such circumstances, the FDIC might have the right to
repudiate the applicable Purchase Agreement and pay damages to the Seller
which, in turn would prepay the related Notes (if any) and Certificates,
which would shorten their respective weighted average lives.
Seller Insolvency-Related Risks
With respect to each Trust that is not a grantor trust, if an
Insolvency Event occurs with respect to the Seller, the Indenture Trustee
or Trustee for such Trust is obligated to sell, dispose of or otherwise
liquidate the related Receivables in a commercially reasonable manner on
commercially reasonable terms, unless registered holders of each class of
Notes ("Noteholders") issued by such Trust representing more than 50% of
the aggregate principal balance of such registered Notes and holders of
Certificates ("Certificateholders" and together with any Noteholders,
"Securityholders") issued by such Trust representing more than 50% of the
aggregate Certificate Balance for such Trust direct otherwise. The
proceeds from any such sale, disposition or liquidation of Receivables will
be treated as collections on the Receivables and deposited in the
Collection Account of such Trust. If the proceeds from the liquidation of
the Receivables and any amounts on deposit in the Reserve Account, the Note
Distribution Account, if any, and the Certificate Distribution Account with
respect to any such Trust and any amounts available from any credit
enhancement are not sufficient to pay any Notes and the Certificates of the
related series in full, the amount of principal returned to any Noteholders
or the Certificateholders will be reduced and such Noteholders and
Certificateholders will incur a loss. See "Description of the Transfer and
Servicing Agreements-Insolvency Event".
The provisions described in the preceding paragraph have been
included in the Transfer and Servicing Agreements for reasons related to
treatment of a Trust that is not a grantor trust as a partnership for
federal income tax purposes. The IRS, however, has issued proposed
regulations that, if adopted as final regulations, would make the foregoing
provisions unnecessary. The amendment provisions of each of the Transfer and
Servicing Agreements, therefore, allow the Seller, the Servicer and the
related Trustee, upon satisfaction of certain conditions, to amend such
Transfer and Servicing Agreement, without the consent of any of the related
Noteholders or Certificateholders, to eliminate such provisions. The
rights of Noteholders and Certificateholders to vote on whether to continue
or dissolve a Trust upon the insolvency of the Seller could therefore be
eliminated without the consent of the Noteholders or Certificateholders.
Ratings of the Securities
It is a condition to the issuance of each class of Securities offered
hereby that they are rated by at least one nationally recognized
statistical rating agency in one of its generic rating categories which
signifies investment grade. A rating is not a recommendation to purchase,
hold or sell Securities, inasmuch as such rating does not comment as to
market price or suitability for a particular investor. The ratings of the
Securities address the likelihood of the timely payment of interest on and
the ultimate payment of principal of the Securities pursuant to their
terms. There can be no assurance that a rating will remain for any given
period of time or that a rating will not be lowered or withdrawn entirely
by a Rating Agency if in its judgment circumstances in the future so
warrant.
Realization Upon Financed Vehicles; Obligor Insolvency-Related Risks
Numerous statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a secured
party to realize upon collateral or to enforce a deficiency judgment
against an obligor. For example, in a Chapter 13 proceeding under the
federal bankruptcy law, a court may prevent a creditor from repossessing a
vehicle, and, as part of the obligor's rehabilitation plan, reduce the
amount of the secured indebtedness to the market value of the vehicle at
the time of bankruptcy (as determined by the court), leaving the creditor
as a general unsecured creditor for the remainder of the indebtedness. A
bankruptcy court may also reduce the monthly payments due under a contract
or change the rate of interest and time of repayment of the indebtedness.
In the event that the credit enhancement for such Trust were insufficient
to cover all such losses, such actions could result in an inability for
holders of the Notes (if any) and Certificates issued by such Trust to
recover payment in full of their respective principal amounts and interest
thereon or could result in delays in such payments.
Consumer Protection Laws
Federal and state consumer protection laws impose requirements upon
creditors in connection with retail installment loans and certain of these
laws make an assignee of such a loan (such as a Trust) liable to the
obligor thereon for any violation by the lender or subject to defenses
which could be asserted by the obligor against the applicable Dealer.
Application of such laws could render a Receivable unenforceable, cause the
Trust to be unable to collect any balance remaining due on the Receivable
or result in liability to the Trust. Such consequences could result in
delays in payments on the related Notes (if any) and Certificates and
possible reductions in the amount of those payments. The Seller will be
obligated to repurchase any Receivable which fails to comply with such
requirements. See "Certain Legal Aspects of the Receivables-Consumer
Protection Laws."
Lack of Recourse to the Seller, the Servicer and their Affiliates
None of the Seller, the Servicer or their affiliates is generally
obligated to make any payments in respect of any Notes, the Certificates or
the Receivables of a given Trust. The Securities will not be guaranteed
by, represent an interest in or obligation, either recourse or nonrecourse,
of the Seller, the Servicer or any person other than the Trust.
However, in connection with the sale of Receivables by the Seller to
a given Trust, the Seller will make representations and warranties with
respect to the characteristics of such Receivables and, in certain
circumstances, the Seller may be required to repurchase Receivables with
respect to which such representations and warranties have been breached.
See "Description of the Transfer and Servicing Agreements-Sale and
Assignment of Receivables". In addition, under certain circumstances, the
Servicer may be required to purchase Receivables. See "Description of the
Transfer and Servicing Agreements-Servicing Procedures". If collections on
any Receivable were reduced as a result of any matter giving rise to a
repurchase obligation on the part of the Seller or the Servicer, and the
Seller or the Servicer failed for any reason to perform in accordance with
that obligation, then delays in payments on the related Notes (if any) and
Certificates and possible reductions in the amount of those payments could
occur. Moreover, if the Bank were to cease acting as the Servicer, delays
in processing payments on the Receivables and information in respect
thereof could occur and result in delays in payments to the
Securityholders.
Subordination
To the extent specified in the related Prospectus Supplement,
distributions of interest and principal on one or more classes of
Certificates of a series may be subordinated in priority of payment to
interest and principal due on the Notes, if any, of such series or one or
more other classes of Certificates of such series. Because all of such
Securities will be issued by the same Trust and entitled to receive
payments and distributions from the same Trust Property, investors in any
such subordinated class or classes of Certificates should consider the risk
that losses on the Receivables will be borne by such investors if any
Reserve Account or any other credit enhancement is exhausted and could
result in the failure of such investors to recover their initial
investment.
Limited Assets; Risk of Credit Losses on Receivables
No Trust will have, or be permitted or expected to have, any
significant assets or sources of funds other than the Receivables and, to
the extent provided in the related Prospectus Supplement, a Pre-Funding
Account, a Revolving Account, a Reserve Account and any other credit
enhancement. The Notes of any series will represent obligations solely of,
and the Certificates of any series will represent interests solely in, the
related Trust and neither the Notes nor the Certificates of any series will
be insured or guaranteed by any Affiliate, the Seller, the Servicer, any
Trustee, any Indenture Trustee or any other person or entity.
Consequently, holders of the Securities of any series must rely for
repayment upon payments on the related Receivables and, if and to the
extent available, amounts on deposit in the Pre-Funding Account (if any),
the Revolving Account (if any), the Reserve Account (if any) and any other
credit enhancement, all as specified in the related Prospectus Supplement.
Amounts to be deposited in any such Reserve Account with respect to any
Trust will be limited in amount and the amount required to be on deposit in
such Reserve Account may be reduced as the Pool Balance is reduced. In
addition, funds in any such Reserve Account will be available on each
Distribution Date to cover shortfalls in distributions of interest and
principal on the related Securities. If any such Reserve Account is
depleted, the related Trust will depend solely on current payments on its
Receivables and other credit enhancement (if any) to make payments on the
related Securities. If losses occur which are not covered by the Reserve
Account (if any) or any other credit enhancement or which exceed the amount
covered by such credit enhancement, holders of Securities may not receive
payment in full of principal and interest on their respective Securities.
If so directed by the holders of the requisite percentage of
outstanding Notes of a series issued with respect to a Trust that issues
Notes, following an acceleration of the Notes upon an Event of Default, the
applicable Indenture Trustee may sell the related Receivables in certain
limited circumstances as specified in the related Indenture. See
"Description of the Notes-The Indenture-Events of Default; Rights upon
Event of Default". However, there is no assurance that the market value of
such Receivables will at any time be equal to or greater than the aggregate
principal amount of such outstanding Notes. Therefore, upon an Event of
Default with respect to the Notes of any series, there can be no assurance
that sufficient funds will be available to repay the related Noteholders in
full. In addition, the amount of principal required to be paid to
Noteholders of such series under the related Indenture will generally be
limited to amounts available to be deposited in the applicable Note
Distribution Account. Therefore, the failure to pay principal on a class of
Notes generally will not result in the occurrence of an Event of Default
until the Final Scheduled Distribution Date (as defined in the related
Prospectus Supplement, the "Final Scheduled Distribution Date") for such
class of Notes.
Risks Associated with Subsequent Receivables
If so specified in the applicable Prospectus Supplement, the property
of a Trust may include monies on deposit in a Pre-Funding Account or
Revolving Account, which monies will be used to purchase or otherwise acquire
Subsequent Receivables from the Seller from time to time during the Funding
Period or Revolving Period specified in the related Prospectus Supplement.
If a Pre-Funding Account or Revolving Account is included in the property
of a Trust, the ability of the Originators to generate Subsequent
Receivables to be conveyed to the Seller for subsequent conveyance to such
Trust will affect the amount on deposit in such account which is not applied
to the purchase of Subsequent Receivables during the Funding Period or
Revolving Period, as applicable. Such Funding Period may be up to one year in
length in the case of any Trust that issues Notes and 90 days after the
Closing Date for any other Trust. The duration of any Revolving Period will
be set forth in the related Prospectus Supplement. At the end of the Funding
Period or Revolving Period, as applicable, the holders of Securities issued
by such Trust may receive a prepayment of principal in an amount equal to
the amount remaining in the Pre-Funding Account or Revolving Account, as
applicable. The reinvestment risk associated with any such distribution of
principal will be borne by the holders of the Securities issued by such Trust.
The amount that may be initially deposited into a Pre-Funding Account may be
up to 100% of the principal amount of the Securities issued by a Trust.
There is no limitation on the percentage of a Trust's property which may be
represented by amounts on deposit in a Pre-Funding Account and
consequently, there is no limitation on the percentage of a series or class
of Securities which may be represented by amounts on deposit in a
Pre-Funding Account. Amounts on deposit in a Revolving Account will be
limited to the amount set forth in the related Prospectus Supplement.
Amounts on deposit in any Pre-Funding Account or Revolving Account may be
invested only in certain permitted investments deemed acceptable by the
Rating Agencies as consistent with the applicable ratings on the
Securities. Subsequent Receivables may be originated at a later date using
credit criteria different from those which were applied to any Initial
Receivables and may be of a different credit quality. In addition, following
the transfer of Subsequent Receivables to the applicable Trust, the
characteristics of the entire pool of Receivables included in such Trust may
vary significantly from those of the Initial Receivables transferred to such
Trust. Accordingly, it is possible that the credit quality of the
Receivables in a Trust, as a whole, may decline due to the transfer of
Subsequent Receivables to the Trust. The transfer of Subsequent Receivables
to the Trust may also result in an accelerated rate of payment to the
applicable Securityholders caused by an increased level of defaults on such
Receivables. Securityholders will bear all reinvestment risk associated with
a higher than expected rate of payment on the Securities. In addition, if
such Securities were purchased at a premium, a higher than expected rate of
payment would result in a reduction in the yield to maturity of any class of
Securities to which such payments are distributed. To the extent that amounts
on deposit in the Pre-Funding Account or Revolving Account have not been
fully applied to the purchase of Subsequent Receivables by a Trust by the end
of the applicable Funding Period or Revolving Period and such amounts exceed
the applicable amount described in the related Prospectus Supplement, the
holders of Securities issued by the related Trust will receive, on the
Distribution Date on or immediately following the last day of the applicable
Funding Period or Revolving Period, as applicable, a prepayment of principal
in an amount equal to the amount remaining in the Pre-Funding Account
or Revolving Account following the purchase of any Subsequent Receivables on
such Distribution Date. It is anticipated that the principal balance of
Subsequent Receivables sold to a Trust will not be exactly equal to the amount
on deposit in the Pre-Funding Account or Revolving Account, and that
therefore there will be at least a nominal amount of principal prepaid
to the holders of the Securities issued by such Trust. Holders of Securities
issued by a Trust the property of which includes a Pre-Funding Account or
Revolving Account will bear the reinvestment risk associated with any
such distribution of amounts on deposit in the Pre-Funding Account or
Revolving Account after the termination of the applicable Pre-Funding
Period or Revolving Period, as applicable. Any such distribution will
have the effect of a prepayment on the related Receivables and, if such
Securities were purchased at a premium, would result in a reduction in
the yield to maturity of any class of Securities to which such amounts
are distributed.
Extensions and Modifications of Receivables
Consistent with its customary servicing practices and procedures, the
Servicer or its designee may, in its discretion and on a case-by-case
basis, arrange with Obligors to extend or modify the terms of the related
Receivables. Some, but not all, of such arrangements will cause the
Servicer to be obligated to purchase such Receivables. Any such extensions
or modifications which do not result in a Servicer obligation to purchase
such Receivables may increase the weighted average life of the related
Securities. Any reinvestment risks resulting from purchases by the
Servicer of Receivables or faster or slower payment resulting from
extensions and modifications of payments on Receivables held by the Trust
will be borne entirely by the Securityholders of the related series of
Securities. The Servicer will not be permitted to grant any such extension
or modification if as a result the final scheduled payment on a Receivable
would fall after the related Final Scheduled Maturity Date, unless the
Servicer repurchases the affected Receivable. See "Risk Factors-Risk of
Prepayment and Possible Adverse Effect on Yield" and "Weighted Average Life
of the Securities."
Risk of Commingling
With respect to each Trust, the Servicer will deposit all payments on
the related Receivables (from whatever source) and all proceeds of such
Receivables collected during each Collection Period into the Collection
Account for such Trust or, during any Revolving Period, into the Revolving
Account for such Trust. For so long as the Bank satisfies certain
requirements for monthly or less frequent remittances and the Rating
Agencies (as such term is defined in the related Prospectus Supplement, the
"Rating Agencies") so permit in connection with the ratings of the related
Securities, then for so long as the Bank serves as the Servicer and
provided that (i) there exists no Servicer Termination Event and (ii) each
other condition to making such monthly or less frequent deposits as may be
described in the related Prospectus Supplement is satisfied, the Servicer
will not be required to deposit such amounts into the Collection Account
or, during any Revolving Period, into the Revolving Account of such Trust
until on or before the business day preceding each Distribution Date. The
Servicer will deposit the aggregate Purchase Amount of Receivables
purchased by the Servicer into the applicable Collection Account on or
before the business day preceding each Distribution Date. Pending deposit
into such Collection Account or, during any Revolving Period, into the
Revolving Account, 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. If the Servicer were unable to remit such funds, the applicable
Securityholders might incur a loss. For example, the Servicer might not
be able to remit such funds if it were to become a debtor in a bankruptcy
or insolvency proceeding. Under the UCC, the Trust's interest in cash
collected by the Servicer that has been commingled with other funds of the
Servicer would become unperfected ten days after receipt by the Servicer.
If the Servicer were to become a debtor in a bankruptcy or insolvency
proceeding, the Trust may be deemed an unsecured creditor with respect to
commingled funds held by the Servicer longer than ten days. To the extent
set forth in the related Prospectus Supplement, the Servicer may, in order
to satisfy the requirements described above, obtain a letter of credit or
other security for the benefit of the related Trust to secure timely
remittances of collections on the related Receivables and payment of the
aggregate Purchase Amount with respect to Receivables purchased by the
Servicer.
Servicer Termination Events
With respect to a series of Securities that includes Notes, in the
event a Servicer Termination Event occurs, the Indenture Trustee or the
Noteholders with respect to such series, as described under "Description of
the Transfer and Servicing Agreements-Rights upon Servicer Termination
Event" may remove the Servicer without the consent of the Trustee or any of
the Certificateholders with respect to such series. The Trustee or the
Certificateholders with respect to such series will not have the ability to
remove the Servicer if a Servicer Termination Event occurs. In addition,
the Noteholders of such series will have the ability, with certain
specified exceptions, to waive Servicer Termination Events by the Servicer,
including Servicer Termination Events that could materially adversely affect
the Certificateholders of such series. See "Description of the Transfer
and Servicing Agreements - Waiver of Past Defaults".
Book-Entry Registration
Each class of Securities of a given series will be initially
represented by one or more certificates registered in the name of Cede &
Co. ("Cede"), or any other nominee for the Depository Trust Company ("DTC")
set forth in the related Prospectus Supplement (Cede, or such other
nominee, "DTC's Nominee"), and will not be registered in the names of the
beneficial owners of the Securities ("Security Owners") of such series or
their nominees unless Definitive Securities are issued. Because of this,
unless and until Definitive Securities for such series are issued, such
Security Owners will not be recognized by the Trustee or any applicable
Indenture Trustee as "Certificateholders", "Noteholders" or
"Securityholders", as the case may be (as such terms are used herein or in
the related Pooling and Servicing Agreement or related Indenture and Trust
Agreement, as applicable). Hence, until Definitive Securities are issued,
such Security Owners will only be able to exercise the rights of
Securityholders indirectly through DTC, Cedel or Euroclear and their
participating organizations. See "Certain Information Regarding the
Securities-Book-Entry Registration" and "-Definitive Securities".
THE TRUSTS
With respect to each series of Securities, the Seller will establish
a separate Trust pursuant to the respective Trust Agreement or Pooling and
Servicing Agreement, as applicable, for the transactions described herein
and in the related Prospectus Supplement. The property of each Trust will
include a pool (a "Receivables Pool") of Receivables pursuant to which a
purchaser (an "Obligor") of a Financed Vehicle is obligated. The property
of each Trust will also include all payments received with respect to any
Simple Interest Receivables on and after the Cutoff Date (as such term is
defined in the related Prospectus Supplement, a "Cutoff Date") and all
payments due with respect to Precomputed Receivables on and after the
applicable Cutoff Date. Pursuant to the Dealer Agreements, a Dealer is
obligated to purchase from the applicable Affiliate Receivables which do
not meet certain representations made by that Dealer, and, to the extent
set forth in the related Prospectus Supplement, any uncollectible
Receivables covered by recourse plans ("Dealer Recourse"). The Receivables
of each Receivables Pool will be serviced by the Servicer. See "The Servicer."
Receivables that are to be included in any Receivables Pool will be transferred
pursuant to a Purchase Agreement by an Affiliate to the Seller for purposes of
transfer to the applicable Trust. In addition, to the extent described in any
Prospectus Supplement, the related Receivables Pool may include Receivables
acquired by an Affiliate through acquisitions.
On or before the applicable Closing Date, the Seller will sell the
Initial Receivables of the applicable Receivables Pool to the Trust. To
the extent so provided in the related Prospectus Supplement, Subsequent
Receivables will be conveyed to the Trust as frequently as daily during a
Funding Period. Any Subsequent Receivables so conveyed will also be assets
of the applicable Trust, subject to the prior rights of the related
Indenture Trustee and the Noteholders, if any, therein. The property of
each Trust will also include (i) such amounts as from time to time may be
held in separate trust accounts established and maintained pursuant to the
related Sale and Servicing Agreement or Pooling and Servicing Agreement and
the proceeds of such accounts, as described herein and in the related
Prospectus Supplement (see "Description of the Transfer and Servicing
Agreement-Accounts" herein and in the related Prospectus Supplement); (ii)
security interests in the Financed Vehicles and any other interest of the
Seller in such Financed Vehicles; (iii) the Seller's rights to proceeds
from claims on physical damage, credit life and disability insurance
policies, if any, covering the Financed Vehicles or the Obligors, as the
case may be and rebates of premiums and other amounts relating to any
insurance policies and other items financed under the Receivables, to the
extent applied to reduce the principal balance of the related Receivable;
(iv) any property that shall have secured a Receivable and that shall have
been acquired by the applicable Trust; (v) any Dealer Recourse and other
rights of Affiliates under Dealer Agreements; (vi) the Seller's rights
under the related Purchase Agreements; (vii) the Seller's rights to
documents and instruments relating to the Receivables; and (viii) any and
all proceeds of the foregoing; provided that, with respect to any series of
Notes, the relevant rights and benefits with respect to such property will
be assigned by the Seller and the applicable Trustee to the related
Indenture Trustee for the benefit of the related Securityholders. To the
extent specified in the related Prospectus Supplement, a Pre-Funding
Account, a Revolving Account, a Reserve Account or other form of credit
enhancement may be a part of the property of any given Trust or may be held
by the Trustee or an Indenture Trustee for the benefit of holders of the
related Securities.
If so specified in the related Prospectus Supplement, a Trust may
acquire Initial Receivables pursuant to "warehousing" financing
arrangements entered into prior to the sale by that Trust of any Notes
offered hereby. "Warehousing financing" generally refers to interim
financing of Motor Vehicle Loans during the period from the purchase of the
Motor Vehicle Loans from Dealers until the securitization of the Motor
Vehicle Loans. Often, an Originator will obtain some or all of the funds
to purchase or fund Motor Vehicle Loans through internal funds. Any
remaining funds necessary may be borrowed from a bank or other third party.
In some cases, to the extent specified in the related Prospectus
Supplement, a Trust that issues Notes will acquire Receivables prior to the
issuance of the Notes and/or Certificates ultimately to be issued by that
Trust, the interim financing for which will be provided by the issuance by
the Trust of notes or certificates which were privately placed. Such notes
or certificates will be refinanced by the sale of the Notes and/or
Certificates. It will be a condition to the issuance of any Securities
which refinance other securities issued by any such Trust that such
warehouse financing be repaid to the extent provided in the related
Prospectus Supplement, and any related security interests released, at or
prior to the time of such issuance.
The Servicer will service the Receivables held by each Trust and will
receive fees for such services. See "Description of the Transfer and
Servicing Agreements-Servicing Compensation and Payment of Expenses" and
"-Servicing Compensation and Payment of Expenses" in the related Prospectus
Supplement. To facilitate the servicing of the Receivables, each Trustee
will authorize the Servicer or the applicable Originator acting as
subservicer, as the case may be, to retain physical possession of the
documents representing the Receivables held by each Trust and other
documents relating thereto as custodian for each such Trust. Due to
administrative burden and expense, the certificates of title to the
Financed Vehicles will not be amended to reflect the sale and assignment of
the security interest in the Financed Vehicles to the Seller or each Trust.
In the absence of such amendments, the Seller and such Trust may not have
a perfected security interest in the Financed Vehicles in all states.
See "Certain Legal Aspects of the Receivables" and "Description of the
Transfer and Servicing Agreements-Sale and Assignment of Receivables".
Notes and Certificates of a given Series will be issued by the same
Trust and payable from the same Trust property. If the protection provided
to any Noteholders of a given series by the subordination of the related
Certificates and by the Reserve Account (if any) or other credit
enhancement for such series, or the protection provided to
Certificateholders by any such Reserve Account or other credit enhancement
is insufficient, such Noteholders or Certificateholders, as the case may
be, would have to look principally to the Obligors on the related
Receivables, the proceeds from the repossession and sale of Financed
Vehicles which secure defaulted Receivables and the proceeds from any
recourse against Dealers with respect to such Receivables. In such event,
certain factors, such as the applicable Trust's not having perfected
security interests in the Financed Vehicles in all states, may affect the
Servicer's ability to repossess and sell the collateral securing the
Receivables, and thus may reduce the proceeds to be distributed to the
holders of the Securities of such series. See "Description of the Transfer
and Servicing Agreements-Distributions", "-Credit and Cash Flow
Enhancement" and "Certain Legal Aspects of the Receivables".
If so specified in the related Prospectus Supplement, a Trust may
make an election to be treated as a "financial asset securitization
investment trust" or "FASIT." The applicable Transfer and Servicing
Agreement for such a Trust may contain any such terms and provide for the
issuance of Notes or Certificates on such terms and conditions as are
permitted to a FASIT and provided in the related Prospectus Supplement.
See "Federal Income Tax Consequences-FASIT Legislation."
The principal offices of the applicable Trust (if any) and the
related Trustee will be specified in the related Prospectus Supplement.
The Trustee
The Trustee for each Trust will be specified in the related
Prospectus Supplement. The Trustee's liability in connection with the
issuance and sale of the related Securities is limited solely to the
express obligations of such Trustee set forth in the related Trust
Agreement and the Sale and Servicing Agreement or the related Pooling and
Servicing Agreement, as applicable. The Trustee under each Trust Agreement
will perform administrative functions under such Trust Agreement, including
making distributions from the Note Distribution Account and from the
Certificate Distribution Account. A Trustee may resign at any time, in
which event the Servicer, or its successor, will be obligated to appoint a
successor trustee. The Servicer may also remove the Trustee if the Trustee
ceases to be eligible to continue as Trustee under the related Trust
Agreement or Pooling and Servicing Agreement, as applicable, or if the
Trustee becomes insolvent. In such circumstances, the Servicer will be
obligated to appoint a successor trustee. Any resignation or removal of a
Trustee and appointment of a successor trustee will not become effective
until acceptance of the appointment by the successor trustee.
THE RECEIVABLES POOLS
General
The Receivables in each Receivables Pool are and will be retail
installment sales contracts and/or promissory notes and security agreements
(collectively, "Motor Vehicle Loans") that have been or will be originated
by a Dealer and purchased by an Originator pursuant to a Dealer Agreement
between the Originator and the Dealer. Receivables Pools may also include
Direct Loans made by an Originator to an Obligor. Receivables held by any
Affiliate may have been originated by other Affiliates. In addition, to
the extent described in any Prospectus Supplement, the related Receivables
Pool may include Receivables acquired by an Affiliate through acquisitions.
Receivables of an Affiliate that are to be included in any Receivables Pool
will be transferred pursuant to a Purchase Agreement by an Affiliate to the
Seller for purposes of sale to the applicable Trust.
Each Originator establishes and maintains relationships with Dealers.
An Originator selects Dealers based upon the Dealer's commercial
reputation, the prior experience of the Dealer (or a predecessor
organization) and, in some cases, financial review of the Dealer. Each Dealer
from whom any of the Originators purchases a Motor Vehicle Loan must
execute a Dealer Agreement with such Originator which sets out, among other
things, the guidelines and procedures of the purchasing process. Such
Dealer Agreements provide for the repurchase by the Dealer of any Motor
Vehicle Loan if any representations or warranties made by the Dealer
relating to the Motor Vehicle Loan are breached.
The Receivables to be held by each Trust will be selected from the
Motor Vehicle Loan portfolio of each Affiliate for inclusion in a
Receivables Pool by several criteria, including that each Receivable (i) is
secured by a new or used vehicle, (ii) was originated in the United States,
(iii) is a Precomputed Receivable or a Simple Interest Receivable and (iv)
as of the Cutoff Date (a) had an outstanding principal balance of at least
the amount set forth in the related Prospectus Supplement, (b) as of the
Cutoff Date, was not more than 60 days past due, (c) had a scheduled
maturity not later than the date set forth in the related Prospectus
Supplement, (d) had an original term to maturity of not more than the
period set forth in the related Prospectus Supplement and (e) had an APR
of not less than the rate per annum set forth in the related Prospectus
Supplement. Not more than 5% of the aggregate outstanding principal
amount of the Receivables to be held by any Trust will be more than
31 days past due as of the Cutoff Date. No selection procedures
believed by the Seller to be adverse to the Securityholders of
any series were or will be used in selecting the related
Receivables.
"Precomputed Receivables" consist of either (i) monthly actuarial
receivables ("Actuarial Receivables") or (ii) receivables that provide for
allocation of payments according to the "Rule of 78's" ("Rule of 78's
Receivables"). An Actuarial Receivable provides for amortization of the
loan over a series of fixed level payment monthly installments. Each
monthly installment, including the monthly installment representing the
final payment on the Receivable, consists of an amount of interest equal to
1/12 of the APR of the loan multiplied by the unpaid principal balance of
the loan, and an amount of principal equal to the remainder of the monthly
installment. A Rule of 78's Receivable provides for the payment by the
obligor of a specified total amount of payments, payable in equal monthly
installments on each due date, which total represents the principal amount
financed and add-on interest in an amount calculated on the stated APR for
the term of the receivable. The rate at which such amount of add-on
interest is earned and, correspondingly, the amount of each fixed monthly
installment allocated to reduction of the outstanding principal are
calculated in accordance with the "Rule of 78's."
"Simple Interest Receivables" are receivables that provide for the
amortization of the amount financed under each receivable over a series of
fixed level payment monthly installments. However, unlike the monthly
installment under an Actuarial Receivable, each monthly installment
consists of an amount of interest which is calculated on the basis of the
outstanding principal balance of the receivable multiplied by the stated
APR and further multiplied by the period elapsed (as a fraction of a
calendar year) since the preceding payment of interest was made. As
payments are received under a Simple Interest Receivable, the amount
received is applied first to interest accrued to the date of payment and
the balance is applied to reduce the unpaid principal balance.
Accordingly, if an obligor pays a fixed monthly installment before its
scheduled due date, the portion of the payment allocable to interest for
the period since the preceding payment was made will be less than it would
have been had the payment been made as scheduled, and the portion of the
payment applied to reduce the unpaid principal balance will be
correspondingly greater. Conversely, if an obligor pays a fixed monthly
installment after its scheduled due date, the portion of the payment
allocable to interest for the period since the preceding payment was made
will be greater than it would have been had the payment been made as
scheduled, and the portion of the payment applied to reduce the unpaid
principal balance will be correspondingly less. In either case, the
obligor pays a fixed monthly installment until the final scheduled payment
date, at which time the amount of the final installment is increased or
decreased as necessary to repay the then outstanding principal balance and
unpaid accrued interest. If a Receivable is prepaid, the Obligor is
required to pay interest only to the date of prepayment.
In the event of the prepayment in full (voluntarily or by
acceleration) of a Rule of 78's Receivable, under the terms of the
contract, a "refund" or "rebate" will be made to the obligor of the portion
of the total amount of payments then due and payable under the contract
allocable to "unearned" add-on interest, calculated in accordance with a
method equivalent to the Rule of 78's. If an Actuarial Receivable is
prepaid in full, with minor variations based upon state law, the Actuarial
Receivable requires that the rebate be calculated on the basis of a
constant interest rate. If a Simple Interest Receivable is prepaid, rather
than receive a rebate, the obligor is required to pay interest only to the
date of prepayment. The amount of a rebate under a Rule of 78's Receivable
generally will be less than the amount of a rebate on an Actuarial
Receivable and generally will be less than the remaining scheduled payments
of interest that would have been due under a Simple Interest Receivable for
which all payments were made on schedule.
Each Trust will account for the Rule of 78's Receivables as if such
Receivables were Actuarial Receivables. Amounts received upon prepayment
in full of a Rule of 78's Receivable in excess of the then outstanding
principal balance of such Receivable and accrued interest thereon
(calculated pursuant to the actuarial method) will not be paid to the
Noteholders or passed through to the Certificateholders of the applicable
series but will be paid to the Servicer as additional servicing
compensation.
Information with respect to each Receivables Pool will be set forth
in the related Prospectus Supplement, including, to the extent appropriate,
the composition, the geographic distribution and distribution by APR and
the portion of such Receivables Pool consisting of Precomputed Receivables
and of Simple Interest Receivables and the portion of such Receivables Pool
secured by new vehicles and by used vehicles.
Underwriting
The Receivables have been or will be originated or acquired by the
applicable Originator in accordance with such Originator's underwriting
standards (or, in the case of Receivables originated by an acquired entity,
the underwriting standards of such acquired entity), which standards are
based upon the vehicle buyer's ability to repay the obligation as well as
the value of the vehicle being financed. Each Originator's underwriting
standards also require physical damage insurance to be maintained on each
financed vehicle. The motor vehicle lending, underwriting and servicing
operations of the Originators are subject to the application of uniform
written underwriting and servicing guidelines (the "Guidelines"). The
Guidelines are not a fixed set of criteria which are required to be met by
all Motor Vehicle Loans and are not intended to replace the judgment of the
credit underwriter in reviewing a loan application. Applicants are required
to complete an application which generally includes such information as the
applicant's income, deposit accounts, liabilities, credit and employment
history and other personal information. The application is reviewed for
completeness and compliance with the Guidelines.
All applications for Motor Vehicle Loans are analyzed using a
combination of empirical (including a credit score based on a proprietary
score card) and subjective judgments based upon the Guidelines. Upon
receipt of an application, a credit bureau report on the applicant is
ordered. Based on information provided in the application and credit bureau
reports, the underwriter evaluates the relationships among the applicant's
income, debt and expenses, including debt and expenses related to the
proposed Motor Vehicle Loan. The credit underwriter then reviews the data
for stability in employment and residence, other banking relationships with
the Originator (or its Affiliates) and creditworthiness based on historical
information. Finally, the manufacturer's suggested retail price or average
retail value reported in the National Automotive Dealers Association's Used
Car Guide, as applicable, is verified for the vehicles and an evaluation is
made of the collateral and the applicant's ability to repay.
Under the Guidelines, an Originator generally will (i) require the
applicant's ratio of aggregate debt service to gross monthly income not to
exceed 50% and (ii) not finance more than 100% of the purchase price, in
the case of new vehicles and 100% of the average retail value, in the case
of used vehicles, plus related amounts financed in connection therewith, if
any, such as taxes, insurance and extended warranties. Motor Vehicle Loans
which do not conform to the Guidelines generally require approval by a more
senior credit underwriting employee than Motor Vehicle Loans which conform
to the Guidelines.
Neither the Seller, the Servicer nor any Originator monitors the
value of the financed vehicle in the ordinary course of business after a
Motor Vehicle Loan is originated and, consequently, there is no required
relationship between the outstanding principal balance of any Motor Vehicle
Loan included in a Trust and the value of the financed vehicle securing
such Motor Vehicle Loan.
Insurance
[Each Originator's underwriting standards require physical damage
insurance protection to be maintained on each Financed Vehicle. Although
such underwriting standards require the applicable Originator to confirm
the maintenance of physical damage insurance at the time each Motor Vehicle
Loan is originated, the maintenance of such insurance after that date is
not monitored by such Originator. If an Obligor fails to maintain the
required physical damage insurance, the Applicable Trustee may, but is not
obligated to, cause the Servicer to force-place (i.e. purchase a policy and
charge the Obligor for the amount of the premium (an "Add-On Balance")) an
insurance policy to cover the related Financed Vehicle. In the alternative,
the Applicable Trustee may fund the payment of any force-placed insurance
premium, in which case, such trustee will be entitled to receive any
payments from the related Obligor in respect of the resulting Add-On
Balance, in addition to the amounts to which the Trust is otherwise
entitled under the related Receivable. See "The Receivables
Pools--Insurance" in the Prospectus.
Subsequent Receivables
Subsequent Receivables may be originated at a later date using credit
criteria different from those which were applied to any Initial Receivables
and may be of a different credit quality. In addition, following the
transfer of Subsequent Receivables to the applicable Trust, the
characteristics of the entire pool of Receivables included in such Trust
may vary significantly from those of the Initial Receivables transferred to
such Trust. See "Risk Factors-Risks Associated with Subsequent
Receivables and the Pre-Funding Account." Each Prospectus Supplement for a
Trust that includes a Pre-Funding Account will describe the effects such
Subsequent Receivables may have on the Receivables Pool of such Trust.
Regular periodic information regarding the Subsequent Receivables will be
included under Item 5 in each Current Report filed on Form 8-K with the
Commission pursuant to the Exchange Act and with respect to each Trust to
which Subsequent Receivables have been transferred.
Delinquencies and Net Losses
Certain information concerning the experience of the Servicer or the
applicable Affiliates pertaining to delinquencies and net losses with
respect to new and used retail automobile and light duty truck Motor
Vehicle Loans will be set forth in the related Prospectus Supplement.
There can be no assurance that the delinquency and net loss experience on
any Receivables Pool will be comparable to prior experience or to such
information.
WEIGHTED AVERAGE LIFE OF THE SECURITIES
The weighted average life of the Notes, if any, and the Certificates
of any series will generally be influenced by the rate at which the
principal balances of the related Receivables are paid, which payment may
be in the form of scheduled amortization or prepayments. (For this purpose,
the term "prepayments" includes prepayments in full, partial prepayments,
liquidations due to default, as well as receipts of proceeds from physical
damage, credit life and disability insurance policies and certain other
Receivables repurchased by the Seller or the Servicer for administrative
reasons). All of the Receivables are repayable at any time without penalty
to the Obligor. The rate of prepayment of automotive receivables is
influenced by a variety of economic, social and other factors, including
decreases in the general level of prevailing interest rates, the desire of
the Obligor to purchase a new vehicle and the fact that an Obligor
generally may not sell or transfer the Financed Vehicle securing a
Receivable unless such Receivable is paid in full. In addition, under
certain circumstances, the Seller will be obligated to repurchase
Receivables from a given Trust pursuant to the related Sale and Servicing
Agreement or Pooling and Servicing Agreement as a result of breaches of
representations and warranties and the Servicer will be obligated to
purchase Receivables from such Trust pursuant to such Sale and Servicing
Agreement or Pooling and Servicing Agreement as a result of breaches of
certain covenants. Holders of Securities should consider, in the case of
Securities purchased at a discount, the risk that a slower than anticipated
rate of principal payments on the Receivables could result in an actual
yield that is less than the anticipated yield and, in the case of
Securities purchased at a premium, the risk that a faster than anticipated
rate of principal payments on the Receivables could result in an actual
yield that is less than the anticipated yield. See "Description of the
Transfer and Servicing Agreements-Sale and Assignment of Receivables" and
"-Servicing Procedures". See also "Description of the Transfer and
Servicing Agreements-Termination" regarding the option of the Seller and
Servicer to purchase the Receivables from a given Trust, "-Insolvency
Event" regarding the sale of the Receivables owned by a Trust that is not a
grantor trust if an Insolvency Event with respect to the Seller occurs and
"Risk Factors-Financial Institution Insolvency Risks" regarding the right
of the FDIC to prepay Securities in certain circumstances.
No prediction can be made as to the rate of prepayment on the
Receivables. The Servicer maintains limited records of the historical
prepayment experience of the Motor Vehicle Loans included in its portfolio
and is not aware of any publicly available industry statistics for the
entire industry on an aggregate basis that set forth principal prepayment
experience for Motor Vehicle Loans similar to the Receivables over an
extended period of time.
In light of the above considerations, there can be no assurance as to
the amount of principal payments to be made on the Notes, if any, or the
Certificates of a given series on each Payment Date or Distribution Date,
as applicable, since such amount will depend, in part, on the amount of
principal collected on the related Receivables Pool during the applicable
Collection Period. Any reinvestment risks resulting from a faster or
slower incidence of prepayment of Receivables will be borne entirely by the
Noteholders, if any, and the Certificateholders of a given series. The
related Prospectus Supplement may set forth certain additional information
with respect to the maturity and prepayment considerations applicable to
the particular Receivables Pool and the related series of Securities.
Consistent with its customary servicing practices and procedures, the
Servicer or its designee may, in its discretion and on a case-by-case
basis, arrange with Obligors to extend or modify the terms of the related
Receivables. On an annual basis, the Servicer generally permits obligors
who have timely made at least the six previous monthly payments and whose
Receivables are not delinquent to defer either the principal portion or the
full scheduled amount of a loan payment for one month, extending the term
of the loan by one month. In addition, the Servicer generally grants
extensions or modifications in situations where the Servicer believes such
action is likely to maximize the amount collected, for example, an obligor
who becomes unemployed and is actively seeking employment. Extensions are
not granted to forestall an inevitable loss. Any such extensions or
modifications which do not result in a Servicer obligation to purchase such
Receivables may increase the weighted average life of the related
Securities. Unless the Servicer repurchases the affected Receivable, the
Servicer will not be permitted to voluntarily (i) make modifications to the
Receivables that reduce the original rates of interest or the aggregate
principal amount of scheduled payments on the Receivables, (ii) grant any
extension or modification if as a result the final scheduled payment on a
Receivable would fall after the related Final Scheduled Maturity Date or
(iii) amend or otherwise modify such Receivable if such amendment or
modification would result in a deemed exchange of such Receivable under
Section 1001 of the Code.
POOL FACTORS AND TRADING INFORMATION
The "Note Pool Factor" for each class of Notes will be a seven-digit
decimal which the Servicer will compute prior to each distribution with
respect to such class of Notes expressing the remaining outstanding
principal balance of such class of Notes, as of the applicable Payment Date
(after giving effect to payments to be made on such Payment Date), as a
fraction of the initial outstanding principal balance of such class of
Notes. The "Certificate Pool Factor" for each class of Certificates will
be a seven-digit decimal which the Servicer will compute prior to each
distribution with respect to such class of Certificates expressing the
remaining Certificate Balance of such class of Certificates, as of the
applicable Distribution Date (after giving effect to distributions to be
made on such Distribution Date), as a fraction of the initial Certificate
Balance of such class of Certificates. Each Note Pool Factor and each
Certificate Pool Factor will initially be 1.0000000 and thereafter will
decline to reflect reductions in the outstanding principal balance of the
applicable class of Notes, or the reduction of the Certificate Balance of
the applicable class of Certificates, as the case may be. A Noteholder's
portion of the aggregate outstanding principal balance of the related class
of Notes is the product of (i) the original denomination of such
Noteholder's Note and (ii) the applicable Note Pool Factor. A
Certificateholder's portion of the aggregate outstanding Certificate
Balance for the related class of Certificates is the product of (i) the
original denomination of such Certificateholder's Certificate and (ii) the
applicable Certificate Pool Factor.
The Noteholders, if any, and the Certificateholders will receive
reports on or about each Payment Date concerning payments received on the
Receivables, the Pool Balance (as such term is defined in the related
Prospectus Supplement, the "Pool Balance"), each Certificate Pool Factor or
Note Pool Factor, as applicable, and various other items of information,
including amounts allocated or distributed for such Payment Date. In
addition, Securityholders of record during any calendar year will be
furnished information for tax reporting purposes not later than the latest
date permitted by law. See "Certain Information Regarding the
Securities-Reports to Securityholders".
USE OF PROCEEDS
The net proceeds from the sale of the Securities of a given series
will be applied by the Seller or the applicable Trust (i) to the purchase
of the Receivables and/or repayment of any related Warehouse Financing,
(ii) to make the initial deposit into the Reserve Account, if any, (iii) to
make the deposit of the Pre-Funded Amount into the Pre-Funding Account, if
any, and (iv) such other uses as may be set forth in the related Prospectus
Supplement. The portion of the net proceeds paid to the Seller will be
used to purchase the Receivables from the Affiliates.
THE SELLER
The Seller is a wholly-owned subsidiary of Norwest Corporation, a
diversified financial services company incorporated under the laws of the
State of Delaware and registered under the Bank Holding Company Act of
1956, as amended. The Seller was incorporated in the State of Delaware on
July 3, 1996. The principal executive offices of the Seller are located at
100 West Commons Boulevard, Suite 212, New Castle, Delaware, 19720.
The Seller has taken steps in structuring the transactions described
herein and in the Prospectus Supplement that are intended to ensure that
the voluntary or involuntary application for relief by Norwest Corporation
under any Insolvency Laws will not result in consolidation of the assets
and liabilities of the Seller with those of Norwest Corporation. These
steps include the creation of the Seller as a separate, limited-purpose
subsidiary pursuant to a restated certificate of incorporation containing
certain limitations (including restrictions on the nature of the Seller's
business and a restriction on the Seller's ability to commence a voluntary
case or proceeding under any Insolvency Law without the prior unanimous
affirmative vote of all of its independent directors). Such certificate of
incorporation includes a provision that requires the Seller to have two
directors who qualify under the certificate of incorporation as
"Independent Directors." However, there can be no assurance that the
activities of the Seller would not result in a court's concluding that the
assets and liabilities of the Seller should be consolidated with those of
Norwest Corporation in a proceeding under any Insolvency Law. See "Risk
Factors-Risk of Substantive Consolidation."
The Seller will warrant to the Trust in the Sale and Servicing
Agreement or Pooling and Servicing Agreement, as applicable, that the sale
of the Receivables by the Seller to the Trustee on behalf of the Trust is a
valid sale of such Receivables. In addition, the Seller, the Trustee and
the Trust will treat the conveyance by the Seller of the Receivables as a
sale of the Receivables by the Seller to the Trustee on behalf of the Trust
and the Seller will take or cause to be taken all actions that are required
to perfect the Trustee's ownership in such Receivables. If the Seller were
to become a debtor in a bankruptcy case and a creditor or trustee in
bankruptcy of the Seller or the Seller itself were to take the position
that the sale of Receivables by the Seller to the Trust should instead be
treated as a pledge of the Receivables to secure a borrowing of the Seller,
then delays in payments of collections of the Receivables could occur or
(should the court rule in favor of any such trustee, debtor or creditor)
reductions in the amount of such payments could result. If the transfer of
the Receivables by the Seller to the Trustee on behalf of the Trust is
treated as a pledge instead of a sale, a tax or government lien on the
property of the Seller arising before the transfer of the Receivables to
the Trustee on behalf of the Trust may have priority over such Trustee's
interest in the Receivables. If the conveyance by the Seller of the
Receivables is treated as a sale, the Receivables would not be part of the
Seller's bankruptcy estate and would not be available to the Seller's
creditors.
THE BANK
Norwest Bank Minnesota, N.A., a national banking association, is a
wholly-owned subsidiary of Norwest Corporation, a diversified financial
services company incorporated under the laws of the State of Delaware and
registered under the Bank Holding Company Act of 1956, as amended. Norwest
Bank Minnesota, N.A. is engaged in banking and related activities,
including providing automotive financing services to its customers and to
automotive dealers and their customers. The principal executive offices of
Norwest Bank Minnesota, N.A. are located at Norwest Center, Sixth and
Marquette, Minneapolis, Minnesota, 55479, and its telephone number is (612)
667-1234.
DESCRIPTION OF THE NOTES
General
With respect to each Trust that issues Notes, one or more classes of
Notes of the related series will be issued pursuant to the terms of an
Indenture, a form of which has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The following summary
describes the material terms and provisions of the Indenture and Notes, but
it does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the applicable Notes
and the Indenture.
Each class of Notes will initially be represented by one or more
Notes, in each case registered in the name of a nominee of DTC (together
with any successor depository selected by the Trust, the "Depository")
except as set forth below. See "Certain Information Regarding the
Securities-Definitive Securities." Notes will be available for purchase in
denominations specified in the related Prospectus Supplement or, if not so
specified, in denominations of $1,000 and integral multiples thereof.
Notes may be issued in book-entry form or as Definitive Notes and if not
otherwise specified in the related Prospectus Supplement, will be issued in
book-entry form only. As to Notes issued in book-entry form, the Seller
has been informed by DTC that DTC's nominee will be Cede, unless another
nominee is specified in the related Prospectus Supplement. Accordingly,
such nominee is expected to be the holder of record of the Notes of each
such class. Unless and until Definitive Notes are issued in replacement
for book-entry Notes under the limited circumstances described herein or in
the related Prospectus Supplement, no Note Owner will be entitled to
receive a physical certificate representing a Note. See "Certain
Information Regarding the Securities-Definitive Securities." As to the
Notes issued in book-entry form, all references herein and in the related
Prospectus Supplement to actions by Noteholders refer to actions taken by
DTC upon instructions from its participating organizations (the
"Participants") and all references herein and in the related Prospectus
Supplement to distributions, notices, reports and statements to Noteholders
refer to distributions, notices, reports and statements to DTC or its
nominee, as the registered holder of the Notes, for distribution to
Noteholders in accordance with DTC's procedures with respect thereto. See
"Certain Information Regarding the Securities-Book-Entry Registration" and
"-Definitive Securities".
Principal and Interest on the Notes
The timing and priority of payment, seniority, Interest Rate and
amount of or method of determining payments of principal and interest on
each class of Notes of a given series will be described in the related
Prospectus Supplement. The right of holders of any class of Notes to
receive payments of principal and interest may be senior or subordinate to
the rights of holders of any other class or classes of Notes of such
series, as described in the related Prospectus Supplement. The dates for
payments of interest and principal on the Notes of such series may be
different from the Distribution Dates for the Certificates of such series.
To the extent specified in the related Prospectus Supplement, payments of
interest on the Notes other than certain Strip Notes of such series will be
made prior to payments of principal thereon. To the extent provided in the
related Prospectus Supplement, a series may include one or more classes of
Strip Notes entitled to (i) principal payments with disproportionate,
nominal or no interest payments or (ii) interest payments with
disproportionate, nominal or no principal payments. Each class of Notes
may have a different Interest Rate, which may be a fixed, variable or
adjustable Interest Rate (and which may be zero for certain classes of
Strip Notes), or any combination of the foregoing. The related Prospectus
Supplement will specify the Interest Rate for each class of Notes of a
given series or the method for determining such Interest Rate. See also
"Certain Information Regarding the Securities-Fixed Rate Securities" and
"-Floating Rate Securities". One or more classes of Notes of a series may
be redeemable in whole or in part under the circumstances specified in the
related Prospectus Supplement, including at the end of the Funding Period
(if any) or as a result of the exercise by the Seller or Servicer of its
option to purchase the related Receivables Pool.
To the extent specified in the related Prospectus Supplement,
payments to Noteholders of all classes within a series in respect of
interest will have the same priority. Under certain circumstances, the
amount available for such payments could be less than the amount of
interest payable on the Notes on any of the dates specified for payments in
the related Prospectus Supplement (each, a "Payment Date", which may be the
same date as each applicable Distribution Date as specified in the related
Prospectus Supplement), in which case each class of Noteholders will
receive its ratable share (based upon the aggregate amount of interest due
to such class of Noteholders) of the aggregate amount available to be
distributed in respect of interest on the Notes of such series. See
"Description of the Transfer and Servicing Agreements-Distributions" and
"-Credit and Cash Flow Enhancement".
In the case of a series of Notes which includes two or more classes
of Notes, the sequential order and priority of payment in respect of
principal and interest, and any schedule or formula or other provisions
applicable to the determination thereof, of each such class will be set
forth in the related Prospectus Supplement. Payments in respect of
principal and interest of any class of Notes will be made on a pro rata
basis among all the Noteholders of such class.
Fixed Payment Notes. To the extent specified in any Prospectus
Supplement, one or more classes of Notes of a given series may have fixed
principal payment schedules. Noteholders of such Notes would be entitled to
receive as payments of principal on any given Payment Date the
applicable amounts set forth on such schedule with respect to such Notes,
in the manner and to the extent set forth in the related Prospectus
Supplement.
Short Term Notes. To the extent specified in any Prospectus
Supplement, one or more classes of Notes of a given series may be
entitled to receive principal payments prior to the receipt of principal
payments by other classes of Securities issued by the applicable Trust. If
so provided in the related Prospectus Supplement, such class or classes of
Notes will have a final scheduled maturity date of less than 397 days from
the initial trade date related thereto and such class or classes will have
received a short-term rating by a Rating Agency that is in one of the two
highest short-term rating categories. The failure to pay such a class of
Notes on or prior to the related Final Scheduled Maturity Date would
constitute an event of default under the related Indenture. In general,
such class or classes of Notes will otherwise be similar to Notes which are
described in this Prospectus.
Planned Amortization Class. To the extent specified in any
Prospectus Supplement, one or more classes of Notes of a given series may
be structured as a planned amortization class ("PAC"). A PAC will be
retired according to a predetermined amortization schedule set forth in the
related Prospectus Supplement and structured to be substantially independent
of the prepayment rate on the Receivables. The timing of distributions in
respect of the other classes of Securities in the related series in some
instances may be slowed down or accelerated so that the PAC scheduled
amortization may be met as provided in the related Prospectus Supplement.
The planned amortization for a PAC set forth in the related Prospectus
Supplement generally will require scheduled sinking fund payments for the PAC
on each Payment Date. Payments to the other classes of Securities in the
related series will be allocated as otherwise set forth in the related
Prospectus Supplement only after the scheduled sinking fund payments or
scheduled amortization payments to the PAC have been made.
Targeted Amortization Class. To the extent specified in any
Prospectus Supplement, one or more classes of Notes of a given series may
be structured as a targeted amortization class ("TAC"). Any TAC will be
similar to a PAC, with support classes providing protection against prepayment
risks to the TAC. However, a TAC will differ from a PAC in that it
generally will not receive as much protection against prepayments as a PAC.
In particular, a TAC will generally provide no protection against the risk
of prepayments occurring more slowly than assumed and generally will not be
structured to permit expected cash flows from non-TAC classes of Securities
to be diverted to the TAC.
Companion Class. To the extent specified in any Prospectus
Supplement, one or more classes of Notes of a given series may be designed
to receive principal payments on a Payment Date only if principal
payments have been made on a specified planned amortization class of Notes
or targeted amortization class of Notes, and to receive any excess payments
over the amount required to reduce the principal amount of the planned
amortization class or targeted amortization class to the planned or
targeted balance for such Payment Date.
The Indenture
Modification of Indenture. With respect to each Trust that has
issued Notes pursuant to an Indenture, the Trust and the Indenture Trustee
may, with the consent of the holders of a majority of the outstanding Notes
of the related series, execute a supplemental indenture to add provisions
to, change in any manner or eliminate any provisions of, the related
Indenture, or modify (except as provided below) in any manner the rights of
the related Noteholders.
With respect to the Notes of a given series, without the consent of
the holder of each outstanding Note affected thereby, no supplemental
indenture will: (i) change the due date of any installment of principal of
or interest on any such Note or reduce the principal amount thereof, the
Interest Rate specified thereon or the redemption price with respect
thereto or change any place of payment where or the coin or currency in
which any such Note or any interest thereon is payable; (ii) impair the
right to institute suit for the enforcement of certain provisions of the
related Indenture regarding payment; (iii) reduce the percentage of the
aggregate amount of the outstanding Notes of such series, the consent of
the holders of which is required for any such supplemental indenture or the
consent of the holders of which is required for any waiver of compliance
with certain provisions of the related Indenture or of certain defaults
thereunder and their consequences as provided for in such Indenture; (iv)
modify or alter the provisions of the related Indenture regarding the
voting of Notes held by the applicable Trust, any other obligor on such
Notes, the Seller or an affiliate of any of them; (v) reduce the percentage
of the aggregate outstanding amount of such Notes, the consent of the
holders of which is required to direct the related Indenture Trustee to
sell or liquidate the Receivables; (vi) decrease the percentage of the
aggregate principal amount of such Notes required to amend the sections of
the related Indenture which specify the applicable percentage of aggregate
principal amount of the Notes of such series necessary to amend such
Indenture or certain other related agreements; or (vii) permit the creation
of any lien ranking prior to or on a parity with the lien of the related
Indenture with respect to any of the collateral for such Notes or, except
as otherwise permitted or contemplated in such Indenture, terminate the
lien of such Indenture on any such collateral or deprive the holder of any
such Note of the security afforded by the lien of such Indenture.
The Trust and the applicable Indenture Trustee may also enter into
supplemental indentures, without obtaining the consent of the Noteholders
of the related series, for the purpose of, among other things, adding any
provisions to or changing in any manner or eliminating any of the
provisions of the related Indenture or of modifying in any manner the
rights of such Noteholders; provided that such action will not materially
and adversely affect the interest of any such Noteholder.
Events Of Default; Rights Upon Event of Default. With respect to the
Notes of a given series, "Events of Default" under the related Indenture
will consist of: (i) a default for five days or more in the payment of any
interest on any such Note; (ii) a default in the payment of the principal
of or any installment of the principal of any such Note when the same
becomes due and payable; (iii) a default in the observance or performance
of any covenant or agreement of the applicable Trust made in the related
Indenture and the continuation of any such default for a period of 30 days
(or for such longer period, not in excess of 90 days, as may be reasonably
necessary to remedy such default; provided that such default is capable of
remedy within 90 days or less and the Servicer on behalf of the related
Indenture Trustee delivers an officer's certificate to the Trustee to the
effect that such Trust has commenced, or will promptly commence and
diligently pursue, all reasonable efforts to remedy such default) after
notice thereof is given to such Trust by the applicable Indenture Trustee
or to such Trust and such Indenture Trustee by the holders of at least 25%
in principal amount of such Notes then outstanding; (iv) any representation
or warranty made by such Trust in the related Indenture or in any
certificate delivered pursuant thereto or in connection therewith having
been incorrect in a material respect as of the time made, and such breach
not having been cured within 30 days (or for such longer period, not in
excess of 90 days, as may be reasonably necessary to remedy such default;
provided that such default is capable of remedy within 90 days or less and
the Servicer on behalf of the related Indenture Trustee delivers an
officer's certificate to the related Indenture Trustee to the effect that
such Trust has commenced, or will promptly commence and diligently pursue,
all reasonable efforts to remedy such default) after notice thereof is
given to such Trust by the applicable Indenture Trustee or to such Trust
and such Indenture Trustee by the holders of at least 25% in principal
amount of such Notes then outstanding; or (v) certain events of bankruptcy,
insolvency, receivership or liquidation of the applicable Trust or the
Seller. However, the amount of principal required to be paid to
Noteholders of such series under the related Indenture will generally be
limited to amounts available to be deposited in the applicable Note
Distribution Account. Therefore, the failure to pay principal on a class
of Notes generally will not result in the occurrence of an Event of Default
until the final scheduled Payment Date for such class of Notes.
If an Event of Default should occur and be continuing with respect to
the Notes of any series, the related Indenture Trustee or holders of a
majority in principal amount of such Notes then outstanding may declare the
principal of such Notes to be immediately due and payable. Such
declaration may, under certain circumstances, be rescinded by the holders
of a percentage of the principal amount of Notes then outstanding specified
in the related Prospectus Supplement and, if not so specified, may be
rescinded by the holder of a majority in principal amount of such Notes
then outstanding.
If the Notes of any series are due and payable following an Event of
Default with respect thereto, the related Indenture Trustee may institute
proceedings to collect amounts due or foreclose on Trust property, exercise
remedies as a secured party, sell the related Receivables or elect to have
the applicable Trust maintain possession of such Receivables and continue
to apply collections on such Receivables as if there had been no
declaration of acceleration. Such Indenture Trustee is prohibited from
selling the related Receivables following an Event of Default, other than a
default in the payment of any principal of or a default for five days or
more in the payment of any interest on any Note of such series, unless (i)
the holders of all such outstanding Notes consent to such sale, (ii) the
proceeds of such sale are sufficient to pay in full the principal of and
the accrued interest on such outstanding Notes at the date of such sale, or
(iii) such Indenture Trustee determines that the proceeds of Receivables
would not be sufficient on an ongoing basis to make all payments on such
Notes as such payments would have become due if such obligations had not
been declared due and payable, and such Indenture Trustee obtains the
consent of the holders of 66-2/3% of the aggregate outstanding amount of
such Notes.
If an Event of Default occurs and is continuing with respect to a
series of Notes, such Indenture Trustee will be under no obligation to
exercise any of the rights or powers under such Indenture at the request or
direction of any of the holders of such Notes, if such Indenture Trustee
believes it will not be adequately indemnified against the costs, expenses
and liabilities which might be incurred by it in complying with such
request. Subject to the provisions for indemnification and certain
limitations contained in the related Indenture, the holders of a majority
in principal amount of the outstanding Notes of a given series will have
the right to direct the time, method and place of conducting any proceeding
or any remedy available to the applicable Indenture Trustee, and the
holders of a majority in principal amount of such Notes then outstanding
may, in certain cases, waive any default with respect thereto, except a
default in the payment of principal or interest or a default in respect of
a covenant or provision of such Indenture that cannot be modified without
the waiver or consent of all the holders of such outstanding Notes.
No holder of a Note of any series will have the right to institute
any proceeding with respect to the related Indenture, unless (i) such
holder previously has given to the applicable Indenture Trustee written
notice of a continuing Event of Default, (ii) the holders of not less than
25% in principal amount of the outstanding Notes of such series have made
written request to such Indenture Trustee to institute such proceeding in
its own name as Indenture Trustee, (iii) such holder or holders have
offered such Indenture Trustee satisfactory indemnity, (iv) such Indenture
Trustee has for 60 days failed to institute such proceeding, and (v) no
direction inconsistent with such written request has been given to such
Indenture Trustee during such 60-day period by the holders of a majority in
principal amount of such outstanding Notes.
With respect to any Trust, neither the related Indenture Trustee nor
the related Trustee in its individual capacity, nor any holder of a
Certificate representing an ownership interest in such Trust nor any of
their respective owners, beneficiaries, agents, officers, directors,
employees, affiliates, successors or assigns will, in the absence of an
express agreement to the contrary, be personally liable for the payment of
the principal of or interest on the related Notes or for the agreements of
such Trust contained in the applicable Indenture.
Certain Covenants
Each Indenture will provide that the related Trust may not
consolidate with or merge into any other entity, unless (i) the entity
formed by or surviving such consolidation or merger is organized under the
laws of the United States or any state, (ii) such entity expressly assumes
such Trust's obligation to make due and punctual payments upon the Notes of
the related series and the performance or observance of every agreement and
covenant of such Trust under the Indenture, (iii) no Event of Default shall
have occurred and be continuing immediately after such merger or
consolidation, (iv) such Trust has been advised that the rating of the
Notes or the Certificates of such series then in effect would not be
reduced or withdrawn by the Rating Agencies as a result of such merger or
consolidation, (v) such Trust has received an opinion of counsel to the
effect that such consolidation or merger would have no material adverse tax
consequence to the Trust or to any related Noteholder or Certificateholder,
and (vi) any action necessary to maintain the lien and security interest
under the Indenture has been taken.
Each Trust will not, among other things, (i) except as expressly
permitted by the applicable Indenture, the applicable Transfer and
Servicing Agreements or certain related documents with respect to such
Trust (collectively, the "Related Documents"), sell, transfer, exchange or
otherwise dispose of any of the assets of such Trust, (ii) claim any credit
on or make any deduction from the principal and interest payable in respect
of the Notes of the related series (other than amounts withheld under the
Code or applicable state law) or assert any claim against any present or
former holder of such Notes because of the payment of taxes levied or
assessed upon such Trust, (iii) permit the validity or effectiveness of the
related Indenture to be impaired or permit any person to be released from
any covenants or obligations with respect to such Notes under such
Indenture except as may be expressly permitted thereby, (iv) permit any
lien, charge, excise, claim, security interest, mortgage or other
encumbrance (other than certain liens that arise by operation of law) to be
created on or extend to or otherwise arise upon or burden the assets of
such Trust or any part thereof, or any interest therein or the proceeds
thereof, or (v) permit the lien of the related Indenture not to constitute
a valid first priority (other than certain liens that arise by operation of
law) security interest in the assets of such Trust.
No Trust may engage in any activity other than as specified under the
section of the related Prospectus Supplement entitled "The Trust". No
Trust will incur, assume or guarantee any indebtedness other than
indebtedness incurred pursuant to the related Notes and the related
Indenture, pursuant to any Advances made to it by the Servicer or otherwise
in accordance with the Related Documents.
Annual Compliance Statement. Each Trust will be required to file
annually with the related Indenture Trustee a written statement as to the
fulfillment of its obligations under the Indenture.
Indenture Trustee's Annual Report. The Indenture Trustee for each
Trust will be required to mail each year to all related Noteholders a brief
report relating to its eligibility and qualification to continue as
Indenture Trustee under the related Indenture, any amounts advanced by it
under the Indenture, the amount, interest rate and maturity date of certain
indebtedness owing by such Trust to the applicable Indenture Trustee in its
individual capacity, the property and funds physically held by such
Indenture Trustee as such and any action taken by it that materially
affects the related Notes and that has not been previously reported.
Satisfaction and Discharge of Indenture. An Indenture will be
discharged with respect to the collateral securing the related Notes upon
the delivery to the related Indenture Trustee for cancellation of all such
Notes or, with certain limitations, upon deposit with such Indenture
Trustee of funds sufficient for the payment in full of all such Notes.
The Indenture Trustee
The Indenture Trustee for a series of Notes will be specified in the
related Prospectus Supplement. The Indenture Trustee for any series may
resign at any time, in which event the Issuer will be obligated to appoint
a successor trustee for such series. The Issuer may also remove any such
Indenture Trustee if such Indenture Trustee ceases to be eligible to
continue as such under the related Indenture or if such Indenture Trustee
becomes insolvent. In such circumstances, the Issuer will be obligated to
appoint a successor trustee for the applicable series of Notes. Any
resignation or removal of the Indenture Trustee and appointment of a
successor trustee for any series of Notes does not become effective until
acceptance of the appointment by the successor trustee for such series.
DESCRIPTION OF THE CERTIFICATES
General
With respect to each Trust, one or more classes of Certificates of
the related series will be issued pursuant to the terms of a Trust
Agreement or a Pooling and Servicing Agreement, a form of each of which has
been filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. The following summary describes the material
terms and provisions of the Certificates, but it does not purport to be
complete and is subject to, and is qualified in its entirety by reference
to, all the provisions of the Certificates and the Trust Agreement or
Pooling and Servicing Agreement, as applicable.
Except for the Certificates, if any, of a given series purchased by
the Seller, each class of Certificates will initially be represented by one
or more Certificates registered in the name of the Depository, except as
set forth below. See "Certain Information Regarding the Securities -
Definitive Securities." Except for the Certificates, if any, of a given
series purchased by the Seller, the Certificates will be available for
purchase in minimum denominations specified in the related Prospectus
Supplement, or if not so specified, in denominations of $1,000 and integral
multiples of $1,000 in excess thereof. Certificates may be issued in
book-entry form or as Definitive Certificates and if not otherwise
specified in the related Prospectus Supplement will be available in
book-entry form only. As to the Certificates issued in book-entry form,
the Seller has been informed by DTC that DTC's nominee will be Cede, unless
another nominee is specified in the related Prospectus Supplement.
Accordingly, such nominee is expected to be the holder of record of the
Certificates of any series that are not purchased by the Seller. Unless
and until Definitive Certificates are issued in replacement for book-entry
Certificates under the limited circumstances described herein or in the
related Prospectus Supplement, no Certificate Owner (other than the Seller)
will be entitled to receive a physical certificate representing a
Certificate. See "Certain Information Regarding the Securities-
Definitive Securities." As to Certificates issued in book-entry form, all
references herein and in the related Prospectus Supplement to actions by
Certificateholders refer to actions taken by DTC upon instructions from the
Participants and all references herein and in the related Prospectus
Supplement to distributions, notices, reports and statements to
Certificateholders refer to distributions, notices, reports and statements
to DTC or its nominee, as the case may be, as the registered holder of the
Certificates, for distribution to Certificateholders in accordance with
DTC's procedures with respect thereto. See "Certain Information Regarding
the Securities--Book-Entry Registration" and "-Definitive Securities".
Any Certificates of such series owned by the Seller or its affiliates will
be entitled to equal and proportionate benefits under the applicable Trust
Agreement, except that such Certificates will be deemed not to be
outstanding for the purpose of determining whether the requisite percentage
of Certificateholders have given any request, demand, authorization,
direction, notice, consent or other action under the Related Documents
(other than the commencement by the related Trust of a voluntary proceeding
in bankruptcy as described under "Description of the Transfer and Servicing
Agreements-Insolvency Event").
Distributions of Principal and Interest
The timing and priority of distributions, seniority, allocations of
losses, Certificate Rate and amount of or method of determining
distributions with respect to principal and interest of each class of
Certificates will be described in the related Prospectus Supplement.
Distributions of interest on such Certificates other than certain Strip
Certificates will be made on the dates specified in the related Prospectus
Supplement (each, a "Distribution Date") and will be made prior to
distributions with respect to principal of such Certificates. To the
extent provided in the related Prospectus Supplement, a series may include
one or more classes of Strip Certificates entitled to (i) distributions in
respect of principal with disproportionate, nominal or no interest
distributions, or (ii) interest distributions with disproportionate,
nominal or no distributions in respect of principal. Each class of
Certificates may have a different Certificate Rate, which may be a fixed,
variable or adjustable Certificate Rate (and which may be zero for certain
classes of Strip Certificates) or any combination of the foregoing. The
related Prospectus Supplement will specify the Certificate Rate for each
class of Certificates of a given series or the method for determining such
Certificate Rate. See also "Certain Information Regarding the
Securities-Fixed Rate Securities" and "-Floating Rate Securities". If a
series of Securities includes classes of Notes, such Notes and Certificates
will be issued by the same Trust and payable from the same Trust property,
and, to the extent specified in the related Prospectus Supplement,
distributions
in respect of the Certificates of such series will be subordinate to
payments in respect of the Notes of such series as more fully described in
the related Prospectus Supplement. Distributions in respect of interest on
and principal of any class of Certificates will be made on a pro rata basis
among all the Certificateholders of such class.
In the case of a series of Certificates which includes two or more
classes of Certificates, the timing, sequential order, priority of payment
or amount of distributions in respect of interest and principal, and any
schedule or formula or other provisions applicable to the determination
thereof, of each such class shall be as set forth in the related Prospectus
Supplement.
CERTAIN INFORMATION REGARDING THE SECURITIES
Fixed Rate Securities
Each class of Securities (other than certain classes of Strip Notes
or Strip Certificates) may bear interest at a fixed rate per annum ("Fixed
Rate Securities") or at a variable or adjustable rate per annum ("Floating
Rate Securities"), as more fully described below and in the related
Prospectus Supplement. Each class of Fixed Rate Securities will bear
interest at the applicable per annum Interest Rate or Certificate Rate, as
the case may be, specified in the related Prospectus Supplement. Interest
on each class of Fixed Rate Securities will be computed on the basis of a
360-day year of twelve 30-day months or on such other day count basis as is
specified in the applicable Prospectus Supplement. See "Description of the
Notes-Principal and Interest on the Notes" and "Description of the
Certificates- Distributions of Principal and Interest".
Floating Rate Securities
Each class of Floating Rate Securities will bear interest for each
applicable Interest Reset Period (as such term is defined in the related
Prospectus Supplement with respect to a class of Floating Rate Securities,
"Interest Reset Period") at a rate per annum determined by reference to an
interest rate basis (the "Base Rate"), plus or minus the Spread, if any, or
multiplied by the Spread Multiplier, if any, in each case as specified in
the related Prospectus Supplement. The "Spread" is the number of basis
points (one basis point equals one one-hundredth of a percentage point)
that may be specified in the applicable Prospectus Supplement as being
applicable to such class, and the "Spread Multiplier" is the percentage
that may be specified in the applicable Prospectus Supplement as being
applicable to such class.
The applicable Prospectus Supplement will designate a Base Rate for a
given Floating Rate Security based on the London interbank offered rate
("LIBOR"), commercial paper rates, Federal funds rates, U.S. Government
treasury securities rates, negotiable certificates of deposit rates or
another rate as set forth in such Prospectus Supplement.
As specified in the applicable Prospectus Supplement, Floating Rate
Securities of a given class may also have either or both of the following
(in each case expressed as a rate per annum): (i) a maximum limitation, or
ceiling, on the rate at which interest may accrue during any interest
period and (ii) a minimum limitation, or floor, on the rate at which
interest may accrue during any interest period. In addition to any maximum
interest rate that may be applicable to any class of Floating Rate
Securities, the interest rate applicable to any class of Floating Rate
Securities will in no event be higher than the maximum rate permitted by
applicable law, as the same may be modified by United States law of general
application.
Each Trust with respect to which a class of Floating Rate Securities
will be issued will appoint, and enter into agreements with, a calculation
agent (each, a "Calculation Agent") to calculate interest rates on each
such class of Floating Rate Securities issued with respect thereto. The
applicable Prospectus Supplement will set forth the identity of the
Calculation Agent for each such class of Floating Rate Securities of a
given series, which may be either the Trustee or Indenture Trustee with
respect to such series. All determinations of interest by the Calculation
Agent shall, in the absence of manifest error, be conclusive for all
purposes and binding on the holders of Floating Rate Securities of a given
class. All percentages resulting from any calculation of the rate of
interest on a Floating Rate Security will be rounded, if necessary, in the
manner specified in the related Prospectus Supplement or, if not so
specified to the nearest 1/100,000 of 1% (.0000001), with five
one-millionths of a percentage point rounded upward.
Book-Entry Registration
With respect to each class of Securities of a given series issued in
book-entry form, Securityholders may hold their Securities through DTC (in
the United States) or Cedel or Euroclear (in Europe) if they are
participants of such systems, or indirectly through organizations that are
participants in such systems. DTC's Nominee will hold the global
Securities. Cedel and Euroclear will hold omnibus positions on behalf of
the Cedel Participants and the Euroclear Participants, respectively,
through customers' securities accounts in Cedel's and Euroclear's names on
the books of their respective depositories (collectively, the
"Depositaries") which in turn will hold such positions in customers'
securities accounts in the Depositaries' names on the books of DTC. For
additional information regarding clearance and settlement procedures see
Annex I hereto.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, 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 holds securities for its Participants ("DTC
Participants") and facilitates the clearance and settlement among DTC
Participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic book-entry changes in DTC
Participants' accounts, thereby eliminating the need for physical movement
of securities certificates. DTC Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to the DTC system is also available to
others such as securities brokers and dealers, banks, and trust companies
that clear through or maintain a custodial relationship with a DTC
Participant, either directly or indirectly ("Indirect Participants"). The
rules applicable to DTC and DTC Participants are on file with the
Securities and Exchange Commission.
Transfers between DTC Participants will occur in accordance with DTC
rules. Transfers between Cedel Participants and Euroclear Participants will
occur in the ordinary way in accordance with their applicable rules and
operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
Participants or Euroclear Participants, on the other, will be effected in
DTC in accordance with DTC rules on behalf of the relevant European
international clearing system by its Depositary; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established
deadlines (European time). The relevant European international clearing
system will, if the transaction meets its settlement requirements, deliver
instructions to its Depositary to take action to effect final settlement on
its behalf by delivering or receiving securities in DTC, and making or
receiving payment in accordance with normal procedures for same-day funds
settlement applicable to DTC. Cedel Participants and Euroclear Participants
may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in Cedel or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business
day following the DTC settlement date, and such credits or any transactions
in such securities settled during such processing will be reported to the
relevant Cedel Participant or Euroclear Participant on such business day.
Cash received in Cedel or Euroclear as a result of sales of securities by
or through a Cedel Participant or a Euroclear Participant to a DTC
Participant will be received with value on the DTC settlement date but will
be available in the relevant Cedel or Euroclear cash account only as of the
business day following settlement in DTC.
Purchases of Securities under the DTC system must be made by or
through DTC Participants, which will receive a credit for the Securities on
DTC's records. The ownership interest of each actual Security Owner is in
turn to be recorded on the DTC Participants' and Indirect Participants'
records. Security Owners will not receive written confirmation from DTC of
their purchase, but Security Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the DTC Participant or Indirect
Participant through which the Security Owner entered into the transaction.
Transfers of ownership interests in the Securities are to be accomplished
by entries made on the books of DTC Participants acting on behalf of
Security Owners. Security Owners will not receive certificates representing
their ownership interest in Securities, except in the event that use of the
book-entry system for the Securities is discontinued. Except to the extent
Seller holds Certificates with respect to any series of Securities, it is
anticipated that the only "Securityholder", "Noteholder" and
"Certificateholder" will be DTC's Nominee. Note Owners will not be
recognized by each Indenture Trustee as Noteholders, as such term is used
in each Indenture, and Note Owners will be permitted to exercise the rights
of Noteholders only indirectly through DTC and DTC Participants.
Similarly, Certificate Owners will not be recognized by each Trustee as
Certificateholders as such term is used in each Trust Agreement or Pooling
and Servicing Agreement, and Certificate Owners will be permitted to
exercise the rights of Certificateholders only indirectly through DTC and
DTC Participants.
To facilitate subsequent transfers, all Securities deposited by DTC
Participants with DTC are registered in the name of DTC's Nominee. The
deposit of Securities with DTC and their registration in the name of DTC's
Nominee effects no change in beneficial ownership. DTC has no knowledge of
the actual Security Owners of the Securities; DTC's records reflect only
the identity of the DTC Participants to whose accounts such Securities are
credited, which may or may not be the Security Owners. The DTC Participants
will remain responsible for keeping account of their holdings on behalf of
their customers.
Conveyance of notices and other communications by DTC to DTC
Participants, by DTC Participants to Indirect Participants, and by DTC
Participants and Indirect Participants to Security Owners will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Neither DTC nor DTC's Nominee will consent or vote with respect to
Securities. Under its usual procedures, DTC mails an omnibus proxy to the
issuer as soon as possible after the record date, which assigns DTC's
Nominees's consenting or voting rights to those DTC Participants to whose
accounts the Securities are credited on the record date (identified in a
listing attached thereto).
Principal and interest payments on the Securities will be made to
DTC. DTC's practice is to credit Participants' accounts on the applicable
Distribution Date in accordance with their respective holdings shown on
DTC's records unless DTC has reason to believe that it will not receive
payment on such Distribution Date. Payments by DTC Participants to Security
Owners will be governed by standing instructions and customary practices,
as is the case with securities held for the accounts of customers in bearer
form or registered in "street name" and will be the responsibility of such
DTC Participant and not of DTC, the related Indenture Trustee or the
related Trustee, as applicable (the "Applicable Trustee") or the Seller,
subject to any statutory or regulatory requirements as may be in effect
from time to time. Payment of principal and interest to DTC is the
responsibility of the Applicable Trustee, disbursement of such payments to
DTC Participants shall be the responsibility of DTC, and disbursement of
such payments to Security Owners shall be the responsibility of DTC
Participants and Indirect Participants. Under a book-entry format,
Securityholders may experience some delay in their receipt of payments,
since such payments will be forwarded by the Applicable Trustee to DTC's
Nominee. DTC will forward such payments to DTC Participants which
thereafter will forward them to Indirect Participants or Security Owners.
Because DTC can only act on behalf of DTC Participants, who in turn
act on behalf of Indirect Participants and certain banks, the ability of a
Securityholder to pledge Securities to persons or entities that do not
participate in the DTC system, or otherwise take actions with respect to
such Securities, may be limited due to the lack of a physical certificate
for such Securities.
DTC has advised the Seller that it will take any action permitted to
be taken by a Noteholder under the related Indenture or a Certificateholder
under the related Trust Agreement or Pooling and Servicing Agreement only
at the direction of one or more DTC Participants to whose accounts with DTC
the applicable Notes or Certificates are credited. DTC may take
conflicting actions with respect to other undivided interests to the extent
that such actions are taken on behalf of Participants whose holdings
include such undivided interests.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Seller believes to be
reliable, but the Seller takes no responsibility for the accuracy thereof.
Cedel Bank, societe anonyme ("Cedel") is incorporated under the laws
of Luxembourg as a professional depository. Cedel holds securities for its
participating organizations ("Cedel Participants") and facilitates the
clearance and settlement of securities transactions between Cedel
Participants through electronic book-entry changes in accounts of Cedel
Participants, thereby eliminating the need for physical movement of
certificates. Transactions may be settled in Cedel in any of 32 currencies,
including United States dollars. Cedel provides to its Cedel Participants,
among other things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. Cedel interfaces with domestic markets in several countries. As
a professional depository, Cedel is subject to regulation by the Luxembourg
Monetary Institute. Cedel Participants are recognized financial
institutions around the world, including underwriters, securities brokers
and dealers, banks, trust companies, clearing corporations and certain
other organizations and may include the underwriters of any series of
Securities. Indirect access to Cedel is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a Cedel Participant, either directly or
indirectly.
The Euroclear System was created in 1968 to hold securities for
participants of the Euroclear System ("Euroclear Participants") and to
clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby
eliminating the need for physical movement of certificates and any risk
from lack of simultaneous transfers of securities and cash. Transactions
may now be settled in any of 32 currencies, including United States
dollars. The Euroclear System includes various other services, including
securities lending and borrowing and interfaces with domestic markets in 25
countries generally similar to the arrangements for cross-market transfers
with DTC described above. The Euroclear System is operated by Morgan
Guaranty Trust Company of New York, Brussels, Belgium office (the
"Euroclear Operator" or "Euroclear"), under contract with Euroclear
Clearance System, Societe Cooperative, a Belgian cooperative corporation
(the "Cooperative"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear
cash accounts are accounts with the Euroclear Operator, not the
Cooperative. The Cooperative Board establishes policy for the Euroclear
System. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial
intermediaries and may include the underwriters of any series of
Securities. Indirect access to the Euroclear System is also available to
other firms that maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such,
it is regulated and examined by the Board of Governors of the Federal
Reserve System and the New York State Banking Department, as well as the
Belgian Banking Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of
Euroclear and the related Operating Procedures of the Euroclear System
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments
with respect to securities in the Euroclear System. All securities in the
Euroclear System are held on a fungible basis without attribution of
specific certificates to specific securities clearance accounts. The
Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to Securities held through Cedel or
Euroclear will be credited to the cash accounts of Cedel Participants or
Euroclear Participants in accordance with the relevant system's rules and
procedures, to the extent received by its Depositary. Such distributions
will be subject to tax reporting in accordance with relevant United States
tax laws and regulations. See "Federal Income Tax Consequences." Cedel or
the Euroclear Operator, as the case may be, will take any other action
permitted to be taken by a Securityholder under a related Agreement on
behalf of a Cedel Participant or Euroclear Participant only in accordance
with its relevant rules and procedures and subject to its Depositary's
ability to effect such actions on its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of Securities among
participants of DTC, Cedel and Euroclear, they are under no obligation to
perform or continue to perform such procedures and such procedures may be
discontinued at any time. Under such circumstances, in the event that a
successor securities depository for DTC is not obtained, Definitive
Securities are required to be printed and delivered. The Seller may decide
to discontinue use of the system of book-entry transfers through DTC (or a
successor securities depository). In that event, Definitive Securities will
be delivered to Securityholders. See "-Definitive Securities."
NONE OF THE TRUST, THE SELLER, THE BANK, THE SERVICER, ANY
SUBSERVICER, ANY APPLICABLE TRUSTEE NOR ANY OF THE UNDERWRITERS WILL HAVE
ANY RESPONSIBILITY OR OBLIGATION TO ANY DTC PARTICIPANTS, CEDEL
PARTICIPANTS OR EUROCLEAR PARTICIPANTS OR THE PERSONS FOR WHOM THEY ACT AS
NOMINEES WITH RESPECT TO (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC,
CEDEL, EUROCLEAR OR ANY PARTICIPANT, (2) THE PAYMENT BY DTC, CEDEL,
EUROCLEAR OR ANY PARTICIPANT OF ANY AMOUNT DUE TO ANY SECURITY OWNER IN
RESPECT OF THE PRINCIPAL BALANCE OF, OR INTEREST ON, THE SECURITIES, (3)
THE DELIVERY BY ANY DTC PARTICIPANT, CEDEL PARTICIPANT, OR EUROCLEAR
PARTICIPANT OF ANY NOTICE TO ANY SECURITY OWNER WHICH IS REQUIRED OR
PERMITTED UNDER THE TERMS OF THE APPLICABLE AGREEMENTS TO BE GIVEN TO
SECURITYHOLDERS OR (4) ANY OTHER ACTION TAKEN BY DTC OR DTC'S NOMINEE AS
THE SECURITYHOLDER.
Definitive Securities
With respect to any series of Notes and any series of Certificates
issued in book-entry form, such Notes or Certificates will be issued in
fully registered, certificated form ("Definitive Notes" and "Definitive
Certificates", respectively, and collectively referred to herein as
"Definitive Securities") to Noteholders or Certificateholders or their
respective nominees, rather than to DTC or its nominee, if the related
Prospectus Supplement so provides with respect to the initial issuance of
any such Securities thereunder and, if the related Prospectus Supplement
does not so provide, only if (i) Seller advises the related Trustee that
DTC is no longer willing or able to discharge properly its responsibilities
as depository with respect to such Securities and such Trustee is unable to
locate a qualified successor, (ii) the Seller at its option, advises the
related Trustee that it elects to terminate the book-entry system through
DTC, or (iii) after the occurrence of an Event of Default or a Servicer
Termination Event with respect to such Securities, holders representing at
least a majority of the outstanding principal amount of the Notes or the
Certificates, as the case may be, of such series advise the Applicable
Trustee and DTC through its Participants in writing that the continuation
of a book-entry system through DTC (or a successor thereto) with respect to
such Notes or Certificates is no longer in the best interest of the holders
of such Securities.
Upon the occurrence of any event described in the immediately
preceding paragraph, the Applicable Trustee will be required to notify all
applicable Security Owners of a given series through Participants of the
availability of Definitive Securities. Upon surrender by DTC of the
definitive certificates representing the corresponding Securities and
receipt of instructions for re-registration, the Applicable Trustee will
reissue such Securities as Definitive Securities to such Securityholders.
Distributions of principal of, and interest on, Definitive Securities
will be made by the Applicable Trustee in accordance with the procedures
set forth in the related Indenture or the related Trust Agreement or
Pooling and Servicing Agreement, as applicable, directly to holders of
Definitive Securities in whose names the Definitive Securities were
registered at the close of business on the applicable record date specified
for such Securities in the related Prospectus Supplement. Such
distributions will be made by check mailed to the address of such holder as
it appears on the register maintained by the Applicable Trustee. The final
payment on any such Definitive Security, however, will be made only upon
presentation and surrender of such Definitive Security at the office or
agency specified in the notice of final distribution to the applicable
Securityholders.
Definitive Securities will be transferable and exchangeable at the
offices of the Applicable Trustee or of a registrar named in a notice
delivered to holders of Definitive Securities. No service charge will be
imposed for any registration of transfer or exchange, but the Applicable
Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith.
List of Securityholders
Three or more holders of the Notes of a given series or one or more
holders of such Notes evidencing not less than 25% of the aggregate
outstanding principal balance of such Notes may, by written request to the
related Indenture Trustee, obtain access to the list of all Noteholders of
such series maintained by such Indenture Trustee for the purpose of
communicating with other Noteholders with respect to their rights under the
related Indenture or under such Notes. Unless Definitive Notes have been
issued, the only "Noteholder" appearing on the list maintained by the
related Indenture Trustee will be Cede, as nominee for DTC. In such
circumstances, any Note Owner wishing to communicate with other Note Owners
will not be able to identify those Note Owners through the Indenture
Trustee and instead will have to attempt to identify them through DTC and
its Participants or such other means as such Note Owner may find available.
Three or more holders of the Certificates of a given series or one or
more holders of such Certificates evidencing not less than 25% of the
Certificate Balance of such Certificates may, by written request to the
related Trustee, obtain access to the list of all Certificateholders of
such series maintained by such Trustee for the purpose of communicating
with other Certificateholders with respect to their rights under the
related Trust Agreement or Pooling and Servicing Agreement or under such
Certificates. Unless Definitive Certificates have been issued, the only
"Certificateholder" appearing on the list maintained by the related Trustee
will be Cede, as nominee for DTC. In such circumstances, any Certificate
Owner wishing to communicate with other Certificate Owners will not be able
to identify those Certificate Owners through the Trustee and instead will
have to attempt to identify them through DTC and its Participants or such
other means as such Certificate Owner may find available.
Reports to Securityholders
With respect to each series of Securities, on or prior to each
Payment Date or Distribution Date, as applicable, the Servicer will prepare
and provide to the related Trustee a statement to be delivered to the
related Securityholders. With respect to each series of Securities, each
such statement to be delivered to Noteholders will include (to the extent
applicable) the following information (and any other information so
specified in the related Prospectus Supplement) as to the Notes of such
series with respect to such Payment Date or the period since the previous
Payment Date, as applicable, and each such statement to be delivered to
Certificateholders will include (to the extent applicable) the following
information (and any other information so specified in the related
Prospectus Supplement) as to the Certificates of such series with respect
to such Distribution Date or the period since the previous Distribution
Date, as applicable:
(i) the amount of the distribution allocable to principal of
each class of such Notes and to the Certificate Balance of each class
of such Certificates;
(ii) the amount of the distribution allocable to interest on or
with respect to each class of Securities of such series;
(iii) the amount of the distribution allocable to draws from the
Reserve Account (if any), any Yield Supplement Account or payments in
respect of any other credit or cash flow enhancement arrangement;
(iv) the Pool Balance as of the close of business on the last
day of the preceding Collection Period;
(v) the aggregate outstanding principal balance and the Note
Pool Factor for each class of such Notes, and the Certificate Balance
and the Certificate Pool Factor for each class of such Certificates,
each after giving effect to all payments reported under clause (i)
above on such date;
(vi) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period or Collection Periods, as the
case may be;
(vii) the Interest Rate or Certificate Rate for the next period
for any class of Notes or Certificates of such series with variable or
adjustable rates;
(viii) the amount of the aggregate realized losses, if any, for
the preceding Collection Period;
(ix) the Noteholders' Interest Carryover Shortfall, the
Noteholders' Principal Carryover Shortfall, the Certificateholders'
Interest Carryover Shortfall and the Certificateholders' Principal
Carryover Shortfall (each as defined in the related Prospectus
Supplement), if any, in each case as applicable to each class of
Securities, and the change in such amounts from the preceding
statement;
(x) the aggregate Purchase Amounts for Receivables, if any,
that were repurchased in such Collection Period;
(xi) the balance of any Yield Supplement Account or the Reserve
Account (if any) on such date, after giving effect to changes therein
on such date;
(xii) for each such date during the Funding Period (if any), the
remaining Pre-Funded Amount;
(xiii) for the first such date that is on or immediately
following the end of the Funding Period (if any), the amount of any
remaining Pre-Funded Amount that has not been used to fund the
purchase of Subsequent Receivables and is being passed through as
payments of principal on the Securities of such series; and
(xiv) the amount of Advances on such date.
Each amount set forth pursuant to subclauses (i), (ii), (vi) and (ix)
with respect to the Notes or the Certificates of any series will be
expressed as a dollar amount per $1,000 of the initial principal balance of
such Notes or the initial Certificate Balance of such Certificates, as
applicable.
Within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of each Trust, the Applicable
Trustee will mail to each person who at any time during such calendar year
has been a Securityholder with respect to such Trust and received any
payment thereon a statement containing certain information for the purposes
of such Securityholder's preparation of federal income tax returns. See
"Federal Income Tax Consequences".
Funding Period or Revolving Period
If specified in the related Prospectus Supplement, during a Funding
Period and/or Revolving Period, the Pre-Funding Account and/or Revolving
Account will be maintained as a trust account in the name of the Applicable
Trustee. The Pre-Funded Amount will initially equal the amount specified in
the related Prospectus Supplement, which may be up to 100% of the aggregate
principal amount of the series of Securities offered thereunder. During the
Funding Period, the Pre-Funded Amount will be reduced by the amount thereof
used to purchase Subsequent Receivables in accordance with the Sale and
Servicing Agreement or the Pooling and Servicing Agreement, as applicable,
and the amounts thereof deposited in the Reserve Account in connection with
the purchase of such Subsequent Receivables.
Prior to being used to purchase Subsequent Receivables or paid to the
Noteholders and Certificateholders, the Pre-Funded Amount and amounts or
deposit in the Revolving Account will be invested from time to time in
Eligible Investments other than, in the case of a Pre-Funding Account, money
market funds. See "Description of the Transfer and Servicing
Agreements-Accounts."
If specified in the related Prospectus Supplement for a Trust that
issues Notes, during a Revolving Period, the Applicable Trustee will
deposit in the related Revolving Account the principal collections on the
related Receivables as described above. In addition, on each Distribution
Date or Payment Date, as applicable, during the Revolving Period, the
applicable Trustee will deposit in the related Revolving Account any other
amount described in the related Prospectus Supplement. Funds on deposit in
a Revolving Account will be withdrawn from time to time during the related
Revolving Period for delivery to the Seller in exchange for the transfer and
assignment of Subsequent Receivables to the related Trust in the manner
specified in the related Prospectus Supplement. In addition, on the
Distribution Date or Payment Date, as applicable, following the end of the
related Revolving Period, the Applicable Trustee will transfer the amount,
if any, on deposit in the related Revolving Account at the close of business
on the last day of such Revolving Period, less any investment earnings on
deposit therein, to the related Collection Account for distribution to the
related Securityholders on such Distribution Date or Payment Date.
In addition, on each Distribution Date or Payment Date, as applicable, during
the related Revolving Period, the Applicable Trustee will transfer to the
related Collection Account for distribution to the related Securityholders
on such Distribution Date or Payment Date the amount, if any, by which the
amount on deposit in the related Revolving Account at the close of business
on the last day of the preceding calendar month, less any investment earnings
on deposit therein, exceeds the maximum permitted Revolving Account balance
specified in the related Prospectus Supplement.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes the material terms of each Sale and
Servicing Agreement or Pooling and Servicing Agreement pursuant to which a
Trust will purchase Receivables from the Seller and the Servicer will agree
to service such Receivables and each Trust Agreement (in the case of a
grantor trust, the Pooling and Servicing Agreement) pursuant to which a
Trust will be created and Certificates will be issued and pursuant to which
the Trustee will undertake certain administrative duties with respect to a
Trust that issues Notes (collectively, the "Transfer and Servicing
Agreements"). Forms of the Transfer and Servicing Agreements have been
filed as exhibits to the Registration Statement of which this Prospectus
forms a part. This summary does not purport to be complete and is subject
to, and qualified in its entirety by reference to, all the provisions of
the Transfer and Servicing Agreements.
Sale and Assignment of Receivables
Prior to or at the time of issuance of the Securities of a given
Trust, pursuant to a related Purchase Agreement, each Affiliate will sell
and assign to the Seller, without recourse, its entire interest in the
Initial Receivables, if any, of the related Receivables Pool, including its
security interests in the related Financed Vehicles. The Seller will,
prior to or at the time of issuance of the Securities of such Trust,
transfer and assign to the Applicable Trustee, without recourse,
pursuant to a Transfer and Servicing Agreement, its entire interest
in the Initial Receivables, if any, of the related Receivables Pool,
including its security interests in the related Financed Vehicles.
The Trustee will not independently verify the existence and qualifi-
cation of any Receivables. The Trustee will, concurrently with such
sale and assignment, execute, authenticate, and deliver the related
Notes and/or Certificates to the Seller in exchange for the Receivables.
Each such Receivable will be identified in a schedule delivered
pursuant to such Transfer and Servicing Agreement (a "Schedule of
Receivables"). The net proceeds received by the Seller from
the sale of the Certificates and the Notes of a given series will
be applied to the purchase of the related Receivables from each Affiliate
and, to the extent specified in the related Prospectus Supplement,
to the repayment of any Warehouse Financing or deposit of the Pre-Funded
Amount into the Pre-Funding Account and to make any required initial
deposit in any Reserve Account. The related Prospectus Supplement for
a given Trust will specify whether, and the terms, conditions
and manner under which, Subsequent Receivables will be sold by the Seller to
the applicable Trust from time to time during any Funding Period on each date
specified as a transfer date in the related Prospectus Supplement (each,
a "Subsequent Transfer Date").
The purchase price for the Receivables purchased by the Trust from the
Seller and by the Seller from any Affiliate may be more or less than the
aggregate principal balance thereof. If any Receivables are purchased for
a purchase price less than their respective principal balances, a portion of
the collections or proceeds in respect of principal from such Receivables
may be deemed collections or proceeds in respect of interest on such
Receivables for the purposes of allocating distributions on the Securities.
If so specified in the related Prospectus Supplement, a Trust may
acquire Initial Receivables pursuant to "warehousing" financing
arrangements entered into prior to the issuance by that Trust of any
Securities offered hereby. It will be a condition to the issuance of
Securities by any such Trust that any Warehouse Financing be repaid in
full, and any related security interests released, at or prior to the time
of such issuance.
In each Purchasing Agreement, each Affiliate will represent and
warrant to the Seller and in each Sale and Servicing Agreement or Pooling and
Servicing Agreement, the Seller will represent and warrant to the applicable
Trust, among other things, that: (i) the information provided in the related
Schedule of Receivables is correct in all material respects; (ii) the
Obligor on each related Receivable is required to maintain physical damage
insurance covering the Financed Vehicle; (iii) as of the applicable Closing
Date or the applicable Subsequent Transfer Date, if any, to the best of its
knowledge, the Financed Vehicle securing the related Receivable is free and
clear of all security interests, liens, charges and encumbrances that are
or may be prior to the lien granted by such Receivable; (iv) as of the
Closing Date or the applicable Subsequent Transfer Date, if any, each of
such Receivables is owned by Seller free and clear of any lien and is
secured by a first perfected security interest in favor of the Seller in
the Financed Vehicle; (v) each related Receivable, at the time it was
originated, complied and, as of the Closing Date or the applicable
Subsequent Transfer Date, if any, complies in all material respects with
applicable federal and state laws, including, without limitation, consumer
credit, truth in lending, equal credit opportunity and disclosure laws; and
(vi) any other representations and warranties that may be set forth in the
related Prospectus Supplement.
As of the last day of the month that includes the sixtieth day (or if
the Seller elects, the thirtieth day) following the discovery by or notice
to the Seller of a breach of any representation or warranty of the Seller
that materially and adversely affects the interests of the related Trust in
any Receivable, the Seller, unless the breach is cured, will repurchase
such Receivable from such Trust at a price equal to the amount that would
be required to be paid by the related Obligor on such date to prepay such
Receivable, after giving effect to the receipt of any moneys collected
(from whatever source) on such Receivable, if any (the "Purchase Amount").
The repurchase obligation constitutes the sole remedy available to the
Certificateholders or the Trustee and any Noteholders or Indenture Trustee
in respect of such Trust for any such uncured breach.
Pursuant to each Sale and Servicing Agreement or Pooling and Servicing
Agreement, to assure uniform quality in servicing the Receivables and to
reduce administrative costs, the Seller and each Trust will designate the
Servicer or an Affiliate as custodian to maintain possession, as such
Trust's agent, of the related motor vehicle retail installment sales
contract or promissory note and security agreement and any other documents
relating to the Receivables. The Receivables will not be segregated,
stamped or otherwise marked to indicate that they have been sold to the
related Trust. The accounting records and computer systems of each
Affiliate, the Servicer and the Seller will reflect the sales and
assignments of the related Receivables to the Seller or a Trust, as
applicable, and Uniform Commercial Code ("UCC") financing statements
reflecting such sales and assignments will be filed. If through
inadvertence or otherwise, another party purchases (or takes a security
interest in) the Receivables for new value in the ordinary course of
business and takes possession of the Receivables without actual knowledge
of the related Trust's interest, the purchaser (or secured party) will
acquire an interest in the Receivables superior to the interest of the
related Trust. See "Certain Legal Aspects of the Receivables-Security
Interest in Vehicles."
Accounts
With respect to each Trust that issues Notes, the Servicer will
establish and maintain with the related Indenture Trustee one or more
accounts, in the name of the Indenture Trustee on behalf of the related
Noteholders and Certificateholders, into which all payments made on or with
respect to the related Receivables will be deposited (the "Collection
Account"). The Servicer will establish and maintain with such Indenture
Trustee an account, in the name of such Indenture Trustee on behalf of such
Noteholders, into which amounts released from the Collection Account and
any Pre-Funding Account, Revolving Account, Reserve Account or other credit
enhancement for payment to such Noteholders will be deposited and from
which all distributions to such Noteholders will be made (the "Note
Distribution Account"). The Servicer will establish and maintain with the
related Trustee one or more accounts, in the name of such Trustee on behalf
of such Certificateholders, into which amounts released from the Collection
Account and any Pre-Funding Account, Revolving Account, Reserve Account or
other credit or cash flow enhancement for distribution to such
Certificateholders will be deposited and from which all distributions to
such Certificateholders will be made (each, a "Certificate Distribution
Account"). With respect to each Trust that does not issue Notes, the
Servicer will also establish and maintain the Collection Account and any
other Trust Account in the name of the related Trustee on behalf of the
related Certificateholders.
If so provided in the related Prospectus Supplement, the Servicer will
establish an additional account (the "Payahead Account"), into which, to
the extent required by the Sale and Servicing Agreement or Pooling and
Servicing Agreement, as applicable, early payments by or on behalf of
Obligors on Precomputed Receivables which do not constitute scheduled
payments, full prepayments, nor certain partial prepayments that result
in a reduction of the Obligor's periodic payment below the scheduled
payment as of the applicable Cutoff Date ("Payaheads") will be deposited
until such time as the payment falls due. Until such time as payments
are transferred from the Payahead Account to the Collection Account,
they will not constitute collected interest or collected principal and
will not be available for distribution to the applicable Noteholders or
Certificateholders. For each Trust that issues Notes, the Payahead
Account will initially be maintained with and in the name of the
applicable Indenture Trustee. With respect to each Trust that
does not issue Notes, the Servicer will establish and maintain with the
related Trustee the Payahead Account in the name of such Trustee. So long
as the Bank is the Servicer and provided that (i) there exists no Servicer
Termination Event and (ii) each other condition to holding Payaheads as may
be required by the applicable Sale and Servicing Agreement or Pooling and
Servicing Agreement is satisfied, Payaheads may be retained by the Servicer
until the applicable Payment Date or Distribution Date.
Any other accounts to be established with respect to a Trust,
including any Pre-Funding Account, Revolving Account, Yield Supplement
Account (as such term is defined in the related Prospectus Supplement, the
"Yield Supplement Account") or Reserve Account, will be described in the
related Prospectus Supplement.
For any series of Securities, funds in the Collection Account, the
Note Distribution Account, the Certificate Distribution Account(s) and any
Pre-Funding Account, Revolving Account, Reserve Account and other accounts
identified as such in the related Prospectus Supplement (collectively, the
"Trust Accounts") will be invested as provided in the related Sale and
Servicing Agreement or Pooling and Servicing Agreement in Eligible
Investments.
"Eligible Investments" (except as set forth in clause (g) below)
consist of book-entry securities, negotiable instruments or securities
represented by instruments in bearer or registered form which evidence: (a)
direct obligations of, and obligations fully guaranteed as to timely
payment by, the United States of America; (b) demand deposits, time
deposits or certificates of deposit of any depository institution
(including the Seller or any affiliate of the Seller) or trust company
incorporated under the laws of the United States of America or any state
thereof or the District of Columbia (or any domestic branch of a foreign
bank) and subject to supervision and examination by Federal or state
banking or depository institution authorities (but excluding depository
receipts issued by any such institution or trust company); provided that at
the time of the investment or contractual commitment to invest therein
(which shall be deemed to be made again each time funds are reinvested
following each Distribution Date), the commercial paper or other short-term
senior unsecured debt obligations (other than such obligations the rating
of which is based on the credit of a Person other than such depository
institution or trust company) of such depository institution or trust
company shall have a short term unsecured debt rating acceptable to the
Rating Agencies; (c) commercial paper (including commercial paper of the
Seller or any affiliate of the Seller) having, at the time of the
investment or contractual commitment to invest therein, a short term
unsecured debt rating acceptable to the Rating Agencies; (d) investments in
money market funds (including funds for which the Seller, Indenture Trustee
or Trustee or any of their respective affiliates is investment manager or
advisor) having a rating acceptable to the Rating Agencies; (e) bankers'
acceptances issued by any depository institution or trust company referred
to in clause (b) above; [(f) repurchase obligations with respect to any
security that is a direct obligation of, or fully guaranteed by, the United
States of America or any agency or instrumentality thereof the obligations
of which are backed by the full faith and credit of the United States of
America, in either case entered into with a depository institution or trust
company (acting as principal) referred to in clause (b) above;] (g) Motor
Vehicle Loans; and (h) any other investment which would not cause either
Rating Agency to downgrade or withdraw its then current rating of any class
of Notes or the Certificates. Investments of the types described in
clauses (d) and (h) above will be "Eligible Investments" only so long as
making such investments will not require the related Trust to register as
an investment company under the Investment Company Act of 1940, as amended.
Eligible Investments generally are limited to obligations or
securities that mature on or before the date of the next distribution for
such series. However, to the extent permitted by the Rating Agencies,
funds in any Reserve Account may be invested in securities that will not
mature prior to the date of the next distribution with respect to such
Certificates or Notes and will not be sold to meet any shortfalls. Thus,
the amount of cash in any Reserve Account at any time may be less than the
balance of the Reserve Account. If the amount required to be withdrawn
from any Reserve Account to cover shortfalls in collections on the related
Receivables (as provided in the related Prospectus Supplement) exceeds the
amount of cash in the Reserve Account, a temporary shortfall in the amounts
distributed to the related Noteholders or Certificateholders could result,
which could, in turn, increase the average life of the Notes or the
Certificates of such series. To the extent specified in the related
Prospectus Supplement, investment earnings on funds deposited in the Trust
Accounts, net of losses and investment expenses (collectively, "Investment
Earnings"), will be either deposited in the applicable Collection Account
on each Distribution Date and shall be treated as collections of interest
on the related Receivables or distributed to the Servicer and not be
treated as collections on the Receivables or otherwise be available for
Noteholders or Certificateholders.
The Trust Accounts will be maintained as Eligible Deposit Accounts.
"Eligible Deposit Account" means either (x) a segregated account with an
Eligible Institution or (y) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of
the United States of America or any one of the states thereof or the
District of Columbia (or any domestic branch of a foreign bank), having
corporate trust powers and acting as trustee for funds deposited in such
account, so long as any of the securities of such depository institution
have a credit rating from each Rating Agency in one of its generic rating
categories which signifies investment grade. "Eligible Institution" means,
with respect to a Trust, (a) the corporate trust department of the related
Indenture Trustee or the related Trustee, as applicable, or (b) a
depository institution organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia (or
any domestic branch of a foreign bank), in each case (i) which has either
(A) a long-term unsecured debt rating acceptable to the Rating Agencies or
(B) a short-term unsecured debt rating or certificate of deposit rating
acceptable to the Rating Agencies and (ii) whose deposits are insured by
the FDIC.
Servicing Procedures
The Servicer will make reasonable efforts to collect all payments due
with respect to the Receivables held by any Trust and will, consistent with
the related Sale and Servicing Agreement or Pooling and Servicing
Agreement, follow such collection procedures as it follows with respect to
comparable motor vehicle retail installment sales contracts and promissory
note and security agreements it services for itself or others. Consistent
with its customary procedures, the Servicer may, in its discretion, arrange
with the Obligor on a Receivable to extend or modify the payment schedule,
but no such arrangement will, for purposes of any Sale and Servicing
Agreement or Pooling and Servicing Agreement, modify the principal balance
or Interest Rate of any Receivable or modify any Receivable if such
amendment or modification would extend the final payment date of any
Receivable beyond the Final Scheduled Maturity Date. Some of such
arrangements may result in the Servicer purchasing the Receivable for the
Purchase Amount. See "Risk Factors-Risk of Prepayment and Possible Adverse
Effect on Yield." The Servicer may sell the Financed Vehicle securing the
respective Receivable at public or private sale, or take any other action
permitted by applicable law. See "Certain Legal Aspects of the
Receivables".
Pursuant to the Sale and Servicing Agreement or the Pooling and
Servicing Agreement, as applicable, the Bank, as Servicer, has the right to
delegate any or all of its responsibilities and obligations as Servicer to
any of its affiliates and to delegate specific duties to third-party
service providers who are in the business of performing such duties. The
Bank intends to delegate to certain Affiliates responsibilities and
obligations as Servicer with respect to Receivables acquired by the Seller
from such Affiliates. Notwithstanding any delegation of its
responsibilities and obligations to any other entity, the Servicer will
continue to be liable for all its servicing obligations under the
applicable Sale and Servicing Agreement or Pooling and Servicing Agreement
as if the Servicer alone were servicing the Receivables.
Collections
With respect to each Trust, the Servicer will deposit all payments on
the related Receivables received from Obligors and all proceeds of the
related Receivables collected during each collection period specified in
the related Prospectus Supplement (each, a "Collection Period") into the
related Collection Account not later than two business days after receipt.
However, so long as the Bank is the Servicer and provided that (i) there
exists no Servicer Termination Event and (ii) each other condition to
making monthly deposits as may be required by the related Sale and
Servicing Agreement or Pooling and Servicing Agreement is satisfied, the
Servicer may retain such amounts until the Business Day (as defined in the
related Prospectus Supplement) prior to the applicable Distribution Date or
Payment Date. The Servicer or the Seller, as the case may be, will remit
the aggregate Purchase Amount of any Receivables to be purchased from a
Trust to the related Collection Account on the Business Day prior to the
applicable Distribution Date or Payment Date. Pending deposit into the
Collection Account, collections may be employed by the Servicer at its own
risk and for its own benefit and will not be segregated from its own funds.
To the extent set forth in the related Prospectus Supplement, the Servicer
may, in order to satisfy the requirements described above, obtain a letter
of credit or other security for the benefit of the related Trust to secure
timely remittances of collections on the related Receivables and payment of
the aggregate Purchase Amount with respect to Receivables purchased by the
Servicer.
Advances
If so provided in the related Prospectus Supplement, to the extent the
collections on a Precomputed Receivable for a Collection Period are less
than the scheduled payment, the amount of Payaheads made on such
Precomputed Receivable not previously applied (the "Payahead Balance"), if
any, with respect to such Precomputed Receivable shall be applied by the
Servicer to the extent of the shortfall. In addition, if so provided in
the related Prospectus Supplement, on or before the business day prior to
each applicable Distribution Date or Payment Date, the Servicer shall
deposit into the related Collection Account an amount generally equal to
the lesser of (a) the excess, if any, of (i) the amount of interest that
would be expected to be received on the Receivables (other than
Non-Defaulted Receivables) during the related Collection Period over (ii)
the actual interest collected by the Servicer during such Collection Period
minus unreimbursed prior Advances and (b) the amount (if any) by which (i)
the sum of any unpaid Servicing Fees for the related Collection Period and
all prior Collection Periods and the amount of interest distributable to
Securityholders on the following Distribution Date exceeds (ii) an amount
equal to the actual interest collected by the Servicer during such
Collection Period minus unreimbursed prior Advances. No advances of
principal will be made with respect to the Receivables. The Servicer will
be entitled to be reimbursed for outstanding Advances on the Distribution
Date in the following month to the extent of Interest Collections for such
Distribution Date and, to the extent such Interest Collections are
insufficient, to the extent of funds available in the Reserve Account. The
Servicer will be obligated to make such an Advance except to the extent
that the Servicer reasonably determines that the Advance is unlikely to be
recoverable from the following month's collections of interest and the
funds in the Reserve Account.
Servicing Compensation and Payment of Expenses
On each Distribution Date, the Servicer will be entitled to receive
the Servicing Fee for the related Collection Period in an amount generally
equal to a specified percentage per annum (as set forth in the related
Prospectus Supplement, the "Servicing Fee Rate") of the Pool Balance as of
the first day of such Collection Period (the "Servicing Fee"). If it is
acceptable to each Rating Agency without a reduction in the rating of any
of the Securities, the Servicing Fee in respect of a Collection Period
(together with any portion of a Servicing Fee that remains unpaid from
prior Distribution Dates) at the option of the Servicer may be paid at or
as soon as possible after the beginning of such Collection Period out of
the first collections of interest received on the Receivables for such
Collection Period.
The Servicer will also collect and retain any late fees, extension
fees, prepayment charges and certain non-sufficient funds charges and other
administrative fees or similar charges ("Supplemental Servicing Fees")
allowed by applicable law with respect to the related Receivables and will
be entitled to reimbursement from such Trust for certain liabilities.
Payments by or on behalf of Obligors will be allocated to scheduled
payments and late fees and other charges in accordance with the Servicer's
customary practices and procedures. To the extent specified in the related
Prospectus Supplement, Supplemental Servicing Fees will include investment
earnings on investments of funds deposited in the Trust Accounts and other
accounts with respect to a Trust.
The Servicing Fee and Supplemental Servicing Fee will compensate the
Servicer for performing the functions of a third party servicer of motor
vehicle receivables as an agent for its beneficial owner, including
collecting and posting all payments, responding to inquiries of Obligors on
the Receivables, investigating delinquencies, sending billing information
to Obligors, reporting tax information to Obligors, paying costs of
collections and disposition of defaults and policing the collateral. The
Servicing Fee also will compensate the Servicer for administering the
particular Receivables Pool, including making Advances, accounting for
collections and furnishing monthly and annual statements to the related
Trustee and Indenture Trustee with respect to distributions and generating
federal income tax information for such Trust and for the related
Noteholders and Certificateholders. The Servicing Fee also will reimburse
the Servicer for certain taxes, the fees of the related Trustee and
Indenture Trustee, if any, accounting fees, outside auditor fees, data
processing costs and other costs incurred in connection with administering
the applicable Receivables Pool.
Distributions
With respect to each series of Securities, beginning on the Payment
Date or Distribution Date, as applicable, specified in the related
Prospectus Supplement, distributions of principal and interest (or, where
applicable, of principal or interest only) on each class of such Securities
entitled thereto will be made by the Applicable Trustee to the Noteholders
and the Certificateholders of such series. The timing, calculation,
allocation, order, source, priorities of and requirements for all payments
to each class of Noteholders and all distributions to each class of
Certificateholders of such series will be set forth in the related
Prospectus Supplement.
With respect to each Trust, on each Payment Date and Distribution
Date, as applicable, collections on the related Receivables will be
transferred from the Collection Account to the Note Distribution Account
for distribution to Noteholders, if any, and to each Certificate
Distribution Account for distribution to Certificateholders to the extent
provided in the related Prospectus Supplement. Credit enhancement, such as
a Reserve Account, will be available to cover any shortfalls in the amount
available for distribution on such date to the extent specified in the
related Prospectus Supplement. As more fully described in the related
Prospectus Supplement, distributions in respect of principal of a class of
Securities of a given series will be subordinate to distributions in
respect of interest on such class, and distributions in respect of one or
more classes of Certificates of such series may be subordinate to payments
in respect of Notes, if any, of such series or other classes of
Certificates of such series.
Credit and Cash Flow Enhancement
The amounts and types of credit and cash flow enhancement arrangements
and the provider thereof, if applicable, with respect to each class of
Securities of a given series, if any, will be set forth in the related
Prospectus Supplement. If and to the extent provided in the related
Prospectus Supplement, credit and cash flow enhancement may be in the form
of subordination of one or more classes of Securities, Reserve Accounts,
over-collateralization, letters of credit, credit or liquidity facilities,
surety bonds, guaranteed investment contracts, guaranteed rate agreements,
swaps or other interest rate protection agreements, repurchase obligations,
yield supplement agreements, other agreements with respect to third party
payments or other support, cash deposits or such other arrangements as may
be described in the related Prospectus Supplement or any combination of two
or more of the foregoing. If specified in the related Prospectus
Supplement, credit or cash flow enhancement for a class of Securities may
cover one or more other classes of Securities of the same series, and
credit or cash flow enhancement for a series of Securities may cover one or
more other series of Securities.
The presence of a Reserve Account and other forms of credit
enhancement for the benefit of any class or series of Securities is
intended to enhance the likelihood of receipt by the Securityholders of
such class or series of the full amount of principal and interest due
thereon and to decrease the likelihood that such Securityholders will
experience losses. The credit enhancement for a class or series of
Securities will not provide protection against all risks of loss and will
not guarantee repayment of the entire principal balance and interest
thereon except to the extent so specified in the related Prospectus
Supplement. If losses occur which exceed the amount covered by any credit
enhancement or which are not covered by any credit enhancement,
Securityholders of any class or series will bear their allocable share of
deficiencies, as described in the related Prospectus Supplement. In
addition, if a form of credit enhancement covers more than one series of
Securities, Securityholders of any such series will be subject to the risk
that such credit enhancement will be exhausted by the claims of
Securityholders of other series.
Reserve Account. If so provided in the related Prospectus Supplement,
pursuant to the related Sale and Servicing Agreement or Pooling and
Servicing Agreement, the Seller will establish for a series or class of
Securities an account, as specified in the related Prospectus Supplement
(the "Reserve Account"), which will be maintained with the related Trustee
or Indenture Trustee, as applicable. The Reserve Account will be funded by
an initial deposit on the Closing Date in the amount (if any) set forth in
the related Prospectus Supplement and, if the related series has a Funding
Period, will also be funded on each Subsequent Transfer Date to the extent
described in the related Prospectus Supplement. To the extent described in
the related Prospectus Supplement, the amount (if any) on deposit in the
Reserve Account will be increased on each Distribution Date or Payment Date
thereafter up to the Specified Reserve Account Balance (as defined in the
related Prospectus Supplement) by the deposit therein of the amount of
collections on the related Receivables remaining on each such Distribution
Date or Payment Date after the payment of all other required payments and
distributions on such date. The related Prospectus Supplement will
describe the circumstances and manner under which distributions may be made
out of the Reserve Account, either to holders of the Securities covered
thereby or to the Seller.
The Seller may at any time, without consent of the Securityholders,
sell, transfer, convey or assign in any manner its rights to and interests
in distributions from the Reserve Account provided that (i) the Rating
Agencies confirm in writing that such action will not result in a reduction
or withdrawal of the rating of any class of Securities, (ii) the Seller
provides to the applicable trustee and any Indenture Trustee an opinion of
counsel from independent counsel that such action will not cause the
related Trust to be classified as an association (or publicly traded
partnership) taxable as a corporation for federal income tax purposes and
(iii) such transferee or assignee agrees in writing to take positions for
federal income tax purposes consistent with the federal income tax
positions agreed to be taken by the Seller.
Yield Supplement Account; Yield Supplement Agreement. If so provided
in the related Prospectus Supplement, pursuant to the related Sale and
Servicing Agreement or Pooling and Servicing Agreement, the Affiliates, the
Seller or another person will enter into a Yield Supplement Agreement (as
such term is defined in the related Prospectus Supplement, the "Yield
Supplement Agreement") pursuant to which the Affiliates, the Seller or such
other person will establish for a series a Yield Supplement Account which
will be maintained with the same entity at which the related Collection
Account is maintained and, if so specified in the related Prospectus
Supplement, will be created with an initial deposit by the Seller. Each
Yield Supplement Account will be designed solely to hold funds to be
applied by the Indenture Trustee or applicable Trustee to provide payments
to Securityholders in respect of Receivables the APR of which is less than
the Required Rate (as such term is defined in the related Prospectus
Supplement, the "Required Rate").
On each Distribution Date, the obligor under the Yield Supplement
Agreement will pay to the Trust an amount equal to the Yield Supplement
Amount (as such term is defined in the related Prospectus Supplement, the
"Yield Supplement Amount") in respect of the Receivables for such
Distribution Date. If so specified in the Prospectus Supplement, in the
event that such obligor defaults on its obligation to make payments under
the Yield Supplement Agreement, the related Prospectus Supplement will
describe the manner and circumstances in which amounts on deposit on any
Distribution Date in the Yield Supplement Account in excess of the Required
Yield Supplement Amount (as such term is defined in the related Prospectus
Supplement, the "Required Yield Supplement Amount") will be released, and
to whom such amounts will be distributed. Monies on deposit in the Yield
Supplement Account may be invested in Eligible Investments under the
circumstances and in the manner described in the related Sale and Servicing
Agreement or Pooling and Servicing Agreement, as applicable. If so
specified in the related Prospectus Supplement, investment earnings on
investment of funds in a Yield Supplement Account will be deposited into
such Yield Supplement Account. The related Prospectus Supplement will
describe the manner in which any monies remaining on deposit in a Yield
Supplement Account upon the termination of the related Trust pursuant to
its terms will be released and to whom such amounts will be distributed.
If a Yield Supplement Account is established with respect to any Trust
as to which a Pre-Funding Account has been established, the Seller and the
related Indenture Trustee or applicable Trustee will enter into a Yield
Supplement Agreement pursuant to which, on each Subsequent Transfer Date,
the Seller will deposit into the Yield Supplement Account the Additional
Yield Supplement Amount (as such term is defined in the related Prospectus
Supplement, the "Additional Yield Supplement Amount") in respect of the
related Subsequent Receivables. Each Yield Supplement Agreement will affect
only Receivables having an APR less than the related Required Rate.
Net Deposits
As an administrative convenience if certain conditions acceptable to
the Rating Agencies are satisfied, the Servicer will be permitted to make
the deposit of collections, aggregate Advances and Purchase Amounts for any
Trust for or with respect to the related Collection Period net of
distributions to be made to the Servicer for such Trust with respect to
such Collection Period. See "-Collections." With respect to any Trust
that issues both Certificates and Notes, if the related Payment Dates do
not coincide with Distribution Dates, all distributions, deposits or other
remittances made on a Payment Date will be treated as having been
distributed, deposited or remitted on the Distribution Date for the
applicable Collection Period for purposes of determining other amounts
required to be distributed, deposited or otherwise remitted on such
Distribution Date. Similarly, the Servicer may cause to be made a single,
net transfer from the Collection Account to the related Payahead Account,
if any, or vice versa. The Servicer, however, will account to the Trustee,
any Indenture Trustee, the Noteholders, if any, and the Certificateholders
with respect to each Trust as if all deposits, distributions, and transfers
were made individually.
Statements to Trustees and Trust
Prior to each Distribution Date with respect to each series of
Securities, the Servicer will provide to the applicable Indenture Trustee,
if any, and the Applicable Trustee as of the close of business on the last
day of the preceding Collection Period a statement setting forth
substantially the same information as is required to be provided in the
periodic reports provided to Securityholders of such series described under
"Certain Information Regarding the Securities - Reports to
Securityholders".
Evidence as to Compliance
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will provide that the Servicer will furnish to the related Trust and
Indenture Trustee or Trustee, as applicable, annually a statement of a firm
of independent certified public accountants (or other evidence satisfactory
to the applicable Rating Agencies) as to compliance by the Servicer during
the preceding twelve months (or, in the case of the first such certificate,
from the applicable Closing Date) with certain standards relating to the
servicing of the applicable Receivables, the Servicer's accounting records
and computer files with respect thereto and certain other matters.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will also provide for delivery to the related Trust and Indenture Trustee
or Trustee, as applicable, substantially simultaneously with the delivery
of such accountants' statement referred to above, of a certificate signed
by an officer of the Servicer stating that the Servicer has fulfilled its
obligations under the Sale and Servicing Agreement or Pooling and Servicing
Agreement, as applicable, throughout the preceding twelve months (or, in
the case of the first such certificate, from the Closing Date) or, if there
has been a default in the fulfillment of any such obligation, describing
each such default. The Servicer has agreed to give each Indenture Trustee
and each Trustee notice of certain Servicer Termination Events under the
related Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the Applicable Trustee
at the appropriate address set forth in the Prospectus Supplement.
Certain Matters Regarding the Servicer
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will provide that the Servicer may not resign from its obligations and
duties as Servicer thereunder, except upon determination that the
Servicer's performance of such duties is no longer permissible under
applicable law. No such resignation will become effective until the
related Indenture Trustee or Trustee, as applicable, or a successor
servicer, has assumed the Servicer's servicing obligations and duties under
such Sale and Servicing Agreement or Pooling and Servicing Agreement.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will further provide that neither the Servicer nor any of its directors,
officers, employees and agents will be under any liability to the related
Trust or the related Noteholders or Certificateholders for taking any
action or for refraining from taking any action pursuant to such Sale and
Servicing Agreement or Pooling and Servicing Agreement or for errors in
judgment; except that neither the Servicer nor any such person will be
protected against any liability that would otherwise be imposed by reason
of willful misfeasance, bad faith or negligence in the performance of the
Servicer's duties thereunder or by reason of reckless disregard of its
obligations and duties thereunder. In addition, each Sale and Servicing
Agreement and Pooling and Servicing Agreement will provide that the
Servicer is under no obligation to appear in, prosecute or defend any legal
action that is not incidental to the Servicer's servicing responsibilities
under such Sale and Servicing Agreement or Pooling and Servicing Agreement
and that, in its opinion, may cause it to incur any expense or liability.
Under the circumstances specified in each Sale and Servicing Agreement
and Pooling and Servicing Agreement, any entity into which the Servicer may
be merged or consolidated, or any entity resulting from any merger or
consolidation to which the Servicer is a party, or any entity succeeding to
the business of the Servicer 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 Norwest 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 such Sale and
Servicing Agreement or Pooling and Servicing Agreement.
Servicer Termination Events
"Servicer Termination Events" under each Sale and Servicing Agreement
and Pooling and Servicing Agreement will consist of (i) any failure by the
Servicer to deliver to the Applicable Trustee for deposit in any of the
Trust Accounts any required payment or to direct the Applicable Trustee to
make any required distributions therefrom, which failure continues
unremedied for five business days after written notice from the Applicable
Trustee is received by the Servicer or after discovery of such failure by
the Servicer, (ii) any failure by the Servicer duly to observe or perform
in any material respect any other covenant or agreement in such Sale and
Servicing Agreement or Pooling and Servicing Agreement, which failure
materially and adversely affects the rights of the Noteholders or the
Certificateholders of the related series and which continues unremedied for
60 days after the giving of written notice of such failure (A) to the
Servicer by the Applicable Trustee or (B) to the Servicer and to the
Applicable Trustee by holders of Notes or Certificates of such series, as
applicable, evidencing not less than 25% in principal amount of such
outstanding Notes or of such Certificate Balance (or, in either case, for
such longer period, not in excess of 120 days, as may be reasonably
necessary to remedy such default; provided that such default is capable of
remedy within 120 days and the Servicer delivers an officer's certificate
to the Applicable Trustee to such effect and to the effect that Servicer
has commenced or will promptly commence, and will diligently pursue, all
reasonable efforts to remedy such default); and (iii) the occurrence of an
Insolvency Event with respect to the Servicer. "Insolvency Event" means,
with respect to any person, any of the following events or actions: certain
events of insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings with respect to such person and certain
actions by such person indicating its insolvency, reorganization pursuant
to bankruptcy proceedings or inability to pay its obligations.
Rights Upon Servicer Termination Events
In the case of any Trust that has issued Notes, as long as a Servicer
Termination Event under a Sale and Servicing Agreement remains unremedied,
the related Indenture Trustee or holders of Notes of the related series
evidencing greater than 50% of the principal amount of such Notes then
outstanding may terminate all the rights and obligations of the Servicer
under such Sale and Servicing Agreement, whereupon such Indenture Trustee
or a successor servicer appointed by such Indenture Trustee will succeed to
all the responsibilities, duties and liabilities of the Servicer under such
Sale and Servicing Agreement and will be entitled to similar compensation
arrangements. In the case of any Trust that has not issued Notes, as long
as a Servicer Termination Event under the related Sale and Servicing
Agreement remains unremedied, the related Trustee or holders of
Certificates of the related series evidencing greater than 50% of the
principal amount of such Certificates then outstanding may terminate all
the rights and obligations of the Servicer under such Sale and Servicing
Agreement or Pooling and Servicing Agreement, whereupon such Trustee or a
successor servicer appointed by such Trustee will succeed to all the
responsibilities, duties and liabilities of the Servicer under such Sale
and Servicing Agreement or Pooling and Servicing Agreement and will be
entitled to similar compensation arrangements. If, however, a conservator,
receiver or similar official has been appointed for the Servicer, and no
Servicer Termination Event other than such appointment has occurred, such
official may have the power to prevent such Indenture Trustee, such
Noteholders, such Trustee or such Certificateholders from effecting a
transfer of servicing. In the event that such Indenture Trustee or Trustee
is unwilling or unable to so act, it may appoint, or petition a court of
competent jurisdiction for the appointment of, a successor with a net worth
of at least $50,000,000 and whose regular business includes the servicing
of motor vehicle receivables. Such Indenture Trustee or Trustee may make
such arrangements for compensation to be paid, which in no event may be
greater than the servicing compensation to the Servicer under such Sale and
Servicing Agreement or Pooling and Servicing Agreement.
Waiver of Past Servicer Termination Events
With respect to each Trust that has issued Notes, the holders of Notes
evidencing at least a majority in principal amount of the then outstanding
Notes of the related series (or the holders of the Certificates of such
series evidencing not less than a majority of the outstanding Certificate
Balance, in the case of any Servicer Termination Event which does not
adversely affect the related Indenture Trustee or such Noteholders) may, on
behalf of all such Noteholders and Certificateholders, waive any Servicer
Termination Event by the Servicer in the performance of its obligations
under the related Sale and Servicing Agreement and its consequences, except
a Servicer Termination Event in making any required deposits to or payments
from any of the Trust Accounts in accordance with such Sale and Servicing
Agreement. With respect to each Trust that has not issued Notes, holders
of Certificates of such series evidencing not less than a majority of the
principal amount of such Certificates then outstanding may, on behalf of
all such Certificateholders, waive any Servicer Termination Event by the
Servicer in the performance of its obligations under the related Sale and
Servicing Agreement or Pooling and Servicing Agreement, except a Servicer
Termination Event in making any required deposits to or payments from the
related Trust Accounts in accordance with such Sale and Servicing Agreement
or Pooling and Servicing Agreement. No such waiver will impair such
Noteholders' or Certificateholders' rights with respect to subsequent
defaults.
Amendment
Each of the Transfer and Servicing Agreements may be amended by the
parties thereto, without the consent of the related Noteholders or
Certificateholders, for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of such Transfer and
Servicing Agreements or of modifying in any manner the rights of such
Noteholders or Certificateholders; provided that such action will not, in
the opinion of counsel satisfactory to the related Trustee or Indenture
Trustee, as applicable, materially and adversely affect the interest of any
such Noteholder or Certificateholder. The Transfer and Servicing
Agreements may also be amended by the Seller, the Servicer, the related
Trustee and any related Indenture Trustee with the consent of the holders
of Notes evidencing at least a majority in principal amount of then
outstanding Notes, if any, of the related series and the holders of the
Certificates of such series evidencing at least a majority of the
Certificate Balance of such Certificates then outstanding, for the purpose
of adding any provisions to or changing in any manner or eliminating any of
the provisions of such Transfer and Servicing Agreements or of modifying in
any manner the rights of such Noteholders or Certificateholders; provided,
however, that no such amendment may (i) increase or reduce in any manner
the amount of, or accelerate or delay the timing of, collections of
payments on the related Receivables or distributions that are required to
be made for the benefit of such Noteholders or Certificateholders or (ii)
reduce the aforesaid percentage of the Notes or Certificates of such series
which are required to consent to any such amendment, without the consent of
the holders of all the outstanding Notes or Certificates, as the case may
be, of such series.
Additionally, each of the Transfer and Servicing Agreements may be
amended by the parties thereto at the direction of the Seller or Servicer
without the consent of any of the Securityholders (i) to add, modify or
eliminate such provisions as may be necessary or advisable in order to
enable all or a portion of a Trust to qualify as, and to permit an election
to be made to cause all or a portion of a Trust to be treated as, a
"financial asset securitization investment trust" as described in the
provisions of the "Small Business Job Protection Act of 1996," H.R. 3448,
and, in connection with any such election, to modify or eliminate existing
provisions of a Transfer and Servicing Agreement relating to the intended
federal income tax treatment of the Securities and the related Trust in the
absence of the election or (ii) to enable all or a portion of a Trust to
qualify as a partnership for federal income tax purposes under applicable
regulations on the classification of entities as partnerships or corporations
under the Code adopted as final regulations, and to the extent such regulations
eliminate or modify the need therefor, to modify or eliminate existing
provisions of a Transfer and Servicing Agreement relating to the intended
availability of a partnership treatment of the Trust for federal income tax
purposes. See "Federal Income Tax Consequences-FASIT Legislation" and
"Description of the Transfer and Servicing Agreements-Insolvency Event."
It is a condition to any such amendment that each Rating Agency will have
notified the Seller, the Servicer and the Applicable Trustee in writing
that the amendment will not result in a reduction or withdrawal of the
rating of any outstanding Securities with respect to which it is a Rating
Agency. The amendment which may be made in connection with any election
described above without the consent of Securityholders may include, without
limitation, the elimination of any sale of Receivables and termination of
each Trust upon the occurrence of an event of receivership or insolvency
with respect to the Seller.
Additionally, each of the Transfer and Servicing Agreements may be
amended by the parties thereto at the direction of the Seller or Servicer
without the consent of any of the Securityholders to add, modify or
eliminate such provisions as may be necessary or advisable in order to
enable (a) the transfer to the Trust of all or any portion of the
Receivables to be derecognized under generally accepted accounting
principles ("GAAP") by the Seller to the applicable Trust or (b) the
applicable Trust to avoid becoming a member of the Seller's consolidated
group under GAAP; provided, however, that it is a condition to any such
amendment that (i) the Seller delivers an officer's certificate to the
related Trustee to the effect that such amendment meets the requirements
set forth in this paragraph and (ii) such amendment will not result in a
withdrawal or reduction of the rating of any outstanding series of
Securities under the related Trust.
Insolvency Event
With respect to a Trust that is not a grantor trust, if an Insolvency
Event occurs with respect to the Seller, the related Receivables of such
Trust will be liquidated and the Trust will be terminated 90 days after the
date of such Insolvency Event, unless, before the end of such 90-day
period, the related Trustee shall have received written instructions from
holders of each class of Notes issued by such Trust representing a majority
of the aggregate principal balance of each such class of Notes, holders of
Certificates holding a majority of the Certificate Balance (not including
the Certificate Balance held by the Seller) and any other persons set forth
in the related Prospectus Supplement, to the effect that they disapprove of
the liquidation of such Receivables and termination of such Trust.
Promptly after the occurrence of an Insolvency Event with respect to the
Seller, notice thereof is required to be given to the Certificateholders
and Noteholders; provided that any failure to give such required notice
will not prevent or delay termination of such Trust. Upon termination of
any Trust, the related Trustee shall, or shall direct the related Indenture
Trustee to, promptly sell the assets of such Trust (other than the Trust
Accounts) in a commercially reasonable manner and on commercially
reasonable terms. The proceeds from any such sale, disposition or
liquidation of the Receivables of such Trust will be treated as collections
on such Receivables and deposited in the related Collection Account. With
respect to any Trust, if the proceeds from the liquidation of the related
Receivables and any amounts on deposit in the Reserve Account (if any), the
Payahead Account (if any), the Note Distribution Account (if any) and the
Certificate Distribution Account are not sufficient to pay the Notes, if
any, and the Certificates of the related series in full, the amount of
principal returned to Noteholders and Certificateholders thereof will be
reduced and some or all of such Noteholders and Certificateholders will
incur a loss.
The provisions described in the preceding paragraph have been included
in the Agreement for reasons related to treatment of a Trust that is not a
grantor trust as a partnership for federal income tax purposes. The IRS
has issued proposed regulations that, if adopted as final regulations,
would make the foregoing provisions unnecessary. The amendment provisions
of each of the Transfer and Servicing Agreements, therefore, allow the
Seller, the Servicer and the related Trustee to amend such Transfer and
Servicing Agreement, without the consent of any of the related Noteholders
or Certificateholders, to eliminate such provisions upon (i) the adoption
of final regulations whose applicable provisions are substantially the same
as the corresponding provisions of the proposed regulations and (ii) the
receipt of an opinion that the deletion of such provisions will not
adversely affect the ability of such Trust to be characterized as a
partnership for federal income tax purposes. The rights of Noteholders and
Certificateholders to vote on whether to continue or dissolve a Trust upon
the insolvency of the Seller could therefore be eliminated without the
consent of the Noteholders and Certificateholders.
Each Trust Agreement will provide that the applicable Trustee does not
have the power to commence a voluntary proceeding in bankruptcy with
respect to the related Trust without the unanimous prior approval of all
Certificateholders (including the Seller) of such Trust and the delivery to
such Trustee by each such Certificateholder (including the Seller) of a
certificate certifying that such Certificateholder reasonably believes that
such Trust is insolvent.
Non-Recourse Sale and Assignment
The Notes of any series will represent obligations solely of, and the
Certificates of any series will represent interests solely in, the related
Trust and neither the Notes nor the Certificates of any series will be
insured or guaranteed by any Affiliate, the Seller, the Servicer, any
Trustee, any Indenture Trustee or any other person or entity.
Payment of Notes
Upon the payment in full of all outstanding Notes of a given series
and the satisfaction and discharge of the related Indenture, the related
Trustee will succeed to all the rights of the Indenture Trustee, and the
Certificateholders of such series will succeed to all the rights of the
Noteholders of such series, under the related Sale and Servicing Agreement,
except as otherwise provided therein.
Seller Liability
Under each Trust Agreement, the Seller with respect to the related Trust
will agree to be liable directly to an injured party for the entire amount
of any losses, claims, damages or liabilities (other than those incurred by
a Noteholder or a Certificateholder in the capacity of an investor with
respect to such Trust) arising out of or based on the arrangement created
by such Trust Agreement as though such arrangement created a partnership
under the Delaware Revised Uniform Limited Partnership Act in which Seller
was a general partner.
Termination
With respect to each Trust, the obligations of the Servicer, the
Seller, the related Trustee and the related Indenture Trustee, if any,
pursuant to the Transfer and Servicing Agreements will terminate upon the
earlier of (i) the maturity or other liquidation of the last related
Receivable and the disposition of any amounts received upon liquidation of
any such remaining Receivables, (ii) the payment to Noteholders, if any,
and Certificateholders of the related series of all amounts required to be
paid to them pursuant to the Transfer and Servicing Agreements and (iii)
the occurrence of either event described below.
In order to avoid excessive administrative expense, each of the Seller
and the Servicer will be permitted at its respective option to purchase
from each Trust, as of the end of any applicable Collection Period, if the
then outstanding Pool Balance with respect to the Receivables held by such
Trust is 5% or less of the Initial Pool Balance (as defined in the related
Prospectus Supplement, the "Initial Pool Balance"), all remaining related
Receivables at a price equal to the aggregate of the Purchase Amounts
thereof as of the end of such Collection Period.
As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed concurrently with
either of the events specified above and the subsequent distribution to the
related Certificateholders of all amounts required to be distributed to
them pursuant to the applicable Trust Agreement or Pooling and Servicing
Agreement will effect early retirement of the Certificates of such series.
Administration Agreement
The Bank, in its capacity as administrator (the "Administrator"), will
enter into an agreement (as amended and supplemented from time to time, an
"Administration Agreement") with each Trust that issues Notes and the
related Indenture Trustee pursuant to which the Administrator will agree,
to the extent provided in such Administration Agreement, to provide the
notices and to perform other administrative obligations required by the
related Indenture. With respect to any such Trust, as compensation for the
performance of the Administrator's obligations under the applicable
Administration Agreement and as reimbursement for its expenses related
thereto, the Administrator will be entitled to a monthly administration fee
in an amount equal to such amount as may be set forth in the related
Prospectus Supplement (the "Administration Fee"), which fee will be paid by
the Seller.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Rights in the Receivables
The Receivables are "chattel paper" as defined in the UCC. Pursuant
to the UCC, a sale of chattel paper is treated in a manner similar to a
transaction creating a security interest in chattel paper. The Seller will
cause appropriate financing statements to be filed with the appropriate
governmental authorities to perfect the interest of the related Trust in
its purchase of Receivables from the Seller and in the appropriate
jurisdictions in which the Affiliates are located to perfect the interest
of the Seller in its purchase of Receivables from the Affiliates.
Pursuant to the Pooling and Servicing Agreement or Sale and Servicing
Agreement, as applicable, an Originator will hold the Receivables as
custodian for the Applicable Trustee following the sale and assignment of
the Receivables to the related Trust. The Seller will take such action as
is required to perfect the rights of the Applicable Trustee in the
Receivables. The Receivables will not be segregated, stamped or otherwise
marked, to indicate that they have been sold to the related Trust. If
through inadvertence or otherwise, another party purchases (or takes a
security interest in) the Receivables for new value in the ordinary course
of business and takes possession of the Receivables without actual
knowledge of the related Trust's interest, the purchaser (or secured party)
will acquire an interest in the Receivables superior to the interest of the
related Trust.
Under the Pooling and Servicing Agreement or Sale and Servicing
Agreement, as applicable, the Servicer will be obligated from time to time
to take such actions as are necessary to protect and perfect the related
Trust's interest in the Receivables and their proceeds.
Security Interest in Vehicles
Each retail installment sales contract or promissory note and security
agreement evidencing a Receivable grants a security interest in the
Financed Vehicle under the applicable UCC. Perfection of security
interests in automobiles and light duty trucks is generally governed by the
motor vehicle registration laws of the state in which the vehicle is
located. In most states in which the Receivables are originated, a
security interest in automobiles and light duty trucks is perfected by
notation of the secured party's lien on the vehicles' certificate of title.
Each Affiliate takes all actions necessary under the laws of the state in
which the financed vehicle is located to perfect its security interest in
the financed vehicle securing a retail installment sales contract purchased
by it from a Dealer or Direct Loan made by such Affiliate, including, where
applicable, having a notation of its lien recorded on such vehicle's
certificate of title. Because the Servicer continues to service the
contracts and loans, the Obligors on the contracts and loans will not be
notified of the sales from an Affiliate to the Seller or from the Seller to
the Trust, and no action will be taken to record the transfer of the
security interest from an Affiliate to the Seller or from the Seller to the
Trust by amendment of the certificates of title for the Financed Vehicles
or otherwise.
Pursuant to each Purchase Agreement, each Affiliate will assign to the
Seller its interests in the Financed Vehicles securing the Receivables
assigned by that Affiliate to the Seller and, with respect to each Trust,
pursuant to the related Sale and Servicing Agreement or Pooling and
Servicing Agreement, the Seller will assign its interests in the Financed
Vehicles securing the related Receivables to such Trust. However, because
of the administrative burden and expense, none of the Affiliates, the
Seller, the Servicer or the related Trustee will amend any certificate of
title to identify either the Seller or such Trust as the new secured party on
such certificate of title relating to a Financed Vehicle. Also, each
Affiliate will continue to hold any certificates of title relating to the
Financed Vehicles in its possession as custodian for the Seller and such
Trust pursuant to the related Sale and Servicing Agreement or Pooling
and Servicing Agreement. See "Description of the Transfer and Servicing
Agreements-Sale and Assignment of Receivables".
In most states, an assignment such as that under each Sale and
Servicing Agreement or Pooling and Servicing Agreement is an effective
conveyance of a security interest without amendment of any lien noted on a
vehicle's certificate of title, and the assignee succeeds thereby to the
assignor's rights as secured party. However, by not identifying the
related Trust as the secured party on the certificate of title, the
security interest of such Trust in the vehicle could be defeated through
fraud or negligence. In most states, in the absence of fraud or forgery by
the vehicle owner or an Affiliate or administrative error by state or local
agencies, the notation of the lien of the applicable Affiliate on the
certificates of title will be sufficient to protect the related Trust against
the rights of subsequent purchasers of a Financed Vehicle or subsequent
lenders who take a security interest in a Financed Vehicle. If there are
any Financed Vehicles as to which the Seller failed to obtain and assign to
the related Trust a perfected security interest, the security interest of
such Trust would be subordinate to, among others, subsequent purchasers of
the Financed Vehicles and holders of perfected security interests. Such a
failure, however, would constitute a breach of the warranties of the Seller
under the related Sale and Servicing Agreement or Pooling and Servicing
Agreement and would create an obligation of the Seller to repurchase the
related Receivable unless the breach is cured. Pursuant to each Sale and
Servicing Agreement and Pooling and Servicing Agreement, the Seller will
assign such rights to the related Trust. See "Description of the Transfer
and Servicing Agreements-Sale and Assignment of Receivables" and "Risk
Factors-Risk of Unenforceable Security Interest in Financed Vehicles."
Under the laws of most states, the perfected security interest in a
vehicle would continue for four months after the vehicle is moved to a
state other than the state in which it is initially registered and
thereafter until the owner thereof re-registers the vehicle in the new
state. A majority of states generally require surrender of a certificate
of title to re-register a vehicle. Accordingly, a secured party must
surrender possession if it holds the certificate of title to the vehicle
or, in the case of a vehicle registered in a state providing for the
notation of a lien on the certificate of title but not possession by the
secured party, the secured party would receive notice of surrender if the
security interest is noted on the certificate of title. Thus, the secured
party would have the opportunity to re-perfect its security interest in the
vehicle in the state of relocation. In states that do not require a
certificate of title for registration of a motor vehicle, re-registration
could defeat perfection. In the ordinary course of servicing motor vehicle
receivables, the applicable Affiliate takes any necessary steps to effect
re-perfection upon receipt of notice of re-registration or information from
the Obligor as to relocation. Similarly, when an Obligor sells a vehicle,
the applicable Affiliate must surrender possession of the certificate of
title or will receive notice as a result of its lien noted thereon and
accordingly will have an opportunity to require satisfaction of the related
Receivable before release of the lien. Under each Sale and Servicing
Agreement and Pooling and Servicing Agreement, the Servicer is obligated to
take appropriate steps, at the Servicer's expense, to maintain perfection
of security interests in the Financed Vehicles and is obligated to purchase
the related Receivable if it fails to do so.
Under the laws of most states, liens for repairs performed on a motor
vehicle and liens for unpaid taxes take priority over even a perfected
security interest in a financed vehicle. The Code 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 vehicles by
governmental authorities under certain circumstances if used in unlawful
activities, which may result in the loss of a secured party's perfected
security interest in the confiscated vehicle. Under each Sale and
Servicing Agreement and Pooling and Servicing Agreement, the Seller will
represent to the related Trust that, as of the date the related Receivable
is sold to such Trust, each security interest in a Financed Vehicle is or
will be prior to all other present liens (other than tax liens and other
liens that arise by operation of law) upon and security interests in such
Financed Vehicle. However, liens for repairs or taxes could arise, or the
confiscation of a Financed Vehicle could occur, at any time during the term
of a Receivable. No notice will be given to the Trustee, any Indenture
Trustee, any Noteholders or the Certificateholders in respect of a given
Trust if such a lien arises or confiscation occurs.
Repossession
In the event of default by vehicle purchasers, the holder of the motor
vehicle retail installment sales contract or Direct Loan has all the
remedies of a secured party under the UCC, except where specifically
limited by other state laws. Among the UCC remedies, the secured party has
the right to perform self-help repossession unless such act would
constitute a breach of the peace. Self-help is the method employed by the
Servicer in most cases and is accomplished simply by retaking possession of
the financed vehicle. In the event of default by the obligor, some
jurisdictions require that the obligor be notified of the default and be
given a time period within which he may cure the default prior to
repossession. Generally, the right of reinstatement may be exercised on a
limited number of occasions in any one-year period. In cases where the
obligor objects or raises a defense to repossession, or if otherwise
required by applicable state law, a court order must be obtained from the
appropriate state court, and the vehicle must then be repossessed in
accordance with that order.
Notice of Sale; Redemption Rights
The UCC and other state laws require the secured party to provide the
obligor with reasonable notice of the date, time and place of any public
sale and/or the date after which any private sale of the collateral may be
held. The obligor has the right to redeem the collateral prior to actual
sale by paying the secured party the unpaid principal balance of the
obligation plus reasonable expenses for repossessing, holding and preparing
the collateral for disposition and arranging for its sale, plus, in some
jurisdictions, reasonable attorneys' fees, or, in some states, by payment
of delinquent installments or the unpaid balance.
Deficiency Judgments and Excess Proceeds
The proceeds of resale of the vehicles generally will be applied first
to the expenses of resale and repossession and then to the satisfaction of
the indebtedness. While some states impose prohibitions or limitations on
deficiency judgments if the net proceeds from resale do not cover the full
amount of the indebtedness, a deficiency judgment can be sought in those
states that do not prohibit or limit such judgments. However, the
deficiency judgment would be a personal judgment against the obligor for
the shortfall, and a defaulting obligor can be expected to have very little
capital or sources of income available following repossession. Therefore,
in many cases, it may not be useful to seek a deficiency judgment or, if
one is obtained, it may be settled at a significant discount.
Occasionally, after resale of a vehicle and payment of all expenses
and all indebtedness, there is a surplus of funds. In that case, the UCC
requires the creditor to remit the surplus to any holder of a lien with
respect to the vehicle or if no such lienholder exists or there are
remaining funds, to remit the surplus to the former owner of the vehicle.
Soldiers' and Sailors Civil Relief Act
The Soldiers' and Sailors Civil Relief Act of 1940 (the "Relief Act")
imposes certain limitations upon the actions of creditors with respect to
persons serving in the Armed Forces of the United States, and, to a more
limited extent, their dependents and guarantors and sureties of debt
incurred by such persons. An obligation incurred by a person prior to
entering military service cannot bear interest at a rate in excess of 6%
during the person's term of military service, unless the obligee petitions
a court which determines that the person's military service does not impair
his or her ability to pay interest at a higher rate. Further, a secured
party may not repossess during a person's military service a motor vehicle
subject to an installment sales contract or a promissory note entered into
prior to the person's entering military service, for a loan default which
occurred prior to or during such service, without court action. The Relief
Act imposes penalties for knowingly repossessing property in contravention
of its provisions. Additionally, dependents of military personnel are
entitled to the protection of the Relief Act, upon application to a court,
if such court determines the obligation of such dependent has been
materially impaired by reason of military service. To the extent an
obligation is unenforceable against the person in military service or a
dependent, any guarantor or surety of such obligation will not be liable
for performance.
Consumer Protection Laws
Numerous federal and state consumer protection laws and related
regulations impose substantial requirements upon lenders and servicers
involved in consumer finance. These laws include the Truth-in-Lending Act,
the Equal Credit Opportunity Act, the Federal Trade Commission Act, the
Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt
Collection Procedures Act, the Magnuson-Moss Warranty Act, the Federal
Reserve Board's Regulations B, Z and AA, the Relief Act, state adoptions of
the National Consumer Act and of the Uniform Consumer Credit Code and state
motor vehicle retail installment sales acts, retail installment sales acts
and other similar laws. In addition to Federal law, state consumer
protection statutes regulate, among other things, the terms and conditions
of the motor vehicle retail installment sales contracts and promissory
notes and security agreements pursuant to which purchasers finance the
acquisition of motor vehicles. These laws place finance charge ceilings
and other restrictions on consumer 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. In some cases, this liability could affect the ability of an
assignee, such as the Applicable Trustee, to enforce consumer finance
contracts such as the Receivables. The "Credit Practices" Rule of the
Federal Trade Commission imposes additional restrictions on contract
provisions and credit practices.
The so-called "Holder-in-Due-Course" Rule of the Federal Trade
Commission (the "FTC Rule"), the provisions of which are generally
duplicated by the Uniform Consumer Credit Code, other statutes or the
common law, has the effect of subjecting a seller in a consumer credit
transaction (and certain related creditors and their assignees) to all
claims and defenses which the obligor in the transaction could assert
against the seller of the goods. Liability under the FTC Rule is limited to
the amounts paid by the obligor under the contract and the holder of the
contract may also be unable to collect any balance remaining due thereunder
from the obligor.
Most of the Receivables will be subject to the requirements of the FTC
Rule. Accordingly, each Trust, as holder of the related Receivables, will
be subject to any claims or defenses that the purchaser of the applicable
Financed Vehicle may assert against the seller of the Financed Vehicle.
Such claims are limited to a maximum liability equal to the amounts paid by
the Obligor on the Receivable. If an Obligor were successful in asserting
any such claim or defense, such claim or defense would constitute a breach
of the Seller's warranties under the related Sale and Servicing Agreement
or Pooling and Servicing Agreement and would create an obligation of the
Seller to repurchase the Receivable unless the breach is cured. See
"Description of the Transfer and Servicing Agreements-Sale and Assignment
of Receivables".
Under the motor vehicle dealer licensing laws of most states, sellers
of motor vehicles are required to be licensed to sell such vehicles at
retail sale. In addition, with respect to used motor vehicles , the FTC's
Rule on Sale of Used Vehicles requires all sellers of used motor vehicles
prepare, complete and display a "Buyer's Guide" which explains the warranty
coverage for such vehicles. Federal Odometer Regulations promulgated under
the Motor Vehicle Information and Cost Savings Act require that all sellers
of used motor vehicles furnish a written statement signed by the seller
certifying the accuracy of the odometer reading. If a seller is not
properly licensed or if either a Buyer's Guide or Odometer Disclosure
Statement was not properly provided to the purchaser of a Financed Vehicle,
such purchaser may be able to assert a claim against the seller of such
vehicle. Although the Affiliates are not sellers of motor vehicles and are
not subject to these laws, a violation thereof may form the basis for a
claim or defense against applicable Affiliate, the Seller or the Applicable
Trustee as holder of the Receivables.
Courts have applied general equitable principles to secured parties
pursuing repossession and litigation involving deficiency balances. These
equitable principles may have the effect of relieving an Obligor from some
or all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies
of secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the
United States. Courts have generally upheld the notice provisions of the
UCC and related laws as reasonable or have found that the repossession and
resale by the creditor do not involve sufficient state action to afford
constitutional protection to borrowers.
Under each Sale and Servicing Agreement and Pooling and Servicing
Agreement, the Seller will warrant to the related Trust that each
Receivable complies with all requirements of law in all material respects.
Accordingly, if an Obligor has a claim against a Trust for violation of any
law and such claim materially and adversely affects such Trust's interest
in a Receivable, such violation would constitute a breach of the warranties
of the Seller under such Sale and Servicing Agreement or Pooling and
Servicing Agreement and would create an obligation of the Seller to
repurchase the Receivable unless the breach is cured. See "Description of
the Transfer and Servicing Agreements - Sale and Assignment of
Receivables".
Other Limitations
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a secured
party to realize upon collateral or to 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 vehicle, and, as part of
the rehabilitation plan, reduce the amount of the secured indebtedness to
the market value of the vehicle at the time of bankruptcy (as determined by
the court), leaving the creditor as a general unsecured creditor for the
remainder of the indebtedness. A bankruptcy court may also reduce the
monthly payments due under a contract or change the rate of interest and
time of repayment of the indebtedness.
Each Affiliate subject to FIRREA intends that the transfer of the
Receivables by it under a Purchase Agreement constitutes a sale. In the
event that an Affiliate that is subject to FIRREA were to become insolvent,
FIRREA sets forth certain powers that the FDIC could exercise if it were
appointed as receiver of such Affiliate. Subject to clarification by FDIC
regulations or interpretations, it would appear from the positions taken by
the FDIC before and after the passage of FIRREA that the FDIC in its
capacity as receiver for an Affiliate would not interfere with the timely
transfer to the Trust of payments collected on the Receivables. If the
transfer of Receivables by an Affiliate to the Seller were to be
characterized as a secured loan, to the extent that such Affiliate would be
deemed to have granted a security interest in the Receivables to the Seller
or the related Trust, and that interest had been validly perfected before
the insolvency of such Affiliate, and had not been taken in contemplation
of insolvency, that security interest should not be subject to avoidance
and payments to the Trust (to the extent of the "actual direct compensatory
damages" of the Seller or Trust) with respect to the Receivables should not
be subject to recovery by the FDIC as receiver of such Affiliate.
If the FDIC were to assert a position contrary to its position with
respect to secured loans described in the preceding paragraph, such as by
requiring the Seller or the related Trust to establish its right to those
payments by submitting to and completing the administrative claims
procedure established under FIRREA, delays in payments on the related Notes
(if any) and the Certificates and possible reductions in the amount of
those payments could occur. Alternatively, in such circumstances, the FDIC
might have the right to repudiate the applicable Purchase Agreement and pay
damages to the Seller which, in turn would prepay the related Notes (if
any) and Certificates, which would shorten their respective weighted
average lives.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of material federal income tax
consequences of the purchase, ownership and disposition of the Notes and
the Certificates. To the extent that the following summary relates to
matters of law or legal conclusions with respect thereto, such summary
represents the opinion of Mayer, Brown & Platt, special federal tax counsel
for the Seller ("Federal Tax Counsel") subject to the qualifications set
forth herein. Federal Tax Counsel have prepared or reviewed the statements
in this Prospectus under the heading "Federal Income Tax Consequences," and
are of the opinion that such statements are correct in all material
respects. The following summary is intended as an explanatory discussion
of the possible effects of certain federal income tax consequences to
Holders generally, but does not purport to furnish information in the level
of detail or with the attention to a Holder's specific tax circumstances
that would be provided by a Holder's own tax advisor. For example, it does
not discuss the tax treatment of Noteholders or Certificateholders that are
insurance companies, regulated investment companies or dealers in
securities. In addition, the discussion regarding the Notes is limited to
the federal income tax consequences of the initial Noteholders and not a
purchaser in the secondary market. Moreover, there are no cases or
Internal Revenue Service ("IRS") rulings on similar transactions involving
both debt and equity interests issued by a trust with terms similar to
those of the Notes and the Certificates. As a result, the IRS may disagree
with all or a part of the discussion below. Prospective investors are
urged to consult their own tax advisors in determining the federal, state,
local, foreign and any other tax consequences to them of the purchase,
ownership and disposition of the Notes and the Certificates.
The following summary is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder and judicial or ruling authority, all of which are
subject to change, which change may be retroactive. Each Trust will be
provided with an opinion of Federal Tax Counsel, regarding certain federal
income tax matters discussed below. An opinion of Federal Tax Counsel,
however, is not binding on the IRS or the courts. No ruling on any of the
issues discussed below will be sought from the IRS. For purposes of the
following summary, references to the Trust, the Notes, the Certificates and
related terms, parties and documents shall be deemed to refer, unless
otherwise specified herein, to each Trust and the Notes, Certificates and
related terms, parties and documents applicable to such Trust.
The federal income tax consequences to Certificateholders will vary
depending on whether the Trust is intended to be treated as a partnership
under the Code or as a grantor trust. The Prospectus Supplement for each
series of Certificates will specify whether a partnership election will be
made or the Trust will be treated as a grantor trust. In addition, to the
extent set forth in the related Prospectus Supplement, the tax consequences
to Securityholders may vary depending upon whether the related Prospectus
Supplement provides for a Revolving Period for Trusts that issue Notes.
FASIT LEGISLATION
In August, 1996, the United States Congress passed and President
Clinton signed into law the "Small Business Job Protection Act of 1996,"
H.R. 3448 (the "Act"). The Act creates a new type of entity for federal
income tax purposes called a "financial asset securitization investment
trust" or "FASIT." The effective date of the FASIT provisions of the Act
is September 1, 1997. The Act enables certain arrangements similar to a
Trust to elect to be treated as a FASIT. Under the FASIT provisions of the
Act, a FASIT generally would avoid federal income taxation and could issue
securities substantially similar to the Certificates and Notes, and those
securities would be treated as debt for federal income tax purposes. If so
specified in the related Prospectus Supplement, a Trust may make an
election to be treated as a FASIT. The applicable Transfer and Servicing
Agreement for such a Trust may contain any such terms and provide for the
issuance of Notes or Certificates on such terms and conditions as are
permitted to a FASIT and provided in the related Prospectus Supplement.
In addition, upon satisfying certain conditions set forth in the Transfer
and Servicing Agreements, the Seller and Servicer will be permitted to amend
the Transfer and Servicing Agreements in order to enable all or a portion of a
Trust to qualify as a FASIT and to permit a FASIT election to be made with
respect thereto, and to make such modifications to a Transfer and Servicing
Agreement as may be permitted by reason of the making of such an election.
See "Description of the Transfer and Servicing Agreements-Amendments."
However, there can be no assurance that the Seller will or will not cause
any permissible FASIT election to be made with respect to a Trust or amend
a Transfer and Servicing Agreement in connection with any election. In
addition, if such an election is made, it may cause a holder to recognize
gain (but not loss) with respect to any Notes or Certificates held by it,
even though Federal Tax Counsel will deliver its opinion that a Note will be
treated as debt for federal income tax purposes without regard to the election
and the Note or Certificate would be treated as debt following the election.
Additionally, any such election and any related amendments to a Transfer
and Servicing Agreement may have other tax and non-tax consequences to
Securityholders. Accordingly, prospective Securityholders should consult
their tax advisors with regard to the effects of any such election and any
permitted related amendments on them in their particular circumstances.
TRUSTS TREATED AS PARTNERSHIPS
Tax Characterization of the Trust as a Partnership
Federal Tax Counsel will deliver its opinion that a Trust which the
Trust Agreement specifies is intended to be treated as a partnership will
not be an association (or publicly traded partnership) taxable as a
corporation for federal income tax purposes. A copy of such opinion of
Federal Tax Counsel will be filed with the Commission with a Form 8-K
following an issuance of Securities by such Trust. This opinion will be
based on the assumption that the terms of the Trust Agreement and related
documents will be complied with, and on Federal Tax Counsel's conclusions
that (1) the Trust will not have certain characteristics necessary for a
business trust to be classified as an association taxable as a corporation
and (2) the nature of the income of the Trust will exempt it from the rule
that certain publicly traded partnerships are taxable as corporations.
If the Trust were taxable as a corporation for federal income tax
purposes, the Trust would be subject to corporate income tax on its taxable
income. The Trust's taxable income would include all its income on the
Receivables, reduced by its interest expense on the Notes provided the
Notes are respected as debt for federal income tax purposes (see discussion
in the following paragraph). Any such corporate income tax could
materially reduce cash available to make payments on the Notes and
distributions on the Certificates, and Certificateholders could be liable
for any such tax that is unpaid by the Trust.
Tax Consequences to Holders of the Notes
Treatment of the Notes as Indebtedness. The Seller will agree, and
the Noteholders will agree by their purchase of Notes, to treat the Notes
as debt for federal, state and local income and franchise tax purposes.
Federal Tax Counsel will deliver its opinion that the Notes will be
classified as debt for federal income tax purposes. A copy of such opinion
of Federal Tax Counsel will be filed with the Commission with a Form 8-K
following the issuance of the Notes. The discussion below assumes this
characterization of the Notes is correct.
The discussion below assumes that all payments on the Notes are
denominated in U.S. dollars, and that the Notes are not Strip Notes.
Moreover, the discussion assumes that the interest formula for the
Notes meets the requirements for "qualified stated interest" under
Treasury regulations (the "OID regulations") relating to original issue
discount ("OID"), and that any OID on the Notes (i.e., any excess of the
principal amount of the Notes over their issue price) does not exceed a de
minimis amount (i.e., 1/4% of their principal amount multiplied by the
number of full years included in their term), all within the meaning of the
OID regulations. If these conditions are not satisfied with respect to any
given series of Notes and as a result the Notes are treated as issued with
OID, additional tax considerations with respect to such Notes will be
disclosed in the related Prospectus Supplement.
Interest Income on the Notes. Based on the above assumptions, except
as discussed in the following paragraph, the Notes will not be considered
issued with OID. The stated interest thereon will be taxable to a
Noteholder as ordinary interest income when received or accrued in
accordance with such Noteholder's method of tax accounting. Under the OID
regulations, a holder of a Note issued with a de minimis amount of OID must
include such OID in income, on a pro rata basis, as principal payments are
made on the Note. It is believed that any prepayment premium paid as a
result of a mandatory redemption will be taxable as contingent interest
when it becomes fixed and unconditionally payable. A purchaser who buys a
Note for more or less than its principal amount will generally be subject,
respectively, to the premium amortization or market discount rules of the
Code.
Sale or Other Disposition. If a Noteholder sells a Note, the holder
will recognize gain or loss in an amount equal to the difference between
the amount realized on the sale and the holder's adjusted tax basis in the
Note. The adjusted tax basis of a Note to a particular Noteholder will
equal the holder's cost for the Note, increased by any market discount, OID
and gain previously included by such Noteholder in income with respect to
the Note and decreased by the amount of bond premium (if any) previously
amortized and by the amount of principal payments previously received by
such Noteholder with respect to such Note. Any such gain or loss will be
capital gain or loss if the Note was held as a capital asset, except for
gain representing accrued interest and accrued market discount not
previously included in income. Capital losses generally may be used by a
corporate taxpayer only to offset capital gains, and by an individual
taxpayer only to the extent of capital gains plus $3,000 of other income.
Foreign Holders. Interest payments made (or accrued) to a Noteholder
who is a nonresident alien, foreign corporation or other non-United States
person (a "foreign person") generally will be considered "portfolio
interest", and generally will not be subject to United States federal
income tax and withholding tax, if the interest is not effectively
connected with the conduct of a trade or business within the United States
by the foreign person and the foreign person (i) is not actually or
constructively a "10 percent shareholder" of the Trust or the Seller
(including a holder of 10% of the outstanding Certificates) or a
"controlled foreign corporation" with respect to which the Trust or the
Seller is a "related person" within the meaning of the Code and (ii)
provides the Trustee or other person who is otherwise required to withhold
U.S. tax with respect to the Notes with an appropriate statement (on Form
W-8 or a similar form), signed under penalties of perjury, certifying that
the beneficial owner of the Note is a foreign person and providing the
foreign person's name and address. If a Note is held through a securities
clearing organization or certain other financial institutions, the
organization or institution may provide the relevant signed statement to
the withholding agent; in that case, however, the signed statement must be
accompanied by a Form W-8 or substitute form provided by the foreign person
that owns the Note. If such interest is not portfolio interest, then it
will be subject to United States federal income and withholding tax at a
rate of 30 percent, unless reduced or eliminated pursuant to an applicable
tax treaty.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from
United States federal income and withholding tax, provided that (i) such
gain is not effectively connected with the conduct of a trade or business
in the United States by the foreign person and (ii) in the case of an
individual foreign person, the foreign person is not present in the United
States for 183 days or more in the taxable year.
Backup Withholding. Each holder of a Note (other than an exempt
holder such as a corporation, tax exempt organization, qualified pension
and profit sharing trust, individual retirement account or nonresident
alien who provides certification as to status as a nonresident) will be
required to provide, under penalties of perjury, a certificate containing
the holder's name, address, correct federal taxpayer identification number
and a statement that the holder is not subject to backup withholding.
Should a nonexempt Noteholder fail to provide the required certification,
the Trust will be required to withhold 31 percent of the amount otherwise
payable to the holder, and remit the withheld amount to the IRS as a credit
against the holder's federal income tax liability. Noteholders should
consult with their tax advisors as to their eligibility for exemption from
backup withholding and the procedure for obtaining the exemption.
Possible Alternative Treatments of the Notes. If, contrary to the
opinion of Federal Tax Counsel, the IRS successfully asserted that one or
more of the Notes did not represent debt for federal income tax purposes,
the Notes might be treated as equity interests in the Trust. If so
treated, the Trust might be taxable as a corporation with the adverse
consequences described above (and the taxable corporation would not be able
to reduce its taxable income by deductions for interest expense on Notes
recharacterized as equity). Alternatively, and most likely in the view of
Federal Tax Counsel, the Trust might be treated as a publicly traded
partnership that would not be taxable as a corporation because it would
meet certain qualifying income tests. Nonetheless, treatment of the Notes
as equity interests in such a publicly traded partnership could have
adverse tax consequences to certain holders. For example, income to
certain tax-exempt entities (including pension funds) would be "unrelated
business taxable income", income to foreign holders generally would be
subject to U.S. tax and U.S. tax return filing and withholding
requirements, and individual holders might be subject to certain
limitations on their ability to deduct their share of Trust expenses.
Furthermore, such a characterization could subject holders to state and
local taxation in jurisdictions in which they are not currently subject
to tax.
Tax Consequences to Holders of the Certificates
Treatment of the Trust as a Partnership. The Seller, the Servicer,
the Trustee, and the Certificateholders, by their purchase of Certificates,
will agree to treat the Trust as a partnership for purposes of federal and
state income tax, franchise tax and any other tax measured in whole or in
part by income, with the assets of the partnership being the assets held by
the Trust, the partners of the partnership being the Certificateholders,
and the Notes being debt of the partnership. However, the proper
characterization of the arrangement involving the Trust, the Certificates,
the Notes, the Seller, and the Servicer is not clear because there is no
authority on transactions closely comparable to that contemplated herein.
A variety of alternative characterizations are possible. For example,
because the Certificates have certain features characteristic of debt, the
Certificates might be considered debt of the Seller or the Trust. Any such
characterization would not result in materially adverse tax consequences to
Certificateholders as compared to the intended consequences from treatment
of the Certificates as equity in a partnership, described below. The
following discussion assumes that the Certificates represent equity
interests in a partnership.
The following discussion assumes that all payments on the Certificates
are denominated in U.S. dollars, none of the Certificates are Strip
Certificates, and that a series of Securities includes a single class of
Certificates. If these conditions are not satisfied with respect to any
given series of Certificates, additional tax considerations with respect to
such Certificates will be disclosed in the related Prospectus Supplement.
Partnership Taxation. As a partnership, the Trust will not be subject
to federal income tax. Rather, each Certificateholder will be required to
separately take into account such holder's accruals of guaranteed payments
from the Trust and its allocated share of other income, gains, losses,
deductions and credits of the Trust. The Trust's income will consist
primarily of interest and finance charges earned on the Receivables
(including appropriate adjustments for market discount, OID and bond
premium) and any gain upon collection or disposition of Receivables. The
Trust's deductions will consist primarily of interest accruing with respect
to the Notes, guaranteed payments on the Certificates, servicing and other
fees, and losses or deductions upon collection or disposition of
Receivables.
The tax items of a partnership are allocable to the partners in
accordance with the Code, Treasury regulations and the partnership
agreement (here, the Trust Agreement and related documents). Under the
Trust Agreement, interest payments on the Certificates at the Certificate
Rate (including interest on amounts previously due on the Certificates but
not yet distributed) will be treated as "guaranteed payments" under Section
707(c) of the Code. Guaranteed payments are payments to partners for the
use of their capital and, in the present circumstances, are treated as
deductible to the Trust and ordinary income to the Certificateholders. The
Trust will have a calendar year tax year and will deduct the guaranteed
payments under the accrual method of accounting. Certificateholders with a
calendar year tax year are required to include the accruals of guaranteed
payments in income in their taxable year that corresponds to the year in
which the Trust deducts the payments, and Certificateholders with a
different taxable year are required to include the payments in income in
their taxable year that includes the December 31 of the Trust year in which
the Trust deducts the payments. It is possible that guaranteed payments
will not be treated as interest for all purposes of the Code.
In addition, the Trust Agreement will provide, in general, that the
Certificateholders will be allocated taxable income of the Trust for each
Collection Period equal to the sum of (i) any Trust income attributable to
discount on the Receivables that corresponds to any excess of the principal
amount of the Certificates over their initial issue price, (ii) prepayment
premium, if any, payable to the Certificateholders for such month and (iii)
any other amounts of income payable to the Certificateholders for such
month. Such allocation will be reduced by any amortization by the Trust of
premium on Receivables that corresponds to any excess of the issue price of
Certificates over their principal amount. All remaining items of taxable
income, gain, loss and deduction of the Trust, if any, will be allocated to
the Seller.
Based on the economic arrangement of the parties, this approach for
allocating Trust income arguably should be permissible under applicable
Treasury regulations, although no assurance can be given that the IRS would
not require a greater amount of income to be allocated to
Certificateholders. Moreover, even under the foregoing method of
allocation, Certificateholders may be allocated income equal to the entire
Certificate Rate plus the other items described above even though the Trust
might not have sufficient cash to make current cash distributions of such
amount. Thus, cash basis holders would, in effect, be required to report
income from the Certificates on the accrual basis and Certificateholders
may become liable for taxes on Trust income even if they have not received
cash from the Trust to pay such taxes. In addition, because tax
allocations and tax reporting will be done on a uniform basis for all
Certificateholders but Certificateholders may be purchasing Certificates at
different times and at different prices, Certificateholders may be required
to report on their tax returns taxable income that is greater or less than
the amount reported to them by the Trust.
All of the guaranteed payments and taxable income allocated to a
Certificateholder that is a pension, profit sharing or employee benefit
plan or other tax-exempt entity (including an individual retirement
account) will constitute "unrelated business taxable income" generally
taxable to such a holder under the Code.
An individual taxpayer's share of expenses of the Trust (including
fees to the Servicer but not interest expense) would be miscellaneous
itemized deductions. Such deductions might be disallowed to the individual
in whole or in part and might result in such holder being taxed on an
amount of income that exceeds the amount of cash actually distributed to
such holder over the life of the Trust. It is not clear whether these
rules would be applicable to a Certificateholder accruing guaranteed
payments.
The Trust intends to make all tax calculations relating to income and
allocations to Certificateholders on an aggregate basis. If the IRS were
to require that such calculations be made separately for each Receivable,
the Trust might be required to incur additional expense but it is believed
that there would not be a material adverse effect on Certificateholders.
Discount and Premium. It is believed that the Receivables were not
issued with OID, and, therefore, the Trust should not have OID income.
However, the purchase price paid by the Trust for the Receivables may be
greater or less than the remaining principal balance of the Receivables at
the time of purchase. If so, the Receivables will have been acquired at a
premium or discount, as the case may be. (As indicated above, the Trust
will make this calculation on an aggregate basis, but might be required to
recompute it on a Receivable-by-Receivable basis.)
If the Trust acquires the Receivables at a market discount or premium,
the Trust will elect to include any such discount in income currently as it
accrues over the life of the Receivables or to offset any such premium
against interest income on the Receivables. As indicated above, a portion
of such market discount income or premium deduction may be allocated to
Certificateholders.
Section 708 Termination. Under Section 708 of the Code, the Trust
will be deemed to terminate for federal income tax purposes if 50% or more
of the capital and profits interests in the Trust are sold or exchanged
within a 12-month period. If such a termination occurs, under current
Treasury regulations the Trust will be considered to distribute its assets
to the partners, who would then be treated as recontributing those assets
to the Trust, as a new partnership. Proposed Treasury regulations would
modify this treatment. The Trust will not comply with certain technical
requirements that might apply when such a constructive termination occurs.
As a result, the Trust may be subject to certain tax penalties and may
incur additional expenses if it is required to comply with those
requirements. Furthermore, the Trust might not be able to comply due to
lack of data.
Disposition of Certificates. Subject to the discussion in the
immediately following paragraph, generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates
sold. A Certificateholder's tax basis in a Certificate will generally
equal the holder's cost increased by the holder's share of Trust income
(includible in income) and decreased by any distributions received with
respect to such Certificate. In addition, both the tax basis in the
Certificates and the amount realized on a sale of a Certificate would
include the holder's share of the Notes and other liabilities of the Trust.
A holder acquiring Certificates at different prices may be required to
maintain a single aggregate adjusted tax basis in such Certificates, and,
upon sale or other disposition of some of the Certificates, allocate a
portion of such aggregate tax basis to the Certificates sold (rather than
maintaining a separate tax basis in each Certificate for purposes of
computing gain or loss on a sale of that Certificate).
Any gain on the sale of a Certificate attributable to the holder's
share of unrecognized accrued market discount on the Receivables would
generally be treated as ordinary income to the holder and would give rise
to special tax reporting requirements. The Trust does not expect to have
any other assets that would give rise to such special reporting
requirements. Thus, to avoid those special reporting requirements, the
Trust will elect to include market discount in income as it accrues.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the
aggregate cash distributions with respect thereto, such excess will
generally give rise to a capital loss upon the retirement of the
Certificates.
Allocations Between Transferors and Transferees. In general, the
Trust's taxable income and losses will be determined monthly and the tax
items for a particular calendar month will be apportioned among the
Certificateholders in proportion to the principal amount of Certificates
owned by them as of the close of the last day of such month. As a result,
a holder purchasing Certificates may be allocated tax items (which will
affect its tax liability and tax basis) attributable to periods before the
actual purchase.
The use of such a monthly convention may not be permitted by existing
Treasury regulations. If a monthly convention is not allowed (or only
applies to transfers of less than all of the partner's interest), taxable
income or losses of the Trust might be reallocated among the
Certificateholders. The Seller is authorized to revise the Trust's method
of allocation between transferors and transferees to conform to a method
permitted by future regulations.
Section 754 Election. In the event that a Certificateholder sells its
Certificates at a profit (loss), the purchasing Certificateholder will have
a higher (lower) basis in the Certificates than the selling
Certificateholder had. The tax basis of the Trust's assets will not be
adjusted to reflect that higher (or lower) basis unless the Trust were to
file an election under Section 754 of the Code. In order to avoid the
administrative complexities that would be involved in keeping accurate
accounting records, as well as potentially onerous information reporting
requirements, the Trust will not make such election. As a result,
Certificateholders might be allocated a greater or lesser amount of Trust
income than would be appropriate based on their own purchase price for
Certificates.
Administrative Matters. The Trustee is required to keep or have kept
complete and accurate books of the Trust. Such books will be maintained
for financial reporting and tax purposes on an accrual basis and the fiscal
year of the Trust will be the calendar year. The Trustee will file a
partnership information return (IRS Form 1065) with the IRS for each
taxable year of the Trust and will report each Certificateholder's
allocable share of items of Trust income and expense to holders and the IRS
on Schedule K-1. The Trust will provide the Schedule K-1 information to
nominees that fail to provide the Trust with the information statement
described below and such nominees will be required to forward such
information to the beneficial owners of the Certificates. Generally,
holders must file tax returns that are consistent with the information
return filed by the Trust or be subject to penalties unless the holder
notifies the IRS of all such inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as
a nominee at any time during a calendar year is required to furnish the
Trust with a statement containing certain information on the nominee, the
beneficial owners and the Certificates so held. Such information includes
(i) the name, address and taxpayer identification number of the nominee and
(ii) as to each beneficial owner (x) the name, address and identification
number of such person, (y) whether such person is a United States person, a
tax-exempt entity or a foreign government, an international organization,
or any wholly owned agency or instrumentality of either of the foregoing,
and (z) certain information on Certificates that were held, bought or sold
on behalf of such person throughout the year. In addition, brokers and
financial institutions that hold Certificates through a nominee are
required to furnish directly to the Trust information as to themselves and
their ownership of Certificates. A clearing agency registered under
Section 17A of the Exchange Act is not required to furnish any such
information statement to the Trust. The information referred to above for
any calendar year must be furnished to the Trust on or before the following
January 31. Nominees, brokers and financial institutions that fail to
provide the Trust with the information described above may be subject to
penalties.
The Seller will be designated as the tax matters partner in the
related Trust Agreement and, as such, will be responsible for representing
the Certificateholders in any dispute with the IRS. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on
which the partnership information return is filed. Any adverse
determination following an audit of the return of the Trust by the
appropriate taxing authorities could result in an adjustment of the returns
of the Certificateholders, and, under certain circumstances, a
Certificateholder may be precluded from separately litigating a proposed
adjustment to the items of the Trust. An adjustment could also result in
an audit of a Certificateholder's returns and adjustments of items not
related to the income and losses of the Trust.
Tax Consequences to Foreign Certificateholders. It is not clear
whether the Trust would be considered to be engaged in a trade or business
in the United States for purposes of federal withholding taxes with respect
to non-U.S. persons because there is no clear authority dealing with that
issue under facts substantially similar to those described herein.
Although it is not expected that the Trust would be engaged in a trade or
business in the United States for such purposes, the Trust will withhold as
if it were so engaged in order to protect the Trust from possible adverse
consequences of a failure to withhold. The Trust expects to withhold on
the portion of its taxable income that is allocable to foreign
Certificateholders pursuant to Section 1446 of the Code, as if such income
were effectively connected to a U.S. trade or business, at a rate of 35%
for foreign holders that are taxable as corporations and 39.6% for all
other foreign holders. Subsequent adoption of Treasury regulations or the
issuance of other administrative pronouncements may require the Trust to
change its withholding procedures. In determining a holder's withholding
status, the Trust may rely on IRS Form W-8, IRS Form W-9 or the holder's
certification of nonforeign status signed under penalties of perjury.
Each foreign holder might be required to file a U.S. individual or
corporate income tax return and pay U.S. income tax on the amount computed
therein (including, in the case of a corporation, the branch profits tax)
on its share of accruals of guaranteed payments and the Trust's income.
Each foreign holder must obtain a taxpayer identification number from the
IRS and submit that number to the Trust on Form W-8 in order to assure
appropriate crediting of the taxes withheld. A foreign holder generally
would be entitled to file with the IRS a claim for refund with respect to
taxes withheld by the Trust, taking the position that no taxes were due
because the Trust was not engaged in a U.S. trade or business. However,
the IRS may assert additional taxes are due, and no assurance can be given
as to the appropriate amount of tax liability.
Backup Withholding. Distributions made on the Certificates and
proceeds from the sale of the Certificates will be subject to a "backup"
withholding tax of 31% if, in general, the Certificateholder fails to
comply with certain identification procedures, unless the holder is an
exempt recipient under applicable provisions of the Code.
Certificateholders should consult with their tax advisors as to their
eligibility for exemption to backup withholding and the procedure for
obtaining the exemption.
TRUSTS TREATED AS GRANTOR TRUSTS
Tax Characterization of the Trust as a Grantor Trust
With respect to any Trust which is not intended to be characterized as
a partnership, Federal Tax Counsel will deliver its opinion that the Trust
will not be classified as an association taxable as a corporation and that
such Trust will be classified as a grantor trust under subpart E, Part 1 of
subchapter J of the Code. A copy of such opinion of Federal Tax Counsel
will be filed with the Commission with a Form 8-K following the issuance of
the Certificates by a Trust not intended to be characterized as a
partnership. In this case, owners of Certificates (referred to herein as
"Grantor Trust Certificateholders") will be treated for federal income tax
purposes as owners of a portion of the Trust's assets as described below.
The Certificates issued by a Trust that is treated as a grantor trust are
referred to herein as "Grantor Trust Certificates".
Characterization. Each Grantor Trust Certificateholder will be
treated as the owner of a pro rata undivided interest in the interest and
principal portions of the Trust represented by the Grantor Trust
Certificates and will be considered the equitable owner of a pro rata
undivided interest in each of the Receivables in the Trust. Any amounts
received by a Grantor Trust Certificateholder in lieu of amounts due with
respect to any Receivable because of a default or delinquency in payment
will be treated for federal income tax purposes as having the same
character as the payments they replace.
Each Grantor Trust Certificateholder will be required to report on its
federal income tax return in accordance with such Grantor Trust
Certificateholder's method of accounting its pro rata share of the entire
income from the Receivables in the Trust represented by the Grantor Trust
Certificates, including interest, OID, if any, market discount, if any,
prepayment fees, assumption fees, any gain recognized upon an assumption
and late payment charges received by the Servicer. Under Sections 162 or
212 of the Code each Grantor Trust Certificateholder will be entitled to
deduct its pro rata share of servicing fees, prepayment fees, assumption
fees, any loss recognized upon an assumption and late payment charges
retained by the Servicer, provided that such amounts are reasonable
compensation for services rendered to the Trust. Grantor Trust
Certificateholders that are individuals, estates or trusts will be entitled
to deduct their share of expenses only to the extent such expenses plus all
other Section 212 expenses exceed two percent of its adjusted gross income.
In addition, the Code provides that the amount of itemized deductions
otherwise allowable for the taxable year for an individual whose adjusted
gross income exceeds a threshold amount specified in the Code adjusted for
inflation ($117,950 in 1996, in the case of a joint return) will be reduced
by the lesser of (i) 3% of the excess of adjusted gross income over the
specified threshold amount or (ii) 80% of the amount of itemized deductions
otherwise allowable for such taxable year. A Grantor Trust
Certificateholder using the cash method of accounting must take into
account its pro rata share of income and deductions as and when collected
by or paid to the Servicer. A Grantor Trust Certificateholder using an
accrual method of accounting must take into account its pro rata share of
income and deductions as they become due or are paid to the Servicer,
whichever is earlier. If the servicing fees paid to the Servicer are
deemed to exceed reasonable servicing compensation, the amount of such
excess could be considered as an ownership interest retained by the
Servicer (or any person to whom the Servicer assigned for value all or a
portion of the servicing fees) in a portion of the interest payments on the
Receivables. The Receivables would then be subject to the "coupon
stripping" rules of the Code discussed below.
Premium. The price paid for a Grantor Trust Certificate by a holder
will be allocated to such holder's undivided interest in each Receivable
based on each Receivable's relative fair market value, so that such
holder's undivided interest in each Receivable will have its own tax basis.
A Grantor Trust Certificateholder that acquires an interest in Receivables
at a premium may elect to amortize such premium under a constant yield
method. Amortizable bond premium will be treated as an offset to interest
income on such Grantor Trust Certificate. The basis for such Grantor Trust
Certificate will be reduced to the extent that amortizable premium is
applied to offset interest payments. A Grantor Trust Certificateholder
that makes this election for a Grantor Trust Certificate that is acquired
at a premium will be deemed to have made an election to amortize bond
premium with respect to all debt instruments having amortizable bond
premium that such Grantor Trust Certificateholder acquires during the year
of the election or thereafter. Absent such an election, the premium will
be deductible as an ordinary loss only upon disposition of the Certificate
or pro rata as principal is paid on the Receivables.
Stripped Bonds and Stripped Coupons
To the extent a transaction is determined to involve "excess
servicing" (as described above), or that the classes of Certificates
represent stripped interests in the underlying Receivables, the Grantor
Trust Certificates will represent interests in stripped bonds for federal
income tax purposes. Although the tax treatment of stripped bonds is not
entirely clear, based on recent guidance by the IRS, each purchaser of a
Grantor Trust Certificate will be treated as the purchaser of a stripped
bond which generally should be treated as a single debt instrument issued
on the day it is purchased for purposes of calculating any OID. Generally,
under Treasury regulations (the "Section 1286 Treasury Regulations"), if
the discount on a stripped bond is larger than a de minimis amount (as
calculated for purposes of the OID rules of the Code) such stripped bond
will be considered to have been issued with OID. If OID rules were to
apply, all of the taxable income to be recognized with respect to the
Certificates would be includible in income as OID but would not be
includible again when the interest is actually received. Regulations do
not adequately address the circumstances in which payment of interest on
Certificates such as the Grantor Trust Certificates would not be considered
unconditionally payable, and thus, it is expected that Federal Tax Counsel
will be unable to opine as to the extent to which interest payments on the
Certificates would be treated as qualified stated interest.
Market Discount and Premium. A Grantor Trust Certificateholder that
acquires an undivided interest in Receivables may be subject to the market
discount rules of Code Sections 1276 through 1278 to the extent an
undivided interest in a Receivable is considered to have been purchased at
a "market discount." Generally, the amount of market discount is equal to
the excess of the portion of the principal amount of such Receivable
allocable to such holder's undivided interest over such holder's tax basis
in such interest. Market discount with respect to a Grantor Trust
Certificate will be considered to be zero if the amount allocable to the
Grantor Trust Certificate is less than 0.25% of the Grantor Trust
Certificate's stated redemption price at maturity multiplied by the
weighted average maturity remaining after the date of purchase. Treasury
regulations implementing the market discount rules have not yet been
issued; therefore, investors should consult their own tax advisors
regarding the application of these rules and the advisability of making any
of the elections allowed under Code Sections 1276 through 1278.
The Code provides that any principal payment (whether a scheduled
payment or a prepayment) or any gain on disposition of a market discount
bond shall be treated as ordinary income to the extent that it does not
exceed the accrued market discount at the time of such payment. The amount
of accrued market discount for purposes of determining the tax treatment of
subsequent principal payments or dispositions of the market discount bond
is to be reduced by the amount so treated as ordinary income.
The Code also grants the Treasury Department authority to issue
regulations providing for the computation of accrued market discount on
debt instruments, the principal of which is payable in more than one
installment. While the Treasury Department has not yet issued regulations,
rules described in the relevant legislative history will apply. Under
those rules, the holder of a market discount bond may elect to accrue
market discount on the basis of a constant yield method.
A holder who acquired a Grantor Trust Certificate at a market discount
may be required to defer a portion of its interest deductions for the
taxable year attributable to any indebtedness incurred or continued to
purchase or carry such Grantor Trust Certificate purchased with market
discount. For these purposes, the de minimis rule referred to above
applies. Any such deferred interest expense would not exceed the market
discount that accrues during such taxable year and is, in general, allowed
as a deduction not later than the year in which such market discount is
includible in income. If such holder elects to include market discount in
income currently as it accrues on all market discount instruments acquired
by such holder in that taxable year or thereafter, the interest deferral
rule described above will not apply.
To the extent a Grantor Trust Certificateholder is considered to have
purchased an undivided interest in a Receivable for an amount that is
greater than its stated redemption price at maturity of such Receivable,
such Grantor Trust Certificateholder will be considered to have purchased
the Receivable with "amortizable bond premium" equal in amount to such
excess. See "-Premium."
Election to Treat All Interest as OID. The OID regulations permit a
Grantor Trust Certificateholder to elect to accrue all interest, discount
(including de minimis market or OID) and premium in income as interest,
based on a constant yield method. If such an election were to be made with
respect to a Grantor Trust Certificate with market discount, the
Certificateholder would be deemed to have made an election to include in
income currently market discount with respect to all other debt instruments
having market discount that such Grantor Trust Certificateholder acquires
during the year of the election or thereafter. Similarly, a Grantor Trust
Certificateholder that makes this election for a Grantor Trust Certificate
that is acquired at a premium will be deemed to have made an election to
amortize bond premium with respect to all debt instruments having
amortizable bond premium that such Grantor Trust Certificateholder owns or
acquires. See "-Premium." The election to accrue interest, discount and
premium on a constant yield method with respect to a Grantor Trust
Certificate is generally irrevocable.
Sale or Exchange of a Grantor Trust Certificate. Sale or exchange of
a Grantor Trust Certificate prior to its maturity will result in gain or
loss equal to the difference, if any, between the amount received and the
owner's adjusted basis in the Grantor Trust Certificate. Such adjusted
basis generally will equal the seller's purchase price for the Grantor
Trust Certificate, increased by the OID included in the seller's gross
income with respect to the Grantor Trust Certificate, and reduced by
principal payments on the Grantor Trust Certificate previously received by
the seller. Such gain or loss will be capital gain or loss to an owner for
which a Grantor Trust Certificate is a "capital asset" within the meaning
of Code Section 1221, and will be long-term or short-term depending on
whether the Grantor Trust Certificate has been owned for the long-term
capital gain holding period (currently more than one year).
Grantor Trust Certificates will be "evidences of indebtedness" within
the meaning of Code Section 582(c)(1), so that gain or loss recognized from
the sale of a Grantor Trust Certificate by a bank or a thrift institution
to which such section applies will be treated as ordinary income or loss.
Non-U.S. Persons. Generally, interest or OID paid by the person
required to withhold tax under Code Section 1441 or 1442 to (i) an owner
that is not a U.S. Person (as defined below) or (ii) a Grantor Trust
Certificateholder holding on behalf of an owner that is not a U.S. Person
would not be subject to withholding if such Grantor Trust Certificateholder
complies with certain identification requirements (including delivery of a
statement, signed by the Grantor Trust Certificateholder under penalties of
perjury, certifying that such Grantor Trust Certificateholder is not a U.S.
Person and providing the name and address of such Grantor Trust
Certificateholder).
As used herein, a "U.S. Person" means a citizen or resident of the
United States, a corporation or a partnership organized in or under the
laws of the United States or any political subdivision thereof or an estate
or trust, the income of which from sources outside the United States is
includible in gross income for federal income tax purposes regardless of
its connection with the conduct of a trade or business within the United
States.
Information Reporting and Backup Withholding. The Servicer will
finish or make available, within a reasonable time after the end of each
calendar year, to each person who was a Grantor Trust Certificateholder at
any time during such year, such information as may be deemed necessary or
desirable to assist Grantor Trust Certificateholders in preparing their
federal income tax returns, or to enable holders to make such information
available to beneficial owners or financial intermediaries that hold
Grantor Trust Certificates as nominees on behalf of beneficial owners. If
a holder, beneficial owner, financial intermediary or other recipient of a
payment on behalf of a beneficial owner fails to supply a certified
taxpayer identification number or if the Secretary of the Treasury
determines that such person has not reported all interest and dividend
income required to be shown on its federal income tax return, 31% backup
withholding may be required with respect to any payments. Any amounts
deducted and withheld from a distribution to a recipient would be allowed
as a credit against such recipient's federal income tax liability.
STATE TAX CONSEQUENCES
The above discussion does not address the tax treatment of any Tax
Partnership, Grantor Trust, Notes, Certificates, Noteholders or
Certificateholders under any state tax laws. Prospective investors are
urged to consult with their own tax advisors regarding the state tax
treatment of any Tax Partnership or Grantor Trust as well as any state tax
consequences to them of purchasing, holding and disposing of Notes or
Certificates.
* * *
THE FEDERAL AND STATE TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
NOTEHOLDER'S OR CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE
PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES
AND CERTIFICATES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL
OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
Section 406 of ERISA and Section 4975 of the Code prohibit a pension,
profit-sharing or other employee benefit plan subject to ERISA, as well as
individual retirement accounts, certain types of Keogh Plans and other
plans subject to Section 4975 of the Code (each a "Benefit Plan"), from
engaging in certain transactions with persons that are "parties in
interest" under ERISA or "disqualified persons" under the Code with respect
to such Benefit Plan. A violation of these "prohibited transaction" rules
may result in an excise tax or other penalties and liabilities under ERISA
and the Code for such persons.
A fiduciary of a Benefit Plan considering the purchase of Securities
of any series should carefully review with its legal and other advisors
whether the assets of the related Trust would be considered plan assets,
whether the purchase or holding of the Securities could give rise to a
transaction prohibited or otherwise impermissible under ERISA or the Code,
and should refer to the discussion under "ERISA Considerations" in the
related Prospectus Supplement regarding any restrictions on the purchase or
holding of the Securities offered thereby.
Certain employee benefit plans, such as governmental plans (as defined
in Section 3(32) of ERISA) and certain church plans (as defined in Section
3(33) of ERISA) are not subject to the fiduciary and prohibited transaction
provisions under ERISA or the Code discussed herein, but governmental plans
may be subject to comparable restrictions under applicable state law.
Trusts That Issue Notes
The following discussion applies only to Trusts that issue Notes.
Certain transactions involving a Trust might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Benefit
Plan that purchased Notes or Certificates if assets of the Trust were
deemed to be assets of the Benefit Plan. Under a regulation issued by the
United States Department of Labor (the "Plan Asset Regulation"), the assets
of a Trust would be treated as plan assets of a Benefit Plan for the
purposes of ERISA and the Code only if the Benefit Plan acquired an "equity
interest" in the Trust and none of the exceptions contained in the Plan
Asset Regulation was applicable. An equity interest is defined under the
Plan Asset Regulation as an interest other than an instrument which is
treated as indebtedness under applicable local law and which has no
substantial equity features. Although there is little guidance on the
subject to the extent provided in the related Prospectus Supplement, the
Seller believes that, at the time of their issuance, the Notes of each
Series should be treated as indebtedness without substantial equity
features for purpose of the Plan Asset Regulation. The debt status of the
Notes could be affected, after their initial issuance, by certain changes
in the financial condition of the related Trust.
Regardless of whether the Notes are treated as an equity interest for
purposes of the Plan Asset Regulation, the acquisition or holding of such
Notes with plan assets of a Benefit Plan could be considered to give rise
to a prohibited transaction if the Seller, the Servicer or the applicable
Issuer, Trustee or Indenture Trustee is or becomes a party in interest
under ERISA or a disqualified person under the Code with respect to such
Benefit Plan. In such case, certain exemptions from the prohibited
transactions rules may be available, depending upon the type and
circumstances of the Benefit Plan fiduciary making the decision to purchase
the Notes with assets of the Benefit Plan. Included among these exemptions
are Prohibited Transaction Exemption ("PTE") 84-14, applicable to certain
transactions effected by a qualified professional asset manager; PTE 90-1,
applicable to certain transactions entered into by an insurance company
separate account; PTE 91-38, applicable to certain transactions entered
into by a bank collective investment trust; PTE 95-60, applicable to
certain transactions entered into by an insurance company general account;
and PTE 96-23, applicable to certain transactions entered into by an
in-house asset manager. Purchasers acquiring Notes of any series with the
assets of a Benefit Plan shall be deemed to represent and warrant that such
purchase and holding will not give rise to a nonexempt prohibited
transaction.
Because the Certificates issued by a Trust that also issues Notes will
most likely be treated as equity interests under the Plan Asset Regulation,
such Certificates may not be acquired with the assets of any Benefit Plan.
Purchasers of the Certificates issued by a Trust that also issues Notes
shall be deemed to represent and warrant that they are not purchasing the
Certificates with the assets of a Benefit Plan.
Trusts That Do Not Issue Notes
The following discussion applies only to nonsubordinated Certificates
(referred to herein as "Senior Certificates") issued by a Trust that does
not issue Notes.
The related Prospectus Supplement will indicate whether the lead
underwriter named therein has been granted by the U.S. Department of Labor,
an exemption (the "Exemption") from certain of the prohibited transaction
rules of ERISA with respect to the initial purchase, the holding and the
subsequent resale by Benefit Plans of certificates representing interests
in asset-backed pass-through trusts that consist of certain receivables,
loans and other obligations that meet the conditions and requirements of
the Exemption. The receivables covered by the Exemption include motor
vehicle installment sales contracts such as the Receivables. The fact that
a portion of the Receivables in certain Trusts may be acquired subsequent
to closing with the assets held in a Pre-Funding Account raises an issue as
to whether the Trust can be characterized as containing a "fixed pool" of
receivables, as required by the Exemption, during the Funding Period. In
addition, the assets held in a Pre-Funding Account prior to the acquisition
of Receivables are not within the list of permitted assets for purposes of
the Exemption. Accordingly, it is not clear whether the terms of the
Exemption will be satisfied during the Funding Period with respect to
Senior Certificates issued by a Trust with Prefunding Account. The
Department of Labor has under consideration an amendment to the Exemption
to extend its application to trusts with prefunding accounts.
Among the conditions which must be satisfied for the Exemption to
apply to the Senior Certificates are the following:
(1) the acquisition of the Senior Certificates by a Benefit
Plan is on terms (including the price for the Senior Certificates)
that are at least as favorable to the Benefit Plan as they would be in
an arm's length transaction with an unrelated party;
(2) the rights and interests evidenced by the Senior
Certificates acquired by the Benefit Plan are not subordinated to the
rights and interests evidenced by other certificates of the Trust;
(3) the Senior Certificates acquired by the Benefit Plan have
received a rating at the time of such acquisition that is in one of
the three highest generic rating categories from either Standard &
Poor's Ratings Services, Moody's Investors Service, Inc., Duff &
Phelps Credit Rating Co. or Fitch Investors Service, L.P.;
(4) the Trustee is not an affiliate of any other member of the
Restricted Group (as defined below);
(5) the sum of all payments made to the underwriters in
connection with the distribution of the Senior Certificates represents
not more than reasonable compensation for underwriting the Senior
Certificates; the sum of all payments made to and retained by the
Seller pursuant to the sale of the Receivables to the Trust represents
not more than the fair market value of such Receivables; and 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 Sale and Servicing Agreement and reimbursement of the Servicer's
reasonable expenses in connection therewith; and
(6) the Benefit Plan investing in the Senior Certificates is an
"accredited investor" as defined in Rule 501(a)(1) of Regulation D of
the Commission under the Securities Act.
Moreover, the Exemption would provide relief from certain
self-dealing/conflict of interest or prohibited transactions only if, among
other requirements, (i) in the case of the acquisition of Senior
Certificates in connection with the initial issuance, at least fifty (50)
percent of the Senior Certificates are acquired by persons independent of
the Restricted Group, (ii) the Benefit Plan's investment in Senior
Certificates does not exceed twenty-five (25) percent of all of the Senior
Certificates outstanding at the time of the acquisition, and (iii)
immediately after the acquisition, no more than twenty-five (25) percent of
the assets of the Benefit Plan are invested in certificates representing an
interest in one or more trusts containing assets sold or serviced by the
same entity. The Exemption does not apply to Benefit Plans sponsored by
the Seller, any underwriter, the Trustee, the Servicer, any Obligor with
respect to Receivables included in the Trust constituting more than five
percent of the aggregate unamortized principal balance of the assets in the
Trust, or any affiliate of such parties (the "Restricted Group").
The related Prospectus Supplement will indicate whether the Seller
believes that all conditions of the Exemption other than those within the
control of the investors have been met with respect to the Senior
Certificates, and whether the Senior Certificates may be acquired by
Benefit Plans.
Because any Certificates issued by a Trust that are subordinate to any
other class of Securities (the "Subordinate Certificates") will not be
eligible for the relief afforded by the Exemption, such Subordinate
Certificates may not be acquired with the assets of a Benefit Plan. Each
purchaser of a Subordinate Certificate shall be deemed to represent and
warrant that it is not acquiring or holding the Subordinate Certificate
with the assets of a Benefit Plan.
PLAN OF DISTRIBUTION
On the terms and conditions set forth in an underwriting agreement
with respect to the Notes, if any, of a given series and an underwriting
agreement with respect to the Certificates of such series (collectively,
the "Underwriting Agreements"), the Seller will agree to cause the related
Trust to sell to the underwriters named therein and in the related
Prospectus Supplement, and each of such underwriters will severally agree
to purchase, the principal amount of each class of Notes and Certificates,
as the case may be, of the related series set forth therein and in the
related Prospectus Supplement.
In each of the Underwriting Agreements with respect to any given
series of Securities, the several underwriters will agree, subject to the
terms and conditions set forth therein, to purchase all the Notes and
Certificates, as the case may be, described therein which are offered
hereby and by the related Prospectus Supplement if any of such Notes and
Certificates, as the case may be, are purchased.
Each Prospectus Supplement will either (i) set forth the price at
which each class of Notes and Certificates, as the case may be, being
offered thereby will be offered to the public and any concessions that may
be offered to certain dealers, if any, participating in the offering of
such Notes and Certificates or (ii) specify that the related Notes and
Certificates, as the case may be, are to be resold by the underwriters in
negotiated transactions at varying prices to be determined at the time of
such sale. After the initial public offering of any such Notes and
Certificates, such public offering prices and such concessions may be
changed.
Each Underwriting Agreement will provide that the Seller will
indemnify the underwriters against certain civil liabilities, including
liabilities under the Securities Act, or contribute to payments the several
underwriters may be required to make in respect thereof.
Each Trust may, from time to time, invest the funds in its Trust
Accounts in Eligible Investments acquired from such underwriters or from
the Seller.
Pursuant to each Underwriting Agreement with respect to a given series
of Securities, the closing of the sale of any class of Securities subject
to such Underwriting Agreement will be conditioned on the closing of the
sale of all other such classes of Securities of that series.
The place and time of delivery for the Securities in respect of which
this Prospectus is delivered will be set forth in the related Prospectus
Supplement.
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
The distribution of the Securities in Canada is being made only on a
private placement basis exempt from the requirement that each Trust prepare
and file a prospectus with the securities regulatory authorities in each
province where trades of the Securities are effected. Accordingly, any
resale of the Securities in Canada must be made in accordance with
applicable securities law which will vary depending on the relevant
jurisdiction, and which may require resales to be made in accordance with
available statutory exemptions or pursuant to a discretionary exemption
granted by the applicable Canadian securities regulatory authority.
Purchasers are advised to seek legal advice prior to any resale of the
Securities.
Representation of Purchasers
Each purchaser of Securities in Canada who receives a purchase
confirmation will be deemed to represent to the Seller, the applicable
Trust and the dealer from whom such purchase confirmation is received that
(i) such purchaser is entitled under applicable provincial securities laws
to purchase such Securities without the benefit of a prospectus qualified
under such securities laws, (ii) where required by law, that such purchaser
is purchasing as principal and not as agent, and (iii) such purchaser has
reviewed the text above under "Resale Restrictions."
Rights of Action and Enforcement
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the Securities Act (Ontario). As a
result, Ontario purchasers must rely on other remedies that may be
available, including common law rights of action for damages or rescission
or rights of action under the civil liability provisions of the U.S.
federal securities laws.
The applicable Trust, the Seller, the Bank, the Servicer and the
Applicable Trustee and their respective directors and officers, if any, as
well as the experts named herein, may be located outside of Canada and, as
a result, it may not be possible for Ontario purchasers to effect service
of process within Canada upon the Seller or such persons. All or a
substantial portion of the assets of the Seller and such persons may be
located outside of Canada and, as a result, it may not be possible to
satisfy a judgment against the Seller or such persons in Canada or to
enforce a judgment obtained in Canadian courts against such Seller or
persons outside of Canada.
Notice to British Columbia Residents
A purchaser of the Securities to whom the Securities Act (British
Columbia) applies is advised that such purchaser is required to file with
the British Columbia Securities Commission a report within ten days of the
sale of any of the Securities acquired by such purchaser pursuant to this
offering. Such report must be in the form attached to British Columbia
Securities Commission Blanket Order BOR #88/5. Only one such report must
be filed in respect of the Securities acquired on the same date and under
the same prospectus exemption.
LEGAL OPINIONS
Certain legal matters relating to the Securities of any series will be
passed upon for the related Trust, the Seller and the Servicer by Stanley
S. Stroup, Executive Vice President and General Counsel of Norwest
Corporation and by Mayer, Brown & Platt, Chicago, Illinois. Mayer, Brown &
Platt may from time to time render legal services to the Seller, the
Servicer and their affiliates. Certain legal matters will be passed upon
for the Underwriters by Mayer, Brown & Platt, Chicago, Illinois.
<PAGE>
INDEX OF TERMS
Add-On Balance........................................................27
Additional Yield Supplement Amount....................................51
Administration Agreement..............................................57
Administration Fee....................................................57
Administrator.........................................................57
Advance...............................................................11
Affiliate..............................................................7
Applicable Trustee....................................................39
APR...................................................................10
Bank...................................................................3
Bankruptcy Code.......................................................16
Base Rate.............................................................37
Benefit Plan..........................................................72
Bill..................................................................62
Calculation Agent.....................................................37
Cede..................................................................22
Cedel.................................................................39
Cedel Participants....................................................39
Certificate Balance....................................................5
Certificate Distribution Account......................................46
Certificate Owners.....................................................5
Certificate Pool Factor...............................................28
Certificate Rate.......................................................5
Certificateholders....................................................18
Certificates...........................................................1
Code..................................................................62
Collection Account....................................................46
Collection Period.....................................................48
Commission.............................................................2
Cooperative...........................................................40
Cutoff Date...........................................................22
Dealer Agreements......................................................6
Dealer Recourse.......................................................22
Definitive Certificates...............................................41
Definitive Notes......................................................41
Definitive Securities.................................................41
Depositaries..........................................................37
Depository............................................................30
Direct Loans...........................................................7
Distribution Date.....................................................36
DTC...................................................................22
DTC Participants......................................................38
DTC's Nominee.........................................................22
Eligible Deposit Account..............................................47
Eligible Institution..................................................47
Eligible Investments..................................................46
ERISA.................................................................13
Euroclear.............................................................40
Euroclear Operator....................................................40
Euroclear Participants................................................40
Events of Default.....................................................33
Exchange Act...........................................................2
Exemption.............................................................74
FDIC..................................................................61
Federal Tax Counsel...................................................62
Final Scheduled Distribution Date.....................................20
Final Scheduled Maturity Date.........................................10
Financed Vehicles......................................................6
FIRREA................................................................17
Fixed Rate Securities.................................................36
Floating Rate Securities..............................................36
Foreign person........................................................64
FTC Rule..............................................................60
Funding Period.........................................................5
GAAP..................................................................55
Grantor Trust Certificateholders......................................69
Grantor Trust Certificates............................................69
Indenture..............................................................3
Indenture Trustee......................................................1
Indirect Participants.................................................38
Initial Pool Balance..................................................56
Insolvency Event......................................................53
Insolvency Laws.......................................................16
Interest Rate..........................................................4
Interest Reset Period.................................................37
Investment Earnings...................................................47
IRS...................................................................62
Issuer.................................................................3
LIBOR.................................................................37
Motor Vehicle Loans...................................................24
Non-Advance Receivables...............................................11
Note Distribution Account.............................................46
Note Owners............................................................3
Note Pool Factor......................................................28
Noteholders...........................................................18
Notes..................................................................1
Obligor...............................................................22
OID...................................................................63
OID regulations.......................................................63
Originator.............................................................7
Participants..........................................................30
Payahead Account......................................................46
Payahead Balance......................................................48
Payaheads.............................................................46
Plan Assets Regulation................................................73
Pool Balance..........................................................29
Pooling and Servicing Agreement........................................3
Portfolio interest....................................................64
Pre-Funded Amount......................................................7
Pre-Funding Account....................................................4
Precomputed Receivables...............................................25
Prepayments...........................................................15
Prospectus Supplement..................................................1
Purchase Amount.......................................................45
Qualified stated interest.............................................63
Rating Agencies.......................................................21
Receivables............................................................6
Receivables Pool......................................................22
Registration Statement.................................................2
Related Documents.....................................................34
Relief Act............................................................59
Required Rate.........................................................51
Required Yield Supplement Amount......................................51
Reserve Account.......................................................50
Restricted Group......................................................74
Revolving Account......................................................9
Revolving Period.......................................................9
Rule of 78's Receivables..............................................25
Sale and Servicing Agreement...........................................7
Schedule of Receivables...............................................44
Section 1286 Treasury Regulations.....................................70
Securities.............................................................1
Securities Act.........................................................2
Security Owners.......................................................22
Securityholders.......................................................18
Seller.................................................................3
Senior Certificates...................................................73
Servicer...............................................................3
Servicer Termination Events...........................................53
Servicing Fee.........................................................49
Servicing Fee Rate....................................................49
Simple Interest Receivables...........................................25
Specified Reserve Account Balance.....................................10
Spread................................................................37
Spread Multiplier.....................................................37
Strip Certificates.....................................................5
Strip Notes............................................................4
Subsequent Transfer Date..............................................45
Supplemental Servicing Fees...........................................49
Terms and Conditions..................................................40
Transfer and Servicing Agreements.....................................44
Trust..................................................................1
Trust Accounts........................................................46
Trust Agreement........................................................3
U.S. Person...........................................................72
UCC...................................................................45
Underwriter...........................................................15
Underwriting Agreements...............................................75
Warehouse Financing...................................................45
Yield Supplement Account..............................................46
Yield Supplement Agreement............................................51
Yield Supplement Amount...............................................51
<PAGE>
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Norwest
Auto Trust Asset Backed Notes and Asset Backed Certificates (the "Global
Securities") will be available only in book-entry form. Investors in the
Global Securities may hold such Global Securities through any of The
Depository Trust Company ("DTC"), Cedel or Euroclear. The Global Securities
will be tradeable as home market instruments in both the European and U.S.
domestic markets. Initial settlement and all secondary trades will settle
in same-day funds.
Secondary market trading between investors holding Global Securities
through Cedel and Euroclear will be conducted in the ordinary way in
accordance with their normal rules and operating procedures and in
accordance with conventional eurobond practice (i.e., seven calendar day
settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures
applicable to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Securities will be effected on a
delivery-against-payment basis through the respective Depositaries
of Cedel and Euroclear (in such capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be
subject to U.S. withholding taxes unless such holders meet certain
requirements and deliver appropriate U.S. tax documents to the securities
clearing organizations or their participants.
Initial Settlement
All Global Securities will be held in book-entry form by DTC in the name
of Cede & Co. as nominee of DTC. Investors' interests in the Global
Securities will be represented through financial institutions acting on
their behalf as direct and indirect Participants in DTC. As a result, Cedel
and Euroclear will hold positions on behalf of their participants through
their respective Depositaries, which in turn will hold such positions in
accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC will
follow the settlement practices applicable to U.S. corporate debt
obligations. Investor securities custody accounts will be credited with
their holdings against payment in same-day funds on the settlement date.
Investors electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global
security and no "lock-up" or restricted period. Global Securities will be
credited to the securities custody accounts on the settlement date against
payment in same-day funds.
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired
value date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to U.S.
corporate debt obligations in same-day funds.
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be
settled using the procedures applicable to conventional eurobonds in
same-day funds.
Trading between DTC seller and Cedel or Euroclear purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to
the account of a Cedel Participant or a Euroclear Participant, the
purchaser will send instructions to Cedel or Euroclear through a Cedel
Participant or Euroclear Participant at least one business day prior to
settlement. Cedel or Euroclear will instruct the respective Depositary, as
the case may be, to receive the Global Securities against payment. Payment
will include interest accrued on the Global Securities from and including
the last coupon payment date to and excluding the settlement date. Payment
will then be made by the respective Depositary to the DTC Participant's
account against delivery of the Global Securities. After settlement has
been completed, the Global Securities will be credited to the respective
clearing system and by the clearing system, in accordance with its usual
procedures, to the Cedel Participant's or Euroclear Participant's account.
The Global Securities credit will appear the next day (European time) and
the cash debit will be back-valued to, and the interest on the Global
Securities will accrue from, the value date (which would be the preceding
day when settlement occurred in New York). If settlement is not completed
on the intended value date (i.e., the trade fails), the Cedel or Euroclear
cash debit will be valued instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to make
available to the respective clearing systems the funds necessary to process
same-day funds settlement. The most direct means of doing so is to
pre-position funds for settlement, either from cash on hand or existing
lines of credit, as they would for any settlement occurring within Cedel or
Euroclear. Under this approach, they may take on credit exposure to Cedel
or Euroclear until the Global Securities are credited to their accounts one
day later.
As an alternative, if Cedel or Euroclear has extended a line of credit
to them, Cedel Participants or Euroclear Participants can elect not to
pre-position funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Cedel Participants or Euroclear
Participants purchasing Global Securities would incur overdraft charges for
one day, assuming they cleared the overdraft when the Global Securities
were credited to their accounts. However, interest on the Global Securities
would accrue from the value date. Therefore, in many cases the investment
income on the Global Securities earned during that one-day period may
substantially reduce or offset the amount of such overdraft charges,
although this result will depend on each Cedel Participant's or Euroclear
Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global
Securities to the respective Depositary for the benefit of Cedel
Participants or Euroclear Participants. The sale proceeds will be available
to the DTC seller on the settlement date. Thus, to the DTC Participant a
cross-market transaction will settle no differently than a trade between
two DTC Participants.
Trading between Cedel or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear
Participants may employ their customary procedures for transactions in
which Global Securities are to be transferred by the respective clearing
system, through the respective Depositary, to a DTC Participant. The seller
will send instructions to Cedel or Euroclear through a Cedel Participant or
Euroclear Participant at least one business day prior to settlement. In
these cases, Cedel or Euroclear will instruct the respective Depositary, as
appropriate, to deliver the Global Securities to the DTC Participant's
account against payment. Payment will include interest accrued on the
Global Securities from and including the last coupon payment date to and
excluding the settlement date. The payment will then be reflected in the
account of the Cedel Participant or Euroclear Participant the following
day, and receipt of the cash proceeds in the Cedel Participant's or
Euroclear Participant's account would be back-valued to the value date
(which would be the preceding day, when settlement occurred in New York).
Should the Cedel Participant or Euroclear Participant have a line of credit
with its respective clearing system and elect to be in debit in
anticipation of receipt of the sale proceeds in its account, the
back-valuation will extinguish any overdraft charges incurred over that
one-day period. If settlement is not completed on the intended value date
(i.e., the trade fails), receipt of the cash proceeds in the Cedel
Participant's or Euroclear Participant's account would instead be valued as
of the actual settlement date. Finally, day traders that use Cedel or
Euroclear and that purchase Global Securities from DTC Participants for
delivery to Cedel Participants or Euroclear Participants should note that
these trades would automatically fail on the sale side unless affirmative
action were taken. At least three techniques should be readily available to
eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel or Euroclear
accounts) in accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC
Participant no later than one day prior to settlement, which would give
the Global Securities sufficient time to be reflected in their Cedel or
Euroclear account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the
trade so that the value date for the purchase from the DTC Participant
is at least one day prior to the value date for the sale to the Cedel
Participant or Euroclear Participant.
Certain U.S. Federal Income Tax Documentation Requirements
A beneficial owner of Global Securities holding securities through Cedel
or Euroclear (or through DTC if the holder has an address outside the U.S.)
will be subject to the 30% U.S. withholding tax that generally applies to
payments of interest (including original issue discount) on registered debt
issued by U.S. Persons, unless (i) each clearing system, bank or other
financial institution that holds customers' securities in the ordinary
course of its trade or business in the chain of intermediaries between such
beneficial owner and the U.S. entity required to withhold tax complies with
applicable certification requirements and (ii) such beneficial owner takes
one of the following steps to obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of
Securities that are non-U.S. Persons can obtain a complete exemption from
the withholding tax by filing a signed Form W-8 (Certificate of Foreign
Status). If the information shown on Form W-8 changes, a new Form W-8 must
be filed within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a
U.S. branch, for which the interest income is effectively connected with
its conduct of a trade or business in the United States, can obtain an
exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are Security Owners residing
in a country that has a tax treaty with the United States can obtain an
exemption or reduced tax rate (depending on the treaty terms) by filing
Form 1001 (Ownership, Exemption or Reduced Rate Certificate). If the treaty
provides only for a reduced rate, withholding tax will be imposed at that
rate unless the filer alternatively files Form W-8. Form 1001 may be filed
by the Security Owner or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Security Owner of a
Global Security or in the case of a Form 1001 or a Form 4224 filer, his
agent, files by submitting the appropriate form to the person through whom
it holds (the clearing agency, in the case of persons holding directly on
the books of the clearing agency). Form W-8 and Form 1001 are effective for
three calendar years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of
the United States or any political subdivision thereof or (iii) an estate
or trust the income of which is includible in gross income for United
States tax purposes, regardless of its source. This summary does not deal
with all aspects of U.S. Federal income tax withholding that may be
relevant to foreign holders of the Global Securities. Investors are advised
to consult their own tax advisers for specific tax advice concerning their
holding and disposing of the Global Securities.
On April 15, 1996, proposed Treasury Regulations (the "1996 Proposed
Regulations") were issued which, if adopted in final form, could affect the
United States taxation of non-U.S. holders. The 1996 Proposed Regulations
are generally proposed to be effective for payments after December 31, 1997,
subject to certain transition rules. It cannot be predicted at this time
whether the 1996 Proposed Regulations will become effective as proposed or
what, if any, modifications may be made to them. The 1996 Proposed
Regulations would, if adopted, alter the rules under this heading in
certain respects. Prospective investors are urged to consult their tax
advisors with respect to the effect the 1996 Proposed Regulations may have
if adopted.
<PAGE>
SUBJECT TO COMPLETION, DATED __________, 199_
[Form of Grantor Trust Supplement]
PRELIMINARY PROSPECTUS SUPPLEMENT
(To Prospectus dated __________, 199_)
[$______________]
Norwest Auto Trust 199_ - _
$______________ Class ____% Asset Backed Certificates, Class A
$______________ Class ____% Asset Backed Certificates, Class B
Norwest Auto Receivables Corporation
Seller
Norwest Bank Minnesota, N.A.
Servicer
The Norwest Auto Trust 199__-__ (the "Trust") will be formed pursuant
to a Pooling and Servicing Agreement, to be dated as of _________, 199__,
among Norwest Auto Receivables Corporation, as seller (the "Seller"),
Norwest Bank Minnesota, N.A., in its capacity as servicer (in such
capacity, the "Servicer"), and ___________, as Trustee. The Trust will
issue $_________ aggregate principal amount of ____% Asset Backed
Certificates, Class A (the "Class A Certificates"), and $________ aggregate
principal amount of ____% Asset Backed Certificates, Class B (the "Class B
Certificates" and, together with the Class A Certificates, the
"Certificates"). The Class A Certificates will evidence in the aggregate
an approximate ___% undivided ownership in the Trust and the Class B
Certificates will evidence in the aggregate an approximate ___% undivided
ownership interest in the Trust. The rights of the Class B
Certificateholders to receive distributions with respect to the Receivables
are subordinated to the rights of the Class A Certificateholders to the
extent described herein. The Trust property will include a pool of motor
vehicle promissory notes and security agreements and/or retail installment
sale contracts secured by new or used automobiles and light duty trucks
(collectively, the "Receivables"), certain monies received thereunder after
_________, 199__, security interests in the motor vehicles financed thereby,
certain rights under Dealer Agreements, certain Eligible Deposit Accounts in
which collections are held, any proceeds from claims on certain insurance
policies and the proceeds of the foregoing. Certain capitalized terms used
in this Prospectus Supplement are defined in this Prospectus Supplement on
the pages indicated in the "Index of Terms" on page ___ of this Prospectus
Supplement or, to the extent not defined herein, have the meanings assigned
to such terms in the Prospectus.
(continued on following 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 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.
Prospective investors should consider the "Risk Factors" set forth at
page S-__ herein and at page ___ in the accompanying
Prospectus (the "Prospectus").
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND DO NOT
REPRESENT OBLIGATIONS OF OR INTERESTS IN THE NORWEST AUTO RECEIVABLES
CORPORATION, NORWEST BANK MINNESOTA, N.A., ANY OTHER NORWEST BANK,
NORWEST CORPORATION OR ANY OF THEIR AFFILIATES. NEITHER THE
CERTIFICATES NOR THE RECEIVABLES ARE INSURED OR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY NORWEST
AUTO RECEIVABLES CORPORATION, NORWEST BANK MINNESOTA,
N.A., ANY OTHER NORWEST BANK, NORWEST INVESTMENT
SERVICES, INC., NORWEST CORPORATION OR ANY OF
THEIR AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
___________________________
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions the Seller(1)(2)
<S> <C> <C> <C>
Per Class A Certificate % % %
Per Class B Certificate % % %
Total $__________ $__________ $__________
__________________________
<FN>
(1) Plus accrued interest, if any, from _______, 199__.
(2) Before deducting expenses, estimated to be $_________.
</TABLE>
The Certificates are offered by the Underwriters when, as and if
issued and accepted by the Underwriters and subject to their right to reject
orders in whole or in part. It is expected that delivery of the Certificates
will be made in book-entry form through the Same Day Funds Settlement System
of The Depository Trust Company, or through Cedel Bank, societe anonyme or
the Euroclear System, on or about _______, 199__.
____________, 199__.
Principal and interest to the extent of the Class A Certificate Rate
or Class B Certificate Rate, as appropriate, generally will be distributed
on the [15th] day of each month (the "Distribution Date") commencing
________, 199__. The Final Scheduled Distribution Date on the Certificates
will be in ____________, 199__ (the "Final Scheduled Distribution Date").
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION
ABOUT THE OFFERING OF THE CERTIFICATES. ADDITIONAL INFORMATION IS CONTAINED
IN THE PROSPECTUS, AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE CERTIFICATES
MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE
CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
There is currently no secondary market for the Certificates offered
hereby and there is no assurance that one will develop. Each Underwriter
expects, but it is not obligated, to make a market in the Certificates.
There can be no assurance that a secondary market will develop, or that it
will provide Certificateholders with liquidity of investment or that it
will continue for the life of the Certificates offered hereby.
<PAGE>
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, monthly and
annual unaudited reports containing information concerning the Receivables
will be prepared by the Servicer and sent on behalf of the Trust only to
Cede & Co., as nominee of the Depository Trust Company and registered
holder of the Certificates. See "Certain Information Regarding the
Securities--Book-Entry Registration" and "--Reports to Securityholders" in
the accompanying Prospectus. Such reports will not constitute financial
statements prepared in accordance with generally accepted accounting
principles. The Seller, as originator of the Trust, will file with the
Securities and Exchange Commission (the "Commission") such periodic reports
as are required under the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder.
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and
in the Prospectus. Certain capitalized terms used herein are defined
elsewhere in this Prospectus Supplement on the pages indicated in the
"Index of Terms" or, to the extent not defined herein, have the meanings
assigned to such terms in the Prospectus.
Issuer................. Norwest Auto Trust 199_-_ (the "Trust" or the
"Issuer"), a trust established pursuant to a
Pooling and Servicing Agreement, to be dated
as of ______, 199__ (as amended and
supplemented from time to time, the
"Agreement"), among the Seller, the Servicer
and the Trustee.
Seller................. Norwest Auto Receivables Corporation, a
_____________ corporation (the "Seller").
See "The Seller."
Servicer............... Norwest Bank Minnesota, N.A., a national
banking association (the "Bank" or in its
capacity as servicer, the "Servicer").
Trustee................ _________________________, a ____________
banking corporation, as trustee under the
Agreement (the "Trustee"). The principal
offices of the Trustee are located in
_______________.
The Certificates....... The Trust will issue Asset Backed Certificates
pursuant to the Agreement in an aggregate
initial principal amount of $_______. The
Certificates represent fractional undivided
interests in the Trust.
The Certificates will consist of $_____
aggregate principal amount of ____% Asset
Backed Certificates, Class A (the "Class A
Certificates"), and $_____ aggregate
principal amount of ____% Asset Backed
Certificates, Class B (the "Class B
Certificates"). The Trust assets will include
a pool of motor vehicle promissory notes and
security agreements and/or retail installment
sale contracts secured by new or used automo-
biles or light duty trucks (collectively,
the "Receivables"), all monies received
thereunder on and after ________, 199__
(the "Cutoff Date"), security interests in
the vehicles financed thereby (the
"Financed Vehicles"), certain rights under
Dealer Agreements, certain Eligible Deposit
Accounts in which collections are held, any
proceeds from claims on certain insurance
policies and the proceeds of the foregoing.
The Certificates will be issued in fully
registered form in denominations of $1,000
and integral multiples thereof.
The Class A Certificates will evidence in the
aggregate an approximate ___% undivided
ownership interest (the "Class A Percentage")
in the Trust, and the Class B Certificates
will evidence in the aggregate an approximate
_____% undivided ownership interest (the
"Class B Percentage") in the Trust. The Class
B Certificates are subordinated to the Class
A Certificates to the extent described
herein.
The Receivables........ On __________, 199__ (the "Closing Date"),
pursuant to the Agreement, the Trust will
purchase from the Seller Receivables having
an aggregate principal balance of
approximately $______________ as of the
Cutoff Date.
The Receivables will generally consist of (i)
motor vehicle promissory notes and security
agreements executed by an Obligor in favor of
an Originator ("Direct Loans") and/or (ii) motor
vehicle retail installment sale contracts
(together with Direct Loans, "Motor Vehicle
Loans") between an Obligor and a Dealer.
Receivables that are to be included in any
Receivables Pool will be transferred by an
Affiliate to the Seller for purposes of sale
to the applicable Trust. Receivables
constituting approximately ___% of the
aggregate principal balance of Receivables as
of the Cutoff Date (the "Acquired Receivables")
were acquired by the Affiliates through
acquisitions.
All of the Receivables provide for the
allocation of payments to principal and
interest in accordance with the "simple
interest" method. The Receivables have been
selected from the Motor Vehicle Loans owned
by the Affiliate based on the criteria
specified in the Agreement and described herein
and in the Prospectus. No Receivable has or will
have a scheduled maturity that, after giving
prospective effect to any permitted
extensions or deferrals, would be later than
_________, 199__ (the "Final Scheduled
Maturity Date"). As of the Cutoff Date, the
weighted average annual percentage rate of
the Receivables was approximately ______% per
annum, the weighted average remaining term to
maturity of the Receivables was approximately
_____ months and the weighted average
original term to maturity of the Receivables
was approximately _____ months. As of the
Cutoff Date, approximately _____% of the
aggregate principal balance of the
Receivables represented financing of new
vehicles and the remainder represented
financing of used vehicles.
The "Pool Balance" means, at any time, the sum
of the outstanding Principal Balances of the
Receivables. The "Principal Balance" for any
Receivable, at any time, means the principal
balance of such Receivable at the end of the
preceding Collection Period, after giving
effect to all payments received from Obligors
and Purchase Amounts to be remitted by the
Servicer or the Seller, as the case may be,
for such Collection Period and all losses
realized on Receivables liquidated during
such Collection Period.
Terms of the Certificates
A. Distribution Dates Distributions with respect to the Certificates
will be made on the 15th day of each month
or, if any such day is not a Business Day, on
the next succeeding Business Day (each, a
"Distribution Date"), commencing __________,
199__. Distributions will be made to
Certificateholders of record as of the last
day of the Collection Period immediately
preceding the applicable Distribution Date
(each, a "Record Date"). A "Business Day" is
a day that is not a Saturday or a Sunday and
that in New York City and in the city in
which the corporate trust office of the
Trustee is located is neither a legal holiday
nor a day on which banking institutions are
authorized by law, regulation or executive
order to be closed. "Collection Period" means
(a) the period from (but not including) the
Cutoff Date to and including __________,
199__ and (b) thereafter, each calendar month
during the term of the Agreement.
B. Class A Certificate Rate ____% per annum (the "Class A Certificate Rate").
C. Class B Certificate Rate ____% per annum (the "Class B Certificate Rate").
D. Interest.......... On each Distribution Date, interest at the
Class A Certificate Rate on the Class A
Certificate Balance and interest at the Class
B Certificate Rate on the Class B Certificate
Balance, in each case as of the immediately
preceding Distribution Date (after giving
effect to all payments of principal made on
such preceding Distribution Date) will be
paid to the holders of record of the Class A
Certificates ("Class A Certificateholders")
and the holders of record of the Class B
Certificates ("Class B Certificateholders";
the Class A Certificateholders and the Class
B Certificateholders are collectively
referred to herein as the "Certificateholders")
as of the Record Date to the extent that
sufficient funds are on deposit for such
Distribution Date in the Collection Account
or available in the Reserve Account to make
such distribution. See "Description of the
Certificates--Distributions" and "--Accounts"
herein. The rights of Class B
Certificateholders to receive payments of
interest will be subordinated to the rights
of the Class A Certificateholders to receive
payments of interest to the extent described
herein. Interest in respect of a Distribution
Date will accrue from the preceding
Distribution Date (or, for the first
Distribution Date, from ______, 199__) to and
including such Distribution Date.
E. Principal......... On each Distribution Date, all payments of
principal on the Receivables received by the
Servicer during the preceding Collection
Period, as described more fully herein, plus
an amount equal to the aggregate principal
balance of any Receivables which became
Defaulted Receivables during the preceding
Collection Period, will be distributed by the
Trustee pro rata to the Class A
Certificateholders and to the Class B
Certificateholders of record on the preceding
Record Date, to the extent that sufficient
funds are on deposit in the Collection
Account or available in the Reserve Account
to make such distribution. See "Description
of the Certificates--Distributions" and
"--Accounts." The rights of the Class B
Certificateholders to receive payments of
principal will be subordinated to the rights
of the Class A Certificateholders to receive
payments of interest and principal to the
extent described herein. The "Class A
Certificate Balance" and "Class B Certificate
Balance" will initially equal $________ and
$_________, respectively, and, in each case,
will thereafter equal the initial Class A
Certificate Balance or the initial Class B
Certificate Balance, as the case may be,
reduced by all principal distributions on the
Class A Certificates and the Class B
Certificates, respectively.
F. Optional Prepayment If the Pool Balance as of the last day of a
Collection Period has declined to 5% or less
of the Original Pool Balance, the Seller or
Servicer may purchase all remaining Trust
Property on any Distribution Date occurring in
a subsequent Collection Period at a purchase
price equal to the aggregate of the Purchase
Amounts of the remaining Receivables (other
than Defaulted Receivables), which would result
in a prepayment of the Certificates. The
"Original Pool Balance" will equal the Pool
Balance as of the Cutoff Date. See
"Description of the Certificates--Optional
Prepayment."
Subordination of Class B
Certificates........... Distributions of interest and principal on the
Class B Certificates will be subordinated in
priority of payment to interest and principal
due on the Class A Certificates to the extent
described herein. The Class B
Certificateholders will not receive any
distributions of interest with respect to a
Collection Period until the full amount of
interest on the Class A Certificates relating
to such Collection Period has been deposited
in the Class A Distribution Account. The
Class B Certificateholders will not receive
any distributions of principal with respect
to such Collection Period until the full
amount of interest on and principal of the
Class A Certificates relating to such
Collection Period has been deposited in the
Class A Distribution Account. See "Risk
Factors--Subordination" and "--Limited Assets"
in the Prospectus.
Advances............... On or prior to the Business Day preceding each
Distribution Date (the "Deposit Date"), the
Servicer will advance (an "Advance") in an
amount equal to the lesser of (a) the excess,
if any, of the amount of interest that would
be expected to be received on the Receivables
(other than Non-Advance Receivables) during
the related Collection Period over the actual
interest collected by the Servicer during
such Collection Period minus unreimbursed
prior Advances and (b) the amount (if any) by
which the sum of any unpaid Servicing Fees
for the related Collection Period and prior
Collection Periods and the amount of interest
distributable to the Certificateholders on
the following Distribution Date exceeds the
actual interest collected by the Servicer
during the related Collection Period minus
unreimbursed prior Advances, subject to
certain limitations described below. The
Servicer will be entitled to be reimbursed
for outstanding Advances on the Distribution
Date in the following month to the extent of
interest collections for such Distribution
Date and, to the extent such collections are
insufficient, to the extent of funds in the
Reserve Account. The Servicer will be
obligated to make such an Advance except to
the extent that the Servicer reasonably
determines that the Advance is unlikely to be
recoverable from the following month's
collections of interest and the funds in the
Reserve Account. See "Description of the
Certificates-Advances."
Reserve Account........ A reserve account (the "Reserve Account") will
be created with an initial deposit by the
Seller of cash or certain investments having
a value of at least $________ (the "Reserve
Account Initial Deposit"). In addition, on
each Distribution Date, any amounts on
deposit in the Collection Account with
respect to the preceding Collection Period
after payments to the Certificateholders and
the Servicer have been made will be deposited
into the Reserve Account until the amount on
deposit in the Reserve Account is equal to
the Specified Reserve Account Balance.
On or prior to each Deposit Date, the Trustee
will withdraw funds from the Reserve Account,
to the extent of the funds therein (exclusive
of investment earnings), (a) to the extent
required to reimburse the Servicer for
Outstanding Advances and (b) to the extent
(i) the sum of the amounts required to be
distributed to Certificateholders and the
Servicer on the related Distribution Date
exceeds (ii) the amount on deposit in the
Collection Account with respect to the
preceding Collection Period (net of
investment income). If the amount on deposit
in the Reserve Account is reduced to zero,
Certificateholders will bear the credit and
other risks associated with ownership of the
Receivables, including the risk that the
Trust may not have a perfected security
interest in the Financed Vehicles. See "Risk
Factors" herein and in the Prospectus,
"Description of the Certificates--Accounts"
herein and "Certain Legal Aspects of the
Receivables" in the Prospectus.
Prepayment Considerations.. The weighted average life of the Certificates
may be reduced by full or partial prepayments
on the Receivables. The Receivables are
prepayable at any time. Prepayments may also
result from liquidations due to default, the
receipt of monthly installments earlier than
the scheduled due dates for such
installments, the receipt of proceeds from
credit life, disability, theft or physical
damage insurance, repurchases by the Seller
as a result of certain uncured breaches of
the warranties made by it in the Pooling and
Servicing Agreement with respect to the
Receivables, purchases by the Servicer as a
result of certain uncured breaches of the
covenants made by it in the Pooling and
Servicing Agreement with respect to the
Receivables, or the Seller or Servicer
exercising its optional purchase right. The
rate of prepayments on the Receivables may be
influenced by a variety of economic, social,
and other factors, including decreases in
interest rates and the fact that the Obligor
may not sell or transfer the Financed Vehicle
securing a Receivable without the consent of
the applicable Affiliate. No prediction
can be made as to the actual prepayment rates
which will be experienced on the Receivables.
If prepayments were to occur after a decline
in interest rates, investors seeking to
reinvest their funds might be required to
invest at a return lower than the applicable
Interest Rate or the Certificate Rate, as the
case may be. Certificate Owners will bear
all reinvestment risk resulting from
prepayment of the Receivables. See "Risk
Factors--Prepayment Considerations" and
"Weighted Average Life of the Securities" in
the Prospectus and "Weighted Average Life of
the Certificates" herein.
Tax Status............. In the opinion of Mayer, Brown & Platt, the
Trust will be treated as a grantor trust for
federal income tax purposes and will not be
subject to federal income tax. Accordingly,
the Certificateholders will be treated as
owners of the Receivables for federal income
tax purposes. Certificateholders will report
their pro rata share of all income earned on
the Receivables (other than amounts, if any,
treated as "stripped coupons") and, subject
to certain limitations in the case of
Certificateholders who are individuals,
trusts, or estates, may deduct their pro rata
share of reasonable servicing and other fees.
See "Federal Income Tax Consequences" and
"Certain State Tax Consequences" in the
Prospectus for additional information
concerning the application of federal and
state tax laws to the Trust and the
Securities.
ERISA Considerations... Subject to the considerations discussed under
"ERISA Considerations" herein and in the
Prospectus, the Class A Certificates are
eligible for purchase by employee benefit
plans.
The Class B Certificates and any beneficial
interest in such Class B Certificates may not
be acquired with the assets of an employee
benefit plan subject to the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA"), or with the assets of an
individual retirement account. See "ERISA
Considerations" herein and in the Prospectus.
Risk Factors........... See "Risk Factors" herein and in the Prospectus
for a discussion of certain factors that
potential investors should consider in
determining whether to invest in the
Certificates.
Ratings of the It is a condition to the issuance of the Class
Certificates........... A Certificates that they be rated in the
highest investment rating category by at
least two nationally recognized rating
agencies (the "Rating Agencies"), and it is a
condition to the issuance of the Class B
Certificates that they be rated by at least
two nationally recognized rating agencies in
the "A" category. There can be no assurance
that a rating will not be lowered or
withdrawn by a rating agency if circumstances
so warrant. See "Risk Factors--Ratings of the
Securities" in the Prospectus and "Risk
Factors--Ratings of the Certificates" herein.
<PAGE>
RISK FACTORS
In addition to the other information contained herein and in the
Prospectus, prospective investors should consider carefully the following
risk factors and the information contained in "Risk Factors" in the
Prospectus.
Geographic Concentration
Economic conditions in states where Obligors reside may affect the
delinquency, loan loss and repossession experience of the Trust with
respect to the Receivables. As of the Cutoff Date, the mailing addresses of
Obligors with respect to approximately ______% by aggregate principal
balance of the Receivables were located in ____________, and the mailing
addresses of Obligors with respect to approximately ______% by aggregate
principal balance of the Receivables were located in ______________,
collectively. See "The Receivables Pool."
Subordination
Distributions of interest and principal on the Class B Certificates
will be subordinated in priority of payment to interest on the Class A
Certificates. No distributions with respect to a Collection Period will be
made on the Class B Certificates until the full amount of interest on and
principal of the Class A Certificates on the related Distribution Date has
been distributed to the Class A Certificateholders.
Limited Assets
The Trust will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables and the
Reserve Account. Holders of the Certificates must rely for repayment upon
payments on the Receivables and, if and to the extent available, amounts on
deposit in the Reserve Account. Similarly, although funds in the Reserve
Account will be available on each Distribution Date to cover shortfalls in
distributions of interest and principal on the Certificates, amounts to be
deposited in the Reserve Account are limited in amount. If the Reserve
Account is exhausted, the Trust will depend solely on current distributions
on the Receivables to make payments on the Certificates.
Amounts on deposit in the Reserve Account will be available on any
Distribution Date first to cover shortfalls in reimbursement of outstanding
Advances and payment of Servicing Fees to the Servicer, then shortfalls in
distributions of interest on the Class A Certificates and then shortfalls
in distributions of interest on the Class B Certificates. After
distributions of interest on the Certificates have been made, the remaining
amounts on deposit in the Reserve Account will be available first to cover
shortfalls in distributions of principal on the Class A Certificates and
then shortfalls in distributions of principal on the Class B Certificates.
If the Reserve Account is exhausted, the Trust will depend solely on
payments on the Receivables to make distributions on the Certificates, and
Certificateholders will bear the risk of delinquency, loan losses and
repossessions with respect to the Receivables. There can be no assurance
that the future delinquency, loan loss and repossession experience of the
Trust with respect to the Receivables will be better or worse than that set
forth herein with respect to the Motor Vehicle Loans serviced by the Servicer.
Any amounts released from the Reserve Account to the Seller will not be
available to the Certificateholders. See "The Receivables Pool--Pool
Composition" and "Delinquencies and Losses" and "The Receivables Pools"
in the Prospectus and "Description of the Certificates--Reserve Account" and
"Distributions."
Maturity and Prepayment Considerations
As the rate of payment of principal of each class of the Certificates
depends on the rate of payment (including prepayments) of the principal
balance of the Receivables, the final distribution in respect of each class
of the Certificates could occur significantly earlier than the Final
Scheduled Distribution Date. It is expected that the final distribution in
respect of the Certificates will occur on or prior to the Final Scheduled
Distribution Date. However, if sufficient funds are not available to
reduce the aggregate Certificate Balance of either class of Certificates to
zero on or prior to the Final Scheduled Distribution Date, the final
distribution in respect of such class of Certificates could occur later
than such date. See "Weighted Average Life of the Certificates" herein and
"Weighted Average Life of the Securities" in the Prospectus.
Ratings of the Certificates
It is a condition to the issuance of the Class A Certificates that
they be rated in the highest investment rating category by at least two
Rating Agencies, and it is a condition to the issuance of the Class B
Certificates that they be rated by at least two Rating Agencies in the "A"
category. A rating is not a recommendation to purchase, hold or sell the
Certificates, inasmuch as such rating does not comment as to market price
or suitability for a particular investor. The ratings of the Certificates
address the likelihood of the payment of principal and interest on the
Certificates pursuant to their terms. There can be no assurance that a
rating will remain for any given period of time or that a rating will not
be lowered or withdrawn entirely by a Rating Agency if in its judgment
circumstances in the future so warrant.
THE TRUST
The Seller will establish the Trust by selling and assigning the
Trust property, as described below, to the Trustee in exchange for the
Certificates. The Servicer will service the Receivables pursuant to the
Agreement and will be compensated for acting as the Servicer. See
"Description of the Certificates--Servicing Compensation and Payment of
Expenses." To facilitate servicing and to minimize administrative burden
and expense, each Originator will be appointed to act as custodian for
the Receivables originated by it or purchased by it from a Dealer, but the
Trustee will not stamp the Receivables to reflect the sale and assignment of
the Receivables to the Trust or amend the certificates of title to the
Financed Vehicles. In the absence of amendments to the certificates of title,
the Trustee may not have perfected security interests in the Financed Vehicles
securing the Receivables originated in some states. See "Certain Legal Aspects
of the Receivables" in the Prospectus.
If the protection provided to the investment of the
Certificateholders by the Reserve Account and, in the case of the Class A
Certificateholders, the subordination of the Class B Certificates, is
insufficient, the Trust will look only to the Obligors on the Receivables,
the proceeds from the repossession and sale of Financed Vehicles which
secure defaulted Receivables and the proceeds from any Dealer Recourse.
In such event, certain factors, such as the Trust's not having first
priority perfected security interests in some of the Financed Vehicles, may
affect the Trust's ability to realize on the collateral securing the
Receivables, and thus may reduce the proceeds to be distributed to
Certificateholders with respect to the Certificates. See "Description of
the Certificates--Distributions" and "--Accounts" herein and "Certain Legal
Aspects of the Receivables" in the Prospectus.
Each Certificate represents a fractional undivided ownership interest
in the Trust. The Trust property includes Direct Loans and/or retail
installment sale contracts secured by new or used automobiles or light duty
trucks, and all payments received thereunder after the Cutoff Date. The Trust
property also includes (a) such amounts as from time to time may be held in one
or more trust accounts established and maintained by the Servicer pursuant to
the Agreement, as described below; (b) security interests in the Financed
Vehicles and any accessions thereto; (c) the rights to proceeds with respect to
the Receivables from claims on certain insurance policies covering the Financed
Vehicles; (d) any property that shall have secured a Receivable and that shall
have been acquired by the Trustee; (e) any Dealer Recourse and any other rights
of Affiliates under Dealer Agreements; (f) certain rights under the Purchase
Agreement; (g) the Seller's rights to certain documents and instruments
relating to the Receivables; (h) certain rebates of premiums and other amounts
relating to certain insurance policies and other items financed under the
Receivables; and (i) any and all proceeds of the foregoing. The Reserve Account
will be maintained by the Trustee for the benefit of the Certificateholders,
but will not be part of the Trust.
THE RECEIVABLES POOL
The pool of Receivables (the "Receivables Pool") will consist of
Receivables purchased as of the Cutoff Date. The Receivables have been
selected from the portfolio of each Affiliate for inclusion in the Receivables
Pool by several criteria, some of which are set forth in the Prospectus under
"The Receivables Pool," as well as the requirement that each Receivable (a) has
an outstanding principal balance of at least $_____, (b) as of the Cutoff Date,
was not more than 30 days past due, (c) has a scheduled maturity not later
than six months before the Final Scheduled Maturity Date, and (d) has an
original term to maturity of not more than ___ months. No selection
procedures believed by any Affiliate to be adverse to the Certificateholders
were used in selecting the Receivables.
Approximately ___% of the aggregate principal balance of Receivables
as of the Cutoff Date constituted Acquired Receivables.
Pool Composition
Set forth in the following tables is information concerning the
composition, distribution by APR and the geographic distribution of the
Receivables to be conveyed by the Seller to the Trust as of the Cutoff
Date.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Composition of the Receivables
as of the Cutoff Date(1)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Weighted Weighted
Weighted Aggregate Average Average Average
Average APR Principal Number of Remaining Original Principal
of Receivables Balance Receivables Term Term Balance
- -------------- --------- ----------- --------- --------- ---------
% $ months months $
- ----------------------
<FN>
(1) The figures are summations or weighted averages of the Receivables
transferred to the Trust as of the Cutoff Date.
<PAGE>
<CAPTION>
----------------------------------------------------------------
Distribution by APR of the Receivables
as of the Cutoff Date(1)
----------------------------------------------------------------
<S> <C> <C> <C>
Percentage of
Aggregate
Number of Aggregate Principal Principal
APR Range Receivables Balance Balance(2)
--------- ----------- ------------------- --------------
(Dollars in Thousands)
$ %
- ------------------------
<FN>
(1) The figures are summations or weighted averages of the Receivables
transferred as of the Cutoff Date.
(2) Percentages may not add to 100% because of rounding.
</TABLE>
<PAGE>
Approximately ___% of the aggregate principal balance of the Receivables,
constituting ___% of the number of such Receivables, as of the Cutoff Date
represented financing of new vehicles and the remainder represented
financing of used vehicles.
Geographic Distribution of the Receivables Pool
as of the Initial Cutoff Date(1)<F3>
Percent of
Aggregate
Loan
State Value
----- ----------
___________________ _.__%
___________________ _.__
___________________ _.__
- -----------------------
<F3>
(1) No more than __% of the aggregate principal balance of the Receivables
as of the Cutoff Date were originated by Motor Vehicle Loans made to
Obligors that currently reside in any state other than __________________
or _____________________.</F3>
Delinquencies and Losses
Set forth below is certain information concerning the historical
experience of the Originators pertaining to Motor Vehicle Loans. There
can be no assurance that the delinquency and loss experience on the
Receivables of the Trust will be comparable to that set forth below.
<PAGE>
<TABLE>
<CAPTION>
Delinquency Experience(1)
At December 31,
-----------------------------------------------------------------------------
1995 1994 1993 1992 1991
-------------- -------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Dollar Percent Dollar Percent Dollar Percent Dollar Percent Dollar Percent
------ ------- ------ ------- ------ ------- ------ ------- ------ -------
(Dollars in Millions)
Amount of Motor Vehicle
Loans Outstanding...
Period of Delinquency:
31-59 days..........
60-89 days..........
over 90 days........
Total Delinquencies...
Total Delinquencies
as a Percent of
Motor Vehicle Loans
Outstanding...........
- ----------------------
<FN>
(1) All amounts and percentages are based on the gross amount scheduled to
be paid on each Motor Vehicle Loan, including unearned finance and other
charges.
<PAGE>
<CAPTION>
Historical Loss Experience
Year Ended December 31,
------------------------------------------
<S> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991
----- ----- ----- ----- -----
(Dollars in Thousands)
Period-end Motor Vehicle Loans
Outstanding .......................................
Average Motor Vehicle
Loans Outstanding(1)...............................
Average Number of Motor Vehicle
Loans Outstanding(1)...............................
Gross Charge-Offs(2).................................
Net Losses(2)(3).....................................
Net Losses as a Percent of Period-end
Principal Balance Outstanding........................
Net Losses as a Percent of Average Principal
Balance Outstanding..................................
___________________
<FN>
(1) Amount represents average of balances at the beginning of period and
each subsequent quarter ended during such period.
(2) Gross Charge-Offs and Net Losses exclude repossession and
disposition expenses.
(3) Amount represents the aggregate balance of all Motor Vehicle Loans
which are determined to be uncollectible in the period, less any
recoveries on Motor Vehicle Loans charged-off in the period or any
prior period.
</TABLE>
<PAGE>
Delinquencies and losses are affected by a number of social,
economic and other factors that may affect an Obligor's ability or
willingness to pay, such as the amount or types of indebtedness
incurred by such Obligor in addition to the Receivable on which such
Obligor is indebted, and there can be no assurance as to the level
of future total delinquencies or the severity of future losses.
As a result, the delinquency and net loss experience of the
Receivables of the Trust may differ from those shown in the tables.
THE SELLER, THE SERVICER AND NORWEST CORPORATION
Information regarding the Seller is set forth under "The Seller" in
the Prospectus and information regarding the Servicer is set forth under
"The Bank" in the Prospectus. Norwest Corporation operates through
subsidiaries engaged in banking and a variety of related businesses.
Norwest Corporation provides retail, commercial and corporate
banking services to customers through banks in 16 states and provides
additional financial services to its customers through subsidiaries engaged
in various businesses, principally mortgage banking, consumer finance,
equipment leasing, agricultural finance, commercial finance, securities
brokerage and investment banking, insurance agency services, computer and
data processing services, trust services, mortgage backed securities
servicing, and venture capital investment. As of March 31, 1996, Norwest
Corporation had consolidated total assets of $73.9 billion, total deposits
of $43.1 billion, and total stockholders' equity of $5.4 billion.
Based on total assets as of March 31, 1996, Norwest Corporation was the
eleventh largest commercial banking organization in the United States.
[Norwest Corporation has agreed to guaranty the performance by the Seller of
its repurchase obligation with respect to Receivables for which there has
been an uncured breach of any representation or warranty that materially and
adversely affects the interests of the Trust in such Receivables. See
"Description of the Transfer and Servicing Agreements--Sale and Assignment
of Receivables" in the Prospectus.]
WEIGHTED AVERAGE LIFE OF THE CERTIFICATES
Information regarding certain maturity and prepayment considerations
with respect to the Certificates is set forth under "Weighted Average Life
of the Securities" in the Prospectus. As the rate of payment of principal
of each class of the Certificates depends primarily on the rate of payment
(including prepayments and liquidations due to default) of the aggregate
principal balance of the Receivables, the final distribution in respect of
the Certificates could occur significantly earlier than the Final Scheduled
Distribution Date. Consistent with its customary servicing practices and
procedures, the Servicer may, in its discretion and on a case-by-case basis,
arrange with Obligors to extend or modify the terms of Receivables. Any such
extension or modification will have the effect of extending the weighted
average life of the Certificates. However, the Servicer will not be permitted
to grant any such deferral or extension if as a result the final scheduled
payment on a Receivable would fall after the Final Scheduled Maturity Date,
unless the Servicer repurchases such Receivable. Certificateholders will bear
the risk of being able to reinvest principal payments on the Certificates at
yields at least equal to the yield on their respective Certificates.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the terms of the
Agreement, a form of which has been filed as an exhibit to the Registration
Statement. A copy of the Agreement will be filed with the Commission
following the issuance of the Certificates. The following summary describes
certain terms of the Certificates and the Agreement. The summary does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, all the provisions of the Certificates and the Agreement. The
following summary supplements the description of the general terms and
provisions of the Certificates of any given series and the related
Agreement set forth in the Prospectus, to which description reference is
hereby made.
General
The Certificates will evidence interests in the Trust created
pursuant to the Agreement. The Class A Certificates will evidence in the
aggregate an undivided ownership interest of approximately ___% (the "Class
A Percentage") in the Trust and the Class B Certificates will evidence in
the aggregate an undivided ownership interest of approximately ___% (the
"Class B Percentage") in the Trust. In general, it is intended that Class A
Certificateholders receive, on each Distribution Date, the Class A
Percentage of the Principal Distribution Amount plus interest at the Class
A Certificate Rate on the Class A Certificate Balance. Subject to the prior
rights of the Class A Certificateholders, it is intended that the Class B
Certificateholders receive, on each Distribution Date, the Class B
Percentage of the Principal Distribution Amount plus interest at the Class
B Certificate Rate on the Class B Principal Certificate.
"Principal Distribution Amount" means, for any Distribution
Date, the sum of the Available Principal for such Distribution Date
plus the Realized Losses with respect to the related Collection
Period.
"Available Principal" means, for any Distribution Date, the sum
of the following amounts with respect to the preceding Collection
Period: (a) that portion of all collections on the Receivables
received during such Collection Period and allocable to principal in
accordance with the Servicer's customary servicing procedures; and
(b) to the extent attributable to principal, the Purchase Amount
received with respect to each Receivable repurchased by the Seller or
purchased by the Servicer under an obligation which arose during the
related Collection Period. "Available Principal" on any Distribution
Date shall exclude all payments and proceeds of any Receivables the
Purchase Amount of which has been distributed on a prior Distribution
Date.
"Defaulted Receivable" means, with respect to any Collection
Period, a Receivable (other than a Purchased Receivable) which the
Servicer has determined to charge off during such Collection Period
in accordance with its customary servicing practices; provided, that
any Receivable which the Seller or Servicer is obligated to
repurchase or purchase shall be deemed to have become a Defaulted
Receivable during a Collection Period if the Seller or Servicer fails
to deposit the Purchase Amount on the related Deposit Date when due.
"Purchased Receivable" means, at any time, a Receivable as to
which payment of the Purchase Amount has previously been made by the
Seller or the Servicer pursuant to the Agreement.
"Realized Losses" means, for any Collection Period, the
aggregate principal balances of any Receivables that became Defaulted
Receivables during such Collection Period.
Optional Prepayment
If the Pool Balance as of the last day of a Collection Period has
declined to 5% or less of the Original Pool Balance, the Seller or Servicer
may purchase all remaining Trust Property on any Distribution Date occurring
in a subsequent Collection Period at a purchase price equal to the aggregate
of the Purchase Amounts of the remaining Receivables (other than Defaulted
Receivables), which purchases would result in a prepayment of the
Certificates. See "Description of the Transfer and Servicing
Agreements-Termination" in the Prospectus.
Accounts
Separate Certificate Distribution Accounts will be established for
the Class A Certificates (the "Class A Distribution Account") and the Class
B Certificates (the "Class B Distribution Account"). In addition to those
accounts and a Collection Account for the Trust (see "Description of the
Transfer and Servicing Agreements--Accounts" in the Prospectus), the Seller
will also establish and maintain in the name of the Trustee, the Reserve
Account. The Reserve Account will be created with an initial deposit by the
Seller of cash or Eligible Investments having a value of at least equal to
the Reserve Account Initial Deposit. In addition, on each Distribution
Date, any amounts on deposit in the Collection Account with respect to the
preceding Collection Period after payments to the Certificateholders and
the Servicer have been made will be deposited into the Reserve Account
until the amount on deposit in the Reserve Account is equal to the
Specified Reserve Account Balance. All investment earnings on funds
deposited in the Trust Accounts, net of losses and investment expenses,
will be distributed to the Seller and not be treated as collections on the
Receivables or otherwise be available for Certificateholders.
The Reserve Account will be an Eligible Deposit Account which the
Seller shall establish and maintain in the name of the Trustee. Funds on
deposit in the Reserve Account will be invested in Eligible Investments
selected by the Seller and, if permitted by the Rating Agencies, funds on
deposit in the Reserve Account may be invested in Eligible Investments that
mature later than the next Deposit Date. The Reserve Account and any
amounts therein will not be property of the Trust, but will be pledged to
and held for the benefit of the Trustee, as secured party.
On each Distribution Date, the amount available in the Reserve
Account (the "Available Reserve Amount") will equal the lesser of (a) the
amount on deposit in the Reserve Account (exclusive of investment earnings)
and (b) the Specified Reserve Account Balance.
On each Deposit Date, the Trustee will withdraw funds from the
Reserve Account (a) to the extent required to make reimbursements of
Outstanding Advances (after application of Interest Collections for that
purpose) and (b) to the extent (i) the sum of the amounts required to be
distributed to Certificateholders and the accrued and unpaid Servicing Fees
payable to the Servicer on such Distribution Date exceeds (ii) the amount
on deposit in the Collection Account with respect to the preceding
Collection Period (net of investment income). Such deficiencies in the
Collection Account may result from, among other things, Receivables
becoming Defaulted Receivables or the failure by the Servicer to make any
remittance required to be made under the Agreement. The aggregate amount to
be withdrawn from the Reserve Account on any Deposit Date will not exceed
the Available Reserve Amount with respect to the related Distribution Date.
The Trustee will deposit the proceeds of such withdrawal into the
Collection Account on or before the Distribution Date with respect to which
such withdrawal was made.
The "Specified Reserve Account Balance" with respect to any
Distribution Date will, subject to reduction as described below, be equal
to ___% of the Pool Balance as of the last day of the preceding Collection
Period, but in any event will not be less than the lesser of (i)
$____________ and (ii) the sum of such Pool Balance plus an amount
sufficient to pay interest on (a) the Class A Percentage times such Pool
Balance at a rate equal to the sum of the Class A Certificate Rate and the
Servicing Fee Rate through the Final Scheduled Distribution Date and (b)
the Class B Percentage times such Pool Balance at a rate equal to the sum
of the Class B Certificate Rate and the Servicing Fee Rate through the
Final Scheduled Distribution Date; provided that the Specified Reserve
Account Balance will be calculated using a percentage of __% for any
Distribution Date (beginning ________, 199__) on which the Average Net Loss
Ratio exceeds __% or the Average Delinquency Ratio exceeds ___%. The
Specified Reserve Account Balance may be reduced to a lesser amount as
determined by the Seller so long as such reduction does not cause either
Rating Agency to withdraw or downgrade its rating of the Certificates. The
time necessary for the Reserve Account to reach and maintain the Specified
Reserve Account Balance at any time after the Closing Date will be affected
by the delinquency, credit loss, repossession and prepayment experience of
the Receivables and, therefore, cannot be accurately predicted. Amounts on
deposit in the Reserve Account will be released to the Servicer on each
Distribution Date to the extent that the amount on deposit in the Reserve
Account would exceed the Specified Reserve Account Balance. The Trustee
also will cause all investment earnings attributable to the Reserve Account
to be distributed on each Distribution Date to the Seller. Upon any
distribution to the Servicer of amounts from the Reserve Account, the
Certificateholders will not have any rights in, or claims to, such amounts.
"Aggregate Net Losses" means, for any Collection Period, the
aggregate amount allocable to principal of all Receivables newly
designated during such Collection Period as Defaulted Receivables
minus all Liquidation Proceeds collected during such Collection
Period with respect to all Defaulted Receivables (whether or not
newly designated as such).
"Average Delinquency Ratio" means, as of any Distribution Date,
the average of the Delinquency Ratios for the preceding three
Collection Periods.
"Average Net Loss Ratio" means, as of any Distribution Date, the
average of the Net Loss Ratios for the preceding three Collection
Periods.
"Delinquency Ratio" means, for any Collection Period, the ratio,
expressed as a percentage, of (a) the principal amount of all
outstanding Receivables (other than Purchased Receivables and
Defaulted Receivables) which are 30 or more days delinquent as of the
end of such Collection Period, determined in accordance with
Servicer's customary practices, divided by (b) the Pool Balance as of
the last day of such Collection Period.
"Liquidation Proceeds" means, with respect to any Receivable
that has become a Defaulted Receivable, (a) insurance proceeds
received by the Servicer, with respect to insurance policies relating
to the Financed Vehicles or the Obligors any proceeds from lender's
single interest insurance policies to the extent not included in
collections distributable to Certificateholders, (b) amounts received
by the Servicer in connection with such Defaulted Receivable pursuant
to the exercise of rights under the related Motor Vehicle Loan, and
(c) the monies collected by the Servicer (from whatever source,
including, but not limited to proceeds of a sale of a Financed Vehicle
or deficiency balance recovered after the charge-off of the related
Receivable or as a result of the exercise of any rights against the
related Dealer) on such Defaulted Receivable net of any expenses
incurred by the Servicer in connection therewith and any payments
required by law to be remitted to the Obligor.
"Net Loss Ratio" means, for any Collection Period, an amount,
expressed as a percentage, equal to (a) the Aggregate Net Losses for
such Collection Period, divided by (b) the average of the Pool
Balances on each of the first day of such Collection Period and the
last day of such Collection Period.
If funds in the Reserve Account are reduced to zero, the
Certificateholders will bear the credit and other risks associated with
ownership of the Receivables. In such a case, the amount available for
distribution may be less than that described below, and the
Certificateholders may experience delays or suffer losses as a result,
among other things, of defaults or delinquencies by the Obligors or
previous extensions made by the Servicer.
Advances
On or prior to each Deposit Date, the Servicer will be required to
advance any Interest Shortfall with respect to the related Distribution
Date by depositing the amount of such Interest Shortfall into the
Collection Account. The Servicer will be obligated to make such an Advance
except to the extent that the Servicer reasonably determines that the
Advance is unlikely to be recoverable as set forth below.
On each Distribution Date, prior to making any of the distributions
set forth in "--Distributions" below, the Servicer shall be reimbursed for
all Outstanding Advances with respect to prior Distribution Dates, to the
extent of the Interest Collections for such Distribution Date and, to the
extent such Interest Collections are insufficient, to the extent of the
funds in the Reserve Account. If it is acceptable to each Rating Agency
without a reduction in the rating of the Certificates, the Outstanding
Advances at the option of the Servicer may be paid at or as soon as
possible after the beginning of the related Collection Period out of the
first collections of interest received on the Receivables for such
Collection Period.
"Expected Interest" means, with respect to any Distribution
Date, an amount equal to the sum of (a) with respect to all Simple
Interest Receivables, the product of (i) one-twelfth of the Weighted
Average APR for such Receivables for the related Collection Period
multiplied by (b) an amount equal to the aggregate Principal Balance
of such Receivables as of the first day of the related Collection
Period minus the sum of the Principal Balances of the Non-Advance
Receivables that are Simple Interest Receivables for such
Distribution Date plus (b) with respect to all Precomputed
Receivables, that portion of the collections on such Receivables
received during the related Collection Period that is allocable to
interest in accordance with the Servicer's customary procedures.
"Interest Collections" for a Distribution Date means the sum of
the following amounts with respect to the related Collection Period:
(a) that portion of the collections on the Receivables received
during the related Collection Period that is allocable to interest in
accordance with the Servicer's customary procedures; (b) all
Liquidation Proceeds received during such Collection Period; and (c)
all Purchase Amounts, each to the extent attributable to accrued
interest, of all Receivables that are repurchased by the Seller or
purchased by the Servicer under an obligation which arose during the
related Collection Period. "Interest Collections" for any
Distribution Date shall exclude all payments and proceeds of any
Receivables the Purchase Amount of which has been distributed on a
prior Distribution Date.
"Interest Shortfall" means, with respect to any Distribution
Date, the lesser of (a) the amount (if any) by which the Expected
Interest for such Distribution Date exceeds the Net Interest
Collections for such Distribution Date and (b) the amount (if any) by
which the sum of any unpaid Servicing Fees for the related Collection
Period and prior Collection Periods and the Class A Interest
Distributable Amount and the Class B Interest Distributable Amount
for such Distribution Date exceeds the Net Interest Collections for
such Distribution Date.
"Net Interest Collections" means, with respect to any
Distribution Date, the greater of (a) zero and (b) Interest
Collections for such Distribution Date minus the Outstanding Advances
as of such Distribution Date.
"Non-Advance Receivables" means, with respect to any
Distribution Date, any Receivables which became Defaulted Receivables
during the related Collection Period or which the Servicer, in its
sole discretion, believes are likely to become Defaulted Receivables.
"Outstanding Advances" means, as of any date, all Advances made
by the Servicer with respect to prior Distribution Dates which have
not been reimbursed.
"Weighted Average APR" means, with respect to any Simple
Interest Receivables or any Precomputed Receivables during any
Collection Period, the weighted average of the APR of such
Receivables (excluding Non-Advance Receivables), weighted based on
the Principal Balance of each such Receivable as of the first day of
such Collection Period.
Servicing Compensation and Payment of Expenses
The Servicing Fee Rate will be 1.0% per annum of the Pool Balance as
of the first day of the related Collection Period (after giving effect to
the distributions to be made on the following Distribution Date). The
Servicing Fee (together with any portion of the Servicing Fee that remains
unpaid from prior Distribution Dates) will be paid on each Distribution
Date solely to the extent of the Available Interest. See "Description of
the Transfer and Servicing Agreements--Servicing Compensation and Payment of
Expenses" in the Prospectus. The Servicer will also collect and retain any
late fees, extension fees, prepayment charges and certain non-sufficient
funds charges and other administrative fees or similar charges (the
"Supplemental Servicing Fee") allowed by applicable law with respect to the
Receivables. Payments by or on behalf of Obligors will be allocated to
scheduled payments and late fees and other charges in accordance with the
Servicer's normal practices and procedures. See "Description of the
Transfer and Servicing Agreements--Servicing Compensation and Payment of
Expenses" in the Prospectus.
"Available Interest" means, with respect to any Distribution
Date, the excess of (a) the sum of (i) Interest Collections for such
Distribution Date and (ii) all Advances made by the Servicer with
respect to such Distribution Date, over (b) the amount of Outstanding
Advances to be reimbursed on or with respect to such Distribution
Date.
Distributions
Deposits to Collection Account. On or before the eighth calendar day
of each month, or if such eighth day is not a Business Day, the immediately
preceding Business Day (the "Determination Date"), the Servicer will
provide the Trustee with a report (the "Servicer's Report") containing
certain information with respect to the preceding Collection Period,
including the amount of aggregate collections on the Receivables during
such Collection Period, the aggregate amount of Receivables which became
Defaulted Receivables during such Collection Period, the aggregate Purchase
Amounts of Receivables to be repurchased by the Seller or to be purchased
by the Servicer on the related Deposit Date and the aggregate amount to be
withdrawn from the Reserve Account. Trustee has agreed to act as Servicer's
agent for the purpose of preparing and delivering Servicer's Reports, and
so long as Trustee timely prepares and delivers Servicer's Report, Servicer
shall not be required to do so. Any failure by Trustee to prepare and
deliver a Servicer's Report, or inaccuracy in any Servicer's Report so
prepared and delivered shall (so long as Servicer shall also not timely
prepare and deliver such Servicer's Report or correct any such inaccuracy)
have the same effect as would such a failure by Servicer or inaccuracy in a
Servicer's Report prepared and filed by Servicer.
On or before each Deposit Date, (a) the Servicer will cause all
collections and Liquidation Proceeds to be deposited into the Collection
Account and will deposit into the Collection Account all Purchase Amounts
of Receivables to be purchased by the Servicer on such Deposit Date, (b)
the Seller will deposit into the Collection Account all Purchase Amounts of
Receivables to be repurchased by the Seller on such Deposit Date, (c) the
Trustee will make any required withdrawals for the related Distribution
Date from the Reserve Account and deposit such amounts into the Collection
Account and (d) the Servicer will deposit all Advances for the related
Distribution Date into the Collection Account.
Deposits to the Distribution Accounts. On each Distribution Date,
after making reimbursements of Outstanding Advances to the Servicer based
on the related Servicer's Report, the Trustee will make the following
deposits and distributions from the Collection Account, to the extent of
the sum of Available Interest and any Available Reserve Amount remaining
after such reimbursements (and, in the case of shortfalls occurring under
clause (b) below in the Class A Interest Distributable Amount, the Class B
Percentage of Available Principal to the extent of such shortfalls), in the
following priority:
(a) to the Servicer, any unpaid Servicing Fee for the related
Collection Period and all unpaid Servicing Fees from prior
Collection Periods;
(b) to the Class A Distribution Account, the Class A Interest
Distributable Amount for such Distribution Date; and
(c) to the Class B Distribution Account, the Class B Interest
Distributable Amount for such Distribution Date.
On each Distribution Date based on the related Servicer's Report, the
Trustee will make the following deposits and distributions, to the extent
of Available Principal and the portions of Available Interest and Available
Reserve Amount remaining after the application of clauses (a), (b) and (c)
above, in the following priority:
(d) to the Class A Distribution Account, the Class A Principal
Distributable Amount for such Distribution Date;
(e) to the Class B Distribution Account, the Class B Principal
Distributable Amount for such Distribution Date;
(f) to the Reserve Account, any amounts remaining, until the amount
on deposit in the Reserve Account equals the Specified Reserve
Account Balance; and
(g) to the Seller, any amounts remaining.
On each Distribution Date, all amounts on deposit in the Class A
Distribution Account will be distributed to the Class A Certificateholders
as of the Record Date and all amounts on deposit in the Class B
Distribution Account will be distributed to the Class B Certificateholders
as of the Record Date by the Trustee.
"Class A Interest Carryover Shortfall" means, (a) with respect
to the initial Distribution Date, zero, and (b) with respect to any
other Distribution Date, the excess of Class A Monthly Interest for
the preceding Distribution Date and any outstanding Class A Interest
Carryover Shortfall on such preceding Distribution Date, over the
amount in respect of interest that is actually deposited in the Class
A Distribution Account on such preceding Distribution Date, plus 30
days of interest on such excess, to the extent permitted by law, at
the Class A Certificate Rate.
"Class A Interest Distributable Amount" means, with respect to
any Distribution Date, the sum of Class A Monthly Interest for such
Distribution Date and the Class A Interest Carryover Shortfall for
such Distribution Date.
"Class A Monthly Interest" means, with respect to any
Distribution Date, one-twelfth of the Class A Certificate Rate
multiplied by the Class A Certificate Balance as of the Distribution
Date occurring in the preceding Collection Period (after giving
effect to any payments made on such Distribution Date) or, in the
case of the first Distribution Date, as of the Closing Date.
"Class A Monthly Principal" means, with respect to any
Distribution Date, the Class A Percentage of the Principal
Distribution Amount for such Distribution Date.
"Class A Principal Carryover Shortfall" means, as of the close
of business on any Distribution Date, the excess of Class A Monthly
Principal for such Distribution Date and any outstanding Class A
Principal Carryover Shortfall from the preceding Distribution Date
over the amount in respect of principal that is actually deposited in
the Class A Distribution Account on such Distribution Date.
"Class A Principal Distributable Amount" means, with respect to
any Distribution Date, the sum of Class A Monthly Principal for such
Distribution Date and, in the case of any Distribution Date other
than the initial Distribution Date, the Class A Principal Carryover
Shortfall as of the close of business on the preceding Distribution
Date; provided, however, that the Class A Principal Distributable
Amount shall not exceed the outstanding aggregate principal balance
of the Class A Certificates prior to such Distribution Date. In
addition, on the Final Scheduled Distribution Date, the Class A
Principal Distributable Amount shall include any additional amount
available to reduce the outstanding aggregate principal balance of
the Class A Certificates to zero.
"Class B Interest Carryover Shortfall" means, (a) with respect
to the initial Distribution Date, zero, and (b) with respect to any
other Distribution Date, the excess of Class B Monthly Interest for
the preceding Distribution Date and any outstanding Class B Interest
Carryover Shortfall on such preceding Distribution Date, over the
amount in respect of interest that is actually deposited in the Class
B Distribution Account on such preceding Distribution Date, plus 30
days of interest on such excess, to the extent permitted by law, at
the Class B Certificate Rate.
"Class B Interest Distributable Amount" means, with respect to
any Distribution Date, the sum of Class B Monthly Interest for such
Distribution Date and the Class B Interest Carryover Shortfall for
such Distribution Date.
"Class B Monthly Interest" means, with respect to any
Distribution Date, one-twelfth of the Class B Certificate Rate
multiplied by the Class B Certificate Balance as of the Distribution
Date occurring in the preceding Collection Period (after giving
effect to any payments made on such Distribution Date) or, in the
case of the first Distribution Date, as of the Closing Date.
"Class B Monthly Principal" means, with respect to any
Distribution Date, the Class B Percentage of the Principal
Distribution Amount for such Distribution Date.
"Class B Principal Carryover Shortfall" means, as of the close
of business on any Distribution Date, the excess of Class B Monthly
Principal for such Distribution Date and any outstanding Class B
Principal Carryover Shortfall from the preceding Distribution Date
over the amount in respect of principal that is actually deposited in
the Class B Distribution Account on such Distribution Date.
"Class B Principal Distributable Amount" means, with respect to
any Distribution Date, the sum of Class B Monthly Principal for such
Distribution Date and, in the case of any Distribution Date other
than the initial Distribution Date, the Class B Principal Carryover
Shortfall as of the close of business on the preceding Distribution
Date; provided, however, that the Class B Interest Distributable
Amount shall not exceed the outstanding aggregate principal balance
of the Class B Certificates prior to such Distribution Date. In
addition, on the Final Scheduled Distribution Date, the Class B
Interest Distributable Amount will include any additional amount
available to reduce the outstanding aggregate principal balance of
the Class B Certificates to zero.
The following chart sets forth an example of the application of the
foregoing provisions to a hypothetical monthly distribution:
March 1 - March 31............. Collection Period. The Servicer receives
monthly payments, prepayments, and other
proceeds in respect of the Receivables.
March 31....................... Record Date. Distributions on the next
Distribution Date are made to
Certificateholders of record at the close
of business on this date.
April 8........................ Determination Date. On or before this
date, the Servicer, delivers to the
Trustee the Servicer's Report, which
notifies the Trustee of the amounts
required to be distributed and the amounts
available for distribution on the next
Distribution Date.
April 12....................... Deposit Date. All Collections and Advances
relating to the preceding Collection
Period are required to be deposited in the
Collection Account on or before this date.
The Trustee withdraws funds from the
Reserve Account to the extent necessary.
April 15....................... Distribution Date. The Trustee distributes
to Certificateholders amounts payable in
respect of the Certificates, pays the
Servicing Fee and reimburses Outstanding
Advances to the Servicer, deposits any
excess funds to the Reserve Account and,
if the Reserve Account is equal to the
Specified Reserve Account Balance, pays
any remaining funds to the Seller.
<PAGE>
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Information regarding certain legal aspects of the Receivables is set
forth under "Certain Legal Aspects of the Receivables" in the Prospectus.
ERISA CONSIDERATIONS
The Class A Certificates
Subject to the considerations set forth under "ERISA
Considerations-Trusts That Do Not Issue Notes" in the Prospectus, the Class
A Certificates may be purchased with the assets of an employee benefit plan
or an individual retirement account (a "Plan") subject to ERISA or Section
4975 of the Internal Revenue Code of 1986, as amended (the "Code"). A
fiduciary of a Plan must determine that the purchase of a Class A
Certificate is consistent with its fiduciary duties under ERISA and does
not result in a nonexempt prohibited transaction as defined in Section 406
of ERISA or Section 4975 of the Code. For additional information regarding
treatment of the Class A Certificates under ERISA, see "ERISA
Considerations" in the Prospectus.
The Class B Certificates
The Class B Certificates and any beneficial interest in such Class B
Certificates may not be acquired (a) with the assets of an employee benefit
plan (as defined in Section 3(3) of ERISA) that is subject to the
provisions of Title I of ERISA, (b) by a plan described in Section
4975(e)(1) of the Code or (c) by any entity whose underlying assets include
plan assets by reason of a plan's investment in the entity. By its
acceptance of a Class B Certificate, each Class B Certificateholder will be
deemed to have represented and warranted that it is not subject to the
foregoing limitation. For additional information regarding treatment of the
Class B Certificates under ERISA, see "ERISA Considerations" in the
Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting
agreement, the Seller has agreed to cause the Trust to sell to each of the
underwriters listed below (each, an "Underwriter"), and each of the
Underwriters has agreed to purchase, the principal amount of the
Certificates set forth opposite its name below. Under the terms and
conditions of the Underwriting Agreement, each of the Underwriters is
obligated to take and pay for all of the Certificates, if any are taken.
Principal Amount of Principal Amount of
Class A Certificates Class B Certificates
-------------------- --------------------
_______________________.....$_____________________ $________________________
_______________________..... _____________________ ________________________
_______________________..... _____________________ ________________________
Total $_____________________ $________________________
The Seller has been advised by the Underwriters that they propose
initially to offer the Certificates to the public at the prices set forth
herein, and to certain dealers at such prices less the initial concession
not in excess of _____% per Class A Certificate and ____% per Class B
Certificate. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of ____% per Class A Certificate and ____% per
Class B Certificate to certain other dealers. After the initial public
offering of the Certificates, the public offering prices and such
concessions may be changed.
The Seller does not intend to apply for listing of the Certificates
on a national securities exchange, but has been advised by the Underwriters
that they intend to make a market in the Certificates. The Underwriters are
not obligated, however, to make a market in the Certificates and may
discontinue market making at any time without notice. No assurance can be
given as to the liquidity of the trading market for the Certificates.
The Seller has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
In the ordinary course of their respective businesses, each
Underwriter and its affiliates have engaged and may in the future engage in
commercial banking and investment banking transactions with the Seller.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus,
certain federal income tax and other legal matters will be passed upon for
the Trust by Mayer, Brown & Platt, Chicago, Illinois. Mayer, Brown & Platt
may from time to time render legal services to the Seller, the Servicer and
its affiliates. Certain legal matters will be passed upon for the
Underwriters by Mayer, Brown & Platt, Chicago, Illinois.
<PAGE>
INDEX OF DEFINED TERMS
Page
Acquired Receivables.................................................S-4
Advance..............................................................S-5
Affiliate............................................................S-3
Aggregate Net Losses................................................S-16
Agreement............................................................S-3
Available Interest..................................................S-17
Available Principal.................................................S-14
Available Reserve Amount............................................S-15
Average Delinquency Ratio...........................................S-16
Average Net Loss Ratio..............................................S-16
Bank.................................................................S-3
Business Day.........................................................S-4
Certificate Rate.....................................................S-4
Certificateholders...................................................S-5
Certificates.........................................................S-1
Class A Certificate Balance..........................................S-5
Class A Certificate Rate.............................................S-4
Class A Certificateholders...........................................S-4
Class A Certificates.................................................S-1
Class A Distribution Account........................................S-15
Class A Interest Carryover Shortfall................................S-18
Class A Interest Distributable Amount...............................S-18
Class A Monthly Interest............................................S-18
Class A Monthly Principal...........................................S-18
Class A Percentage...................................................S-3
Class A Principal Carryover Shortfall...............................S-19
Class A Principal Distributable Amount..............................S-19
Class B Certificate Balance..........................................S-5
Class B Certificate Rate.............................................S-4
Class B Certificateholders...........................................S-5
Class B Certificates.................................................S-1
Class B Distribution Account........................................S-15
Class B Interest Carryover Shortfall................................S-19
Class B Interest Distributable Amount...............................S-19
Class B Monthly Interest............................................S-19
Class B Monthly Principal...........................................S-19
Class B Percentage...................................................S-3
Class B Principal Carryover Shortfall...............................S-19
Class B Principal Distributable Amount..............................S-19
Closing Date.........................................................S-3
Code................................................................S-20
Collection Period....................................................S-4
Commission...........................................................S-2
Cutoff Date..........................................................S-3
Dealer Agreements....................................................S-3
Dealers..............................................................S-3
Defaulted Receivable................................................S-15
Delinquency Ratio...................................................S-16
Deposit Date.........................................................S-5
Determination Date..................................................S-17
Distribution Date....................................................S-2
ERISA................................................................S-7
Expected Interest...................................................S-16
Final Scheduled Distribution Date....................................S-2
Final Scheduled Maturity Date........................................S-4
Financed Vehicles....................................................S-3
Interest Collections................................................S-17
Interest Shortfall..................................................S-17
Issuer...............................................................S-3
Liquidation Proceeds................................................S-16
Net Interest Collections............................................S-17
Net Loss Ratio......................................................S-16
Non-Advance Receivables.............................................S-17
Norwest Bank.........................................................S-3
Original Pool Balance................................................S-5
Outstanding Advances................................................S-17
Plan................................................................S-20
Pool Balance.........................................................S-4
Principal Balance....................................................S-4
Principal Distribution Amount.......................................S-14
Prospectus...........................................................S-1
Purchased Receivable................................................S-15
Rating Agencies......................................................S-7
Realized Losses.....................................................S-15
Receivables..........................................................S-1
Receivables Pool....................................................S-10
Record Date..........................................................S-4
Reserve Account......................................................S-6
Reserve Account Initial Deposit......................................S-6
Seller...............................................................S-1
Servicer.............................................................S-1
Servicer's Report...................................................S-17
Specified Reserve Account Balance...................................S-15
Supplemental Servicing Fee..........................................S-17
Trust................................................................S-1
Trustee..............................................................S-3
Underwriter.........................................................S-20
Weighted Average APR................................................S-17
<PAGE>
==================================== ====================================
No dealer, salesman or other person
has been authorized to give any
information or to make any
representation not contained in this
Prospectus Supplement or the Prospectus
and, if given or made, such information
or representation must not be relied
upon as having been authorized by the
Seller or the Underwriters. This
Prospectus Supplement and the
Prospectus do not constitute an
offer of any securities other than
those to which they relate or an
offer to sell, or a solicitation of
an offer to buy, to any person in
any jurisdiction where such an offer
or solicitation would be unlawful.
Neither the delivery of this
Prospectus Supplement and the $________________________
Prospectus nor any sale made hereunder (Approximate)
shall, under any circumstances,
create any implication that the
information contained herein is correct
as of any time subsequent to their
respective dates.
___________________________
TABLE OF CONTENTS
NORWEST AUTO
Prospectus Supplement RECEIVABLES CORPORATION
(Seller)
Page
Reports to Certificateholders S-2
Summary of Terms.............. S-3
Risk Factors.................. S-9
The Trust..................... S-10
The Receivables Pool.......... S-10
The Seller, the Servicer
and Norwest Corporation...... S-14
Weighted Average Life of the
Certificates................. S-14
Description of the Certificates S-14
Certain Legal Aspects of the
Receivables.................. S-20 $__________________
ERISA Considerations.......... S-20 __% Asset Backed
Underwriting.................. S-21 Certificates
Legal Opinions................ S-21 Class A
Index of Defined Terms........ S-22
<PAGE>
Prospectus
Page
Available Information.........
Incorporation of Certain
Documents by Reference...... $__________________
Summary of Terms.............. __% Asset Backed
Risk Factors.................. Certificates
The Trusts.................... Class B
The Receivables Pools.........
Weighted Average Life of the
Securities..................
Pool Factors and Trading
Information.................
Use of Proceeds...............
The Seller....................
The Bank and Norwest
Corporation.................
Description of the Notes......
Description of the
Certificates................
Certain Information Regarding
the Securities............. ================
Description of the Transfer
and Servicing Agreements.... PROSPECTUS SUPPLEMENT
Certain Legal Aspects of the ______________, 199__
Receivables.................
Federal Income Tax ================
Consequences................
Certain State Tax
Consequences................
ERISA Considerations..........
Plan of Distribution..........
Notice to Canadian Residents..
Legal Opinions................
Index of Defined Terms........
Global Clearance, Settlement
and Tax Documentation
Procedures..................
Until 90 days after the date of this
Prospectus Supplement, all dealers
effecting transactions in the securities
described in this Prospectus
Supplement, whether or not participating
in this distribution, may be required to
deliver this Prospectus Supplement and
the Prospectus. This is in addition to
the obligation of dealers to deliver
this Prospectus Supplement and the
Prospectus when acting as underwriters
and with respect to their unsold
allotments or subscriptions.
====================================== ===================================
<PAGE>
SUBJECT TO COMPLETION, DATED __________, 199_
[Form of Owner Trust Supplement]
PRELIMINARY PROSPECTUS SUPPLEMENT
(To Prospectus dated __________, 199_)
[$______________]
Norwest Auto Trust 199_ - _
$______________ Class A-1 ____% Asset Backed Notes
$______________ Class A-2 ____% Asset Backed Notes
$______________ ____% Asset Backed Certificates
Norwest Auto Receivables Corporation
Seller
Norwest Bank Minnesota, N.A.
Servicer
The Norwest Auto Trust 199_-__ (the "Trust") will be governed
by a Trust Agreement, to be dated as of ____________, 199_, between Norwest
Auto Receivables Corporation, as seller (the "Seller") and
___________________________, as Owner Trustee. The Trust will issue
$_____________ aggregate principal amount of Class A-1 ___% Money Market
Asset Backed Notes (the "Class A-1 Notes"), and $____________ aggregate
principal amount of Class A-2 ___% Asset Backed Notes (the "Class A-2
Notes" and, together with the Class A-1 Notes, the "Notes") pursuant to an
Indenture to be dated as of _____________, 199_, between the Trust and
___________________, as Indenture Trustee. The Trust will also issue
$__________________ aggregate principal amount of ___% Asset Backed
Certificates (the "Certificates" and, together with the Notes, the
"Securities"). The assets of the Trust will include a pool of motor
vehicle promissory notes and security agreements and/or retail installment
sale contracts secured by new or used automobiles and light duty trucks
(collectively, the "Receivables"), payments received thereunder after
____________, 199__, security interests in the motor vehicles financed
thereby, rights under Dealer Agreements, certain deposit accounts
in which collections are held, any proceeds from claims on insurance policies
relating to the Financed Vehicles and the proceeds of the foregoing.
(continued on following page)
___________________________
<PAGE>
Prospective investors should consider the "Risk Factors" set forth at page
S-__ herein and at page ___ in the accompanying Prospectus (the "Prospectus").
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT
BENEFICIAL INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN NORWEST AUTO RECEIVABLES
CORPORATION, NORWEST BANK MINNESOTA, N.A., ANY OTHER
NORWEST BANK OR ANY OF THEIR AFFILIATES. NEITHER
THE SECURITIES NOR THE RECEIVABLES ARE INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, ANY OTHER GOVERNMENTAL AGENCY
OR INSTRUMENTALITY OR BY NORWEST AUTO
RECEIVABLES CORPORATION, NORWEST BANK
MINNESOTA, N.A., ANY OTHER NORWEST
BANK, NORWEST INVESTMENT SERVICES,
INC. OR ANY OF THEIR AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
___________________________
<PAGE>
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions the Seller(1)(2)
--------------- ----------------- -----------------
<S> <C> <C> <C>
Per Class A-1 Note % % %
Per Class A-2 Note % % %
Per Certificate % % %
Total $____________ $____________ $____________
- ----------------------
<FN>
(1) Plus accrued interest, if any, from ___________, 199__.
(2) Before deducting expenses, estimated to be $___________.
</TABLE>
<PAGE>
The Notes and Certificates are offered by the Underwriters when,
as and if issued and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that delivery
of the Notes and the Certificates will be made in book-entry form only
through the Same Day Funds Settlement System of The Depository Trust
Company, or through Cedel Bank, societe anonyme or the Euroclear System, on
or about __________, 199__.
_____________, 199__.
<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 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.
The assets of the Trust will be transferred by the Seller to
the Trust on or prior to the Closing Date. The Notes will be secured by the
assets of the Trust pursuant to the Indenture. Certain capitalized terms
used in this Prospectus Supplement are defined in this Prospectus
Supplement on the pages indicated in the "Index of Terms" on page ___ of
this Prospectus Supplement or, to the extent not defined herein, have the
meanings assigned to such terms in the Prospectus. Interest on all classes
of Notes will accrue at the fixed per annum interest rates specified above.
Interest on the Notes will generally be payable on the [15th] day of each
month (each, a "Distribution Date"), commencing _______, 199_. Principal
of the Notes will be payable on each Distribution Date to the extent
described herein, except that no principal will be paid on the Class A-2
Notes until the Class A-1 Notes have been paid in full. See "Description of
the Notes--Payments of Interest."
The Certificates will represent fractional undivided interests
in the Trust. Interest, at the Certificate Rate, will be distributed to
the Certificateholders on each Distribution Date to the extent of available
funds. Principal, to the extent described herein, will be distributed to
the Certificateholders on each Distribution Date commencing with the
Distribution Date on which the Notes were paid in full to the extent of
available funds. See "Description of the Certificates--Distributions of
Principal Payments." Distributions of interest and principal on the
Certificates will be subordinated in priority to payments due on the Notes
as described herein. See "Description of the Transfer and Servicing
Agreements--Subordination of Certificates."
Each class of the Notes and the Certificates will be payable
in full on the applicable final scheduled Distribution Date as set forth
herein. However, payment in full of a class of Notes or of the
Certificates could occur earlier or later than such dates as described
herein. See "Weighted Average Life of the Securities." In addition,
the Class A-2 Notes and the Certificates will be subject to prepayment
in whole, but not in part, on any Distribution Date on which Norwest
Bank Minnesota, N.A. in its capacity as servicer (in such capacity,
the "Servicer"), or the Seller exercises its option to purchase
the Receivables. The Seller or Servicer may purchase the Receivables when
the aggregate principal balance of the Receivables has declined to 5% or
less of the initial aggregate principal balance of the Receivables purchased
by the Trust.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION
ABOUT THE OFFERING OF THE NOTES AND THE CERTIFICATES. ADDITIONAL
INFORMATION IS CONTAINED IN THE PROSPECTUS AND PROSPECTIVE INVESTORS ARE
URGED TO READ BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL.
SALES OF THE NOTES OR THE CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE
PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY
OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET
PRICES OF THE NOTES AND THE CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY
BE DISCONTINUED AT ANY TIME.
There is currently no secondary market for the Securities
offered hereby. Each Underwriter expects, but is not obligated to make a
market in the Notes and Certificates. There can be no assurance that a
secondary market will develop or that it will provide Securityholders with
liquidity of investment or that it will continue for the life of the
Securities offered hereby.
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Notes or Definitive Certificates
are issued, monthly and annual unaudited reports containing information
concerning the Receivables will be prepared by the Servicer and sent on
behalf of the Trust only to Cede & Co., as nominee of the Depository Trust
Company and registered holder of the Notes and the Certificates. See
"Certain Information Regarding the Securities--Book-Entry Registration" and
"--Reports to Securityholders" in the accompanying Prospectus. Such reports
will not constitute financial statements prepared in accordance with
generally accepted accounting principles. The Seller, as originator of the
Trust, will file with the Securities and Exchange Commission (the
"Commission") such periodic reports as are required under the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder. In addition, the Commission maintains a public access
site on the Internet through the World Wide Web at which site reports,
information statements and other information, including all electronic
filings, may be viewed. The Internet address of such World Wide Web site
is http:/www.sec.gov.
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by
reference to the detailed information appearing elsewhere in this
Prospectus Supplement and in the Prospectus. Certain capitalized terms
used herein are defined elsewhere in this Prospectus Supplement on the
pages indicated in the "Index of Terms" beginning at page S-__ or, to the
extent not defined herein, have the meanings assigned to such terms in the
Prospectus.
Issuer................ Norwest Auto Trust 199_-__ (the "Trust" or the
"Issuer"), a Delaware business trust
established pursuant to a trust agreement (as
amended and supplemented, the "Trust
Agreement"), dated as of ________________,
199_ between the Seller and the Owner Trustee.
Seller................ Norwest Auto Receivables Corporation, a
___________ corporation (the "Seller"). See
"The Seller."
Servicer.............. Norwest Bank Minnesota, N.A., a national banking
association (the "Bank" or in its capacity as
servicer, the "Servicer").
Indenture Trustee..... ____________________, as trustee under the
Indenture (the "Indenture Trustee").
Owner Trustee......... ____________________, as trustee under the Trust
Agreement (the "Owner Trustee").
The Notes............. The Trust will issue Asset Backed Notes (the
"Notes"), pursuant to an Indenture to be dated
as of _______________, 199_ (as amended and
supplemented from time to time, the
"Indenture"), between the Issuer and the
Indenture Trustee, as follows: (a) Class A-1
__% Money Market Asset Backed Notes (the
"Class A-1 Notes") in the aggregate initial
principal amount of $______________; and (b)
Class A-2 __% Asset Backed Notes (the "Class
A-2 Notes") in the aggregate initial principal
amount of $____________.
The Notes will be secured by the assets of the
Trust pursuant to the Indenture.
The Certificates...... The Trust will issue __% Asset Backed
Certificates (the "Certificates" and, together
with the Notes, the "Securities") with an
aggregate initial Certificate Balance of
$________________. The Certificates will
represent fractional undivided interests in
the Trust and will be issued pursuant to the
Trust Agreement.
The Receivables....... On or prior to __________, 199_ (the "Closing
Date"), the Trust will purchase a pool of
motor vehicle promissory notes and security
agreements and/or retail installment sale
contracts secured by new or used automobiles or
light duty trucks (collectively, the
"Receivables"), including rights to receive
payments received under such Receivables
after the applicable Cutoff Date,
security interests in the vehicles
financed thereby (the "Financed Vehicles"),
rights under Dealer Agreements, rights with
respect to Eligible Deposit Accounts
in which collections are held, any
proceeds from claims on or rebates of
premiums and other amounts relating
to insurance policies with respect to
Financed Vehicles and the proceeds of the
foregoing. The Receivables have an
aggregate principal balance of approximately
$___________ as of ____________, 199_ (the
"Cutoff Date"), and will be purchased by
the Trust from the Seller pursuant to a
Sale and Servicing Agreement to be dated as
of ____________, 199_ (as amended and
supplemented from time to time, the "Sale and
Servicing Agreement"), among the Trust, the
Seller and the Servicer. See "Description of
the Transfer and Servicing Agreements" herein
and in the Prospectus.
The Receivables will generally consist of (i)
motor vehicle promissory notes and security
agreements executed by an Obligor in favor of
an Originator ("Direct Loans") and/or (ii) motor
vehicle retail installment sale contracts
(together with Direct Loans, "Motor Vehicle
Loans") between an Obligor and a Dealer.
Receivables that are to be included in any
Receivables Pool will be transferred by an
Affiliate to the Seller for purposes
of sale to the applicable Trust. Receivables
constituting approximately ___% of the aggregate
principal balance of Receivables as of the
Cutoff Date (the "Acquired Receivables") were
acquired by the Affiliates through acquisitions.
All the Receivables provide for the allocation
of payments to principal and interest in
accordance with the "simple interest" method.
The Receivables have been selected from Motor
Vehicle Loans owned by the Affiliates based
on the criteria specified in the Sale and
Servicing Agreement and described herein and
in the Prospectus. See "The Receivables Pool"
herein and "The Receivables Pools" in the
Prospectus. No Receivable will have
a scheduled maturity that, after giving
prospective effect to any permitted extensions
or such deferrals, would be later than
____________ (the "Final Scheduled Maturity
Date"). As of the Cutoff Date, the weighted
average remaining maturity of the Receivables
was approximately _____ months and the weighted
average original maturity of the Receivables
was approximately ____ months. As of the
Cutoff Date, approximately ____% of the
aggregate principal balance of the Receivables
represented financing of new vehicles and the
remainder represented financing of used
vehicles.
The "Pool Balance" means, at any time, the sum
of the outstanding Principal Balances of the
Receivables. The "Principal Balance" for any
Receivable, at any time, means the principal
balance of such Receivable at the end of the
preceding Collection Period, after giving
effect to all payments received from Obligors
and Purchase Amounts to be remitted by the
Servicer or the Seller, as the case may be,
for such Collection Period and all losses
realized on Receivables liquidated during such
Collection Period.
Terms of the Notes
A. Distribution Dates Payments of interest and principal on the Notes
will be made on the [15th] day of each month
or, if any such day is not a Business Day, on
the next succeeding Business Day (each, a
"Distribution Date"), commencing
______________, 199_. Each reference to a
"Payment Date" in the Prospectus shall refer
to a Distribution Date herein. Payments will
be made to holders of record of the Notes (the
"Noteholders") as of the day immediately
preceding such Distribution Date or, if
Definitive Notes are issued, as of the [30th]
day of the preceding month (a "Record Date").
A "Business Day" is a day other than a
Saturday, a Sunday and that in New York City
and in the city in which the corporate trust
office of the Trustee is located is neither a
legal holiday nor a day on which banking
institutions are authorized by law, regulation
or executive order to be closed.
B. Interest Rates.... The Class A-1 Notes will bear interest at the
rate of __% per annum (the "Class A-1 Interest
Rate") and the Class A-2 Notes will bear
interest at the rate of __% per annum (the
"Class A-2 Interest Rate"). The Class A-1
Interest Rate and the Class A-2 Interest Rate
are referred to herein collectively as
"Interest Rates".
C. Interest.......... Interest on the outstanding principal amount of
the Notes of each class will accrue at the
applicable Interest Rate from the Closing Date
(in the case of the first Distribution Date)
and thereafter from the preceding Distribution
Date through the current Distribution Date
(each an "Interest Period"). Interest on the
Notes will be calculated on the basis of a
360-day year consisting of twelve 30-day
months. See "Description of the
Notes--Payments of Interest."
D. Principal......... Principal of the Notes will be payable on each
Distribution Date in an amount equal to the
Noteholders' Principal Distributable Amount
for the calendar month (the "Collection
Period") preceding such Distribution Date (in
the case of the first Distribution Date, the
period from (but not including) the Cutoff
Date to and including ___________, 199_) to
the extent of funds available therefor.
No principal payments will be made on the Class
A-2 Notes until the Class A-1 Notes have been
paid in full.
The outstanding principal amount of the Class
A-1 Notes, to the extent not previously paid,
will be payable on the _____________, 199_
Distribution Date (the "Class A-1 Final
Scheduled Distribution Date"); and the
outstanding principal amount of the Class A-2
Notes, to the extent not previously paid, will
be payable on the ____________, 199_
Distribution Date (the "Class A-2 Final
Scheduled Distribution Date").
E. Significant
Characteristics
of Class Notes....... [Interest will accrue on the Class __ Notes from
[the Closing Date] but no interest will be payable
on the Class __ Notes until [[the Distribution]
[Payment] Date]] [the [Distribution] [Payment]
Date on or after which the Class __ Notes have
been paid in full]. [The Class __ Notes [do not
bear interest] [bear interest at a nominal rate]
and principal thereon is due and payable on [and
after] [the [Distribution] [Payment] Date
following the [Distribution] [Payment] Date on
or after which the Class __ Notes have been paid
in full] [each [Distribution] [Payment] Date to
the extent that principal available to be paid on
the Class __ Notes exceeds the amount necessary
to reduce the outstanding principal balance of the
Class __ Notes to the [planned balance] for such
[Distribution] [Payment] Date. [No principal
is payable with respect to the Class __ Notes.
The Class __ Notes are entitled only to interest
on the [nominal] [notional] amount thereof, as
described above under "Principal."] As a result
the yield to maturity on the Class __ Notes will
be particularly sensitive to the rate and timing
of repayment, repurchase and defaults on the
Receivables.] [See "Risk Factors" and "The
Receivables Pool -- Weighted Average Life of the
Securities."]
F. Optional Redemption After the Class A-1 Notes have been paid in
full, the Class A-2 Notes will be redeemed in
whole, but not in part, on any Distribution
Date on which the Seller or Servicer exercises
its option to purchase the Receivables, which
can occur after the Pool Balance declines to 5%
or less of the Original Pool Balance, at a
redemption price equal to the unpaid principal
amount of the Class A-2 Notes plus accrued and
unpaid interest thereon. See "Description of
the Notes--Optional Redemption." The "Original
Pool Balance" will equal the aggregate
principal balance of the Receivables as of the
Cutoff Date.
Terms of the Certificates
A. Distribution Dates Distributions with respect to the Certificates
will be made on each Distribution Date,
commencing __________, 199_. Distributions
will be made to holders of record of the
Certificates (the "Certificateholders" and,
together with the Noteholders, the
"Securityholders") as of the related Record
Date (which will be the [30th] day of the
preceding month if Definitive Certificates are
issued).
B. Certificate Rate ___% per annum (the "Certificate Rate").
C. Interest.......... On each Distribution Date, the Owner Trustee
will distribute pro rata to Certificateholders
accrued interest at the Certificate Rate on
the outstanding Certificate Balance generally
to the extent of funds available following
payment of the Servicing Fee and distributions
in respect of interest on the Notes from the
Total Distribution Amount and the Reserve
Account. Interest will be calculated on the
basis of a 360-day year consisting of twelve
30-day months. Interest in respect of a
Distribution Date will accrue from the Closing
Date (in the case of the first Distribution
Date) and thereafter from the preceding
Distribution Date to and including such
Distribution Date.
D. Principal......... No distributions of principal on the
Certificates will be made until all of the
Notes have been paid in full. On each
Distribution Date commencing on the
Distribution Date on which the Class A-2 Notes
are paid in full, principal of the
Certificates will be payable in an amount
generally equal to the Certificateholders'
Principal Distributable Amount for the
Collection Period preceding such Distribution
Date, to the extent of funds available
therefor following payment of the Servicing
Fee, payments of interest and principal, if
any, due in respect of the Notes and the
distribution of interest in respect of the
Certificates.
The outstanding principal amount, if any, of the
Certificates will be payable in full on the
__________ Distribution Date (the "Certificate
Final Scheduled Distribution Date").
E. Optional Prepayment If the Pool Balance as of the last day of a
Collection Period has declined to 5% or less
of the Original Pool Balance, the Seller or
Servicer may purchase all remaining Trust
Property on any Distribution Date occurring in
a subsequent Collection Period at a purchase
price equal to the aggregate of the Purchase
Amounts of the remaining Receivables (other
than Defaulted Receivables), which would result
in a prepayment of the Certificates. See
"Description of the Certificates--Optional
Prepayment."
Advances.............. On or prior to the Business Day preceding each
Distribution Date (the "Deposit Date"), the
Servicer will advance (an "Advance") in an
amount equal to the lesser of (a) the excess,
if any, of the amount of interest that would
be expected to be received on the Receivables
(other than Non-Advance Receivables) during
the related Collection Period over the actual
interest collected by the Servicer during such
Collection Period minus unreimbursed prior
Advances and (b) the amount (if any) by which
the sum of any unpaid Servicing Fees for the
related Collection Period and prior Collection
Periods and the amount of interest
distributable to the Securityholders on the
following Distribution Date exceeds the actual
interest collected by the Servicer during the
related Collection Period minus unreimbursed
prior Advances, subject to certain limitations
described below. The Servicer will be entitled
to be reimbursed for outstanding Advances on
the Distribution Date in the following month
to the extent of interest collections for such
Distribution Date and, to the extent such
collections are insufficient, to the extent of
funds in the Reserve Account. The Servicer
will be obligated to make such an Advance
except to the extent that the Servicer
reasonably determines that the Advance is
unlikely to be recoverable from the following
month's collections of interest and the funds
in the Reserve Account. See "Description of
the Transfer and Servicing Agreements--Advances."
Reserve Account....... A reserve account (the "Reserve Account") will
be created with an initial deposit by the
Seller of cash or certain investments having a
value of at least $________ (the "Reserve
Account Deposit"). In addition, on each
Distribution Date, any amounts on deposit in
the Collection Account with respect to the
preceding Collection Period after payments to
the Certificateholders and the Servicer have
been made will be deposited into the Reserve
Account until the amount of the Reserve
Account is equal to the Specified Reserve
Account Balance.
On or prior to each Deposit Date, the Indenture
Trustee will withdraw funds from the Reserve
Account, to the extent of the funds therein
(exclusive of investment earnings), (a) to the
extent required to reimburse the Servicer for
Outstanding Advances and (b) to the extent (i)
the sum of the amounts required to be
distributed to Certificateholders and the
Servicer on the related Distribution Date
exceeds (ii) the amount on deposit in the
Collection Account with respect to the
preceding Collection Period (net of investment
income). If the amount in the Reserve Account
is reduced to zero, Certificateholders will
bear the credit and other risks associated
with ownership of the Receivables, including
the risk that the Trust may not have a
perfected security interest in the Financed
Vehicles. See "Risk Factors" herein and in
the Prospectus, "Description of the
Certificates--The Reserve Account"; and
"Certain Legal Aspects of the Receivables" in
the Prospectus.
Prepayment Considerations The weighted average life of the Securities may
be reduced by full or partial prepayments on
the Receivables. The Receivables are
prepayable at any time. Prepayments may also
result from liquidations due to default, the
receipt of monthly installments earlier than
the scheduled due dates for such installments,
the receipt of proceeds from credit life,
disability, theft or physical damage
insurance, repurchases by the Seller as a
result of certain uncured breaches of the
warranties made by it in the Sale and
Servicing Agreement with respect to the
Receivables, purchases by the Servicer as a
result of certain uncured breaches of the
covenants made by it in the Sale and Servicing
Agreement with respect to the Receivables, or
the Seller or Servicer exercising its optional
purchase right. The rate of prepayments on the
Receivables may be influenced by a variety of
economic, social, and other factors, including
decreases in interest rates and the fact that
the Obligor may not sell or transfer the
Financed Vehicle securing a Receivable without
the consent of the applicable Affiliate.
No prediction can be made as to the actual
prepayment rates which will be experienced on
the Receivables. If prepayments were to occur
after a decline in interest rates, investors
seeking to reinvest their funds might be
required to invest at a return lower than the
applicable Interest Rate or the Certificate
Rate, as the case may be. Security Owners
will bear all reinvestment risk resulting from
prepayment of the Receivables. See "Risk
Factors--Prepayment Considerations" and
"Weighted Average Life of the Securities" in
the Prospectus and "Weighted Average Life of
the Securities" herein.
Tax Status............ In the opinion of Mayer, Brown & Platt, for
federal income tax purposes, the Notes will be
characterized as debt, and the Trust will not
be characterized as an association (or a
publicly traded partnership) taxable as a
corporation. In the opinion of _____________,
____________ tax counsel to the Trust, the
same characterizations would apply for
____________ income tax purposes as for
federal income tax purposes. Each Noteholder,
by the acceptance of a Note, will agree to
treat the Notes as indebtedness, and each
Certificateholder, by the acceptance of a
Certificate, will agree to treat the Trust as
a partnership in which the Certificateholders
are partners for federal, state and local
income tax purposes. Alternative
characterizations of the Trust and the
Certificates are possible, but would not
result in materially adverse tax consequences
to Certificateholders. See "Federal
Income Tax Consequences" and "Certain State
Tax Consequences" in the Prospectus for
additional information concerning the
application of federal and state tax laws to
the Trust and the Securities.
ERISA Considerations... Subject to the considerations discussed under
"ERISA Considerations" herein and in the
Prospectus, the Notes are eligible for
purchase by employee benefit plans.
The Certificates may not be acquired with the
assets of any employee benefit plan subject to
the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or Section 4975 of
the Internal Revenue Code of 1986, as amended
(the "Code"), or with the assets of an
individual retirement account. See "ERISA
Considerations" herein and in the Prospectus.
Legal Investment...... The Class A-1 Notes will be eligible securities
for purchase by money market funds under
paragraph (a)(5) of Rule 2a-7 under the
Investment Company Act of 1940, as amended.
Risk Factors.......... See "Risk Factors" herein and in the Prospectus
for a discussion of certain factors that
potential investors should consider in
determining whether to invest in the Securities.
[No] Listing of
Securities............ [The [Securities]/[Notes]/[Certificates] will not
be listed on any national securities exchange or
automated quotation system of a registered
securities association.] [The Certificates]
[Notes] [Securities] will be listed on
_________________.]
Rating of the Notes... It is a condition to the issuance of the Notes
that the Class A-1 Notes be rated in the
highest short-term rating category and that
the Class A-2 Notes be rated in the highest
long-term rating category by at least two
nationally recognized rating agencies (the
"Rating Agencies"). There can be no assurance
that a rating will not be lowered or withdrawn
by a Rating Agency if circumstances so
warrant. See "Risk Factors--Ratings of the
Securities" herein and in the Prospectus.
Rating of the
Certificates ....... It is a condition to the issuance of the
Certificates that they be rated at least "A"
or its equivalent by at least two nationally
recognized rating agencies. There can be no
assurance that a rating will not be lowered or
withdrawn by a rating agency if circumstances
so warrant. See "Risk Factors--Ratings of the
Securities" in the Prospectus.
RISK FACTORS
In addition to the other information contained herein and in the
Prospectus, prospective investors should consider carefully the following
risk factors and the information contained in "Risk Factors" in the
Prospectus.
Geographic Concentration
Economic conditions in states where Obligors reside may affect
the delinquency, loan loss and repossession experience of the Trust with
respect to the Receivables. As of the Cutoff Date, the mailing addresses
of Obligors with respect to approximately __% by principal balance of the
Receivables were located in ____________, and the mailing addresses of
Obligors with respect to approximately __% by principal balance of the
Receivables were located in ____________ and ________________ collectively.
See "The Receivables Pool."
Subordination
Distributions of interest and principal on the Certificates
will be subordinated in priority of payment to interest and principal due
on the Class A-1 Notes and Class A-2 Notes. Consequently, the
Certificateholders will not receive any distributions with respect to a
Collection Period until the full amount of interest on and principal of the
Notes on such Distribution Date has been deposited in the Note Distribution
Account. The Certificateholders will not receive any distributions of
principal until the Distribution Date on which the Class A-2 Notes were
paid in full. However, upon the occurrence and during the continuation of
an Event of Default which has resulted in an acceleration of the Notes,
distributions of the amounts on the Certificates will be subordinated in
priority of payment to payment in full of principal of the Notes.
If an Event of Default occurs, the Indenture Trustee or the
holders of a majority of the aggregate principal amount of all the Notes
may declare the principal of the Notes to be immediately due and payable,
and the Indenture Trustee may institute or be required to institute
proceedings to collect amounts due or exercise its remedies as a secured
party (including foreclosure or sale of the Receivables). In the event of
a sale of Receivables by the Indenture Trustee following an Event of
Default, there is no assurance that the proceeds of such sale will be equal
to or greater than the aggregate outstanding principal amount of the Notes
and the Certificate Balance plus accrued interest. Because neither
interest nor principal is distributed to Certificateholders upon sale of
the Receivables following an Event of Default and acceleration of the Notes
under the Indenture until all the Notes have been paid in full, the
interests of Noteholders and the Certificateholders may conflict, and the
exercise by the Indenture Trustee of its right to sell the Receivables or
exercise other remedies under the Indenture and applicable law may cause
the Certificateholders to suffer a loss of all or part of their investment.
See "Description of the Notes--The Indenture--Events of Default; Rights upon
Event of Default" and "Description of the Transfer and Servicing
Agreements--Insolvency Event" in the Prospectus.
In general, the Seller may, and in certain circumstances the
Certificateholders may, direct the Owner Trustee in the administration of
the Trust. However, because the Trust has pledged the property of the
Trust to the Indenture Trustee to secure the payment of the Notes,
including in such pledge certain rights of the Trust under the Sale and
Servicing Agreement, the Indenture Trustee and not the Seller or the
Certificateholders has the power to direct the Trust to take certain
actions in connection with the administration of the property of the Trust
until the Notes have been paid in full and the lien of the Indenture has
been released. In addition, the Seller and Certificateholders are not
allowed to direct the Owner Trustee to take any action which conflicts with
the provisions of any of the Sale and Servicing Agreement, the Trust
Agreement or the Indenture (together the "Basic Documents"). The Indenture
specifically prohibits the Issuer from taking any action which would impair
the Indenture Trustee's security interest in the Trust and generally
requires the Owner Trustee to obtain the consent of the Indenture Trustee
or the holders of a majority of the aggregate principal amount of the Notes
before modifying, amending, supplementing, waiving or terminating any Basic
Document or any provision of any Basic Document. Therefore, until the
Notes have been paid in full, the ability to direct the Trust with respect
to certain actions permitted to be taken by it under the Basic Documents
rests with the Indenture Trustee and the Noteholders instead of the Seller
or the Certificateholders.
If an Event of Servicing Termination were to occur, the holders
of a majority of the outstanding principal amount of the Notes, the
Indenture Trustee acting on behalf of the Noteholders, or the Owner Trustee
and not the Seller or the Certificateholders, would have the right to
terminate the Servicer as the servicer of the Receivables without
consideration of the effect such termination would have on
Certificateholders. In addition, the holders of not less than a majority
of the outstanding principal amount of the Notes would have the right to
waive certain Events of Servicing Termination, without consideration of the
effect such waiver would have on Certificateholders. See "Description of
the Transfer and Servicing Agreements--Events of Servicing Termination" and
"--Rights upon Event of Servicing Termination" in the Prospectus.
Limited Assets
The Trust will not have, nor is it permitted or expected to
have, any significant assets or sources of funds other than the Receivables
and the Reserve Account. Holders of the Notes and the Certificates must
rely for repayment upon payments on the Receivables and, if and to the
extent available, amounts on deposit in the Reserve Account. Similarly,
although funds in the Reserve Account will be available on each
Distribution Date to cover shortfalls in distributions of interest and
principal on the Notes and the Certificates, amounts to be deposited in the
Reserve Account are limited in amount. If the Reserve Account is
exhausted, the Trust will depend solely on current distributions on the
Receivables to make payments on the Notes and the Certificates.
Amounts on deposit in the Reserve Account will be available
on any Distribution Date first to cover shortfalls in reimbursement of
outstanding Advances and payment of Servicing Fees to the Servicer, then
shortfalls in distributions of interest on the Notes then shortfalls in
distributions of interest on Certificates. After distributions of interest
on the Certificates have been made, the remaining amounts on deposit in the
Reserve Account will be available first to cover shortfalls in
distributions of principal on the Notes and then shortfalls in
distributions of principal on the Certificates. If the Reserve Account is
exhausted, the Trust will depend solely on payments on the Receivables to
make distributions on the Securities, and Securityholders will bear the
risk of delinquency, loan losses and repossessions with respect to the
Receivables. There can be no assurance that the future delinquency, loan
loss and repossession experience of the Trust with respect to the
Receivables will be better or worse than that set forth herein with respect
to the portfolio of Motor Vehicle Loans serviced by the Servicer. Any amounts
released from the Reserve Account to the Seller will not be available to the
Securityholders. See "The Receivables Pool--Pool Composition" and
"Delinquencies and Losses" herein and "The Receivables Pools" in the
Prospectus and "Description of the Transfer and Servicing
Agreements--Subordination of Certificateholders; Reserve Account" and
"--Distributions" herein.
Maturity and Prepayment Considerations
The Certificates will not receive any principal payments until
the Notes have been paid in full. In addition, no principal payments on
the Certificates will be made until the Distribution Date on which the
Notes are paid in full. As the rate of payment of principal of the Notes
and the Certificates depends on the rate of payment (including prepayments)
of the principal balance of the Receivables, final payment of the Notes and
the final distribution in respect of the Certificates could occur
significantly earlier than the applicable Final Scheduled Distribution
Date. It is expected that final payment of the Notes and the final
distribution in respect of the Certificates will occur on or prior to the
applicable Final Scheduled Distribution Date. However, if sufficient funds
are not available to pay the Notes or the Certificates in full on or prior
to the applicable Final Scheduled Distribution Date, final payment of the
Notes and the final distribution in respect of the Certificates could occur
later than such date. See "Weighted Average Life of the Securities" herein
and in the Prospectus.
[THE YIELD ON THE CLASS ___ NOTES WILL BE EXTREMELY SENSITIVE TO THE
RATE AND TIMING OF PAYMENTS (INCLUDING PREPAYMENTS) ON THE RECEIVABLES.
[AN INVESTOR PURCHASING A CLASS ___ NOTE AT A SIGNIFICANT PREMIUM COULD,
UNDER CERTAIN PREPAYMENT SCENARIOS, FAIL TO RECOUP ITS ORIGINAL INVESTMENT.]
[THE YIELD TO MATURITY ON THE CLASS ___ NOTES WILL BE ADVERSELY AFFECTED
BY A LOWER THAN ANTICIPATED RATE OF PAYMENT ON THE RECEIVABLES.] [The
reinvestment risk to an investor in the Class ___ Notes may be exacerbated
in the event of [an increase in the rate of payment on the Receivables in a
decreasing interest rate environment] [a decrease in the rate of payment on
the Receivables in an increasing rate environment]. Any ratings assigned
to the Class ___ Notes by a Rating Agency will reflect only such Rating
Agency's assessment of the likelihood that timely distributions will be
made with respect to the Class ___ Notes in accordance with the Sale and
Servicing Agreement and the Indenture. Such rating will not constitute an
assessment of the likelihood that principal prepayments on the Receivables
will occur or of the degree to which the rate of such prepayments might
differ from that originally anticipated. As a result, such rating will not
address the possibility that prepayment rates higher or lower than
anticipated by an investor may cause [such investor to experience a lower
than anticipated yield] [an investor purchasing a Class ___ Note at a
significant premium might fail to recoup its investment]. See "The
Receivables Pool--Sensitivity of the Class ___ Notes to Prepayments."]
Ratings of the Securities
It is a condition to the issuance of the Notes and of the
Certificates that the Class A-1 Notes be rated in the highest short-term
rating category and that the Class A-2 Notes be rated in the highest
long-term rating category, and that the Certificates be rated at least "A"
or its equivalent, by at least two nationally recognized rating agencies.
A rating is not a recommendation to purchase, hold or sell Securities,
inasmuch as such rating does not comment as to market price or suitability
for a particular investor. The ratings of the Securities address the
likelihood of the payment of principal and interest on the Securities
pursuant to their terms. There can be no assurance that a rating will
remain for any given period of time or that a rating will not be lowered or
withdrawn entirely by a Rating Agency if in its judgment circumstances in
the future so warrant.
THE TRUST
General
The Issuer, Norwest Auto Trust 199_-_, is a business trust
formed under the laws of the State of Delaware pursuant to the Trust
Agreement for the transactions described in this Prospectus Supplement.
After its formation, the Trust will not engage in any activity other than
(a) acquiring, holding and managing the Receivables and the other assets of
the Trust and proceeds therefrom, (b) from time to time prior to the
Closing Date, issuing indebtedness or other securities to finance its
purchase of the Receivables and such other assets and, on and after the
Closing Date, issuing the Notes and the Certificates to finance such
assets, (c) making payments on the indebtedness and other securities and
the Notes and the Certificates issued by it, and (d) engaging in other
activities that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith.
At the time the Notes and Certificates are issued, the Trust
will be capitalized with equity in an amount equal to the Certificate
Balance of $__________, excluding amounts deposited in the Reserve Account.
On the Closing Date, Certificates with an original principal balance of
$______________ will be sold to the Seller, and the remaining equity
interest will be sold to third party investors that are expected to be
unaffiliated with the Seller, the Servicer or their affiliates or the
Trust. The equity of the Trust, together with the net proceeds from the
sale of the Notes, will be used by the Trust to purchase the Receivables
from the Seller pursuant to the Sale and Servicing Agreement or to
repayment of any related Warehouse Financing.
If the protection provided to the investment of the
Securityholders by the Reserve Account is insufficient, the Trust will look
only to the Obligors on the Receivables, the proceeds from the repossession
and sale of Financed Vehicles which secure defaulted Receivables and the
proceeds from any Dealer Recourse. In such event, certain factors, such
as the Trust's not having first priority perfected security interests in
some of the Financed Vehicles, may affect the Trust's ability to realize on
the collateral securing the Receivables, and thus may reduce the proceeds
to be distributed to Securityholders with respect to the Securities. See
"Description of the Transfer and Servicing Agreements--Distributions" and
"--Reserve Account" and "Certain Legal Aspects of the Receivables" in the
Prospectus.
The Trust's principal offices are in Delaware, in care of
__________________, as Owner Trustee, at the address listed below under
"--The Owner Trustee".
Capitalization of the Trust
The following table illustrates the capitalization of the
Trust as of the Closing Date, as if the issuance and sale of the Notes and
the Certificates have taken place on such date:
Class A-1 __% Money Market Asset Backed Notes. . . $___________
Class A-2 __% Asset Backed Notes . . . . . . . . . ___________
__% Asset Backed Certificates. . . . . . . . . . . ___________
Total. . . . . . . . . . . . . . . . . . . . . . . $
===========
The Owner Trustee
_______________ is the Owner Trustee under the Trust Agreement.
_____________ is a __________________ and its principal offices where
information can be obtained relating to the Trust and the Certificates are
located at _____________________. The Seller and its affiliates may maintain
normal commercial banking relations with the Owner Trustee and its
affiliates.
THE RECEIVABLES POOL
The pool of Receivables (the "Receivables Pool") will consist of
Receivables purchased as of the Cutoff Date. The Receivables have been
selected from the portfolio of each Affiliate for inclusion in the Receivables
Pool by several criteria, some of which are set forth in the Prospectus under
"The Receivables Pool," as well as the requirement that each Receivable (a)
has an outstanding principal balance of at least $_____, (b) as of the Cutoff
Date, was not more than 30 days past due, (c) has a scheduled maturity not
later than six months before the Final Scheduled Maturity Date, and (d) has
an original term to maturity of not more than ___ months. No selection
procedures believed by any Affiliate to be adverse to the Certificateholders
were used in selecting the Receivables. Approximately ___% of the aggregate
principal balance of Receivables as of the Cutoff Date constituted Acquired
Receivables.
<PAGE>
Pool Composition
Set forth in the following tables is information concerning
the composition, distribution by APR and the geographic distribution of the
Receivables to be conveyed by the Seller to the Trust as of the Cutoff
Date.
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Composition of the Receivables
as of the Cutoff Date(1)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Weighted Aggregate
Average APR Principal Number of Weighted Average Weighted Average Average
of Receivables Balance Receivables Remaining Term Original Term Principal Balance
- --------------- ---------- ----------- ---------------- ---------------- -----------------
% $ months months $
- --------------------------------
<FN>
(1) The figures are summations or weighted averages of the Receivables
transferred to the Trust as of the Cutoff Date.
<PAGE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Distribution by APR of the Receivables
as of the Cutoff Date(1)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Percentage of
Number of Aggregate Principal Aggregate Principal
APR Range Receivables Balance Balance(2)
- ---------- ------------ ------------------- -------------------
(Dollars in Thousands)
$ %
- -----------------------------
<FN>
(1) The figures are summations or weighted averages of the Receivables
transferred as of the Cutoff Date.
(2) Percentages may not add to 100% because of rounding.
Approximately ___% of the aggregate principal balance of the Receivables,
constituting ___% of the number of such Receivables, as of the Cutoff Date
represented financing of new vehicles and the remainder represented
financing of used vehicles.
<PAGE>
<CAPTION>
Geographic Distribution of the Receivables
Pool as of the Initial Cutoff Date(1)
Percent of
Aggregate
Loan
State Value
===== ----------
___________________ _.__%
___________________ _.__%
___________________ _.__%
________________________________
<FN>
(1) No more than __% of the aggregate principal balance of the Receivables
as of the Cutoff Date were originated by Motor Vehicle Loans made to
Obligors that currently reside in any state other than ________________
or __________________.
</TABLE>
Delinquencies and Losses
Set forth below is certain information concerning the historical
experience of the Originators pertaining to Motor Vehicle Loans. There
can be no assurance that the delinquency and loss experience on the
Receivables of the Trust will be comparable to that set forth below.
<PAGE>
<TABLE>
<CAPTION>
Delinquency Experience(1)
At December 31,
-----------------------------------------------------
1995 1994 1993 1992 1991
--------------- --------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Dollar Percent Dollar Percent Dollar Percent Dollar Percent Dollar Percent
------- ------- ------- ------- ------ ------- ------ ------- ------ -------
(Dollars in Millions)
Amount of Motor Vehicle
Loans Outstanding.....
Period of Delinquency:
31-59 days..........
60-89 days..........
over 90 days........
Total
Delinquencies.........
Total Delinquencies as
a Percentage of Motor
Vehicle Loans
Outstanding............
- ----------------------
<FN>
(1) All amounts and percentages are based on the gross amount scheduled to
be paid on each Motor Vehicle Loan, including unearned finance and other
charges.
<PAGE>
<CAPTION>
Historical Loss Experience
Year Ended December 31,
------------------------------------------
<S> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991
----- ----- ----- ----- -----
(Dollars in Thousands)
Period-end Motor Vehicle Loans
Outstanding..........................................
Average Motor Vehicle
Loans Outstanding(1).................................
Average Number of Motor Vehicle
Loans Outstanding(1).................................
Gross Charge-Offs(2).................................
Net Losses(2)(3).....................................
Net Losses as a Percent of Period-end Principal
Balance Outstanding..................................
Net Losses as a Percent of Average Principal
Balance Outstanding................................
____________________
<FN>
(1) Amount represents average of balances at the beginning of period and
each subsequent quarter ended during such period.
(2) Gross Charge-Offs and Net Losses exclude repossession and
disposition expenses.
(3) Amount represents the aggregate balance of all Motor Vehicle Loans
which are determined to be uncollectible in the period, less any
recoveries on Motor Vehicle Loans charged-off in the period or any
prior period.
</TABLE>
<PAGE>
Delinquencies and losses are affected by a number of
social, economic and other factors that may affect an Obligor's ability or
willingness to pay, such as the amount or types of indebtedness incurred by
such Obligor in addition to the Receivable on which such Obligor is
indebted, and there can be no assurance as to the level of future total
delinquencies or the severity of future losses. As a result, the
delinquency and loss experience of the Receivables may differ from
those shown in the tables.
THE SELLER, THE SERVICER AND NORWEST CORPORATION
Information regarding the Seller is set forth under "The Seller"
in the Prospectus and information regarding the Servicer is set forth under
"The Bank" in the Prospectus. Norwest Corporation operates through
subsidiaries engaged in banking and a variety of related businesses. Norwest
Corporation provides retail, commercial and corporate banking services to
customers through banks in 16 states and provides additional financial
services to its customers through subsidiaries engaged in various businesses,
principally mortgage banking, consumer finance, equipment leasing,
agricultural finance, commercial finance, securities brokerage and investment
banking, insurance agency services, computer and data processing services,
trust services, mortgage backed securities servicing, and venture capital
investment. As of March 31, 1996, Norwest Corporation had consolidated total
assets of $73.9 billion, total deposits of $43.1 billion, and total
stockholders' equity of $5.4 billion. Based on total assets as of March 31,
1996, Norwest Corporation was the eleventh largest commercial banking
organization in the United States. [Norwest Corporation has agreed to
guaranty the performance by the Seller of its repurchase obligation with
respect to Receivables for which there has been an uncured breach of any
representation or warranty that materially and adversely affects the
interests of the Trust in such Receivables. See "Description of the Transfer
and Servicing Agreements--Sale and Assignment of Receivables" in the
Prospectus.]
WEIGHTED AVERAGE LIFE OF THE SECURITIES
Information regarding certain maturity and prepayment
considerations with respect to the Securities is set forth under "Weighted
Average Life of Securities" in the Prospectus. No principal payments will
be made on the Class A-2 Notes until all Class A-1 Notes have been paid in
full. In addition, no principal payments on the Certificates will be made
until all of the Notes have been paid in full. See "Description of the
Notes--Payments of Principal" and "Description of the
Certificates--Distributions of Principal Payments." As the rate of payment
of principal of each class of Notes and the Certificates depends primarily
on the rate of payment (including prepayments) of the principal balance of
the Receivables, final payment of any class of the Notes and the final
distribution in respect of the Certificates could occur significantly
earlier than the respective Final Scheduled Distribution Dates. It is
expected that final payment of the Notes and the final distribution in
respect of the Certificates will occur on or prior to the applicable Final
Scheduled Distribution Date. However, if sufficient funds are not
available to pay the Notes or the Certificates in full on or prior to the
applicable Final Scheduled Distribution Date, final payment of the Notes
and the final distribution in respect of the Certificates could occur later
than such date.
Loan extensions, deferrals or modifications may have the effect
of increasing the weighted average life of the Notes and Certificates.
Consistent with its customary servicing practices and procedures, the
Servicer may, in its discretion and on a case-by-case basis, arrange with
Obligors to extend or modify the terms of Receivables. Any such extension
or modification will have the effect of extending the weighted average life
of the Certificates. However, the Servicer will not be permitted to grant
any such extension or modification if as a result the final scheduled
payment on a Receivable would fall after the Final Scheduled Maturity Date,
unless the Servicer repurchases such Receivable. Securityholders will bear
the risk of being able to reinvest principal payments on the Securities at
yields at least equal to the yields on their respective Securities.
Prepayments on motor vehicle receivables can be measured relative
to a prepayment standard or model. The model used in this Prospectus
Supplement, the Absolute Prepayment Model ("ABS"), represents an assumed
rate of prepayment each month relative to the original number of
receivables in a pool of receivables. ABS further assumes that all the
receivables are the same size and amortize at the same rate and that each
receivable in each month of its life will either be paid as scheduled or be
prepaid in full. For example, in a pool of receivables originally
containing 10,000 receivables, a 1% ABS rate means that 100 receivables
prepay each month. ABS does not purport to be an historical description of
prepayment experience or a prediction of the anticipated rate of prepayment
of any pool of receivables, including the Receivables.
As the rate of payment of principal with respect of the Securities
will depend on the rate of payment (including prepayments) of the principal
balance of the Receivables, final payment of any class of Notes could occur
significantly earlier than the Class A-1 or Class A-2 Final Scheduled
Distribution Date, as applicable. The final distribution in respect of the
Certificates also could occur prior to the Certificate Final Scheduled
Distribution Date. Reinvestment risk associated with early payment of the
Notes and the Certificates will be borne exclusively by the Noteholders and
the Certificateholders, respectively.
The table captioned "Percent of Initial Note Principal Balance or
Initial Certificate Balance at Various ABS Percentages" (the "ABS Table")
has been prepared on the basis of the characteristics of the Receivables.
The ABS Table assumes that (a) the Receivables prepay in full at the
specified constant percentage of ABS monthly, with no defaults, losses or
repurchases, (b) each scheduled monthly payment on the Receivables is made
on the last day of each month and each month has 30 days, (c) payments on
the Notes and distributions on the Certificates are made on each
Distribution Date (and each such date is assumed to be the 15th day of each
applicable month), (d) the balance in the Reserve Account on each
Distribution Date is equal to the Specified Reserve Account Balance, and
(e) the Seller or Servicer does not exercise its option to purchase the
Receivables. The pool has an assumed cutoff date of the Cutoff Date. The
ABS Table indicates the projected weighted average life of each class of Notes
and the Certificates and sets forth the percent of the initial principal
amount of each class of Notes and the percent of the initial Certificate
Balance that is projected to be outstanding after each of the Distribution
Dates shown at various constant ABS percentages.
The actual characteristics and performance of the Receivables
will differ from the assumptions used in constructing the ABS Table. The
assumptions used are hypothetical and have been provided only to give a
general sense of how the principal cash flows might behave under varying
prepayment scenarios. For example, it is very unlikely that the
Receivables will prepay at a constant level of ABS until maturity or that
all of the Receivables will prepay at the same level of ABS. Moreover, the
diverse terms of Receivables within each of the four hypothetical pools
could produce slower or faster principal distributions than indicated in
the ABS Table at the various constant percentages of ABS specified, even if
the original and remaining terms to maturity of the Receivables are as
assumed. Any difference between such assumptions and the actual
characteristics and performance of the Receivables, or actual prepayment
experience, will affect the percentages of initial balances outstanding
over time and the weighted average lives of each class of Notes and the
Certificates.
<PAGE>
<TABLE>
<CAPTION>
Percent of Initial Note Principal Balance at Various ABS Percentages
Class A-1 Notes Class A-2 Notes
------------------------ ------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Distribution Date 0.5% 1.0% 1.2% 1.5% 0.5% 1.0% 1.2% 1.5%
- ------------------- ---- ---- ---- ---- ---- ---- ---- ----
Closing Date......
April 1996........
May 1996..........
June 1996.........
July 1996.........
August 1996.......
September 1996....
October 1996......
November 1996.....
December 1996.....
January 1997......
February 1997.....
March 1997........
April 1997........
Weighted Average Life
(years)(1)......
_______________________
<FN>
(1) The weighted average life of a Class A-1 Note or Class A-2 Note is
determined by (a) multiplying the amount of each principal payment of
such Note by the number of years from the date of the issuance of
such Note to the related Distribution Date, (b) adding the results
and (c) dividing the sum by the related initial principal amount of
such Note.
<PAGE>
<CAPTION>
The ABS Table has been prepared based on the assumptions described above
(including the assumptions regarding the characteristics and performance of
the Receivables which will differ from the actual characteristics and
performance thereof) and should be read in conjunction therewith.
Percent of Initial Certificate Balance at Various ABS Percentages
Certificates
----------------------------
Distribution Date 0.5% 1.0% 1.2% 1.5%
- ----------------- ---- ---- ---- ----
Closing Date........................
April 1996..........................
May 1996............................
June 1996...........................
July 1996...........................
August 1996.........................
September 1996......................
October 1996........................
November 1996.......................
December 1996.......................
January 1997........................
February 1997.......................
March 1997..........................
April 1997..........................
Weighted Average Life (years)(1)....
_________________________
<FN>
(1) The weighted average life of a Certificate is determined by (a)
multiplying the amount of each distribution in respect of the
Certificate Balance of such Certificate by the number of years
from the date of the issuance of such Certificate to the related
Distribution Date, (b) adding the results and (c) dividing the
sum by the original Certificate Balance of such Certificate.
</TABLE>
<PAGE>
The ABS Tables have been prepared based on the assumptions described above
(including the assumptions regarding the characteristics and performance of
the Receivables which will differ from the actual characteristics and
performance thereof) and should be read in conjunction therewith.
[SENSITIVITY OF THE CLASS ___ NOTES TO PREPAYMENTS
[Describe method of calculating principal and interest payable on the
Class ___ Notes, including setting forth notional balance for each
[Distribution] [Payment] Date, if applicable. Set forth in tabular form
relationship between yield to maturity of the Class ___ Notes and assumed
prepayment speeds. State assumptions, including as to purchase price of the
Class ___ Notes, if applicable, used in calculating the data set forth in the
table.]
DESCRIPTION OF THE NOTES
General
The Notes will be issued pursuant to the Indenture, a form of
which has been filed as an exhibit to the Registration Statement. A copy
of the Indenture will be filed with the Commission following the issuance
of the Securities. The following summary describes certain terms of the
Notes and the Indenture. The summary describes the material terms of the
Notes and the Indenture, but it does not purport to be complete and
is subject to, and is qualified in its entirety by reference to, all the
provisions of the Notes and the Indenture. Where particular provisions or
terms used in the Indenture are referred to, the actual provisions
(including definitions of terms) are incorporated by reference as part of
such summary. The following summary supplements the description of the
general terms and provisions of the Notes of any given series and the
related Indenture set forth in the Prospectus, to which description
reference is hereby made. _____________________ will be the Indenture
Trustee under the Indenture. The address of the Indenture Trustee at which
information regarding the Trust and Notes may be obtained in _______________.
Payments of Interest
Each class of the Notes will constitute Fixed Rate Securities,
as such term is defined under "Certain Information Regarding the
Securities--Fixed Rate Securities" in the Prospectus. Interest on the
principal balances of the classes of the Notes will accrue at their
respective per annum Interest Rates and will be payable to the Noteholders
monthly on each Distribution Date, commencing ______, 199__. Interest on
the outstanding principal amount of the Notes will accrue at the applicable
Interest Rate for the applicable Interest Accrual Period. Interest
distributions due for any Distribution Date but not distributed on such
Distribution Date will be due on the next Distribution Date increased by an
amount equal to interest on such amount at the applicable Interest Rate (to
the extent lawful). Interest on the Notes will be calculated on the basis
of a 360-day year consisting of twelve 30-day months. Interest payments on
the Notes will generally be derived from the Total Distribution Amount
remaining after the payment of the Servicing Fee. See "Description of the
Transfer and Servicing Agreements--Distributions" and "--Reserve Account."
<PAGE>
Interest payments to both classes of Noteholders will have the
same priority. Under certain circumstances, the amount available for
interest payments could be less than the amount of interest payable on the
Notes on any Distribution Date, in which case each class of Noteholders
will receive their ratable share (based upon the aggregate amount of
interest due to such class of Noteholders) of the aggregate amount
available to be distributed in respect of interest on the Notes.
Payments of Principal
Principal payments will be made to the Noteholders on each
Distribution Date in an amount generally equal to the Noteholders'
Principal Distributable Amount. Principal payments on the Notes will
generally be derived from the Total Distribution Amount remaining after the
payment of the Servicing Fee and the Noteholders' Interest Distributable
Amount. See "Description of the Transfer and Servicing
Agreements--Distributions" and "--Reserve Account."
On the Business Day immediately preceding each Distribution
Date (a "Determination Date"), the Indenture Trustee shall determine the
amount in the Collection Account allocable to interest and the amount
allocable to principal.
On each Distribution Date, principal payments on the Notes
will be applied in the following order of priority: (a) to the principal
balance of the Class A-1 Notes until the principal balance of the Class A-1
Notes is reduced to zero; and (b) to the principal balance of the Class A-2
Notes until the principal balance of the Class A-2 Notes is reduced to
zero. The principal balance of the Class A-1 Notes, to the extent not
previously paid, will be due on the Class A-1 Final Scheduled Distribution
Date and the principal balance of the Class A-2 Notes, to the extent not
previously paid, will be due on the Class A-2 Final Scheduled Distribution
Date. The actual date on which the aggregate outstanding principal amount
of either class of Notes is paid may be earlier than the respective final
scheduled Distribution Dates set forth above based on a variety of factors,
including those described under "Weighted Average Life of the Securities"
herein and in the Prospectus.
Optional Redemption
On any Distribution Date after the Class A-1 Notes have been
paid in full, the Class A-2 Notes will be redeemed in whole, but not in
part, if the Seller or Servicer exercises its option to purchase the
Receivables. The Seller or Servicer may purchase the Receivables when the
Pool Balance shall have declined to 5% or less of the Original Pool Balance,
as described in the Prospectus under "Description of the Transfer and
Servicing Agreements--Termination". The redemption price will be equal to
the unpaid principal amount of the Class A-2 Notes plus accrued and unpaid
interest thereon.
DESCRIPTION OF THE CERTIFICATES
General
The Certificates will be issued pursuant to the Trust Agreement,
a form of which has been filed as an exhibit to the Registration Statement.
A copy of the Trust Agreement will be filed with the Commission following
the issuance of the Securities. The following summary describes certain
terms of the Certificates and the Trust Agreement. The summary describes
the material terms of the Certificates and the Trust Agreement, but it does
not purport to be complete and is subject to, and qualified in its entirety
by reference to, all the provisions of the Certificates and the Trust
Agreement. The following summary supplements the description of the
general terms and provisions of the Certificates of any given series and
the related Trust Agreement set forth in the Prospectus, to which
description reference is hereby made.
Distribution of Interest Income
On each Distribution Date, commencing _______, 199__, the
Certificateholders will be entitled to distributions in an amount equal to
the amount of interest that would accrue on the Certificate Balance at the
Certificate Rate. The Certificates will constitute Fixed Rate Securities,
as such term is defined under "Certain Information Regarding the
Securities--Fixed Rate Securities" in the Prospectus. Interest in respect
of a Distribution Date will accrue from the Closing Date (in the case of
the First Distribution Date) and thereafter, from the [15th] day of the
month preceding the month of the Distribution Date to and including the ___
day of the month of such Distribution Date. Interest distributions due for
any Distribution Date but not distributed on such Distribution Date will be
due on the next Distribution Date increased by an amount equal to interest
on such amount at the Certificate Rate (to the extent lawful). Interest
distributions with respect to the Certificates will generally be funded
from the portion of the Total Distribution Amount and the funds in the
Reserve Account remaining after the distribution of the Servicing Fee and
the Noteholders' Interest Distributable Amount. See "Description of the
Transfer and Servicing Agreements--Distributions" and "--Reserve Account."
Distributions of Principal Payments
Certificateholders will be entitled to distributions of
principal on each Distribution Date, commencing with the Distribution Date
on which the Notes are paid in full, in an amount generally equal to the
Principal Distribution Amount (less on the Distribution Date on which the
Notes are paid in full, the portion thereof payable on the Notes).
Distributions with respect to principal payments will generally be funded
from the portion of the Total Distribution Amount remaining after the
distribution of the Servicing Fee, the Noteholders' Distributable Amount
(on the Distribution Date on which the Notes are paid in full) and the
Certificateholders' Interest Distributable Amount. See "Description of the
Transfer and Servicing Agreements--Distributions" and "--Reserve Account".
Optional Prepayment
If the Seller or Servicer exercises its option to purchase the
Receivables when the Pool Balance declines to 5% or less of the Original Pool
Balance, the Seller or Servicer may purchase all remaining Trust Property on
any Distribution Date occurring in a subsequent Collection Period at a purchase
price equal to the aggregate of the Purchase Amounts of the remaining
Receivables (other than Defaulted Receivables), which purchases would result
in a prepayment of the Certificates. The proceeds from any such purchase
would first be applied to any unpaid principal amount on the Class A-2
Notes and accrued interest thereon and then to the Certificates and accrued
interest thereon. See "Description of the Transfer and Servicing
Agreements--Termination" in the Prospectus.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of the Sale and
Servicing Agreement and the Trust Agreement (collectively, the "Transfer
and Servicing Agreements"). Forms of the Transfer and Servicing Agreements
have been filed as exhibits to the Registration Statement. A copy of the
Sale and Servicing Agreement will be filed with the Commission following
the issuance of the Securities. The summary describes the material terms
of the Transfer and Servicing Agreements, but it does not purport to be
complete and is subject to, and qualified in its entirety by reference to,
all the provisions of the Transfer and Servicing Agreements. The following
summary supplements the description of the general terms and provisions of
the Transfer and Servicing Agreements set forth in the Prospectus, to which
description reference is hereby made.
Accounts
Accounts referred to under "Description of the Transfer and
Servicing Agreements--Accounts" in the Prospectus, as well as the Reserve
Account, will be established by the Servicer and maintained in the name of
the Indenture Trustee on behalf of the Noteholders and the
Certificateholders. Amounts held from time to time in the Reserve Account
will be held for the benefit of Noteholders and Certificateholders. Funds
on deposit in the Reserve Account will be invested in Eligible Investments
selected by the Seller and, if permitted by the Rating Agencies, funds on
deposit in the Reserve Account may be invested in Eligible Investments that
mature later than the next Deposit Date. All investment earnings on funds
deposited in the Trust Accounts, net of losses and investment expenses,
will be distributed to the Servicer and will not be treated as Collections
on the Receivables or otherwise be available for Noteholders or
Certificateholders. Upon any distribution to the Servicer of amounts from
the Reserve Account, the Securityholders will not have any rights in, or
claims to, such amounts.
On each Deposit Date, prior to making any of the distributions
described above in "Deposits to the Distribution Accounts", Servicer shall
be reimbursed for all Outstanding Advances with respect to prior
Distribution Dates, to the extent of the Interest Collections for such
Distribution Date and, to the extent such Interest Collections are
insufficient, to the extent of the funds in the Reserve Account. On or
before each Distribution Date, funds in the amount of the Reserve Account
Transfer Amount for such Distribution Date will be withdrawn from the
Reserve Account and deposited in the Collection Account.
On each Distribution Date, the amount available in the Reserve
Account (the "Available Reserve Amount") will equal the lesser of (a) the
amount on deposit in the Reserve Account (exclusive of investment earnings)
and (b) the Specified Reserve Account Balance.
On each Deposit Date, the Trustee will withdraw funds from the
Reserve Account (a) to the extent required to make reimbursements of
Outstanding Advances (after application of Interest Collections for that
purpose) and (b) The Reserve Account Transfer Amount. Such excess may
result from, among other things, Receivables becoming Defaulted Receivables
or the failure by the Servicer to make any remittance required to be made
under the Agreement. The aggregate amount to be withdrawn from the Reserve
Account on any Deposit Date will not exceed the Available Reserve Amount
with respect to the related Distribution Date. The Trustee will deposit the
proceeds of such withdrawal into the Collection Account on or before the
Distribution Date with respect to which such withdrawal was made.
"Specified Reserve Account Balance" means, for (a) any
Distribution Date prior to the Distribution Date on which the outstanding
amount of the Class A-1 Notes has been paid in full, $__________ and (b)
any Distribution Date on or after the Distribution Date on which the
outstanding amount of the Class A-1 Notes has been paid in full the greater
of (i) ____% of the sum of the aggregate outstanding principal amount of
each class of Notes plus the outstanding Certificate Balance on such
Distribution Date (after giving effect to all payments on the Notes and
distributions with respect to the Certificates to be made on such
Distribution Date); or (ii) ___% of the sum of the aggregate initial
principal of the Notes plus the initial Certificate Balance except that, if
on any Distribution Date (x) the Average Net Loss Ratio exceeds ___% or (y)
the Average Delinquency Ratio for the three preceding Collection Periods
exceeds ___%, then the Specified Reserve Account Balance shall be an amount
equal to ___% of the sum of the aggregate outstanding principal amount of
each class of Notes and the aggregate outstanding principal amount of each
class of Notes and the aggregate outstanding Certificate Balance on such
Distribution Date (after giving effect to all payments on the Notes and
distributions with respect to the Certificates to be made on such
Distribution Date). The Specified Reserve Account Balance may be reduced
to a lesser amount as determined by the Seller so long as such reduction
does not cause either Rating Agency to withdraw or downgrade its rating of
the Certificates. The time necessary for the Reserve Account to reach and
maintain the Specified Reserve Account Balance at any time after the
Closing Date will be affected by the delinquency, credit loss, repossession
and prepayment experience of the Receivables and, therefore, cannot be
accurately predicted. Amounts on deposit in the Reserve Account will be
released to the Servicer on each Distribution Date to the extent that the
amount on deposit in the Reserve Account would exceed the Specified Reserve
Account Balance.
"Aggregate Net Losses" means, for any Collection
Period, the aggregate amount allocable to principal of all Receivables
newly designated during such Collection Period as Defaulted
Receivables minus all Liquidation Proceeds collected during such
Collection Period with respect to all Defaulted Receivables (whether
or not newly designated as such).
"Average Delinquency Ratio" means, as of any
Distribution Date, the average of the Delinquency Ratios for the
preceding three Collection Periods.
"Average Net Loss Ratio" means, as of any
Distribution Date, the average of the Net Loss Ratios for the
preceding three Collection Periods.
"Delinquency Ratio" means, for any Collection
Period, the ratio, expressed as a percentage, of (a) the principal
amount of all outstanding Receivables (other than Purchased
Receivables and Defaulted Receivables) which are ___ or more days
delinquent as of the end of such Collection Period, determined in
accordance with Servicer's customary practices, divided by (b) the
Pool Balance as of the last day of such Collection Period.
"Liquidation Proceeds" means, with respect to any
Receivable that has become a Defaulted Receivable, (a) insurance
proceeds received by the Servicer, with respect to insurance policies
relating to the Financed Vehicles or the Obligors any proceeds from
lender's single interest insurance policies to the extent not included
in collections distributable to Securityholders, (b) amounts received
by the Servicer in connection with such Defaulted Receivable pursuant
to the exercise of rights under the related Motor Vehicle Loan, and
(c) the monies collected by the Servicer (from whatever source,
including, but not limited to proceeds of a sale of a Financed Vehicle
or deficiency balance recovered after the charge-off of the related
Receivable) on such Defaulted Receivable, net of any expenses incurred
by the Servicer in connection therewith and any payments required by
law to be remitted to the Obligor.
"Net Loss Ratio" means, for any Collection Period, an amount,
expressed as a percentage, equal to (a) the Aggregate Net Losses for
such Collection Period, divided by (b) the average of the Pool
Balances on each of the first day of such Collection Period and the
last day of such Collection Period.
"Reserve Account Transfer Amount" means, on any
Distribution Date, an amount equal to the lesser of (a) the amount of
cash or other immediately available funds on deposit in the Reserve
Account on such Distribution Date (before giving effect to any
withdrawals therefrom relating to such Distribution Date) or (b) the
amount, if any, by which (i) the sum of the Servicing Fee for the
related Collection Period and all accrued and unpaid Servicing Fees
for prior Collection Periods, the Noteholders' Interest Distributable
Amount, the Certificateholders' Interest Distributable Amount, the
Noteholders' Principal Distributable Amount and the
Certificateholders' Principal Distributable Amount for such
Distribution Date exceeds (ii) the sum of the Available Interest and
the Available Principal for such Distribution Date.
If funds in the Reserve Account are reduced to zero, the
Securityholders will bear the credit and other risks associated with
ownership of the Receivables. In such a case, the amount available for
distribution may be less than that described below, and the
Certificateholders may experience delays or suffer losses as a result,
among other things, of defaults or delinquencies by the Obligors or
previous extensions made by the Servicer.
Advances
On or prior to each Deposit Date, the Servicer will advance any
Interest Shortfall with respect to the related Distribution Date by
depositing the amount of such Interest Shortfall into the Collection
Account. The Servicer will be obligated to make such an Advance except to
the extent that the Servicer reasonably determines that the Advance is
unlikely to be recoverable as set forth below.
On each Distribution Date, prior to making any of the
distributions set forth in "--Distributions", the Servicer shall be
reimbursed for all Outstanding Advances with respect to prior Distribution
Dates, to the extent of the Interest Collections for such Distribution Date
and, to the extent such Interest Collections are insufficient, to the
extent of the funds in the Reserve Account. If it is acceptable to each
Rating Agency without a reduction in the rating of the Certificates, the
Outstanding Advances at the option of the Servicer may be paid at or as
soon as possible after the beginning of the related Collection Period out
of the first collections of interest received on the Receivables for such
Collection Period.
"APR" means, with respect to a Receivable, the rate
per annum of interest charged on the outstanding principal balance of
such Receivable.
"Defaulted Receivable" means, with respect to any
Collection Period, a Receivable (other than a Purchased Receivable)
which the Servicer has determined to charge off during such Collection
Period in accordance with its customary servicing practices; provided,
however, that any Receivable which the Seller or Servicer is obligated
to repurchase or purchase shall be deemed to have become a Defaulted
Receivable during a Collection Period if the Seller or Servicer fails
to deposit the Purchase Amount on the related Deposit Date when due.
"Expected Interest" means, with respect to any Distribution Date,
an amount equal to the sum of (a) with respect to all Simple Interest
Receivables, the product of (i) one-twelfth of the Weighted Average APR
for such Receivables for the related Collection Period multiplied by
(b) an amount equal to the aggregate Principal Balance of such
Receivables as of the first day of the related Collection Period minus
the sum of the Principal Balances of the Non-Advance Receivables that
are Simple Interest Receivables for such Distribution Date plus (b)
with respect to all Precomputed Receivables, that portion of the
collections on such Receivables received during the related Collection
Period that is allocable to interest in accordance with the Servicer's
customary procedures.
"Interest Collections" for a Distribution Date shall
mean the sum of the following amounts with respect to the related
Collection Period: (a) that portion of the Collections on the
Receivables received during the related Collection Period that is
allocable to interest in accordance with the Servicer's customary
procedures; (b) all Liquidation Proceeds received during such
Collection Period; and (c) all Purchase Amounts, to the extent
attributable to accrued interest, of all Receivables that are
repurchased by the Seller or purchased by the Servicer under an
obligation which arose during the related Collection Period.
"Interest Collections" for any Distribution Date shall exclude all
payments and proceeds of any Receivables the Purchase Amount of which
has been distributed on a prior Distribution Date.
"Interest Shortfall" means, with respect to any
Distribution Date, the lesser of (a) the amount (if any) by which the
Expected Interest for such Distribution Date exceeds the Net Interest
Collections for such Distribution Date and (b) the amount (if any) by
which the sum of the Servicing Fee for the related Collection Period
and all accrued and unpaid Servicing Fees for prior Collection
Periods, the Noteholders' Interest Distributable Amount and the
Certificateholders' Interest Distributable for such Distribution Date
exceeds the Net Interest Collections for such Distribution Date.
"Net Interest Collections" means, with respect to any
Distribution Date, the greater of (a) zero and (b) Interest
Collections for such Distribution Date minus the Outstanding Advances
as of such Distribution Date.
"Non-Advance Receivables" means, with respect to any
Distribution Date, any Receivables which became Defaulted Receivables
during the related Collection Period or which the Servicer, in its
sole discretion, believes are likely to become Defaulted Receivables.
"Outstanding Advances" means, as of any date, all Advances
made by the Servicer with respect to prior Distribution Dates which
have not been reimbursed.
"Purchase Amount" means the amount, as of the close of
business on the last day of a Collection Period, required to prepay in
full the respective Receivable under the terms thereof including
interest at the APR to the end of the month of purchase.
"Purchased Receivable" means a Receivable purchased as of
the close of business on the last day of a Collection Period by the
Servicer or repurchased by the Seller pursuant to the Sale and
Servicing Agreement.
"Weighted Average APR" means, with respect to any Simple
Interest Receivables or any Precomputed Receivables during any
Collection Period, the weighted average of the APR of such Receivables
(excluding Non-Advance Receivables), weighted based on the Principal
Balance of each such Receivable as of the first day of such Collection
Period.
Servicing Compensation and Payment of Expenses
The Servicing Fee Rate shall be 1.0% per annum, calculated on
the basis of a 360-day year consisting of twelve 30-day months. The
Servicing Fee, with respect to any Distribution Date, will be an amount
equal to the product of (a) one-twelfth of the Servicing Fee Rate,
multiplied by (b) the Pool Balance as of the first day of the preceding
Collection Period. The Servicing Fee in respect of a Collection Period
(together with any portion of the Servicing Fee that remains unpaid from
prior Distribution Dates) may be paid at the beginning of such Collection
Period out of collections for such Collection Period. See "Description of
the Transfer and Servicing Agreements--Servicing Compensation and Payment of
Expenses" in the Prospectus.
The Servicer will also collect and retain any late fees,
extension fees, prepayment charges and certain non-sufficient funds charges
and other administrative fees or similar charges (the "Supplemental
Servicing Fee") allowed by applicable law with respect to the Receivables.
Payments by or on behalf of Obligors will be allocated to scheduled
payments and late fees and other charges in accordance with the Servicer's
normal practices and procedures. See "Description of the Transfer and
Servicing Agreements--Servicing Compensation and Payment of Expenses" in
the Prospectus.
Distributions
Deposits to Collection Account. On or before each Distribution
Date, the Servicer will cause all collections and other amounts
constituting the Total Distribution Amount to be deposited into the
Collection Account.
"Available Interest" means, with respect to any
Distribution Date, the excess of (a) the sum of (i) Interest
Collections for such Distribution Date and (ii) all Advances made by
Servicer with respect to such Distribution Date, over (b) the amount
of Outstanding Advances to be reimbursed on or with respect to such
Distribution Date.
"Available Principal" for a Distribution Date means the sum
of the following amounts with respect to the preceding Collection
Period: (a) that portion of all Collections received during such
Collection Period and allocable to principal in accordance with
Servicer's customary servicing procedures; and (b) to the extent
attributable to principal, the Purchase Amount received with respect
to each Receivable repurchased by Seller or purchased by Servicer
under an obligation which arose during the related Collection Period.
"Available Principal" on any Distribution Date shall exclude all
payments and proceeds of any Receivables the Purchase Amount of which
has been distributed on a prior Distribution Date.
"Certificate Balance" equals, initially, $___________ and,
thereafter, equals the initial Certificate Balance, reduced by all
amounts allocable to principal previously distributed to
Certificateholders.
"Certificateholders' Interest Carryover Shortfall" means,
with respect to any Distribution Date, the excess of the
Certificateholders' Monthly Interest Distributable Amount for the
preceding Distribution Date and any outstanding Certificateholders'
Interest Carryover Shortfall on such preceding Distribution Date, over
the amount in respect of interest that is actually deposited in the
Certificate Distribution Account on such preceding Distribution Date,
plus interest on such excess, to the extent permitted by law, at the
Certificate Rate from and including such preceding Distribution Date
to but excluding the current Distribution Date.
"Certificateholders' Interest Distributable Amount" means,
for any Distribution Date, the sum of the Certificateholders' Monthly
Interest Distributable Amount for such Distribution Date and the
Certificateholders' Interest Carryover Shortfall for such Distribution
Date.
"Certificateholders' Monthly Interest Distributable Amount"
means, for any Distribution Date, the amount of interest accrued on
the Certificates at the Certificate Rate during the related Interest
Period (calculated on the basis of a 360-day year and twelve 30-day
months).
"Certificateholders' Percentage" means 100% minus the
Noteholders' Percentage.
"Certificateholders' Principal Distributable Amount" means,
for any Distribution Date, the sum of the Certificateholders' Monthly
Principal Distributable Amount for such Distribution Date and the
Certificateholders' Principal Carryover Shortfall as of the close of
the preceding Distribution Date; provided that the Certificateholders'
Principal Distributable Amount shall not exceed the Certificate
Balance. In addition, on the Certificate Final Scheduled Distribution
Date, the principal required to be distributed to Certificateholders
will include the lesser of (a) any payments of principal due and
remaining unpaid on each Receivable owned by Issuer as of ___________
or (b) the portion of the amount that is necessary (after giving
effect to the other amounts to be deposited in the Certificate
Distribution Account on such Distribution Date and allocable to
principal) to reduce the Certificate Balance to zero, in either case
after giving effect to any required distribution of the Noteholders'
Principal Distributable Amount to the Note Distribution Account. In
addition, on any Distribution Date on which, after giving effect to
all distributions to Servicer, the Noteholders and the
Certificateholders on such Distribution Date, (i) the outstanding
principal balance of the Notes is zero and (ii) the amount on deposit
in the Reserve Account is equal to or greater than the Certificate
Balance, Certificateholders' Principal Distributable Amount shall
include an amount equal to such Certificate Balance.
"Certificateholder's Monthly Principal Distributable Amount"
means, for any Distribution Date, the Certificateholders' Percentage
of the Principal Distribution Amount or, for any Distribution Date on
or after the Distribution Date on which the outstanding principal
balance of the Class A-2 Notes is reduced to zero, 100% of the
Principal Distribution Amount (less any amount required on the first
such Distribution Date to reduce the outstanding principal balance of
the Class A-2 Notes to zero, which shall be deposited into the Note
Distribution Account).
"Certificateholders' Principal Carryover Shortfall" means,
as of the close of any Distribution Date, the excess of the
Certificateholders' Monthly Principal Distributable Amount and any
outstanding Certificateholders' Principal Carryover Shortfall from the
preceding Distribution Date, over the amount in respect of principal
that is actually deposited in the Certificate Distribution Account.
"Principal Distribution Amount" means, for any Distribution
Date, the sum of (a) the Available Principal for such Distribution
Date, and (b) the amount of Realized Losses for the related Collection
Period.
"Realized Losses" means, for any Collection Period, the
aggregate principal balances of any Receivables that became Defaulted
Receivables during such Collection Period.
"Total Distribution Amount" means, for each Distribution Date,
the sum of (a) the Available Interest, (b) the Available Principal and
(c) the Reserve Account Transfer Amount, in each case in respect of
such Distribution Date.
Deposits to the Distribution Accounts. On each Distribution Date,
after making the reimbursements to Servicer of Outstanding Advances,
Servicer shall instruct Indenture Trustee or, in the event that the
Collection Account is maintained with an institution other than Indenture
Trustee, instruct and cause such institution (based on the information
contained in the Servicer's Report delivered on the related Determination
Date) to make, and Indenture Trustee or such other institution shall make,
the following deposits and distributions from the Collection Account for
deposit in the applicable account by 11:00 a.m. (New York time), to the
extent of the Total Distribution Amount, in the following order of
priority:
(a) to Servicer, from the Total Distribution Amount, the
Servicing Fee for the related Collection Period and all accrued and
unpaid Servicing Fees for prior Collection Periods;
(b) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clause (a), the
Noteholders' Interest Distributable Amount;
(c) to Owner Trustee for deposit in the Certificate
Distribution Account, from the Total Distribution Amount remaining
after the application of clause (a) and clause (b), the
Certificateholders' Interest Distributable Amount;
(d) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (a)
through (c), the Noteholders' Principal Distributable Amount;
(e) to Owner Trustee for deposit in the Certificate
Distribution Account, from the Total Distribution Amount remaining
after the application of clauses (a) through (d), the
Certificateholders' Principal Distributable Amount;
(f) to the Reserve Account until the amount on deposit
in the Reserve Account equals the Specified Reserve Account Balance;
and
(g) to Seller, any amounts remaining.
On each Determination Date (other than the first Determination Date),
the Servicer will provide the Owner Trustee and the Indenture Trustee with
certain information with respect to the Collection Period related to the
prior Distribution Date, including the amount of aggregate collections on
the Receivables, the aggregate amount of Receivables which were written off
and the aggregate Purchase Amount of Receivables to be repurchased by the
Seller or to be purchased by the Servicer.
For purposes hereof, the following terms shall have the following
meanings:
"Noteholders' Distributable Amount" means, with respect
to any Distribution Date, the sum of the Noteholders' Principal
Distributable Amount and the Noteholders' Interest Distributable
Amount.
"Noteholders' Interest Carryover Shortfall" means, with
respect to any Distribution Date, the excess of the Noteholders'
Monthly Interest Distributable Amount for the preceding Distribution
Date and any outstanding Noteholders' Interest Carryover Shortfall on
such preceding Distribution Date, over the amount in respect of
interest that is actually deposited in the Note Distribution Account
on such preceding Distribution Date, plus interest on the amount of
interest due but not paid to Noteholders on the preceding Distribution
Date, to the extent permitted by law, at the respective Interest Rates
borne by each class of Notes from such preceding Distribution Date
through the current Distribution Date.
"Noteholders' Interest Distributable Amount" means, for any
Distribution Date, the sum of the Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and the Noteholders'
Interest Carryover Shortfall for such Distribution Date.
"Noteholders' Monthly Interest Distributable Amount" means,
for any Distribution Date and for each class of Notes, the amount of
interest accrued on such class at its respective Interest Rate during
the related Interest Period (calculated on the basis of a 360-day year
and twelve 30-day months).
"Noteholders' Monthly Principal Distributable Amount" means,
for any Distribution Date, the Noteholders' Percentage of the
Principal Distribution Amount.
"Noteholders' Percentage" means 100% until the point in time
at which Class A-1 Notes and Class A-2 Notes have been paid in full
and zero thereafter.
"Noteholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Noteholders' Monthly
Principal Distributable Amount and any outstanding Noteholders'
Principal Carryover Shortfall from the preceding Distribution Date
over the amount in respect of principal that is actually deposited in
the Note Distribution Account.
"Noteholders' Principal Distributable Amount" means, for any
Distribution Date, the sum of the Noteholder's Monthly Principal
Distributable Amount for such Distribution Date and the Noteholders'
Principal Carryover Shortfall as of the close of the preceding
Distribution Date; provided that the Noteholders' Principal
Distributable Amount shall not exceed the outstanding principal
balance of the Notes. In addition, on the Final Scheduled Distribution
Date of each class of Notes, the principal required to be deposited in
the Note Distribution Account will include the amount necessary (after
giving effect to the other amounts to be deposited in the Note
Distribution Account on such Distribution Date and allocable to
principal) to reduce the outstanding amount of such class of Notes to
zero.
On each Distribution Date, all amounts on deposit in the Note
Distribution Account (other than investment earnings) will be generally
paid in the following order of priority:
(a) to the applicable Noteholders, accrued and unpaid
interest on the outstanding principal balance of the applicable class
of Notes at the applicable Interest Rate;
(b) the Noteholders' Principal Distributable Amount in the
following order of priority:
(i) to the Holders of the Class A-1 Notes in
reduction of principal until the principal balance of the
Class A-1 Notes has been reduced to zero; and
(ii) to the Holders of the Class A-2 Notes in
reduction of principal until the principal balance of the
Class A-2 Notes has been reduced to zero.
On each Distribution Date, all amounts on deposit in the Certificate
Distribution Account will be distributed to the Certificateholders in the
following priority:
(a) first, to the Certificateholders, on a pro rata basis,
an amount equal to the Certificateholders' Interest Distributable
Amount; and
(b) second, to the Certificateholders, on a pro rata basis,
an amount equal to the Certificateholders' Principal Distributable
Amount.
Subordination of Certificateholders
The rights of the Certificateholders to receive distributions with
respect to the Receivables generally will be subordinated to the rights of
the Noteholders in the event of defaults and delinquencies on the
Receivables as provided in the Sale and Servicing Agreement. The
protection afforded to the Noteholders through subordination will be
effected both by the preferential right of the Noteholders to receive
current distributions with respect to the Receivables and by the
establishment of the Reserve Account. If on any Distribution Date the
entire Noteholders' Interest Distributable Amount for such Distribution
Date (after giving effect to any amounts withdrawn from the Reserve
Account) is not deposited in the Note Distribution Account, the
Certificateholders will not receive any distributions.
The subordination of the Certificates and the Reserve Account are
intended to enhance the likelihood of receipt by Noteholders of the full
amount of principal and interest due them and to decrease the likelihood
that the Noteholders will experience losses. In addition, the Reserve
Account is intended to enhance the likelihood of receipt by
Certificateholders of the full amount of principal and interest due them
and to decrease the likelihood that the Certificateholders will experience
losses. However, in certain circumstances, the Reserve Account could be
depleted. If the amount required to be withdrawn from the Reserve Account
to cover shortfalls in collections on the Receivables exceeds the amount of
available cash in the Reserve Account, Noteholders or Certificateholders
could incur losses or a temporary shortfall in the amounts distributed to
the Noteholders or the Certificateholders could result, which could, in
turn, increase the average life of the Notes or the Certificates.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Information regarding certain legal aspects of the Receivables is set
forth under "Certain Legal Aspects of the Receivables" in the Prospectus.
LEGAL INVESTMENT
The Class A-1 Notes will be eligible for purchase by money market funds
under paragraph (a)(5) of Rule 2a-7 under the Investment Company Act of
1940, as amended.
ERISA CONSIDERATIONS
The Notes
The Notes may be purchased by an employee benefit plan or an
individual retirement account (a "Plan") subject to ERISA or Section 4975
of the Code. A fiduciary of a Plan must determine that the purchase of a
Note is consistent with its fiduciary duties under ERISA and does not
result in the assets of the Trust being deemed to constitute plan assets or
in a nonexempt prohibited transaction as defined in Section 406 of ERISA or
Section 4975 of the Code. For additional information regarding the likely
treatment of the Notes as debt under ERISA, see "ERISA Considerations" in
the Prospectus.
However, without regard to whether the Notes are treated as an
equity interest for such purposes, the acquisition or holding of Notes by
or on behalf of a Plan could be considered to give rise to a prohibited
transaction if an Affiliate, the Seller, the Trust, the Servicer, the
Indenture Trustee or the Owner Trustee is or becomes a party in interest
under ERISA or disqualified person under the Code with respect to such
Plan. Certain exemptions from the prohibited transaction rules could be
applicable to the purchase and holding of Notes by a Plan depending on the
type and circumstances of the plan fiduciary making the decision to acquire
such Notes. Included among these exemptions, each of which contains
several conditions which must be satisfied before the exemption applies,
are: Prohibited Transaction Class Exemption ("PTCE") 95-60, regarding
investments by insurance company general accounts, PTCE 91-38, regarding
investments by bank collective investment funds; PTCE 90-1, regarding
investments by insurance company separate accounts, and PTCE 84-14,
regarding transactions effected by "qualified professional asset managers".
By its acceptance of a Note, each Noteholder shall be deemed to have
represented and warranted that its purchase and holding of the Note will
not result in a nonexempt prohibited transaction under Section 406(a) of
ERISA or Section 4975 of the Code.
The Certificates
The Certificates may not be acquired (a) with the assets of an
employee benefit plan (as defined in Section 3(3) of ERISA) that is subject
to the provisions of Title I of ERISA, (b) by a plan described in Section
4975(e) (1) of the Code or (c) by any entity whose underlying assets
include plan assets by reason of a plan's investment in the entity or which
uses plan assets to acquire Certificates. By its acceptance of a
Certificate, each Certificateholder will be deemed to have represented and
warranted that it is not subject to the foregoing limitation. In this
regard, purchasers that are insurance companies should consult with their
counsel with respect to the United States Supreme Court case interpreting
the fiduciary responsibility rules of ERISA, John Hancock Mutual Life
Insurance Co. v. Harris Trust and Savings Bank (decided December 13, 1993).
In John Hancock, the Supreme Court ruled that assets held in an insurance
company's general account may be deemed to be "plan assets" for ERISA
purposes under certain circumstances. Prospective purchasers should
determine whether the decision affects their ability to make purchases of
the Certificates. For additional information regarding treatment of the
Certificates under ERISA, see "ERISA Considerations" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting
agreement, the Seller has agreed to cause the Trust to sell to each of the
underwriters listed below (each, an "Underwriter"), and each of the
Underwriters has agreed to purchase, the principal amount of the Securities
set forth opposite its name below. Under the terms and conditions of the
Underwriting Agreement, each of the Underwriters is obligated to take and
pay for all of the Securities if any are taken.
Principal Amount of Principal Amount
Class A-1 of Class A-2 Principal Amount
Asset-Backed Asset-Backed of Asset-Backed
Notes Notes Certificates
------------------- ---------------- ----------------
_________________ $__________________ $_________________ $_________________
_________________ __________________ _________________ _________________
_________________ __________________ _________________ _________________
Total: $ $ $
================== ================= =================
The Seller has been advised by the Underwriters that they propose
initially to offer the Securities to the public at the prices set forth
herein, and to certain dealers at such prices less the initial concession
not in excess of ____% per Class A-1 Note; _____% per Class A-2 Note; and
_____% per Certificate. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of .__% of the principal amount of the
Securities to certain other dealers. After the initial public offering, the
public offering price and such concessions may be changed.
The Seller does not intend to apply for listing of the Notes or the
Certificates on a national securities exchange, but has been advised by the
Underwriters that they intend to make a market in the Notes and
Certificates. The Underwriters are not obligated, however, to make a
market in the Notes and the Certificates and may discontinue market making
at any time without notice. No assurance can be given as to the liquidity
of the trading market for the Notes or the Certificates.
The Seller has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
In the ordinary course of their respective businesses, each
Underwriter and its affiliates have engaged and may in the future engage in
commercial banking and investment banking transactions with the Seller.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus,
certain legal matters relating to the Notes and the Certificates and
certain federal income tax and other matters will be passed upon for the
Trust by _________, and by Mayer, Brown & Platt, Chicago, Illinois. Mayer,
Brown & Platt may from time to time render legal services to the Seller,
the Servicer and its affiliates. Certain legal matters will be passed upon
for the Underwriters by Mayer, Brown & Platt, Chicago, Illinois.
<PAGE>
INDEX OF DEFINED TERMS
Page
-----
ABS..................................................................S-19
ABS Table............................................................S-19
Acquired Receivables..................................................S-4
Advance...............................................................S-7
Aggregate Net Losses.................................................S-25
APR..................................................................S-26
Available Reserve Amount.............................................S-24
Average Delinquency Ratio............................................S-25
Average Net Loss Ratio...............................................S-25
Basic Documents......................................................S-11
Business Day..........................................................S-5
Certificate Balance..................................................S-28
Certificate Final Scheduled Distribution Date.........................S-7
Certificate Rate......................................................S-7
Certificateholder's Monthly Principal Distributable Amount...........S-29
Certificateholders....................................................S-6
Certificateholders' Interest Carryover Shortfall.....................S-28
Certificateholders' Interest Distributable Amount....................S-28
Certificateholders' Monthly Interest Distributable Amount............S-28
Certificateholders' Principal Carryover Shortfall....................S-29
Certificateholders' Principal Distributable Amount...................S-28
Certificates..........................................................S-1
Class A-1 Final Scheduled Distribution Date...........................S-5
Class A-1 Interest Rate...............................................S-5
Class A-1 Notes.......................................................S-1
Class A-2 Final Scheduled Distribution Date...........................S-6
Class A-2 Interest Rate...............................................S-5
Class A-2 Notes.......................................................S-1
Closing Date..........................................................S-3
Code..................................................................S-9
Collection Period.....................................................S-5
Commission............................................................S-2
Cutoff Date...........................................................S-4
Defaulted Receivable.................................................S-26
Delinquency Ratio....................................................S-25
Deposit Date......................................................S-7,S-8
Determination Date...................................................S-22
Direct Loans..........................................................S-4
Distribution Date.....................................................S-5
ERISA.................................................................S-9
Expected Interest....................................................S-26
Final Scheduled Maturity Date.........................................S-4
Financed Vehicles.....................................................S-4
Indenture.............................................................S-3
Indenture Trustee.....................................................S-3
Interest Accrual Period...............................................S-5
Interest Collections.................................................S-27
Interest Period.......................................................S-5
Interest Rates........................................................S-5
Interest Shortfall...................................................S-27
Issuer................................................................S-3
Liquidation Proceeds.................................................S-25
Motor Vehicle Loans...................................................S-4
Net Interest Collections.............................................S-27
Net Loss Ratio.......................................................S-26
Non-Advance Receivables..............................................S-27
Noteholders...........................................................S-5
Noteholders' Distributable Amount....................................S-30
Noteholders' Interest Carryover Shortfall............................S-30
Noteholders' Interest Distributable Amount...........................S-30
Noteholders' Monthly Interest Distributable Amount...................S-30
Noteholders' Monthly Principal Distributable Amount..................S-30
Noteholders' Principal Carryover Shortfall...........................S-30
Noteholders' Principal Distributable Amount..........................S-31
Notes.................................................................S-3
Original Pool Balance.................................................S-6
Originators..........................................................S-27
Outstanding Advances.................................................S-27
Owner Trustee.........................................................S-3
Payment Date..........................................................S-5
Plan.................................................................S-32
Pool Balance..........................................................S-4
Principal Balance.....................................................S-4
Prospectus............................................................S-1
Purchase Amount......................................................S-27
Purchased Receivable.................................................S-27
Rating Agencies......................................................S-10
Realized Losses......................................................S-29
Receivables...........................................................S-1
Receivables Pool.....................................................S-14
Record Date...........................................................S-5
Reserve Account.......................................................S-8
Reserve Account Deposit...............................................S-8
Sale and Servicing Agreement..........................................S-4
Securities............................................................S-3
Securityholders.......................................................S-6
Seller................................................................S-3
Servicer..............................................................S-2
Specified Reserve Account Balance....................................S-25
Supplemental Servicing Fee...........................................S-28
Total Distribution Amount............................................S-29
Transfer and Servicing Agreements....................................S-24
Trust.................................................................S-3
Trust Agreement.......................................................S-3
Underwriter..........................................................S-33
Weighted Average APR.................................................S-27
<PAGE>
==================================== ====================================
No dealer, salesman or other person
has been authorized to give any
information or to make any
representation not contained in this
Prospectus Supplement or the Prospectus
and, if given or made, such information
or representation must not be relied
upon as having been authorized by the
Seller or the Underwriters. This
Prospectus Supplement and the
Prospectus do not constitute an
offer of any securities other than
those to which they relate or an
offer to sell, or a solicitation of
an offer to buy, to any person in
any jurisdiction where such an offer
or solicitation would be unlawful.
Neither the delivery of this
Prospectus Supplement and the $________________________
Prospectus nor any sale made hereunder (Approximate)
shall, under any circumstances,
create any implication that the
information contained herein is correct
as of any time subsequent to their
respective dates.
___________________________
TABLE OF CONTENTS
NORWEST AUTO
Prospectus Supplement RECEIVABLES CORPORATION
(Seller)
Page
-----
Reports to Securityholders.... S-2
Summary of Terms.............. S-3
Risk Factors.................. S-9
The Trust..................... S-11
The Receivables Pool.......... S-11
The Seller, the Servicer
and Norwest Corporation...... S-15
Weighted Average Life of the
Securities................... S-15
Description of the Notes...... S-17
Description of the Certificates S-18
Description of the Transfer
and Servicing Agreements..... S-19
Certain Legal Aspects of the
Receivables.................. S-26
Legal Investment.............. S-26 $__________________
ERISA Considerations.......... S-26 Class A-1
Underwriting.................. S-27 ___% Money Market
Legal Opinions................ S-27 Asset Backed Notes
Index of Defined Terms........ S-28
Prospectus
Page
Available Information.........
Incorporation of Certain
Documents by Reference...... $_________________
Summary of Terms.............. Class A-2 ____%
Risk Factors.................. Asset Backed Notes
The Trusts....................
The Receivables Pools.........
Weighted Average Life of the
Securities..................
Pool Factors and Trading
Information.................
Use of Proceeds...............
The Seller....................
The Bank and Norwest
Corporation................. $________________
Description of the Notes...... ____%
Description of the Asset Backed Certificates
Certificates................
Certain Information Regarding
the Securities.............
Description of the Transfer
and Servicing Agreements....
Certain Legal Aspects of the
Receivables.................
Federal Income Tax =====================
Consequences................
Certain State Tax PROSPECTUS SUPPLEMENT
Consequences................ ______________, 199__
ERISA Considerations..........
Plan of Distribution.......... =====================
Notice to Canadian Residents..
Legal Opinions................
Index of Defined Terms........
Global Clearance, Settlement
and Documentation
Procedures..................
Until 90 days after the date of this
Prospectus Supplement, all dealers
effecting transactions in the Securities
described in this Prospectus
Supplement, whether or not participating
in this distribution, may be required to
deliver this Prospectus Supplement and
the Prospectus. This is in addition to
the obligation of dealers to deliver
this Prospectus Supplement and the
Prospectus when acting as underwriter
and with respect to their unsold
allotments or subscriptions.
====================================== ===================================
<PAGE>
SUBJECT TO COMPLETION, DATED SEPTEMBER __, 1996
[Owner Trust Supplement]
PRELIMINARY PROSPECTUS SUPPLEMENT
(To Prospectus dated __________, 1996)
[$______________]
Norwest Auto Trust 1996 - A
$______________ Class A-1 ____% Asset Backed Notes
$______________ Class A-2 ____% Asset Backed Notes
$______________ Class A-3 ____% Asset Backed Notes
$______________ Class A-4 ____% Asset Backed Notes
$______________ ____% Asset Backed Certificates
Norwest Auto Receivables Corporation
Seller
Norwest Bank Minnesota, N.A.
Servicer
The Norwest Auto Trust 1996-A (the "Trust") will be governed by a
Trust Agreement, to be dated as of ____________, 1996, between Norwest Auto
Receivables Corporation, as seller (the "Seller") and Wilmington Trust
Company, as Owner Trustee. The Trust will issue $_____________ aggregate
principal amount of Class A-1 ___% Asset Backed Notes (the "Class A-1
Notes"), $____________ aggregate principal amount of Class A-2 ___% Asset
Backed Notes (the "Class A-2 Notes"), $___________ aggregate principal
amount of Class A-3 Asset Backed Notes (the "Class A-3 Notes"), and
$_____________ aggregate principal amount of Class A-4 Asset Backed Notes
(the "Class A-4 Notes" and, together with the Class A-1 Notes, the Class
A-2 Notes and the Class A-3 Notes, the "Notes") pursuant to an Indenture to
be dated as of _____________, 1996, between the Trust and Chase Manhattan
Bank, as Indenture Trustee. The Trust will also issue $______________
aggregate principal amount of ___% Asset Backed Certificates (the
"Certificates" and, together with the Notes, the "Securities").
(continued on following 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 supplement and the related prospectus
shall not constitute an offer to sell or the solicitation of an offer to
buy nor shall there be any sale of these securities in any State in which
such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
<PAGE>
Prospective investors should consider the "Risk Factors" set forth at page S-__
herein and at page ___ in the accompanying Prospectus (the "Prospectus").
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT
BENEFICIAL INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN NORWEST AUTO RECEIVABLES
CORPORATION, NORWEST BANK MINNESOTA, N.A., ANY OTHER
NORWEST BANK, NORWEST CORPORATION OR ANY OF THEIR
AFFILIATES. NEITHER THE SECURITIES NOR THE
RECEIVABLES ARE INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, ANY
OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY,
NORWEST AUTO RECEIVABLES CORPORATION, NORWEST
BANK MINNESOTA, N.A., ANY OTHER NORWEST BANK,
NORWEST INVESTMENT SERVICES, INC., NORWEST
CORPORATION OR ANY OF THEIR AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Price to Underwriting Proceeds to
Public(1) Discounts the Seller(1)(2)
Per Class A-1 Note % % %
Per Class A-2 Note % % %
Per Class A-3 Note % % %
Per Class A-4 Note % % %
Per Certificate % % %
Total $__________ $__________ $_________
_________________
[FN]
(1) Plus accrued interest, if any, from ___________, 1996.
(2) Before deducting expenses, estimated to be $___________.
The Notes and Certificates are offered by the Underwriters when, as
and if issued and accepted by the Underwriters and subject to their right
to reject orders in whole or in part. It is expected that delivery of the
Notes and the Certificates will be made in book-entry form only through the
Same Day Funds Settlement System of The Depository Trust Company, or
through Cedel Bank, societe anonyme or the Euroclear System, on or about
__________, 1996.
September __, 1996
<PAGE>
The Notes will be secured by the assets of the Trust pursuant
to the Indenture. The assets of the Trust will include a pool of
retail installment sale contracts (collectively, the "Receivables"),
payments received thereunder on or after September 1, 1996, security
interests in the motor vehicles financed thereby, rights under Dealer
Agreements, deposit accounts in which collections are held, any proceeds
from claims on insurance policies relating to the Financed Vehicles and the
proceeds of the foregoing. The assets of the Trust will be transferred by
the Seller to the Trust on or prior to the Closing Date. Certain
capitalized terms used herein are defined in the "Index of Terms" on page
___ of this Prospectus Supplement or, to the extent not defined herein,
have the meanings assigned to such terms in the Prospectus. Interest on
all classes of Notes will accrue at the fixed per annum interest rates
specified above. Interest on the Notes will generally be payable on the
15th day of each month (each, a "Distribution Date"), commencing October
15, 1996. Principal of the Notes will be payable on each Distribution Date
to the extent described herein, except that no principal will be paid on
the Class A-2 Notes until the Class A-1 Notes have been paid in full and no
principal will be paid on the Class A-3 Notes until the Class A-2 Notes
have been paid in full and no principal will be paid on the Class A-4 Notes
until the Class A-3 Notes have been paid in full. See "Description of the
Notes--Payments of Interest."
The Certificates will represent fractional undivided interests in the
Trust. Interest at the Certificate Rate will be distributed to the
Certificateholders on each Distribution Date to the extent of available
funds. Principal, to the extent described herein, will be distributed to
the Certificateholders on each Distribution Date commencing with the
Distribution Date on which the Notes were paid in full to the extent of
available funds. See "Description of the Certificates--Distributions of
Principal Payments." Distributions of interest and principal on the
Certificates will be subordinated in priority to payments due on the Notes
as described herein. See "Description of the Transfer and Servicing
Agreements--Subordination of Certificateholders."
The Class A-1 Notes will be payable in full on the __________
Distribution Date, the Class A-2 Notes will be payable in full on the
____________ Distribution Date, the Class A-3 Notes will be payable in full
on the ___________ Distribution Date, and the Class A-4 Notes will be
payable in full on the _____________ Distribution Date. The Final
Scheduled Date with respect to the Certificates will be the _________
Distribution Date. However, payment in full of a class of Notes or of the
Certificates could occur earlier or later than such dates as described
herein. See "Weighted Average Life of the Securities." The Class A-4
Notes and the Certificates will be subject to prepayment in whole, but not
in part, in the event Norwest Bank Minnesota, N.A., in its capacity as
servicer (in such capacity, the "Servicer"), or the Seller exercises its
option to purchase the Receivables on any Distribution Date when the
aggregate principal balance of the Receivables has declined to 5% or less
of the initial aggregate principal balance of the Receivables purchased by
the Trust.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPETE INFORMATION ABOUT
THE OFFERING OF THE NOTES AND THE CERTIFICATES. ADDITIONAL INFORMATION IS
CONTAINED IN THE PROSPECTUS AND PROSPECTIVE INVESTORS ARE URGED TO READ
BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE
NOTES OR THE CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS
RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE
NOTES AND THE CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
There is currently no secondary market for the Securities offered
hereby. Each Underwriter expects, but is not obligated to make a market in
the Notes and Certificates. There can be no assurance that a secondary
market will develop or that it will provide Securityholders with liquidity
of investment or that it will continue for the life of the Securities
offered hereby.
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Notes or Definitive Certificates are
issued, monthly and annual unaudited reports containing information
concerning the Receivables will be prepared by the Servicer and sent on
behalf of the Trust only to Cede & Co., as nominee of the Depository Trust
Company and registered holder of the Notes and the Certificates. See
"Certain Information Regarding the Securities--Book-Entry Registration" and
"--Reports to Securityholders" in the accompanying Prospectus. Such reports
will not constitute financial statements prepared in accordance with
generally accepted accounting principles. The Seller, as originator of the
Trust, will file with the Securities and Exchange Commission (the
"Commission") such periodic reports as are required under the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the
Commission thereunder. In addition, the Commission maintains a public
access site on the Internet through the World Wide Web at which site
reports, information statements and other information, including all
electronic filings, may be viewed. The Internet address of such World Wide
Web site is http://www.sec.gov.
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and
in the Prospectus. Certain capitalized terms used herein are defined
elsewhere in this Prospectus Supplement on the pages indicated in the
"Index of Terms" beginning at page S-13 or, to the extent not defined
herein, have the meanings assigned to such terms in the Prospectus.
Issuer................. Norwest Auto Trust 1996-A (the "Trust" or the
"Issuer"), a Delaware business trust
established pursuant to a trust agreement (as
amended and supplemented, the "Trust
Agreement"), dated as of ________________,
1996 between the Seller and the Owner
Trustee.
Seller................. Norwest Auto Receivables Corporation, a
Delaware corporation (the "Seller"). See
"The Seller."
Servicer............... Norwest Bank Minnesota, N.A., a national
banking association (the "Bank" or in its
capacity as servicer, the "Servicer").
Indenture Trustee...... Chase Manhattan Bank, as trustee under the
Indenture (the "Indenture Trustee").
Owner Trustee.......... Wilmington Trust Company, as trustee under the
Trust Agreement (the "Owner Trustee").
The Notes.............. The Trust will issue four classes of Asset
Backed Notes (the "Notes"), pursuant to an
Indenture to be dated as of _______________,
1996 (as amended and supplemented from time
to time, the "Indenture"), between the Issuer
and the Indenture Trustee, as follows: (a)
Class A-1 __% Asset Backed Notes (the "Class
A-1 Notes") in the aggregate initial
principal amount of $______________; (b)
Class A-2 __% Asset Backed Notes (the "Class
A-2 Notes") in the aggregate initial
principal amount of $_________; (c) Class A-3
__% Asset Backed Notes (the "Class A-3
Notes") in the aggregate initial principal
amount of $____________; and (d) Class A-4
___% Asset Backed Notes (the "Class A-4
Notes") in the aggregate principal amount of
$___________.
The Notes will be secured by the assets of the
Trust pursuant to the Indenture.
The Certificates....... The Trust will issue __% Asset Backed
Certificates (the "Certificates" and,
together with the Notes, the "Securities")
with an aggregate initial Certificate Balance
of $________________. The Certificates will
represent fractional undivided interests in
the Trust and will be issued pursuant to the
Trust Agreement.
The Receivables....... On or prior to __________, 199_ (the "Closing
Date"), the Trust will purchase a pool of
motor vehicle promissory notes and security
agreements and/or retail installment sale
contracts secured by new or used automobiles or
light duty trucks (collectively, the
"Receivables"), including rights to receive
payments received under such Receivables
after the applicable Cutoff Date,
security interests in the vehicles
financed thereby (the "Financed Vehicles"),
rights under Dealer Agreements, rights with
respect to Eligible Deposit Accounts
in which collections are held, any
proceeds from claims on or rebates of
premiums and other amounts relating
to insurance policies with respect to
Financed Vehicles and the proceeds of the
foregoing. The Receivables have an
aggregate principal balance of approximately
$___________ as of ____________, 199_ (the
"Cutoff Date"), and will be purchased by
the Trust from the Seller pursuant to a
Sale and Servicing Agreement to be dated as
of ____________, 199_ (as amended and
supplemented from time to time, the "Sale and
Servicing Agreement"), among the Trust, the
Seller and the Servicer. See "Description of
the Transfer and Servicing Agreements" herein
and in the Prospectus.
The Receivables will generally consist of
retail installment sale contracts
("Motor Vehicle Loans") between an
Obligor and a Dealer. The Receivables will
be transferred by Affiliates to the Seller
for purposes of sale to the Trust.
All the Receivables provide for the allocation
of payments to principal and interest in
accordance with the "simple interest" method.
The Receivables have been selected from Motor
Vehicle Loans owned by the Affiliates based
on the criteria specified in the Sale and
Servicing Agreement and described herein and
in the Prospectus. See "The Receivables
Pool" herein and "The Receivables Pools" in
the Prospectus. No Receivable will have a
scheduled maturity that, after giving
prospective effect to any permitted
extensions or deferrals, would be later than
____________ (the "Final Scheduled Maturity
Date"). As of the Cutoff Date, the weighted
average remaining number of scheduled
payments of the Receivables was approximately
_____ and the weighted average original
number of scheduled payments of the
Receivables was approximately ____. As of
the Cutoff Date, approximately ____% of the
aggregate principal balance of the
Receivables represented financing of new
vehicles and the remainder represented
financing of used vehicles.
The "Pool Balance" means, at any time, the sum
of the outstanding Principal Balances of the
Receivables. The "Principal Balance" for any
Receivable, at any time, means the principal
balance of such Receivable at the end of the
preceding Collection Period, after giving
effect to all payments received from Obligors
and other amounts customarily applied by the
Servicer to reduce the Principal Balance of
such Receivables during such Collection
Period.
Terms of the Notes
A. Distribution Dates. Payments of interest and principal on the Notes
will be made on the 15th day of each month
or, if any such day is not a Business Day, on
the next succeeding Business Day (each, a
"Distribution Date"), commencing October 15,
1996. Each reference to a "Payment Date" in
the Prospectus shall refer to a Distribution
Date herein. Payments will be made to
holders of record of the Notes (the
"Noteholders") as of the day immediately
preceding such Distribution Date or, if
Definitive Notes are issued, as of the last
day of the preceding month (a "Record Date").
A "Business Day" is a day other than a
Saturday, a Sunday and that in New York City
and in the city in which the corporate trust
office of the Trustee is located is neither a
legal holiday nor a day on which banking
institutions are authorized by law,
regulation or executive order to be closed.
B. Interest Rates..... The Class A-1 Notes will bear interest at the
rate of __% per annum (the "Class A-1
Interest Rate"); the Class A-2 Notes will
bear interest at the rate of __% per annum
(the "Class A-2 Interest Rate"), the Class
A-3 Notes will bear interest at the rate of
__% per annum (the "Class A-3 Interest Rate")
and the Class A-4 Notes will bear interest at
the rate of ___% per annum (the "Class A-4
Interest Rate"). The Class A-1 Interest
Rate, the Class A-2 Interest Rate, the Class
A-3 Interest Rate and the Class A-4 Interest
Rate are referred to herein collectively as
"Interest Rates".
C. Interest........... On each Distribution Date, the Indenture
Trustee will distribute pro rata to the
Noteholders of each class of Notes, accrued
interest at the applicable Interest Rate on
the outstanding principal amount of the Notes
of each class generally to the extent of
funds available following reimbursement of
Outstanding Advances and payment of the
Servicing Fee from the Total Distribution
Amount. Interest on the outstanding
principal amount of the Notes of each class
will accrue at the applicable Interest Rate
from and including the Closing Date (in the
case of the first Distribution Date) and
thereafter from and including the preceding
Distribution Date to but excluding the
current Distribution Date (each an "Interest
Period"). With respect to any Distribution
Date, interest on the Class A-1 Notes will be
calculated on the basis of a 360-day year
based upon the actual number of days elapsed
during the related Interest Period and
interest on the Class A-2 Notes, Class A-3
Notes and Class A-4 Notes will be calculated
on the basis of a 360-day year consisting of
twelve 30-day months. See "Description of
the Notes--Payments of Interest."
D. Principal.......... Principal of the Notes will be payable on each
Distribution Date in an amount equal to the
Noteholders' Principal Distributable Amount
for the calendar month (the "Collection
Period") preceding such Distribution Date (in
the case of the first Distribution Date, the
period from and including the Cutoff Date to
but excluding October 1, 1996. "Noteholders'
Principal Distributable Amount" generally
means, for any Distribution Date, the sum of
the Noteholder's Monthly Principal
Distributable Amount for such Distribution
Date and the Noteholders' Principal Carryover
Shortfall as of the close of the preceding
Distribution Date. "Noteholders' Monthly
Principal Distributable Amount" means, for
any Distribution Date, the Noteholders'
Percentage of the sum of (a) that portion of
all collections (other than Liquidation
Proceeds) received during the related
Collection Period and allocable to principal
in accordance with the Servicer's customary
servicing procedures, (b) to the extent
attributable to principal, the Purchase
Amount received with respect to each
Receivable repurchased by Seller or purchased
by Servicer under an obligation which arose
during the related Collection Period, and (c)
the amount of Realized Losses for the related
Collection Period. "Noteholders' Principal
Carryover Shortfall" means, as of the close
of any Distribution Date, the excess of the
Noteholders' Monthly Principal Distributable
Amount and any outstanding Noteholders'
Principal Carryover Shortfall from the
preceding Distribution Date over the amount
in respect of principal that is actually
deposited in the Note Distribution Account
for such Distribution Date. "Noteholders'
Percentage" means 100% until the point in
time at which the Class A-1 Notes, Class A-2
Notes, Class A-3 Notes and Class A-4 Notes
have been paid in full and zero thereafter.
No principal payments will be made on the Class
A-2 Notes until the Class A-1 Notes have been
paid in full, no principal payments will be
made on the Class A-3 Notes until the Class
A-2 Notes have been paid in full and no
principal payments will be made on the Class
A-4 Notes until the Class A-3 Notes have been
paid in full.
The outstanding principal amount of the Class
A-1 Notes, to the extent not previously paid,
will be payable on the _____________, 199_
Distribution Date (the "Class A-1 Final
Scheduled Distribution Date"); the
outstanding principal amount of the Class A-2
Notes, to the extent not previously paid,
will be payable on the ____________, 199_
Distribution Date (the "Class A-2 Final
Scheduled Distribution Date"), the
outstanding principal amount of the Class A-3
Notes, to the extent not previously paid,
will be payable on the ____________, 199_
Distribution Date (the "Class A-3 Final
Scheduled Distribution Date") and the
outstanding principal amount of the Class A-4
Notes, to the extent not previously paid,
will be payable on the __________, _____
Distribution Date (the "Class A-4 Final
Distribution Date").
E. Optional Redemption After the Class A-3 Notes have been paid in
full, the Class A-4 Notes will be redeemed in
whole, but not in part, on any Distribution
Date on which the Seller or Servicer
exercises its option to purchase the
Receivables, which can occur on any
Distribution Date on which the Pool Balance
has declined to 5% or less of the Original
Pool Balance, at a redemption price equal to
the unpaid principal amount of the Class A-4
Notes plus accrued and unpaid interest
thereon. See "Description of the
Notes--Optional Redemption." The "Original
Pool Balance" will equal the aggregate
principal balance of the Receivables as of
the Cutoff Date.
Terms of the Certificates
A. Distribution Dates. Distributions with respect to the Certificates
will be made on each Distribution Date,
commencing October 15, 1996. Distributions
will be made to holders of record of the
Certificates (the "Certificateholders" and,
together with the Noteholders, the
"Securityholders") as of the related Record
Date (which will be the last day of the
preceding month if Definitive Certificates
are issued).
B. Certificate Rate... ___% per annum (the "Certificate Rate").
C. Interest........... On each Distribution Date, the Trustee will
distribute pro rata to the
Certificateholders, accrued interest at the
Certificate Rate on the outstanding
Certificate Balance generally to the extent
of funds available following reimbursement of
Outstanding Advances, payment of the
Servicing Fee and payment of interest and
principal in respect of the Notes from the
Total Distribution Amount; provided, however,
that upon the occurrence and during the
continuation of an Event of Default which has
resulted in an acceleration of the Notes, all
distributions of any amounts on the
Certificates will be subordinated in priority
to payment in full of principal of and
accrued interest on the Notes. Interest on
the Certificates will be calculated on the
basis of a 360-day year consisting of twelve
30-day months. Interest in respect of a
Distribution Date will accrue from and
including the Closing Date (in the case of
the first Distribution Date) and thereafter
from and including the preceding Distribution
Date to but excluding such Distribution Date.
D. Principal.......... No distributions of principal on the
Certificates will be made until all of the
Notes have been paid in full. On each
Distribution Date commencing on the
Distribution Date on which the Class A-4
Notes are paid in full, principal of the
Certificates will be payable in an amount
generally equal to the Certificateholders'
Principal Distributable Amount for the
Collection Period preceding such Distribution
Date, to the extent of funds available
therefor following payment of the Servicing
Fee, payments of interest and principal, if
any, due in respect of the Notes and the
distribution of interest in respect of the
Certificates. "Certificateholders' Principal
Distributable Amount" generally means, for
any Distribution Date, the sum of the
Certificateholder's Monthly Principal
Distributable Amount for such Distribution
Date and the Certificateholders' Principal
Carryover Shortfall as of the close of the
preceding Distribution Date.
"Certificateholders' Monthly Principal
Distributable Amount" means, for any
Distribution Date, the Certificateholders'
Percentage of the sum of (a) that portion of
all collections (other than Liquidation
Proceeds) received during the related
Collection Period and allocable to principal
in accordance with the Servicer's customary
servicing procedures, (b) to the extent
attributable to principal, the Purchase
Amount received with respect to each
Receivable repurchased by Seller or purchased
by Servicer under an obligation which arose
during the related Collection Period, and (c)
the amount of Realized Losses for the related
Collection Period. "Certificateholders'
Principal Carryover Shortfall" means, as of
the close of any Distribution Date, the
excess of the Certificateholders' Monthly
Principal Distributable Amount and any
outstanding Certificateholders' Principal
Carryover Shortfall from the preceding
Distribution Date over the amount in respect
of principal that is actually deposited in
the Certificate Distribution Account for such
Distribution Date. "Certificateholders'
Percentage" at any time means 100% minus the
Noteholders' Percentage at such time.
The outstanding principal amount, if any, of
the Certificates will be payable in full on
the __________ __, __ Distribution Date (the
"Certificate Final Scheduled Distribution
Date" and, together with the Class A-1 Final
Schedule Distribution Date, the Class A-2
Final Scheduled Distribution Date, the Class
A-3 Final Scheduled Distribution Date, and
the Class A-4 Final Scheduled Distribution
Date, each a "Final Scheduled Distribution
Date").
E. Optional Prepayment If the Seller or the Servicer exercises its
option to purchase the Receivables, which can
occur after the Pool Balance declines to 5%
or less of the Original Pool Balance, the
Certificateholders will receive an amount in
respect of the Certificates equal to the
Certificate Balance together with accrued
interest at the Certificate Rate, and the
Certificates will be retired. See
"Description of the Certificates -- Optional
Prepayment."
Advances............... On or prior to the Business Day preceding each
Distribution Date (the "Deposit Date"), the
Servicer will advance (an "Advance") in an
amount equal to the lesser of (a) the excess,
if any, of (i) the amount of interest that
would be expected to be received on the
Receivables (other than Non-Advance
Receivables) during the related Collection
Period over (ii)(A) the actual interest
collected by the Servicer during such
Collection Period minus (B) unreimbursed
prior Advances and (b) the amount (if any) by
which (i) the sum of (A) any unpaid Servicing
Fees for the related Collection Period and
prior Collection Periods and (B) the amount
of interest distributable to the
Securityholders on the following Distribution
Date exceeds (ii)(A) the actual interest
collected by the Servicer during the related
Collection Period minus (B) unreimbursed
prior Advances, subject to certain
limitations described below. The Servicer
will be entitled to be reimbursed for
outstanding Advances on the Distribution Date
in the following month to the extent of
interest collections for such Distribution
Date and, to the extent such collections are
insufficient, to the extent of funds in the
Reserve Account. The Servicer will be
obligated to make such an Advance except to
the extent that the Servicer reasonably
determines that the Advance is unlikely to be
recoverable from the following month's
collections of interest and the funds in the
Reserve Account. See "Description of the
Transfer and Servicing Agreements--Advances."
Reserve Account........ A reserve account (the "Reserve Account") will
be created with an initial deposit by the
Seller of cash or certain investments having
a value of at least $________ (the "Reserve
Account Deposit"). In addition, on each
Distribution Date, any amounts on deposit in
the Collection Account with respect to the
preceding Collection Period after payments to
the Securityholders and the Servicer have
been made will be deposited into the Reserve
Account until the amount of the Reserve
Account is equal to the Specified Reserve
Account Balance.
On or prior to each Deposit Date, the Indenture
Trustee will withdraw funds from the Reserve
Account, to the extent of the funds therein,
(a) to the extent required to reimburse the
Servicer for Outstanding Advances and (b) to
the extent (i) the sum of the amounts
required to be distributed to Securityholders
and the Servicer on the related Distribution
Date exceeds (ii) the amount on deposit in
the Collection Account with respect to the
preceding Collection Period. If the amount in
the Reserve Account is reduced to zero,
Securityholders will bear the credit and
other risks associated with ownership of the
Receivables, including the risk that the
Trust may not have a perfected security
interest in the Financed Vehicles. See "Risk
Factors" herein and in the Prospectus,
"Description of the Transfer and Servicing
Agreements--Credit and Cash Flow Enhancement;"
and "Certain Legal Aspects of the
Receivables" in the Prospectus.
Prepayment Considerations The weighted average life of the Securities may
be reduced by full or partial prepayments on
the Receivables. The Receivables are
prepayable at any time. Prepayments may also
result from liquidations due to default, the
receipt of monthly installments earlier than
the scheduled due dates for such
installments, the receipt of proceeds from
credit life, disability, theft or physical
damage insurance, repurchases by the Seller
as a result of certain uncured breached of
the warranties made by it in the Sale and
Servicing Agreement with respect to the
Receivables, purchases by the Servicer as a
result of certain uncured breaches of the
covenants made by it in the Sale and
Servicing Agreement with respect to the
Receivables, or the Seller or Servicer
exercising its optional purchase right. The
rate of prepayments on the Receivables may be
influenced by a variety of economic, social,
and other factors, including decreases in
interest rates and the fact that the Obligor
may not sell or transfer the Financed Vehicle
securing a Receivable without the consent of
the applicable Affiliate. No prediction can
be made as to the actual prepayment rates
which will be experienced on the Receivables.
If prepayments were to occur after a decline
in interest rates, investors seeking to
reinvest their funds might be required to
invest at a return lower than the applicable
Interest Rate or the Certificate Rate, as the
case may be. Security Owners will bear all
reinvestment risk resulting from prepayment
of the Receivables. See "Risk Factors--Risk
of Prepayment and Possible Adverse Effect on
Yield" and "Weighted Average Life of the
Securities" in the Prospectus and "Weighted
Average Life of the Securities" herein.
Tax Status............. In the opinion of Mayer, Brown & Platt, for
federal income tax purposes, the Notes will
be characterized as debt, and the Trust will
not be characterized as an association (or a
publicly traded partnership) taxable as a
corporation. In the opinion of _____________
_________, Minnesota tax counsel to the Trust,
the same characterizations would apply for
Minnesota income tax purposes as for federal
income tax purposes. Each Noteholder, by the
acceptance of a Note, will agree to treat the
Notes as indebtedness, and each
Certificateholder, by the acceptance of a
Certificate, will agree to treat the Trust as
a partnership in which the Certificateholders
are partners for federal, state and local
income tax purposes. See "Federal Income Tax
Consequences" and "Certain State Tax
Consequences" in the Prospectus for
additional information concerning the
application of federal and state tax laws to
the Trust and the Securities.
ERISA Considerations... Subject to the considerations discussed under
"ERISA Considerations" herein and in the
Prospectus, the Notes are eligible for
purchase by employee benefit plans.
The Certificates may not be acquired with the
assets of any employee benefit plan subject
to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as
amended (the "Code"), or with the assets of
an individual retirement account. See "ERISA
Considerations" herein and in the Prospectus.
Legal Investment....... The Class A-1 Notes will be eligible securities
for purchase by money market funds under
paragraph (a)(5) of Rule 2a-7 under the
Investment Company Act of 1940, as amended.
Risk Factors........... See "Risk Factors" herein and in the Prospectus
for a discussion of certain factors that
potential investors should consider in
determining whether to invest in the
Securities.
No Listing of Securities The Securities will not be listed on any
national securities exchange or automated
quotation system of a registered securities
association.
Rating of the Notes.... It is a condition to the issuance of the Notes
that the Class A-1 Notes be rated in the
highest short-term rating category and that
the Class A-2 Notes, Class A-3 Notes and
Class A-4 Notes be rated in the highest
long-term rating category by at least two
nationally recognized rating agencies (the
"Rating Agencies"). There can be no
assurance that a rating will not be lowered
or withdrawn by a Rating Agency if
circumstances so warrant. See "Risk
Factors-Ratings of the Securities" herein and
in the Prospectus.
Rating of the Certificates It is a condition to the issuance of the
Certificates that they be rated at least "A"
or its equivalent by at least two nationally
recognized rating agencies. There can be no
assurance that a rating will not be lowered
or withdrawn by a rating agency if
circumstances so warrant. See "Risk
Factors--Ratings of the Securities" in the
Prospectus.
<PAGE>
RISK FACTORS
In addition to the other information contained herein and in the
Prospectus, prospective investors should consider carefully the following
risk factors and the information contained in "Risk Factors" in the
Prospectus.
Geographic Concentration
Economic conditions in states where Obligors reside may affect the
delinquency, loan loss and repossession experience of the Trust with
respect to the Receivables. As of the Cutoff Date, the mailing addresses
of Obligors on Receivables representing approximately 40.65% by principal
balance of the Receivables were located in Minnesota, and the mailing
addresses of Obligors on Receivables representing approximately 14.15% and
13.38% by principal balance of the Receivables were located in Iowa and
Nebraska, respectively. As a result, economic conditions in such states
may have a disproportionate impact on the Trust. In particular, an
economic downturn in one or more of such states could adversely affect the
performance of the Trust as a whole (even if national economic conditions
remain unchanged or improve) as Obligors in such state or states experience
the effects of such a downturn and face greater difficulty in making
payments on their Financed Vehicles. See "The Receivables Pool."
Subordination
Distributions of interest and principal on the Certificates will be
subordinated in priority of payment to interest and principal due on the
Notes. Consequently, the Certificateholders will not receive any
distributions with respect to a Collection Period until the full amount of
interest on and principal of the Notes payable on such Distribution Date
has been deposited in the Note Distribution Account. The
Certificateholders will not receive any distributions of principal until
the Distribution Date on which the Class A-4 Notes were paid in full.
However, upon the occurrence and during the continuation of an Event of
Default which has resulted in an acceleration of the Notes, all
distributions on the Certificates will be subordinated in priority of
payment to payment in full of principal of and accrued interest on the
Notes.
If an Event of Default occurs, the Indenture Trustee or the holders
of a majority of the aggregate principal amount of all the Notes may
declare the principal of the Notes to be immediately due and payable, and
the Indenture Trustee may institute or be required to institute proceedings
to collect amounts due or exercise its remedies as a secured party
(including foreclosure or sale of the Receivables). In the event of a sale
of Receivables by the Indenture Trustee following an Event of Default,
there is no assurance that the proceeds of such sale will be equal to or
greater than the aggregate outstanding principal amount of the Notes and
the Certificate Balance plus accrued interest. Because neither interest
nor principal is distributed to Certificateholders upon sale of the
Receivables following an Event of Default and acceleration of the Notes
under the Indenture until all the Notes have been paid in full, the
interests of Noteholders and the Certificateholders may conflict, and the
exercise by the Indenture Trustee of its right to sell the Receivables or
exercise other remedies under the Indenture and applicable law may cause
the Certificateholders to suffer a loss of all or part of their investment.
See "Description of the Notes-The Indenture--Events of Default; Rights upon
Event of Default" and "Description of the Transfer and Servicing
Agreements--Insolvency Event" in the Prospectus.
In general, the Seller may, and in certain circumstances the
Certificateholders may, direct the Owner Trustee in the administration of
the Trust. However, because the Trust has pledged the property of the
Trust to the Indenture Trustee to secure the payment of the Notes,
including in such pledge certain rights of the Trust under the Sale and
Servicing Agreement, the Indenture Trustee and not the Seller or the
Certificateholders has the power to direct the Trust to take certain
actions in connection with the administration of the property of the Trust
until the Notes have been paid in full and the lien of the Indenture has
been released. In addition, the Seller and Certificateholders are not
allowed to direct the Owner Trustee to take any action which conflicts with
the provisions of any of the Sale and Servicing Agreement, the Trust
Agreement or the Indenture (together the "Basic Documents"). The Indenture
specifically prohibits the Issuer from taking any action which would impair
the Indenture Trustee's security interest in the Trust and generally
requires the Owner Trustee to obtain the consent of the Indenture Trustee
or the holders of a majority of the aggregate principal amount of the Notes
before modifying, amending, supplementing, waiving or terminating any Basic
Document or any provision of any Basic Document. Therefore, until the
Notes have been paid in full, the ability to direct the Trust with respect
to certain actions permitted to be taken by it under the Basic Documents
rests with the Indenture Trustee and the Noteholders instead of the Seller
or the Certificateholders.
If an Event of Servicing Termination were to occur, the holders of a
majority of the outstanding principal amount of the Notes, the Indenture
Trustee acting on behalf of the Noteholders, or the Owner Trustee and not
the Seller or the Certificateholders, would have the right to terminate the
Servicer as the servicer of the Receivables without consideration of the
effect such termination would have on Certificateholders. In addition, the
holders of not less than a majority of the outstanding principal amount of
the Notes would have the right to waive certain Events of Servicing
Termination, without consideration of the effect such waiver would have on
Certificateholders. See "Description of the Transfer and Servicing
Agreements--Events of Servicing Termination" and "--Rights upon Event of
Servicing Termination" in the Prospectus.
Limited Assets
The Trust will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables and the
Reserve Account. Holders of the Notes and the Certificates must rely for
repayment upon payments on the Receivables and, if and to the extent
available, amounts on deposit in the Reserve Account. Similarly, although
funds in the Reserve Account will be available on each Distribution Date to
cover shortfalls in distributions of interest and principal on the Notes
and the Certificates, amounts to be deposited in the Reserve Account are
limited in amount. If the Reserve Account is exhausted, the Trust will
depend solely on current distributions on the Receivables to make payments
on the Notes and the Certificates.
Amounts on deposit in the Reserve Account will be available on any
Distribution Date first to cover shortfalls in reimbursement of Outstanding
Advances and payment of Servicing Fees to the Servicer, then shortfalls in
distributions of interest on the Notes then shortfalls in distributions of
principal on the Notes. After distributions of interest and principal on
the Notes have been made, the remaining amounts on deposit in the Reserve
Account will be available first to cover shortfalls in distributions of
interest on the Certificates and then shortfalls in distributions of
principal on the Certificates. If the Reserve Account is exhausted, the
Trust will depend solely on payments on the Receivables to make
distributions on the Securities, and Securityholders will bear the risk of
delinquency, loan losses and repossessions with respect to the Receivables.
There can be no assurance that the future delinquency, loan loss and
repossession experience of the Trust with respect to the Receivables will
be better or worse than that set forth herein with respect to the portfolio
of Motor Vehicle Loans serviced by the Servicer. Any amounts released from
the Reserve Account to the Seller will not be available to the
Securityholders. See "The Receivables Pool--Pool Composition" and
"Delinquencies and Losses" herein and "The Receivables Pools" in the
Prospectus and "Description of the Transfer and Servicing
Agreements--Subordination of Certificateholders" and "--Distributions"
herein.
Maturity and Prepayment Considerations
The Class A-2 Notes will not receive any principal payments until the
Class A-1 Notes are paid in full, the Class A-3 Notes will not receive any
principal payments until the Class A-2 Notes are paid in full and the Class
A-4 Notes will not receive any principal payments until the Class A-3 Notes
are paid in full. In addition, no principal payments on the Certificates
will be made until the Distribution Date on which the Notes are paid in
full. As the rate of payment of principal of the Notes and the
Certificates depends on the rate of payment (including prepayments) of the
principal balance of the Receivables, final payment of the Notes and the
final distribution in respect of the Certificates could occur significantly
earlier or later than the applicable Final Scheduled Distribution Date. It
is expected that final payment of the Notes and the final distribution in
respect of the Certificates will occur on or prior to the applicable Final
Scheduled Distribution Date. However, if sufficient funds are not
available to pay the Notes or the Certificates in full on or prior to the
applicable Final Scheduled Distribution Date, final payment of the Notes
and the final distribution in respect of the Certificates could occur later
than such date. See "Weighted Average Life of the Securities" herein and in
the Prospectus.
Ratings of the Securities
It is a condition to the issuance of the Notes and of the
Certificates that the Class A-1 Notes be rated in the highest short-term
rating category and that the Class A-2 Notes, Class A-3 Notes and the Class
A-4 Notes be rated in the highest long-term rating category, and that the
Certificates be rated at least "A" or its equivalent, by at least two
nationally recognized rating agencies. A rating is not a recommendation to
purchase, hold or sell Securities, inasmuch as such rating does not comment
as to market price or suitability for a particular investor. The ratings
of the Securities address the likelihood of the payment of principal and
interest on the Securities pursuant to their terms. There can be no
assurance that a rating will remain for any given period of time or that a
rating will not be lowered or withdrawn entirely by a Rating Agency if in
its judgment circumstances in the future so warrant.
THE TRUST
General
The Issuer, Norwest Auto Trust 1996-A, is a business trust formed
under the laws of the State of Delaware pursuant to the Trust Agreement for
the transactions described in this Prospectus Supplement. After its
formation, the Trust will not engage in any activity other than (a)
acquiring, holding and managing the Receivables and the other assets of the
Trust and proceeds therefrom, (b) from time to time prior to the Closing
Date, issuing indebtedness or other securities to finance its purchase of
the Receivables and such other assets and, on and after the Closing Date,
issuing the Notes and the Certificates to finance such assets, (c) making
payments on the indebtedness and other securities and the Notes and the
Certificates issued by it, and (d) engaging in other activities that are
necessary, suitable or convenient to accomplish the foregoing or are
incidental thereto or connected therewith.
At the time the Notes and Certificates are issued, the Trust will be
capitalized with equity in an amount equal to the Certificate Balance of
$__________, excluding amounts deposited in the Reserve Account. On the
Closing Date, Certificates with an original principal balance of
$______________ will be issued to the Seller, and the remaining equity
interest will be sold to third party investors unaffiliated with the
Seller, the Servicer or their affiliates. The equity of the Trust,
together with the net proceeds from the sale of the Notes, will be used by
the Trust to purchase the Receivables from the Seller pursuant to the Sale
and Servicing Agreement or to repayment of any related Warehouse Financing.
See "Risk Factors--Seller Insolvency--Related Risks" and "The Seller" in the
Prospectus.
If the protection provided to the investment of the Securityholders
by the Reserve Account is insufficient, the Trust will look only to the
Obligors on the Receivables and the proceeds from the repossession and sale
of Financed Vehicles which secure defaulted Receivables. In such event,
certain factors, such as the Trust's not having first priority perfected
security interests in some of the Financed Vehicles, may affect the Trust's
ability to realize on the collateral securing the Receivables, and thus may
reduce the proceeds to be distributed to Securityholders with respect to
the Securities. See "Risk Factors--Limited Assets" and "Description of the
Transfer and Servicing Agreements--Distributions" and "--Reserve Account" and
"Certain Legal Aspects of the Receivables" in the Prospectus.
The Trust's principal offices are in Delaware, in care of Wilmington
Trust Company, as Owner Trustee, at the address listed below under "--The
Owner Trustee."
Capitalization of the Trust
The following table illustrates the capitalization of the Trust as of
the Closing Date, as if the issuance and sale of the Notes and the
Certificates have taken place on such date:
Class A-1 __% Asset Backed Notes..... $__________
Class A-2 __% Asset Backed Notes..... __________
Class A-3 __% Asset Backed Notes..... __________
Class A-4 __% Asset Backed Notes..... __________
__% Asset Backed Certificates........ __________
Total................................ $
==========
The Owner Trustee
Wilmington Trust Company is the Owner Trustee under the Trust
Agreement. Wilmington Trust Company is a Delaware banking corporation and
its principal offices where information can be obtained relating to the
Trust and the Certificates are located at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware, 19890. The Seller and its affiliates
may maintain normal commercial banking relations with the Owner Trustee and
its affiliates.
<PAGE>
THE RECEIVABLES POOL
The pool of Receivables (the "Receivables Pool") will consist of
Receivables purchased as of the Cutoff Date. The Receivables have been
selected from the portfolio of each Affiliate for inclusion in the
Receivables Pool by several criteria, some of which are set forth in the
Prospectus under "The Receivables Pool," as well as the requirement that
each Receivable (a) has an outstanding principal balance of at least
$500.00, (b) as of the Cutoff Date, was not more than 30 days past due, (c)
has a remaining number of scheduled payments of not more than 72, (d) has
an original scheduled number of payments of not more than 72, (e) has an
APR of not less than 7.0% and not more than 21.99%; and (f) is a fixed
rate, Simple Interest Receivable. No selection procedures believed by the
Seller to be adverse to the Securityholders were used in selecting the
Receivables.
Pool Composition
Set forth in the following tables is information concerning the
composition, distribution by annual percentage rate, distribution by
remaining principal, distribution by remaining number of scheduled
payments, the geographic distribution and distribution by new or used motor
vehicles of the Receivables as of the Cutoff Date.
Composition of the Receivables
Weighted Average APR............................... 9.792%
Range of APRs...................................... 7.00% to 21.99%
Aggregate Principal Balance........................ $1,118,988,159.59
Number of Receivables.............................. 127,371
Weighted Average of Remaining Number of Scheduled
Payments......................................... 41.68
Range of Remaining Number of Scheduled Payments.... 13 to 72
Weighted Average Original Number of Scheduled Payments 56.07
Range of Original Number of Scheduled Payments..... 14 to 72
Average Remaining Principal Balance................ $8,785.27
Range of Remaining Principal Balances............. $500.12 to $58,691.04
Average Original Amount Financed................... $12,106.06
Range of Original Amounts Financed................. $950.00 to $77,796.00
<PAGE>
<TABLE>
<CAPTION>
Distribution by Annual Percentage Rate of the Receivables
Number of Aggregate % of Pool
APR Range Receivables Principal Balance Balance(1)
--------- ----------- ----------------- -----------
<S> <C> <C> <C>
7.00 to 7.99 15,647 $ 119,890,992.67 10.71
8.00 to 8.99 28,087 257,107,457.71 22.98
9.00 to 9.99 34,080 340,926,614.53 30.47
10.00 to 10.99 24,265 221,863,925.87 19.83
11.00 to 11.99 12,581 101,142,177.50 9.04
12.00 to 12.99 7,978 53,862,268.88 4.81
13.00 to 13.99 2,371 13,620,336.59 1.22
14.00 to 14.99 1,213 5,806,335.73 0.52
15.00 to 21.99 1,149 4,768,050.11 0.43
------- ------------------ -------
Total 127,371 $1,118,988,159.59 100.00
__________________________
<FN>
(1) Percentages may not add to 100% because of rounding.
<CAPTION>
Distribution by Remaining Principal Balance
of the Receivables
Range of Remaining Number of Aggregate % of Pool
Principal Balance Receivables Principal Balance Balance(1)
- ------------------ ----------- ----------------- ----------
<S> <C> <C> <C>
$ 500.00 to 2,000.00 2,618 $ 4,170,263.62 0.37
2,000.01 to 4,000.00 16,625 51,918,667.78 4.64
4,000.01 to 6,000.00 23,198 116,314,827.78 10.39
6,000.01 to 8,000.00 22,500 157,195,384.19 14.05
8,000.01 to 10,000.00 19,202 172,103,730.32 15.38
10,000.01 to 12,000.00 14,978 163,905,325.47 14.65
12,000.01 to 14,000.00 10,472 135,524,107.93 12.11
14,000.01 to 16,000.00 7,015 104,679,949.79 9.35
16,000.01 to 18,000.00 4,313 72,885,838.84 6.51
18,000.01 to 20,000.00 2,555 48,356,111.49 4.32
20,000.01 to 40,000.00 3,879 91,188,521.35 8.15
40,000.01 to 58,691.04 16 745,431.03 0.07
------- ---------------- -------
Total 127,371 $1,118,988,159.59 100.00
======= ================ =======
____________________
<FN>
(1) Percentages may not add to 100% because of rounding.
<CAPTION>
Distribution by Remaining Number of Payments on the Receivables
Range of Remaining Number of Aggregate % of Pool
Number of Payments Receivables Principal Balance Balance(1)
- ------------------ ----------- ----------------- ----------
<S> <C> <C> <C>
12 to 23 24,414 $ 101,194,184.99 9.04
24 to 35 37,954 259,294,333.04 23.17
36 to 47 37,996 376,294,681.17 33.63
48 to 59 24,319 330,553,481.58 29.54
60 to 71 2,665 51,099,455.93 4.57
72 23 552,022.88 0.05
------- ---------------- ------
Total 127,371 $1,118,988,159.59 100.00
======= ================ ======
<FN>
(1) Percentages may not add to 100.00% because of rounding.
<PAGE>
<CAPTION>
Geographic Distribution of the Receivables Pool
Number of Aggregate % of Pool
State Receivables Principal Balance Balance(1)
----- ----------- ----------------- ----------
<S> <C> <C> <C>
Minnesota 49,037 $454,891,884.04 40.65
Iowa 18,484 158,284,293.49 14.15
Nebraska 17,610 149,717,073.23 13.38
Wisconsin 9,138 81,571,999.60 7.29
Indiana 8,974 75,821,370.76 6.78
South Dakota 8,132 65,029,529.63 5.81
Other 15,996 133,672,008.84 11.95
------- ---------------- -------
Total(2) 127,371 $1,118,988,159.59 100.00
======= ================ =======
__________________
<FN>
(1) Percentages may not add to 100.00% because of rounding.
(2) No more than 5.0% of the Pool Balance as of the Cutoff Date was
originated by Motor Vehicle Loans made to Obligors that currently
reside in any state other than the states set forth above.
<CAPTION>
Distribution of the Receivables by New/Used Motor Vehicles
Number of Aggregate % of Pool
Receivables Principal Balance Balance
----------- ----------------- ---------
<S> <C> <C> <C>
New Motor Vehicles 48,168 $520,301,378.36 46.50
Used Motor Vehicles 79,203 598,686,781.23 53.50
------- ---------------- ------
Total Receivables 127,371 $1,118,988,159.59 100.00
======= ================ ======
</TABLE>
<PAGE>
Delinquencies and Losses
Set forth below is certain information concerning the historical
experience of the following [Affiliates] pertaining to Motor Vehicle Loans:
Norwest Bank Illinois, N.A.
Norwest Bank Indiana, N.A.
Norwest Bank Iowa, N.A.
Norwest Bank LaCrosse, N.A.
Norwest Bank Minnesota North, N.A.
Norwest Bank Minnesota South, N.A.
Norwest Bank Minnesota Southwest, N.A.
Norwest Bank Minnesota West, N.A.
Norwest Bank Minnesota, N.A.
Norwest Bank Nebraska, N.A.
Norwest Bank North Dakota, N.A.
Norwest Bank Ohio, N.A.
Norwest Bank Red Wing, N.A.
Norwest Bank South Dakota, N.A.
Norwest Bank Wisconsin, N.A.
There can be no assurance that the delinquency and loss experience on
the Receivables of the Trust will be comparable to that set forth below.
<PAGE>
<TABLE>
<CAPTION>
Delinquency Experience(1)
At June 30, At December 31,
---------------------------------------- --------------------------------------------------------------
1996 1995 1995 1994 1993
------------------- ------------------- ------------------- ------------------- -------------------
Number Amount Number Amount Number Amount Number Amount Number Amount
------- ---------- ------- ---------- ------- ---------- ------- ---------- ------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Motor Vehicle Loans
Outstanding........... 182,858 $1,413,553 197,451 $1,564,522 192,259 $1,503,257 200,457 $1,618,700 181,615 $1,370,814
Period of Delinquency:
31-59 days............ 2,875 $ 20,445 2,440 $ 17,861 3,136 $ 22,838 2,725 $ 18,694 2,078 $ 12,892
60-89 days............ 743 5,451 623 4,627 774 5,583 670 4,655 498 2,926
90 days or more....... 695 5,393 600 4,462 699 5,260 525 3,620 436 2,865
Total Delinquencies..... 4,313 $ 31,289 3,663 $ 26,950 4,609 $ 33,681 3,920 $ 26,969 3,012 $ 18,683
Total Delinquencies as a
Percent of Motor Vehicle
Loans Outstanding........ 2.36% 2.21% 1.86% 1.72% 2.40% 2.24% 1.96% 1.67% 1.66% 1.36%
____________________________
<FN>
(1) Amounts represent net principal amounts of Motor Vehicle Loans Outstanding.
<PAGE>
<CAPTION>
Historical Loss Experience (1)
Six Months Ended June 30, Year Ended December 31,
------------------------- ----------------------------------
1996 1995 1995 1994 1993
---------- ------------ ---------- ---------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Motor Vehicle Loans
Outstanding.................... $1,413,553 $1,564,522 $1,503,257 $1,618,700 $1,370,814
Average Motor Vehicle Loans
Outstanding(2)................. $1,450,493 $1,590,264 $1,565,367 $1,480,140 $1,230,554
Average Number of Motor Vehicle
Loans Outstanding(2)........... 188,003 199,852 197,930 189,862 165,543
Gross Charge-Offs(2)........... $ 6,691 $ 6,539 $ 14,179 $ 12,986 $ 10,996
Net Losses(3)(4)............... $ 3,700 $ 2,994 $ 7,504 $ 5,381 $ 5,043
Net Losses as a Percent of
Principal Balance
Outstanding.................... 0.53% 0.38% 0.50% 0.33% 0.37%
Net Losses as a Percent of
Average Principal Balance
Outstanding.................... 0.51% 0.38% 0.48% 0.36% 0.41%
_____________________________
<FN>
(1) Percentage amounts with respect to the sixth month periods ended June 30
are annualized.
(2) Amount represents average of balances at the beginning of period and
each subsequent quarter ended during such period.
(3) Gross Charge-Offs and Net Losses exclude repossession and disposition
expenses.
(4) Amount represents the aggregate balance of all Motor Vehicle Loans which
are determined to be uncollectible in the period, less any recoveries on
Motor Vehicle Loans charged-off in the period or any prior period.
/TABLE
<PAGE>
Delinquencies and losses are affected by a number of social,
economic and other factors that may affect an Obligor's ability or
willingness to pay, such as the amount or types of indebtedness incurred
by such Obligor in addition to the Receivable on which such Obligor is
indebted, and there can be no assurance as to the level of future total
delinquencies or the severity of future losses. As a result, the
delinquency and loss experience of the Receivables may differ from
those shown in the tables.
Extensions and Modifications of Receivables
For a description of the Servicer's practices with respect to the
extension and modification of Receivables, see "Risk Factors--Extensions and
Modifications of Receivables" in the Prospectus.
THE SELLER, THE SERVICER AND NORWEST CORPORATION
Information regarding the Seller is set forth under "The Seller" in
the Prospectus and information regarding the Servicer is set forth under
"The Bank" in the Prospectus. Norwest Corporation is a diversified
financial services company incorporated under the laws of the State of
Delaware and registered under the Bank Holding Company Act of 1956, as
amended. Norwest Corporation owns subsidiaries engaged in banking and a
variety of related businesses. Norwest Corporation provides retail,
commercial and corporate banking services to customers through banks in 16
states and provides additional financial services to its customers through
subsidiaries engaged in various businesses, principally mortgage banking,
consumer finance, equipment leasing, agricultural finance, commercial
finance, securities brokerage and investment banking, insurance agency
services, computer and data processing services, trust services, mortgage
backed securities servicing, and venture capital investment. As of June
30, 1996, Norwest Corporation had consolidated total assets of $77.8
billion, total deposits of $46.3 billion, and total stockholders' equity of
$5.6 billion. Based on total assets as of June 30, 1996, Norwest
Corporation was the twelfth largest commercial banking organization in the
United States. Norwest Corporation has agreed to guaranty the performance
by the Seller of its repurchase obligation with respect to Receivables for
which there has been an uncured breach of any representation or warranty
that materially and adversely affects the interests of the Trust in such
Receivables. See "Description of the Transfer and Servicing
Agreements--Sale and Assignment of Receivables" in the Prospectus.
WEIGHTED AVERAGE LIFE OF THE SECURITIES
Information regarding certain maturity and prepayment considerations
with respect to the Securities is set forth under "Weighted Average Life of
Securities" in the Prospectus. No principal payments will be made on the
Class A-2 Notes until all Class A-1 Notes have been paid in full, no
principal payments will be made on the Class A-3 Notes until the Class A-2
Notes have been paid in full and no principal payments will be made on the
Class A-4 Notes until the Class A-3 Notes have been paid in full. In
addition, no principal payments on the Certificates will be made until all
of the Notes have been paid in full. See "Description of the
Notes--Payments of Principal" and "Description of the
Certificates--Distributions of Principal Payments." As the rate of payment
of principal of each class of Notes and the Certificates depends primarily
on the rate of payment (including prepayments) of the principal balance of
the Receivables, final payment of any class of the Notes and the final
distribution in respect of the Certificates could occur significantly
earlier than the respective Final Scheduled Distribution Dates. It is
expected that final payment of the Notes and the final distribution in
respect of the Certificates will occur on or prior to the applicable Final
Scheduled Distribution Date. However, if sufficient funds are not
available to pay the Notes or the Certificates in full on or prior to the
applicable Final Scheduled Distribution Date, final payment of the Notes
and the final distribution in respect of the Certificates could occur later
than such date.
Consistent with its customary servicing practices and procedures, the
Servicer or its designee may, in its discretion and on a case-by-case
basis, arrange with Obligors to extend or modify the terms of the related
Receivables. In addition, the Servicer may grant extensions or
modifications in situations where the Servicer believes such action is
likely to maximize the amount collected, for example, an obligor who
becomes unemployed and is actively seeking employment. Extensions are not
granted to forestall an inevitable loss. Any such extensions or
modifications which do not result in a Servicer obligation to purchase such
Receivables may increase the weighted average life of the related
Securities. Unless the Servicer repurchases the affected Receivable, the
Servicer will not be permitted to voluntarily (i) make modifications to the
Receivables that reduce the original rates of interest or the aggregate
principal amount of scheduled payments on the Receivables (ii) grant any
extension or modification if as a result the final scheduled payment on a
Receivable would fall after the related Final Scheduled Maturity Date or
(iii) amend or otherwise modify such Receivable if such amendment or
modification would result in a deemed exchange of such Receivable under
Section 1001 of the Code. Securityholders will bear the risk of being able
to reinvest principal payments on the Securities at yields at least equal
to the yields on their respective Securities. See "Weighted Average Life
of the Securities" in the Prospectus.
Prepayments on motor vehicle receivables can be measured relative to
a prepayment standard or model. The model used in this Prospectus
Supplement, the Absolute Prepayment Model ("ABS"), represents an assumed
rate of prepayment each month relative to the original number of
receivables in a pool of receivables. ABS further assumes that all the
receivables are the same size and amortize at the same rate and that each
receivable in each month of its life will either be paid as scheduled or be
prepaid in full. For example, in a pool of receivables originally
containing 10,000 receivables, a 1% ABS rate means that 100 receivables
prepay each month. ABS does not purport to be an historical description of
prepayment experience or a prediction of the anticipated rate of prepayment
of any pool of receivables, including the Receivables.
As the rate of payment of principal with respect of the Securities
will depend on the rate of payment (including prepayments) of the principal
balance of the Receivables, final payment of any class of Notes could occur
significantly earlier than its applicable Final Scheduled Distribution
Date. The final distribution in respect of the Certificates also could
occur prior to the Certificate Final Scheduled Distribution Date.
Reinvestment risk associated with early payment of the Notes and the
Certificates will be borne exclusively by the Noteholders and the
Certificateholders, respectively.
The tables captioned "Percent of Initial Note Principal Balance at
Various ABS Percentages" and "Percent of Initial Certificate Balance at
Various ABS Percentages" (each an "ABS Table") have been prepared on the
basis of the characteristics of the Receivables. Each ABS Table assumes
that (a) the Receivables prepay in full at the specified constant
percentage of ABS monthly, with no defaults, losses or repurchases, (b)
each scheduled monthly payment on the Receivables is made on the last day
of each month and each month has 30 days, (c) payments on the Notes and
distributions on the Certificates are made on each Distribution Date (and
each such date is assumed to be the 15th day of each applicable month), (d)
the balance in the Reserve Account on each Distribution Date is equal to
the Specified Reserve Account Balance, and (e) the Seller or Servicer does
not exercise its option to purchase the Receivables. The pool has an
assumed cutoff date of the Cutoff Date. Each ABS Table indicates the
projected weighted average life of each class of Notes and the
Certificates, as applicable, and sets forth the percent of the initial
principal amount of each class of Notes and the percent of the initial
Certificate Balance, as applicable, that is projected to be outstanding
after each of the Distribution Dates shown at various constant ABS
percentages.
The ABS Tables also assume that the Receivables have been aggregated
into hypothetical pools with all of the Receivables within each such pool
having the following characteristics and that the level scheduled monthly
payment for each of the pools (which is based on its aggregate principal
balance, APR, original number of scheduled payments and remaining number of
scheduled payments as of the Cut-Off Date) will be such that each pool will
be fully amortized by the end of its remaining term to maturity.
Original Number Remaining Number
Aggregate of Scheduled of Scheduled
Pool Principal Balance APR Payments Payments
- -------- ----------------- ----- --------------- ---------------
1....... $ %
The actual characteristics and performance of the Receivables will
differ from the assumptions used in constructing each ABS Table. The
assumptions used are hypothetical and have been provided only to give a
general sense of how the principal cash flows might behave under varying
prepayment scenarios. For example, it is very unlikely that the
Receivables will prepay at a constant level of ABS until maturity or that
all of the Receivables will prepay at the same level of ABS. Moreover, the
diverse terms of Receivables within each of the four hypothetical pools
could produce slower or faster principal distributions than indicated in
the ABS Table at the various constant percentages of ABS specified, even if
the original and remaining terms to maturity of the Receivables are as
assumed. Any difference between such assumptions and the actual
characteristics and performance of the Receivables, or actual prepayment
experience, will affect the percentages of initial balances outstanding
over time and the weighted average lives of each class of Notes and the
Certificates.
The ABS Tables have been prepared based on the assumptions described above
(including the assumptions regarding the characteristics and performance of
the Receivables which will differ from the actual characteristics and
performance thereof) and should be read in conjunction therewith.
<PAGE>
<TABLE>
<CAPTION>
Percent of Initial Note Principal Balance at Various ABS Percentages
Class A-1 Notes Class A-2 Notes
------------------------ ---------------------------
<S> <C> <C>
Distribution Dates 0.0% 0.5% 1.0% 1.5% 2.0% 0.0% 0.5% 1.0% 1.5% 2.0%
- ------------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Closing Date....
October 1996....
November 1996...
December 1996...
January 1997....
February 1997...
March 1997......
April 1997......
May 1997........
June 1997.......
July 1997.......
August 1997.....
September 1997..
Weighted Average
Life (years)(1)
<PAGE>
<CAPTION>
Class A-3 Notes Class A-4 Notes
------------------------ ---------------------------
<S> <C> <C>
Distribution Dates 0.0% 0.5% 1.0% 1.5% 2.0% 0.0% 0.5% 1.0% 1.5% 2.0%
- ------------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
Closing Date....
October 1996....
November 1996...
December 1996...
January 1997....
February 1997...
March 1997......
April 1997......
May 1997........
June 1997.......
July 1997.......
August 1997.....
September 1997..
Weighted Average
Life (years)(1)
___________________________
<FN>
(1) The weighted average life of a Note is determined by (a) multiplying the
amount of each principal payment of such Note by the number of years
from the date of the issuance of such Note to the related Distribution
Date, (b) adding the results and (c) dividing the sum by the related
initial principal amount of such Note.
<PAGE>
<CAPTION>
Percent of Initial Certificate Balance at Various ABS Percentages
Certificates
-----------------------------------
<S> <C> <C> <C> <C> <C>
Distribution Date 0.0.% 0.5% 1.0% 1.5% 2.0%
- ----------------- ----- ---- ---- ---- ----
Closing Date.........................
October 1996.........................
November 1996........................
December 1996........................
January 1997.........................
February 1997........................
March 1997...........................
April 1997...........................
May 1997.............................
June 1997............................
July 1997............................
August 1997..........................
September 1997.......................
Weighted Average Life (years)(1).....
________________________________
<FN>
(1) The weighted average life of a Certificate is determined by (a)
multiplying the amount of each distribution in respect of the
Certificate Balance of such Certificate by the number of years from the
date of the issuance of such Certificate to the related Distribution
Date, (b) adding the results and (c) dividing the sum by the original
Certificate Balance of such Certificate.
</TABLE>
DESCRIPTION OF THE NOTES
General
The Notes will be issued pursuant to the Indenture, a form of which
has been filed as an exhibit to the Registration Statement. A copy of the
Indenture will be filed with the Commission following the issuance of the
Securities. The following summary describes the material terms of the
Notes and the Indenture, but it does not purport to be a complete
description of the Notes and the Indenture and is subject to, and is
qualified in its entirety by reference to, all the provisions of the Notes
and the Indenture. Where particular provisions or terms used in the
Indenture are referred to, the actual provisions (including definitions of
terms) are incorporated by reference as part of such summary. The
following summary supplements the description of the general terms and
provisions of the Notes of any given series and the related Indenture set
forth in the Prospectus, to which description reference is hereby made.
Chase Manhattan Bank will be the Indenture Trustee under the Indenture.
The address of the Indenture Trustee at which information regarding the
Trust and Notes may be obtained is ________________.
Payments of Interest
Each class of the Notes will constitute Fixed Rate Securities, as
such term is defined under "Certain Information Regarding the
Securities--Fixed Rate Securities" in the Prospectus. Interest on the
principal balances of the classes of the Notes will accrue at their
respective per annum Interest Rates and will be payable to the Noteholders
monthly on each Distribution Date, commencing , 1996. Interest on the
outstanding principal amount of the Notes will accrue at the applicable
Interest Rate for the applicable Interest Period. Interest distributions
due for any Distribution Date but not distributed on such Distribution Date
will be due on the next Distribution Date increased by an amount equal to
interest on such amount at the applicable Interest Rate (to the extent
lawful). With respect to any Distribution Date, interest on the Class A-1
Notes will be calculated on the basis of a 360-day year based upon the
actual number of days elapsed during the related Interest Period and
interest on the Class A-2 Notes, Class A-3 Notes and Class A-4 Notes will
be calculated on the basis of a 360-day year consisting of twelve 30-day
months. Interest payments on the Notes will generally be derived from the
Total Distribution Amount remaining after the reimbursement of Outstanding
Advances and payment of the Servicing Fee. See "Description of the
Transfer and Servicing Agreements--Distributions" and "--Reserve Account."
Interest payments to each class of Noteholders will have the same
priority. Under certain circumstances, the amount available for interest
payments could be less than the amount of interest payable on the Notes on
any Distribution Date, in which case each class of Noteholders will receive
their ratable share (based upon the aggregate amount of interest due to
such class of Noteholders) of the aggregate amount available to be
distributed in respect of interest on the Notes.
Payments of Principal
Principal payments will be made to the Noteholders on each
Distribution Date in an amount generally equal to the Noteholders'
Principal Distributable Amount. Principal payments on the Notes will
generally be derived from the Total Distribution Amount remaining after the
payment of the Servicing Fee and the Noteholders' Interest Distributable
Amount. See "Description of the Transfer and Servicing
Agreements--Distributions" and "--Reserve Account."
On the Business Day immediately preceding each Distribution Date (a
"Determination Date"), the Indenture Trustee shall determine the amount in
the Collection Account allocable to interest and the amount allocable to
principal.
On each Distribution Date, principal payments on the Notes will be
applied in the following order of priority: (a) to the principal balance
of the Class A-1 Notes until the principal balance of the Class A-1 Notes
is reduced to zero; (b) to the principal balance of the Class A-2 Notes
until the principal balance of the Class A-2 Notes is reduced to zero; (c)
to the principal balance of the Class A-3 Notes until the principal balance
of the Class A-3 Notes is reduced to zero; and (d) to the principal balance
of the Class A-4 Notes until the principal balance of the Class A-4 Notes
is reduced to zero. The principal balance of the Class A-1 Notes, to the
extent not previously paid, will be due on the Class A-1 Final Scheduled
Distribution Date, the principal balance of the Class A-2 Notes, to the
extent not previously paid, will be due on the Class A-2 Final Distribution
Date, the principal balance of the Class A-3 Notes, to the extent not
previously paid, will be due on the Class A-3 Final Scheduled Distribution
Date and the principal amount of the Class A-4 Notes, to the extent not
previously paid, will be due on the Class A-4 Final Scheduled Distribution
Date. The actual date on which the aggregate outstanding principal amount
of any class of Notes is paid may be earlier or later than the respective
Final Scheduled Distribution Dates set forth above based on a variety of
factors, including those described under "Weighted Average Life of the
Securities" herein and in the Prospectus.
Optional Redemption
If the Seller or Servicer exercises its option to purchase the
Receivables when the Pool Balance declines to 5% or less of the Original
Pool Balance and all classes of Notes other than the Class A-4 Notes have
been paid in full, the Class A-4 Notes will be redeemed at a price equal to
the unpaid principal amount of the Class A-4 Notes plus accrued and unpaid
interest thereon.
DESCRIPTION OF THE CERTIFICATES
General
The Certificates will be issued pursuant to the Trust Agreement, a
form of which has been filed as an exhibit to the Registration Statement.
A copy of the Trust Agreement will be filed with the Commission following
the issuance of the Securities. The following summary describes the
material terms of the Certificates and the Trust Agreement, but it does not
purport to be a complete description of the Certificates and the Trust
Agreement and is subject to, and qualified in its entirety by reference to,
all the provisions of the Certificates and the Trust Agreement. The
following summary supplements the description of the general terms and
provisions of the Certificates of any given series and the related Trust
Agreement set forth in the Prospectus, to which description reference is
hereby made.
Distribution of Interest Income
On each Distribution Date, commencing October 15, 1996, the
Certificateholders will be entitled to distributions in an amount equal to
the amount of interest that would accrue on the Certificate Balance at the
Certificate Rate for the applicable Interest Period. The Certificates will
constitute Fixed Rate Securities, as such term is defined under "Certain
Information Regarding the Securities--Fixed Rate Securities" in the
Prospectus. Interest distributions due for any Distribution Date but not
distributed on such Distribution Date will be due on the next Distribution
Date increased by an amount equal to interest on such amount at the
Certificate Rate (to the extent lawful). Interest distributions with
respect to the Certificates will generally be funded from the portion of
the Total Distribution Amount remaining after the distribution of the
Servicing Fee and the Noteholders' Distributable Amount. See "Description
of the Transfer and Servicing Agreements--Distributions" and "--Reserve
Account."
Distributions of Principal Payments
Certificateholders will be entitled to distributions of principal on
each Distribution Date, commencing with the Distribution Date on which the
Notes are paid in full, in an amount generally equal to the Principal
Distribution Amount (less on the Distribution Date on which the Notes are
paid in full, the portion thereof payable on the Notes). Distributions with
respect to principal payments will generally be funded from the portion of
the Total Distribution Amount remaining after the distribution of the
Servicing Fee, the Noteholders' Distributable Amount (on the Distribution
Date on which the Notes are paid in full) and the Certificateholders'
Interest Distributable Amount. See "Description of the Transfer and
Servicing Agreements--Distributions" and "--Reserve Account."
<PAGE>
Optional Prepayment
If the Seller or Servicer exercises its option to purchase the
Receivables when the Pool Balance declines to 5% or less of the Original
Pool Balance, Certificateholders will receive an amount in respect of the
Certificates equal to the outstanding Certificate Balance together with
accrued interest at the Certificate Rate, which distribution shall effect
early retirement of the Certificates. See "Description of the Transfer and
Servicing Agreements--Termination" in the Prospectus.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of the Sale and
Servicing Agreement and the Trust Agreement (collectively, the "Transfer
and Servicing Agreements"). Forms of the Transfer and Servicing Agreements
have been filed as exhibits to the Registration Statement. A copy of the
Sale and Servicing Agreement will be filed with the Commission following
the issuance of the Securities. The summary describes the material terms
of the Transfer and Servicing Agreements, but it does not purport to be
complete and is subject to, and qualified in its entirety by reference to,
all the provisions of the Transfer and Servicing Agreements. The following
summary supplements the description of the general terms and provisions of
the Transfer and Servicing Agreements set forth in the Prospectus, to which
description reference is hereby made.
Accounts
Accounts referred to under "Description of the Transfer and Servicing
Agreements--Accounts" in the Prospectus, as well as the Reserve Account,
will be established by the Servicer and maintained in the name of the
Indenture Trustee on behalf of the Noteholders and the Certificateholders.
Amounts held from time to time in the Reserve Account will be held for the
benefit of Noteholders and Certificateholders. Funds on deposit in the
Reserve Account will be invested in Eligible Investments selected by the
Seller and, if permitted by the Rating Agencies, funds on deposit in the
Reserve Account may be invested in Eligible Investments that mature later
than the next Deposit Date. All net investment earnings on funds deposited
in the Collection Account net of losses and investment expenses, will be
treated as Interest Collections. All net investment earnings on funds
deposited in the Reserve Account during any Interest Period will be
included in the Available Reserve Amount for the related Distribution Date.
Upon any distribution to the Servicer after such Distribution Date of
amounts from the Reserve Account, the Securityholders will not have any
rights in, or claims to, such amounts. All net investment earnings on
funds invested in any other Trust Account will be distributed to the
Servicer and will not be treated as collections on the Receivables or
otherwise be available for Securityholders.
On each Deposit Date, prior to making any of the distributions
described above in "Deposits to the Distribution Accounts", Servicer shall
be reimbursed for all Outstanding Advances with respect to prior
Distribution Dates, to the extent of the Interest Collections for such
Distribution Date and, to the extent such Interest Collections are
insufficient, to the extent of the funds in the Reserve Account. On or
before each Distribution Date, funds in the amount of the Reserve Account
Transfer Amount for such Distribution Date will be withdrawn from the
Reserve Account and deposited in the Collection Account.
On each Distribution Date, the amount available in the Reserve
Account (the "Available Reserve Amount") will equal the lesser of (a) the
amount on deposit in the Reserve Account (exclusive of investment earnings)
and (b) the Specified Reserve Account Balance.
On each Deposit Date, the Trustee will withdraw funds from the
Reserve Account (a) to the extent required to make reimbursements of
Outstanding Advances (after application of Interest Collections for that
purpose) and (b) the Reserve Account Transfer Amount. Such excess may
result from, among other things, Receivables becoming Defaulted Receivables
or the failure by the Servicer to make any remittance required to be made
under the Agreement. The aggregate amount to be withdrawn from the Reserve
Account on any Deposit Date will not exceed the Available Reserve Amount
with respect to the related Distribution Date. The Trustee will deposit the
proceeds of such withdrawal into the Collection Account on or before the
Distribution Date with respect to which such withdrawal was made.
"Specified Reserve Account Balance" means, for (a) any Distribution
Date prior to the Distribution Date on which the outstanding amount of the
Class A-1 Notes has been paid in full, $__________ and (b) any Distribution
Date on or after the Distribution Date on which the outstanding amount of
the Class A-1 Notes has been paid in full the greater of (i) ____% of the
sum of the aggregate outstanding principal amount of each class of Notes
plus the outstanding Certificate Balance on such Distribution Date (after
giving effect to all payments on the Notes and distributions with respect
to the Certificates to be made on such Distribution Date); or (ii) ___% of
the sum of the aggregate initial principal of the Notes plus the initial
Certificate Balance except that, if on such Distribution Date (x) the
Average Net Loss Ratio exceeds ___% or (y) the Average Delinquency Ratio
for the three preceding Collection Periods exceeds ___%, then the Specified
Reserve Account Balance shall be an amount equal to ___% of the sum of the
aggregate outstanding principal amount of each class of Notes and the
aggregate outstanding Certificate Balance on such Distribution Date (after
giving effect to all payments on the Notes and distributions with respect
to the Certificates to be made on such Distribution Date). In any event,
on any Distribution Date, the Specified Reserve Account Balance will not
exceed the aggregate outstanding principal amount of the Notes plus the
aggregate outstanding Certificate Balance on such Distribution Date and may
be reduced to a lesser amount, as determined by the Seller, so long as such
reduction does not cause either Rating Agency to withdraw or downgrade its
rating of the Certificates. The time necessary for the Reserve Account to
reach and maintain the Specified Reserve Account Balance at any time after
the Closing Date will be affected by the delinquency, credit loss,
repossession and prepayment experience of the Receivables and, therefore,
cannot be accurately predicted. Amounts on deposit in the Reserve Account
will be released to the Servicer on each Distribution Date to the extent
that the amount on deposit in the Reserve Account would exceed the
Specified Reserve Account Balance after giving effect to any withdrawal
from the Reserve Account on such Distribution Date.
"Aggregate Net Losses" means, for any Collection Period, the
aggregate amount allocable to principal of all Receivables newly
designated during such Collection Period as Defaulted Receivables
minus all Liquidation Proceeds collected during such Collection
Period with respect to all Defaulted Receivables (whether or not
newly designated as such).
"Average Delinquency Ratio" means, as of any Distribution Date,
the average of the Delinquency Ratios for the preceding three
Collection Periods.
"Average Net Loss Ratio" means, as of any Distribution Date, the
average of the Net Loss Ratios for the preceding three Collection
Periods.
"Delinquency Ratio" means, for any Collection Period, the ratio,
expressed as a percentage, of (a) the principal amount of all
outstanding Receivables (other than Purchased Receivables and
Defaulted Receivables) which are ___ or more days delinquent as of
the end of such Collection Period, determined in accordance with
Servicer's customary practices, divided by (b) the Pool Balance as of
the last day of such Collection Period.
"Liquidation Proceeds" means, with respect to any Receivable
that has become a Defaulted Receivable in a prior Collection Period,
(a) insurance proceeds received by the Servicer, with respect to
insurance policies relating to the Financed Vehicles or the Obligors
and any proceeds from lender's single interest insurance policies to
the extent not included in collections distributable to
Securityholders, (b) amounts received by the Servicer in connection
with such Defaulted Receivable pursuant to the exercise of rights
under the related Motor Vehicle Loan, and (c) the monies collected by
the Servicer (from whatever source, including, but not limited to
proceeds of a sale of a Financed Vehicle or deficiency balance
recovered after the charge-off of the related Receivable) on such
Defaulted Receivable, net of any expenses incurred by the Servicer in
connection therewith and any payments required by law to be remitted
to the Obligor.
"Net Loss Ratio" means, for any Collection Period, an amount,
expressed as a percentage, equal to (a) the Aggregate Net Losses for
such Collection Period, divided by (b) the average of the Pool
Balances on each of the first day of such Collection Period and the
last day of such Collection Period.
"Reserve Account Transfer Amount" means, on any Distribution
Date, an amount equal to the lesser of (a) the amount of cash or
other immediately available funds on deposit in the Reserve Account
on such Distribution Date (before giving effect to any withdrawals
therefrom relating to such Distribution Date) or (b) the amount, if
any, by which (i) the sum of the Servicing Fee for the related
Collection Period and all accrued and unpaid Servicing Fees for prior
Collection Periods, the Noteholders' Interest Distributable Amount,
the Certificateholders' Interest Distributable Amount, the
Noteholders' Principal Distributable Amount and the
Certificateholders' Principal Distributable Amount for such
Distribution Date exceeds (ii) the sum of the Available Interest and
the Available Principal for such Distribution Date.
If funds in the Reserve Account are reduced to zero, the
Securityholders will bear the credit and other risks associated with
ownership of the Receivables. In such a case, the amount available for
distribution may be less than that described below, and the Securityholders
may experience delays or suffer losses as a result, among other things, of
defaults or delinquencies by the Obligors or previous extensions made by
the Servicer.
Advances
On or prior to each Deposit Date, the Servicer will advance any
Interest Shortfall with respect to the related Distribution Date by
depositing the amount of such Interest Shortfall into the Collection
Account. The Servicer will be obligated to make such an Advance except to
the extent that the Servicer reasonably determines that the Advance is
unlikely to be recoverable as set forth below.
On each Distribution Date, prior to making any of the distributions
set forth in "--Distributions", the Servicer shall be reimbursed for all
Outstanding Advances with respect to prior Distribution Dates, to the
extent of the Interest Collections for such Distribution Date and, to the
extent such Interest Collections are insufficient, to the extent of the
funds in the Reserve Account. If it is acceptable to each Rating Agency
without a reduction in the rating of the Certificates, the Outstanding
Advances at the option of the Servicer may be paid at or as soon as
possible after the beginning of the related Collection Period out of the
first collections of interest received on the Receivables for such
Collection Period.
"APR" means, with respect to a Receivable, the rate per annum of
interest charged on the outstanding principal balance of such
Receivable.
"Defaulted Receivable" means, with respect to any Collection
Period, a Receivable (other than a Purchased Receivable) which the
Servicer has determined to charge off during such Collection Period
in accordance with its customary servicing practices; provided,
however, that any Receivable which the Seller or Servicer is
obligated to repurchase or purchase shall be deemed to have become a
Defaulted Receivable during a Collection Period if the Seller or
Servicer fails to deposit the Purchase Amount on the related Deposit
Date when due.
"Expected Interest" means, with respect to any Distribution
Date, an amount equal to the sum of the product of (a) one-twelfth of
the Weighted Average APR for the related Collection Period multiplied
by (b) an amount equal to the Pool Balance as of the first day of the
related Collection Period minus the sum of the Principal Balances of
Non-Advance Receivables for such Distribution Date.
"Interest Collections" for a Distribution Date shall mean the
sum of the following amounts with respect to the related Collection
Period: (a) that portion of the collections on the Receivables
received during the related Collection Period that is allocable to
interest in accordance with the Servicer's customary procedures; (b)
all Liquidation Proceeds received during such Collection Period; (c)
all Purchase Amounts, to the extent attributable to accrued interest,
of all Receivables that are repurchased by the Seller or purchased by
the Servicer under an obligation which arose during the related
Collection Period; and (d) the net investment income earned on
balances held in the Collection Account during such Collection
Period. "Interest Collections" for any Distribution Date shall
exclude all payments and proceeds of any Receivables the Purchase
Amount of which has been distributed on a prior Distribution Date.
"Interest Shortfall" means, with respect to any Distribution
Date, the lesser of (a) the amount (if any) by which the Expected
Interest for such Distribution Date exceeds the Net Interest
Collections for such Distribution Date and (b) the amount (if any) by
which the sum of the Servicing Fee for the related Collection Period
and all accrued and unpaid Servicing Fees for prior Collection
Periods, the Noteholders' Interest Distributable Amount and the
Certificateholders' Interest Distributable for such Distribution Date
exceeds the Net Interest Collections for such Distribution Date.
"Net Interest Collections" means, with respect to any
Distribution Date, the greater of (a) zero and (b) Interest
Collections for such Distribution Date minus the Outstanding Advances
as of such Distribution Date.
"Non-Advance Receivables" means, with respect to any
Distribution Date, any Receivables which became Defaulted Receivables
during the related Collection Period or which the Servicer, in its
sole discretion, believes are likely to become Defaulted Receivables.
"Outstanding Advances" means, as of any date, all Advances made
by the Servicer with respect to prior Distribution Dates which have
not been reimbursed.
"Purchase Amount" means the amount, as of the close of business
on the last day of a Collection Period, required to prepay in full
the respective Receivable under the terms thereof including interest
at the APR to the end of the month of purchase.
"Purchased Receivable" means a Receivable purchased as of the
close of business on the last day of a Collection Period by the
Servicer or repurchased by the Seller pursuant to the Sale and
Servicing Agreement.
"Weighted Average APR" means, with respect to any Collection
Period, the weighted average of the APR of the Receivables (excluding
Non-Advance Receivables), weighted based on the Principal Balance of
each such Receivable as of the first day of such Collection Period.
Servicing Compensation and Payment of Expenses
The Servicing Fee Rate shall be 1.0% per annum, calculated on the
basis of a 360-day year consisting of twelve 30-day months. The Servicing
Fee, with respect to any Distribution Date, will be an amount equal to the
product of (a) one-twelfth of the Servicing Fee Rate, multiplied by (b) the
Pool Balance as of the first day of the preceding Collection Period. The
Servicing Fee in respect of a Collection Period (together with any portion
of the Servicing Fee that remains unpaid from prior Distribution Dates) may
be paid at the beginning of such Collection Period out of collections for
such Collection Period. See "Description of the Transfer and Servicing
Agreements--Servicing Compensation and Payment of Expenses" in the
Prospectus.
The Servicer will also collect and retain any late fees, extension
fees, prepayment charges and certain non-sufficient funds charges and other
administrative fees or similar charges (the "Supplemental Servicing Fee")
allowed by applicable law with respect to the Receivables. Payments by or
on behalf of Obligors will be allocated to scheduled payments and late fees
and other charges in accordance with the Servicer's normal practices and
procedures. See "Description of the Transfer and Servicing
Agreements--Servicing Compensation and Payment of Expenses" in the
Prospectus.
Distributions
Deposits to Collection Account. On or before each Distribution Date,
the Servicer will cause all collections and other amounts constituting the
Total Distribution Amount to be deposited into the Collection Account.
"Available Interest" means, with respect to any Distribution
Date, the excess of (a) the sum of (i) Interest Collections for such
Distribution Date and (ii) all Advances made by Servicer with respect
to such Distribution Date, over (b) the amount of Outstanding
Advances to be reimbursed on or with respect to such Distribution
Date.
"Available Principal" for a Distribution Date means the sum of
the following amounts with respect to the preceding Collection
Period: (a) that portion of all collections (other than Liquidation
Proceeds) received during such Collection Period and allocable to
principal in accordance with Servicer's customary servicing
procedures; and (b) to the extent attributable to principal, the
Purchase Amount received with respect to each Receivable repurchased
by Seller or purchased by Servicer under an obligation which arose
during the related Collection Period. "Available Principal" on any
Distribution Date shall exclude all payments and proceeds of any
Receivables the Purchase Amount of which has been distributed on a
prior Distribution Date.
"Certificate Balance" equals, initially, $ and,
thereafter, equals the initial Certificate Balance, reduced by all
amounts allocable to principal previously distributed to
Certificateholders.
"Certificateholders' Interest Carryover Shortfall" means, with
respect to any Distribution Date, the excess of the
Certificateholders' Monthly Interest Distributable Amount for the
preceding Distribution Date and any outstanding Certificateholders'
Interest Carryover Shortfall on such preceding Distribution Date,
over the amount in respect of interest that is actually deposited in
the Certificate Distribution Account on such preceding Distribution
Date, plus interest on such excess, to the extent permitted by law,
at the Certificate Rate from and including such preceding
Distribution Date to but excluding the current Distribution Date.
"Certificateholders' Interest Distributable Amount" means, for
any Distribution Date, the sum of the Certificateholders' Monthly
Interest Distributable Amount for such Distribution Date and the
Certificateholders' Interest Carryover Shortfall for such
Distribution Date.
"Certificateholders' Monthly Interest Distributable Amount"
means, for any Distribution Date, the amount of interest accrued on
the Certificates at the Certificate Rate during the related Interest
Period (calculated on the basis of a 360-day year and twelve 30-day
months).
"Certificateholders' Percentage" means 100% minus the
Noteholders' Percentage.
"Certificateholders' Principal Distributable Amount" means, for
any Distribution Date, the sum of the Certificateholders' Monthly
Principal Distributable Amount for such Distribution Date and the
Certificateholders' Principal Carryover Shortfall as of the close of
the preceding Distribution Date; provided that the
Certificateholders' Principal Distributable Amount shall not exceed
the Certificate Balance. In addition, on the Certificate Final
Scheduled Distribution Date, the principal required to be distributed
to Certificateholders will include the lesser of (a) any payments of
principal due and remaining unpaid on each Receivable owned by Issuer
as of ___________ or (b) the portion of the amount that is necessary
(after giving effect to the other amounts to be deposited in the
Certificate Distribution Account on such Distribution Date and
allocable to principal) to reduce the Certificate Balance to zero, in
either case after giving effect to any required distribution of the
Noteholders' Principal Distributable Amount to the Note Distribution
Account.
"Certificateholder's Monthly Principal Distributable Amount"
means, for any Distribution Date, the Certificateholders' Percentage
of the Principal Distribution Amount or, for any Distribution Date on
or after the Distribution Date on which the outstanding principal
balance of the Class A-4 Notes is reduced to zero, 100% of the
Principal Distribution Amount (less any amount required on the first
such Distribution Date to reduce the outstanding principal balance of
the Class A-4 Notes to zero, which shall be deposited into the Note
Distribution Account).
"Certificateholders' Principal Carryover Shortfall" means, as of
the close of any Distribution Date, the excess of the
Certificateholders' Monthly Principal Distributable Amount and any
outstanding Certificateholders' Principal Carryover Shortfall from
the preceding Distribution Date, over the amount in respect of
principal that is actually deposited in the Certificate Distribution
Account.
"Principal Distribution Amount" means, for any Distribution
Date, the sum of (a) the Available Principal for such Distribution
Date, and (b) the amount of Realized Losses for the related
Collection Period.
"Realized Losses" means, for any Collection Period, the
aggregate principal balances of any Receivables that became Defaulted
Receivables during such Collection Period.
"Total Distribution Amount" means, for each Distribution Date,
the sum of (a) the Available Interest, (b) the Available Principal
and (c) the Reserve Account Transfer Amount, in each case in respect
of such Distribution Date.
Deposits to the Distribution Accounts. On each Distribution Date,
after making the reimbursements to Servicer of Outstanding Advances,
Servicer shall instruct Indenture Trustee or, in the event that the
Collection Account is maintained with an institution other than Indenture
Trustee, instruct and cause such institution (based on the information
contained in the Servicer's Report delivered on the related Determination
Date) to make, and Indenture Trustee or such other institution shall make,
the following deposits and distributions from the Collection Account for
deposit in the applicable account by 11:00 a.m. (New York time), to the
extent of the Total Distribution Amount, in the following order of
priority:
(a) to Servicer, from the Total Distribution Amount, the
Servicing Fee for the related Collection Period and all accrued and
unpaid Servicing Fees for prior Collection Periods;
(b) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clause (a),
the Noteholders' Interest Distributable Amount;
(c) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clause (a) and
clause (b), the Noteholders' Principal Distributable Amount;
(d) to Owner Trustee for deposit in the Certificate
Distribution Account, from the Total Distribution Amount remaining
after the application of clauses (a) through (c), the
Certificateholders' Interest Distributable Amount;
(e) to Owner Trustee for deposit in the Certificate
Distribution Account, from the Total Distribution Amount remaining
after the application of clauses (a) through (d), the
Certificateholders' Principal Distributable Amount;
(f) to the Reserve Account until the amount on deposit in the
Reserve Account equals the Specified Reserve Account Balance; and
(g) to Seller, any amounts remaining.
On each Determination Date (other than the first Determination Date),
the Servicer will provide the Owner Trustee and the Indenture Trustee with
certain information with respect to the Collection Period related to the
prior Distribution Date, including the amount of aggregate collections on
the Receivables, the aggregate amount of Receivables which were written off
and the aggregate Purchase Amount of Receivables to be repurchased by the
Seller or to be purchased by the Servicer.
For purposes hereof, the following terms shall have the following
meanings:
"Noteholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Principal
Distributable Amount and the Noteholders' Interest Distributable
Amount.
"Noteholders' Interest Carryover Shortfall" means, with respect
to any Distribution Date, the excess of the Noteholders' Monthly
Interest Distributable Amount for the preceding Distribution Date and
any outstanding Noteholders' Interest Carryover Shortfall on such
preceding Distribution Date, over the amount in respect of interest
that is actually deposited in the Note Distribution Account on such
preceding Distribution Date, plus interest on the amount of interest
due but not paid to Noteholders on the preceding Distribution Date,
to the extent permitted by law, at the respective Interest Rates
borne by each class of Notes from such preceding Distribution Date
through the current Distribution Date.
"Noteholders' Interest Distributable Amount" means, for any
Distribution Date, the sum of the Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and the Noteholders'
Interest Carryover Shortfall for such Distribution Date.
"Noteholders' Monthly Interest Distributable Amount" means, for
any Distribution Date and for each class of Notes, the amount of
interest accrued on such class at its respective Interest Rate during
the related Interest Period (calculated on the basis of a 360-day
year and the actual number of days elapsed for the Class A-1 Notes
and on the basis of a 360-day year and twelve 30-day months in the
case of the Class A-2 Notes, Class A-3 Notes and Class A-4 Notes).
"Noteholders' Monthly Principal Distributable Amount" means, for
any Distribution Date, the Noteholders' Percentage of the Principal
Distribution Amount.
"Noteholders' Percentage" means 100% until the point in time at
which the Notes have been paid in full and zero thereafter.
"Noteholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Noteholders'
Monthly Principal Distributable Amount and any outstanding
Noteholders' Principal Carryover Shortfall from the preceding
Distribution Date over the amount in respect of principal that is
actually deposited in the Note Distribution Account for such
Distribution Date.
"Noteholders' Principal Distributable Amount" means, for any
Distribution Date, the sum of the Noteholder's Monthly Principal
Distributable Amount for such Distribution Date and the Noteholders'
Principal Carryover Shortfall as of the close of the preceding
Distribution Date; provided that the Noteholders' Principal
Distributable Amount shall not exceed the outstanding principal
balance of the Notes. In addition, on the Final Scheduled
Distribution Date of each class of Notes, the principal required to
be deposited in the Note Distribution Account will include the amount
necessary (after giving effect to the other amounts to be deposited
in the Note Distribution Account on such Distribution Date and
allocable to principal) to reduce the outstanding amount of such
class of Notes to zero.
On each Distribution Date, all amounts on deposit in the Note
Distribution Account (other than investment earnings) will be generally
paid in the following order of priority:
(a) to the applicable Noteholders, accrued and unpaid interest
on the outstanding principal balance of the applicable class of Notes
at the applicable Interest Rate;
(b) the Noteholders' Principal Distributable Amount in the
following order of priority:
(i) to the Holders of the Class A-1 Notes in reduction of
principal until the principal balance of the Class A-1 Notes has
been reduced to zero;
(ii) to the Holders of the Class A-2 Notes in reduction
of principal until the principal balance of the Class A-2 Notes
has been reduced to zero;
(iii) to the Holders of the Class A-3 Notes in reduction
of principal until the principal balance of the Class A-3 Notes
has been reduced to zero; and
(iv) to the Holders of the Class A-4 Notes in reduction
of principal until the principal balance of the Class A-4 Notes
has been reduced to zero.
On each Distribution Date, all amounts on deposit in the Certificate
Distribution Account will be distributed to the Certificateholders in the
following priority:
(a) first, to the Certificateholders, on a pro rata basis, an
amount equal to the Certificateholders' Interest Distributable
Amount; and
(b) second, to the Certificateholders, on a pro rata basis, an
amount equal to the Certificateholders' Principal Distributable
Amount.
Subordination of Certificateholders
The rights of the Certificateholders to receive distributions with
respect to the Receivables generally will be subordinated to the rights of
the Noteholders in the event of defaults and delinquencies on the
Receivables as provided in the Sale and Servicing Agreement. The
protection afforded to the Noteholders through subordination will be
effected both by the preferential right of the Noteholders to receive
current distributions with respect to the Receivables and by the
establishment of the Reserve Account. If on any Distribution Date the
entire Noteholders' Distributable Amount for such Distribution Date (after
giving effect to any amounts withdrawn from the Reserve Account) is not
deposited in the Note Distribution Account, the Certificateholders will not
receive any distributions.
The subordination of the Certificates and the Reserve Account are
intended to enhance the likelihood of receipt by Noteholders of the full
amount of principal and interest due them and to decrease the likelihood
that the Noteholders will experience losses. In addition, the Reserve
Account is intended to enhance the likelihood of receipt by
Certificateholders of the full amount of principal and interest due them
and to decrease the likelihood that the Certificateholders will experience
losses. However, in certain circumstances, the Reserve Account could be
depleted. If the amount required to be withdrawn from the Reserve Account
to cover shortfalls in collections on the Receivables exceeds the amount of
available cash in the Reserve Account, Noteholders or Certificateholders
could incur losses or a temporary shortfall in the amounts distributed to
the Noteholders or the Certificateholders could result, which could, in
turn, increase the average life of the Notes or the Certificates.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Information regarding certain legal aspects of the Receivables is set
forth under "Certain Legal Aspects of the Receivables" in the Prospectus.
LEGAL INVESTMENT
The Class A-1 Notes will be eligible for purchase by money market
funds under paragraph (a)(5) of Rule 2a-7 under the Investment Company Act
of 1940, as amended.
ERISA CONSIDERATIONS
The Notes
The Notes may be purchased by an employee benefit plan or an
individual retirement account (a "Plan") subject to ERISA or Section 4975
of the Code. A fiduciary of a Plan must determine that the purchase of a
Note is consistent with its fiduciary duties under ERISA and does not
result in the assets of the Trust being deemed to constitute plan assets or
in a nonexempt prohibited transaction as defined in Section 406 of ERISA or
Section 4975 of the Code. For additional information regarding the likely
treatment of the Notes as debt under ERISA, see "ERISA Considerations" in
the Prospectus.
However, without regard to whether the Notes are treated as an equity
interest for such purposes, the acquisition or holding of Notes by or on
behalf of a Plan could be considered to give rise to a prohibited
transaction if an Affiliate, the Seller, the Trust, the Servicer, the
Indenture Trustee or the Owner Trustee is or becomes a party in interest
under ERISA or disqualified person under the Code with respect to such
Plan. Certain exemptions from the prohibited transaction rules could be
applicable to the purchase and holding of Notes by a Plan depending on the
type and circumstances of the plan fiduciary making the decision to acquire
such Notes. Included among these exemptions, each of which contains
several conditions which must be satisfied before the exemption applies,
are: Prohibited Transaction Class Exemption ("PTCE") 95-60, regarding
investments by insurance company general accounts, PTCE 91-38, regarding
investments by bank collective investment funds; PTCE 90-1, regarding
investments by insurance company separate accounts, and PTCE 84-14,
regarding transactions effected by "qualified professional asset managers."
By its acceptance of a Note, each Noteholder shall be deemed to have
represented and warranted that its purchase and holding of the Note will
not result in a nonexempt prohibited transaction under Section 406(a) of
ERISA or Section 4975 of the Code.
The Certificates
The Certificates may not be acquired (a) with the assets of an
employee benefit plan (as defined in Section 3(3) of ERISA) that is subject
to the provisions of Title I of ERISA, (b) by a plan described in Section
4975(e) (1) of the Code or (c) by any entity whose underlying assets
include plan assets by reason of a plan's investment in the entity or which
uses plan assets to acquire Certificates. By its acceptance of a
Certificate, each Certificateholder will be deemed to have represented and
warranted that it is not subject to the foregoing limitation. In this
regard, purchasers that are insurance companies should consult with their
counsel with respect to the United States Supreme Court case interpreting
the fiduciary responsibility rules of ERISA, John Hancock Mutual Life
Insurance Co. v. Harris Trust and Savings Bank (decided December 13, 1993).
In John Hancock, the Supreme Court ruled that assets held in an insurance
company's general account may be deemed to be "plan assets" for ERISA
purposes under certain circumstances. Prospective purchasers should
determine whether the decision affects their ability to make purchases of
the Certificates. For additional information regarding treatment of the
Certificates under ERISA, see "ERISA Considerations" in the Prospectus.
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting
agreement, the Seller has agreed to cause the Trust to sell to each of the
underwriters listed below (each, an "Underwriter"), and each of the
Underwriters has agreed to purchase, the principal amount of the Securities
set forth opposite its name below. Under the terms and conditions of the
Underwriting Agreement, each of the Underwriters is obligated to take and
pay for all of the Securities if any are taken.
<TABLE>
<CAPTION>
Principal Amount Principal Amount Principal Amount Principal Amount Principal Amount
of Class A-1 of Class A-2 of Class A-3 of Class A-4 of Asset-Backed
Asset-Backed Notes Asset-Backed Notes Asset-Backed Notes Asset-Backed Notes Certificates
<S> <C> <C> <C> <C> <C>
- ------------------ $------------- $----------- $------------ $------------ $-----------
- ------------------ ------------- ----------- ------------ ------------ -----------
- ------------------ ------------- ----------- ------------ ------------ -----------
Total: $ $ $ $ $
============ =========== ============ ============ ===========
</TABLE>
<PAGE>
The Seller has been advised by the Underwriters that they propose
initially to offer the Securities to the public at the prices set forth
herein, and to certain dealers at such prices less the initial concession
not in excess of ____% per Class A-1 Note; _____% per Class A-2 Note;
_____% per Class A-3 Note; ___% per Class A-4 Note; and _____% per
Certificate. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of .__% of the principal amount of the Securities
to certain other dealers. After the initial public offering, the public
offering price and such concessions may be changed.
The Seller does not intend to apply for listing of the Notes or the
Certificates on a national securities exchange, but has been advised by the
Underwriters that they intend to make a market in the Notes and
Certificates. The Underwriters are not obligated, however, to make a
market in the Notes and the Certificates and may discontinue market making
at any time without notice. No assurance can be given as to the liquidity
of the trading market for the Notes or the Certificates.
The Seller has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
In the ordinary course of their respective businesses, each
Underwriter and its affiliates have engaged and may in the future engage in
commercial banking and investment banking transactions with the Seller.
<PAGE>
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus,
certain legal matters relating to the Notes and the Certificates and
certain federal income tax and other matters will be passed upon for the
Trust by Mayer, Brown & Platt, Chicago, Illinois and certain Minnesota tax
matters will be passed upon by _________________, Minneapolis, Minnesota.
Each of _________________ and Mayer, Brown & Platt may from time to time
render legal services to the Seller, the Servicer and its affiliates.
Certain legal matters will be passed upon for the Underwriters by Mayer,
Brown & Platt, Chicago, Illinois.
<PAGE>
INDEX OF DEFINED TERMS
Page
ABS.................................................................S-22
ABS Table...........................................................S-23
Advance..............................................................S-9
Aggregate Net Losses................................................S-29
APR.................................................................S-30
Available Interest..................................................S-31
Available Principal.................................................S-32
Available Reserve Amount............................................S-28
Average Delinquency Ratio...........................................S-29
Average Net Loss Ratio..............................................S-29
Bank.................................................................S-4
Basic Documents.....................................................S-13
Business Day.........................................................S-6
Certificate Balance.................................................S-32
Certificate Final Scheduled Distribution Date........................S-9
Certificate Rate.....................................................S-8
Certificateholder's Monthly Principal Distributable Amount..........S-32
Certificateholders...................................................S-8
Certificateholders' Interest Carryover Shortfall....................S-32
Certificateholders' Interest Distributable Amount...................S-32
Certificateholders' Monthly Interest Distributable Amount...........S-32
Certificateholders' Monthly Principal Distributable Amount...........S-9
Certificateholders' Percentage.......................................S-9
Certificateholders' Principal Carryover Shortfall...................S-32
Certificateholders' Principal Distributable Amount..................S-32
Certificates.........................................................S-4
Class A-1 Final Scheduled Distribution Date..........................S-7
Class A-1 Interest Rate..............................................S-6
Class A-1 Notes......................................................S-4
Class A-2 Final Scheduled Distribution Date..........................S-7
Class A-2 Interest Rate..............................................S-6
Class A-2 Notes......................................................S-4
Class A-3 Interest Rate..............................................S-6
Class A-3 Notes......................................................S-4
Class A-4 Final Distribution Date....................................S-8
Class A-4 Interest Rate..............................................S-6
Class A-4 Notes......................................................S-4
Closing Date.........................................................S-4
Code................................................................S-12
Collection Period....................................................S-7
Commission...........................................................S-2
Cutoff Date..........................................................S-5
Defaulted Receivable................................................S-30
Delinquency Ratio...................................................S-29
Deposit Date.........................................................S-9
Determination Date..................................................S-26
Distribution Date....................................................S-6
ERISA...............................................................S-12
Expected Interest...................................................S-30
Final Scheduled Distribution Date....................................S-9
Final Scheduled Maturity Date........................................S-5
Financed Vehicles....................................................S-5
Indenture............................................................S-4
Indenture Trustee....................................................S-4
Interest Collections................................................S-30
Interest Period......................................................S-6
Interest Rates.......................................................S-6
Interest Shortfall..................................................S-30
Issuer...............................................................S-4
Liquidation Proceeds................................................S-29
Motor Vehicle Loans..................................................S-5
Net Interest Collections............................................S-31
Net Loss Ratio......................................................S-29
Non-Advance Receivables.............................................S-31
Noteholders..........................................................S-6
Noteholders' Distributable Amount...................................S-34
Noteholders' Interest Carryover Shortfall...........................S-34
Noteholders' Interest Distributable Amount..........................S-34
Noteholders' Monthly Interest Distributable Amount..................S-34
Noteholders' Monthly Principal Distributable Amount.................S-34
Noteholders' Percentage.............................................S-34
Noteholders' Principal Carryover Shortfall..........................S-34
Noteholders' Principal Distributable Amount.........................S-34
Notes................................................................S-4
Original Pool Balance................................................S-8
Outstanding Advances................................................S-31
Owner Trustee........................................................S-4
Payment Date.........................................................S-6
Plan................................................................S-36
Pool Balance.........................................................S-5
Principal Balance....................................................S-5
Principal Distribution Amount.......................................S-33
Prospectus...........................................................S-1
Purchase Amount.....................................................S-31
Purchased Receivable................................................S-31
Rating Agencies.....................................................S-12
Realized Losses.....................................................S-33
Receivables..........................................................S-5
Receivables Pool....................................................S-16
Record Date..........................................................S-6
Reserve Account.....................................................S-10
Reserve Account Deposit.............................................S-10
Reserve Account Transfer Amount.....................................S-29
Sale and Servicing Agreement.........................................S-5
Securities...........................................................S-4
Securityholders......................................................S-8
Seller...............................................................S-4
Servicer.............................................................S-4
Specified Reserve Account Balance...................................S-28
Supplemental Servicing Fee..........................................S-31
Total Distribution Amount...........................................S-33
Transfer and Servicing Agreements...................................S-27
Trust................................................................S-4
Trust Agreement......................................................S-4
Underwriter.........................................................S-36
Weighted Average APR................................................S-31
<PAGE>
========================================
No dealer, salesman or other person
has been authorized to give any
information or to make any represen-
tation not contained in this Prospectus
Supplement or the Prospectus and, if
given or made, such information or
representation must not be relied upon
as having been authorized by the
Seller or the Underwriters. This
Prospectus Supplement and the Prospectus
do not constitute an offer of any
securities other than those to which
they relate or an offer to sell, or a
solicitation of an offer to buy, to any
person in any jurisdiction where such
an offer or solicitation would be
unlawful. Neither the delivery of this
Prospectus Supplement and the
Prospectus nor any sale made hereunder
shall, under any circumstances,
create any implication that the
information contained herein is correct
as of any time subsequent to their
respective dates.
___________________________
TABLE OF CONTENTS
Prospectus Supplement
Page
----
Reports to Securityholders.. S-2
Summary of Terms............ S-4
Risk Factors................ S-13
The Trust................... S-15
The Receivables Pool........ S-16
The Seller, the Servicer and
Norwest Corporation....... S-21
Weighted Average Life of the
Securities................ S-22
Description of the Notes.... S-25
Description of the
Certificates.............. S-27
Description of the Transfer
and Servicing Agreements.. S-27
Certain Legal Aspects of
the Receivables............. S-35
Legal Investment............ S-36
ERISA Considerations........ S-36
Underwriting................ S-37
Legal Opinions.............. S-37
Index of Defined Terms...... S-38
<PAGE>
Prospectus
Page
----
Available Information.......
Incorporation of Certain
Documents by Reference....
Summary of Terms............
Risk Factors................
The Trusts..................
The Receivables Pools.......
Weighted Average Life of
the Securities..............
Pool Factors and Trading
Information...............
Use of Proceeds.............
The Seller..................
The Bank and Norwest
Corporation...............
Description of the Notes....
Description of the
Certificates..............
Certain Information Regarding
the Securities............
Description of the Transfer
and Servicing Agreements..
Certain Legal Aspects of
the Receivables...........
Federal Income Tax
Consequences..............
Certain State Tax
Consequences..............
ERISA Considerations........
Plan of Distribution........
Notice to Canadian
Residents.................
Legal Opinions..............
Index of Defined Terms......
Global Clearance, Settlement
and Documentation
Procedures................
Until 90 days after the date of this
Prospectus Supplement, all dealers
effecting transactions in the
Securities described in this Prospectus
Supplement, whether or not participating
in this distribution, may be
required to deliver this Prospectus
Supplement and the Prospectus. This is
in addition to the obligation of
dealers to deliver this Prospectus
Supplement and the Prospectus when
acting as underwriter and with respect
to their unsold allotments or
subscriptions.
===========================================
<PAGE>
==================================
$_________________________
(Approximate)
Norwest Auto
Receivables Corporation
(Seller)
$______________
Class A-1 ____%
Asset Backed Notes
$______________
Class A-2 ____%
Asset Backed Notes
$______________
Class A-3____%
Asset Backed Notes
$______________
Class A-4____%
Asset Backed Notes
$______________
____%
Asset Backed Certificates
=======================
PROSPECTUS SUPPLEMENT
______________, 199__
=======================
==============================
<PAGE>
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus supplement and the related prospectus
shall not constitute an offer to sell or the solicitation of an offer to
buy nor shall there be any sale of these securities in any State in which
such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED _________ __, 1996
[ALTERNATE COVER]
[Owner Trust Supplement]
PRELIMINARY PROSPECTUS SUPPLEMENT
(To Prospectus dated __________, 1996)
[$____________________]
Norwest Auto Trust 1996 - A
$______________ Class A-1 ____% Asset Backed Notes
$______________ Class A-2 ____% Asset Backed Notes
$______________ Class A-3 ____% Asset Backed Notes
$______________ Class A-4 ____% Asset Backed Notes
$______________ ____% Asset Backed Certificates
Norwest Auto Receivables Corporation
Seller
Norwest Bank Minnesota, N.A.
Servicer
The Norwest Auto Trust 1996-A (the "Trust") will be governed by a
Trust Agreement, to be dated as of ____________, 1996, between Norwest Auto
Receivables Corporation, as seller (the "Seller") and Wilmington Trust
Company, as Owner Trustee. The Trust will issue $_____________ aggregate
principal amount of Class A-1 ___% Asset Backed Notes (the "Class A-1
Notes"), $____________ aggregate principal amount of Class A-2 ___% Asset
Backed Notes (the "Class A-2 Notes"), $___________ aggregate principal
amount of Class A-3 Asset Backed Notes (the "Class A-3 Notes"), and
$_____________ aggregate principal amount of Class A-4 Asset Backed Notes
(the "Class A-4 Notes" and, together with the Class A-1 Notes, the Class
A-2 Notes and the Class A-3 Notes, the "Notes") pursuant to an Indenture to
be dated as of _____________, 1996, between the Trust and Chase Manhattan
Bank, as Indenture Trustee. The Trust will also issue $______________
aggregate principal amount of ___% Asset Backed Certificates (the
"Certificates" and, together with the Notes, the "Securities").
(continued on following page)
------------------
Prospective investors should consider the "Risk Factors" set forth at page
S-__ herein and at page ___ in the accompanying Prospectus (the "Prospectus").
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT BENEFICIAL
INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS OF OR
INTERESTS IN NORWEST AUTO RECEIVABLES CORPORATION, NORWEST BANK
MINNESOTA, N.A., ANY OTHER NORWEST BANK, NORWEST CORPORATION
OR ANY OF THEIR AFFILIATES. NEITHER THE SECURITIES NOR THE
RECEIVABLES ARE INSURED OR GUARANTEED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, ANY OTHER GOVERN-
MENTAL AGENCY OR INSTRUMENTALITY,NORWEST AUTO
RECEIVABLES CORPORATION, NORWEST BANK
MINNESOTA, N.A., ANY OTHER NORWEST
BANK, NORWEST INVESTMENT SERVICES,
INC., NORWEST CORPORATION OR ANY
OF THEIR AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Price to Underwriting Proceeds to
Public(1) Discounts the Seller(1)(2)
<S> <C> <C> <C>
Per Class A-1 Note % % %
Per Class A-2 Note % % %
Per Class A-3 Note % % %
Per Class A-4 Note % % %
Per Certificate % % %
Total $____________ $___________ $____________
- ----------------------
<FN>
(1) Plus accrued interest, if any, from ___________, 1996.
(2) Before deducting expenses, estimated to be $___________.
</TABLE>
This Prospectus Supplement and the related Prospectus may be used
by Norwest Investment Services, Inc., an affiliate of the Seller, in
connection with market making transactions in the Certificates and Notes.
Norwest Investment Services, Inc. may act as principal or agent in such
transactions. Such sales will be made at prices related to prevailing
market prices at the time of sale. Certain information in this Prospectus
Supplement will be updated from time to time as described in "Incorporation
of Certain Documents by Reference."
Norwest Investment Services, Inc.
September __, 1996
<PAGE>
[ALTERNATE PAGE]
UNDERWRITING
This Prospectus Supplement and the related Prospectus may be used by
Norwest Investment Services, Inc., an affiliate of the Seller, the Servicer
and the Affiliates, in connection with offers and sales relating to market
making transactions in the Certificates. Norwest Investment Services, Inc.
may act as principal or agent in such transactions. Such sales will be made
at prices related to prevailing market prices at the time of sale. Norwest
Investment Services, Inc. does not have any obligation to make a market in
the Notes or the Certificates, and it may discontinue any such
market-making activities at any time without notice, in its sole
discretion. Norwest Investment Services, Inc. is among the underwriters
participating in the initial distribution of the Notes and the
Certificates.
LEGAL OPINION
In addition to the legal opinions described in the Prospectus,
certain legal matters relating to the Notes and the Certificates and
certain federal income tax and other matters will be passed upon for the
Trust by Mayer, Brown & Platt, Chicago, Illinois and certain Minnesota tax
matters will be passed upon by ____________, Minneapolis, Minnesota.
Each of _____________ and Mayer, Brown & Platt may from time to time
render legal services to the Seller, the Servicer and its affiliates.
Certain legal matters will be passed upon for the Underwriters by Mayer,
Brown & Platt, Chicago, Illinois.
<PAGE>
No dealer, salesman or other person
has been authorized to give any
information or to make any
representation not contained in this
Prospectus Supplement or the Prospectus
and, if given or made, such information
or representation must not be relied
upon as having been authorized by the
Seller or the Underwriters. This
Prospectus Supplement and the
Prospectus do not constitute an offer
of any securities other than those
to which they relate or an offer to
sell, or a solicitation of an offer to
buy, to any person in any jurisdiction
where such an offer or solicitation
would be unlawful. Neither the
delivery of this Prospectus Supplement
and the Prospectus nor any sale made
hereunder shall, under any circumstances,
create any implication that the
information contained herein is correct
as of any time subsequent to their
respective dates.
---------------------------
TABLE OF CONTENTS
Prospectus Supplement
Page
-----
Reports to Securityholders.................... S-2
Summary of Terms.............................. S-4
Risk Factors.................................. S-13
The Trust..................................... S-15
The Receivables Pool.......................... S-16
The Seller, the Servicer and Norwest
Corporation................................. S-21
Weighted Average Life of the Securities....... S-22
Description of the Notes...................... S-25
Description of the Certificates............... S-27
Description of the Transfer and Servicing
Agreements.................................. S-27
Certain Legal Aspects of the Receivables...... S-35
Legal Investment.............................. S-36
ERISA Considerations.......................... S-36
Underwriting.................................. S-37
Legal Opinions................................ S-37
Index of Defined Terms........................ S-38
Prospectus
Page
-----
Available Information.........................
Incorporation of Certain Documents
by Reference................................
Summary of Terms..............................
Risk Factors..................................
The Trusts....................................
The Receivables Pools.........................
Weighted Average Life of the Securities.......
Pool Factors and Trading Information..........
Use of Proceeds...............................
The Seller....................................
The Bank and Norwest Corporation..............
Description of the Notes......................
Description of the Certificates...............
Certain Information Regarding the
Securities..................................
Description of the Transfer and Servicing
Agreements
Certain Legal Aspects of the Receivables......
Federal Income Tax Consequences...............
Certain State Tax Consequences................
ERISA Considerations..........................
Plan of Distribution..........................
Notice to Canadian Residents..................
Legal Opinions................................
Index of Defined Terms........................
Global Clearance, Settlement and
Documentation Procedures....................
Until 90 days after the date of this Prospectus
Supplement, all dealers effecting transactions
in the Securities described in this Prospectus
Supplement, whether or not participating
in this distribution, may be required to deliver
this Prospectus Supplement and the Prospectus.
This is in addition to the obligation of
dealers to deliver this Prospectus
Supplement and the Prospectus when acting as
underwriter and with respect to their unsold
allotments or subscriptions.
<PAGE>
[ALTERNATE BACK COVER]
$-------------------------
(Approximate)
NORWEST AUTO
RECEIVABLES CORPORATION
(Seller)
$--------------
Class A-1 ____%
Asset Backed Notes
$--------------
Class A-2 ____%
Asset Backed Notes
$--------------
Class A-3____%
Asset Backed Notes
$--------------
Class A-4____%
Asset Backed Notes
$--------------
----%
Asset Backed Certificates
=======================
PROSPECTUS SUPPLEMENT
_______________, 199__
=======================
Norwest Investment Services, Inc.
<PAGE>
<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 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.
PROSPECTUS
SUBJECT TO COMPLETION, DATED __________ __, 1996
[ALTERNATE COVER]
NORWEST AUTO TRUSTS
Asset Backed Notes
Asset Backed Certificates
[NORWEST LOGO]
NORWEST AUTO RECEIVABLES CORPORATION
Seller
NORWEST BANK MINNESOTA, N.A.
Servicer
The Asset Backed Notes (the "Notes") and the Asset Backed
Certificates (the "Certificates" and, together with the Notes, the
"Securities") described herein may be sold from time to time in one or more
series, in amounts, at prices and on terms to be determined at the time of
sale and to be set forth in a supplement to this Prospectus (a "Prospectus
Supplement"). Each series of Securities, which may include one or more
classes of Notes or one or more classes of Certificates (or both), will be
issued by a trust to be formed on or before the issuance date for that
series (each, a "Trust"). Each Trust will be formed pursuant to either a
Trust Agreement to be entered into among Norwest Auto Receivables
Corporation, a Delaware corporation, as seller (the "Seller"), Norwest Bank
Minnesota, N.A., in its capacity as servicer (in such capacity, the
"Servicer"), and the trustee specified in the related Prospectus Supplement
(the "Trustee") or a Pooling and Servicing Agreement to be entered into
among the Trustee, the Seller and the Servicer. If a series of Securities
includes Notes, such Notes of a series will be issued and secured pursuant
to an Indenture between the Trust and the indenture trustee specified in
the related Prospectus Supplement (the "Indenture Trustee") and will
represent indebtedness of the related Trust. The Certificates of a series
will represent fractional undivided interests in the related Trust. Certain
capitalized terms used in this Prospectus are defined in this Prospectus on
the pages indicated in the "Index of Terms" on page [___] of this
Prospectus.
The related Prospectus Supplement will specify which class or
classes of Notes, if any, and which class or classes of Certificates, if
any, of the related series are being offered thereby. The property of each
Trust will include a pool of promissory notes and security agreements
and/or retail installment sales contracts secured by new or used
automobiles and light duty trucks (collectively, the "Receivables"),
payments received thereunder on and after the applicable Cutoff Date set
forth in the related Prospectus Supplement, security interests in the
vehicles financed thereby, rights under dealer agreements, rights with
respect to deposit accounts in which collections are held or that serve as
credit enhancement, any other credit enhancements, the proceeds of the
foregoing and any proceeds from claims on insurance policies with respect
to the Financed Vehicles, all as described herein and in the related
Prospectus Supplement. See "The Trusts."
Prospective investors should consider the "Risk Factors"
set forth at page [16] herein.
ANY NOTES OF A SERIES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES OF A
SERIES REPRESENT BENEFICIAL INTERESTS IN, THE RELATED TRUST ONLY AND DO
NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN NORWEST AUTO RECEIVABLES
CORPORATION, NORWEST BANK MINNESOTA, N.A., ANY OTHER NORWEST BANK,
NORWEST CORPORATION OR ANY OF THEIR AFFILIATES. NONE OF THE NOTES,
NOTES, THE CERTIFICATES OR THE RECEIVABLES ARE GUARANTEED OR
INSURED BY, THE FEDERAL DEPOSIT INSURANCE CORPORATION, ANY
OTHER GOVERNMENT AGENCY OR INSTRUMENTALITY, NORWEST AUTO
RECEIVABLES CORPORATION, NORWEST BANK MINNESOTA, N.A.,
ANY OTHER NORWEST BANK, NORWEST INVESTMENT SERVICES,
INC., NORWEST CORPORATION OR
ANY OF THEIR AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
This Prospectus may not be used to consummate sales of Securities offered
hereby unless accompanied by a Prospectus Supplement.
Norwest Investment Services, Inc.
The date of this Prospectus is _______ __, 1996.
<PAGE>
[ALTERNATE PAGE]
The related Prospectus Supplement will indicate whether the Seller
believes that all conditions of the Exemption other than those within the
control of the investors have been met with respect to the Senior
Certificates, and whether the Senior Certificates may be acquired by
Benefit Plans.
Because any Certificates issued by a Trust that are subordinate to
any other class of Securities (the "Subordinate Certificates") will not be
eligible for the relief afforded by the Exemption, such Subordinate
Certificates may not be acquired with the assets of a Benefit Plan. Each
purchaser of a Subordinate Certificate shall be deemed to represent and
warrant that it is not acquiring or holding the Subordinate Certificate
with the assets of a Benefit Plan.
PLAN OF DISTRIBUTION
This Prospectus is to be used by Norwest Investment Services, Inc.
("NISI"), an affiliate of the Affiliates, the Servicer, the Seller and
Norwest Corporation, in connection with offers and sales related to
market-making transactions in the Securities in which NISI acts as
principal. NISI may also act as agent in such transactions. NISI is a
broker/dealer and a member of the National Association of Securities
Dealers, Inc. and the Securities Investor Protection Corporation. Sales
will be made at prices related to the prevailing prices at the time of
sale. NISI is not a bank or thrift, is a subsidiary of Norwest Corporation
and an entity separate from any Affiliate, and is solely responsible for
its contractual obligations and commitments. The portion of the net
proceeds paid to the Seller will be used to purchase the Receivables from
the Affiliates.
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
The distribution of the Securities in Canada is being made only on
a private placement basis exempt from the requirement that each Trust
prepare and file a prospectus with the securities regulatory authorities in
each province where trades of the Securities are effected. Accordingly, any
resale of the Securities in Canada must be made in accordance with
applicable securities law which will vary depending on the relevant
jurisdiction, and which may require resales to be made in accordance with
available statutory exemptions or pursuant to a discretionary exemption
granted by the applicable Canadian securities regulatory authority.
Purchasers are advised to seek legal advice prior to any resale of the
Securities.
Representation of Purchasers
Each purchaser of Securities in Canada who receives a purchase
confirmation will be deemed to represent to the Seller, the applicable
Trust and the dealer from whom such purchase confirmation is received that
(i) such purchaser is entitled under applicable provincial securities laws
to purchase such Securities without the benefit of a prospectus qualified
under such securities laws, (ii) where required by law, that such purchaser
is purchasing as principal and not as agent, and (iii) such purchaser has
reviewed the text above under "Resale Restrictions."
<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 buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
SUBJECT TO COMPLETION, DATED __________, 199_
[Owner Trust Supplement]
PRELIMINARY PROSPECTUS SUPPLEMENT
(To Prospectus dated __________, 199_)
[ALTERNATE COVER]
[$______________]
Norwest Auto Trust 199_ - _
$______________ Class A-1 ____% Asset Backed Notes
$______________ Class A-2 ____% Asset Backed Notes
$______________ ____% Asset Backed Certificates
Norwest Auto Receivables Corporation
Seller
Norwest Bank Minnesota, N.A.
Servicer
The Norwest Auto Trust 199_-__ (the "Trust") will be governed by a
Trust Agreement, to be dated as of ____________, 199_, between Norwest Auto
Receivables Corporation, as seller (the "Seller") and
___________________________, as Owner Trustee. The Trust will issue
$_____________ aggregate principal amount of Class A-1 ___% Money Market
Asset Backed Notes (the "Class A-1 Notes"), and $____________ aggregate
principal amount of Class A-2 ___% Asset Backed Notes (the "Class A-2
Notes" and, together with the Class A-1 Notes, the "Notes") pursuant to an
Indenture to be dated as of _____________, 199_, between the Trust and
___________________, as Indenture Trustee. The Trust will also issue
$__________________ aggregate principal amount of ___% Asset Backed
Certificates (the "Certificates" and, together with the Notes, the
"Securities"). The assets of the Trust will include a pool of motor vehicle
promissory notes and security agreements and/or retail installment sale
contracts secured by new or used automobiles and light duty trucks
(collectively, the "Receivables"), payments received thereunder after
_________, 199__, security interests in the motor vehicles financed
thereby, rights under Dealer Agreements, certain deposit accounts in which
collections are held, any proceeds from claims on insurance policies
relating to the Financed Vehicles and the proceeds of the foregoing.
(continued on following page)
---------------------------
Prospective investors should consider the "Risk
Factors" set forth at page S-__ herein and at page
___ in the accompanying Prospectus (the
"Prospectus").
<PAGE>
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT BENEFICIAL
INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS OF OR INTERESTS
RECEIVABLES CORPORATION, NORWEST BANK MINNESOTA, N.A., ANY OTHER NORWEST
BANK OR ANY OF THEIR AFFILIATES. NEITHER THE SECURITIES NOR THE
RECEIVABLES ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, ANY OTHER GOVERNMENTAL AGENCY
OR INSTRUMENTALITY OR BY NORWEST AUTO RECEIVABLES
CORPORATION, NORWEST BANK MINNESOTA, N.A.,
ANY OTHER NORWEST BANK, NORWEST
INVESTMENT SERVICES, INC. OR
OR ANY OF THEIR AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------------
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions the Seller(1)(2)
------------ ------------- ----------------
<S> <C> <C> <C>
Per Class A-1 Note % % %
Per Class A-2 Note % % %
Per Certificate % % %
Total $____________ $____________ $____________
- ----------------------
<FN>
(1) Plus accrued interest, if any, from ___________, 199__.
(2) Before deducting expenses, estimated to be $___________.
</TABLE>
This Prospectus Supplement and the related Prospectus may be used
by Norwest Investment Services, Inc., an affiliate of the Seller, in
connection with market making transactions in the Certificates and Notes.
Norwest Investment Services, Inc. may act as principal or agent in such
transactions. Such sales will be made at prices related to prevailing
market prices at the time of sale. Certain information in this Prospectus
Supplement will be updated from time to time as described in "Incorporation
of Certain Documents by Reference."
Norwest Investment Services, Inc.
_____________, 199__.
<PAGE>
[ALTERNATE PAGE]
UNDERWRITING
This Prospectus Supplement and the related Prospectus may be used by
Norwest Investment Services, Inc., an affiliate of the Seller, the Servicer
and the Affiliates, in connection with offers and sales relating to market
making transactions in the Certificates. Norwest Investment Services, Inc.
may act as principal or agent in such transactions. Such sales will be made
at prices related to prevailing market prices at the time of sale. Norwest
Investment Services, Inc. does not have any obligation to make a market in
the Notes or the Certificates, and it may discontinue any such
market-making activities at any time without notice, in its sole
discretion. Norwest Investment Services, Inc. is among the underwriters
participating in the initial distribution of the Notes and the Certificates.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus,
certain legal matters relating to the Notes and the Certificates and
certain federal income tax and other matters will be passed upon for the
Trust by _________, and by Mayer, Brown & Platt, Chicago, Illinois. Mayer,
Brown & Platt may from time to time render legal services to the Seller,
the Servicer and its affiliates. Certain legal matters will be passed upon
for the Underwriters by Mayer, Brown & Platt, Chicago, Illinois.
<PAGE>
====================================
No dealer, salesman or other person
has been authorized to give
any information or to make any
representation not contained in this
Prospectus Supplement or the
Prospectus and, if given or made,
such information or representation
must not be relied upon as
having been authorized by the Seller
or the Underwriters. This
Prospectus Supplement and the
Prospectus do not constitute an
offer of any securities other than
those to which they relate or an
offer to sell, or a solicitation of
an offer to buy, to any person in
any jurisdiction where such an offer
or solicitation would be
unlawful. Neither the delivery of
this Prospectus Supplement and
the Prospectus nor any sale made
hereunder shall, under any
circumstances, create any implication
that the information
contained herein is correct as of any
time subsequent to their
respective dates.
---------------------------
TABLE OF CONTENTS
Prospectus Supplement
Page
----
Reports to Securityholders.................... S-2
Summary of Terms.............................. S-3
Risk Factors.................................. S-9
The Trust..................................... S-11
The Receivables Pool.......................... S-11
The Seller, the Servicer and Norwest
Corporation................................. S-15
Weighted Average Life of the Securities....... S-15
Description of the Notes...................... S-17
Description of the Certificates............... S-18
Description of the Transfer and Servicing
Agreements.................................. S-19
Certain Legal Aspects of the Receivables...... S-26
Legal Investment.............................. S-26
ERISA Considerations.......................... S-26
Underwriting.................................. S-27
Legal Opinions................................ S-27
Index of Defined Terms........................ S-28
Prospectus
Page
----
Available Information.........................
Incorporation of Certain Documents
by Reference................................
Summary of Terms..............................
Risk Factors..................................
The Trusts....................................
The Receivables Pools.........................
Weighted Average Life of the Securities.......
Pool Factors and Trading Information..........
Use of Proceeds...............................
The Seller....................................
The Bank and Norwest Corporation..............
Description of the Notes......................
Description of the Certificates...............
Certain Information Regarding the
Securities..................................
Description of the Transfer and Servicing
Agreements..................................
Certain Legal Aspects of the Receivables......
Federal Income Tax Consequences...............
Certain State Tax Consequences................
ERISA Considerations..........................
Plan of Distribution..........................
Notice to Canadian Residents..................
Legal Opinions................................
Index of Defined Terms........................
Global Clearance, Settlement and
Documentation Procedures....................
Until 90 days after the date of this Prospectus
Supplement, all dealers effecting transactions
in the Securities described in this Prospectus
Supplement, whether or not participating in this
distribution, may be required to deliver this
Prospectus Supplement
====================================
<PAGE>
====================================
$-------------------------
(Approximate)
NORWEST AUTO
RECEIVABLES CORPORATION
(Seller)
$--------------
Class A-1
___% Money Market
Asset Backed Notes
$--------------
----%
Asset Backed Certificates
=======================
PROSPECTUS SUPPLEMENT
_______________, 199__
=======================
Norwest Investment Services, Inc.
====================================<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws
of any such State.
SUBJECT TO COMPLETION, DATED __________, 199_
[Grantor Trust Supplement]
PRELIMINARY PROSPECTUS SUPPLEMENT
(To Prospectus dated __________, 199_)
[$______________]
Norwest Auto Trust 199_ - _
$______________ Class ____% Asset Backed Certificates, Class A
$______________ Class ____% Asset Backed Certificates, Class B
Norwest Auto Receivables Corporation
Seller
Norwest Bank Minnesota, N.A.
Servicer
..............................................The Norwest Auto Trust
199__-__ (the "Trust") will be formed pursuant to a Pooling and Servicing
Agreement, to be dated as of _________, 199__, among Norwest Auto
Receivables Corporation, as seller (the "Seller"), Norwest Bank Minnesota,
N.A., in its capacity as servicer (in such capacity, the "Servicer"), and
___________, as Trustee. The Trust will issue $_________ aggregate
principal amount of ____% Asset Backed Certificates, Class A (the "Class A
Certificates"), and $________ aggregate principal amount of ____% Asset
Backed Certificates, Class B (the "Class B Certificates" and, together with
the Class A Certificates, the "Certificates"). The Class A Certificates
will evidence in the aggregate an approximate ___% undivided ownership in
the Trust and the Class B Certificates will evidence in the aggregate an
approximate ___% undivided ownership interest in the Trust. The rights of
the Class B Certificateholders to receive distributions with respect to the
Receivables are subordinated to the rights of the Class A
Certificateholders to the extent described herein. See "Description of the
Certificates--Distributions." The Trust property will include a pool of
motor vehicle promissory notes and security agreements and/or retail
installment sale contracts secured by new or used automobiles and light
duty trucks (collectively, the "Receivables"), payments received thereunder
after _________, 199__, security interests in the motor vehicles financed
thereby, rights under Dealer Agreements, certain deposit accounts in which
collections are held, any proceeds from claims on certain insurance
policies and the proceeds of the foregoing. Certain capitalized terms used
in this Prospectus Supplement are defined in this Prospectus Supplement on
the pages indicated in the "Index of Terms" on page ___ of this Prospectus
Supplement or, to the extent not defined herein, have the meanings assigned
to such terms in the Prospectus.
(continued on following page)
---------------------------
<PAGE>
Prospective investors should consider the "Risk Factors"
set forth at page S-__ herein and at page ___
in the accompanying Prospectus (the
"Prospectus").
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND DO NOT
REPRESENT OBLIGATIONS OF OR INTERESTS IN THE NORWEST AUTO RECEIVABLES
CORPORATION, NORWEST BANK MINNESOTA, N.A., ANY OTHER NORWEST BANK,
NORWEST CORPORATION OR ANY OF THEIR AFFILIATES. NEITHER THE
CERTIFICATES NOR THE RECEIVABLES ARE INSURED OR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, ANY OTHER
GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY NORWEST
AUTO RECEIVABLES CORPORATION, NORWEST BANK
MINNESOTA, N.A., ANY OTHER NORWEST BANK,
NORWEST INVESTMENT SERVICES, INC.,
NORWEST CORPORATION OR ANY OF
THEIR AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE>
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public(1) Commissions the Seller(1)(2)
----------- -------------- ----------------
<S> <C> <C> <C>
Per Class A Certificate % % %
Per Class B Certificate % % %
Total $____________ $____________ $____________
- --------------------------
<FN>
(1) Plus accrued interest, if any, from _______, 199__.
(2) Before deducting expenses, estimated to be $_________.
</TABLE>
This Prospectus Supplement and the related Prospectus may be used
by Norwest Investment Services, Inc., an affiliate of the Seller, in
connection with market making transactions in the Certificates. Norwest
Investment Services, Inc. may act as principal or agent in such
transactions. Such sales will be made at prices related to prevailing
market prices at the time of sale. Certain information in this Prospectus
Supplement will be updated from time to time as described in "Incorporation
of Certain Documents by Reference."
Norwest Investment Services, Inc.
___________, 19__.
<PAGE>
[ALTERNATE PAGE]
UNDERWRITING
After the initial distribution of the Certificates by the
Underwriters, this Prospectus Supplement may be used by Norwest Investment
Services, Inc., an affiliate of the Seller, the Servicer and the
Affiliates, in connection with offers and sales relating to market making
transactions in the Certificates. Norwest Investment Services, Inc. may act
as principal or agent in such transactions. Such sales will be made at
prices related to prevailing market prices at the time of sale.Norwest
Investment Services, Inc. does not have any obligation to make a market in
the Notes or the Certificates, and it may discontinue any such
market-making activities at any time without notice, in its sole discretion.
Norwest Investment Services, Inc. is among the underwriters participating
in the initial distribution of the Notes and the Certificates.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus,
certain federal income tax and other legal matters will be passed upon for
the Trust by Mayer, Brown & Platt, Chicago, Illinois. Mayer, Brown & Platt
may from time to time render legal services to the Seller, the Servicer and
its affiliates. Certain legal matters will be passed upon for the
Underwriters by Mayer, Brown & Platt, Chicago, Illinois.
<PAGE>
[ALTERNATE PAGE]
==========================================
No dealer, salesman or other person has
been authorized to give any information
or to make any representation not contained
in this Prospectus Supplement or the
Prospectus and, if given or made,
such information or representation must
not be relied upon as having been
authorized by the Seller or the
Underwriters. This Prospectus Supplement
and the Prospectus do not constitute an
offer of any securities other than those
to which they relate or an offer to sell,
or a solicitation of an offer to buy,
to any person in any jurisdiction where
such an offer or solicitation would be
unlawful. Neither the delivery of this
Prospectus Supplement and the Prospectus
nor any sale made hereunder shall, under any
circumstances, create any implication that
the information contained herein is correct
as of any time subsequent to their
respective dates.
---------------------------
TABLE OF CONTENTS
Prospectus Supplement
Page
-----
Reports to Certificateholders................. S-2
Summary of Terms.............................. S-3
Risk Factors.................................. S-9
The Trust..................................... S-10
The Receivables Pool.......................... S-10
The Seller, the Servicer and Norwest
Corporation................................. S-14
Weighted Average Life of the Certificates..... S-14
Description of the Certificates............... S-14
Certain Legal Aspects of the Receivables...... S-20
ERISA Considerations.......................... S-20
Underwriting.................................. S-21
Legal Opinions................................ S-21
Index of Defined Terms........................ S-22
Prospectus
Page
----
Available Information.........................
Incorporation of Certain Documents
by Reference................................
Summary of Terms..............................
Risk Factors..................................
The Trusts....................................
The Receivables Pools.........................
Weighted Average Life of the Securities.......
Pool Factors and Trading Information..........
Use of Proceeds...............................
The Seller....................................
The Bank and Norwest Corporation..............
Description of the Notes......................
Description of the Certificates...............
Certain Information Regarding the
Securities..................................
Description of the Transfer and Servicing
Agreements..................................
Certain Legal Aspects of the Receivables......
Federal Income Tax Consequences...............
Certain State Tax Consequences................
ERISA Considerations..........................
Plan of Distribution..........................
Notice to Canadian Residents..................
Legal Opinions................................
Index of Defined Terms........................
Global Clearance, Settlement and Tax
Documentation Procedures....................
Until 90 days after the date of this Prospectus
Supplement, all dealers effecting transactions
in the securities described in this Prospectus
Supplement, whether or not participating
in this distribution, may be
required to deliver this Prospectus
Supplement and the Prospectus. This is
in addition to the obligation of
dealers to deliver this Prospectus
Supplement and the Prospectus when acting
as underwriters and with respect
to their unsold allotments
or subscriptions.
================================================
<PAGE>
================================================
$-------------------------
(Approximate)
NORWEST AUTO
RECEIVABLES CORPORATION
(Seller)
$_____________
__% Asset Backed
Certificates
Class A
$_____________
__% Asset Backed
Certificates
Class B
=======================
PROSPECTUS SUPPLEMENT
_______________, 199__
=======================
Norwest Investment Services, Inc.
=============================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized list of the estimated expenses to be incurred
in connection with the offering of the securities being offered hereunder
other than underwriting discounts and commissions.
Registration Fee...................................... $1,084,490
"Blue Sky" Registration Fees.......................... 5,000
Printing and Engraving Expenses....................... 60,000
Trustee Fees and Expenses............................. 75,000
Legal Fees and Expenses............................... 225,000
Accountants' Fees and Expenses........................ 60,000
Rating Agencies' Fees................................. 300,000
Miscellaneous......................................... 50,000
Total................................. $ 1,809,490
=========
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 of 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, even 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 a 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.
<PAGE>
(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 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 XI of the By-Laws of Norwest Auto Receivables Corporation
(referred to as the "Company" therein) provides as follows:
Section 1. Coverage. Each person who was or is made a party or
is threatened to be made a party to or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative
or investigative ("proceeding"), by reason of the fact that he or she
is or was a director, officer or agent of the Company (which term
shall include any predecessor corporation of the Company) or is or
was serving at the request of the Company as a director, officer,
employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect to
employee benefit plan ("indemnitee"), whether the basis of such
proceeding is alleged action in an official capacity as a director,
officer, employee or agent or in any other capacity while serving as
a director, officer, employee or agent, shall be indemnified and held
harmless by the Company to the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or may hereafter
be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide
prior to such amendment), against all expenses, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith and such
indemnification shall continue as to an indemnitee who has ceased to
be a director, officer, employee or agent and shall inure to the
benefit of the indemnitee's heirs, executors and administrators;
provided, however, that, except as provided in Section 2 of this
Article XI with respect to proceedings to enforce rights to
indemnification, the Company shall indemnify any such indemnitee in
connection with a proceeding (or part thereof) initiated by such
indemnitee only if such proceeding (or part thereof) was authorized
by the Board of Directors. The right to indemnification conferred in
this Article XI shall be a contract right and shall include the right
to be paid by the Company the expenses incurred in defending any such
proceeding in advance of its final disposition; provided, however,
that, if the Delaware General Corporation Law requires, the payment
of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in
which service was or is rendered by such indemnitee, including,
without limitation, service to an employee benefit plan) shall be
made in advance of the final disposition of a proceeding only upon
delivery to the Company of an undertaking, by or on behalf of such
indemnitee, to repay all amounts so advanced if it ultimately be
determined by final judicial decision from which there is no further
right to appeal that such indemnitee is not entitled to be
indemnified for such expenses under this Article XI or otherwise.
Expenses incurred by agents in defending in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
may be paid by the Company upon such terms and conditions, if any, as
the Board of Directors deems appropriate.
Section 2. Claims. If a claim under Section 1 of this Article
XI is not paid in full by the Company within sixty (60) days after a
written claim has been received by the Company, except in the case of
a claim for expenses incurred in defending a proceeding in advance of
its final disposition, in which case the applicable period shall be
thirty (30) days, the indemnitee may at any time thereafter bring
suit against the Company to recover the unpaid amount of the claim.
If successful in whole or in part in any such suit or in a suit
brought by the Company to recover payments by the Company or expenses
incurred by an indemnitee in defending in his or her capacity as a
director or officer, a proceeding in advance of its final
disposition, the indemnitee shall be entitled to be paid also for the
expense of prosecuting or defending such claim. In any action
brought by the indemnitee to enforce a right to indemnification
hereunder (other than an action brought to enforce a claim for
expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered
to the Company) or by the Company to recover payments by the Company
of expenses incurred by an indemnitee in defending, in his or her
capacity as a director or officer, a proceeding in advance of its
final disposition, the burden of proving that the indemnitee is not
entitled to be indemnified under this Article XI or otherwise shall
be on the Company. Neither the failure of the Company (including the
Board of Directors, independent legal counsel, or its stockholders)
to have made a determination prior to the commencement of such action
that indemnification of the indemnitee is proper in the circumstances
because the indemnitee has met the applicable standard of conduct set
forth in the Delaware General Corporation Law, nor an actual
determination by the Company (including the Board of Directors,
independent legal counsel or its stockholders) that the indemnitee
has not met such applicable standard of conduct, shall be a
presumption that the indemnitee has not met the applicable standard
of conduct, or in the case of such an action brought by the
indemnitee, be a defense to the action.
Section 3. Rights Not Exclusive. The rights conferred on any
person by Sections 1 and 2 of this Article XI shall not be exclusive
of any other right which such person may have or hereafter acquire
under any statute, the Certificate of Incorporation of the Company,
these By-laws, any agreement, a vote of stockholders or disinterested
directors or otherwise.
Section 4. Employees. Persons who are not included as
indemnitees under Section 1 of this Article XI but are employees of
the Company or any subsidiary may be indemnified to the extent
authorized at any time or from time to time by the Board of
Directors.
The Company also maintains insurance coverage relating to certain
liabilities of directors and officers.
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS
(a) All financial statements, schedules and historical financial
information have been omitted as they are not applicable.
1.1 Form of Underwriting Agreement.***
3.1 Restated Certificate of Incorporation of Norwest Auto
Receivables Corporation***
3.2 By-Laws of Norwest Auto Receivables Corporation***
3.3 Form of Certificate of Trust for Norwest Auto Trusts (included
in Exhibit 4.2).*
4.1 Form of Indenture between the Trust and the Indenture Trustee
(including forms of Notes). *
4.2 Form of Trust Agreement between the Registrant and the Trustee
(including forms of Certificates).*
4.3 Form of Pooling and Servicing Agreement, among the Registrant,
the Servicer and the Trustee (including forms of
Certificates).*
4.4 Form of Prospectus Supplement (for Trusts that do not issue
Notes).*
4.5 Form of Prospectus Supplement (for Trusts that do issue
Notes).*
5.1 Opinion of Mayer, Brown & Platt with respect to legality.*
8.1 Opinion of Mayer, Brown & Platt with respect to federal tax
matters**
23.1 Consent of Mayer, Brown & Platt (included in its opinions filed
as Exhibits 5.1 and 8.1).*
24.1 Powers of Attorney (included in the signature page).*
25.1 Form of T-1 Statement of Eligibility under the Trust Indenture
Act of 1939 of Chase Manhattan Bank.***
99.1 Form of Sale and Servicing Agreement among the Registrant, the
Servicer and the Trust.*
99.2 Form of Administration Agreement among the Seller, the Servicer
and the Indenture Trustee*
_____________________________
* Previously filed.
** Filed herewith.
*** To be filed by amendment.
<PAGE>
ITEM 17. UNDERTAKINGS
(a) As to Rule 415:
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made of the securities registered hereby, a post-effective amendment
to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Securities Act");
(ii) to reflect in the prospectus any facts or events arising
after the effective date of this registration statement (or the most
recent post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in this registration statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement;
provided, however, that the understandings set forth in clauses (i) and
(ii) above do not apply if the information required to be included in a
post-effective amendment by those clauses is contained in periodic reports
filed by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934, as amended, that are incorporated by
reference in this registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, as amended, 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) For purposes of determining any liability under the
Securities Act, 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.
(b) As to documents subsequently filed that are incorporated by
reference:
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended,
each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934, as amended, that is
incorporated by reference in this registration statement shall be deemed to
be a new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) As to Equity Offerings of Nonreporting Registrants:
The undersigned registrant hereby undertakes to provide to the
underwriter at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required
by the underwriter to permit prompt delivery to each purchaser.
(d) As to indemnification:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers
and controlling persons of the registrant pursuant to the provisions
described under Item 15 above, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
of 1933, as amended, and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in such Securities Act of 1933, as amended, and
will be governed by the final adjudication of such issue.
(e) As to qualification of Trust Indentures under Trust Indenture
Act of 1939 for delayed offerings:
The undersigned registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with
the rules and regulations prescribed by the Commission under Section
305(b)(2) of the Act.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 2 to Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of Minneapolis, State of Minnesota, on the 11th day of
October, 1996.
By: /s/ John T. Thornton
-------------------------
John T. Thornton
Treasurer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Signature Title Date
- ---------- ------ -----
/s/ * President October 11, 1996
William H. Queenan (principal executive
officer) and Director
/s/ John T. Thornton Treasurer October 11, 1996
John T. Thornton (principal financial
and accounting officer)
and Director
[*] Signature by John T. Thornton
as Attorney-in-Fact under
Power of Attorney
/s/ John T. Thornton
- ----------------------
John T. Thornton
Attorney-in-Fact
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit Sequential
No. Description of Exhibit Page Number
- ------- ----------------------- -----------
<S> <C> <C>
1.1 Form of Underwriting Agreement.***
3.1 Restated Certificate of Incorporation of
Norwest Auto Receivables Corporation.***
3.2 By-Laws of Norwest Auto Receivables Corporation.***
3.3 Form of Certificate of Trust for Norwest Auto
Trusts (included in Exhibit 4.2).*
4.1 Form of Indenture between the Trust and the
Indenture Trustee (including forms of Notes).*
4.2 Form of Trust Agreement between the Registrant
and the Trustee (including forms of Certificates).*
4.3 Form of Pooling and Servicing Agreement, among
the Registrant, the Servicer and the Trustee
(including forms of Certificates).*
4.4 Form of Prospectus Supplement (for Trusts that
do not issue Notes).*
4.5 Form of Prospectus Supplement (for Trusts that
do issue Notes).*
5.1 Opinion of Mayer, Brown & Platt with respect
to legality.*
8.1 Opinion of Mayer, Brown & Platt with respect to
federal tax matters**
23.1 Consent of Mayer, Brown & Platt (included in its
opinions filed as Exhibits 5.1 and 8.1).*
24.1 Powers of Attorney (included in the signature page).*
25.1 Form of T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of Chase Manhattan Bank.***
99.1 Form of Sale and Servicing Agreement among the
Registrant, the Servicer and the Trust.*
99.2 Form of Administration Agreement among the Seller,
the Servicer and the Indenture Trustee*
<FN>
___________________
* Previously filed.
** Filed herewith.
*** To be filed by Amendment.
</TABLE>
