<PAGE> 1
PROSPECTUS SUPPLEMENT
(To Prospectus dated September 14, 1995)
$290,623,554
Boatmen's Auto Trust 1996-A
$82,654,904 Class A-1 5.7525% Money Market Asset Backed Notes
$120,000,000 Class A-2 6.35% Asset Backed Notes
$76,343,707 Class A-3 6.75% Asset Backed Notes
$11,624,943 7.05% Asset Backed Certificates
BOATMEN'S
LOGO
The Boatmen's National Bank of St. Louis
Seller and Servicer
----------------
Boatmen's Auto Trust 1996-A (the ``Trust'') will be governed by a Trust
Agreement, to be dated as of July 1, 1996, among The Boatmen's National Bank
of St. Louis, in its capacity as seller (in such capacity, the ``Seller''),
BNB Auto, Inc., an affiliate of the Seller (the ``Company'') and The Bank
of New York (Delaware), as owner trustee (the ``Owner Trustee''). The
Trust will issue $82,654,904 aggregate principal amount of Class A-1 5.7525%
Money Market Asset Backed Notes (the ``Class A-1 Notes''), $120,000,000
aggregate principal amount of Class A-2 6.35% Asset Backed Notes (the
``Class A-2 Notes''), $76,343,707 aggregate principal amount of
Class A-3 6.75% Asset Backed Notes (the ``Class A-3 Notes'' and,
together with the Class A-1 Notes and the Class A-2 Notes,
the ``Notes''), pursuant to an Indenture to be dated as
of July 1, 1996, between the Trust and The Chase
Manhattan Bank, N.A., as indenture trustee (the
``Indenture Trustee''). The Trust will also issue
(Continued on following page)
--------------------
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT BENEFICIAL
INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS OF OR
INTERESTS IN THE BOATMEN'S NATIONAL BANK OF ST. LOUIS, THE
COMPANY OR ANY OF THEIR RESPECTIVE AFFILIATES. NONE OF
THE NOTES, THE CERTIFICATES OR THE RECEIVABLES ARE
INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions the Seller<F1><F2>
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
Per Class A-1 Note............................................. 100.000000% 0.180% 99.820000%
Per Class A-2 Note............................................. 99.906250% 0.250% 99.656250%
Per Class A-3 Note............................................. 99.953125% 0.325% 99.628125%
Per Certificate................................................ 99.859375% 0.350% 99.509375%
Total.......................................................... $290,458,920.31 $737,583.18 $289,721,337.13
<FN>
<F1> Plus accrued interest, if any, from July 15, 1996.
<F2> Before deducting expenses, estimated to be $585,000.
</TABLE>
----------------
The Notes and the Certificates are offered by the Underwriters when, as and
if issued by the Trust, delivered to 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 in book-entry form will be made
through the facilities of The Depository Trust Company (``DTC'') on or about
July 17, 1996 against payment therefor in immediately available funds.
CS First Boston
Donaldson, Lufkin & Jenrette
Securities Corporation
Lehman Brothers
The Boatmen's National Bank of St. Louis
The date of this Prospectus Supplement is July 10, 1996.
<PAGE> 2
(Continued from preceding page)
$11,624,943 aggregate principal amount of 7.05% Asset Backed Certificates (the
``Certificates'' and, together with the Notes, the ``Securities''). The
Certificates will represent fractional undivided interests in the Trust. The
assets of the Trust will include a pool of motor vehicle retail installment
sale contracts and simple interest loan note and security agreements (the
``Receivables''), secured by security interests in the motor vehicles
financed thereby and including certain monies received thereunder on
and after the Cutoff Date (as defined herein), transferred to the
Trust by the Seller on the Closing Date (as defined herein). The
Notes will be secured by the assets of the Trust pursuant to the
Indenture. Interest on all the classes of the Notes will accrue
at the 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 August
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.
Interest on the Certificates, to the extent of the Pass Through Rate (as defined
herein) will be distributed to the Certificateholders (as defined herein) on
each Distribution Date. Principal, to the extent described herein, will be
distributed to the Certificateholders on each Distribution Date commencing
with the Distribution Date on which all of the Notes are paid in full to
the extent of available funds. Distributions of interest and principal
on the Certificates will be subordinated in priority to payments due
on the Notes as described herein.
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 than such dates as described herein. In addition, the Class
A-3 Notes and the Certificates will be subject to prepayment in
whole, but not in part, on any Distribution Date on which The
Boatmen's National Bank of St. Louis, in its capacity as
servicer (in such capacity, the ``Servicer''), exercises
its option to purchase the Receivables. The Servicer may
purchase the Receivables when the aggregate principal
balance of the Receivables shall have declined to 5%
or less of the initial aggregate principal balance
of the Receivables purchased by the Trust.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER ``RISK
FACTORS'' AT PAGE S-9 HEREIN AND AT PAGES 10 THROUGH 12 IN THE ACCOMPANYING
PROSPECTUS (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.
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. TO THE EXTENT ANY STATEMENTS IN THIS
PROSPECTUS SUPPLEMENT CONFLICT WITH STATEMENTS IN THE PROSPECTUS, THE
STATEMENTS IN THIS PROSPECTUS SUPPLEMENT SHALL CONTROL.
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Notes (as defined herein) or Definitive
Certificates (as defined herein) 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.
S-2
<PAGE> 3
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus. Certain
capitalized terms used herein are defined elsewhere in this Prospectus
Supplement on the pages indicated in the ``Index of Terms'' or, to the extent
not defined herein, have the meanings assigned to such terms in the Prospectus.
<TABLE>
<C> <S>
Issuer.................................. Boatmen's 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 July 1, 1996 among the Seller, BNB
Auto, Inc., a Delaware corporation and an affiliate of the
Seller (the ``Company''), and the Owner Trustee.
Seller and Servicer..................... The Boatmen's National Bank of St. Louis, a national banking
association (in its capacity as seller, the ``Seller'' or, in
its capacity as servicer, the ``Servicer'' or ``Boatmen's
Bank'').
Indenture Trustee....................... The Chase Manhattan Bank, N.A., a national banking association,
as trustee under the Indenture (the ``Indenture Trustee'').
Owner Trustee........................... The Bank of New York (Delaware), a Delaware banking corporation,
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 July 1, 1996 (as amended and
supplemented from time to time, the ``Indenture''), between the
Issuer and the Indenture Trustee, as follows: (i) Class A-1
5.7525% Money Market Asset Backed Notes (the ``Class A-1 Notes'')
in the aggregate principal amount of $82,654,904; (ii) Class A-2
6.35% Asset Backed Notes (the ``Class A-2 Notes'') in the
aggregate principal amount of $120,000,000; and (iii) Class A-3
6.75% Asset Backed Notes (the ``Class A-3 Notes'') in the
aggregate principal amount of $76,343,707.
The Notes will be secured by the assets of the Trust pursuant to
the Indenture.
The Certificates........................ The Trust will issue 7.05% Asset Backed Certificates (the
``Certificates'' and, together with the Notes, the
``Securities'') with an aggregate initial Certificate Balance of
$11,624,943. The Certificates will represent fractional
undivided interests in the Trust and will be issued pursuant to
the Trust Agreement.
The Receivables......................... On July 17, 1996 (the ``Closing Date''), the Trust will
purchase a pool of motor vehicle retail installment sale
contracts and simple interest loan note and security agreements
secured by new or used automobiles, vans or light duty trucks
(the ``Receivables''), including rights to receive certain
payments made with respect to such Receivables, security
interests in the vehicles financed thereby (the ``Financed
Vehicles''), certain accounts and the proceeds thereof and any
proceeds from claims on certain related insurance policies,
having an aggregate principal balance of approximately
$290,623,554.12 as of July 1, 1996 (the ``Cutoff Date''), from
the Seller pursuant to a Sale and Servicing Agreement to be
dated as of July 1, 1996 (as amended and supplemented from time
to time, the ``Sale and Servicing Agree-
S-3
<PAGE> 4
ment''), among the Trust, the Seller and the Servicer. See
``Description of the Transfer and Servicing Agreements'' herein
and in the Prospectus.
The Receivables arise from loans originated (i) by the Seller
directly and indirectly through agents of regional automobile
clubs and a property and casualty insurer (the ``Agent Referral
Program''), (ii) by Boatmen's Bank of Tennessee (``Boatmen's
Tennessee'') and purchased by the Seller pursuant to
intercompany agreements, or (iii) by motor vehicle dealers (the
``Dealers'') and purchased by the Seller (or other banking
subsidiaries of Boatmen's Bancshares, Inc. and subsequently sold
to the Seller) pursuant to agreements with the Dealers. All of
these loans provide for the allocation of payments to principal
and interest in accordance with the ``simple interest'' method.
The Receivables have been selected from the contracts owned by
the Seller and Boatmen's Tennessee based on the criteria
specified in the Sale and Servicing Agreement and described
herein and in the Prospectus. No Receivable will have a
scheduled maturity later than July 5, 2002 (the ``Final
Scheduled Maturity Date''). As of the Cutoff Date, the weighted
average remaining maturity of the Receivables was approximately
49.45 months and the weighted average original maturity of the
Receivables was approximately 56.22 months. As of the Cutoff
Date, approximately 32.47% of the aggregate principal balance of
the Receivables represents financing of new vehicles and the
remainder represents financing of used vehicles. As of the
Cutoff Date, approximately 66.26% of the aggregate principal
balance of the Receivables represents contracts originated by
the Seller or purchased by the Seller otherwise than from
Boatmen's Tennessee and the remainder represents contracts
originated by Boatmen's Tennessee.
The ``Pool Balance'' at any time will represent the aggregate
principal balance of the Receivables 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...................... The principal terms of the Notes will be as described below:
A. Distribution Dates............... Payments of interest and principal on the Notes will be made on
the 15th day of each month (each, a ``Distribution Date''), or,
if any such day is not a Business Day, then such payments will
be made on the next succeeding Business Day, commencing August
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 or a day on which banking institutions
or trust companies in the City of New York are authorized by
law, regulation or executive order to be closed.
S-4
<PAGE> 5
B. Interest Rates................... The Class A-1 Notes will bear interest at the rate of 5.7525% per
annum (the ``Class A-1 Rate''), the Class A-2 Notes will bear
interest at the rate of 6.35% per annum (the ``Class A-2 Rate''),
and the Class A-3 Notes will bear interest at the rate of 6.75%
per annum (the ``Class A-3 Rate''). The interest rates for all
classes of the Notes are referred to herein collectively as
``Interest Rates.''
C. Interest......................... Interest on the outstanding principal amount of the Notes of
each class will be payable, subject to available funds, on each
Distribution Date and will accrue at the applicable Interest
Rate from and including the most recent date to which interest
has been paid to but excluding the next Distribution Date (or,
in the case of the first Distribution Date, from and including
July 15, 1996 to but excluding August 15, 1996) (each an
``Interest Accrual Period''). Interest on the Class A-1 Notes
will be calculated on the basis of the actual days elapsed in
each month and a 360 day year. Interest on all classes of Notes,
other than the Class A-1 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'' herein.
Notwithstanding anything to the contrary contained herein, on
August 8, 1997 (the ``Class A-1 Final Scheduled Distribution
Date'') holders of record as of the Business Day preceding such
date shall be entitled to receive from funds available therefor
interest on the outstanding principal amount of the Class A-1
Notes immediately prior to such date at a rate of 5.7525% per annum
for the period (the ``Final Class A-1 Interest Period'') from
and including the most recent Distribution Date on which
interest has been paid on the Class A-1 Notes to but excluding
the Class A-1 Final Scheduled Distribution Date (together with
interest due but not paid on a prior Distribution Date and, to
the extent permitted by law, interest on such amount at a rate
of 5.7525% per annum) plus the unpaid principal amount of the Class
A-1 Notes. Interest will be calculated on the basis of a 360-day
year and the actual number of days elapsed in the Final Class
A-1 Interest Period.
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 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 and no principal
payments will be made on the Class A-3 Notes until the Class A-2
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 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 January 2003 Distribution Date (the
``Class A-2 Final Scheduled Distribution Date''); and the
outstanding principal amount of the Class A-3 Notes, to the
extent not previously paid, will be payable on the January 2003
Distribution Date (the ``Class A-3 Final Scheduled Distribution
Date'').
S-5
<PAGE> 6
E. Optional Redemption.............. After the Class A-2 Notes have been paid in full, the Class A-3
Notes will be redeemed in whole, but not in part, on any
Distribution Date on which the Servicer exercises its option to
purchase the Receivables, which can occur after the Pool Balance
declines to 5% or less of the Initial Pool Balance, at a
redemption price equal to the unpaid principal amount of the
Class A-3 Notes plus accrued and unpaid interest thereon at the
Class A-3 Rate. See ``Description of the Notes--Optional
Redemption'' herein. The ``Initial Pool Balance'' will equal the
aggregate principal balance of the Receivables as of the Cutoff
Date.
Terms of the Certificates............... The principal terms of the Certificates will be as described
below:
A. Distribution Dates............... Distributions with respect to the Certificates will be made on
each Distribution Date, commencing August 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. Pass Through Rate................ 7.05% per annum (the ``Pass Through Rate'').
C. Interest......................... On each Distribution Date, the Owner Trustee will distribute pro
rata to Certificateholders accrued interest for the Interest
Accrual Period at the Pass Through 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.
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
all of the 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 January 2003 Distribution Date
(the ``Final Scheduled Distribution Date'').
E. Optional Prepayment.............. If the Servicer exercises its option to purchase the
Receivables, which can occur after the Class A-2 Notes have been
paid in full and after the Pool Balance declines to 5% or less
of the Initial Pool Balance, the Certificateholders will receive
an amount in respect of the Certificates equal to the
Certificate Balance together with accrued interest at the Pass
Through Rate, and the Certificates will be retired. See
``Description of the Certificates--Optional Prepayment'' herein.
Reserve Account......................... The reserve account (the ``Reserve Account'') will be created
with an initial deposit by the Seller on the Closing Date of
cash or Eligible
S-6
<PAGE> 7
Investments having a value at least equal to $5,812,471.09. The
amount initially deposited in the Reserve Account by the Seller
is referred to as the ``Reserve Account Initial Deposit''.
Certain amounts in the Reserve Account on any Distribution Date
(after giving effect to all distributions made on such
Distribution Date), in excess of the Specified Reserve Account
Balance for such Distribution Date will be released to the
Seller (except to the extent described under ``Description of
the Transfer and Servicing Agreements--Reserve Account'').
Subject to reduction as described below, the ``Specified Reserve
Account Balance'' with respect to any Distribution Date
generally will be equal to the greater of (i) 2% of the Initial
Pool Balance, and (ii) 3.25% of the Pool Balance on the first
day of the related Collection Period. Funds will be withdrawn
from the Reserve Account up to the Available Amount to the
extent that the Total Distribution Amount with respect to any
Collection Period remaining after the Servicing Fee is paid is
less than the Noteholders' Distributable Amount and will be
deposited in the Note Distribution Account for distribution to
the Noteholders on the related Distribution Date. In addition,
after giving effect to such withdrawal, funds will be withdrawn
from the Reserve Account up to the Available Amount (as reduced
by any withdrawal pursuant to the preceding sentence) to the
extent that the portion of the Total Distribution Amount remain-
ing after payment of the Servicing Fee and the deposit of the
Noteholders' Distributable Amount in the Note Distribution
Account is less than the Certificateholders' Distributable
Amount and will be deposited in the Certificate Distribution
Account for distribution to the Certificateholders. If funds
applied in accordance with the preceding sentence are
insufficient to distribute the interest due on the Certificates,
subject to certain limitations, funds will be withdrawn from the
Reserve Account and applied to distribute interest on the
Certificates to the extent of the Certificate Interest Reserve
Amount.
Collection Account;
Priority of Payments.................. The Servicer will generally be required to remit collections
received with respect to the Receivables to one or more accounts
in the name of the Indenture Trustee (the ``Collection
Account'') on or prior to each Distribution Date, net of the
Servicing Fee and any unpaid Servicing Fees from prior
Distribution Dates. Pursuant to the Sale and Servicing
Agreement, the Servicer will have the revocable power to
instruct the Indenture Trustee to withdraw funds on deposit in
the Collection Account and to apply such funds on each
Distribution Date to the following (in the priority indicated):
(i) the Servicing Fee, together with any unpaid Servicing Fees
from prior Distribution Dates (if not deducted from the
Servicer's remittance as described above), (ii) the Noteholders'
Interest Distributable Amount into the Note Distribution
Account, (iii) the Certificateholders' Interest Distributable
Amount into the Certificate Distribution Account, (iv) the
Noteholders' Principal Distributable Amount into the Note
Distribution Account, (v) after all of the Notes have been paid
in full, the Certificateholders' Principal Distributable Amount
into the Certificate Distribution Account, and (vi) the amount
remaining, if any, to the Reserve Account.
S-7
<PAGE> 8
Tax Status.............................. In the opinion of Lewis, Rice & Fingersh, L.C., 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. Missouri
will similarly treat the Trust as a nontaxable entity for state
income tax purposes. Ownership of Notes or Certificates should
not cause nonresidents of Missouri who are not otherwise subject
to Missouri state income taxation to incur Missouri tax
liability. Each Noteholder, by the acceptance of a Note, will
agree to treat the Notes as indebtedness, and each
Certificateholder, by the acceptance of a Certificate, will
agree to treat the Trust as a partnership in which the
Certificateholders are partners for federal income and Missouri
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
``Certain Federal Income Tax Consequences'' and ``Certain State
Tax Consequences'' in the Prospectus for additional information
concerning the application of federal income and Missouri tax
laws to the Trust and the Securities.
Legal Investment........................ The Class A-1 Notes will be eligible securities for purchase by
money market funds under Rule 2a-7 under the Investment Company
Act of 1940, as amended.
ERISA Considerations.................... Subject to the considerations discussed under ``ERISA Considera-
tions'' herein and in the Prospectus, the Notes are eligible for
purchase by employee benefit plans.
The Certificates may not be acquired by 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 by an
individual retirement account. See ``ERISA Considerations''
herein and in the Prospectus.
Ratings of the Securities............... It is a condition to the issuance of each class of the Notes
that they be rated in the highest applicable investment rating
category by at least two nationally recognized rating agencies.
In addition, 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 any rating will not be lowered or withdrawn
by a rating agency if circumstances so warrant.
A securities rating addresses the likelihood of the receipt by
the Securityholders of scheduled interest payments at the
Interest Rate or the Pass Through Rate, as applicable, and
scheduled principal payments on the Securities. The rating takes
into consideration the characteristics of the Receivables and
the structural, legal and tax aspects associated with the
Securities. The ratings on the Securities do not, however,
constitute statements regarding the likelihood or frequency of
prepayments on the Receivables or the possibility that the
Securityholders might realize a lower than anticipated yield.
</TABLE>
S-8
<PAGE> 9
RISK FACTORS
Limited Liquidity. There is currently no secondary market for the
Securities offered hereby. Each Underwriter currently intends to make a market
in the Securities offered hereby, 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 offered
hereby.
Characteristics of the Receivables; Limited Repurchase Obligations. On the
Closing Date, the Seller will transfer to the Trust approximately
$290,623,554.12 of Receivables. The conveyance of the Receivables is subject to
the satisfaction, on or before the Closing Date, of the following conditions
precedent, among others: (i) each such Receivable must satisfy the eligibility
criteria specified in the Sale and Servicing Agreement (including that such
Receivable has not been repurchased by the Seller through the exercise of
optional repurchase provisions contained in other securitization transactions);
(ii) the Seller will not select such Receivables in a manner that it believes
is adverse to the interests of the Noteholders or the Certificateholders; (iii)
as of the Cutoff Date, the Receivables in the Trust at that time will satisfy
the parameters described under ``The Receivables Pool'' herein and under ``The
Receivables Pools'' in the Prospectus; (iv) the Reserve Account Initial Deposit
shall have been made; and (v) the Seller shall have executed and delivered to
the Trust (with a copy to the Indenture Trustee) a written assignment conveying
such Receivables to the Trust (including a schedule identifying such
Receivables). Moreover, the conveyance of the Receivables will also be subject
to the satisfaction of the following conditions subsequent, among others: (a)
the Seller will deliver certain opinions of counsel to the Owner Trustee, the
Indenture Trustee and the Rating Agencies with respect to the validity of the
conveyance of the Receivables; and (b) the Trust and the Indenture Trustee will
receive written confirmation from a firm of certified independent public
accountants that the Receivables in the Trust at that time satisfied the
parameters described under ``The Receivables Pool'' herein and under ``The
Receivables Pools'' in the Prospectus. The Seller will immediately repurchase
any Receivable, at a price equal to the Purchase Amount thereof, upon the
failure of the Seller to satisfy any of the foregoing conditions subsequent
with respect thereto.
The Seller and the Servicer Not Obligated to Make Payments on the
Securities. Neither the Seller nor the Servicer is generally obligated to make
any payments in respect of the Notes, the Certificates or the Receivables. In
addition, if Boatmen's Bank were to cease acting as Servicer, delays in
processing payments on the Receivables and information in respect thereof could
occur and result in delays in payments to the Securityholders.
Subordination of the Certificates; Limited Assets of the Trust.
Distributions of principal on the Certificates will be subordinated in priority
of payment to interest and principal due on the Notes. The Certificateholders
will not receive any distributions of interest with respect to a Collection
Period until the full amount of interest on the Notes due 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 all of the Notes have been paid in full.
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.
Ratings of the Securities. It is a condition to the issuance of each class
of the Notes and of the Certificates that each class of the Notes be rated in
the highest applicable investment rating category, and that the Certificates be
rated at least ``A'' or its equivalent, by at least two nationally recognized
rating agencies (the ``Rating Agencies''). A rating is not a recommendation to
purchase, hold or sell Securities, inasmuch as such rating does not comment as
to market price or suitability for a particular investor. The ratings of the
Securities address the likelihood of the payment of principal and interest on
the Securities pursuant to their terms. The ratings on the Securities do not,
however, constitute statements regarding the likelihood or frequency of
prepayments on the Receivables or the possibility that the Securityholders
might realize a lower than anticipated yield. 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.
S-9
<PAGE> 10
THE TRUST
GENERAL
The Issuer, Boatmen's 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 (i) acquiring, holding and
managing the Receivables and the other assets of the Trust and proceeds
therefrom, (ii) issuing the Notes and the Certificates, (iii) making payments
on the Notes and the Certificates, and (iv) engaging in other activities that
are necessary, suitable or convenient to accomplish the foregoing or are
incidental thereto or connected therewith.
The Trust will initially be capitalized with equity equal to the
Certificate Balance of $11,624,943, excluding amounts deposited in the Reserve
Account. Certificates with an original principal balance of $116,943 will be
sold to the Company, 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 on the Closing Date from the Seller pursuant to the
Sale and Servicing Agreement.
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
``Description of the Transfer and Servicing Agreements--Distributions'' and
``--Reserve Account'' herein and ``Certain Legal Aspects of the Receivables''
in the Prospectus.
The Trust's principal offices are in Delaware, in care of The Bank of New
York (Delaware), 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 each class of the Notes and the
Certificates have taken place on such date:
<TABLE>
<S> <C>
Class A-1 Notes................................................... $ 82,654,904
Class A-2 Notes................................................... 120,000,000
Class A-3 Notes................................................... 76,343,707
Certificates...................................................... 11,624,943
-------------
Total................................................... $ 290,623,554
=============
</TABLE>
THE OWNER TRUSTEE
The Bank of New York (Delaware) is the Owner Trustee under the Trust
Agreement. The Bank of New York (Delaware) is a Delaware banking corporation
and its principal offices are located at 100 White Clay Center, 1st Floor,
Route 273, Newark, Delaware 19711, Attention: Trust Department. 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 were originated (a) by the Seller directly and indirectly
through the Agent Referral Program, (b) by Boatmen's Tennessee and purchased by
the Seller pursuant to intercompany agreements, or (c) by Dealers in the
ordinary course of business and purchased by the Seller (or other banking
subsidiaries of Boatmen's Bancshares, Inc. and subsequently sold to the Seller)
pursuant to agreements with such Dealers. The Seller selected the Receivables
from its portfolio for inclusion in the Receivables Pool by several criteria,
some of which are set forth in the Prospectus under ``The Receivables Pools,''
as well as the requirement that each Receivable (i) has an outstanding
S-10
<PAGE> 11
principal balance of at least $500, (ii) as of the Cutoff Date, was not more
than 59 days past due, (iii) has scheduled maturity of not later than the Final
Scheduled Maturity Date, and (iv) provides for level monthly payments which
fully amortize the amount financed within 72 months from origination (except
for the last payment, which may be different from the level payment). As of the
Cutoff Date, no Obligor on any Receivable was noted in the related records of
the Seller as being the subject of a bankruptcy proceeding. Certain of the
Receivables represent financing extended to Obligors who are employees of the
Seller or other banking subsidiaries of Boatmen's Bancshares, Inc. No selection
procedures believed by the Seller to be adverse to Securityholders were used in
selecting the Receivables.
MOTOR VEHICLE LENDING
The Seller and Boatmen's Tennessee (each, an ``Affiliate''), both directly
originate through their branch networks and purchase from Dealers, motor
vehicle retail installment sale contracts and simple interest loan note and
security agreements which are secured by a new or used automobile, van or
light-duty truck (``Motor Vehicle Loans''). In addition, the Seller indirectly
originates Motor Vehicle Loans through the Agent Referral Program.
Approximately 49% of the principal balance of the Receivables at the Cutoff
Date were originated by the Seller indirectly pursuant to the Agent Referral
Program. Dealer Agreements are entered into by the Affiliates primarily with
Dealers that are franchised to sell new motor vehicles and with certain Dealers
that sell used motor vehicles, based upon a limited financial review of the
Dealer or, in some cases, the reputation and prior experience of the Affiliates
with such Dealers and their key management. The Seller's motor vehicle lending
operations are centrally managed through the Consumer Loan Underwriting
Department located in St. Louis. Boatmen's Tennessee maintains its own
underwriting facilities. In addition to purchasing Motor Vehicle Loans from
such Dealers, the Seller also extends loans and lines of credit to certain
Dealers for, among other things, inventories and other commercial purposes.
Such loans and lines of credit are not included in the Receivables purchased by
the Trust.
Each Motor Vehicle Loan is purchased or originated after a review in
accordance with the Affiliate's established underwriting procedures described
below. These procedures are intended to assess the ability of all applicants
for a proposed Motor Vehicle Loan to repay a proposed Motor Vehicle Loan and
the adequacy of the motor vehicle as collateral. The Affiliate's guidelines are
intended to provide a basis for lending decisions, but are not meant to
supersede the credit judgment of the lending officer. As a result, certain
Motor Vehicle Loans may not comply with all of the Affiliate's guidelines.
The Dealers and the Affiliates require an applicant 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 Affiliate's guidelines. The Affiliates evaluate applicants
by considering, based on information provided in the application and the credit
bureau reports referred to below, the relation of the applicant's income to
expenses, including expenses relating to such Motor Vehicle Loan.
All credit decisions relating to Motor Vehicle Loans are judgmental, with a
credit scoring system used as a guide. The credit scoring system was developed
for the Affiliates by Management Decision Systems, Inc. based on the
Affiliates' historical data. The Affiliates use an automated application
processing system which provides automated application processing from data
entry through approval. Following data entry, the system obtains a complete
credit bureau report for each applicant/co-signor (including a credit bureau
score), and calculates various ratios (i.e., debt-to-income and percentage
financed), and assigns a credit score to the application. The data is then
presented on-line to an analyst for review and evaluation. Once a decision is
made, the originating branch, dealer, or agent is notified by facsimile copy.
The system does not automatically make decisions with respect to any loans. The
Affiliates target low overrides (i.e., loans that do not meet the minimum
cutoff score) to ten percent of new originations. Applications that score below
the minimum which are subsequently judged to be within the Affiliate's
underwriting guidelines are reviewed by departmental management on a selective
basis and may be approved. The Seller and Boatmen's Tennessee estimate that
approximately 40% and 55%, respectively, of all applications are declined. It
is estimated that seven to ten percent of scorecard approved applicants are
subsequently declined for judgmental reasons. The Affiliates define derogatory
credit as a previous bankruptcy, repossession, foreclosure, major charge-offs
and judgments. Slow credit is defined as a payment history of more than one
thirty day delinquency for each twelve months of payment history, or any
account which has been over 60 days delinquent. The analyst may make further
direct inquiries to clarify any unusual or incorrect credit information.
Applicants with derogatory or slow credit may be approved if sufficient equity
exists in the collateral or if other favorable conditions exist. Primary
underwriting
S-11
<PAGE> 12
guidelines address the applicants' stability of residence, employment,
debt-to-income ratios and credit history. Credit decisions are based on the
applicant's qualifications and co-signors are used for the primary purpose of
strengthening a loan when the applicant does not have sufficient credit history
for approval.
Under the Seller's normal underwriting standards, the amount advanced under
a Motor Vehicle Loan generally will not normally exceed (i) in the case of new
motor vehicles, 100% of the sales price plus sales tax, license fees, credit
insurance premiums, and extended warranties, or (ii) in the case of used motor
vehicles, 100% of the average retail value reported in the most recent edition
of the National Automotive Dealers Association Used Car Guide plus sales tax,
license fees, credit insurance premiums, and extended warranties. Under
Boatmen's Tennessee's normal underwriting standards, the amount advanced under
a Motor Vehicle Loan generally will not normally exceed (i) in the case of new
motor vehicles, 120% of invoice price, or (ii) in the case of used motor
vehicles, 120% of the average trade-in value reported in the most recent
edition of the National Automotive Dealers Association Used Car Guide. Advances
in excess of these standards are permitted only after review by an underwriter
or an underwriting manager. The Affiliates review each of the Motor Vehicle
Loans to ensure compliance with its established policies and procedures.
Cancellation of extended warranty contracts or insurance may result in partial
prepayments of the Motor Vehicle Loans. The maximum term of a contract is also
limited to 72 months for new vehicles whilst a sliding scale is employed for
used vehicles ranging from 60 months for one and two year old vehicles down to
24 months for vehicles 7 years old.
DEALER AGREEMENTS
Each Dealer that originates Motor Vehicle Loans and assigns them to an
Affiliate has made representations and warranties to the Affiliate with respect
to each Motor Vehicle Loan and the security interest in the motor vehicle
relating thereto, including that (a) the Motor Vehicle Loan and underlying
purchase transaction comply with all applicable laws and regulations, (b) the
contract is a bona fide sale that arose from the sale of the vehicle described
therein, the Obligor's signature thereon is genuine and the Obligor is of full
age and has the capacity to contract, (c) the cash down payment and/or trade-in
allowance were actually received and were in the amounts specified in the
documents delivered to the Affiliate, (d) all statements of fact in the
contract are true to the best of the Dealer's knowledge, (e) there are no
warranties, express or implied, that exist outside the written contract, and
(f) the Dealer has no knowledge of any fact impairing the validity or value of
the contract. None of these representations and warranties relate to the
creditworthiness of the Obligor or the collectability of the Motor Vehicle
Loans. Upon breach of any representation or warranty made by such Dealer with
respect to a Motor Vehicle Loan, the Seller has a right to require the Dealer
to repurchase such loan.
CONTRACT MODIFICATIONS
The Affiliates follow specific procedures with respect to contract
extensions and modifications. The Affiliates' extension policy is limited to
extraordinary circumstances and periodic promotions which generally permit an
extension of one month in any rolling twelve-month period. Apart from periodic
promotions (in connection with which Obligors are pre-approved), an extension
within such policy requires approval by a collection supervisor. Extensions
exceeding the Affiliate's policy require the approval of a collection manager.
The Affiliates may also change a payment date once during the term of the
contract as an accommodation to the Obligor if the new payment date is within
20 days of the original scheduled payment date. Such change of payment date is
not deemed to be an extension and no extension fee is charged. The Affiliates
will not voluntarily make modifications to the Receivables that reduce the
original rates of interest or the amount of the regularly scheduled payments on
the Receivables or that extend the final payments on such Receivables beyond
the initial term set forth in the documentation for the Receivables.
COLLECTION AND CHARGE-OFF POLICIES
Collection activities with respect to delinquent Motor Vehicle Loans are
conducted through a central collection unit at the Seller. Collection calls via
an automated power dialer are initiated at the 17th day with the Seller's
collection personnel on the telephone with the Obligor. On the 15th day of
delinquency a written notice is sent to each Obligor specifying past due
amounts and due dates. More intensive efforts take place after 30 days of
delinquency. These efforts include the assignment of responsibility for the
loan to more senior collection personnel at the Seller. Such personnel attempt
to initiate contact with the delinquent Obligor by telephone and/or computer
generated
S-12
<PAGE> 13
letters tailored to specific variables based on the term of delinquency and the
history of an account. When a Motor Vehicle Loan becomes 60 days past due, it
is referred to a collection supervisor for review. Repossession procedures
typically begin when the Motor Vehicle Loan becomes 60 to 75 days delinquent
and all other methods of collection have been exhausted. Repossession is
carried out by independent contractors and repossessed vehicles are sold at
weekly ``dealer-only'' auctions no later than 45 days after repossession.
The Seller's general policy is to charge off all delinquent Motor Vehicle
Loans as to which the related motor vehicle has not been repossessed prior to
the loan becoming 120 days delinquent. Motor Vehicle Loans where the related
motor vehicle has been repossessed are charged off when the vehicle is sold or
prior to the loan becoming 120 days delinquent, whichever comes first. The net
proceeds from the sale of a repossessed vehicle which has been charged off are
subsequently recognized as recoveries. Deficiency balances are generally
pursued, unless the Seller determines it would not be useful based on the
resources of the Obligor.
INSURANCE
Pursuant to the Seller's customary policies, each Motor Vehicle Loan
requires the Obligor to obtain fire, theft and collision insurance or
comprehensive and collision insurance with respect to the Financed Vehicle. The
Servicer, on behalf of the Trust, is not obligated, and does not intend, to
purchase insurance on any Financed Vehicle.
POOL COMPOSITION
Set forth in the following tables is information concerning the
composition, geographic distribution, distribution by range of remaining
principal balance, distribution by annual percentage rate (``APR'') and
distribution by range of the remaining term of the Receivables to be conveyed
by the Seller to the Trust as of the Cutoff Date.
<TABLE>
COMPOSITION OF THE RECEIVABLES AS OF THE CUTOFF DATE
<CAPTION>
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AGGREGATE AVERAGE AVERAGE AVERAGE
APR OF PRINCIPAL NUMBER OF REMAINING ORIGINAL PRINCIPAL
RECEIVABLES BALANCE RECEIVABLES TERM TERM BALANCE
- ----------- --------- ----------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
9.53% $290,623,554.12 24,919 49.45 months 56.22 months $11,662.73
</TABLE>
<TABLE>
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES AS OF THE CUTOFF DATE
<CAPTION>
PERCENTAGE
OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
STATE<F1> RECEIVABLES BALANCE BALANCE<F2>
- --------- ----------- --------- -----------
<S> <C> <C> <C>
Florida.................................................................... 4,376 $ 52,388,581.21 18.03%
Illinois................................................................... 3,213 36,170,779.44 12.45
Michigan................................................................... 1,754 18,102,721.34 6.23
Missouri................................................................... 3,454 35,811,228.99 12.32
South Carolina............................................................. 1,525 18,046,728.76 6.21
Tennessee.................................................................. 6,245 75,777,056.95 26.07
Texas...................................................................... 1,704 23,468,027.13 8.08
Other<F3>.................................................................. 2,648 30,858,430.30 10.61
------ --------------- ------
Total.................................................................. 24,919 $290,623,554.12 100.00%
====== =============== ======
<FN>
- --------
<F1> Based on physical addresses of the Obligors on the Receivables.
<F2> Percentages may not add to 100.00% due to rounding.
<F3> Includes 36 other states, Puerto Rico, and Washington, D.C. (none of which
have a concentration of Receivables in excess of 5.00% of the Aggregate
Principal Balance).
</TABLE>
S-13
<PAGE> 14
<TABLE>
DISTRIBUTION BY RANGE OF REMAINING PRINCIPAL BALANCE OF THE RECEIVABLES AS OF THE CUTOFF DATE
<CAPTION>
PERCENTAGE
OF
AGGREGATE AGGREGATE
RANGE OF REMAINING NUMBER OF PRINCIPAL PRINCIPAL
PRINCIPAL BALANCE RECEIVABLES BALANCE BALANCE<F1>
------------------ ----------- --------- -----------
<S> <C> <C> <C>
$ 500.00 to $ 2,499.99................................................... 360 $ 690,161.53 .24%
2,500.00 to 4,999.99................................................... 2,276 8,876,291.87 3.05
5,000.00 to 7,499.99................................................... 3,116 19,561,075.37 6.73
7,500.00 to 9,999.99................................................... 3,833 33,696,291.58 11.59
10,000.00 to 12,499.99................................................... 4,554 51,291,548.80 17.65
12,500.00 to 14,999.99................................................... 4,186 57,370,638.06 19.74
15,000.00 to 17,499.99................................................... 3,206 51,796,140.40 17.82
17,500.00 to 19,999.99................................................... 1,981 36,879,654.62 12.69
20,000.00 to 22,499.99................................................... 1,072 22,655,261.29 7.80
22,500.00 to 24,999.99................................................... 335 7,806,490.60 2.69
------ --------------- ------
Total.................................................................. 24,919 $290,623,554.12 100.00%
====== =============== ======
<FN>
- --------
<F1> Percentages may not add to 100.00% due to rounding.
</TABLE>
<TABLE>
DISTRIBUTION BY APR OF THE RECEIVABLES AS OF THE CUTOFF DATE
<CAPTION>
PERCENTAGE
OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
APR RANGE RECEIVABLES BALANCE BALANCE<F1>
--------- ----------- --------- -----------
<S> <C> <C> <C>
8.000% to 8.999%......................................................... 6,971 $103,636,034.33 35.66%
9.000% to 9.999%......................................................... 12,065 124,632,916.96 42.88
10.000% to 10.999%......................................................... 4,021 41,000,508.91 14.11
11.000% to 11.999%......................................................... 1,654 18,995,090.65 6.54
12.000% to 12.000%......................................................... 208 2,359,003.27 .81
------ --------------- ------
Total.................................................................. 24,919 $290,623,554.12 100.00%
====== =============== ======
<FN>
- --------
<F1> Percentages may not add to 100.00% due to rounding.
</TABLE>
<TABLE>
DISTRIBUTION BY REMAINING TERM OF THE RECEIVABLES AS OF THE CUTOFF DATE
<CAPTION>
PERCENTAGE
OF
AGGREGATE AGGREGATE
NUMBER OF PRINCIPAL PRINCIPAL
RANGE OF REMAINING TERM RECEIVABLES BALANCE BALANCE<F1>
- ----------------------- ----------- --------- -----------
<S> <C> <C> <C>
10 to 11 months............................................................ 44 $ 131,602.36 .05%
12 to 23 months............................................................ 1,615 7,096,747.26 2.44
24 to 35 months............................................................ 3,363 22,773,404.19 7.84
36 to 47 months............................................................ 7,330 75,757,656.15 26.07
48 to 59 months............................................................ 10,624 150,940,536.12 51.94
60 to 71 months............................................................ 1,904 33,141,175.78 11.40
72 to 72 months............................................................ 39 782,432.26 .27
------ --------------- ------
Total.................................................................. 24,919 $290,623,554.12 100.00%
====== =============== ======
<FN>
- --------
<F1> Percentages may not add to 100.00% due to rounding.
</TABLE>
Approximately 32.47% of the aggregate principal balance of the Receivables,
constituting 26.35% of the number of such Receivables as of the Cutoff Date,
represents financing of new vehicles and the remainder represents financing of
used vehicles.
S-14
<PAGE> 15
WEIGHTED AVERAGE LIFE OF THE SECURITIES
Prepayments on automotive receivables can be measured relative to a
prepayment standard or model. The model used in this Prospectus, the Absolute
Prepayment Model (``ABS''), represents an assumed rate of prepayment each month
relative to the original number of receivables in a pool of receivables. ABS
further assumes that all the receivables are the same size and amortize at the
same rate and that each receivable in each month of its life will either be
paid as scheduled or be prepaid in full. For example, in a pool of receivables
originally containing 10,000 receivables, a 1% ABS rate means that 100
receivables prepay each month. ABS does not purport to be an historical
description of prepayment experience or a prediction of the anticipated rate of
prepayment of any pool of receivables, including the Receivables.
As the rate of payment of principal of each class of Notes and in respect
of the Certificate Balance 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 Final Scheduled
Distribution Date for such class of Notes. The final distribution in respect of
the Certificates also could occur prior to the 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 (i) the Receivables prepay in full at the specified constant
percentage of ABS monthly, with no defaults, losses or repurchases, (ii) each
scheduled monthly payment on the Receivables is made on the last day of each
month and each month has 30 days, (iii) payments on the Notes 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), (iv) the balance in the
Reserve Account on each Distribution Date is equal to the Specified Reserve
Account Balance, and (v) the Seller does not exercise its option to purchase
the Receivables. The pools have an assumed cutoff date of July 1, 1996. 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 ABS Table also assumes that the Receivables have been aggregated into
four 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 four pools (which is based on its aggregate principal
balance, APR, original term to maturity and remaining term to maturity as of
the Cutoff Date) will be such that each pool will be fully amortized by the end
of its remaining term to maturity.
<TABLE>
<CAPTION>
ORIGINAL TERM REMAINING TERM
AGGREGATE TO MATURITY TO MATURITY
POOL PRINCIPAL BALANCE APR (IN MONTHS) (IN MONTHS)
- ---- ----------------- --- ------------- --------------
<S> <C> <C> <C> <C>
1...................................................... $ 30,001,753.81 9.79% 40 28
2...................................................... 75,757,656.15 9.73 52 43
3...................................................... 150,940,536.12 9.37 59 54
4...................................................... 33,923,608.04 9.56 66 63
---------------
$290,623,554.12
===============
</TABLE>
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 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.
S-15
<PAGE> 16
<TABLE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE OR
INITIAL CERTIFICATE BALANCE AT VARIOUS ABS PERCENTAGES
<CAPTION>
CLASS A-1 NOTES CLASS A-2 NOTES
------------------------------------------- --------------------------------------------
DISTRIBUTION DATE 0.5% 1.0% 1.5% 2.0% 0.5% 1.0% 1.5% 2.0%
- ----------------- ------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date.......................... 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
08/15/96.............................. 92.029 90.117 88.060 85.838 100.000 100.000 100.000 100.000
09/15/96.............................. 84.074 80.319 76.281 71.921 100.000 100.000 100.000 100.000
10/15/96.............................. 76.134 70.607 64.666 58.251 100.000 100.000 100.000 100.000
11/15/96.............................. 68.211 60.984 53.216 44.832 100.000 100.000 100.000 100.000
12/15/96.............................. 60.304 51.449 41.934 31.666 100.000 100.000 100.000 100.000
01/15/97.............................. 52.414 42.005 30.822 18.757 100.000 100.000 100.000 100.000
02/15/97.............................. 44.542 32.652 19.882 6.108 100.000 100.000 100.000 100.000
03/15/97.............................. 36.687 23.392 9.117 0.000 100.000 100.000 100.000 95.676
04/15/97.............................. 28.850 14.226 0.000 0.000 100.000 100.000 98.986 87.329
05/15/97.............................. 21.033 5.156 0.000 0.000 100.000 100.000 91.816 79.168
06/15/97.............................. 13.234 0.000 0.000 0.000 100.000 97.371 84.770 71.195
07/15/97.............................. 5.454 0.000 0.000 0.000 100.000 91.257 77.851 63.413
08/15/97.............................. 0.000 0.000 0.000 0.000 98.412 85.213 71.061 55.824
09/15/97.............................. 0.000 0.000 0.000 0.000 93.081 79.238 64.400 48.431
10/15/97.............................. 0.000 0.000 0.000 0.000 87.765 73.333 57.870 41.236
11/15/97.............................. 0.000 0.000 0.000 0.000 82.463 67.500 51.474 34.242
12/15/97.............................. 0.000 0.000 0.000 0.000 77.176 61.739 45.212 27.450
01/15/98.............................. 0.000 0.000 0.000 0.000 71.905 56.051 39.087 20.864
02/15/98.............................. 0.000 0.000 0.000 0.000 66.649 50.439 33.101 14.487
03/15/98.............................. 0.000 0.000 0.000 0.000 61.408 44.901 27.254 8.320
04/15/98.............................. 0.000 0.000 0.000 0.000 56.184 39.440 21.550 2.366
05/15/98.............................. 0.000 0.000 0.000 0.000 50.977 34.056 15.989 0.000
06/15/98.............................. 0.000 0.000 0.000 0.000 45.787 28.751 10.574 0.000
07/15/98.............................. 0.000 0.000 0.000 0.000 40.614 23.526 5.306 0.000
08/15/98.............................. 0.000 0.000 0.000 0.000 35.458 18.382 0.187 0.000
09/15/98.............................. 0.000 0.000 0.000 0.000 30.320 13.319 0.000 0.000
10/15/98.............................. 0.000 0.000 0.000 0.000 25.201 8.339 0.000 0.000
11/15/98.............................. 0.000 0.000 0.000 0.000 20.101 3.443 0.000 0.000
12/15/98.............................. 0.000 0.000 0.000 0.000 15.867 0.000 0.000 0.000
01/15/99.............................. 0.000 0.000 0.000 0.000 11.649 0.000 0.000 0.000
02/15/99.............................. 0.000 0.000 0.000 0.000 7.447 0.000 0.000 0.000
03/15/99.............................. 0.000 0.000 0.000 0.000 3.261 0.000 0.000 0.000
04/15/99.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
05/15/99.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
06/15/99.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
07/15/99.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
08/15/99.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
09/15/99.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
10/15/99.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
11/15/99.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
12/15/99.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
01/15/00.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
02/15/00.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
03/15/00.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
04/15/00.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
05/15/00.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
06/15/00.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
07/15/00.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
08/15/00.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
09/15/00.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
10/15/00.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
11/15/00.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
12/15/00.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
01/15/01.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
02/15/01.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
03/15/01.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
04/15/01.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
05/15/01.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
06/15/01.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
07/15/01.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
08/15/01.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
09/15/01.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
10/15/01.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Weighted Average Life (years)<F1>..... 0.569 0.476 0.403 0.348 1.901 1.647 1.414 1.208
<FN>
- ----------
<F1> The weighted average life of a Class A-1 Note or a Class A-2 Note is
determined by (i) multiplying the amount of each principal payment on a
Note by the number of years from the date of the issuance of the Note to
the related Distribution Date, (ii) adding the results and (iii) dividing
the sum by the related initial principal amount of the Note.
</TABLE>
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.
S-16
<PAGE> 17
<TABLE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE OR
INITIAL CERTIFICATE BALANCE AT VARIOUS ABS PERCENTAGES
<CAPTION>
CLASS A-3 NOTES CERTIFICATES
------------------------------------------- --------------------------------------------
DISTRIBUTION DATE 0.5% 1.0% 1.5% 2.0% 0.5% 1.0% 1.5% 2.0%
- ----------------- ------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date.......................... 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
08/15/96.............................. 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
09/15/96.............................. 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
10/15/96.............................. 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
11/15/96.............................. 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
12/15/96.............................. 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
01/15/97.............................. 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
02/15/97.............................. 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
03/15/97.............................. 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
04/15/97.............................. 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
05/15/97.............................. 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
06/15/97.............................. 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
07/15/97.............................. 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
08/15/97.............................. 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
09/15/97.............................. 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
10/15/97.............................. 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
11/15/97.............................. 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
12/15/97.............................. 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
01/15/98.............................. 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
02/15/98.............................. 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
03/15/98.............................. 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
04/15/98.............................. 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
05/15/98.............................. 100.000 100.000 100.000 94.700 100.000 100.000 100.000 100.000
06/15/98.............................. 100.000 100.000 100.000 86.025 100.000 100.000 100.000 100.000
07/15/98.............................. 100.000 100.000 100.000 77.698 100.000 100.000 100.000 100.000
08/15/98.............................. 100.000 100.000 100.000 69.723 100.000 100.000 100.000 100.000
09/15/98.............................. 100.000 100.000 92.485 62.105 100.000 100.000 100.000 100.000
10/15/98.............................. 100.000 100.000 84.917 54.847 100.000 100.000 100.000 100.000
11/15/98.............................. 100.000 100.000 77.593 47.955 100.000 100.000 100.000 100.000
12/15/98.............................. 100.000 98.906 71.255 41.806 100.000 100.000 100.000 100.000
01/15/99.............................. 100.000 92.509 65.115 35.951 100.000 100.000 100.000 100.000
02/15/99.............................. 100.000 86.222 59.176 30.394 100.000 100.000 100.000 100.000
03/15/99.............................. 100.000 80.045 53.439 25.138 100.000 100.000 100.000 100.000
04/15/99.............................. 98.572 73.982 47.907 20.187 100.000 100.000 100.000 100.000
05/15/99.............................. 92.044 68.032 42.584 15.544 100.000 100.000 100.000 100.000
06/15/99.............................. 85.544 62.198 37.471 11.215 100.000 100.000 100.000 100.000
07/15/99.............................. 79.072 56.482 32.571 7.201 100.000 100.000 100.000 100.000
08/15/99.............................. 72.627 50.883 27.886 3.507 100.000 100.000 100.000 100.000
09/15/99.............................. 66.211 45.406 23.421 0.138 100.000 100.000 100.000 100.000
10/15/99.............................. 59.824 40.049 19.176 0.000 100.000 100.000 100.000 80.926
11/15/99.............................. 53.467 34.817 15.155 0.000 100.000 100.000 100.000 63.127
12/15/99.............................. 47.140 29.709 11.360 0.000 100.000 100.000 100.000 47.532
01/15/00.............................. 40.843 24.728 7.795 0.000 100.000 100.000 100.000 34.604
02/15/00.............................. 34.578 19.875 4.463 0.000 100.000 100.000 100.000 23.062
03/15/00.............................. 30.455 16.569 2.015 0.000 100.000 100.000 100.000 12.922
04/15/00.............................. 26.353 13.345 0.000 0.000 100.000 100.000 98.124 4.201
05/15/00.............................. 22.272 10.205 0.000 0.000 100.000 100.000 83.999 1.992
06/15/00.............................. 18.212 7.150 0.000 0.000 100.000 100.000 70.866 0.000
07/15/00.............................. 14.174 4.180 0.000 0.000 100.000 100.000 58.739 0.000
08/15/00.............................. 10.158 1.297 0.000 0.000 100.000 100.000 47.628 0.000
09/15/00.............................. 6.165 0.000 0.000 0.000 100.000 90.162 37.547 0.000
10/15/00.............................. 2.194 0.000 0.000 0.000 100.000 72.392 28.507 0.000
11/15/00.............................. 0.000 0.000 0.000 0.000 88.489 55.214 20.522 0.000
12/15/00.............................. 0.000 0.000 0.000 0.000 62.721 38.635 13.602 0.000
01/15/01.............................. 0.000 0.000 0.000 0.000 37.112 22.664 7.763 0.000
02/15/01.............................. 0.000 0.000 0.000 0.000 32.886 19.755 6.211 0.000
03/15/01.............................. 0.000 0.000 0.000 0.000 28.685 16.940 4.826 0.000
04/15/01.............................. 0.000 0.000 0.000 0.000 24.509 14.222 3.611 0.000
05/15/01.............................. 0.000 0.000 0.000 0.000 20.358 11.601 2.568 0.000
06/15/01.............................. 0.000 0.000 0.000 0.000 16.233 9.078 1.699 0.000
07/15/01.............................. 0.000 0.000 0.000 0.000 12.135 6.656 1.005 0.000
08/15/01.............................. 0.000 0.000 0.000 0.000 8.063 4.334 0.489 0.000
09/15/01.............................. 0.000 0.000 0.000 0.000 4.018 2.115 0.153 0.000
10/15/01.............................. 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Weighted Average Life (years)<F1>..... 3.467 3.180 2.813 2.403 4.613 4.470 4.157 3.474
<FN>
- ----------
<F1> The weighted average life of a Class A-3 Note or a Certificate is
determined by (i) multiplying the amount of each principal payment on a
Note by the number of years from the date of the issuance of the Note to
the related Distribution Date or, in the case of a Certificate, 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, (ii) adding the results and
(iii) dividing the sum by the related initial principal amount of the Note
or, in the case of a Certificate, the original Certificate balance of such
Certificate.
</TABLE>
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.
S-17
<PAGE> 18
DELINQUENCIES AND NET LOSSES
Set forth below is certain information concerning the historical experience
of the Seller and Boatmen's Tennessee pertaining to new and used automobile,
van and light duty truck receivables. There can be no assurance that the
delinquency and net loss experience on the Receivables will be comparable to
that set forth below.
<TABLE>
DELINQUENCY EXPERIENCE: THE BOATMEN'S NATIONAL BANK OF ST. LOUIS<F1>
(DOLLAR AMOUNTS IN THOUSANDS)
<CAPTION>
AT MARCH 31, AT DECEMBER 31,
----------------- -----------------------------------------------------------------------------------
1996 1995 1994 1993 1992
----------------- ----------------- ----------------- ----------------- -----------------
DOLLARS % DOLLARS % DOLLARS % DOLLARS % DOLLARS %
--------- ---- --------- ---- --------- ---- --------- ---- --------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Principal Amount
Outstanding........ $ 694,601 $ 639,475 $ 511,259 $ 309,649 $ 219,132
Delinquencies:
31-60 days......... 7,139 1.03% 7,261 1.14% 3,611 0.71% 2,064 0.67% 1,909 0.87%
61-90 days......... 1,638 0.24 1,353 0.21 672 0.13 360 0.12 352 0.16
over 90 days....... 648 0.09 718 0.11 154 0.03 144 0.05 117 0.05
Amount in
Repossession....... 286 0.04 207 0.03 241 0.05 NA NA NA NA
Total Delinquencies
and Amount in Re-
possession<F2>..... $ 9,711 1.40% $ 9,539 1.49% $ 4,678 0.91% $ 2,568 0.83% $ 2,378 1.09%
<FN>
- ---------
<F1> All amounts and percentages are based on the net remaining principal
balance.
<F2> Percentages may not exactly add due to rounding.
</TABLE>
<TABLE>
DELINQUENCY EXPERIENCE: BOATMEN'S BANK OF TENNESSEE<F1>
(DOLLAR AMOUNTS IN THOUSANDS)
<CAPTION>
AT MARCH 31, AT DECEMBER 31,
----------------- -----------------------------------------------------------------------------------
1996 1995 1994 1993 1992
----------------- ----------------- ----------------- ----------------- -----------------
DOLLARS % DOLLARS % DOLLARS % DOLLARS % DOLLARS %
--------- ---- --------- ---- --------- ---- --------- ---- --------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Principal Amount
Outstanding........ $ 577,945 $ 528,930 $ 515,375 $ 375,308 $ 301,498
Delinquencies:
31-60 days......... 7,141 1.24% 9,500 1.80% 4,941 0.96% 2,180 0.58% 2,679 0.89%
61-90 days......... 1,692 0.29 3,005 0.57 423 0.08 222 0.06 56 0.02
over 90 days....... 948 0.16 1,537 0.29 185 0.04 16 0.00 62 0.02
Amount in
Repossession....... 820 0.14 715 0.14 789 0.15 310 0.08 356 0.12
Total Delinquencies
and Amount in Re-
possession<F2>..... $ 10,601 1.83% $ 14,757 2.79% $ 6,338 1.23% $ 2,728 0.72% $ 3,153 1.05%
<FN>
- ---------
<F1> All amounts and percentages are based on the net remaining principal
balance.
<F2> Percentages may not exactly add due to rounding.
</TABLE>
S-18
<PAGE> 19
<TABLE>
HISTORICAL NET LOSS EXPERIENCE: THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
(DOLLAR AMOUNTS IN THOUSANDS)
<CAPTION>
QUARTER ENDED YEAR ENDED DECEMBER 31,
-------------- -----------------------------------------------
MARCH 31, 1996 1995 1994 1993 1992
-------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Principal Amount Outstanding<F1>... $694,601 $639,475 $511,259 $309,649 $219,132
Average Principal Amount
Outstanding...................... $671,812 $567,666 $439,606 $253,251 $193,416
Number of Loans Outstanding........ 81,693 76,415 58,737 39,182 31,044
Net Losses<F2>..................... $552 $1,146 $560 $208 $448
Net Losses as a Percent of
Principal Amount
Outstanding<F3>.................. 0.32% 0.18% 0.11% 0.07% 0.20%
Net Losses as a Percent of
Average Principal Amount
Outstanding<F3>.................. 0.33% 0.20% 0.13% 0.08% 0.23%
<FN>
- --------
<F1> Amount Outstanding is the net remaining principal balance.
<F2> Amount represents the aggregate balance of all contracts which are
determined to be uncollectible in the period, less any recoveries on
contracts charged-off in the period or any prior period.
<F3> Annualized.
</TABLE>
<TABLE>
HISTORICAL NET LOSS EXPERIENCE: BOATMEN'S BANK OF TENNESSEE
(DOLLAR AMOUNTS IN THOUSANDS)
<CAPTION>
QUARTER ENDED YEAR ENDED DECEMBER 31,
-------------- -----------------------------------------------
MARCH 31, 1996 1995 1994 1993 1992
-------------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Principal Amount Outstanding<F1>... $577,945 $528,930 $515,375 $375,308 $301,498
Average Principal Amount
Outstanding...................... $558,217 508,185 461,846 341,572 284,042
Number of Loans Outstanding........ 60,509 57,479 53,480 40,253 33,900
Net Losses<F2>..................... $1,289 $2,800 $1,538 $1,194 $1,625
Net Losses as a Percent of
Principal Amount
Outstanding<F3>.................. 0.89% 0.53% 0.30% 0.32% 0.54%
Net Losses as a Percent of
Average Principal Amount
Outstanding<F3>.................. 0.92% 0.55% 0.33% 0.35% 0.57%
<FN>
- --------
<F1> Amount Outstanding is the net remaining principal balance.
<F2> Amount represents the aggregate balance of all contracts which are
determined to be uncollectible in the period, less any recoveries on
contracts charged-off in the period or any prior period.
<F3> Annualized.
</TABLE>
Delinquencies and net charge-offs are affected by a number of social,
economic and other factors, and there can be no assurance as to the level of
future total delinquencies or the severity of future net charge-offs. As a
result, the delinquency and net charge-off experience of the Receivables may
differ from those shown in the tables.
S-19
<PAGE> 20
THE SELLER AND THE SERVICER
Information regarding the Seller and the Servicer is set forth under ``The
Seller and the Servicer'' in the Prospectus. In addition, the Servicer provides
auto financing services to the Affiliates' customers and to automobile dealers
and their customers throughout all 50 states. As of May 31, 1996, the Servicer
serviced financing arrangements for approximately 214,000 vehicles.
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 of the Class A-1 Notes have been paid in full and no
principal payments will be made on the Class A-3 Notes until all of the Class
A-2 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'' herein. 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. 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.
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of the Indenture, a form of
which has been filed as an exhibit to the Registration Statement. A copy of the
Indenture will be filed with the Commission following the issuance of the
Securities. The following summary describes certain terms of the Notes and the
Indenture. The summary does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, all the provisions of the Notes
and the Indenture. 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, and to the extent inconsistent therewith replaces, 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. The Chase Manhattan Bank, N.A., a national banking association,
will be the Indenture Trustee under the Indenture.
PAYMENTS OF INTEREST
Interest on the outstanding principal balance of the Notes of each class
will accrue at the applicable per annum Interest Rate and will be payable to
the Noteholders monthly on each Distribution Date, commencing August 15, 1996.
Interest on the outstanding principal balance of the Notes of each class will
accrue at the applicable Interest Rate for the applicable Interest Accrual
Period. Interest on the Class A-1 Notes will be calculated on the basis of a
360 day year for the actual number of days elapsed in the period for which
interest is payable. Interest on the Notes, other than the Class A-1 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 and from
the Reserve Account. See ``Description of the Transfer and Servicing
Agreements--Distributions'' and ``--Reserve Account'' herein.
Interest payments on the Notes 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 the 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.
S-20
<PAGE> 21
PAYMENTS OF PRINCIPAL
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.
Principal payments will be made to the Noteholders on each Distribution
Date in an amount generally equal to the Regular Principal Distribution Amount.
The ``Regular Principal Distribution Amount'' with respect to a Distribution
Date generally equals the sum of principal payments received with respect to
the Receivables during the preceding Collection Period, plus the principal
balances of defaulted Receivables written off in respect of such Collection
Period, subject to certain limitations. Principal payments on the Notes will
generally be derived from the Total Distribution Amount and the amount, if any,
in the Reserve Account up to the Available Amount remaining after the payment
of the Servicing Fee, the Noteholders' Interest Distributable Amount and the
Certificateholders' Interest Distributable Amount. See ``Description of the
Transfer and Servicing Agreements--Distributions'' and ``--Reserve Account''
herein.
No principal will be paid on the Class A-2 Notes until all of the Class A-1
Notes have been paid in full and no principal will be paid on the Class A-3
Notes until all of the Class A-2 Notes have been paid in full. 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 Scheduled Distribution Date; and 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. The actual date on which the aggregate
outstanding principal balance of any class of Notes is paid may be earlier than
the Final Scheduled Distribution Date for that class based on a variety of
factors, including those described under ``Weighted Average Life of the
Securities'' herein and in the Prospectus.
CLASS A-1 FINAL SCHEDULED DISTRIBUTION DATE
Notwithstanding anything to the contrary contained herein, on the Class A-1
Final Scheduled Distribution Date holders of record as of the Business Day
preceding such date shall be entitled to receive from funds available therefor
interest on the outstanding principal amount of the Class A-1 Notes immediately
prior to such date at a rate of 5.7525% per annum for the Final Class A-1
Interest Period (together with interest due but not paid on a prior
Distribution Date and, to the extent permitted by law, interest on such amount
at 5.7525%) plus the unpaid principal amount of the Class A-1 Notes. Interest
will be calculated on the basis of a 360-day year and the actual number of days
elapsed in the Final Class A-1 Interest Period.
OPTIONAL REDEMPTION
On any Distribution Date after the Class A-2 Notes have been paid in full,
the Class A-3 Notes will be redeemed in whole, but not in part, if the Servicer
exercises its option to purchase the Receivables. The Servicer may purchase the
Receivables after the Class A-2 Notes have been paid in full and after the Pool
Balance shall have declined to 5% or less of the Initial Pool Balance, as
described in the Prospectus under ``Description of the Transfer and Servicing
Agreements--Termination''. The redemption price will be equal to the unpaid
principal amount of the Class A-3 Notes plus accrued and unpaid interest
thereon at the Class A-3 Rate.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of the Trust
Agreement, a form of which has been filed as an exhibit to the Registration
Statement. A copy of the Trust Agreement will be filed with the Commission
following the issuance of the Securities. The following summary describes
certain terms of the Certificates and the Trust Agreement. The summary does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, all the provisions of the Certificates and the Trust Agreement.
The following summary supplements, and to the extent inconsistent therewith
replaces, 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.
S-21
<PAGE> 22
DISTRIBUTION OF INTEREST INCOME
On each Distribution Date, commencing August 15, 1996, the
Certificateholders will be entitled to distributions in an amount equal to the
amount of interest for the Interest Accrual Period that would accrue on the
Certificate Balance at the Pass Through 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
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. Interest distributions due for any
Distribution Date but not distributed on such Distribution Date in the event
that sufficient funds are not available therefor will be due on the next
Distribution Date increased by an amount equal to interest on such amount at
the Pass Through Rate (to the extent lawful). See ``Description of the Transfer
and Servicing Agreements--Distributions'' and ``--Reserve Account'' herein.
DISTRIBUTIONS OF PRINCIPAL PAYMENTS
Certificateholders will be entitled to distributions of principal on each
Distribution Date, commencing with the Distribution Date on which all of the
Notes are paid in full, in an amount generally equal to the Regular Principal
Distribution Amount (less, on the Distribution Date on which all of 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 and funds in the Reserve Account remaining after the
distribution of the Servicing Fee, the Noteholders' Distributable Amount (on
the Distribution Date on which all of 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 Servicer exercises its option to purchase the Receivables after the
Class A-2 Notes have been paid in full and the Pool Balance declines to 5% or
less of the Initial Pool Balance, Certificateholders will receive an amount in
respect of the Certificates equal to the outstanding Certificate Balance
together with accrued interest at the Pass Through 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, the Administration Agreement and the Trust Agreement (collectively,
the ``Transfer and Servicing Agreements''). Forms of the Transfer and Servicing
Agreements have been filed as exhibits to the Registration Statement. A copy of
the Sale and Servicing Agreement will be filed with the Commission following
the issuance of the Securities. The summary does not purport to be complete and
is subject to, and qualified in its entirety by reference to, all the
provisions of the Transfer and Servicing Agreements. The following summary
supplements, and to the extent inconsistent therewith replaces, 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 with the Indenture Trustee in the
name of the Indenture Trustee on behalf of the Noteholders and the
Certificateholders.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicing Fee Rate with respect to the Servicing Fee for the Servicer
will be 1% per annum of the Pool Balance as of the first day of the related
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) will be paid at the end 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.
S-22
<PAGE> 23
DISTRIBUTIONS
Deposits to Collection Account. On or prior to each Distribution Date, the
Servicer will cause all collections and other amounts constituting the Total
Distribution Amount to be deposited into the Collection Account. The ``Total
Distribution Amount'' for a Distribution Date shall be the sum of the Interest
Distribution Amount and the Regular Principal Distribution Amount (other than
the portion thereof attributable to Realized Losses). ``Realized Losses'' means
the excess of the principal balance of any Liquidated Receivable over
Liquidation Proceeds to the extent allocable to principal.
The ``Interest Distribution Amount'' on any Distribution Date will
generally be the sum of the following amounts with respect to the preceding
Collection Period: (i) that portion of all collections on the Receivables
allocable to interest; (ii) all proceeds of the liquidation of defaulted
Receivables (``Liquidated Receivables''), net of expenses incurred by the
Servicer in connection with such liquidation and any amounts required by law to
be remitted to the Obligor on such Liquidated Receivables (``Liquidation
Proceeds''), to the extent attributable to interest due thereon in accordance
with the Servicer's customary servicing procedures, and all recoveries in
respect of Liquidated Receivables which were written off in prior Collection
Periods; (iii) the Purchase Amount of each Receivable that was repurchased by
the Seller or purchased by the Servicer under an obligation which arose during
the related Collection Period, to the extent attributable to accrued interest
thereon; and (iv) investment earnings for such Distribution Date, exclusive of
investment earnings on the Reserve Account which will be available for
distribution as described herein under ``--Reserve Account''.
The ``Regular Principal Distribution Amount'' on any Distribution Date will
generally be the sum of the following amounts with respect to the preceding
Collection Period: (i) that portion of all collections on the Receivables
allocable to principal; (ii) all Liquidation Proceeds attributable to the
principal amount of Receivables which became Liquidated Receivables during such
Collection Period in accordance with the Servicer's customary servicing
procedures, plus the amount of Realized Losses with respect to such Liquidated
Receivables; (iii) 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; and (iv) partial prepayments relating to refunds of extended warranty
protection plan costs or of physical damage, credit life or disability
insurance policy premiums, but only if such costs or premiums were financed by
the respective Obligor as of the date of the original contract.
The Interest Distribution Amount and the Regular Principal Distribution
Amount on any Distribution Date shall exclude the following:
(i) all payments and proceeds (including Liquidation Proceeds) of any
Receivables, the Purchase Amount of which has been included in the Total
Distribution Amount in a prior Collection Period; and
(ii) Liquidation Proceeds with respect to a Receivable attributable to
accrued and unpaid interest thereon (but not including interest for the
then current Collection Period).
Deposits to the Distribution Accounts. On each Distribution Date, the
Servicer shall allocate amounts on deposit in the Collection Account as
described under ``Description of the Notes--Payments of Principal'' in the
Prospectus and will instruct the Indenture Trustee to make the following
deposits and distributions, to the extent of the amount then on deposit in the
Collection Account, in the following order of priority:
(i) to the Servicer, from the Interest Distribution Amount (as so
allocated) the Servicing Fee and all unpaid Servicing Fees from prior
Collection Periods;
(ii) to the Note Distribution Account, from the Total Distribution
Amount remaining after the payment of the Servicing Fee for such
Collection Period and all unpaid Servicing Fees from prior Collection
Periods, the Noteholders' Interest Distributable Amount;
(iii) to the Certificate Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i) and
(ii), the Certificateholders' Interest Distributable Amount;
(iv) to the Note Distribution Account, from the Total Distribution
Amount remaining after the application of clauses (i) through (iii), the
Noteholders' Principal Distributable Amount;
S-23
<PAGE> 24
(v) after all of the Notes have been paid in full, to the Certificate
Distribution Account, from the Total Distribution Amount remaining after
the application of clauses (i) through (iv), the Certificateholders'
Principal Distributable Amount; and
(vi) to the Reserve Account, from the Total Distribution Amount, any
amount remaining after the application of clauses (i) through (v) hereof.
On each Determination Date (other than the first Determination Date), the
Servicer will provide the 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 Distributable Amount'' means, with respect to
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, with
respect to any Distribution Date, the product of (i)(A) in the case of the
Class A-1 Notes, the product of the Class A-1 Rate and a fraction, the
numerator of which is the number of days elapsed from and including the
most recent date to which interest has been paid (or, in the case of the
first Distribution Date, from and including July 15, 1996 to but excluding
August 15, 1996) to but excluding such Distribution Date and the
denominator of which is 360 and (B) in the case of each other class of
Notes, one-twelfth of the Interest Rate for such class (or, in the case of
the first Distribution Date, the Interest Rate for such class multiplied
by a fraction, the numerator of which is the number of days elapsed from
and including July 15, 1996 to but excluding August 15, 1996 and the
denominator of which is 360) and (ii) the outstanding principal balance of
the Notes of such class on the immediately preceding Distribution Date
(or, in the case of the first Distribution Date, on the Closing Date),
after giving effect to all payments of principal to the Noteholders of
such class on or prior to such Distribution Date (or in the case of the
first Distribution Date, on the Closing Date).
``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 for the related Interest Accrual
Period.
``Noteholders' Principal Distributable Amount'' means, with respect to
any Distribution Date, the sum of the Noteholders' Monthly Principal
Distributable Amount for such Distribution Date and the Noteholders'
Principal Carryover Shortfall as of the close of the preceding
Distribution Date; provided, however, that the Noteholders' Principal
Distributable Amount shall not exceed the outstanding principal balance of
the Notes; and provided, further, that the Noteholders' Principal
Distributable Amount on the Final Scheduled Distribution Date of each
class of Notes shall not be less than the amount that is necessary (after
giving effect to other amounts to be deposited in the Note Distribution
Account on such Distribution Date and allocable to principal) to reduce
the outstanding principal balance of such class of Notes to zero.
``Noteholders' Monthly Principal Distributable Amount'' means, with
respect to any Distribution Date prior to the Distribution Date on which
the Notes are paid in full, the Regular Principal Distribution Amount.
``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.
S-24
<PAGE> 25
``Certificateholders' Distributable Amount'' means, with respect to any
Distribution Date, the sum of the Certificateholders' Principal
Distributable Amount and the Certificateholders' Interest Distributable
Amount.
``Certificateholders' Interest Distributable Amount'' means, with
respect to 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,
with respect to any Distribution Date, interest accrued for the related
Interest Accrual Period on the Certificates at the Pass-Through Rate on
the outstanding Certificate Balance on the immediately preceding
Distribution Date (or, in the case of the first Distribution Date, the
Closing Date), after giving effect to all payments allocable to the
reduction of the Certificate Balance made on or prior to such Distribution
Date.
``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 Pass Through Rate for the related Interest
Accrual Period.
``Certificateholders' Principal Distributable Amount'' means, with
respect to 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, however, that the
Certificateholders' Principal Distributable Amount shall not exceed the
Certificate Balance. In addition, on the Final Scheduled Distribution
Date, the principal required to be deposited into the Certificate
Distribution Account will include the lesser of (a) any principal due and
remaining unpaid on each Receivable, in the Trust as of the Final
Scheduled Maturity Date, or (b) 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.
``Certificateholders' Monthly Principal Distributable Amount'' means,
with respect to any Distribution Date prior to the Distribution Date on
which all of the Notes are paid in full, zero; and with respect to any
Distribution Date commencing on the Distribution Date on which all of the
Notes are paid in full, the Regular Principal Distribution Amount (less,
on the Distribution Date on which all of the Notes are paid in full, the
portion thereof payable on the Notes).
``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.
``Certificate Balance'' equals, initially, $11,624,943 and, thereafter,
equals the initial Certificate Balance, reduced by all amounts allocable
to principal previously distributed to Certificateholders.
On each Distribution Date, all amounts on deposit in the Note Distribution
Account will be generally paid in the following order of priority:
(i) to the applicable Noteholders in respect of accrued and unpaid
interest on the outstanding principal balance of the applicable class of
the Notes at the applicable Interest Rate;
(ii) to the Class A-1 Noteholders in reduction of principal until the
principal balance of the Class A-1 Notes has been reduced to zero;
(iii) to the Class A-2 Noteholders in reduction of principal until the
principal balance of the Class A-2 Notes has been reduced to zero; and
(iv) to the Class A-3 Noteholders in reduction of principal until the
principal balance of the Class A-3 Notes has been reduced to zero.
On each Distribution Date, all amounts on deposit in the Certificate
Distribution Account will be distributed to the Certificateholders in respect
of interest and on each Distribution Date after all of the Notes have been paid
in full,
S-25
<PAGE> 26
all amounts on deposit in the Certificate Distribution Account will be
distributed to Certificateholders in respect of interest and principal until
the principal balance of the Certificates has been reduced to zero.
RESERVE ACCOUNT
The rights of the Certificateholders to receive distributions with respect
to the Receivables generally will be subordinated to the rights of the
Noteholders in the event of defaults and delinquencies on the Receivables as
provided in the Sale and Servicing Agreement. The protection afforded to the
Noteholders through subordination will be effected both by the preferential
right of the Noteholders to receive current distributions with respect to the
Receivables and by the establishment of the Reserve Account. The Reserve
Account will be created with a deposit initially by the Seller on the Closing
Date. It is currently contemplated that the Reserve Account will be held at The
Boatmen's National Bank of St. Louis or a banking affiliate thereof.
If the amount on deposit in the Reserve Account on any Distribution Date
(after giving effect to all deposits therein or other withdrawals therefrom on
such Distribution Date) is greater than the Specified Reserve Account Balance
for such Distribution Date, except as described below and subject to certain
limitations, the Servicer shall instruct the Indenture Trustee to distribute
such excess to the Seller. Upon any distribution to the Seller of amounts from
the Reserve Account, neither the Noteholders nor the Certificateholders will
have any rights in, or claims to, such amounts. Subsequent to any reduction or
withdrawal by any Rating Agency of its rating of any class of Notes, unless
such rating has been restored, any such excess released from the Reserve
Account on a Distribution Date will be deposited in the Note Distribution
Account for payment to Noteholders as an accelerated payment of principal on
such Distribution Date.
``Specified Reserve Account Balance'' with respect to any Distribution Date
means the greater of (i) 2% of the Initial Pool Balance, and (ii) 3.25% of the
Pool Balance on the first day of the related Collection Period, except that if
on any Distribution Date (a) the average of the Charge-off Rates for the three
preceding Collection Periods exceeds 1.25%, or (b) the average of the
Delinquency Percentages for the three preceding Collection Periods exceeds
1.25%, then the Specified Reserve Account Balance shall be an amount equal to
6% of the sum of the aggregate outstanding principal amount of each class of
the Notes and the outstanding Certificate Balance on such Distribution Date
(after giving effect to all distributions with respect to the Notes and the
Certificates to be made on such Distribution Date); provided, however, that in
no circumstances will the Seller be required to deposit any amounts in the
Reserve Account other than the Reserve Account Initial Deposit.
The ``Charge-off Rate'' with respect to a Collection Period will equal the
Aggregate Net Losses with respect to the Receivables expressed, on an
annualized basis, as a percentage of the average of (x) the Pool Balance on the
last day of the immediately preceding Collection Period and (y) the Pool
Balance on the last day in such Collection Period. The ``Aggregate Net Losses''
with respect to a Collection Period will equal the aggregate principal balance
of all Receivables newly designated during such Collection Period as Liquidated
Receivables minus Liquidation Proceeds collected during such Collection Period
with respect to all Liquidated Receivables. The ``Delinquency Percentage'' with
respect to a Collection Period will equal the ratio of (a) the outstanding
principal balance of the Receivables 61 days or more delinquent as of the last
day of such Collection Period, determined in accordance with the Servicer's
normal practices, divided by (b) the outstanding principal balance of all
Receivables on the last day of such Collection Period.
Amounts held from time to time in the Reserve Account will continue to be
held for the benefit of the Noteholders and Certificateholders. Funds held in
the Reserve Account shall be invested and the investment income earned thereon
will be held in the Reserve Account and will be available for distribution to
the Noteholders and the Certificateholders. On each Distribution Date funds
will be withdrawn from the Reserve Account up to the Available Amount to the
extent that the Total Distribution Amount (after the payment of the Servicing
Fee) with respect to any Collection Period is less than the Noteholders
Distributable Amount and will be deposited in the Note Distribution Account. In
addition, after giving effect to such withdrawal, funds will be withdrawn from
the Reserve Account up to the Available Amount (as reduced by any withdrawal
pursuant to the preceding sentence) to the extent that the portion of the Total
Distribution Amount remaining after the payment of the Servicing Fee and the
deposit of the Noteholders' Distributable Amount in the Note Distribution
Account is less than the Certificateholders' Distributable Amount and will be
deposited in the Certificate Distribution Account. If funds applied in
accordance with the preceding sentence are insufficient to distribute interest
due on the Certificates, subject to certain limitations, funds
S-26
<PAGE> 27
will be withdrawn from the Reserve Account and applied to distribute interest
due on the Certificates to the extent of the Certificate Interest Reserve
Amount.
``Available Amount'' means, with respect to any Distribution Date, the
amount of funds on deposit in the Reserve Account on such Distribution Date
less the Certificate Interest Reserve Amount with respect to such Distribution
Date, in each case, before giving effect to any reduction thereto on such
Distribution Date.
``Certificate Interest Reserve Amount'' means the lesser of (i)
$204,889.63 less the amount of any application of the Certificate Interest
Reserve Amount to pay interest on the Certificates on any prior Distribution
Date and (ii) 1.7625% of the Certificate Balance on such Distribution Date
(before giving effect to any reduction thereof on such Distribution Date);
provided, however, that the Certificate Interest Reserve Amount shall be zero
subsequent to any reduction by any Rating Agency to less than ``A'' or its
equivalent or, in the case of the Class A-1 Notes, ``A-1'' or its equivalent,
or withdrawal by any Rating Agency, of its rating of the Notes, unless such
rating has been restored.
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 generally will not receive any distributions other than
those, if any, in respect of interest made from the Certificate Interest
Reserve Amount.
After the payment in full, or the provision for such payment, of (i) all
accrued and unpaid interest on the Securities and (ii) the outstanding
principal balance of the Securities, any funds remaining on deposit in the
Reserve Account, subject to certain limitations, will be paid to the Seller.
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.
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 a nonexempt
prohibited transaction as defined in Section 406 of ERISA or Section 4975 of
the Code. For additional information regarding treatment of the Notes under
ERISA, see ``ERISA Considerations'' in the Prospectus.
The Notes may not be purchased with the assets of a Plan if the Seller, the
Servicer, the Indenture Trustee, the Owner Trustee or any of their affiliates
(a) has investment or administrative discretion with respect to such Plan
assets; (b) has authority or responsibility to give, or regularly gives,
investment advice with respect to such Plan assets, for a fee and pursuant to
an agreement or understanding that such advice (i) will serve as a primary
basis for investment decisions with respect to such Plan assets and (ii) will
be based on the particular investment needs for such Plan; or (c) is an
employer maintaining or contributing to such Plan.
THE CERTIFICATES
The Certificates may not be acquired by (a) an employee benefit plan (as
defined in Section 3 (3) of ERISA) that is subject to the provisions of Title I
of ERISA, (b) a plan described in Section 4975(e) (1) of the Code or (c) 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 recent United States Supreme Court case
S-27
<PAGE> 28
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 CS First Boston
Corporation, Donaldson, Lufkin & Jenrette Securities Corporation and Lehman
Brothers Inc. (collectively, the ``Underwriters''), and each of the
Underwriters has severally agreed to purchase, the principal amount of each
class of the Notes and the Certificates set forth opposite its name below:
<TABLE>
CLASS A-1 NOTES
<CAPTION>
PRINCIPAL
UNDERWRITERS AMOUNT
- ------------ ---------
<S> <C>
CS First Boston Corporation........................................................... $25,551,636
Donaldson, Lufkin & Jenrette Securities Corporation................................... 25,551,634
Lehman Brothers Inc................................................................... 25,551,634
-----------
Total............................................................................. $76,654,904
===========
<CAPTION>
CLASS A-2 NOTES
PRINCIPAL
UNDERWRITERS AMOUNT
- ------------ ---------
<S> <C>
CS First Boston Corporation........................................................... $ 35,000,000
Donaldson, Lufkin & Jenrette Securities Corporation................................... 35,000,000
Lehman Brothers Inc................................................................... 35,000,000
------------
Total............................................................................. $105,000,000
============
<CAPTION>
CLASS A-3 NOTES
PRINCIPAL
UNDERWRITERS AMOUNT
- ------------ ---------
<S> <C>
CS First Boston Corporation........................................................... $22,281,237
Donaldson, Lufkin & Jenrette Securities Corporation................................... 22,281,235
Lehman Brothers Inc................................................................... 22,281,235
-----------
Total............................................................................. $66,843,707
===========
<CAPTION>
CERTIFICATES
PRINCIPAL
UNDERWRITERS AMOUNT
- ------------ ---------
<S> <C>
CS First Boston Corporation........................................................... $ 3,836,000
Donaldson, Lufkin & Jenrette Securities Corporation................................... 3,836,000
Lehman Brothers Inc................................................................... 3,836,000
-----------
Total............................................................................. $11,508,000
===========
</TABLE>
S-28
<PAGE> 29
In addition, The Boatmen's National Bank of St. Louis will directly offer
$6,000,000 principal amount of the Class A-1 Notes, $15,000,000 principal amount
of the Class A-2 Notes, $9,500,000 principal amount of the Class A-3 Notes, and
$116,943 principal amount of the Certificates.
The Underwriters and The Boatmen's National Bank of St. Louis propose to
offer the Securities to the public initially at the public offering prices set
forth herein, and to certain dealers at such prices less a concession of 0.11%
per Class A-1 Note, 0.15% per Class A-2 Note, 0.195% per Class A-3 Note, and
0.21% per Certificate. The Underwriters, The Boatmen's National Bank of St.
Louis and such dealers may allow a discount of 0.10% per Class A-1 Note, 0.10%
per Class A-2 Note, 0.125% per Class A-3 Note, and 0.15% per Certificate on
the sale to certain other dealers. After the initial public offering of the
Securities, the public offering prices and the concessions and discounts to
dealers may be changed by the Underwriters.
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.
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 Lewis, Rice &
Fingersh, L.C., St. Louis, Missouri. Lewis, Rice & Fingersh, L.C. 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 Underwriter by Weil, Gotshal
& Manges, New York, New York.
S-29
<PAGE> 30
<TABLE>
INDEX OF TERMS
<S> <C>
ABS................................................................................................... S-15
ABS Table............................................................................................. S-15
Affiliate............................................................................................. S-11
Agent Referral Program................................................................................ S-4
Aggregate Net Losses.................................................................................. S-26
APR................................................................................................... S-13
Available Amount...................................................................................... S-27
Boatmen's Bank........................................................................................ S-3
Boatmen's Tennessee................................................................................... S-4
Business Day.......................................................................................... S-4
Certificate Balance................................................................................... S-25
Certificate Interest Reserve Amount................................................................... S-27
Certificateholders.................................................................................... S-6
Certificateholders' Distributable Amount.............................................................. S-25
Certificateholders' Interest Carryover Shortfall...................................................... S-25
Certificateholders' Interest Distributable Amount..................................................... S-25
Certificateholders' Monthly Interest Distributable Amount............................................. S-25
Certificateholders' Monthly Principal Distributable Amount............................................ S-25
Certificateholders' Principal Carryover Shortfall..................................................... S-25
Certificateholders' Principal Distributable Amount.................................................... S-25
Certificates.......................................................................................... S-3
Charge-off Rate....................................................................................... S-26
Class A-1 Final Scheduled Distribution Date........................................................... S-5
Class A-2 Final Scheduled Distribution Date........................................................... S-5
Class A-3 Final Scheduled Distribution Date........................................................... S-5
Class A-1 Notes....................................................................................... S-3
Class A-2 Notes....................................................................................... S-3
Class A-3 Notes....................................................................................... S-3
Class A-1 Rate........................................................................................ S-5
Class A-2 Rate........................................................................................ S-5
Class A-3 Rate........................................................................................ S-5
Closing Date.......................................................................................... S-3
Code.................................................................................................. S-8
Collection Account.................................................................................... S-7
Collection Period..................................................................................... S-5
Commission............................................................................................ S-2
Company............................................................................................... S-3
Cutoff Date........................................................................................... S-3
Dealers............................................................................................... S-4
Delinquency Percentage................................................................................ S-26
Determination Date.................................................................................... S-21
Distribution Date..................................................................................... S-4
ERISA................................................................................................. S-8
Final Class A-1 Interest Period....................................................................... S-5
Final Scheduled Distribution Date..................................................................... S-6
Final Scheduled Maturity Date......................................................................... S-4
Financed Vehicles..................................................................................... S-3
Indenture............................................................................................. S-3
Indenture Trustee..................................................................................... S-3
Initial Pool Balance.................................................................................. S-6
Interest Accrual Period............................................................................... S-5
Interest Distribution Amount.......................................................................... S-23
S-30
<PAGE> 31
Interest Rate......................................................................................... S-5
Issuer................................................................................................ S-3
Liquidated Receivables................................................................................ S-23
Liquidation Proceeds.................................................................................. S-23
Motor Vehicle Loans................................................................................... S-11
Noteholders........................................................................................... S-4
Noteholders' Distributable Amount..................................................................... S-24
Noteholders' Interest Carryover Shortfall............................................................. S-24
Noteholders' Interest Distributable Amount............................................................ S-24
Noteholders' Monthly Interest Distributable Amount.................................................... S-24
Noteholders' Monthly Principal Distributable Amount................................................... S-24
Noteholders' Principal Carryover Shortfall............................................................ S-24
Noteholders' Principal Distributable Amount........................................................... S-24
Notes................................................................................................. S-3
Owner Trustee......................................................................................... S-3
Pass Through Rate..................................................................................... S-6
Plan.................................................................................................. S-27
Pool Balance.......................................................................................... S-4
Prospectus............................................................................................ S-2
Rating Agencies....................................................................................... S-9
Realized Losses....................................................................................... S-23
Receivables........................................................................................... S-3
Receivables Pool...................................................................................... S-10
Record Date........................................................................................... S-4
Regular Principal Distribution Amount................................................................. S-21
Reserve Account....................................................................................... S-6
Reserve Account Initial Deposit....................................................................... S-7
Sale and Servicing Agreement.......................................................................... S-3
Securities............................................................................................ S-3
Securityholders....................................................................................... S-6
Seller................................................................................................ S-3
Servicer.............................................................................................. S-3
Specified Reserve Account Balance..................................................................... S-7
Total Distribution Amount............................................................................. S-23
Transfer and Servicing Agreements..................................................................... S-22
Trust................................................................................................. S-3
Trust Agreement....................................................................................... S-3
Underwriter........................................................................................... S-28
</TABLE>
S-31
<PAGE> 32
Boatmen's Auto Trusts
Asset Backed Notes
Asset Backed Certificates
The Boatmen's National Bank of St. Louis
Seller and 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 and/or one or more classes of Certificates, will be issued by a
trust to be formed with respect to such series (each, a ``Trust'').
Each Trust will be formed pursuant to either a Trust Agreement to
be entered into among The Boatmen's National Bank of St. Louis,
in its capacity as seller (in such capacity, the ``Seller''),
an affiliate of the Seller specified in the related Prospectus
Supplement, 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 Boatmen's National Bank of St. Louis,
in its capacity as servicer (in such capacity, the
``Servicer''). If a series of Securities includes
Notes, such Notes of a series will be issued and
secured pursuant to an Indenture between the Trust
and the Indenture Trustee specified in the related
Prospectus Supplement (the ``Indenture Trustee'')
and will represent indebtedness of the related Trust.
The Certificates of a series will represent fractional
undivided interests in the related Trust. The related
Prospectus Supplement will specify which class or
classes of Notes, if any, and which class or classes
of Certificates, if any, of the related series are
being offered thereby. The property of each Trust
will include a pool of motor vehicle retail
installment sale contracts and simple interest
loan note and security agreements secured by
new or used automobiles, vans and light duty
trucks (the ``Receivables''), certain monies
received thereunder on and after the Cutoff
Date set forth in the related Prospectus
Supplement, security interests in the
vehicles financed thereby and certain
other property, all as described
herein and in the related
Prospectus Supplement.
(Continued on following page)
--------------------
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, AND ARE NOT GUARANTEED
OR INSURED BY, THE BOATMEN'S NATIONAL BANK OF ST. LOUIS OR ANY OF
ITS AFFILIATES. PROSPECTIVE INVESTORS SHOULD CONSIDER THE
FACTORS SET FORTH UNDER ``RISK FACTORS'' HEREIN AND IN
THE RELATED PROSPECTUS SUPPLEMENT.
----------------
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.
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of Securities offered hereby unless accompanied by a
Prospectus Supplement.
----------------
CS First Boston
Lehman Brothers
The Boatmen's National Bank of St. Louis
---------
The date of this Prospectus is September 14, 1995.
<PAGE> 33
(Continued from preceding page)
Except as otherwise provided in the related Prospectus Supplement, each class of
Securities of any series 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. 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 to the extent described
herein and in the related Prospectus Supplement. A series may include
one or more classes of Notes and/or Certificates which differ as to the
timing and priority of payment, interest rate or amount of distributions
in respect of principal or interest or both. A series may include one
or more classes of Notes or Certificates entitled to distributions in
respect of principal with disproportionate, nominal or no interest
distributions, or to interest distributions, with disproportionate,
nominal or no distributions in respect of principal. The rate
of payment in respect of principal of any class of Notes and
distributions in respect of the Certificate Balance (as
defined herein) of the Certificates of any class will
depend on the priority of payment of such class and the
rate and timing of payments (including prepayments,
defaults, liquidations and repurchases of Receivables)
on the related Receivables. A rate of payment lower
or higher than that anticipated may affect the
weighted average class of each class of Securities
in the manner described herein and in the
related Prospectus Supplement.
If the Securities are Strip Notes (as defined herein) or Strip Certificates (as
defined herein) 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 risks, 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 Certificate
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, Suite 1400, 500 West Madison Street, Chicago, Illinois 60661 and Seven
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.
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 herein
or in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a party of this Prospectus.
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 Secretary, The Boatmen's National Bank of St.
Louis, One Boatmen's Plaza, 800 Market Street, St. Louis, Missouri 63101
(Telephone: (314) 466-6000).
2
<PAGE> 34
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''.
<TABLE>
<C> <S>
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 Seller, an affiliate of the
Seller (the ``Company'') and the Trustee for such Trust (the
``Trustee''), 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 Boatmen's
National Bank of St. Louis, as Servicer (the ``Servicer'').
Seller and Servicer..................... The Boatmen's National Bank of St. Louis, a national banking
association (in its capacity as seller, the ``Seller'' or, in
its capacity as servicer, the ``Servicer'' or ``Boatmen's
Bank'').
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, the Indenture Trustee
specified in the related Prospectus Supplement.
The Notes............................... A series of Securities may include one, two 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.
Unless otherwise specified in the related Prospectus Supplement,
Notes will be available for purchase in denominations of $1,000
and integral multiples thereof and will be available in
book-entry form only. Unless otherwise specified in the related
Prospectus Supplement, Noteholders 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''.
Each class of Notes will have a stated or notional principal
amount and will bear interest at a specified rate or rates (with
respect to each class of Notes, the ``Interest Rate'') or, if
specified in the related Prospectus Supplement, will not bear
interest. If specified in the related Prospectus Supplement, a
series may include one or more classes of Notes (``Strip
Notes'') entitled to (i) stated principal payments and no inter-
est payments, nominal interest payments or interest payments not
based on such principal amount or (ii) specified interest
payments and no principal payments, nominal principal payments
or principal payments not equal to the amount on which interest
is accrued. See ``--Strip Notes and Strip Certificates.'' Each
class of Notes may have a different Interest Rate, which may be
a fixed, variable or adjustable
3
<PAGE> 35
Interest Rate, or any combination of the foregoing. Adjustable
interest rates may be based on indices such as LIBOR, Treasury
rates, rates on certificates of deposit and other similar
indices. See ``Certain information Regarding the
Securities--Floating Rate Securities''. The related Prospectus
Supplement will specify the Interest Rate for each class of
Notes, or the method for determining the Interest Rate.
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.
If the Servicer exercises its option to purchase the Receivables
of a Trust (or, if not, and to the extent provided in the
related Prospectus Supplement, if satisfactory bids for the
purchase of such Receivables are received), in the manner and on
the respective terms and conditions described under
``Description of the Transfer and Servicing
Agreements--Termination'', the outstanding Notes will be
redeemed as set forth in the related Prospectus Supplement.
The Certificates........................ A series may include one or more classes of Certificates and may
not include any Notes. The related Prospectus Supplement will
specify which class or classes, if any, of the Certificates are
being offered thereby.
Unless otherwise specified in the related Prospectus Supplement,
Certificates will be available for purchase in a minimum
denomination of $1,000 and in integral multiples of $1,000 in
excess thereof and will be available in book-entry form only.
Unless otherwise specified in the related Prospectus Supplement,
Certificateholders 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''.
Each class of Certificates will have a stated or notional
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 ``Pass Through
Rate''). Each class of Certificates may have a different Pass
Through Rate, which may be a fixed, variable or adjustable Pass
Through Rate, or any combination of the foregoing. The related
Prospectus Supplement will specify the Pass Through Rate for
each class of Certificates or the method for determining the
Pass Through Rate.
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 or losses, Pass Through
Rate or amount of distributions in respect of principal or
interest, or 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
4
<PAGE> 36
designated portions of the Receivables Pool. In addition, a
series may include one or more classes of Certificates (``Strip
Certificates'') entitled to (i) stated distributions in respect
of principal and no interest distributions, nominal interest
distributions or interest distributions not based on such
principal amount or (ii) specified interest distributions and no
distributions in respect of principal, nominal principal
distributions or principal distributions not equal to the amount
on which interest is accrued. See ``--Strip Notes and Strip
Certificates.''
If a series of securities includes classes of Notes,
distributions in respect of the Certificates may be subordinated
in priority of payment to payments on the Notes to the extent
specified in the related Prospectus Supplement.
If the Servicer exercises its option to purchase the Receivables
of a Trust (or, if not, and if and to the extent provided in the
related Prospectus Supplement, satisfactory bids for the
purchase of such Receivables are received), 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 as specified
in the related Prospectus Supplement.
Strip Notes and Strip Certificates...... Strip Notes and Strip Certificates may entitle the holder
thereof to receive interest only, principal only, or payments of
interest or principal that are disproportionate to
(respectively) the principal balance of such securities or the
amount of interest payable thereon. In some cases interest on
Strip Notes or Strip Securities will be payable on a
``notional'' principal amount that will be determined at the
time of issuance of such Securities based on the principal
balances of the Receivables attributable to such Securities.
Reference to these notional amounts is solely for convenience in
expressing certain calculations and does not represent the right
to receive any distributions allocable to principal or interest,
as the case may be. Unless otherwise specified in the related
Prospectus Supplement, rights of holders of Strip Notes and
Strip Certificates to receive amounts distributable thereon will
rank pari passu with the rights of holders of other classes of
Notes or Certificates, as the case may be, of the related
Series.
Prepayments on the Receivables generally will result in a faster
rate of principal payments on the Securities than if payments on
the Receivables were made as scheduled. Thus, the prepayment
experience on the Receivables will affect the average life of
each class of the Securities and the extent to which each such
class is paid prior to its final scheduled maturity date. If
prevailing interest rates fall significantly below the
applicable automobile financing interest rates on the Re-
ceivables, the rate of principal payments may be higher than if
prevailing interest rates remain at or above the interest rates
borne by the Receivables. Conversely, if prevailing interest
rates rise to a level significantly above the rates on the
Receivables, the rate of principal payments may be lower than
might otherwise be the case. Yields on the Strip Notes and Strip
Certificates will be sensitive to prepayments on the Receivables
and, in the case of a class of such Securities where
5
<PAGE> 37
the amount of interest payable is extremely disproportionate to
principal, a holder might, in some prepayment scenarios, fail to
recoup its original investment.
The Trust Property...................... The property of each Trust will include a pool of motor vehicle
retail installment sale contracts and simple interest loan note
and security agreements secured by new or used automobiles, vans
or light duty trucks (the ``Receivables''), including rights to
receive certain payments made with respect to such Receivables,
security interests in the vehicles financed thereby (the
``Financed Vehicles''), certain accounts and the proceeds
thereof and any proceeds from claims on certain related
insurance policies. On the Closing Date specified in the related
Prospectus Supplement with respect to a Trust, the Seller will
sell or transfer 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 Reserve Account and any other
account identified in the related Prospectus Supplement.
The Receivables arise from loans originated (i) by the Seller
directly and indirectly through agents of regional automobile
clubs and a property and casualty insurer (the ``Agent Referral
Program''), (ii) by other banking subsidiaries of Boatmen's
Bancshares, Inc. (both directly and indirectly through the Agent
Referral Program) and purchased by the Seller pursuant to
intercompany agreements, or (iii) by motor vehicle dealers (the
``Dealers'') and purchased by the Seller (or by such other
banking subsidiaries and subsequently sold to the Seller)
pursuant to agreements with the Dealers. All of these loans
provide for the allocation of payments to principal and interest
in accordance with the ``simple interest'' method. 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.
Credit and Cash Flow Enhancement........ If and to the extent specified in the related Prospectus
Supplement, credit enhancement with respect to a Trust or any
class or classes of Securities may include any one or more of
the following: 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.
Unless otherwise specified in the related Prospectus Supplement,
any form of credit
6
<PAGE> 38
enhancement will have certain limitations and exclusions from
coverage thereunder, which will be described in the related
Prospectus Supplement.
Reserve Account......................... Unless otherwise 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 or Payment
Date after making all other distributions required on such date.
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) will be distributed.
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 such Trust
to be responsible for servicing, managing, maintaining custody
of and making collections on the Receivables. The Servicer will
undertake certain administrative duties under an Administration
Agreement with respect to any Trust that has issued Notes.
The related Prospectus Supplement may provide that the Servicer
shall advance any interest shortfall on a Receivable (an
``Advance''). The Servicer shall be entitled to a reimbursement
of Advances from subsequent payments on or with respect to the
Receivables to the extent described herein and in the related
Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement,
the Seller will be obligated to repurchase any Receivable if the
interest of the applicable Trust in such Receivable is
materially 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.
Unless otherwise provided in the related Prospectus Supplement,
the Servicer will be obligated to purchase or make Advances with
respect to 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 amount
of a scheduled payment of such Receivable or fails to maintain a
perfected security interest in the related Financed Vehicle.
7
<PAGE> 39
Unless otherwise specified in the related Prospectus Supplement,
the Servicer will be entitled to receive a fee for servicing the
Receivables of each Trust equal to a specified percentage of the
aggregate principal balance of the related Receivables Pool, as
set forth in the related Prospectus Supplement, plus certain
late fees, prepayment charges and other administrative fees or
similar charges. See ``Description of the Transfer and Servicing
Agreements--Servicing Compensation and Payment of Expenses''
herein and in the related Prospectus Supplement.
Certain Legal Aspects of the
Receivables; Repurchase Obligations... 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.
Unless otherwise specified in the related Prospectus Supplement,
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 shall materially 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 second (or, if the Seller elects, the first) month 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. 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, 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.
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. Unless otherwise
specified in the related Prospectus Supplement, 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.
Tax Status.............................. Unless the related Prospectus Supplement specifies that the
related Trust will be treated as a grantor trust and, except as
otherwise provided in such Prospectus Supplement, upon the
issuance of the related series of Securities (a) Lewis, Rice &
Fingersh, L.C., Federal
8
<PAGE> 40
tax counsel to such Trust (``Federal Tax Counsel''), will
deliver an opinion to the effect that, for federal income tax
purposes: (i) any Notes of such series will be characterized as
debt and (ii) such Trust will not be characterized as an
association (or a publicly traded partnership) taxable as a
corporation and (b) Lewis, Rice & Fingersh, L.C., Missouri tax
counsel to such Trust, will deliver an opinion to the effect
that the same characterizations would apply for Missouri income
tax purposes as for federal income tax purposes. In respect of
any such series, each Noteholder, by the acceptance of a Note of
such series, will agree to treat such Note as indebtedness, and
each Certificateholder, by the acceptance of a Certificate of
such series, will agree to treat such Trust as a partnership in
which such Certificateholder is a partner for federal income and
Missouri income tax purposes. Alternative characterizations of
such Trust and such Certificates are possible, but would not
result in materially adverse tax consequences to
Certificateholders.
If the related Prospectus Supplement specifies that the related
Trust will be treated as a grantor trust and except as otherwise
provided in such Prospectus Supplement, 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
Certificateholders would be treated as owners of the Receivables
for federal income tax purposes.
See ``Certain Federal Income Tax Consequences'' and ``Certain
State Tax Consequences'' for additional information concerning
the application of federal and Missouri tax laws.
ERISA Considerations.................... Subject to the considerations discussed under ``ERISA Considera-
tions'' herein and in the related Prospectus Supplement, and
unless otherwise specified therein, any Notes of a series and
any Certificates that are issued by a Trust that is a grantor
trust and are not subordinated to any other class of
Certificates are eligible for purchase by employee benefit
plans.
Unless otherwise specified in the related Prospectus Supplement,
the Certificates of any series that are subordinated to any
other Security of that series may not be acquired by any
employee benefit plan 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.
Ratings of the Securities............... The related Prospectus Supplement will specify the ratings upon
which the issuance of the Securities will be conditioned.
A securities rating addressees the likelihood of the receipt by
the Securityholders of scheduled interest and principal
payments. The rating takes in to consideration the
characteristics of the Receivables and the structural, legal and
tax aspects associated with the Securities. The ratings on the
Securities do not, however, constitute statements regarding the
likelihood or frequency of prepayments on the Receivables or the
possibility that the Securityholders might realize a lower than
anticipated yield or that if there is a rapid rate of principal
payments, including prepayments, on the Receivables, investors
in Strip Notes or Strip Certificates could fail to recover their
initial investments.
</TABLE>
9
<PAGE> 41
RISK FACTORS
Certain Legal Aspects--Security Interests in Financed Vehicles. 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 simultaneously with the sale of such Receivables 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 the 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.
Unless otherwise provided in the related Prospectus Supplement, the Seller will
be obligated to repurchase any Receivable sold to such Trust as to which the
Seller has represented that it has a perfected security interest in the name of
the Seller in the Financed Vehicle securing such Receivable as of the date such
Receivable is transferred to such Trust, if such breach shall materially
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 second
(or, if the Seller elects, the first) month 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. 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 through fraud or negligence, such Trust could lose the priority
of its security interest or its security interest in a Financed Vehicle.
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. 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
(such as such Trust) liable to the obligor thereon for any violation by the
lender. Unless otherwise specified in the related Prospectus Supplement, the
Seller will be obligated to repurchase any Receivable which fails to comply
with such requirements.
The Seller intends that the transfer of the Receivables by it under a Sale
and Servicing Agreement or a Pooling and Servicing Agreement constitutes a
sale. In the event that the Seller were to become insolvent, the Financial
Institutions Reform, Recovery and Enforcement Act of 1989 (``FIRREA'') sets
forth certain powers that the Federal Deposit Insurance Corporation (the
``FDIC'') could exercise if it were appointed as receiver of the Seller.
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 the Seller would not
interfere with the timely transfer to the Trust of payments collected on the
Receivables. If the transfer to the Trust were to be characterized as a secured
loan, to the extent that the Seller would be deemed to have granted a security
interest in the Receivables to the Trust, and that interest had been validly
perfected before the Seller's insolvency and had not been taken in
contemplation of insolvency, that security interest should not be subject to
avoidance and payments to the Trust with respect to the Receivables should not
be subject to recovery by the FDIC as receiver of the Seller. If, however, the
FDIC were to assert a contrary position, such as by requiring the Trustee to
establish its right to those payments by submitting to and completing the
administrative claims procedure established under FIRREA, delays in payments on
the Notes and the Certificates and possible reductions in the amount of those
payments could occur.
With respect to each Trust that is not a grantor trust, if an Insolvency
Event occurs with respect to the Company (which will be an affiliate of the
Seller as set forth in the related Prospectus Supplement), the Indenture
Trustee or Trustee for such Trust will promptly sell, dispose of or otherwise
liquidate the related Receivables in a commercially reasonable manner on
commercially reasonable terms, unless more than 50% of the Certificateholders
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 Seller and the Servicer Not Obligated to Make Payments on the
Securities. 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.
10
<PAGE> 42
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''. Moreover, if Boatmen's 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.
The related Prospectus Supplement may set forth certain additional
information regarding the Seller and the Servicer. In addition, Boatmen's
Bancshares, Inc. is subject to the information requirements of the Exchange Act
and in accordance therewith files reports and other information with the
Commission. For further information regarding Boatmen's Bancshares Inc.,
reference is made to such reports and other information, which are available as
described under ``Available Information''.
Subordination of the Certificates; Limited Assets of the Trust. 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. Moreover, each Trust will not have, nor is it permitted or
expected to have, any significant assets or sources of funds other than the
Receivables and, to the extent provided in the related Prospectus Supplement, a
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 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 Reserve Account (if any) and any other credit
enhancement, all as specified in the related Prospectus Supplement.
Maturity and Prepayment Considerations. All the Receivables are prepayable
at any time. (For this purpose the term ``prepayments'' includes prepayments in
full, partial prepayments (including those related to rebates of extended
warranty contract costs and insurance premiums) and liquidations due to
default, as well as receipts of proceeds from physical damage, credit life and
disability insurance policies and certain other Receivables repurchased for
administrative reasons.) The rate of prepayments on the Receivables may be
influenced by a variety of economic, social and other factors, including
changes in prevailing interest rates for comparable automobile financing and
the fact that an Obligor generally may not sell or transfer the Financed
Vehicle securing a Receivable without the consent of the Seller. The rate of
prepayment on the Receivables may also be influenced by the structure of the
loan. 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 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 breaches of certain covenants. See
``Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables''. Any reinvestment risks 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 Servicer's option to purchase the Receivables of a given Receivables Pool
and ``--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
applicable Company occurs.
Yield on Securities; Risk Associated With Strip Notes and Strip
Certificates. The yield on the Securities, and in particular the Strip Notes
and the Strip Certificates, will be sensitive to, among other things, the rate
and timing of principal payments (including prepayments) on the Receivables. If
prevailing interest rates fall significantly below the applicable automobile
financing interest rates on the Receivables, the rate of principal payments on
the Receivables may be higher than if prevailing interest rates remain at or
above the interest rates borne by the Receivables. Conversely, if prevailing
interest rates rise to a level significantly above the rates on the
Receivables, the rate of principal payments may be lower than might otherwise
be the case. Investors in the Securities, and in particular the Strip Notes and
the Strip Certificates, should fully consider the associated risks, including
(i) the risk in connection with Strip Notes or Strip Certificates that provide
for the payment of principal only, or principal payments that are extremely
disproportionate to interest that a slower than anticipated rate of principal
payments may result in a lower
11
<PAGE> 43
than anticipated yield on such Strip Notes or Strip Certificates and (ii) the
risk in connection with Strip Notes or Strip Certificates that provide for the
payment of interest only, or interest payments that are extremely
disproportionate to principal, that a faster than anticipated rate of principal
payments may result in a lower than anticipated yield on such Strip Notes or
Strip Certificates and the risk that a rapid rate of principal payments on the
Receivables could result in the failure of investors therein to recover their
initial investment.
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 of such Trust. For so long as Boatmen's 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 Boatmen's Bank serves as the Servicer and provided that (i)
there exists no Servicer Default and (ii) each other condition to making such
monthly or less frequent deposits as may be specified by the Rating Agencies
and described in the related Prospectus Supplement is satisfied, the Servicer
will not be required to deposit such amounts into the Collection 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, 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. 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 Default. Unless otherwise provided in the related Prospectus
Supplement with respect to a series of Securities that includes Notes, in the
event a Servicer Default 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 Default'', 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
Default occurs. In addition, the Noteholders of such series have the ability,
with certain specified exceptions, to waive defaults by the Servicer, including
defaults that could materially adversely affect the Certificateholders of such
series. See ``Description of the Transfer and Servicing Agreements--Waiver of
Past Defaults''.
Book-Entry Registration. Unless otherwise specified in the related
Prospectus Supplement, 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
holders of the Securities of such series or their nominees. Because of this,
unless and until Definitive Securities for such series are issued, holders of
such Securities will not be 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,
holders of such Securities will only be able to exercise the rights of
Securityholders indirectly through DTC and its participating organizations. See
``Certain Information Regarding the Securities--Book-Entry Registration'' and
``--Definitive Securities''.
12
<PAGE> 44
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 actions described herein and in the
related Prospectus Supplement. The property of each Trust will include a pool
(a ``Receivables Pool'') of motor vehicle retail installment sales contracts
and simple interest loan note and security agreements between the Servicer,
other banking subsidiaries of Boatmen's Bancshares, Inc. or Dealers and the
purchasers (the ``Obligors'') of new and used automobiles, vans or light duty
trucks and all payments received thereunder on and after the applicable Cutoff
Date (as such term is defined in the related Prospectus Supplement, a ``Cutoff
Date''). The Receivables of each Receivables Pool were or will be originated
(i) by the Seller directly and indirectly through the Agent Referral Program,
(ii) by other banking subsidiaries of Boatmen's Bancshares, Inc. (both directly
and indirectly through the Agent Referral Program) and purchased by the Seller
pursuant to intercompany agreements, or (iii) by the Dealers and purchased by
the Seller pursuant to agreements with Dealers (``Dealer Agreements'') or
purchased by such other banking subsidiaries from such Dealers pursuant to
Dealer Agreements and subsequently sold to the Seller. Such Receivables will
continue to be serviced by the Servicer and evidence direct and indirect
financing made available by the Seller to the Obligors. On the applicable
Closing Date, after the issuance of the Certificates and any Notes of a given
series, the Seller will sell the Receivables of the applicable Receivables Pool
to the Trust. 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; (ii) security interests in the Financed
Vehicles and any other interest of the Seller in such Financed Vehicles; (iii)
the rights to proceeds from claims on certain physical damage, credit life and
disability insurance policies covering the Financed Vehicles or the Obligors,
as the case may be; (iv) the interest of the Seller in any proceeds from
recourse to Dealers on Receivables or Financed Vehicles with respect to which
the Servicer has determined that eventual repayment in full is unlikely; (v)
any property that shall have secured a Receivable and that shall have been
acquired by the applicable Trust; and (vi) any and all proceeds of the
foregoing. To the extent specified in the related Prospectus Supplement, 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. Additionally,
pursuant to contracts between the Servicer and the Dealers, the Dealers have an
obligation after origination to repurchase Receivables as to which Dealers have
made certain misrepresentations.
The Servicer will continue to service the 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'' herein
and in the related Prospectus Supplement. To facilitate the servicing of the
Receivables, the Seller and each Trustee will authorize the Servicer 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 each Trust. In the absence of
such an amendment, a 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''.
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''.
The principal offices of each Trust and the related Trustee will be
specified in the related Prospectus Supplement.
13
<PAGE> 45
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 or the related Pooling and
Servicing Agreement, as applicable. A Trustee may resign at any time, in which
event the Administrator of a Trust that is not a grantor trust and the Servicer
in respect of a Trust that is not a grantor trust, or its successor, will be
obligated to appoint a successor trustee. The Administrator of a Trust that is
not a grantor trust and the Servicer in respect of a Trust that is a grantor
trust may also remove the Trustee if the Trustee ceases to be eligible to
continue as Trustee under the related Trust Agreement or Pooling and Servicing
Agreement, as applicable, or if the Trustee becomes insolvent. In such
circumstances, the Administrator or the Servicer, as applicable, 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 Receivables that have been
originated in the ordinary course of business (i) by the Seller directly and
indirectly through the Agent Referral Program, (ii) by other banking
subsidiaries of Boatmen's Bancshares, Inc. both directly and through the Agent
Referral Program and subsequently sold to the Seller pursuant to intercompany
agreements, or (iii) by Dealers and purchased by the Seller (or such other
banking subsidiaries and subsequently sold to the Seller) pursuant to Dealer
Agreements throughout Florida, Missouri, Michigan, New Mexico, Oklahoma, Iowa,
Texas, Illinois, Arkansas, Tennessee and Kansas. All of the Receivables in each
Receivables Pool provide for the allocation of payments made thereunder to
principal and interest in accordance with the ``simple interest'' method. The
Seller and the other banking subsidiaries of Boatmen's Bancshares, Inc.
originate Receivables and purchase Receivables in accordance with the Seller's
credit standards which are based upon the vehicle buyer's ability and
willingness to repay the obligation as well as the value of the vehicle being
financed.
The Receivables to be held by each Trust will be selected from the Seller's
portfolio for inclusion in a Receivables Pool by several criteria, including
that, unless otherwise provided in the related Prospectus Supplement, each
Receivable (i) is secured by a new or used vehicle, (ii) was originated in the
United States of America, (iii) provides for level monthly payments (except for
the last payment, which may be minimally different from the level payments)
that fully amortize the amount financed over its original term to maturity,
(iv) provides for the allocation of payments made thereunder to interest and
principal in accordance with the ``simple interest'' method and (v) satisfies
the other criteria, if any, set forth in the related Prospectus Supplement. 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.
The ``simple interest'' method provides for the amortization of the amount
financed under each Receivable over a series of fixed level monthly payments.
Each monthly payment consists of an installment 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 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.
14
<PAGE> 46
Information with respect to each Receivables Pool will be set forth in the
related Prospectus Supplement, including, to the extent appropriate, the
composition, the distribution by APR and by the states of origination and the
portion of such Receivables Pool secured by new vehicles and by used vehicles.
DELINQUENCIES AND NET LOSSES
Certain information concerning the experience of the Servicer pertaining to
delinquencies and net losses with respect to new and used retail automobile,
van and light duty truck receivables 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 (including
those related to rebates of extended warranty contract costs and insurance
premiums), 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 prepayable 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 the fact that an
Obligor generally may not sell or transfer the Financed Vehicle securing a
Receivable without the consent of the Seller. 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. 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 Servicer's option to purchase the
Receivables from a given Trust and ``--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 Company occurs.
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.
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 (a) the original
denomination of such Certificateholder's Certificate and (b) the applicable
Certificate Pool Factor.
15
<PAGE> 47
Unless otherwise provided in the related Prospectus Supplement with respect
to each Trust, the Noteholders, if any, and the Certificateholders will receive
reports on or about each Payment Date concerning (i) with respect to the
Collection Period immediately preceding such Payment Date, 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, and
(ii) with respect to the Collection Period second preceding such Payment Date,
as applicable, amounts allocated or distributed on the preceding Payment Date
and any reconciliation of such amounts with information provided by the
Servicer prior to such current 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
Unless otherwise provided in the related Prospectus Supplement, the net
proceeds from the sale of the Securities of a given series will be applied by
the applicable Trust (i) to the purchase of the Receivables from the Seller,
and (ii) to make the initial deposit into the Reserve Account, if any. Unless
otherwise specified in the related Prospectus Supplement, the Seller will use
that portion of such net proceeds paid to it with respect to any such Trust for
general corporate purposes.
THE SELLER AND THE SERVICER
The Boatmen's National Bank of St. Louis, a national banking association,
is a wholly-owned subsidiary of Boatmen's Bancshares, Inc., a multi-bank
holding company incorporated under the laws of the State of Missouri. The
Boatmen's National Bank of St. Louis is engaged in banking and related
activities, including providing automotive financing services to its and its
affiliates' customers and to automotive dealers and their customers throughout
Florida, Missouri, Michigan, New Mexico, Oklahoma, Iowa, Texas, Illinois,
Arkansas, Tennessee and Kansas. The principal executive offices of The
Boatmen's National Bank of St. Louis are located at One Boatmen's Plaza, 800
Market Street, St. Louis, Missouri 63101, and its telephone number is (314)
466-6000. The related Prospectus Supplement will set forth certain additional
information with respect to The Boatmen's National Bank of St. Louis.
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 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.
Unless otherwise specified in the related Prospectus Supplement, 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. Unless otherwise specified in the related Prospectus Supplement, the
Notes will be available for purchase in denominations of $1,000 and integral
multiples thereof in book-entry form only. 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 class. Unless and until Definitive Notes
are issued under the limited circumstances described herein or in the related
Prospectus Supplement, no Noteholder will be entitled to receive a physical
certificate representing a Note. All references herein and in the related
Prospectus 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''.
16
<PAGE> 48
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. Unless otherwise provided in the related Prospectus
Supplement, payments of interest on the 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) stated principal payments and no interest payments, nominal
interest payments or interest payments not based on such principal amount, or
(ii) specified interest payments and no principal payments, nominal principal
payments or principal payments not equal to the amount on which interest is
accrued. 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, as a result of the Servicer's exercising its
option to purchase the related Receivables Pool.
To the extent specified in any Prospectus Supplement, one or more classes
of a given series may have fixed principal payment schedules, as set forth in
such Prospectus Supplement; 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.
Unless otherwise 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 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.
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.
Unless otherwise specified in the related Prospectus Supplement with
respect to a series of Notes, without the consent of the holder of each such
outstanding Note affected thereby, however, no supplemental indenture will: (i)
change the due date of any installment of principal of or interest on any such
Note or reduce the principal amount thereof, the Interest Rate specified
thereon or the redemption price with respect thereto or change any place of
payment where or the coin or currency in which any such Note or any interest
thereon is 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 Company, 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
17
<PAGE> 49
required to direct the related Indenture Trustee to sell or liquidate the
Receivables if the proceeds of such sale would be insufficient to pay the
principal amount and accrued but unpaid interest on the outstanding Notes of
such series; (vi) decrease the percentage of the aggregate principal amount of
such Notes required to amend the sections of the related Indenture which
specify the applicable percentage of aggregate principal amount of the Notes of
such series necessary to amend such Indenture or certain other 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.
Unless otherwise provided in the related Prospectus Supplement, 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, unless otherwise specified in the related Prospectus
Supplement, ``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 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 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 Issuer or the Company. 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, unless
otherwise specified in the related Prospectus Supplement, the failure to pay
principal on a class of Notes generally will not result in the occurrence of an
Event of Default until the final scheduled 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. Unless otherwise specified in the
related Prospectus Supplement, such declaration may, under certain
circumstances, be rescinded by the holders 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. Unless otherwise specified in the related Prospectus Supplement,
however, such Indenture Trustee is prohibited from selling the related
Receivables following an Event of Default, other than a default in the payment
of any principal of or a default for five days or more in the payment of any
interest on any Note of such series, unless (i) the holders of all 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 reasonably 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
18
<PAGE> 50
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.
Unless otherwise specified in the related Prospectus Supplement, no holder
of a Note of any series will have the right to institute any proceeding with
respect to the related Indenture, unless (i) such holder previously has given
to the applicable Indenture Trustee written notice of a continuing Event of
Default, (ii) the holders of not less than 25% in principal amount of the
outstanding Notes of such series have made written request to such Indenture
Trustee to institute such proceeding in its own name as Indenture Trustee,
(iii) such holder or holders have offered such Indenture Trustee reasonable
indemnity, (iv) such Indenture Trustee has for 60 days failed to institute such
proceeding, and (v) no direction 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.
In addition, each Indenture Trustee and the related Noteholders, by
accepting the related Notes, will covenant that they will not at any time
institute against the applicable Trust any bankruptcy, reorganization or other
proceeding under any federal or state bankruptcy or similar law.
With respect to any Trust, neither the related Indenture Trustee nor the
related Trustee in its 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 of America, any state or the District of Columbia, (ii)
such entity expressly assumes such Trust's obligation to make due and punctual
payments upon the Notes of the related series and the performance or observance
of every agreement and covenant of such Trust under the Indenture, (iii) no
Event of Default shall have occurred and be continuing immediately after such
merger or consolidation, (iv) such Trust has been advised that the rating of
the Notes or the Certificates of such series then in effect would not be
reduced or withdrawn by the Rating Agencies as a result of such merger or
consolidation, and (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.
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) dissolve or
liquidate in whole or in part, (iv) permit the validity or effectiveness of the
related Indenture to be impaired or permit any person to be released from any
covenants or obligations with respect to such Notes under such Indenture except
as may be expressly permitted thereby, or (v) permit any lien, charge, excise,
claim, security interest, mortgage or other encumbrance to be created on or
extend to or otherwise arise upon or burden the assets of such Trust or any
part thereof, or any interest therein or the proceeds thereof.
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.
19
<PAGE> 51
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 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.
Unless otherwise specified in the related Prospectus Supplement and except
for the Certificates, if any, of a given series purchased by the Company, 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. Unless
otherwise specified in the related Prospectus Supplement and except for the
Certificates, if any, of a given series purchased by the Company, the
Certificates will be available for purchase in minimum denominations of $1,000
and integral multiples of $1,000 in excess thereof in book-entry form only. 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 Company. Unless and until Definitive
Certificates are issued under the limited circumstances described herein or in
the related Prospectus Supplement, no Certificateholder (other than the
Company) will be entitled to receive a physical certificate representing a
Certificate. 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 a given series owned by the Company or its affiliates will
generally 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'').
20
<PAGE> 52
DISTRIBUTIONS OF PRINCIPAL AND INTEREST
The timing and priority of distributions, seniority, allocations of losses,
Pass Through Rate and amount of or method of determining distributions with
respect to principal and interest of each class of Certificates will be
described in the related Prospectus Supplement. Distributions of interest on
such Certificates will be made on the dates specified in the related Prospectus
Supplement (each, a ``Distribution Date'') and will be made prior to
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 and no interest distributions, nominal interest distributions or
interest distributions not based on such principal amount, or (ii) specified
interest payments and no principal payments, nominal principal payments or
principal payments not equal to the amount on which interest is accrued. Each
class of Certificates may have a different Pass Through Rate, which may be a
fixed, variable or adjustable Pass Through 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 Pass Through Rate for each class
of Certificates of a given series or the method for determining such Pass
Through Rate. See also ``Certain Information Regarding the Securities--Fixed
Rate Securities'' and ``--Floating Rate Securities''. Unless otherwise provided
in the related Prospectus Supplement, distributions in respect of the
Certificates of a given series that includes Notes 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 Pass Through Rate, as the case may be,
specified in the related Prospectus Supplement. Unless otherwise set forth 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. 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, the
``Interest Reset Period'') at a rate per annum determined by reference to an
interest rate basis (the ``Base Rate''), plus or minus the Spread, if any, or
multiplied by the Spread Multiplier, if any, in each case as specified in the
related Prospectus Supplement. The ``Spread'' is the number of basis points
(one basis point equals one one-hundredth of a percentage point) that may be
specified in the related Prospectus Supplement as being applicable to such
class, and the ``Spread Multiplier'' is the percentage that may be specified in
the related Prospectus Supplement as being applicable to such class.
The related Prospectus Supplement will designate one of the following Base
Rates as applicable to a given Floating Rate Security: (i) LIBOR (a ``LIBOR
Security''), (ii) the Commercial Paper Rate (a ``Commercial Paper Rate
Security''), (iii) the Treasury Rate (a ``Treasury Rate Security''), (iv) the
Federal Funds Rate (a ``Federal Funds Rate Security''), (v) the CD Rate (a ``CD
Rate Security''), or (vi) such other Base Rate as is set forth in such
Prospectus Supplement. The ``Index Maturity'' for any class of Floating Rate
Securities is the period of maturity of the instrument or obligation from which
the Base Rate is calculated. ``H.15(519)'' means the publication entitled
``Statistical Release H.15(519), Selected Interest Rates'', or any successor
publication, published by the Board of
21
<PAGE> 53
Governors of the Federal Reserve System. ``Composite Quotations'' means the
daily statistical release entitled ``Composite 3:30 p.m. Quotations for U.S.
Government Securities'' published by the Federal Reserve Bank of New York.
``Interest Reset Date'' will be the first day of the applicable Interest Reset
Period, or such other day as may be specified in the related Prospectus
Supplement with respect to a class of Floating Rate Securities.
As specified in the related 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 rate of interest that may be
applicable to any class of Floating Rate Securities, the rate of interest
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 rates of interest on each such
class of Floating Rate Securities issued with respect thereto. The related
Prospectus Supplement will set forth the identity of the Calculation Agent for
each such class of Floating Rate Securities of a given series, which may be
either the related Trustee or Indenture Trustee with respect to such series.
All determinations of interest by the Calculation Agent shall, in the absence
of manifest error, be conclusive for all purposes and binding on the holders of
Floating Rate Securities of a given class. Unless otherwise specified in the
related Prospectus Supplement, all percentages resulting from any calculation
of the rate of interest on a Floating Rate Security will be rounded, if
necessary, to the nearest 1/100,000 of 1% (.0000001), with five one-millionths
of a percentage point rounded upward.
CD Rate Securities. Each CD Rate Security will bear interest for each
Interest Reset Period at the rate of interest calculated with reference to the
CD Rate and the Spread or Spread Multiplier, if any, specified in such Security
and in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, the ``CD
Rate'' for each Interest Reset Period shall be the rate as of the second
business day prior to the Interest Reset Date for such Interest Reset Period (a
``CD Rate Determination Date'') for negotiable certificates of deposit having
the Index Maturity designated in the related Prospectus Supplement as published
in H.15(519) under the heading ``CDs (Secondary Market)''. In the event that
such rate is not published prior to 3:00 p.m., New York City time, on the
Calculation Date (as defined below) pertaining to such CD Rate Determination
Date, then the ``CD Rate'' for such Interest Reset Period will be the rate on
such CD Rate Determination Date for negotiable certificates of deposit of the
Index Maturity designated in the related Prospectus Supplement as published in
Composite Quotations under the heading ``Certificates of Deposit''. If by 3:00
p.m., New York City time, on such Calculation Date such rate is not yet
published in either H.15(519) or Composite Quotations, then the ``CD Rate'' for
such Interest Reset Period will be calculated by the Calculation Agent for such
CD Rate Security and will be the arithmetic mean of the secondary market
offered rates as of 10:00 a.m., New York City time, on such CD Rate
Determination Date, of three leading nonbank dealers in negotiable U.S. dollar
certificates of deposit in The City of New York selected by the Calculation
Agent for such CD Rate Security for negotiable certificates of deposit of major
United States money center banks of the highest credit standing (in the market
for negotiable certificates of deposit) with a remaining maturity closest to
the Index Maturity designated in the related Prospectus Supplement in a
denomination specified in the related Prospectus Supplement; provided, however,
that if the dealers selected as aforesaid by such Calculation Agent are not
quoting offered rates as mentioned in this sentence, the ``CD Rate'' for such
Interest Reset Period will be the same as the CD Rate for the immediately
preceding Interest Reset Period.
The ``Calculation Date'' pertaining to any CD Rate Determination Date shall
be the first to occur of (a) the tenth calendar day after such CD Rate
Determination Date or, if such day is not a business day, the next succeeding
business day or (b) the second business day preceding the date any payment is
required to be made for any period following the applicable Interest Reset
Date.
Commercial Paper Rate Securities. Each Commercial Paper Rate Security will
bear interest for each Interest Reset Period at the rate of interest calculated
with reference to the Commercial Paper Rate and the Spread or Spread
Multiplier, if any, specified in such Security and in the related Prospectus
Supplement.
22
<PAGE> 54
Unless otherwise specified in the related Prospectus Supplement, the
``Commercial Paper Rate'' for each Interest Reset Period will be determined by
the Calculation Agent for such Commercial Paper Rate Security as of the second
business day prior to the Interest Reset Date for such Interest Reset Period (a
``Commercial Paper Rate Determination Date'') and shall be the Money Market
Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper having the Index Maturity specified in the related Prospectus
Supplement, as such rate shall be published in H.15(519) under the heading
``Commercial Paper''. In the event that such rate is not published prior to
3:00 p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such Commercial Paper Rate Determination Date, then the
``Commercial Paper Rate'' for such Interest Reset Period shall be the Money
Market Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the specified Index Maturity as published in Composite
Quotations under the heading ``Commercial Paper''. If by 3:00 p.m., New York
City time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the ``Commercial Paper Rate'' for such
Interest Reset Period shall be the Money Market Yield of the arithmetic mean of
the offered rates, as of 11:00 a.m., New York City time, on such Commercial
Paper Rate Determination Date of three leading dealers of commercial paper in
The City of New York selected by the Calculation Agent for such Commercial
Paper Rate Security for commercial paper of the specified Index Maturity placed
for an industrial issuer whose bonds are rated ``AA'' or the equivalent by a
nationally recognized rating agency; provided, however, that if the dealers
selected as aforesaid by such Calculation Agent are not quoting offered rates
as mentioned in this sentence, the ``Commercial Paper Rate'' for such Interest
Reset Period will be the same as the Commercial Paper Rate for the immediately
preceding Interest Reset Period.
``Money Market Yield'' shall be a yield calculated in accordance with the
following formula:
D X 360
Money Market Yield = --------------- X 100
360 (D X M)
where ``D'' refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and ``M'' refers to the
actual number of days in the specified Index Maturity.
The ``Calculation Date'' pertaining to any Commercial Paper Rate
Determination Date shall be the first to occur of (a) the tenth calendar day
after such Commercial Paper Rate Determination Date or, if such day is not a
business day, the next succeeding business day or (b) the second business day
preceding the date any payment is required to be made for any period following
the applicable Interest Reset Date.
Federal Funds Rate Securities. Each Federal Funds Rate Security will bear
interest for each Interest Reset Period at the rate of interest calculated with
reference to the Federal Funds Rate and the Spread or Spread Multiplier, if
any, specified in such Security and in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, the
``Federal Funds Rate'' for each Interest Reset Period shall be the effective
rate on the Interest Reset Date for such Interest Reset Period (a ``Federal
Funds Rate Determination Date'') for Federal Funds as published in H.15(519)
under the heading ``Federal Funds (Effective)''. In the event that such rate is
not published prior to 3:00 p.m., New York City time, on the Calculation Date
(as defined below) pertaining to such Federal Funds Rate Determination Date,
the ``Federal Funds Rate'' for such Interest Reset Period shall be the rate on
such Federal Funds Rate Determination Date as published in Composite Quotations
under the heading ``Federal Funds/Effective Rate''. If by 3:00 p.m., New York
City time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the ``Federal Funds Rate'' for such
Interest Reset Period shall be the rate on such Federal Funds Rate
Determination Date made publicly available by the Federal Reserve Bank of New
York which is equivalent to the rate which appears in H.15(519) under the
heading ``Federal Funds (Effective)''; provided, however, that if such rate is
not made publicly available by the Federal Reserve Bank of New York by 3:00
p.m., New York City time, on such Calculation Date, the ``Federal Funds Rate''
for such Interest Reset Period will be the same as the Federal Funds Rate in
effect for the immediately preceding Interest Reset Period. In the case of a
Federal Funds Rate Security that resets daily, the rate of interest on such
Security for the period from and including a Monday to but excluding the
succeeding Monday will be reset by the Calculation Agent for such Security on
such second Monday (or, if not a business day, on the next succeeding business
day) to a rate equal to the average of the Federal Funds Rates in effect with
respect to each such day in such week.
The ``Calculation Date'' pertaining to any Federal Funds Rate Determination
Date shall be the next succeeding business day.
23
<PAGE> 55
LIBOR Securities. Each LIBOR Security will bear interest for each Interest
Reset Period at the rate of interest calculated with reference to LIBOR and the
Spread or Spread Multiplier, if any, specified in such Security and in the
related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, with
respect to LIBOR indexed to the offered rates for U.S. dollar deposits,
``LIBOR'' for each Interest Reset Period will be determined by the Calculation
Agent for any LIBOR Security as follows:
(i) On the second London Banking Day prior to the Interest Reset Date for
such Interest Reset Period (a ``LIBOR Determination Date''), the Calculation
Agent for such LIBOR Security will determine the arithmetic mean of the offered
rates for deposits in U.S. dollars for the period of the Index Maturity
specified in the related Prospectus Supplement, commencing on such Interest
Reset Date, which appear on the Reuters Screen LIBO Page at approximately 11:00
a.m., London time, on such LIBOR Determination Date. For purposes of
calculating LIBOR, ``London Banking Day'' means any business day on which
dealings in deposits in United States dollars are transacted in the London
interbank market and ``Reuters Screen LIBO Page'' means the display designated
as page ``LIBO'' on the Reuters Monitor Money Rates Service (or such other page
as may replace the LIBO page on that service for the purpose of displaying
London interbank offered rates of major banks). If at least two such offered
rates appear on the Reuters Screen LIBO Page, ``LIBOR'' for such Interest Reset
Period will be the arithmetic mean of such offered rates as determined by the
Calculation Agent for such LIBOR Security.
(ii) If fewer than two offered rates appear on the Reuters Screen LIBO Page
on such LIBOR Determination Date, the Calculation Agent for such LIBO Security
will request the principal London offices of each of four major banks in the
London interbank market selected by such Calculation Agent to provide such
Calculation Agent with its offered quotations for deposits in U.S. dollars for
the period of the specified Index Maturity, commencing on such Interest Reset
Date, to prime banks in the London interbank market at approximately 11:00
a.m., London time, on such LIBOR Determination Date and in a principal amount
equal to an amount of not less than $1,000,000 that is representative of a
single transaction in such market at such time. If at least two such quotations
are provided, ``LIBOR'' for such Interest Reset Period will be the arithmetic
mean of such quotations. If fewer than two such quotations are provided,
``LIBOR'' for such Interest Reset Period will be the arithmetic mean of rates
quoted by three major banks in The City of New York selected by the Calculation
Agent for such LIBOR Security at approximately 11:00 a.m., New York City time,
on such LIBOR Determination Date for loans in U.S. dollars to leading European
banks, for the period of the specified Index Maturity, commencing on such
Interest Reset Date, and in a principal amount equal to an amount of not less
than $1,000,000 that is representative of a single transaction in such market
at such time; provided, however, that if the banks selected as aforesaid by
such Calculation Agent are not quoting rates as mentioned in this sentence,
``LIBOR'' for such Interest Reset Period will be the same as LIBOR for the
immediately preceding Interest Reset Period.
Treasury Rate Securities. Each Treasury Rate Security will bear interest
for each Interest Reset Period at the rate of interest calculated with
reference to the Treasury Rate and the Spread or Spread Multiplier, if any,
specified in such Security and in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, the
``Treasury Rate'' for each Interest Period will be the rate for the auction
held on the Treasury Rate Determination Date for such Interest Reset Period of
direct obligations of the United States (``Treasury bills'') having the Index
Maturity specified in the related Prospectus Supplement, as such rate shall be
published in H.15(519) under the heading ``U.S. Government Securities-Treasury
bills-auction average (investment)'' or, in the event that such rate is not
published prior to 3:00 p.m., New York City time, on the Calculation Date (as
defined below) pertaining to such Treasury Rate Determination Date, the auction
average rate (expressed as a bond equivalent on the basis of a year of 365 or
366 days, as applicable, and applied on a daily basis) on such Treasury Rate
Determination Date as otherwise announced by the United States Department of
the Treasury. In the event that the results of the auction of Treasury bills
having the specified Index Maturity are not published or reported as provided
above by 3:00 p.m., New York City time, on such Calculation Date, or if no such
auction is held on such Treasury Rate Determination Date, then the ``Treasury
Rate'' for such Interest Reset Period shall be calculated by the Calculation
Agent for such Treasury Rate Security and shall be the yield to maturity
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) of the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 p.m., New York City time,
on such Treasury Rate Determination Date, of three leading primary United
States government securities dealers selected by
24
<PAGE> 56
such Calculation Agent for the issue of Treasury bills with a remaining
maturity closest to the specified Index Maturity; provided, however, that if
the dealers selected as aforesaid by such Calculation Agent are not quoting bid
rates as mentioned in this sentence, then the ``Treasury Rate'' for such
Interest Reset Period will be the same as the Treasury Rate for the immediately
preceding Interest Reset Period.
The ``Treasury Rate Determination Date'' for each Interest Reset Period
will be the day of the week in which the Interest Reset Date for such Interest
Reset Period falls on which Treasury bills would normally be auctioned.
Treasury bills are normally sold at auction on Monday of each week, unless that
day is a legal holiday, in which case the auction is normally held on the
following Tuesday, except that such auction may be held on the preceding
Friday. If, as the result of a legal holiday, an auction is so held on the
preceding Friday, such Friday will be the Treasury Rate Determination Date
pertaining to the Interest Reset Period commencing in the next succeeding week.
If an auction date shall fall on any day that would otherwise be an Interest
Reset Date for a Treasury Rate Security, then such Interest Reset Date shall
instead be the business day immediately following such auction date.
The ``Calculation Date'' pertaining to any Treasury Rate Determination Date
shall be the first to occur of (a) the tenth calendar day after such Treasury
Rate Determination Date or, if such a day is not a business day, the next
succeeding business day or (b) the second business day preceding the date any
payment is required to be made for any period following the applicable Interest
Reset Date.
INDEXED SECURITIES
To the extent so specified in any Prospectus Supplement, any class of
Securities of a given series may consist of Securities (``Indexed Securities'')
in which the principal amount payable at the final scheduled Payment Date or
Distribution Date, as the case may be, for such class (the ``Indexed Principal
Amount'') is determined by reference to a measure (the ``Index'') which will be
related to (i) the difference in the rate of exchange between United States
dollars and a currency or composite currency (the ``Indexed Currency'')
specified in the related Prospectus Supplement; (ii) the difference in the
price of a specified commodity (the ``Indexed Commodity'') on specified dates;
or (iii) the difference in the level of a specified stock index (the ``Stock
Index''), which may be based on U.S. or foreign stocks, on specified dates; or
(iv) such other objective price or economic measures as are described in the
related Prospectus Supplement. The manner of determining the Indexed Principal
Amount of an Indexed Security and historical and other information concerning
the Indexed Currency, the Indexed Commodity, the Stock Index or other price or
economic measures used in such determination will be set forth in the related
Prospectus Supplement, together with information concerning tax consequences to
the holders of such Indexed Securities.
If the determination of the Indexed Principal Amount of an Indexed Security
is based on an Index calculated or announced by a third party and such third
party either suspends the calculation or announcement of such Index or changes
the basis upon which such Index is calculated (other than changes consistent
with policies in effect at the time such Indexed Security was issued and
permitted changes described in the related Prospectus Supplement), then such
Index shall be calculated for purposes of such Indexed Security by an
independent calculation agent named in the related Prospectus Supplement on the
same basis, and subject to the same conditions and controls, as applied to the
original third party. If for any reason such Index cannot be calculated on the
same basis and subject to the same conditions and controls as applied to the
original third party, then the Indexed Principal Amount of such Indexed
Security shall be calculated in the manner set forth in the related Prospectus
Supplement. Any determination of such independent calculation agent shall in
the absence of manifest error be binding on all parties.
Unless otherwise specified in the related Prospectus Supplement, interest
on an Indexed Security will be payable based on the amount designated in the
related Prospectus Supplement as the ``Face Amount'' of such Indexed Security.
The related Prospectus Supplement will describe whether the principal amount of
the related Indexed Security, if any, that would be payable upon redemption or
repayment prior to the applicable final scheduled Payment Date or Distribution
Date, as the case may be, will be the Face Amount of such Indexed Security, the
Indexed Principal Amount of such Indexed Security at the time of redemption or
repayment or another amount described in such Prospectus Supplement.
BOOK-ENTRY REGISTRATION
DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a ``clearing
corporation'' within the meaning of the New York UCC and a ``clearing agency''
25
<PAGE> 57
registered pursuant to Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions between Participants through electronic
book-entries, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks, trust
companies and clearing corporations. Indirect access to the DTC system also is
available to others such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly (``Indirect Participants'').
Unless otherwise specified in the related Prospectus Supplement,
Securityholders (other than the Company) that are not Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership of,
or other interests in, Securities may do so only through Participants and
Indirect Participants. In addition, Securityholders (other than the Company)
will receive all distributions of principal and interest from the related
Indenture Trustee or the related Trustee, as applicable, through 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 its Participants,
which thereafter will forward them to Indirect Participants or Securityholders.
Except to the extent the applicable Company holds Certificates with respect to
any series of Securities, it is anticipated that the only ``Securityholder'',
``Noteholder'' and ``Certificateholder'' will be DTC's Nominee. Noteholders
will not be recognized by each Indenture Trustee as Noteholders, as such term
is used in each Indenture, and Noteholders will be permitted to exercise the
rights of Noteholders only indirectly through DTC and its Participants.
Similarly, Certificateholders (other than the Company) will not be recognized
by each Trustee as Certificateholders as such term is used in each Trust
Agreement or Pooling and Servicing Agreement, and Certificateholders (other
than the Company) will be permitted to exercise the rights of
Certificateholders only indirectly through DTC and its Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the ``Rules''), DTC is required to make book-entry transfers of
Securities among Participants on whose behalf it acts with respect to the
Securities and to receive and transmit distributions of principal of, and
interest on, the Securities. Participants and Indirect Participants with which
Securityholders have accounts with respect to the Securities similarly are
required to make book-entry transfers and receive and transmit such payments on
behalf of their respective Securityholders. Accordingly, although
Securityholders will not possess Securities, the Rules provide a mechanism by
which Participants will receive payments and will be able to transfer their
interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Securityholder to pledge Securities to persons or entities that do not
participate in the DTC system, or to otherwise act 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 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.
Except as required by law, neither the Administrator, if any, the
applicable Trustee nor the applicable Indenture Trustee, if any, will have any
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests of the Securities of any series held by DTC's
Nominee, or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
DEFINITIVE SECURITIES
Unless otherwise specified in the related Prospectus Supplement, the Notes,
if any, and the Certificates of a given series 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, only if (i) the related
Administrator or Trustee, as applicable, determines that DTC is no longer
willing or able to discharge properly its responsibilities as depository with
respect to such Securities and such Administrator or Trustee is unable to
locate a qualified successor (and if it is an Administrator that has made such
determination, such Administrator so notifies the applicable Trustee in
writing), (ii) the Administrator or Trustee, as applicable, at its option,
elects to terminate the book-entry system through DTC,
26
<PAGE> 58
or (iii) after the occurrence of an Event of Default or a Servicer Default 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 through DTC in writing that
the continuation of a book-entry system through DTC (or a successor thereto)
with respect to such Notes or Certificates is no longer in the best interest of
the holders of such Securities.
Upon the occurrence of any event described in the immediately preceding
paragraph, the applicable Trustee will be required to notify all applicable
Securityholders of a given series through Participants of the 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, such Definitive Securities
will thereafter be made by the applicable Trustee in accordance with the
procedures set forth in the related Indenture or the related Trust Agreement or
Pooling and Servicing Agreement, as 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 he
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
Unless otherwise specified in the related Prospectus Supplement with
respect to the Notes of any series, three or more holders of the Notes of such
series or one or more holders of such Notes evidencing not less than 25% of the
aggregate outstanding principal balance of such Notes may, by written request
to the applicable Indenture Trustee, obtain access to the list of all
Noteholders maintained by such Indenture Trustee for the purpose of
communicating with other Noteholders with respect to their rights under the
related Indenture or under such Notes.
Unless otherwise specified in the related Prospectus Supplement with
respect to the Certificates of any series, three or more holders of the
Certificates of such series or one or more holders of such Certificates
evidencing not less than 25% of the Certificate Balance of such Certificates
may, by written request to the applicable Trustee, obtain access to the list of
all Certificateholders 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.
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 applicable 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;
27
<PAGE> 59
(iii) the Pool Balance as of the close of business on the last day of
the preceding Collection Period;
(iv) 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;
(v) 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;
(vi) the Interest Rate or Pass Through Rate for the next period for any
class of Notes or Certificates of such series with variable or adjustable
rates;
(vii) the amount of the aggregate realized losses, if any, for the
second preceding Collection Period;
(viii) 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;
(ix) the aggregate Purchase Amounts for Receivables if any, that were
repurchased in such Collection Period; and
(x) the balance of the Reserve Account (if any) on such date, after
giving effect to changes therein on such date.
Each amount set forth pursuant to subclauses (i), (ii), (v) and (viii) 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 ``Certain
Federal Income Tax Consequences''.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain 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, 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 each Administration Agreement pursuant to which
The Boatmen's National Bank of St. Louis 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
On the Closing Date specified with respect to any given Trust in the
related Prospectus Supplement (the ``Closing Date''), the Seller will transfer
and assign to the applicable Trustee, without recourse, pursuant to a Sale and
Servicing Agreement or a Pooling and Servicing Agreement, as applicable, its
entire interest in the Receivables of the related Receivables Pool, including
its security interests in the related Financed Vehicles. Each such Receivable
will be identified in a schedule appearing as an exhibit to such Pooling and
Servicing Agreement or Sale and Servicing Agreement (a ``Schedule of
Receivables''). The applicable Trustee will, concurrently with such transfer
and assignment, execute and deliver the related Notes and/or Certificates.
Unless otherwise provided in the related Prospectus Supplement, the net
proceeds received from the sale of the Certificates and the Notes of a given
series will be applied to the purchase of the related Receivables from the
Seller.
28
<PAGE> 60
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 in accordance with the Seller's normal requirements; (iii)
as of the Closing Date to the best of its knowledge, the related Receivables
are free and clear of all security interests, liens, charges and encumbrances
and no offsets, defenses or counterclaims have been asserted or threatened;
(iv) as of the Closing Date, each of such Receivables is or will be 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, 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.
Unless otherwise provided in the related Prospectus Supplement, as of the
last day of the second (or, if the Seller elects, the first) month 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 unpaid
principal balance owed by the Obligor thereof plus interest thereon at the
respective APR to the last day of the month of repurchase (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 as
custodian to maintain possession, as such Trust's agent, of the related motor
vehicle retail installment sale contracts and simple interest loan note and
security agreements and any other documents relating to the Receivables. The
Seller's and the Servicer's accounting records and computer systems will
reflect the sale and assignment of the related Receivables to the applicable
Trust, and Uniform Commercial Code (``UCC'') financing statements reflecting
such sale and assignment will be filed.
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 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 an account, in the name of such Trustee on behalf of such
Certificateholders, into which amounts released from the Collection Account and
any Reserve Account or other credit or cash flow enhancement for distribution
to such Certificateholders will be deposited and from which all distributions
to such Certificateholders will be made (the ``Certificate Distribution
Account''). With respect to each Trust that does not issue Notes, the Servicer
will also establish and maintain the Collection Account and any other Trust
Account in the name of the related Trustee on behalf of the related
Certificateholders.
Any other accounts to be established with respect to a Trust, including any
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 and any 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'') which may include, without
limitation, (a) direct obligations of, and obligations fully guaranteed by, the
United States of America or any agency or instrumentality of the United States
of America, the obligations of which are backed by the full faith and credit of
the United States of America, (b) demand and time deposits, certificates of
deposit or bankers' acceptances, (c) repurchase obligations pursuant to a
written agreement with respect to (1) any security described in clause (a)
above, or (2) any other security issued or guaranteed by an agency or
instrumentality of the United States of America,
29
<PAGE> 61
(d) securities bearing interest or sold at a discount issued by any corporation
incorporated under the laws of the United States of America or any state, (e)
commercial paper (including both non-interest bearing discount obligations and
interest bearing obligations payable on demand or on a specified date not more
than not more than one year after the date of issuance thereof), (f)
certificates or receipts representing ownership interests in future interest or
principal payments on obligations described in clause (a) above, and (g) any
other demand, money market or time deposit obligation, securities or investment
acceptable to the Rating Agencies. Except as described below or in the related
Prospectus Supplement, Eligible Investments 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. Except as
otherwise specified in the related Prospectus Supplement, investment earnings
on funds deposited in the Trust Accounts, net of losses and investment expenses
(collectively, ``Investment Earnings''), shall be deposited in the applicable
Collection Account on each Distribution Date or Payment Date and shall be
treated as collections of interest on the related Receivables.
The Trust Accounts will be maintained as Eligible Deposit Accounts.
``Eligible Deposit Account'' means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution have a credit rating from each Rating
Agency in one of its generic rating categories which signifies investment
grade. ``Eligible Institution'' means, with respect to a Trust, (a) the
corporate trust department of the related Indenture Trustee or the 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), (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 sale contracts and simple interest loan note and
security agreements it services for itself or others. Consistent with its
normal 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 original due dates or the amount of the
scheduled payments or 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, while others may
result in the Servicer making Advances. 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''.
COLLECTIONS
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 specified in the related Prospectus
Supplement (each, a ``Collection Period'') into the related Collection Account
on or before the applicable Distribution Date or Payment Date. Pending deposit
into the Collection Account, collections may be invested by the Servicer at its
own risk and for its own benefit and will not be segregated from its own funds.
If the Servicer were unable to remit such funds, Securityholders might incur a
loss. To the extent set forth in the related Prospectus Supplement, the
Servicer may, in order to satisfy the requirements described above, obtain
letters of credit or other
30
<PAGE> 62
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
The related Prospectus Supplement may provide that, on or before each
applicable Distribution Date or Payment Date, the Servicer shall deposit into
the related Collection Account as an Advance an amount equal to the amount of
interest that would have been due on the Receivables at their respective APRs
for the related Collection Period (assuming that the Receivables are paid on
their respective due dates) minus the amount of interest actually received on
the Receivables during the related Collection Period. If such calculation
results in a negative number, an amount equal to such amount shall be paid to
the Servicer in reimbursement of outstanding Advances. In addition, in the
event that a Receivable becomes a Liquidated Receivable (as such term is
defined in the related Prospectus Supplement), the amount of accrued and unpaid
interest thereon (but not including interest for the then current Collection
Period) shall be withdrawn from the Collection Account and paid to the Servicer
in reimbursement of outstanding Advances. No advances of principal will be made
with respect to the Receivables.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the related Prospectus Supplement with
respect to any Trust, the Servicer will be entitled to receive the Servicing
Fee for each Collection Period in an amount 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 the related Collection
Period (the ``Servicing Fee''). The Servicing Fee (together with any portion of
the Servicing Fee that remains unpaid from prior Distribution Dates or Payment
Dates) will be paid solely to the extent of the amounts available for
distributions of interest. However, the Servicing Fee will be paid prior to the
distribution of any portion of the amounts available for distributions of
interest to the Noteholders or the Certificateholders of the given series.
Unless otherwise provided in the related Prospectus Supplement with respect
to a given Trust, the Servicer will also collect and retain any late fees,
prepayment charges and other administrative fees or similar charges 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 normal practices and procedures.
The 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
payment coupons 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, if any, and the
Certificate Distribution Account for distribution to Noteholders, if any, and
Certificateholders to the extent provided in the related Prospectus Supplement.
Credit enhancement, such as a Reserve Account, will be available to cover any
31
<PAGE> 63
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, and unless otherwise specified therein,
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, swaps or other interest rate protection agreements, repurchase
obligations issued by an institution named in the related Prospectus Supplement
obligating such institution to purchase defaulted or liquidated receivables,
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. Unless otherwise
specified in the related Prospectus Supplement, 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. 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 Pool 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. Unless otherwise provided in the related Prospectus
Supplement, the Reserve Account will be funded by an initial deposit on the
Closing Date in the amount set forth in the related Prospectus Supplement. As
further described in the related Prospectus Supplement, the amount 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.
NET DEPOSITS
As an administrative convenience, 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. 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.
32
<PAGE> 64
STATEMENTS TO TRUSTEES AND TRUST
Prior to each Distribution Date or Payment 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 a firm of independent public accountants will furnish to the
related Trust and Indenture Trustee or Trustee, as applicable, annually a
statement 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 Defaults 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.
CERTAIN MATTERS REGARDING THE SERVICER
Each Sale and Servicing Agreement and Pooling and Servicing Agreement will
provide that Boatmen's Bank may not resign from its obligations and duties as
Servicer thereunder, except upon determination that Boatmen's Bank'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 Boatmen's Bank'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 Boatmen's Bancshares, Inc., 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.
33
<PAGE> 65
SERVICER DEFAULT
Except as otherwise provided in the related Prospectus Supplement,
``Servicer Default'' 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 three 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 or
the Seller, as the case may be, duly to observe or perform in any material
respect any other covenant or agreement in such Sale and Servicing 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 or the Seller, as the case may be, by the
applicable Trustee or (B) to the Servicer or the Seller, as the case may be,
and to the applicable Trustee by holders of Notes or Certificates of such
series, as applicable, evidencing greater than 50% in principal amount of such
outstanding Notes or of such Certificate Balance; and (iii) the occurrence of
an Insolvency Event with respect to the Servicer, the Seller or any related
Company. ``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 DEFAULT
In the case of any Trust that has issued Notes, unless otherwise provided
in the related Prospectus Supplement, as long as a Servicer Default 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
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, unless otherwise provided in the related Prospectus
Supplement, as long as a Servicer Default under the related Pooling 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 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 Pooling and Servicing Agreement and will be entitled to similar
compensation arrangements. If, however, a bankruptcy trustee or similar
official has been appointed for the Servicer, and no Servicer Default other
than such appointment has occurred, such trustee or official may have the power
to prevent such Indenture Trustee, such Noteholders, such Trustee or such
Certificateholders from effecting a transfer of servicing. In the event that
such Indenture Trustee or Trustee is unwilling or unable to so act, it may
appoint, or petition a court of competent jurisdiction for the appointment of,
a successor with a net worth of not less than $100,000,000 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 DEFAULTS
With respect to each Trust that has issued Notes, unless otherwise provided
in the related Prospectus Supplement, 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 Default which does not adversely affect the related Indenture Trustee
or such Noteholders) may, on behalf of all such Noteholders and
Certificateholders, waive any default by the Servicer in the performance of its
obligations under the related Sale and Servicing Agreement and its
consequences, except a Servicer Default 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 default by the Servicer in the
performance of its obligations under the related Pooling and Servicing
Agreement, except a Servicer Default in making any required deposits to or
payments
34
<PAGE> 66
from the related Trust Accounts in accordance with such Pooling and Servicing
Agreement. No such waiver will impair such Noteholders' or Certificateholders'
rights with respect to subsequent defaults.
AMENDMENT
Unless otherwise provided in the related Prospectus Supplement, 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. Unless
otherwise specified in the related Prospectus Supplement, 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 principal
amount of such Certificates then outstanding, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
such Transfer and Servicing Agreements or of modifying in any manner the rights
of such Noteholders or Certificateholders; provided, however, that no such
amendment may (i) increase or reduce in any manner the amount of, or accelerate
or delay the timing of, 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.
INSOLVENCY EVENT
With respect to a Trust that is not a grantor trust, if an Insolvency Event
occurs with respect to the Company of such Trust, 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 the Certificates (other than such Company) with
respect to such Trust representing more than 50% of the aggregate unpaid
principal amount of each such class (not including the principal amount of such
Certificates held by such Company), and 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 such Company,
notice thereof is required to be given to such Certificateholders; 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 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.
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 applicable Company) of such Trust and the delivery to such
Trustee by each such Certificateholder (including such Company) of a
certificate certifying that such Certificateholder reasonably believes that
such Trust is insolvent.
PAYMENT OF NOTES
Upon the payment in full of all outstanding Notes of a given series and the
satisfaction and discharge of the related Indenture, the related Trustee will
succeed to all the rights of the Indenture Trustee, and the 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.
35
<PAGE> 67
COMPANY LIABILITY
Under each Trust Agreement, the Company 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 such Company 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.
Unless otherwise provided in the related Prospectus Supplement, in order to
avoid excessive administrative expense, the Servicer will be permitted at its
option to purchase from each Trust, as of the end of any applicable 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.
If and to the extent provided in the related Prospectus Supplement with
respect to a Trust, the applicable Trustee will, within 30 days following a
Distribution Date or Payment Date as of which the Pool Balance is equal to or
less than the percentage of the Initial Pool Balance specified in the related
Prospectus Supplement, solicit bids for the purchase of the Receivables
remaining in such Trust, in the manner and subject to the terms and conditions
set forth in such Prospectus Supplement. If the applicable Trustee receives
satisfactory bids as described in such Prospectus Supplement, then the
Receivables remaining in such Trust will be sold to the highest bidder.
As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed concurrently with
either of the events specified above and the subsequent distribution to the
related Certificateholders of all amounts required to be distributed to them
pursuant to the applicable Trust Agreement or Pooling and Servicing Agreement
will effect early retirement of the Certificates of such series.
ADMINISTRATION AGREEMENT
The Boatmen's National Bank of St. Louis, 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. Unless otherwise specified in
the related Prospectus Supplement 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 such amount as may be set forth in the related Prospectus Supplement
(the ``Administration Fee''), which fee will be paid by the Servicer.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
SECURITY INTEREST IN VEHICLES
In states in which retail installment sale contracts and simple interest
loan note and security agreements such as the Receivables evidence the credit
sale of automobiles, vans and light duty trucks, the contracts also constitute
personal property security agreements and include grants of security interests
in the vehicles under the applicable UCC. Perfection of security interests in
the automobiles, vans and light duty trucks financed by the Seller is generally
governed by the motor vehicle registration laws of the state in which the
vehicle is located. In all states in which the Receivables have been
originated, a security interest in automobiles, vans and light duty trucks is
perfected by
36
<PAGE> 68
obtaining the certificate of title to the Financed Vehicle or notation of the
secured party's lien on the vehicles' certificate of title.
The Servicer takes all actions necessary under the laws of the state in
which the financed vehicle is located to perfect the Servicer's security
interest in the financed vehicle, 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, the obligors on the contracts
will not be notified of the sale from the Seller to the Trust, and no action
will be taken to record the transfer of the security interest from the Seller
to the Trust by amendment of the certificates of title for the Financed
Vehicles or otherwise.
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
Seller, the Servicer or the related Trustee will amend any certificate of title
to identify such Trust as the new secured party on such certificate of title
relating to a Financed Vehicle. Also, the Servicer will continue to hold any
certificates of title relating to the 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 such 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 such states, in the
absence of fraud or forgery by the vehicle owner or the Servicer or
administrative error by state or local agencies, the notation of the Servicer's
lien on the certificates of title will be sufficient to protect such Trust
against the rights of subsequent purchasers of a Financed Vehicle or subsequent
lenders who take a security interest in a Financed Vehicle. If there are any
Financed Vehicles as to which the Servicer failed to obtain and assign to the
Trust a perfected security interest, the security interest of the 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--Certain Legal Aspects--Security Interests
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 Servicer takes 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 Servicer must
surrender possession of the certificate of title or will receive notice as a
result of its lien noted thereon and accordingly will have an opportunity to
require satisfaction of the related Receivable before release of the lien.
Under each Sale and Servicing Agreement 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
37
<PAGE> 69
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 sale contract 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, the UCC
requires the creditor to remit the surplus to the former owner of the vehicle.
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 and Z,
the Soldiers' and Sailors' Civil Relief Act of 1940, the Texas Consumer Credit
Code, 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. Also, state laws impose 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 with their
38
<PAGE> 70
provisions. In some cases, this liability could affect an assignee's ability to
enforce consumer finance contracts such as the Receivables.
The so-called ``Holder-in-Due-Course'' Rule of the Federal Trade Commission
(the ``FTC Rule''), 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''.
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 such 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.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain federal income tax
consequences of the purchase, ownership and disposition of the Notes and the
Certificates. The summary does not purport to deal with the federal income tax
consequences applicable to all categories of holders, some of which may be
subject to special rules. For example, it does not discuss the tax treatment of
Noteholders or Certificateholders that are insurance companies, regulated
investment companies 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
39
<PAGE> 71
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 to each Trust specified in the related
Prospectus Supplement 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 related Prospectus Supplement for each
series of Certificates will specify whether the Trust will be treated as a
grantor trust or a partnership.
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. 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 (l) 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 foregoing 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 Issuer will agree, and the
Noteholders and the Certificateholders will agree by their purchase of Notes,
to treat the Notes as debt for federal income tax purposes. Federal Tax Counsel
will, except as otherwise provided in the related Prospectus Supplement,
deliver an opinion to the effect that the Notes will be classified as debt for
federal income tax purposes. The discussion below assumes this characterization
of the Notes is correct.
OID, Indexed Securities, etc. The discussion below assumes that all
payments on the Notes are denominated in U.S. dollars, and that the Notes are
not Indexed Securities or 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, 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
40
<PAGE> 72
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 holder of a Note that has a fixed maturity date of not more than one year
from the issue date of such Note (a ``Short-Term Note'') may be subject to
special rules. An accrual basis holder of a Short-Term Note (and certain cash
method holders, including regulated investment companies, as set forth in
Section 1281 of the Code) generally would be required to report interest income
as interest accrues on a straight-line basis over the term of each interest
period. Other cash basis holders of a Short-Term Note would, in general, be
required to report interest income as interest is paid (or, if earlier, upon
the taxable disposition of the Short-Term Note). However, a cash basis holder
of a Short-Term Note reporting interest income as it is paid may be required to
defer a portion of any interest expense otherwise deductible on indebtedness
incurred to purchase or carry the Short-Term Note until the taxable disposition
of the Short-Term Note. A cash basis taxpayer may elect under Section 1281 of
the Code to accrue interest income on all nongovernment debt obligations with a
term of one year or less, in which case the taxpayer would include interest on
the Short-Term Note in income as it accrues, but would not be subject to the
interest expense deferral rule referred to in the preceding sentence. Certain
special rules apply if a Short-Term Note is purchased for more or less than its
principal amount.
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, acquisition 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 only to offset capital gains.
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)
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.
41
<PAGE> 73
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 Depositor, 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, the Company 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 Company 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.
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 allocated share of 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), any gain
upon collection or disposition of Receivables and Investment Earnings. The
Trust's deductions will consist primarily of interest accruing with respect to
the Notes, 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). The Trust Agreement will provide, in
general, that the Certificateholders will be allocated taxable income of the
Trust for each month equal to the sum of (i) the interest that accrues on the
Certificates in accordance with their terms for such month, including interest
accruing at the Pass Through Rate for such month and interest on amounts
previously due on the Certificates but not yet distributed; (ii) 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; (iii) prepayment premium payable to the Certificateholders for such
month; and (iv) 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 taxable income
of the Trust, if any, will be allocated to the Company. 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 Pass Through 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 will in effect be
required to report income from the Certificates on the accrual basis and
Certificateholders may become liable for taxes on Trust income even if they
have not received cash from the Trust to pay such taxes. In addition, because
tax
42
<PAGE> 74
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 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.
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, the Trust will be considered to
distribute its assets to the partners, who would then be treated as
recontributing those assets to the Trust, as a new partnership. The Trust will
not comply with certain technical requirements that might apply when such a
constructive termination occurs. As a result, the Trust may be subject to
certain tax penalties and may incur additional expenses if it is required to
comply with those requirements. Furthermore, the Trust might not be able to
comply due to lack of data.
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.
43
<PAGE> 75
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
Company 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 or cause to be filed
a partnership information return (IRS Form 1065) with the IRS for each taxable
year of the Trust and will report or cause to be reported 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 Company 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
44
<PAGE> 76
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 (including, in the case of a corporation, the
branch profits tax) on its share of 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, interest payments made (or accrued) to a
Certificateholder who is a foreign person generally will be considered
guaranteed payments to the extent such payments are determined without regard
to the income of the Trust. If these interest payments are properly
characterized as guaranteed payments, then the interest will not be considered
``portfolio interest.'' As a result, foreign Certificateholders will be subject
to United States federal income tax and withholding tax at a rate of 30
percent, unless reduced or eliminated pursuant to an applicable treaty. In such
case, a foreign holder would only be entitled to claim a refund for that
portion of the taxes in excess of the taxes that should be withheld with
respect to the guaranteed payments.
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. 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 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. 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
45
<PAGE> 77
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 interest 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.
It is not clear whether a reasonable prepayment assumption should be used
in computing amortization of premium allowable under Section 171. If a premium
is not subject to amortization using a reasonable prepayment assumption, the
holder of a Grantor Trust Certificate acquired at a premium should recognize a
loss if a Receivable prepays in full, equal to the difference between the
portion of the prepaid principal amount of such Receivable that is allocable to
the Grantor Trust Certificate and the portion of the adjusted basis of the
Grantor Trust Certificate that is allocable to such Receivable. If a reasonable
prepayment assumption is used to amortize such premium, it appears that such a
loss would be available, if at all, only if prepayments have occurred at a rate
faster than the reasonable assumed prepayment rate. It is not clear whether any
other adjustments would be required to reflect differences between an assumed
prepayment rate and the actual rate of prepayments.
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 original issue discount. 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. See ``Original Issue Discount.'' Based on the preamble to the Section 1286
Treasury Regulations, Federal Tax Counsel is of the opinion that, although the
matter is not entirely clear, the interest income on the Certificates at the
sum of the Pass Through Rate and the portion of the Servicing Fee Rate that
does not constitute excess servicing will be treated as ``qualified stated
interest'' within the meaning of the Section 1286 Treasury Regulations and such
income will be so treated in the Trustee's tax information reporting.
Original Issue Discount. The IRS in published releases addressing
circumstances similar to those described herein indicate that the special rules
of the Code relating to ``original issue discount'' (currently Sections 1271
through 1273 and 1275) will be applicable to a Grantor Trust
Certificateholder's interest in those Receivables meeting the conditions
necessary for these sections to apply. Generally, a Grantor Trust
Certificateholder that acquires an undivided interest in a Receivable issued or
acquired with OID must include in gross income the sum of the ``daily
portions,'' as defined below, of the OID on such Receivable for each day on
which it owns a Certificate, including the date of purchase but excluding the
date of disposition. In the case of an original Grantor Trust
Certificateholder, the daily portions of OID with respect to a Receivable
generally would be determined as follows. A calculation will be made of the
portion of OID that accrues on the Receivable during each successive monthly
accrual period (or shorter period in respect of the date of original issue or
the final Distribution Date). This calculation will be made in the case of each
full monthly accrual period, by adding (i) the present value of all remaining
payments to be received on the
46
<PAGE> 78
Receivable under the prepayment assumption used in respect of the Receivables
and (ii) any payments received during such accrual period, and subtracting from
that total the ``adjusted issue price'' of the Receivable at the beginning of
such accrual period. No representation is made that the Receivables will prepay
at any prepayment assumption. The ``adjusted issue price'' of a Receivable at
the beginning of the first accrual period is its issue price (as determined for
purposes of the OID rules of the Code) and the ``adjusted issue price'' of a
Receivable at the beginning of a subsequent accrual period is the ``adjusted
issue price'' at the beginning of the immediately preceding accrual period plus
the amount of OID allocable to that accrual period and reduced by the amount of
any payment (other than ``qualified stated interest'') made at the end of or
during that accrual period. The OID accruing during such accrual period will
then be divided by the number of days in the period to determine the daily
portion of OID for each day in the period. With respect to an initial accrual
period shorter than a full monthly accrual period, the daily portions of OID
must be determined according to an appropriate allocation under either an exact
or approximate method set forth in the OID Regulations, or some other
reasonable method, provided that such method is consistent with the method used
to determine the yield to maturity of the Receivables.
With respect to the Receivables, the method of calculating OID as described
above will cause the accrual of OID to either increase or decrease (but never
below zero) in any given accrual period to reflect the fact that prepayments
are occurring at a faster or slower rate than the prepayment assumption used in
respect of the Receivables. Subsequent purchasers that purchase Receivables at
more than a de minimis discount should consult their tax advisors with respect
to the proper method to accrue such OID.
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 either on the basis of
a constant interest rate or according to one of the following methods. If the
Receivables underlying a Grantor Trust Certificate were issued with OID, the
amount of market discount that accrues during any accrual period would be equal
to the product of (i) the total remaining market discount and (ii) a fraction,
the numerator of which is the OID accruing during the period and the
denominator of which is the total remaining OID at the beginning of the accrual
period. For Receivables underlying the Grantor Trust Certificates issued
without OID, the amount of market discount that accrues during a period is
equal to the product of (i) the total remaining market discount and (ii) a
fraction, the numerator of which is the amount of stated interest paid during
the accrual period and the denominator of which is the total amount of stated
interest remaining to be paid at the beginning of the accrual period. For
purposes of calculating market discount under any of the above methods in the
case of instruments (such as the Grantor Trust Certificates) that provide for
payments that may be accelerated by reason of prepayments of other obligations
securing such instruments, the same prepayment assumption applicable to
calculating the accrual of OID will apply. Because the regulations described
above have not been issued, it is impossible to predict what effect those
regulations might have on the tax treatment of a Grantor Trust Certificate
purchased at a discount or premium in the secondary market.
47
<PAGE> 79
A holder who acquired a Grantor Trust Certificate at a market discount also
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'' herein.
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 original issue discount) 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'' herein. The election to accrue interest, discount and premium on a
constant yield method with respect to a Grantor Trust Certificate is
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, to the extent that a Grantor Trust Certificate
evidences ownership in underlying Receivables that were issued on or before
July 18, 1984, interest or OID paid by the person required to withhold tax
under Section 1441 or 1442 to (i) an owner that is not a U.S. Person or (ii) a
Grantor Trust Certificateholder holding on behalf of an owner that is not a
U.S. Person will be subject to federal income tax, collected by withholding, at
a rate of 30% or such lower rate as may be provided for interest by an
applicable tax treaty. Accrued OID recognized by the owner on the sale or
exchange of such a Grantor Trust Certificate also will be subject to federal
income tax at the same rate. Generally, such payments would not be subject to
withholding to the extent that a Grantor Trust Certificate evidences ownership
in Receivables issued after July 18, 1984, 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 furnish 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
48
<PAGE> 80
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.
CERTAIN STATE TAX CONSEQUENCES
The activities to be undertaken by the Servicer in servicing and collecting
the receivable will take place in Missouri. The State of Missouri imposes a
state individual income tax and a state corporate income tax. The following
discussion is limited to state income tax consequences and will not address any
other potential state tax including but not limited to excise taxes, property
taxes, etc. This discussion is based upon the present provisions of Missouri
statutes and the regulations promulgated thereunder, and applicable Missouri
judicial and administrative authority, all of which are subject to change,
which change may be retroactive. No ruling on any of the issues discussed below
will be sought from the Missouri Department of Revenue.
Because of the variation in each state's laws which impose a tax based in
whole or in part upon income, it is impossible to predict tax consequences to
holders of the Notes and Certificates in all of the state income taxing
jurisdictions in which they are already subject to tax. Noteholders and
Certificateholders are urged to consult their own tax advisors with respect to
state income tax consequences arising out of the purchase, ownership and
disposition of Notes and Certificates.
For purposes of the following summary, references to the Trusts, 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.
INCOME TAX CONSEQUENCES WITH RESPECT TO THE NOTES
It is expected that counsel for the Seller (``Lewis, Rice & Fingersh,
L.C.'') will advise each such trust that issues Notes that, assuming the Notes
will be treated as debt for federal income tax purposes, the Notes will also be
treated as debt for Missouri income tax purposes. Accordingly, Noteholders not
otherwise subject to taxation in Missouri should not become subject to income
taxation in Missouri solely because of a holder's ownership of Notes. However,
a Noteholder already subject to Missouri income tax could be required to pay
additional Missouri tax as result of the holder's ownership or disposition of
the Notes.
INCOME TAX CONSEQUENCES WITH RESPECT TO THE CERTIFICATES ISSUED BY A TRUST
TREATED AS A PARTNERSHIP
If the arrangement created by the Trust Agreement is treated as a
partnership (not taxable as a corporation) for federal income tax purposes,
Lewis, Rice & Fingersh, L.C. will deliver its opinion that the same treatment
will also apply for Missouri income tax purposes and the Trust will not be
subject to Missouri income tax. Rather, under current law, a Certificateholder
who is an individual, estate or trust resident in Missouri will include all of
his distributive share of the Trust's income in his Missouri taxable income,
but with respect to a Certificateholder which is a corporation or who is an
individual, estate or trust not resident in Missouri, none of such
Certificateholder's distributive share of the Trust's income should be Missouri
source income subject to Missouri income tax.
If the arrangement created by the Trust Agreement is treated for federal
income tax purposes as an association or a ``publicly traded partnership'', in
each case taxable as a corporation, Lewis, Rice & Fingersh, L.C. will deliver
its opinion that the same treatment will also apply for Missouri income tax
purposes. In that event, however, under current law, none of the Trust's income
should be Missouri source income subject to Missouri income taxes. In addition,
under current law, a Certificateholder who is an individual, estate or trust
resident in Missouri will include all of his income received from the Trust in
his Missouri taxable income, but with respect to a Certificateholder which is a
corporation or who is an individual, estate or trust not resident in Missouri,
none of the income received by such Certificateholders from the Trust should be
Missouri source income subject to Missouri income tax.
49
<PAGE> 81
INCOME TAX CONSEQUENCES WITH RESPECT TO THE CERTIFICATES ISSUED BY A TRUST
TREATED AS A GRANTOR TRUST
If the arrangement created by the Pooling and Servicing Agreement is
treated as a grantor trust for federal income tax purposes, Lewis, Rice &
Fingersh, L.C. will deliver its opinion that the same treatment will also apply
for Missouri income tax purposes and the Trust will not be subject to Missouri
income tax. Rather, under current law, a Certificateholder who is an
individual, estate or trust resident in Missouri will include all of his
portion of the Trust's income in his Missouri taxable income, but with respect
to a Certificateholder which is a corporation or who is an individual, estate
or trust not resident in Missouri, none of such Certificateholders' portion of
the Trust's income should be Missouri source income subject to Missouri income
tax.
If the arrangement created by the Trust Agreement is treated for federal
income tax purposes as an association or a ``publicly traded partnership'', in
each case taxable as a corporation, Lewis, Rice & Fingersh, L.C. will deliver
its opinion that the same treatment will also apply for Missouri income tax
purposes. In that event, however, under current law, none of the Trust's income
should be Missouri source income subject to Missouri income taxes. In addition,
under current law, a Certificateholder who is an individual, estate or trust
resident in Missouri will include all of his income received from the Trust in
his Missouri taxable income, but with respect to a Certificateholder which is a
corporation or who is an individual, estate or trust not resident in Missouri,
none of the income received by such Certificateholders from the Trust should be
Missouri source income subject to Missouri income tax.
* * * * *
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, as well as individual retirement
accounts and certain types of Keogh Plans (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.
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 Assets 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 Assets Regulation was
applicable. An equity interest is defined under the Plan Assets Regulation as
an interest other than an instrument which is treated as indebtedness under
applicable local law and which has no substantial equity features. The likely
treatment in this context of Notes and Certificates of a given series will be
discussed in the related Prospectus Supplement.
Employee benefit plans that are 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 ERISA requirements.
A plan fiduciary considering the purchase of Securities of a given series
should consult its tax and/or legal advisors regarding whether the assets of
the related Trust would be considered plan assets, the possibility of exemptive
relief from the prohibited transaction rules and other issues and their
potential consequences.
SENIOR CERTIFICATES ISSUED BY TRUSTS THAT DO NOT ISSUE NOTES
Unless otherwise specified in the related Prospectus Supplement, the
following discussion applies only to nonsubordinated Certificates (referred to
herein as ``Senior Certificates'') issued by a Trust that does not issue Notes.
50
<PAGE> 82
The U.S. Department of Labor has granted to the lead underwriter named in
the related Prospectus Supplement 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 Exemption will apply to the acquisition, holding and resale of
the Senior Certificates by a Benefit Plan, provided that certain conditions
(certain of which are described below) are met.
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
Corporation, Moody's Investors Service, Inc., Duff & Phelps Inc. or
Fitch Investors Service, Inc.;
(4) the Trustee is not an affiliate of any other member of the Restricted
Group;
(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 Seller believes that the Exemption will apply to the acquisition and
holding by Benefit Plans of Senior Certificates sold by the underwriter or
underwriters named in the related Prospectus Supplement and that all conditions
of the Exemption other than those within the control of the investors have been
met. In addition, as of the date hereof, no obligor with respect to Receivables
included in the Trust constitutes more than five percent of the aggregate
unamortized principal balance of the assets of the Trust.
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
51
<PAGE> 83
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 underwriter 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 Notes in Canada is being made only on a private
placement basis exempt from the requirement that the Trust prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of the Notes are effected. Accordingly, any resale of the Notes in
Canada must be made in accordance with applicable securities laws 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 Notes.
REPRESENTATIONS OF PURCHASERS
Each purchaser of Notes in Canada who receives a purchase confirmation will
be deemed to represent to the Seller, the Trust and the dealer from who such
purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase such Notes without the
benefit of a prospectus qualified under such securities laws, (ii) 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 rescissions or rights of action
under the civil liability provisions of the U.S. federal securities laws.
The Trust, the Seller, the Servicer, the Company, the Owner Trustee and the
Indenture Trustee and their respective directors and officers, if any, as well
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 Issuer or such persons. All or a substantial portion of the
assets of the Issuer and such persons may be located outside of Canada
52
<PAGE> 84
and, as a result, it may be possible to satisfy a judgment against the Issuer
or such persons in Canada or to enforce a judgment obtained in Canadian courts
against such Issuer or persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of Notes 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 Notes
or Certificates 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
Notes 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 Lewis, Rice &
Fingersh, L.C., St. Louis, Missouri. Lewis, Rice & Fingersh, L.C. 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 Weil, Gotshal
& Manges, New York, New York.
53
<PAGE> 85
<TABLE>
INDEX OF TERMS
<S> <C>
Administration Agreement.............................................................................. 36
Administration Fee.................................................................................... 36
Administrator......................................................................................... 36
Advance............................................................................................... 7
Agent Referral Program................................................................................ 6
APR................................................................................................... 7
Base Rate............................................................................................. 21
Benefit Plan.......................................................................................... 50
Boatmen's Bank........................................................................................ 3
Calculation Agent..................................................................................... 22
Calculation Date...................................................................................... 22
CD Rate............................................................................................... 22
CD Rate Determination Date............................................................................ 22
CD Rate Security...................................................................................... 21
Cede.................................................................................................. 12
Certificate Balance................................................................................... 4
Certificate Distribution Account...................................................................... 29
Certificate Pool Factor............................................................................... 15
Certificateholders.................................................................................... 12
Certificates.......................................................................................... 1
Closing Date.......................................................................................... 28
Code.................................................................................................. 40
Collection Account.................................................................................... 29
Collection Period..................................................................................... 30
Commercial Paper Rate................................................................................. 23
Commercial Paper Rate Determination Date.............................................................. 23
Commercial Paper Rate Security........................................................................ 21
Commission............................................................................................ 2
Company............................................................................................... 3
Composite Quotations.................................................................................. 22
Cutoff Date........................................................................................... 13
Dealer Agreements..................................................................................... 13
Dealers............................................................................................... 6
Definitive Certificates............................................................................... 26
Definitive Notes...................................................................................... 26
Definitive Securities................................................................................. 26
Depository............................................................................................ 16
Distribution Date..................................................................................... 21
DTC................................................................................................... 12
DTC's Nominee......................................................................................... 12
Eligible Deposit Account.............................................................................. 30
Eligible Institution.................................................................................. 30
Eligible Investments.................................................................................. 29
ERISA................................................................................................. 9
Events of Default..................................................................................... 18
Exchange Act.......................................................................................... 2
Exemption............................................................................................. 51
Face Amount........................................................................................... 25
FDIC.................................................................................................. 10
Federal Funds Rate.................................................................................... 23
Federal Funds Rate Determination Date................................................................. 23
Federal Funds Rate Security........................................................................... 21
54
<PAGE> 86
Federal Tax Counsel................................................................................... 9
Final Scheduled Maturity Date......................................................................... 7
Financed Vehicles..................................................................................... 6
FIRREA................................................................................................ 10
Fixed Rate Securities................................................................................. 21
Floating Rate Securities.............................................................................. 21
foreign person........................................................................................ 41
FTC Rule.............................................................................................. 39
Grantor Trust Certificateholders...................................................................... 45
Grantor Trust Certificates............................................................................ 45
H.15(519)............................................................................................. 21
Indenture............................................................................................. 3
Indenture Trustee..................................................................................... 1
Index................................................................................................. 25
Index Maturity........................................................................................ 21
Indexed Commodity..................................................................................... 25
Indexed Currency...................................................................................... 25
Indexed Principal Amount.............................................................................. 25
Indexed Securities.................................................................................... 25
Indirect Participants................................................................................. 26
Initial Pool Balance.................................................................................. 36
Insolvency Event...................................................................................... 34
Interest Rate......................................................................................... 3
Interest Reset Date................................................................................... 22
Interest Reset Period................................................................................. 21
Investment Earnings................................................................................... 30
IRS................................................................................................... 39
Issuer................................................................................................ 3
LIBOR................................................................................................. 24
LIBOR Determination Date.............................................................................. 24
LIBOR Security........................................................................................ 21
London Banking Day.................................................................................... 24
Money Market Yield.................................................................................... 23
Note Distribution Account............................................................................. 29
Note Pool Factor...................................................................................... 15
Noteholders........................................................................................... 12
Notes................................................................................................. 1
Obligors.............................................................................................. 13
OID................................................................................................... 40
OID Regulations....................................................................................... 40
Participants.......................................................................................... 16
Pass Through Rate..................................................................................... 4
Payment Date.......................................................................................... 17
Plan Assets Regulation................................................................................ 50
Pool Balance.......................................................................................... 16
Pooling and Servicing Agreement....................................................................... 3
Prospectus Supplement................................................................................. 1
Purchase Amount....................................................................................... 29
Rating Agencies....................................................................................... 12
Receivables........................................................................................... 6
Receivables Pool...................................................................................... 13
Registration Statement................................................................................ 2
Related Documents..................................................................................... 19
Reserve Account....................................................................................... 32
55
<PAGE> 87
Restricted Group...................................................................................... 51
Reuters Screen LIBO Page.............................................................................. 24
Rules................................................................................................. 26
Sale and Servicing Agreement.......................................................................... 6
Schedule of Receivables............................................................................... 28
Section 1286 Treasury Regulations..................................................................... 46
Securities............................................................................................ 1
Securities Act........................................................................................ 2
Securityholder........................................................................................ 12
Seller................................................................................................ 3
Senior Certificates................................................................................... 50
Servicer.............................................................................................. 3
Servicer Default...................................................................................... 34
Servicing Fee......................................................................................... 31
Servicing Fee Rate.................................................................................... 31
Short-Term Note....................................................................................... 41
Spread................................................................................................ 21
Spread Multiplier..................................................................................... 21
Stock Index........................................................................................... 25
Strip Certificates.................................................................................... 5
Strip Notes........................................................................................... 3
Transfer and Servicing Agreements..................................................................... 28
Treasury bills........................................................................................ 24
Treasury Rate......................................................................................... 24
Treasury Rate Determination Date...................................................................... 25
Treasury Rate Security................................................................................ 21
Trust................................................................................................. 1
Trust Accounts........................................................................................ 29
Trust Agreement....................................................................................... 3
Trustee............................................................................................... 3
U.S. Person........................................................................................... 48
UCC................................................................................................... 29
Underwriting Agreements............................................................................... 51
</TABLE>
56
<PAGE> 88
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE SELLER
OR BY THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
SECURITIES OFFERED HEREBY TO ANYONE IN ANY JURISDICTION IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO
WHOM IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT
INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS.
----------------
<TABLE>
TABLE OF CONTENTS
<CAPTION>
PROSPECTUS SUPPLEMENT
PAGE
----
<S> <C>
Reports to Securityholders.................................... S-2
Summary of Terms.............................................. S-3
Risk Factors.................................................. S-9
The Trust..................................................... S-10
The Receivables Pool.......................................... S-10
The Seller and the Servicer................................... S-20
Weighted Average Life of the Securities....................... S-20
Description of the Notes...................................... S-20
Description of the Certificates............................... S-21
Description of the Transfer and Servicing Agreements.......... S-22
ERISA Considerations.......................................... S-27
Underwriting.................................................. S-28
Legal Opinions................................................ S-29
Index of Terms................................................ S-30
<CAPTION>
PROSPECTUS
<S> <C>
Available Information......................................... 2
Incorporation of Certain Documents by Reference............... 2
Summary of Terms.............................................. 3
Risk Factors.................................................. 10
The Trusts.................................................... 13
The Receivables Pools......................................... 14
Weighted Average Life of the Securities....................... 15
Pool Factors and Trading Information.......................... 15
Use of Proceeds............................................... 16
The Seller and the Servicer................................... 16
Description of the Notes...................................... 16
Description of the Certificates............................... 20
Certain Information Regarding the Securities.................. 21
Description of the Transfer and Servicing Agreements.......... 28
Certain Legal Aspects of the Receivables...................... 36
Certain Federal Income Tax Consequences....................... 39
Certain State Tax Consequences................................ 49
ERISA Considerations.......................................... 50
Plan of Distribution.......................................... 51
Notice to Canadian Residents.................................. 52
Legal Opinions................................................ 53
Index of Terms................................................ 54
</TABLE>
--------------------
UNTIL OCTOBER 8, 1996 (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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$290,623,554
Boatmen's Auto
Trust 1996-A
$82,654,904
Class A-1 5.7525% Money Market Asset
Backed Notes
$120,000,000
Class A-2 6.35% Asset Backed Notes
$76,343,707
Class A-3 6.75% Asset Backed Notes
$11,624,943
7.05% Asset Backed Certificates
BOATMEN'S
LOGO
The Boatmen's
National Bank of
St. Louis
Seller and Servicer
PROSPECTUS SUPPLEMENT
CS First Boston
Donaldson, Lufkin & Jenrette
Securities Corporation
Lehman Brothers
The Boatmen's National Bank
of St. Louis
- --------------------------------------------------------------------------------
