REGISTRATION NO.333-03557
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
______________
NATIONSBANK, N.A
NATIONSBANK, N.A. (SOUTH
NATIONSBANK OF TEXAS, N.A
ORIGINATORS OF THE TRUST DESCRIBED HEREIN
_______________
6090 United States of America 57-0236115, 58-0193243
(Primary Standard (State or other 75-2238693
Industrial jurisdiction of (IRS Employer
Classification incorporation or Identification
Code No.) organization) Nos.)
NationsBank, N.A. NationsBank, N.A. NationsBank of Texas, N.A.
(South)
NationsBank Corporate 600 Peachtree 901 Main Street
Center Street, N.E. Dallas, Texas 75202
100 North Tryon Street Atlanta, Georgia 30308 (214) 508-6262
Charlotte, (404) 581-2121
North Carolina 28255
(704) 386-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF EACH REGISTRANT'S PRINCIPAL
EXECUTIVE OFFICES)
_______________
ROBERT W. LONG, JR., ESQ
ASSISTANT GENERAL COUNSEL
NATIONSBANK CORPORATION
NATIONSBANK CORPORATE CENTER
100 NORTH TRYON STREET
NC1-007-20-01
CHARLOTTE, NORTH CAROLINA 28255
(704) 386-2400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
_______________
COPIES TO
RICHARD S. FORTUNATO, ESQ
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
_______________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC.
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box.(x)
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. ( )
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. ( )
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.( )
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Title of Offering Aggregate Amount of
Securities Amount to be Price Offering Registration
to be Registered Registered Per Unit(2) Price(2) Fee
Asset Backed
Notes and
Asset Backed
Certificates $1,000,000 100% $344.83(3)
(1) The Asset Backed Certificates and Asset Backed Notes (together,
the "Securities") are also being registered for the purpose of market-
making.
(2) Estimated solely for the purpose of calculating registration fee.
(3) Previously paid.
_______________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGIS-
TRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
INTRODUCTORY NOTE
This Registration Statement contains (i) a form of Prospectus relating
to the offering of series of Asset Backed Notes and/or Asset Backed
Certificates by various NationsBank Auto Trusts created from time to time
by NationsBank, N.A., NationsBank, N.A. (South) and NationsBank of Texas,
N.A. and (ii) two forms of Prospectus Supplement relating to the offering
by NationsBank Auto Trust 199 - of the particular series of Asset Backed
Certificates or of Asset Backed Notes and Asset Backed Certificates
described therein. Each form of Prospectus Supplement relates only to the
securities described therein and is a form which may be used, among others,
by the Originators to offer Asset Backed Notes and/or Asset Backed Certifi-
cates under this Registration Statement. Because NationsBanc Capital
Markets, Inc. ("NCMI"), a subsidiary of NationsBank Corporation, the parent
corporation of each of the Originators of the Trust, intends to act as an
underwriter in any offering of the Securities and intends to make a market
in the Securities for which it acts as an underwriter, NCMI will distribute
the prospectus and the applicable Prospectus Supplement in connection with
any such offering.
SUBJECT TO COMPLETION, DATED _____ __, 1996
PROSPECTUS
NATIONSBANK AUTO TRUSTS
ASSET BACKED NOTES
ASSET BACKED CERTIFICATES
_________________
[NationsBank Logo]
_________________
NATIONSBANK, N.A.
NATIONSBANK, N.A. (SOUTH)
NATIONSBANK OF TEXAS, N.A.
SELLERS
_________________
NATIONSBANK, N.A.
SERVICER
_________________
The Asset Backed Notes (the "Notes") and the Asset
Backed Certificates (the "Certificates" and, together
with the Notes, the "Securities") described herein may be
sold from time to time in one or more series, in amounts,
at prices and on terms to be determined at the time of
sale and to be set forth in a supplement to this Prospec-
tus (a "Prospectus Supplement"). Each series of Securi-
ties, 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
between NationsBank, N.A., NationsBank, N.A. (South) and
NationsBank of Texas, N.A. as sellers (each, a "Seller"
and collectively, the "Sellers"), and the Trustee speci-
fied in the related Prospectus Supplement (the "Trustee")
or a Pooling and Servicing Agreement to be entered into
among the Trustee, the Sellers and NationsBank, N.A., as
servicer (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 retail motor vehicle
installment sales contracts originated by Dealers and
purchased by the Sellers and secured by new or used
automobiles and light trucks (the "Receivables"), certain
monies due or received thereunder on and after the appli-
cable Cut-Off 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. See "The
Trusts." In addition, if so specified in the related
Prospectus Supplement, the property of the Trust will
include monies on deposit in a trust account (the
"Pre-Funding Account") to be established with the Inden-
ture Trustee or the applicable Trustee, as the case may
be, which will be used to purchase additional retail
motor vehicle installment sales contracts (the "Subse-
quent Receivables") from the Sellers from time to time
during the Funding Period specified in the related Pro-
spectus Supplement. Certain capitalized terms used in
this Prospectus are defined elsewhere in this Prospectus
on the pages indicated in the "Index of Terms" beginning
on page [65].
Each class of Securities of any series will repre-
sent 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. Distri-
butions on one or more classes of Certificates of a
series may be subordinated in priority to payments due on
one or more classes of Notes or Certificates 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 dispro-
portionate, 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 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 life of each class of Securities in the manner
described herein and in the related Prospectus Supple-
ment.
PROSPECTIVE INVESTORS SHOULD CONSIDER, AMONG OTHER
THINGS, THE INFORMATION SET FORTH IN "RISK FACTORS" ON
PAGE __ HEREIN.
______________________
ANY NOTES OF A SERIES REPRESENT OBLIGATIONS OF, AND THE
CERTIFICATES OF A SERIES REPRESENT BENEFICIAL INTERESTS
IN, THE RELATED TRUST ONLY AND DO NOT REPRESENT OBLIGA-
TIONS OF OR INTERESTS IN, AND ARE NOT GUARANTEED OR
INSURED BY, THE FEDERAL DEPOSIT INSURANCE CORPORATION,
ANY GOVERNMENTAL AGENCY, ANY OF THE SELLERS, THE SERVICER
OR NATIONSBANK CORPORATION OR ANY OF THEIR RESPECTIVE
AFFILIATES.
______________________
THESE SECURITIES ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL AMOUNT INVESTED AND 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 Securi-
ties offered hereby unless accompanied by a Prospectus
Supplement.
______________________
The date of this Prospectus is _____ __, 1996.
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Securities are issued,
unaudited monthly and annual reports concerning the
Receivables and each Trust will be prepared by the
Servicer and sent by the Trustee, on behalf of each
Trust, only to the registered holders of the Certificates
(the "Certificateholders") pursuant to the applicable
Trust Agreement and the registered holders of the Notes
(the "Noteholders") pursuant to the applicable Indenture.
The registered holder of the Certificates and the Notes
is Cede & Co., as nominee of The Depository Trust Company
("DTC"). Such reports will not contain audited financial
statements with respect to the applicable Trust. Owners
of beneficial interests in the Certificates ("Certificate
Owners") may obtain these reports free of charge (except
for copying and postage costs) by a request in writing to
the Trustee at [Name:______] [Ad-
dress:___________________], Attention: _________. Owners
of beneficial interests in the Notes ("Note Owners") may
similarly obtain these reports free of charge (except for
copying and postage costs) by a request in writing to the
Indenture Trustee, The Chase Manhattan Bank,(National
Association) at [Address:___________________], Attention:
_________. The Sellers do not intend to send any of
their consolidated reports of condition and income or
other information required to be furnished to the
Sellers' regulators to Certificateholders, Noteholders,
Certificate Owners or Note Owners. See "Book-Entry and
Definitive Securities; Reports to Securityholders Book-
Entry Registration" and " Reports to Securityholders."
The Servicer intends to continue to file with respect to
each Trust periodic reports pursuant to the requirements
of the Securities Exchange Act of 1934, as amended, for
the period after such filings could be discontinued in
reliance on Section 15(d) thereof until the Securities
issued by such Trust are no longer outstanding.
AVAILABLE INFORMATION
The Sellers, as the originators of each Trust, have
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. Each of the Sellers is a wholly-owned sub-
sidiary of NationsBank Corporation, a multibank holding
company incorporated under the laws of North Carolina,
headquartered in Charlotte, North Carolina and registered
under the Bank Holding Company Act of 1956, as amended.
NationsBank Corporation is subject to the periodic re-
porting requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports and other information with the
Commission. For further information, reference is made
to the Registration Statement, the exhibits thereto, and
the reports and other information filed by NationsBank
Corporation 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, including the Midwest
Regional Office, located at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511,
and the Northeast Regional Office located at Seven World
Trade Center, Suite 1300, New York, New York 10048. Paper
copies of the Registration Statement may be obtained from
the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, the Commission maintains a public
access site on the Internet through a World Wide Web site
at which reports, information statements and other infor-
mation, including all electronic filings, regarding the
Sellers and NationsBank Corporation may be viewed. The
Internet address of such World Wide Web site is
http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by or on behalf of each Trust
pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, subsequent
to the date of this Prospectus and prior to the termina-
tion of the offering of the Securities shall be deemed to
be incorporated by reference in this Prospectus.
This Prospectus and the related Prospectus Supplement may
be used by NationsBanc Capital Markets, Inc., an affili-
ate of the Sellers and the Servicer, in connection with
offers and sales related to market-making transactions in
the Securities. In connection with any such market-
making transactions in the Securities by NationsBanc
Capital Markets, Inc., all documents filed by or on
behalf of the related Trust pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended, subsequent to the date of this Prospec-
tus and prior the date of any offer and sale related to
such a market-making transaction shall be deemed incorpo-
rated by reference into this Prospectus and to be a part
hereof. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus
to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to
be incorporated by reference herein modifies or super-
sedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Sellers 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 any 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 docu-
ments). Requests for such copies should be directed to
[Name:____________; Address:___________] (Telephone:
( ) __-___).
SUMMARY
The following summary is qualified in its entirety
by reference to the detailed information appearing else-
where in this Prospectus and by reference to the informa-
tion with respect to the Securities of any series con-
tained in the related Prospectus Supplement to be pre-
pared 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."
ISSUER . . . . . With respect to each series of Secu-
rities, the Trust to be formed pur-
suant to either a Trust Agreement
(as amended and supplemented from
time to time, a "Trust Agreement")
among the Sellers and the Trustee
for such Trust (the "Trust" or the
"Issuer") or a Pooling and Servic-
ing Agreement (as amended and sup-
plemented from time to time, the
"Pooling and Servicing Agreement")
among the Trustee, the Sellers and
the Servicer.
SELLERS . . . . . NationsBank, N.A., NationsBank, N.A.
(South) ("NationsBank South") and
NationsBank of Texas, N.A.
("NationsBank Texas"), each a na-
tional banking association (each,
in such capacity, a "Seller" and a
"Bank" and, collectively, the
"Sellers" and the "Banks").
SERVICER . . . . NationsBank, N.A. in its capacity as
servicer (the "Servicer").
TRUSTEE . . . . . With respect to each series of Secu-
rities, the Trustee specified in
the related Prospectus Supplement.
INDENTURE TRUSTEE With respect to any applicable series
of Securities, the Indenture Trust-
ee specified in the related Pro-
spectus Supplement.
THE TRUST PROPERTY The property of each Trust will in-
clude a pool of retail motor vehi-
cle installment sales contracts
secured by new or used automobiles,
vans or light trucks (the "Receiv-
ables"), including rights to re-
ceive certain payments made with
respect to such Receivables, secu-
rity interests in the vehicles fi-
nanced thereby (the "Financed Vehi-
cles"), certain accounts, which
will include the Collection Account
and may include a Reserve Account
and/or a Yield Supplement Account,
and the proceeds thereof and any
proceeds from claims on certain
related insurance policies. On the
Closing Date specified in the re-
lated Prospectus Supplement with
respect to a Trust (the "Closing
Date"), the Sellers will sell or
transfer Receivables (the "Initial
Receivables") having an aggregate
principal balance specified in the
related Prospectus Supplement as of
the date specified therein (the
"Initial Cut-Off Date") to such
Trust pursuant to either a Sale and
Servicing Agreement among the Sell-
ers, the Servicer and the Trust (as
amended and supplemented from time
to time, a "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 Sellers, the
Servicer and the Trustee. The
property of each Trust will also
include amounts on deposit in cer-
tain trust accounts, including the
related Collection Account, any
Pre-Funding Account, any Yield Sup-
plement Account, any Reserve Ac-
count and any other account identi-
fied in the applicable Prospectus
Supplement.
THE RECEIVABLES . The Receivables will consist of a pool
of retail motor vehicle installment
sales contracts secured by new or
used automobiles or light trucks.
The Receivables for any given Receiv-
ables Pool arise or will arise from
loans originated by motor vehicle
dealers (the "Dealers") and purchased
by the Sellers pursuant to agreements
with the Dealers. The purchase
price for the Receivables purchased
by the Trust from the Sellers and by
the Seller or Sellers from a Dealer
may be more or less than the aggre-
gate principal balance thereof.
Subsequent Receivables. To the ex-
tent provided in the related Pro-
spectus Supplement, the Sellers
will be obligated (subject only to
the availability thereof) to sell,
and the related Trust will be obli-
gated to purchase (subject to the
satisfaction of certain conditions
described in the applicable Sale
and Servicing Agreement or Pooling
and Servicing Agreement), addition-
al Receivables (the "Subsequent
Receivables") from time to time (as
frequently as daily) during the
Funding Period specified in the
related Prospectus Supplement hav-
ing an aggregate principal balance
approximately equal to the amount
on deposit in the Pre-Funding Ac-
count (the "Pre-Funded Amount") on
the Closing Date. See "Risk Fac-
tors Risk Associated with Subse-
quent Receivables and the Pre-Fund-
ing Account" and "The Receivables
Pool Subsequent Receivables."
Simple Interest Receivables. Simple
Interest Receivables are receiv-
ables secured by new or used auto-
mobiles, vans or light trucks that
provide for the amortization of the
amount financed under the Receiv-
able over a series of fixed level
monthly payments (except that the
last such payment may be differ-
ent). Each monthly payment in-
cludes an installment of interest
which is calculated on the basis of
the outstanding principal balance
of the Receivable multiplied by the
stated Contract Rate and further
multiplied by the period elapsed
(as a fraction of a calendar year)
since the preceding payment of in-
terest was made.
Balloon Receivables. Balloon Receiv-
ables are monthly payment receiv-
ables secured by new or used auto-
mobiles, vans or light trucks that
provide for the amortization of the
amount financed under the Receiv-
able over a series of fixed level
monthly payments like a Simple In-
terest Receivable, but also re-
quires a final scheduled payment
due after payment of such monthly
installments which differs signifi-
cantly from the preceding fixed
level monthly installments. In
addition, the Balloon Receivables
provide that the related Obligor
may satisfy the final scheduled
payment by (1) paying the full
amount due on its due date; (2)
refinancing the amount of the final
scheduled payment subject to cer-
tain conditions; or (3) transfer-
ring the Financed Vehicle to the
Seller on behalf of the Trust in
satisfaction of the final scheduled
payment and paying a disposition
fee to the Servicer and any appli-
cable charges for excess wear and
tear and excess mileage. See
"Risk Factors Balloon Receivables;
Final Scheduled Payment Risk."
[NB-SPC] . . . . Prior to the first issuance of a
series of Securities that includes
Notes, the parent of the Sellers
will form a wholly-owned limited
purpose subsidiary ("[NB-SPC]") for
the limited purpose of purchasing a
portion of the Certificates issued
by each Trust that issues Notes,
acting as the general partner of
each such Trust for federal income
tax purposes and engaging in inci-
dental activities.
NO RECOURSE
TO SELLERS OR SERVICER The Receivables sold and assigned
to the applicable Trust will be sold
and assigned by the Sellers to such
Trust without recourse to the Sellers,
the Servicer or any of their respec-
tive affiliates for credit losses on
such Receivables. The Notes of any
series will represent obligations
solely of, and the Certificates of any
series will represent interests solely
in, the related Trust and neither the
Notes nor the Certificates of any se-
ries will be insured or guaranteed by
the Seller, the Servicer, the applica-
ble Trustee, any Indenture Trustee or
any other person or entity.
THE NOTES . . . . The terms of the Notes generally are
described below.
A. General . . . A series of Securities may include
one or more classes of Notes, which
will be issued pursuant to an In-
denture between the Trust and the
Indenture Trustee (as amended and
supplemented from time to time, an
"Indenture"). The related Prospec-
tus Supplement will specify which
class or classes, if any, of Notes
of the related series are being
offered thereby.
B. Denominations;
Book-Entry . Notes will be available for purchase
in the denominations specified in
the related Prospectus Supplement
and will be available in book-entry
form only. Noteholders will be
able to receive Definitive Notes
only in the limited circumstances
described herein or in the related
Prospectus Supplement. See "Book-
Entry and Definitive Securities;
Reports to
Securityholders Definitive Securi-
ties."
C. Note Interest Rate. Each class of Notes may have a stated
principal amount or notional amount
and may bear interest at a speci-
fied rate or rates (with respect to
each class of Notes, the "Note In-
terest Rate") or may not bear in-
terest. Each class of Notes may
have a different Note Interest
Rate, which may be a fixed, vari-
able or adjustable Note Interest
Rate, or any combination of the
foregoing. The related Prospectus
Supplement will specify the stated
principal amount, if any, and the
Note Interest Rate, if any, for
each class of Notes, or the method
for determining such Note Interest
Rate.
D. Characteristics With respect to a series that in-
cludes two or more classes of
Notes, each class may differ as to
the timing and priority of pay-
ments, allocations of losses, Note
Interest Rate or amount of payments
of principal or interest, or pay-
ments of principal or interest in
respect of any such class or class-
es may or may not be made upon the
occurrence of specified events or
on the basis of collections from
designated portions of the Receiv-
ables Pool. In addition, a series
may include one or more classes of
Notes ("Strip Notes") entitled to
(i) principal payments with dispro-
portionate, nominal or no interest
payments or (ii) interest payments
with disproportionate, nominal or
no principal payments.
E. Clean Up Call;
Redemption . If the Servicer exercises its option
to purchase the Receivables of a
Trust, in the manner and on the
respective terms and conditions
described under "Description of the
Transfer and Servicing Agree-
ments Termination," the outstanding
Notes will be redeemed as set forth
in the related Prospectus Supple-
ment.
F. Sale of Receivables;
Redemption . If the Servicer does not exercise its
option to purchase the Receivables
of a Trust, to the extent provided
in the related Prospectus Supple-
ment, the Servicer may obtain bids
for the purchase of the Receivables
in the manner and on the respective
terms described under "Description
of the Transfer and Servicing
Agreements -- Termination," and
upon any resulting sale of the Re-
ceivables the outstanding Notes
will be redeemed as set forth in
the applicable Prospectus Supple-
ment. No such bid will be accepted
unless, among other things, the
amount thereof shall be sufficient
to pay in full all outstanding
principal of and all accrued inter-
est on all Notes outstanding.
G. Pre-Funding Account
and Redemption. In addition, if the related Prospec-
tus Supplement provides that the
property of a Trust will include a
Pre-Funding Account (as such term
is defined in the related Prospec-
tus Supplement, the "Pre-Funding
Account"), one or more classes of
the outstanding Notes will be sub-
ject to partial redemption on or
immediately following the end of
the Funding Period (as such term is
defined in the related Prospectus
Supplement, the "Funding Period")
in an amount and manner specified
in the related Prospectus Supple-
ment. In the event of such partial
redemption, the Noteholders may be
entitled to receive a prepayment
premium from the Trust, in the
amount and to the extent provided
in the related Prospectus Supple-
ment.
THE CERTIFICATES The terms of the Certificates gener-
ally are described below.
A. General . . A series of Securities will include
one or more classes of Certificates
and may or may not include any
Notes. The related Prospectus Sup-
plement will specify which class or
classes, if any, of the Certificates
are being offered thereby.
B. Denominations;
Book-Entry or
Registered Form. Certificates will be available for
purchase in the denominations
specified in the related Prospectus
Supplement and may be available in
book-entry form. If Certificates
are issued in book-entry form, Cer-
tificateholders will be able to
receive Definitive Certificates
only in the limited circumstances
described herein or in the related
Prospectus Supplement. See "Book-
Entry and Definitive Securities;
Reports to Securityholders
Definitive Securities."
C. Certificate
Rate. Each class of Certificates may have a
stated Certificate Balance (with
respect to each class of Certifi-
cates, the "Certificate Balance")
and may accrue interest on such
Certificate Balance at a specified
rate (with respect to each class of
Certificates, the "Certificate
Rate"). Each class of Certificates
may have a different Certificate
Rate, which may be a fixed, vari-
able or adjustable Certificate
Rate, or any combination of the
foregoing. The related Prospectus
Supplement will specify the Certif-
icate Balance and the Certificate
Rate for each class of Certificates
or the method for determining the
Certificate Rate.
D. Characteristics With respect to a series that in-
cludes two or more classes of Cer-
tificates, each class may differ as
to the timing and priority of dis-
tributions, allocation of losses,
Certificate Rate or amount of dis-
tributions in respect of principal
or interest, or distributions in
respect of principal or interest in
respect of any such class or class-
es may or may not be made upon the
occurrence of specified events or
on the basis of collections from
designated portions of the Receiv-
ables Pool. In addition, a series
may include one or more classes of
Certificates ("Strip Certificates")
entitled to (i) distributions in
respect of principal with dispro-
portionate, nominal or no interest
distributions or (ii) interest dis-
tributions with disproportionate,
nominal or no distributions in re-
spect of principal.
E. Certificates
May Be Subor-
dinated to Notes
of the Same
Trust.......... 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 ex-
tent specified in the related Pro-
spectus Supplement.
F. Clean-Up Call;
Redemption If the Servicer exercises its option
to purchase the Receivables of a
Trust, in the manner and on the
respective terms and conditions
described under "Description of the
Transfer and Servicing Agree-
ments Termination," Certificate-
holders will receive as a prepay-
ment an amount in respect of the
Certificates as specified in the
related Prospectus Supplement.
G. Sale of Receivables;
Redemption If the Servicer does not exercise its
option to purchase the Receivables
of a Trust, to the extent provided
in the related Prospectus Supple-
ment the Servicer may obtain bids
for the purchase of the Receivables
in the manner and on the respective
terms described under "Description
of the Transfer and Servicing
Agreements -- Termination," and
upon any resulting sale of the Re-
ceivables Certificateholders will
receive a prepayment of principal
as set forth in the applicable Pro-
spectus Supplement. No such bid
will be accepted unless, among oth-
er things, the amount thereof shall
be sufficient to distribute in full
all outstanding principal of and
all accrued interest on all Certif-
icates outstanding.
H. Pre-Funding
Account and
Partial Pre-
payment....... In addition, if the related Prospec-
tus Supplement provides that the
property of a Trust will include a
Pre-Funding Account, Certificate-
holders may receive a partial pre-
payment of principal on or immedi-
ately following the end of the
Funding Period in an amount and
manner specified in the related
Prospectus Supplement. In the event
of such partial prepayment, the
Certificateholders may be entitled
to receive a prepayment premium
from the Trust, in the amount and
to the extent provided in the re-
lated Prospectus Supplement.
BOOK-ENTRY
REGISTRATION . . Each class of Securities of a given
series may be initially represented
by one or more certificates regis-
tered in the name of Cede & Co.
("Cede"), or any other nominee for
DTC set forth in the related Prospec-
tus Supplement (Cede, or such other
nominee, "DTC's Nominee"), and for
each such class, will not be regis-
tered in the names of the holders of
the Securities of such series or
their nominees. Because of this,
unless and until Definitive Securi-
ties for such series are issued,
holders of such Securities will not
be recognized by the Trustee or any
Indenture Trustee as "Certificate-
holders," "Noteholders" or
"Securityholders," as the case may be
(as such terms are used herein or in
the related Pooling and Servicing
Agreement or the related Indenture
and Trust Agreement, as applicable).
Hence, until Definitive Securities
are issued, holders of such Securi-
ties will be able to exercise the
rights of Securityholders only indi-
rectly through DTC and its partici-
pating organizations. See "Risk
Factors Book-Entry Registration;
Owners of Securities Not Recognized
as "Securityholders"" and "Book-Entry
and Definitive Securities; Reports to
Securityholders Book-Entry Registra-
tion,"and " Definitive Securities."
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: subordina-
tion of one or more other classes
of Securities, a Reserve Account,
over-collateralization, letters of
credit, credit or liquidity facili-
ties, surety bonds, guaranteed in-
vestment contracts, guaranteed rate
agreements, swaps or other interest
rate protection agreements, repur-
chase obligations, yield supplement
agreements, other agreements with
respect to third party payments or
other support, cash deposits or
other arrangements. Any form of
credit enhancement may have certain
limitations and exclusions from
coverage thereunder, which will be
described in the related Prospectus
Supplement.
RESERVE ACCOUNT . If so specified in the related Pro-
spectus Supplement, a Reserve Ac-
count may be created for the relat-
ed Trust with an initial deposit of
cash or certain investments having
a value equal to the amount speci-
fied in the related Prospectus Sup-
plement. To the extent specified
in the related Prospectus Supple-
ment, funds in the Reserve Account
will thereafter be supplemented by
the deposit of amounts remaining on
any Distribution Date after making
all other distributions required on
such date and any amounts deposited
from time to time from the
Pre-Funding Account in connection
with a purchase of Subsequent Re-
ceivables. Amounts in the Reserve
Account will be available to cover
shortfalls in amounts due to the
holders of those classes of Securi-
ties specified in the related Pro-
spectus Supplement in the manner
and under the circumstances speci-
fied therein. The related Prospec-
tus Supplement will also specify to
whom and the manner and circum-
stances under which amounts on de-
posit 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 Prospec-
tus Supplement) will be distribut-
ed.
PRE-FUNDING ACCOUNT If so specified in the related Pro-
spectus Supplement, the property of
each Trust may include monies on
deposit in a Pre-Funding Account,
which monies will be used to pur-
chase or otherwise acquire Subse-
quent Receivables from the Sellers
from time to time during the Fund-
ing Period specified in the related
Prospectus Supplement. The amount
that may be initially deposited
into a Pre-Funding Account may be
up to 100% of the net proceeds from
the sale of the Securities issued
by a Trust and the length of the
Funding Period may be up to one
year. The amount that may be ini-
tially deposited into a Pre-Funding
Account, and the length of a Fund-
ing Period, will be specified in
the related Prospectus Supplement.
YIELD SUPPLEMENT ACCOUNT;
YIELD SUPPLEMENT AGREEMENT
If so specified in the related Pro-
spectus Supplement, the Sellers, [NB-
SPC] or a third party will establish
a yield supplement account with the
related Indenture Trustee or applica-
ble Trustee for the benefit of the
holders of the related Securities (as
such term is defined in the related
Prospectus Supplement, the "Yield
Supplement Account"). Each Yield
Supplement Account will be designed
solely to hold funds that secure the
obligation of a Seller or other per-
son to make payments under a Yield
Supplement Agreement, as the case may
be, to provide payments to the
Securityholders in respect of Receiv-
ables the Contract Rate of which is
less than the Required Rate (as such
term is defined in the related Pro-
spectus Supplement, the "Required
Rate").
If so specified in the related Pro-
spectus Supplement, the Yield Sup-
plement Account will be created
with an initial deposit (the
"Yield Supplement Initial Deposit")
in an amount equal to the net pres-
ent value (discounted at a per an-
num rate specified in the related
Sale and Servicing Agreement or
Pooling and Servicing Agreement) of
the aggregate amount by which in-
terest on the principal balance of
each Initial Receivable for the
period commencing on the Initial
Cut-Off Date and ending with the
scheduled maturity of each Receiv-
able, assuming that payments on
such Receivables are made as sched-
uled and no prepayments are made,
at the Required Rate exceeds inter-
est on such principal balances at
the Contract Rate of each such Re-
ceivable (the "Yield Supplement
Amount" and, with respect to the
Initial Receivables, the "Required
Initial Yield Supplement Amount").
If a Yield Supplement Account and a
Pre-Funding Account are established
with respect to any Trust, the
Servicer, the Sellers and the re-
lated Indenture Trustee or applica-
ble Trustee, as the case may be,
may enter into a Yield Supplement
Agreement (as amended and supple-
mented from time to time, a "Yield
Supplement Agreement") pursuant to
which, on each Subsequent Transfer
Date, the Sellers will deposit into
the Yield Supplement Account an
amount (the "Additional Yield Sup-
plement Amount") equal to the net
present value (discounted at a per
annum rate specified in the related
Sale and Servicing Agreement or
Pooling and Servicing Agreement) of
the aggregate Yield Supplement
Amounts, if any, in respect of Sub-
sequent Receivables for the periods
commencing with the related Subse-
quent Cut-Off Date and ending with
the scheduled maturities of the
related Subsequent Receivables,
assuming that payments on such Re-
ceivables are made as scheduled and
no prepayments are made. The ag-
gregate of the Additional Yield
Supplement Amounts in respect of
the Subsequent Receivables is re-
ferred to herein as the "Required
Subsequent Yield Supplement Amount"
and, together with the Required
Initial Yield Supplement Amount,
the "Required Yield Supplement
Amount." See "Description of the
Transfer and Servicing Agree-
ments Credit and Cash Flow Enhance-
ment Yield Supplement Account;
Yield Supplement Agreement."
TRANSFER AND SERVICING
AGREEMENTS . . With respect to each Trust, the Sell-
ers will sell the related Receiv-
ables 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 servic-
ing, managing, maintaining custody
of and making collections on the
Receivables. The Servicer will un-
dertake certain administrative du-
ties under an Administration Agree-
ment with respect to any Trust that
has issued Notes.
To the extent provided in the related
Prospectus Supplement, with respect
to Simple Interest Receivables, the
Servicer may advance interest
shortfalls (an "Advance") and may
be entitled to reimbursement of
Advances from subsequent payments
on or with respect to the Receiv-
ables. If the related Prospectus
Supplement does not provide for the
making of Advances, such Prospectus
Supplement may provide that inter-
est shortfalls may be paid out of
funds withdrawn from the Reserve
Account (each an "Advance Reserve
Withdrawal").
The Sellers will be obligated to
repurchase any Receivable if the
interest of the applicable Trust in
such Receivable is materially and
adversely affected by a breach of
any representation or warranty made
by the Sellers with respect to the
Receivable, if the breach has not
been cured following the discovery
by or notice to the Sellers of the
breach.
To the extent provided in the related
Prospectus Supplement, the Servicer
will be obligated to purchase any
Receivable if, among other things,
it extends the date for final pay-
ment by the Obligor of such Receiv-
able beyond the last day of the
Collection Period immediately pre-
ceding the applicable Final Sched-
uled Maturity Date (as defined in
the related Prospectus Supplement,
the "Final Scheduled Maturity
Date"), changes the Contract Rate
or the total amount or number of
scheduled payments of such Receiv-
able or fails to maintain a first
priority perfected security inter-
est in the related Financed Vehi-
cle.
To the extent provided 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 princi-
pal balance of the related Receiv-
ables Pool, as set forth in the
related Prospectus Supplement, and
may, in addition, include certain
late fees, prepayment charges and
other administrative fees or simi-
lar charges, plus reinvestment pro-
ceeds on any payments received in
respect of the Receivables. See
"Description of the Transfer and
Servicing Agreements Servicing Com-
pensation and Expenses" herein and
in the related Prospectus Supple-
ment.
MATERIAL LEGAL ASPECTS
OF THE RECEIVABLES
Pursuant to the Transfer and Servicing
Agreements, NSI will hold the Receiv-
ables and the Receivable Files as
custodian for the Trustee following
the sale and assignment of the Re-
ceivables to the applicable Trust.
The Receivables will not be segregat-
ed or stamped, or otherwise marked,
to indicate that they have been sold
to the Trust. If another party pur-
chases (or takes a security interest
in) the Receivables for new value in
the ordinary course of business and
takes possession of the Receivables
without actual knowledge of the ap-
plicable Trust's interest, the pur-
chaser (or secured party) will ac-
quire an interest in the Receivables
superior to the interest of the
Trust.
In connection with the sale of Re-
ceivables to a Trust, security in-
terests in the Financed Vehicles
securing such Receivables will be
assigned by the Sellers to such
Trust; however, the certificates of
title to the Financed Vehicles will
not be amended to reflect the as-
signment to such Trust. As a re-
sult, such Trust may not have a
first priority perfected security
interest in the Financed Vehicles
securing the Receivables in some
states. If such Trust does not
have a first priority perfected
security interest in a Financed
Vehicle, its ability to realize on
such Financed Vehicle in the event
of a default may be adversely af-
fected. To the extent the security
interest is perfected, such Trust
will have a prior claim over subse-
quent purchasers of such Financed
Vehicles and holders of subsequent-
ly perfected security interests.
However, as against subsequent pur-
chasers who were to obtain physical
possession of the Receivables with-
out knowledge of their assignment
to the Trust or holders of liens
for repairs of Financed Vehicles or
for taxes unpaid by an Obligor un-
der a Receivable, or because of
fraud or negligence, such Trust
could lose the priority of its se-
curity interest or its security
interest in Financed Vehicles. See
"Risk Factors Risk of Superior In-
terests in Receivables and Financed
Vehicles" and "Certain Legal As-
pects of the Receivables Security
Interests in Vehicles."
Federal and state consumer protection
laws impose requirements upon cred-
itors 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 there-
on for any violation by the lender.
In each Sale and Servicing Agreement,
each Seller will make certain rep-
resentations and warranties with
respect to such Seller's rights in
and to the related Financed Vehi-
cles and the Trust's rights in and
to the Receivables conveyed by such
Seller as well as to the compliance
of such Receivables with federal
and state consumer laws. The
breach of such representations and
warranties with respect to a Re-
ceivable by a Seller may result in
such Seller being obligated to re-
purchase such Receivable.
TAX STATUS . . . Unless the Prospectus Supplement
specifies that the related Trust
will be treated as a grantor trust
or a "financial asset securitiza-
tion investment trust" ("FASIT"),
upon the issuance of the related
series of Securities, Special Tax
Counsel to such Trust will deliver
an opinion to the effect that, for
federal income tax purposes: (i)
any Notes of such series will be
characterized as debt and (ii) such
Trust will not be characterized as
an association (or a publicly trad-
ed partnership) taxable as a corpo-
ration. In respect of any such
series, each Noteholder, if any, by
the acceptance of a Note of such
series, will agree to treat such
Note as indebtedness, and each Cer-
tificateholder, by the acceptance
of a Certificate of such series,
will agree to treat such Trust as a
partnership in which such Certifi-
cateholder is a partner for federal
income tax purposes. Alternative
characterizations of such Trust and
such Certificates are possible.
A Note may be treated as having been
issued with original issue dis-
count, which may be included in the
holder's gross income. The sale of
a Note by the holder may result in
a gain or a loss depending on the
difference between the net sale
proceeds and the Noteholder's ad-
justed tax basis in the Note sold.
Certificateholders' will be re-
quired to take into account sepa-
rately such holder's allocated
share of income, losses, gains,
deductions and credits of the re-
lated Trust. Under certain circum-
stances, a Certificateholder's tax-
able income from the related Trust
could exceed the cash it is enti-
tled to receive from such Trust.
The sale of a Certificate by the
holder may result in a gain or a
loss depending upon the difference
between the net sale proceeds and
the Certificateholder's adjusted
tax basis in the Certificate sold.
If the Prospectus Supplement speci-
fies that the related Trust will be
treated as a grantor trust, upon
the issuance of the related series
of Certificates, Special Tax Coun-
sel to such Trust will deliver an
opinion to the effect that such
Trust will be treated as a grantor
trust for federal income tax pur-
poses and will not be subject to
federal income tax. With certain
exceptions, each Certificateholder
of such a Trust will be required to
report on its federal income tax
return its pro rata share of the
entire income of the related Trust
for the period during which it owns
a Certificate. The sale of a Cer-
tificate by the holder may result
in a gain or a loss depending on
the difference between the amount
realized on the sale and the ad-
justed basis of the holder in the
Receivables and other assets held
by the related Trust. Each such
opinion delivered by the Special
Tax Counsel referred to in this
paragraph and the preceding para-
graph will be filed with the Com-
mission either as an exhibit to the
Registration Statement by a post-
effective amendment to the Regis-
tration Statement, or as an exhibit
in a Current Report filed on Form
8-K.
In the event that legislation is
enacted providing for a federal
income tax election to be a FASIT,
a Trust may make such election and
Securities may be classified as
"regular interests" in a FASIT.
Any Securities that represent "reg-
ular interests" in a FASIT will be
classified as indebtedness for fed-
eral income tax purposes.
See "Federal Income Tax Consequences"
herein and in the related Prospec-
tus Supplement for additional in-
formation concerning the applica-
tion of federal tax laws.
ERISA CONSIDERATIONS
A fiduciary of any employee benefit
plan or other retirement arrangement
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"), should careful-
ly review with its legal advisors
whether the purchase or holding of
Notes or Certificates of any series
could give rise to a transaction
prohibited or not otherwise permissi-
ble under ERISA or Section 4975 of
the Code. See "ERISA Considerations"
herein and in the related Prospectus
Supplement.
MATERIAL RISKS . There are material risks associated
with an investment in the Securi-
ties. Prospective investors should
consider the factors set forth un-
der "Risk Factors" on pages __ to
__, and as are provided in the re-
lated Prospectus Supplement.
RATING OF THE SECURITIES
It is a condition to the issuance of
the Securities that the Notes be
rated in one of the four highest
investment rating categories by at
least two nationally recognized sta-
tistical rating organizations, and to
the issuance of the Certificates that
they be rated at or above the rating
specified in the applicable Prospec-
tus Supplement. However, the rating
agencies do not evaluate, and any
such rating will not address, the
likelihood that, in the case of the
Notes, the Note Prepayment Premium
will be paid, and in the case of the
Certificates, the Certificate Prepay-
ment Premium will be paid. In addi-
tion, there can be no assurance that
a rating will not be lowered or with-
drawn by a rating agency if circum-
stances so warrant.
LISTING . . . . . Except to the extent described in an
applicable Prospectus Supplement,
application will not be made to
list the Securities on a national
securities exchange or on the Lux-
embourg Stock Exchange. Except to
the extent described in the appli-
cable Prospectus Supplement, the
Securities will not be listed in
an automated quotation system of a
registered securities association.
RISK FACTORS
LIMITED LIQUIDITY
It is expected that upon the issuance of any
Securities, there will be no secondary market for such
Securities, and there can be no assurance that any such
secondary market will develop.
RISK OF SUPERIOR INTERESTS IN RECEIVABLES AND FINANCED
VEHICLES
The Receivables and Receivables Files Not Trans-
ferred to Trustee. The Receivables and the Receivables
Files (as defined below) will not be held by the applica-
ble Trustee, but rather will be held by Servicer or its
affiliate, NationsBank Services, Inc. ("NSI"), an indi-
rect wholly-owned subsidiary of NationsBank Corporation,
as custodian for the applicable Trustee. Due to adminis-
trative burden and expense associated with the segrega-
tion or the marking of individual receivables and receiv-
ables files, the Receivables and the Receivables Files
will not be segregated or marked or stamped to indicate
that the related Receivables have been sold and assigned
to the applicable Trust. The Sellers, however, will
cause financing statements to be filed with the appropri-
ate governmental authorities to perfect the interest of
each Trust as against the Sellers in respect of such
Trust's purchase of the Receivables in accordance with
the requirements of the Uniform Commercial Code in effect
in the states of North Carolina, Georgia and Texas (the
"UCC"). If, as a result of fraud or negligence on the
part of a Seller or the Servicer (and in violation of
covenants contained in the applicable Transfer and Ser-
vicing Agreement), a Receivable is sold (or a security
interest therein is granted) by a Seller to a purchaser
(or a secured party) for new value in the ordinary course
of business of such purchaser (or secured party) and such
purchaser (or secured party) takes possession of such
Receivable without actual knowledge of the applicable
Trust's interest, the purchaser (or secured party) will
acquire an interest in such Receivable superior to the
interest of the Trust. Such an acquisition of a superior
interest in the Receivables would deprive Certificate-
holders of the benefits of the ownership of the Receiv-
ables. The Sellers believe that it is customary for
Receivables and Receivables Files to not be segregated or
stamped or otherwise marked in connection with asset
securitizations of the type contemplated hereby. The
Sellers historically have not purchased pools of automo-
tive retail installment sale contracts similar to the
Receivables; however if any of the Sellers did so, the
Sellers believe that if the transferor of such install-
ment sales contracts were to retain servicing rights with
respect to such installment sale contracts, the transfer-
or would retain, and the applicable Seller would not take
possession of, the related receivables and receivables
files. In the event that a Seller were to purchase a
pool of automotive retail installment sale contracts
similar to the Receivables and were to also service such
installment sale contracts, the Sellers believe that the
applicable Seller would take possession of, the related
receivables and receivables files.
Certificates of Title Not Endorsed. Although the
Sellers will assign their security interests in the
Financed Vehicles to the applicable Trustee, the certifi-
cates of title or ownership with respect to the related
Financed Vehicles will not be endorsed or otherwise
amended to identify the Trust as the new secured party.
There exists a risk in not identifying the Trust or
Trustee as the new secured party on the certificate of
title or ownership that the first priority perfected
security interest of the Trust or Trustee may not be
enforceable. In the event the Trust has failed to obtain
or maintain a first priority perfected security interest
in a Financed Vehicle, its security interest would be
subordinate to, among others, a bankruptcy trustee of the
Obligor, a subsequent purchaser of the Financed Vehicle
or a holder of a first priority perfected security inter-
est. As a result, Certificateholders might not be able
to obtain the proceeds of the repossession and sale of an
affected Financed Vehicle. The Sellers believe that it
is customary for certificates of title or ownership to
not be endorsed or amended in connection with asset
securitizations of the type contemplated hereby. The
Sellers historically have not purchased pools of automo-
tive retail installment sale contracts similar to the
Receivables for their own account. In the event that a
Seller were to purchase such a pool of installment sales
contracts, the Sellers believe that, because of the
associated administrative burden and expense, the appli-
cable Seller would not generally require that the certif-
icates of title or ownership covering the related fi-
nanced vehicles be endorsed or amended to reflect that
the security interests in the related financed vehicles
have been assigned to the applicable Seller.
Certain Original Loan Documents Not Retained; Risk
of Prepayment. As part of its normal operating proce-
dures during the period from at least 1979 until January
4, 1996, after receiving Motor Vehicle Loan documents
from Dealers and after reviewing those documents,
NationsBank, N.A. microfilmed the manually signed origi-
nal Motor Vehicle Loan document and then destroyed the
manually signed original document; however, certificates
of title were not destroyed as part of these procedures.
In the event of a bankruptcy of a Dealer, a creditor of
such Dealer or the bankruptcy trustee of such Dealer
could assert that NationsBank, N.A., to the extent
NationsBank, N.A. was relying solely on possession as a
means of perfecting a first priority ownership interest
in such an affected Receivable, no longer had a perfected
ownership interest in such Receivable because it no
longer had the manually signed original Receivable docu-
ment as a result of its destruction of the manually
signed original Receivable document. If successful, such
assertion would render NationsBank, N.A. an unsecured
creditor of the Dealer in bankruptcy and as a result, the
transfer by NationsBank, N.A. to a Trust would be effec-
tive only to transfer such unsecured claim rather than a
first priority perfected ownership interest in such
Receivables. NationsBank, N.A. has agreed that if, after
the bankruptcy of a Dealer, the bankruptcy trustee of the
Dealer or any other creditor of such Dealer asserts that
NationsBank, N.A. did not have, or that the Trust does
not have, a first priority perfected ownership interest
in any such Receivable acquired by NationsBank, N.A. from
such Dealer and such assertion is related to NationsBank,
N.A.'s prior practice of retaining original Motor Vehicle
Loan documents only in microfilm form, NationsBank, N.A.
will repurchase such Receivable from a Trust at the
Purchase Amount. Such repurchase obligation would be a
general unsecured obligation of NationsBank, N.A. In
connection with any such repurchase by NationsBank, N.A.,
the Securities would be subject to prepayment to the
extent of the principal portion of any such payment made
by NationsBank, N.A.
POTENTIAL DELAYS OR REDUCTIONS IN PAYMENTS AS A RESULT OF
THE INSOLVENCY OF A SELLER
Subject to certain qualifications, to the extent
that a Trust has a valid perfected security interest in
the Receivables sold and assigned, such security interest
of the applicable Trustee should be enforceable (to the
extent of such Trust's "actual direct compensatory damag-
es") notwithstanding the insolvency of, or the appoint-
ment of a receiver or conservator for, a Seller, and
payments to such Trust with respect to the Receivables
sold and assigned by such Seller (up to the amount of
such damages) should not be subject to a stay of payment
or to recovery by such a conservator or receiver. If,
however, the conservator or receiver were to assert that
the security interest was unperfected or unenforceable,
or were to require the applicable Trustee to establish
its right to those payments by submitting to and complet-
ing administrative claims procedure established under the
United States Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA"), or the conservator or
receiver were to request a stay of proceedings with
respect to a Seller as provided under FIRREA, delays in
payments on the Securities and possible reductions in the
amount of those payments could occur. In addition, a
conservator or receiver of a Seller has the power under
FIRREA to repudiate contracts of such Seller. To the
extent a conservator or receiver of a Seller exercised
its right to repudiate the obligations of such Seller
under the applicable Transfer and Servicing Agreement,
the security interest of the applicable Trustee should
nevertheless be enforceable (to the extent of such
Trust's "actual direct compensatory damages"). It is
expected that in most cases "actual direct compensatory
damages" would include the outstanding principal on the
Securities issued by such Trust plus interest accrued
thereon to the date of payment. In the event of a repu-
diation of obligations, FIRREA provides that a claim for
the repudiated obligation is limited to "actual direct
compensatory damages" determined as of the date of the
appointment of the conservator or receiver. The FDIC has
not adopted a formal policy statement on payment of
principal and interest on collateralized borrowings of
banks which are repudiated. The Sellers believe that the
general policy of the FDIC in such circumstances is to
permit the collateral to be applied to pay the principal
owed plus interest at the contract rate up to the date of
payment, together with the costs of liquidation of the
collateral if provided for in the contract. In one case
involving the repudiation by the Resolution Trust Corpo-
ration of certain secured zero-coupon bonds issued by a
savings association, a United States federal district
court held that "actual direct compensatory damages" in
the case of a marketable security meant the value of the
repudiated bonds as of the date of repudiation. If such
court's view were applied to determine a Trust's "actual
direct compensatory damages" in the event a conservator
or receiver of a Seller repudiated its obligations under
a Transfer and Servicing Agreement, the amount paid to
Securityholders could, depending upon circumstances
existing on the date of the repudiation, be less than the
principal of the Securities and the interest accrued
thereon to the date of payment.
TRUST'S RELATIONSHIP TO THE SELLERS, NATIONSBANK CORPORA-
TION AND THEIR AFFILIATES
None of the Sellers, the Servicer, NSI, [NB-SPC] or
NationsBank Corporation or any of their affiliates is
generally obligated to make any payments in respect of
any Notes, the Certificates or the Receivables of a given
Trust.
However, in connection with the sale of Receivables
by the Sellers to a given Trust, the Sellers will make
representations and warranties with respect to the char-
acteristics of such Receivables and, in certain circum-
stances, the applicable Seller may be required to repur-
chase Receivables with respect to which such representa-
tions and warranties have been breached. See "Descrip-
tion 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 Ser-
vicing Agreements Servicing Procedures." Moreover, if
NationsBank, N.A. 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.
The related Prospectus Supplement may set forth
certain additional information regarding a Seller, the
Servicer, NSI, [NB-SPC] and NationsBank Corporation. In
addition, NationsBank Corporation 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
NationsBank Corporation reference is made to such reports
and other information, which are available as described
under "Available Information."
RISK OF CREDIT LOSSES ON RECEIVABLES
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
Pre-Funding Account, a Yield Supplement Account, a Re-
serve Account and any other credit or cash flow enhance-
ment. Consequently, holders of the Securities of any
series must rely for repayment upon payments on the
related Receivables and, if and to the extent available,
amounts on deposit in the Pre-Funding Account (if any),
the Yield Supplement Account (if any), the Reserve Ac-
count (if any) and any other credit or cash flow enhance-
ment, all as specified in the related Prospectus Supple-
ment. Amounts to be deposited in any such Reserve Ac-
count with respect to any Trust will be limited in
amount, and the amount required to be on deposit in such
Reserve Account will be reduced as the Pool Balance is
reduced. If such Reserve Account, or, to the extent
provided in an applicable Prospectus Supplement, any
other credit or cash flow enhancement is depleted, the
related Trust will depend solely on current payments on
its Receivables to make payments on the related Securi-
ties.
RISK OF SALE OF RECEIVABLES UPON EVENT OF DEFAULT
Following an acceleration of the Notes upon an Event
of Default the applicable Indenture Trustee may sell the
related Receivables in certain limited circumstances as
specified in the related Indenture. There is no assur-
ance that the market value of such Receivables will at
any time be equal to or greater than the aggregate prin-
cipal amount of such outstanding Notes and the aggregate
principal amount of Certificates issued by the related
Trust. As a result, upon an Event of Default with re-
spect to the Notes of any series, there can be no assur-
ance that sufficient funds will be available to repay the
related Noteholders or Certificateholders in full. In
addition, the amount of principal required to be paid to
Noteholders of such series under the related Indenture
will generally be limited to amounts available to be
deposited in the applicable Note Payment Account. There-
fore, unless otherwise specified in the related Prospec-
tus 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 Distribu-
tion Date for such class of Notes.
BALLOON RECEIVABLES; FINAL SCHEDULED PAYMENT RISK
The Balloon Receivables provide that the Obligors
may satisfy the final scheduled payment thereon by (1)
paying the full amount on its due date; (2) refinancing
the amount of the final scheduled payment through a
modification agreement; or (3) transferring the Financed
Vehicle to the Seller on behalf of the Trust in satisfac-
tion of the final scheduled payment and paying any appli-
cable charges for excess wear and tear and excess mileage
and paying a disposition fee to the Seller. The final
scheduled payment on a Balloon Receivable is determined
by the applicable Seller at the time the related retail
installment sales contract is entered into based on the
Seller's projection of the anticipated end of term whole-
sale value of the vehicle that is being financed under
such contract. [With respect to Balloon Receivables, if
so provided in the related Prospectus Supplement, only
the principal and interest payments due prior to the
final scheduled payment and not the final scheduled
payment will be included in such Trust; the final sched-
uled payment will be retained by the applicable Seller.
However, in the case of a Trust that is not a grantor
trust, each Seller will have the option to transfer the
final scheduled payments with respect to the related
Balloon Receivables retained by such Seller to such Trust
and to cause such Trust to issue certificates represent-
ing interests in such final scheduled payments or indebt-
edness secured by such final scheduled payments.]
[With respect to each Trust to which final scheduled
payments have been transferred, if, at the end of the
applicable retail installment sales contract, the Obligor
on a Balloon Receivable elects to pay the final scheduled
payment in full in cash [or by refinancing], the entire
amount of such final scheduled payment will be deposited
as a collection on the Receivable. [In the case of a
refinancing, [the applicable Seller will make a payment
to the Trust in satisfaction of the final scheduled
payment][the term of the related Receivable will be
extended by the number of months necessary to amortize
the then remaining principal balance, bearing interest at
the existing Contract Rate, with a monthly payment equal
to the regular monthly payment required under such Bal-
loon Receivable]. If the Obligor elects to If the Obligor
elects the option to transfer the Financed Vehicle to the
Seller thereof on behalf of the Trust in satisfaction of
the final scheduled payment and pay any applicable charg-
es for excess wear and tear and excess mileage, it must
also pay a disposition fee to the Servicer, which the
Servicer will retain. The Servicer will then sell the
Financed Vehicle at wholesale, by either public or pri-
vate sale. Such sale proceeds plus amounts paid in
respect of excess wear ant tear and excess mileage will
be transferred to the applicable Trust. Under the relat-
ed retail installment sales contracts for such Balloon
Receivables, such sale proceeds and amounts are deemed to
satisfy in full the Obligor's obligation to make the
final scheduled payment. Consequently, in the event that
such proceeds and amounts are less than the related final
scheduled payments transferred to the Trust, none of the
Sellers, the Servicer, or the Trust will have any re-
course to the Obligor for any shortfall, nor will the
Sellers or the Servicer have any obligation to pay any
such shortfall to the Trust.]
The Servicer's continued operation of its existing
business will affect the Trust's ability to realize in
cash the amount of any final scheduled payments which
have been transferred to the Trust. The Sellers are
obligated, to the extent that each offers vehicle financ-
ing, to offer an option to an Obligor to refinance the
final scheduled payment on a Balloon Receivable purchased
by the Seller and transferred to the Trust. If an Obli-
gor elects the refinancing option, [the related Seller
will deposit into the Collection Account of the Trust an
amount equal to the final scheduled payment for the
Balloon Receivable at the time of such refinancing] [the
term of the Balloon Receivable may be extended as de-
scribed above]. The Securityholders will bear all rein-
vestment risk associated with the receipt by the Trust of
any such refinancing proceeds and as well will bear all
risks associated with any increase in the weighted aver-
age maturity of the Securities which may occur as a
result of any such modifications to Balloon receivables.]
MATURITY AND PREPAYMENT CONSIDERATIONS
All the Receivables are prepayable at any time.
(For this purpose the term "prepayments" includes prepay-
ments 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 credit 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 the fact that an Obligor generally may
not sell or transfer the Financed Vehicle securing a
Receivable without the consent of the applicable Seller.
The rate of prepayment on the Receivables may also be
influenced by the structure of the loan. In addition,
under certain circumstances, the applicable Seller will
be obligated to repurchase Receivables pursuant to a Sale
and Servicing Agreement or Pooling and Servicing Agree-
ment 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 Servic-
ing Agreement as a result of breaches of certain cove-
nants. See "Description of the Transfer and Servicing
Agreements Sale and Assignment of Receivables." Consis-
tent with its normal servicing practices and procedures,
the Servicer may, in its discretion and on a case-by-case
basis, arrange with Obligors to extend or modify the
terms of the related Receivables. Some of such arrange-
ments (including any extension beyond the Final Scheduled
Maturity Date set forth in the related Prospectus Supple-
ment) will cause the Servicer to be obligated to repur-
chase such Receivables, as described above. Any rein-
vestment risks resulting from a faster or slower inci-
dence 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" re-
garding the Servicer option to purchase the Receivables
of a given Receivables Pool and " Insolvency Event or
Dissolution" regarding the sale of the Receivables owned
by a Trust that is not a grantor trust if an Insolvency
Event or a dissolution with respect to [NB-SPC] occurs.
RISK OF PREPAYMENT AND POSSIBLE ADVERSE EFFECT ON YIELD
The yield on the Strip Notes will be extremely
sensitive to the rate and timing of payments (including
prepayments) on the Receivables. An investor purchasing
a Strip Note which receives interest distributions and no
or nominal principal distributions at a significant
premium could, under certain prepayment scenarios, fail
to recoup its original investment. The yield to maturity
on any Strip Notes which receives principal distributions
and no or nominal interest distributions will be adverse-
ly affected by a lower than anticipated rate of payment
on the related Receivables Pool. The reinvestment risk
of an investment in any Strip Note will be borne solely
by the investor.
The weighted average life of any class of Notes
described in the related Prospectus Supplement as a
companion class to either a specified planned amortiza-
tion class of Notes or targeted amortization class of
Notes will be extremely sensitive to decreases or in-
creases in the rate of payment on the Receivables. The
weighted average life of such a class of Notes generally
will be shortened if the rate of payment on the related
Receivables Pool increases and such weighted average life
will generally increase if the rate of payment on the
related Receivables Pool decreases. Any such change in
the weighted average life of such a class of Notes will
effect the yield to maturity of an investor in such
Notes.
Any ratings assigned to any class of Notes by a
Rating Agency will reflect only such Rating Agency's
assessment of the likelihood that timely distributions
will be made with respect to such Notes in accordance
with the applicable Transfer and Servicing Agreement and,
if applicable, the related Indenture. Such rating will
not constitute an assessment of the likelihood that
principal prepayments on the Receivables will occur or of
the degree to which the rate of such prepayments might
differ from that originally anticipated. As a result,
such rating will not address the possibility that prepay-
ment rates higher or lower than anticipated by an inves-
tor may cause such investor to experience a lower than
anticipated yield or that any investor in a Strip Note
which is entitled to receive interest distributions but
no or nominal principal distributions which Note was
purchased at a significant premium might fail to recoup
its investment.
RISK OF SHORTFALLS AND PREPAYMENTS DUE TO DELINQUENCIES
AND REPOSSESSIONS
Delinquencies on the Receivables will result in
shortfalls in distributions to Securityholders unless
such shortfalls are covered by Advances (which will not
be made if the Servicer does not expect to recover the
amount advanced), withdrawals from a Reserve Account or
from the Yield Supplement Account, available cashflow
from other non-delinquent Receivables, or any other
credit or yield enhancement. The delinquency experience
of the Receivables may be affected by general or regional
economic conditions as well as by the underwriting and
servicing expertise of the Servicer. If a delinquency on
a Receivable is not remedied, the Servicer will generally
cause the related Financed Vehicle to be repossessed and
resold. The proceeds of any such liquidation will be
distributed to the holders of the Securities in the
manner described in the related Prospectus Supplement and
will generally have the effect of a principal prepayment
in respect of the liquidated Receivable. There can be no
assurance that the future delinquency, repossession and
loss experience of the Receivables will be similar to any
set forth in a related Prospectus Supplement for such
Securities.
GEOGRAPHIC CONCENTRATION
Economic conditions in states where Obligors reside
may affect the delinquency, loan loss and repossession
experience of a Trust with respect to the related Receiv-
ables. An applicable Prospectus Supplement will set forth
summary information derived from the Sellers' records
indicating the relative geographic concentration by
principal balance of the Receivables in any state where a
significant proportion of the mailing addresses of the
Obligors with respect to the related Receivables are
located. A disproportionate geographic concentration
could cause economic conditions in the such locations to
have a disproportionate impact on a Trust.
RISK OF COMMINGLING
With respect to each Trust, the Servicer will depos-
it all payments on the related Receivables received from
Obligors and all proceeds of the related Receivables
collected during each Collection Period into the related
Collection Account not later than the business day after
receipt. However, so long as NationsBank, N.A. is the
Servicer and provided that (i) there exists no Event of
Servicing Termination and (ii) each other condition to
making monthly deposits as may be required by the related
Sale and Servicing Agreement or Pooling and Servicing
Agreement is satisfied, the Servicer may retain such
amounts until the applicable Distribution Date. The
Servicer or the Seller, as the case may be, will remit
the aggregate Purchase Amount of any Receivables to be
purchased from a Trust to the related Collection Account
on the applicable Distribution Date. Pending deposit
into the Collection Account, collections may be employed
by the Servicer at its own risk and for its own benefit
and will not be segregated from its own funds. 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 remit-
tances of collections on the related Receivables and
payment of the aggregate Purchase Amount with respect to
Receivables purchased by the Servicer.
RISKS ASSOCIATED WITH SUBSEQUENT RECEIVABLES AND THE PRE-
FUNDING ACCOUNT
If so specified in the applicable Prospectus Supple-
ment, the property of a Trust may include monies on
deposit in a Pre-Funding Account, which monies will be
used to purchase or otherwise acquire Subsequent Receiv-
ables from the Sellers from time to time during the
Funding Period specified in the related Prospectus Sup-
plement. If a Pre-Funding Account is included in the
property of a Trust, the ability of the Sellers to gener-
ate Subsequent Receivables to be conveyed to such Trust
will affect the amount on deposit in such account which
is not applied to the conveyance of Subsequent Receiv-
ables during the Funding Period. Such Funding Period may
be up to one year in length. At the end of the Funding
Period, the holders of Securities issued by such Trust
may receive a prepayment of principal in an amount equal
to the amount remaining in the Pre-Funding Account. The
reinvestment risk associated with any such distribution
of principal will be borne by the holders of the Securi-
ties issued by such Trust. The amount that may be ini-
tially deposited into a Pre-Funding Account may be up to
100% of the net proceeds from the sale of the Securities
issued by a Trust. There is no limitation on the per-
centage of a Trust's property which may be represented by
amounts on deposit in a Pre-Funding Account and conse-
quently, there is no limitation on the percentage of a
series or class of Securities which may be represented by
amounts on deposit in a Pre-Funding Account. Amounts on
deposit in any Pre-Funding Account may be invested only
in Permitted Investments. To the extent provided in the
related Prospectus supplement, the Sellers will apply
their usual and customary credit underwriting standards
in connection with the origination of any Subsequent
receivable. To the extent that amounts on deposit in the
Pre-Funding Account have not been fully applied to the
conveyance of Subsequent Receivables to a Trust by the
end of the Funding Period and such amount exceeds the
applicable amount described in the related Prospectus
Supplement, the holders of Securities issued by the
related Trust will receive, on the Distribution Date on
or immediately following the last day of the applicable
Funding Period, a prepayment of principal in an amount
equal to the amount remaining in the Pre-Funding Account
following the purchase of any Subsequent Receivables on
such Distribution Date. It is anticipated that the
principal balance of Subsequent Receivables sold to a
Trust will not be exactly equal to the amount on deposit
in the Pre-Funding Account, and that therefore there will
be at least a nominal amount of principal prepaid to the
holders of the Securities issued by such Trust. Holders
of Securities issued by a Trust the property of which
includes a Pre-Funding Account will bear the reinvestment
risk associated with any such distribution of amounts on
deposit in the Pre-Funding Account after the termination
of the applicable Pre-Funding Period. Any such distribu-
tion will have the effect of a prepayment on the related
Receivables and will result in a reduction in the yield
to maturity of any class of Securities to which such
amounts are distributed.
EVENT OF SERVICING TERMINATION; RIGHTS OF NOTEHOLDERS
With respect to a series of Securities that includes
Notes, in the event that an Event of Servicing Termina-
tion occurs, the Indenture Trustee or the Noteholders
with respect to such series, as described under "Descrip-
tion of the Transfer and Servicing Agreements Rights
upon Event of Servicing Termination," 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 an Event of Servicing Termination occurs and any Notes
are outstanding. In addition, the Noteholders of such
series have the ability, with certain specified excep-
tions, 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
Events of Servicing Termination." In the event of an
Event of Servicing Termination, if a conservator or
receiver is appointed for the Servicer, and no Event of
Servicing Termination other than such conservatorship or
receivership or insolvency of the Servicer exists, the
conservator or receiver may have the power to prevent a
transfer of servicing to a successor Servicer.
BOOK-ENTRY REGISTRATION; OWNERS OF SECURITIES NOT RECOG-
NIZED AS "SECURITYHOLDERS"
If so specified in the related Prospectus Supple-
ment, each class of Securities of a given series will be
initially represented by one or more certificates regis-
tered in the name of 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 recog-
nized by the Trustee or any Indenture Trustee as "Certif-
icateholders," "Noteholders" or "Securityholders," as the
case may be (as such terms are used herein or in the
related Pooling and Servicing Agreement or the related
Indenture and Trust Agreement, as applicable). Hence,
until Definitive Securities are issued, holders of such
Securities will be able to exercise the rights of
Securityholders only indirectly through DTC and its
participating organizations. See "Book-Entry and Defini-
tive Securities; Reports to Securityholders Book-Entry
Registration" and " Definitive Securities."
THE TRUSTS
With respect to each series of Securities, the
Sellers will establish a separate Trust pursuant to the
respective Trust Agreement or Pooling and Servicing
Agreement, as applicable, for the transactions described
herein and in the related Prospectus Supplement. The
property of each Trust will include a pool (a "Receiv-
ables Pool") of retail motor vehicle installment sales
contracts purchased by the Sellers from Dealers and all
payments received thereunder after the applicable Cut-Off
Date. The Receivables of each Receivables Pool were or
will be originated by the Dealers in accordance with
Sellers' requirements and purchased by the Sellers pursu-
ant to agreements with Dealers and any assignments and
other documents related thereto ("Dealer Agreements").
Pursuant to the Dealer Agreements, the Dealers are obli-
gated to repurchase from the Sellers Receivables which do
not meet certain representations made by the Dealers.
The Receivables of each Receivables Pool will continue to
be serviced by the Servicer and evidence indirect financ-
ing made available by the applicable Seller to the
obligors under the Receivables (the "Obligors").
On the applicable Closing Date, after the issuance
of the Certificates and any Notes of a given series, the
Sellers will sell the Initial Receivables of the applica-
ble Receivables Pool to the Trust to the extent, if any,
specified in the related Prospectus Supplement. To the
extent so provided in the related Prospectus Supplement,
Subsequent Receivables will be conveyed to the Trust as
frequently as daily during the Funding Period. Any
Subsequent Receivables so conveyed will also be assets of
the applicable Trust, subject to the prior rights of the
related Trustee or, where applicable, the Indenture
Trustee and the Noteholders, if any, therein. The prop-
erty 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 Agree-
ment and the proceeds of such accounts, as described
herein and in the related Prospectus Supplement; (ii)
security interests in the Financed Vehicles and any
accessions thereto; (iii) the rights to proceeds from
claims on certain physical damage, credit life and credit
disability insurance policies covering the Financed
Vehicles or the Obligors, as the case may be; (iv) cer-
tain rights of the Trust to receive payments from the
Reserve Account, if any, and pursuant to any applicable
Yield Supplement Agreement; (v) any property that shall
have secured a Receivable and that shall have been ac-
quired by the applicable Trust; (vi) certain of the
rights of each of the Sellers relating to the repurchase
of Receivables under each Dealer Agreement and under the
documents and instruments contained in the Receivable
Files; (vii) rebates of premiums and other amounts relat-
ing to certain insurance policies and other items fi-
nanced under the Receivables, in each case to the extent
applied to reduce the principal balance of the related
Receivable; (viii) the rights of the applicable Trust
under the Sale and Servicing Agreement or the Pooling and
Servicing Agreement, as the case may be; and (ix) any and
all proceeds of the foregoing; provided that, with re-
spect to any series of Notes, the relevant rights and
benefits with respect to such property will be assigned
by the Sellers and the applicable Trustee to the entity
acting as the Indenture Trustee for the benefit of the
related Noteholders. Any Yield Supplement Account will
be maintained with the related Indenture Trustee or
applicable Trustee, as the case may be, for the benefit
of the related Securityholders. If so specified in the
related Prospectus Supplement, a Yield Supplement Account
may not be part of the property of the related Trust. To
the extent specified in the related Prospectus Supple-
ment, a Pre-Funding Account, a Reserve Account or other
form of credit enhancement may be a part of the property
of any given Trust or may be held by the entity acting as
the Trustee or an Indenture Trustee for the benefit of
holders of the related Securities. Additionally, pursu-
ant 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 Receiv-
ables held by each Trust and will receive fees for such
services. See "Description of the Transfer and Servicing
Agreements Servicing Compensation and Expenses" herein
and in the related Prospectus Supplement. To facilitate
servicing and to minimize administrative burden and
expense the Servicer will retain physical possession of
the Receivables held by each Trust and documents relating
thereto as custodian for each such Trust. Due to the
administrative burden and expense, the certificates of
title to the Financed Vehicles will not be amended to
reflect the assignment of the security interest in the
Financed Vehicles to each Trust. In the absence of such
amendment, any Trust may not have a first priority per-
fected security interest in the Financed Vehicles in all
states. See "Certain Legal Aspects of the Receiv-
ables Security Interests in Vehicles." Neither the Trust-
ee nor any Indenture Trustee will be responsible for the
legality, validity, or enforceability of any security
interest in any Financed Vehicle. 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 Certifi-
cates 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 Receiv-
ables, 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 first
priority perfected security interests in the Financed
Vehicles in all states, may affect the Servicer ability
to repossess and sell the collateral securing the Receiv-
ables, 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 Agree-
ments 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 applicable Prospectus
Supplement.
THE TRUSTEE
The Trustee for each Trust will be specified in the
related Prospectus Supplement. The Trustee's liability
in connection with the issuance and sale of the related
Securities is limited solely to the express obligations
of such Trustee set forth in the related Trust Agreement
and the Sale and Servicing Agreement or the related
Pooling and Servicing Agreement, as applicable. A Trust-
ee may resign at any time, in which event the Servicer,
or its successor, will be obligated to appoint a succes-
sor trustee. The Administrator in respect 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 Adminis-
trator 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 Sellers purchase fixed rate simple interest
retail motor vehicle installment sales contracts secured
by new and used automobiles, vans and light-duty trucks
("Motor Vehicle Loans") from Dealers in at least 15
states and the District of Columbia. These originations
occur through Dealer Financial Services Group ("DFSG"), a
functional group that includes personnel employed by the
Sellers and other affiliates of NationsBank Corporation.
All Motor Vehicle Loan applications are reviewed for
acceptance by DFSG in accordance with DFSG's established
underwriting policies, as described below, and are not
purchased by a Seller unless approved by DFSG.
DFSG establishes and maintains relationships with
the Dealers. DFSG selects each Dealer from whom the
Sellers purchase motor vehicle loans based upon the
Dealer's commercial reputation, the prior experience of
the Dealer or predecessor organization and, if needed, a
financial review of the Dealer. Generally, Dealer portfo-
lio performance is monitored monthly and, for the largest
Dealers, reviewed annually. All Dealers from whom any of
the Sellers purchase Motor Vehicle Loans must execute a
dealer agreement with each such Seller which sets out,
among other things, the guidelines and procedures of the
purchasing process. Such agreements provide for the
repurchase by the Dealer of any Motor Vehicle Loan if any
representations or warranties made by the Dealer relating
to the Motor Vehicle Loan are breached.
The Receivables to be held by each Trust will be
selected from the Sellers' portfolio for inclusion in a
Receivables Pool by several criteria, including that each
Receivable (i) is secured by a new or used vehicle, (ii)
was originated in the United States, (iii) provides for
level monthly payments (except that, if so provided in
the related Prospectus Supplement, the last monthly
payment may, in the case of Balloon Receivables, be a
final scheduled payment that is more than minimally
different from the preceding level monthly payments)
that fully amortize the amount financed over its original
term to maturity, (iv) is a Simple Interest Receivable
and (v) satisfies the other criteria, if any, set forth
in the related Prospectus Supplement. No selection
procedures believed by the Sellers to be adverse to the
Noteholders or the Certificateholders of any series were
or will be used in selecting the related Receivables.
All terms of the retail motor vehicle installment sales
contracts constituting such Receivables which are materi-
al to investors are described herein and in the related
Prospectus Supplement.
"Simple Interest Receivables" are receivables that
provide for the amortization of the amount financed under
the Receivable over a series of fixed level monthly
payments (except that the last such payment may be dif-
ferent). Each monthly payment includes an installment of
interest which is calculated on the basis of the out-
standing principal balance of the Receivable multiplied
by the stated Contract Rate and further multiplied by the
period elapsed (as a fraction of a calendar year) since
the preceding payment of interest was made. As payments
are received under a Simple Interest Receivable, the
amount received is applied first to late fees and other
fees and charges, if any, second to interest accrued and
unpaid 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, thereby having the
effect of a prepayment. 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 correspond-
ingly less. In either case, the Receivables provide for
the Obligor to pay a fixed monthly installment until the
final scheduled payment date, at which time the amount of
the final installment is increased or decreased as neces-
sary to repay the then outstanding principal balance.
"Balloon Receivables" are monthly payment receiv-
ables secured by new or used automobiles, vans or light
trucks with a final scheduled payment which differs
significantly from the scheduled monthly payments. The
final scheduled payment on a Balloon Receivable is deter-
mined by the applicable Seller at the time the related
retail installment sales contract is entered into based
on the Seller's projection of the anticipated end of term
wholesale value of the vehicle that is being financed
under such contract. Each Balloon Receivable provides
for amortization of the loan over a series of fixed level
payment monthly installments like a Simple Interest
Receivable, but also requires a final scheduled payment
due after payment of such monthly installments which
differs significantly from the preceding fixed level
monthly installments. In addition, the Balloon Receiv-
ables provide that the Obligors may satisfy the final
scheduled payment by (1) paying the full amount on its
due date; (2) refinancing the amount of the final sched-
uled payment; or (3) transferring the Financed Vehicle to
the Seller on behalf of the Trust in satisfaction of the
final scheduled payment and paying a disposition fee to
the Seller and any applicable charges for excess wear and
tear and excess mileage.
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 Contract Rate and by the states of
Obligor addresses, the portion of such Receivables Pool
not consisting of Simple Interest Receivables and the
portion of such Receivables Pool secured by new vehicles
and by used vehicles.
SUBSEQUENT RECEIVABLES
Subsequent Receivables may be originated by the
Dealers at a later date using credit criteria different
from those which were applied to any Initial Receivables
and may be of a different credit quality and seasoning.
In addition, following the transfer of Subsequent Receiv-
ables to the applicable Trust, the characteristics of the
entire pool of Receivables included in such Trust may
vary significantly from those of the Initial Receivables
transferred to such Trust. See "Risk Factors Risks
Associated with Subsequent Receivables and the Pre-Fund-
ing Account." Each Prospectus Supplement will describe
the effects including such Subsequent Receivables may
have on the Receivables Pool included in the Trust Prop-
erty of each Trust issuing Securities. Regular periodic
information regarding the Subsequent Receivables will be
included under Item 5 in each Current Report filed on
Form 8-K with the Commission pursuant to the Exchange Act
and with respect to each Trust to which Subsequent Re-
ceivables have been transferred.
UNDERWRITING
The underwriting policies utilized by DFSG take into
account each prospective obligor's historical credit
performance, current ability to pay and overall
creditworthiness, as well as the asset value of the motor
vehicle that is to secure the Motor Vehicle Loan. Prior
to each loan origination, DFSG reviews the loan applica-
tion transmitted to it from the Dealer. Each applicant
for a Motor Vehicle Loan must complete and sign a loan
application, providing the applicant's name, address,
source and amount of monthly income, among other informa-
tion. For each loan application, DFSG's underwriting
decision relies on the results of an objective credit
scoring system, underwriting guidelines with established
tolerances for advances, loan to value, term and capacity
to repay and, typically, a credit analyst's judgement to
assess an applicant's ability to repay the loan. In
addition, attention is paid to the current value and
expected depreciation of the related motor vehicle.
In evaluating an application, items such as the
interest rate charged on the loan, the term of the loan,
and the required down payment are structured by the
credit analyst based upon the perceived creditworthiness
of the applicant and other underwriting guidelines,
including the customized credit grade (consisting of a
credit score based on a proprietary credit scorecard and
a credit score obtained from a credit bureau), the pres-
ence or absence of any derogatory credit events, and the
capacity of the obligor to repay (evaluating the amount
of the proposed loan measured against income, overall
indebtedness and monthly cash flow). Generally, the
amount advanced on a specific loan is based upon guide-
lines for the percentage (which may vary based on the
obligor's credit quality) of the manufacturer's invoice
price (for new vehicles) or the wholesale value (for used
vehicles) versus the credit quality of the obligor,
maximum funding limits for the funding of warranty and
insurance products and the downpayment amount. DFSG
communicates the decision to approve or decline a loan to
the Dealer. Motor Vehicle Loans funded by the Dealers
based on a Seller's purchase commitment are typically
purchased by the applicable Seller within two business
days of such funding.
There is no required relationship between the out-
standing principal balance of any Receivable included in
a Trust and the value of the Financed Vehicle securing
such Receivable.
SERVICING AND COLLECTIONS
DFSG services all of the Motor Vehicle Loans. The
servicing functions include customer service, document
file keeping, Motor Vehicle Loan record keeping, vehicle
title processing and collections. DFSG's servicing poli-
cies and practices may change from time to time in accor-
dance with the Sellers' and DFSG's business judgment.
Servicing of Motor Vehicle Loans, including payment
processing, collateral monitoring, and maintenance of
computer systems is conducted by DFSG on a regional basis
from Dallas, Texas and Greensboro, North Carolina. Col-
lections are handled centrally from DFSG's headquarters
in Greensboro, North Carolina. All obligors on Motor
Vehicle Loans are given coupon books to remit with their
scheduled payments. The use of coupon books aids in the
efficient and timely processing of payments through
DFSG's operations and systems. Payments on the Motor
Vehicle Loans are generally received by DFSG through lock
box accounts, designated post office boxes, direct debit
to bank accounts, and customer service centers.
If a Motor Vehicle Loan becomes delinquent, it is
interfaced from the consumer loan system to the collec-
tion system, each operated by DFSG. The collection system
utilizes behavioral scoring methodology to assess the
risk of loss and to establish a collection strategy. The
strategy addresses the optimal timing and method for
written and verbal communications with the delinquent
obligor. Delinquent accounts may receive an initial
contact as early as four days or as late as 21 days
following delinquency. The lower risk collection strate-
gies use autodialers to contact the delinquent obligor;
higher risk collection strategies use direct telephone
contact and/or direct mail correspondence.
Generally, accounts that remain delinquent for 45 to
60 days, or are otherwise recognized by DFSG's collec-
tions personnel as having an otherwise serious delinquen-
cy problem, are considered for liquidation. To minimize
losses on liquidation, DFSG has a dedicated unit estab-
lished to manage the liquidation of collateral effective-
ly. This group principally contracts with outside agen-
cies to acquire the collateral and transport it to a
selected wholesale auction. DFSG controls the auction
selection process through evaluations that include size,
location and recent wholesale activity. Vendor service is
monitored closely on an individual motor vehicle unit
basis to ensure that an overall goal of averaging 90% of
a standardized wholesale market value is attained and
that motor vehicles remain in inventory on average less
than 45 days. These guidelines are strictly monitored by
the DFSG group with vendors not meeting the guidelines
being removed.
Deficiencies remaining after liquidation may be
pursued by DFSG on behalf of the applicable Seller in
various ways, including settlement and payment arrange-
ments, litigation, post-judgment initiatives and collec-
tion agency referrals. Generally, if a motor vehicle has
been repossessed, the Motor Vehicle Loan is charged off
90 days after repossession or when repossession proceeds
have been received, whichever is earlier. If a motor
vehicle has not been repossessed, the Motor Vehicle Loan
is generally charged off when the loan is 120 days delin-
quent.
PHYSICAL DAMAGE INSURANCE
The Sellers and DFSG discontinued placing physical
damage insurance on uninsured accounts effective April 8,
1994. Although DFSG continues to confirm insurance on the
motor vehicle at the inception of each Motor Vehicle
Loan, it no longer tracks the maintenance of insurance
after that date.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Certain information concerning the Sellers' experi-
ence with respect to their portfolio of Motor Vehicle
Loans (including previously sold contracts which a Seller
continues to service, but not including retail motor
vehicle installment sales contracts purchased by any of
the Sellers under certain special financing programs)
will be set forth in each Prospectus Supplement. There
can be no assurance that the delinquency, repossession
and net loss experience on any Receivables Pool will be
comparable to prior experience or to such information.
MATURITY AND PREPAYMENT CONSIDERATIONS
The weighted average life of the Notes, if any, and
the Certificates of any series will generally be influ-
enced by the rate at which the principal balances of the
related Receivables are paid, which payment may be in the
form of scheduled amortization or prepayments. (For this
purpose, the term "prepayments" includes prepayments in
full, partial prepayments, liquidations due to default,
the receipt of monthly installments earlier than the
scheduled due dates for such installments, the receipt of
proceeds from credit life, credit disability, theft or
physical damage insurance, repurchases by the Sellers as
a result of certain uncured breaches of the warranties
made by them in the Transfer and Servicing Agreement with
respect to the Receivables, purchases by the Servicer as
a result of certain uncured breaches of the covenants
made by it in the Agreement with respect to the Receiv-
ables, or the Servicer exercising its option to purchase
all of the remaining Receivables.) All of the Receiv-
ables are prepayable at any time without penalty to the
Obligor. The rate of prepayment of automotive receiv-
ables is influenced by a variety of economic, social and
other factors, including the fact that an Obligor gener-
ally may not sell or transfer the Financed Vehicle secur-
ing a Receivable without the consent of the applicable
Seller. The rate of prepayment on the Receivables may
also be influenced by the structure of the loan. In
addition, under certain circumstances, the applicable
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 breach-
es of certain covenants. Consistent with its normal
servicing practices and procedures and, to the extent
permitted in the related Sale and Servicing Agreement or
Pooling and Servicing Agreement, the Servicer may, in its
discretion and on a case-by-case basis, arrange with
Obligors to extend or modify the terms of the related
Receivables. Some of such arrangements (including any
extension beyond the Final Scheduled Maturity Date set
forth in the related Prospectus Supplement) will cause
the Servicer to be obligated to repurchase such Receiv-
ables, as described above. See "Description of the
Transfer and Servicing Agreements Sale and Assignment of
Receivables" and " Servicing Procedures." See also
"Description of the Transfer and Servicing Agree-
ments Termination" regarding the Servicer's option to
purchase the Receivables from a given Trust as well as
the possible sale of Receivables by a given Trust to a
successful bidder for the Receivables and " Insolvency
Event or Dissolution" regarding the sale of the Receiv-
ables owned by a Trust that is not a grantor trust if an
Insolvency Event or a dissolution with respect to the
Seller occurs.
In addition, if a Pre-Funding Account is included in
the property of a Trust, the ability of the Sellers to
generate Subsequent Receivables to be conveyed to such
Trust will effect the amount on deposit in such account
which is not applied to the conveyance of Subsequent
Receivables. At the end of the Funding Period, the
holders of Securities issued by such Trust may receive a
prepayment of principal in an amount equal to the amount
remaining in the Pre-Funding Account. It is anticipated
that there will be at least a nominal amount of principal
prepaid to the holders of the Securities issued by such
Trust. Holders of Securities issued by a Trust the
property of which includes a Pre-Funding Account will
bear the reinvestment risk associated with any such
distribution of amounts on deposit in the Pre-Funding
Account after the termination of the applicable Pre-
Funding Period.
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 Distribution Date, as applicable, since
such amount will depend, in part, on the amount of prin-
cipal 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 indicating the remaining outstanding principal
balance of such class of Notes, as of the applicable
Distribution Date (after giving effect to payments to be
made on such Distribution 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 indicating the
remaining Certificate Balance of such class of Certifi-
cates, as of the applicable Distribution Date (after
giving effect to distributions to be made on such Distri-
bution 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 reduc-
tions in the outstanding principal balance of the appli-
cable class of Notes, or the reduction of the Certificate
Balance of the applicable class of Certificates, as the
case may be, as a result of scheduled payments, prepay-
ments and liquidations of the Receivables (and also as a
result of a prepayment arising from the application of
the Pre-Funding Account, if any). The Note Pool Factor
and the Certificate Pool Factor will not change as a
result of the addition of Subsequent Receivables. A
Noteholder's portion of the aggregate outstanding princi-
pal balance of the related class of Notes is the product
of (i) the original denomination of such Noteholder's
Note and (ii) the applicable Note Pool Factor. A
Certificateholder's portion of the aggregate outstanding
Certificate Balance for the related class of Certificates
is the product of (i) the original denomination of such
Certificateholder's Certificate and (ii) the applicable
Certificate Pool Factor.
With respect to each Trust, the Noteholders, if any,
and the Certificateholders will receive reports on or
about each Distribution Date concerning payments received
on the Receivables during the Collection Period immedi-
ately preceding such Distribution Date, the Pool Balance
(as such term is defined in the related Prospectus Sup-
plement, the "Pool Balance"), each Certificate Pool
Factor or Note Pool Factor, as applicable, and various
other items of information. 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 "Book-Entry and Defin-
itive Securities; Reports to Securityholders Reports to
Securityholders."
USE OF PROCEEDS
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 Sellers,
(ii) to the deposit of the Pre-Funded Amount into the
Pre-Funding Account, if any, and (iii) to make the ini-
tial deposit into the Reserve Account, if any. The net
proceeds to be received by the Sellers from any such
Trust will be added to their general corporate funds and
will be used for general corporate purposes.
THE BANKS, NATIONSBANK CORPORATION AND [NB-SPC]
GENERAL
The Banks are wholly-owned subsidiaries of
NationsBank Corporation. NationsBank Corporation is a
bank holding company established as a North Carolina
corporation in 1968 and is registered under the Bank
Holding Company Act of 1956, as amended (the "BHCA"),
with its principal assets being the stock of its subsid-
iaries. Through its banking subsidiaries and its various
non-banking subsidiaries, NationsBank Corporation pro-
vides banking and banking related services primarily
throughout the Southeast and Mid-Atlantic states and
Texas. The principal executive offices of NationsBank
Corporation are located at NationsBank Corporate Center,
100 North Tryon Street, Charlotte, North Carolina 28255.
Its telephone number is (704) 386-5000. See "Risk Fac-
tors Trust's Relationship to the Sellers, NationsBank
Corporation and their Affiliates" and "Available Informa-
tion."
OPERATIONS
NationsBank Corporation provides a diversified range
of banking and certain non-banking financial services and
products through its various subsidiaries. NationsBank
Corporation manages its business activities through three
major internal management groups or business units: the
General Bank, the Global Finance Unit and the Financial
Services Unit.
NationsBank, N.A. is a national banking association
headquartered in Charlotte, North Carolina. As of March
31, 1996, it had assets of $74.450 billion and sharehold-
er equity of $5.306 billion. The principal executive
offices of NationsBank, N.A. are located at NationsBank
Corporate Center, 100 North Tryon Street, Charlotte,
North Carolina 28255. Its telephone number is (704) 386-
5000. NationsBank, N.A. is also the Servicer. See "The
Servicer" and "The Receivables Pools General" and "
Servicing and Collections."
NationsBank Texas is a national banking association
headquartered in Dallas, Texas. As of March 31, 1996, it
had assets of $49.354 billion and shareholder equity of
$2.804 billion The principal executive offices of
NationsBank Texas are located at 901 Main Street, Dallas,
Texas 75202. Its telephone number is (214) 508-6262.
NationsBank South is a national banking association
headquartered in Atlanta, Georgia. As of March 31, 1996,
it had assets of $46.114 billion and shareholder equity
of $4.198 billion. The principal executive offices of
NationsBank South are located at 600 Peachtree Street,
N.E., Atlanta, Georgia 30308. Its telephone number is
(404) 581-2121.
Prior to issuing for the first time a Series of
Securities that includes Notes, NationsBank Corporation
will form a wholly-owned special purpose subsidiary ("NB-
SPC") for the limited purpose of purchasing a portion of
the Certificates issued by each Trust that issues Notes,
acting as the general partner of each such Trust for
federal income tax purposes and engaging in incidental
activities. NationsBank Corporation will take certain
steps to minimize the likelihood that an Insolvency Event
occurs with respect to [NB-SPC]. These steps include the
creation of [NB-SPC] as a separate, limited purpose
corporation pursuant to a certificate of incorporation
containing limitations (including restrictions on the
nature of [NB-SPC's] business and a restriction on [NB-
SPC's] ability to commence a voluntary case or proceeding
under any insolvency or bankruptcy law without the prior
unanimous vote of its directors). However, there can be
no assurance that an Insolvency Event will not occur with
respect to [NB-SPC].
THE SERVICER
NationsBank, N.A., through DFSG and units in prede-
cessor banks of NationsBank, N.A., has been servicing
indirect motor vehicle loan portfolios since 1970. The
indirect motor vehicle loan portfolio serviced either
directly by NationsBank, N.A. or through its affiliates
was approximately $5.5 billion as of March 31, 1996. DFSG
also services other indirect and direct consumer loan
portfolios totalling over $25.3 billion (including the
indirect motor vehicle loan portfolio) as of March 31,
1996. Current information regarding the indirect motor
vehicle loan portfolios and the direct consumer loan
portfolios serviced by NationsBank, N.A. and DFSG will be
included in each applicable Prospectus Supplement.
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 which is
incorporated by reference in its entirety in each appli-
cable Prospectus Supplement. A form of the Indenture has
been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part. The following summa-
ry 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.
Each class of Notes will initially be represented by
one or more Notes, in each case registered in the name of
the nominee of DTC (together with any successor deposito-
ry selected by the Trust, the "Depository") except as set
forth below. The Notes will be available for purchase in
the denominations specified in the related Prospectus
Supplement and in book-entry form only. The Sellers have
been informed by DTC that DTC's nominee will be Cede,
unless another nominee is specified in the related Pro-
spectus Supplement. Accordingly, such nominee is expect-
ed 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 Supple-
ment to actions by Noteholders refer to actions taken by
DTC upon instructions from its participating organiza-
tions (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 "Book-Entry and
Definitive Securities; Reports to Securityholders
Book-Entry Registration" and " Definitive Securities."
PRINCIPAL AND INTEREST ON THE NOTES
The timing and priority of payment, allocation of
losses, Note 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 Supple-
ment. Payments of interest on the Notes of such series
may be made prior to payments of principal thereon. The
dates for payments of interest and principal on the Notes
of such series may be different from the Distribution
Dates for the Certificates of such series. To the extent
provided in the related Prospectus Supplement, a series
may include one or more classes of Notes designated as
money market classes, planned amortization classes,
targeted amortization classes or companion classes, each
as described in the related Prospectus Supplement. To
the extent provided in the related Prospectus Supplement,
a series may include one or more classes of Strip Notes
entitled to (i) principal payments with disproportionate,
nominal or no interest payments or (ii) interest payments
with disproportionate, nominal or no principal payments.
Each class of Notes may have a different Note Interest
Rate, which may be a fixed, variable or adjustable Note
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 Note
Interest Rate for each class of Notes of a given series
or the method for determining such Note Interest Rate.
See also "Description of Fixed and Floating Rate Op-
tions Fixed Rate Securities" and " Floating Rate Securi-
ties." One or more classes of Notes of a series may be
redeemable in whole or in part under the circumstances
specified in the related Prospectus Supplement, including
at the end of the Funding Period (if any) or as a result
of the Servicer exercising its option to purchase the
related Receivables Pool or as a result of the sale of
the related Receivables Pool to a successful bidder. See
"Description of the Transfer and Servicing Agree-
ments Termination."
If so specified in the related Prospectus Supple-
ment, payments to Noteholders of all classes within a
series in respect of interest will have the same priori-
ty. Under certain circumstances, the amount available
for such payments could be less than the amount of inter-
est payable on the Notes on any of the dates specified
for payments in the related Prospectus Supplement, in
which case each class of Noteholders will receive its
ratable share (based upon the aggregate amount of inter-
est 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 prior-
ity of payment in respect of principal and interest, and
any schedule or formula or other provisions applicable to
the determination thereof, of each such class will be set
forth in the related Prospectus Supplement. Payments in
respect of principal and interest of any class of Notes
will be made on a pro rata basis among all the
Noteholders of such class.
FIXED PAYMENT NOTES
To the extent specified in any Prospectus Supple-
ment, one or more classes of Notes of a given series may
have fixed principal payment schedules. Noteholders of
such Notes would be entitled to receive as payments of
principal on any given Distribution 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.
MONEY MARKET NOTES
To the extent specified in any Prospectus Supple-
ment, one or more classes of Notes of a given series may
have a final scheduled distribution date of less than 397
days from the initial trade date related thereto or such
other date on which an initial investor's interest there-
in is subject to market action. The failure to pay such
a class of Notes on or prior to the related final sched-
uled distribution date would constitute an event of
default under the related Indenture.
PLANNED AMORTIZATION CLASS
To the extent specified in any Prospectus Supple-
ment, one or more classes of Notes of a given series may
be designed to receive principal payments using a prede-
termined principal balance schedule (a "planned balance")
derived by assuming two constant prepayment rates for the
related Receivables Pool. The applicable Prospectus
Supplement will set forth a schedule of the planned
balance of such a class of Notes for each applicable
Distribution Date. Noteholders of such a class of Notes
would be entitled to receive principal payments in re-
spect of a Distribution Date only to the extent necessary
to reduce the principal balance of such Notes to the
amount set forth as the planned balance for such Distri-
bution Date.
TARGETED AMORTIZATION CLASS
To the extent specified in any Prospectus Supple-
ment, one or more classes of Notes of a given series may
be designed to receive principal payments using a prede-
termined principal balance schedule (a "targeted bal-
ance") derived by assuming one constant prepayment rate
for the related Receivables Pool. The applicable Pro-
spectus Supplement will set forth a schedule of the
planned balance of such a class of Notes for each appli-
cable Distribution Date. Noteholders of such a class of
Notes would be entitled to receive principal payments in
respect of a Distribution Date only to the extent neces-
sary to reduce the principal balance of such Notes to the
amount set forth as the targeted balance for such Distri-
bution Date.
COMPANION CLASS
To the extent specified in any Prospectus Supple-
ment, one or more classes of Notes of a given series may
be designed to receive principal payments on a Distribu-
tion date only if principal payments have been made on a
specified planned amortization class of Notes or targeted
amortization class of Notes.
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 relat-
ed Noteholders.
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 pay-
able; (ii) impair the right to institute suit for the
enforcement of certain provisions of the related Inden-
ture regarding payment; (iii) reduce the percentage of
the aggregate amount of the outstanding Notes of such
series, the consent of the holders of which is required
for any such supplemental indenture or the consent of the
holders of which is required for any waiver of compliance
with certain provisions of the related Indenture or of
certain defaults thereunder and their consequences as
provided for in such Indenture; (iv) modify or alter the
provisions of the related Indenture regarding the voting
of Notes held by the applicable Trust, any other obligor
on such Notes, the Sellers or an affiliate of any of
them; (v) reduce the percentage of the aggregate out-
standing principal amount of such Notes, the consent of
the holders of which is required to direct the related
Indenture Trustee to sell or liquidate the Receivables 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 relat-
ed agreements; or (vii) permit the creation of any lien
ranking prior to or on a parity with the lien of the
related Indenture with respect to any of the collateral
for such Notes or, except as otherwise permitted or
contemplated in such Indenture, terminate the lien of
such Indenture on any such collateral or deprive the
holder of any such Note of the security afforded by the
lien of such Indenture.
The Trust and the applicable Indenture Trustee may
also enter into supplemental indentures, without obtain-
ing the consent of the Noteholders of the related series,
for the purpose of, among other things, adding any provi-
sions to or changing in any manner or eliminating any of
the provisions of the related Indenture or of modifying
in any manner the rights of such Noteholders; provided
that such action will not materially and adversely affect
the interest of any such Noteholder.
Events of Default; Rights upon Event of Default.
With respect to the Notes of a given series, "Events of
Default" under the related Indenture will consist of: (i)
a default for five days or more in the payment of any
interest on any such Note; (ii) a default in the payment
of the principal of or any installment of the principal
of any such Note when the same becomes due and payable;
(iii) a default in the observance or performance of any
material 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 Trust-
ee 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 60 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 out-
standing; (v) certain events of bankruptcy, insolvency,
receivership or liquidation of the applicable Trust; or
(vi) such other events, if any, set forth in the related
Prospectus Supplement. 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
Payment Account. Therefore, the failure to pay principal
on a class of Notes generally will not result in the
occurrence of an Event of Default until the Final Sched-
uled Distribution Date for such class of Notes.
If an Event of Default should occur and be continu-
ing 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 pay-
able. Such declaration may, under certain circumstances,
be rescinded by the holders of a majority in principal
amount of such Notes then outstanding. Any such rescis-
sion could be treated, for federal income tax purposes,
as a constructive exchange of such Notes by the related
Noteholders for deemed new Notes upon which gain or loss
would be recognized.
If the Notes of any series have been declared 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. 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
outstanding Notes of such series consent to such sale,
(ii) the proceeds of such sale are sufficient to pay in
full the principal of and the accrued interest on the
outstanding Notes of such series 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 the Notes of such
series 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 principal amount
of the Notes of such series.
Subject to the provisions of the applicable Inden-
ture relating to the duties of the related Indenture
Trustee, 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 direc-
tion of any of the holders of such Notes, if such Inden-
ture Trustee reasonably believes it will not be adequate-
ly indemnified against the costs, expenses and liabili-
ties which might be incurred by it in complying with such
request. Subject to the provisions for indemnification
and certain limitations contained in the related Inden-
ture, 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.
Any such waiver could be treated, for federal income tax
purposes, as a constructive exchange of such Notes by the
related Noteholders for deemed new Notes upon which gain
or loss would be recognized.
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 inconsis-
tent with such written request has been given to such
Indenture Trustee during such 60-day period by the hold-
ers 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 cove-
nant 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 individ-
ual capacity, nor any holder of a Certificate represent-
ing 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, 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 such term is defined in the
related Prospectus Supplement, the "Rating Agencies") as
a result of such merger or consolidation, (v) such Trust
has received an opinion of counsel to the effect that
such consolidation or merger would have no material
adverse tax consequence to the Trust or to any related
Noteholder or Certificateholder, (vi) any action as is
necessary to maintain the lien and security interest
created by the related Indenture shall have been taken
and (vii) such Trust has received an opinion of counsel
and officer's certificate each stating that such consoli-
dation or merger satisfies all requirements under the
related Indenture.
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 (collective-
ly, the "Basic 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 other-
wise arise upon or burden the assets of such Trust or any
part thereof, or any interest therein or the proceeds
thereof, except as may be created by the terms of the
related Indenture.
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 indebted-
ness 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 Basic
Documents.
List of Noteholders. 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
related 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 and until Definitive Securities
are issued in fully registered, certificated form, refer-
ences to the "holders of Notes" and to the "Noteholders"
shall refer to DTC and its nominee. See "Book-Entry and
Definitive Securities; Reports to Securityholders
Definitive Securities." Such Indenture Trustee may
elect not to afford the requesting Noteholders
access to the list of Noteholders if it agrees to mail
the desired communication or proxy, on behalf of
and at the expense of the requesting Noteholders,
to all Noteholders of such series.
Annual Compliance Statement. Each Trust will be
required to file annually with the related Indenture
Trustee a written statement as to the fulfillment of its
obligations under the Indenture.
Indenture Trustee's Annual Report. The Indenture
Trustee for each Trust will be required to mail each year
to all related Noteholders a brief report relating to its
eligibility and qualification to continue as Indenture
Trustee under the related Indenture, any amounts advanced
by it under the Indenture, the amount, interest rate and
maturity date of certain indebtedness owing by such Trust
to the applicable Indenture Trustee in its individual
capacity, the property and funds physically held by such
Indenture Trustee as such and any action taken by it that
materially affects the related Notes and that has not
been previously reported.
Satisfaction and Discharge of Indenture. An Inden-
ture 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 pay-
ment 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 be-
comes 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 pursu-
ant 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 summa-
ry does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, all the
provisions of the Certificates and the Trust Agreement or
Pooling and Servicing Agreement, as applicable.
Except for the Certificates, if any, of a given
series retained by the Seller, each class of Certificates
may initially be represented by one or more Certificates
registered in the name of the Depository, except as set
forth below. Except for the Certificates, if any, of a
given series retained by the Seller, the Certificates
will be available for purchase in the denominations
specified in the related Prospectus Supplement and may be
available in book-entry form only. The Sellers have 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
issued in book-entry form that are not retained by the
Sellers. If the Certificates of a series are issued in
book-entry form, unless and until Definitive Certificates
are issued under the limited circumstances described
herein or in the related Prospectus Supplement, no Cer-
tificateholder (other than the Seller) will be entitled
to receive a physical certificate representing a Certifi-
cate. If the Certificates of a series are issued in
book-entry form, all references herein and in the related
Prospectus Supplement to actions by Certificateholders
refer to actions taken by DTC upon instructions from the
Participants and all references herein and in the related
Prospectus Supplement to distributions, notices, reports
and statements to Certificateholders refer to distribu-
tions, 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 "Book-Entry and Definitive Securities; Reports to
Securityholders Book-Entry Registration" and " Definitive
Securities." Any Certificates of a given series owned by
any of the Sellers or their affiliates will be entitled
to equal and proportionate benefits under the applicable
Trust Agreement, except that such Certificates will be
deemed not to be outstanding for the purpose of determin-
ing whether the requisite percentage of Certificatehold-
ers have given any request, demand, authorization, direc-
tion, notice, consent or other action under the Basic
Documents (other than the commencement by the related
Trust of a voluntary proceeding in bankruptcy as de-
scribed under "Description of the Transfer and Servicing
Agreements Insolvency Event or Dissolution").
DISTRIBUTIONS OF PRINCIPAL AND INTEREST
The timing and priority of distributions, allocation
of losses, Certificate Rate and amount of or method of
determining distributions with respect to principal and
interest of each class of Certificates will be described
in the related Prospectus Supplement. Distributions of
interest on such Certificates will be made on the dates
specified in the related Prospectus Supplement (each, a
"Distribution Date") and will be made prior to distribu-
tions 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 Certif-
icates entitled to (i) distributions in respect of prin-
cipal with disproportionate, nominal or no interest
distributions or (ii) interest distributions with dispro-
portionate, nominal or no distributions in respect of
principal. Each class of Certificates may have a differ-
ent Certificate Rate, which may be a fixed, variable or
adjustable Certificate Rate (and which may be zero for
certain classes of Strip Certificates) or any combination
of the foregoing. The related Prospectus Supplement will
specify the Certificate Rate for each class of Certifi-
cates of a given series or the method for determining
such Certificate Rate. See also "Description of Fixed
and Floating Rate Options Fixed Rate Securities" and
" Floating Rate Securities." Distributions in respect of
the Certificates of a given series that includes Notes
may be subordinate to payments in respect of the Notes of
such series as more fully described in the related Pro-
spectus 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 in-
cludes two or more classes of Certificates, the timing,
sequential order, priority of payment or amount of dis-
tributions 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.
LIST OF CERTIFICATEHOLDERS
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 related
Trustee, obtain access to the list of all Certificate-
holders 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 Certifi-
cates. Unless and until Definitive Securities are
issued in fully registered, certificated form, references
to the "holders of Certificates" and the "Certificate-
holders" shall refer to DTC and its nominee. See "Book-
Entry and Definitive Securities; Reports to
Securityholders Definitive Securities."
DESCRIPTION OF FIXED AND FLOATING RATE OPTIONS
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
applicable Prospectus Supplement. Each class of Fixed
Rate Securities will bear interest at the applicable per
annum Note Interest Rate or Certificate Rate, as the case
may be, specified in the applicable Prospectus Supple-
ment. Interest on each class of Fixed Rate Securities
will be computed on the basis of a 360-day year of twelve
30-day months or on such other day and month count basis
as is specified in the applicable Prospectus Supplement.
See "Description of the Notes Principal and Interest on
the Notes" and "Description of the Certifi-
cates 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 speci-
fied in the applicable Prospectus Supplement as being
applicable to such class, and the "Spread Multiplier" is
the percentage that may be specified in the applicable
Prospectus Supplement as being applicable to such class.
The applicable Prospectus Supplement will designate
one of the following Base Rates as applicable to a given
Floating Rate Security: (i) the CD Rate (a "CD Rate
Security"), (ii) the Commercial Paper Rate (a "Commercial
Paper Rate Security"), (iii) the Federal Funds Rate (a
"Federal Funds Rate Security"), (iv) LIBOR (a "LIBOR
Security"), (v) the Treasury Rate (a "Treasury 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 publica-
tion entitled "Statistical Release H.15(519), Selected
Interest Rates," or any successor publication, published
by the Board of Governors of the Federal Reserve System.
"Composite Quotations" means the daily statistical re-
lease 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 Pro-
spectus Supplement with respect to a class of Floating
Rate Securities.
As specified in the applicable Prospectus Supple-
ment, Floating Rate Securities of a given class may also
have either or both of the following (in each case ex-
pressed as a rate per annum): (i) a maximum limitation,
or ceiling, on the rate at which interest may accrue
during any interest period and (ii) a minimum limitation,
or floor, on the rate at which interest may accrue during
any interest period. In addition to any maximum interest
rate that may be applicable to any class of Floating Rate
Securities, the interest rate applicable to any class of
Floating Rate Securities will in no event be higher than
the maximum rate permitted by applicable law, as the same
may be modified by United States law of general applica-
tion.
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 "Cal-
culation Agent") to calculate interest rates on each such
class of Floating Rate Securities issued with respect
thereto. The applicable Prospectus Supplement will set
forth the identity of the Calculation Agent for each such
class of Floating Rate Securities of a given series,
which may be either the related Trustee or Indenture
Trustee with respect to such series. All determinations
of interest by the Calculation Agent shall, in the ab-
sence of manifest error, be conclusive for all purposes
and binding on the holders of Floating Rate Securities of
a given class. All percentages resulting from any calcu-
lation of the rate of interest on a Floating Rate Securi-
ty 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 interest
rate calculated with reference to the CD Rate and the
Spread or Spread Multiplier, if any, specified in such
Security and in the applicable 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
applicable Prospectus Supplement as subsequently pub-
lished 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 Calcula-
tion 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 Determina-
tion Date for negotiable certificates of deposit of the
Index Maturity designated in the applicable 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 Quota-
tions, 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 certif-
icates of deposit in The City of New York selected by the
Calculation Agent for such CD Rate Security for negotia-
ble 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 desig-
nated in the related Prospectus Supplement in a denomina-
tion of $5,000,000; provided, however, that if the deal-
ers 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 Inter-
est 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 succeed-
ing 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 interest rate calculated with refer-
ence to the Commercial Paper Rate and the Spread or
Spread Multiplier, if any, specified in such security and
in the applicable 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 Determi-
nation Date") and shall be the Money Market Yield (as
defined below) on such Commercial Paper Rate Determina-
tion Date of the rate for commercial paper having the
Index Maturity specified in the applicable 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 Commer-
cial 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 nation-
ally 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:
Money Market Yield = D x 360 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 busi-
ness 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 applica-
ble Interest Reset Date.
Federal Funds Rate Securities. Each Federal Funds
Rate Security will bear interest for each Interest Reset
Period at the interest rate calculated with reference to
the Federal Funds Rate and the Spread or Spread Multipli-
er, if any, specified in such Security and in the appli-
cable 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 (Effec-
tive)." In the event that such rate is not published
prior to 3:00 p.m., New York City time, on the Calcula-
tion 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 Inter-
est Reset Period. In the case of a Federal Funds Rate
Security that resets daily, the interest rate 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 Federal Funds Rate 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 succeed-
ing business day.
LIBOR Securities. Each LIBOR Security will bear
interest for each Interest Reset Period at the interest
rate calculated with reference to LIBOR and the Spread or
Spread Multiplier, if any, specified in such Security and
in the applicable 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 Calcula-
tion Agent for such LIBOR Security will determine
the arithmetic mean of the offered rates for depos-
its in U.S. dollars for the period of the Index
Maturity specified in the applicable 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 Determi-
nation Date, the Calculation Agent for such LIBOR
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 Inter-
est Reset Date, to prime banks in the London inter-
bank 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 trans-
action 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 approx-
imately 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 Inter-
est Reset Date, and in a principal amount equal to
an amount of not less than $1,000,000 that is repre-
sentative 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 Secu-
rity will bear interest for each Interest Reset Period at
the interest rate calculated with reference to the Trea-
sury Rate and the Spread or Spread Multiplier, if any,
specified in such Security and in the applicable Prospec-
tus Supplement.
The "Treasury Rate" for each Interest Reset Period
will be the rate for the auction held on the Treasury
Rate Determination Date (as defined below) for such
Interest Reset Period of direct obligations of the United
States ("Treasury bills") having the Index Maturity
specified in the applicable 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 arithme-
tic mean of the secondary market bid rates, as of approx-
imately 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 such
Calculation Agent for the issue of Treasury bills with a
remaining maturity closest to the specified Index Maturi-
ty; 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 holi-
day, 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 fol-
lowing 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 Inter-
est Reset Date.
BOOK-ENTRY AND DEFINITIVE SECURITIES; REPORTS TO
SECURITYHOLDERS
BOOK-ENTRY REGISTRATION
The Prospectus Supplement related to a given series
will specify whether the holders of the Notes or Certifi-
cates of such series may hold their respective Securities
through DTC (in the United States) or Cedel Bank, societe
anonyme ("Cedel") or Euroclear (as defined below) (in
Europe) if they are participants of such systems, or
indirectly through organizations that are participants in
such systems ("Book-Entry Notes" or "Book-Entry Certifi-
cates," respectively, and collectively referred to herein
as "Book-Entry Securities").
The Sellers have been informed by DTC that DTC's
nominee will be Cede, unless another nominee is specified
in the related Prospectus Supplement. Accordingly, such
nominee (i.e., DTC's Nominee) is expected to be the
holder of record of the Securities of any series held
through DTC. DTC's Nominee will hold the global Securi-
ties. Cedel and Euroclear will hold omnibus positions on
behalf of the Cedel Participants and the Euroclear Par-
ticipants, respectively, through customers' securities
accounts in Cedel's and Euroclear's names on the books of
their respective depositaries (collectively, the "Deposi-
taries") which in turn will hold such positions in
customers' securities accounts in the Depositaries' names
on the books of DTC.
DTC is a limited-purpose trust company organized
under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within
the meaning of the New York Uniform Commercial Code, and
a "clearing agency" registered pursuant to the provisions
of Section 17A of the Exchange Act. DTC was created to
hold securities for its participating organizations
("Participants") and facilitate the clearance and settle-
ment of securities transactions between Participants
through electronic book-entries, thereby eliminating the
need for physical movement of certificates. Participants
include securities brokers and dealers (who may include
any of the underwriters of a series of Securities),
banks, trust companies and clearing corporations and may
include certain other organizations. Indirect access to
the DTC system also is available to others such as banks,
brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Participant,
either directly or indirectly (the "Indirect Partici-
pants").
Transfers between DTC Participants will occur in
accordance with DTC rules. Transfers between Cedel
Participants and Euroclear Participants will occur in the
ordinary way in accordance with their applicable rules
and operating procedures.
Cross-market transfers between persons holding
directly or indirectly through DTC, on the one hand, and
directly or indirectly through Cedel Participants or
Euroclear Participants, on the other, will be effected in
DTC in accordance with DTC rules on behalf of the rele-
vant European international clearing system by its Depos-
itary; however, such cross-market transactions will
require delivery of instructions to the relevant European
international clearing system by the counterparty in such
system in accordance with its rules and procedures and
within its established deadlines (European time). The
relevant European international clearing system will, if
the transaction meets its settlement requirements, deliv-
er instructions to its Depositary to take action to
effect final settlement on its behalf by delivering or
receiving securities in DTC, and making or receiving
payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Cedel Participants
and Euroclear Participants may not deliver instructions
directly to the Depositaries.
Because of time-zone differences, credits of securi-
ties in Cedel or Euroclear as a result of a transaction
with a DTC Participant will be made during the subsequent
securities settlement processing, dated the business day
following the DTC settlement date, and such credits or
any transactions in such securities settled during such
processing will be reported to the relevant Cedel Partic-
ipant or Euroclear Participant on such business day.
Cash received by Cedel or Euroclear as a result of sales
of securities by or through a Cedel Participant or a
Euroclear Participant to a DTC Participant will be re-
ceived with value on the DTC settlement date but will be
available in the relevant Cedel or Euroclear cash account
only as of the business day following settlement in DTC.
The Securityholders who are not Participants or
Indirect Participants but who desire to purchase, sell or
otherwise transfer ownership of, or other interest in,
Securities may do so only through Participants and Indi-
rect Participants. In addition, Securityholders will
receive all distributions of principal and interest from
the Indenture Trustee or the applicable Trustee, as the
case may be (the "Applicable Trustee"), through the
Participants who in turn will receive them from DTC.
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 Indi-
rect Participants or Securityholders. To the extent the
related Prospectus Supplement provides that Book-Entry
Securities will be issued, the only "Noteholder" or
"Certificateholder," as applicable, will be DTC's Nomi-
nee. Securityholders will not be recognized by the
Applicable Trustee as "Noteholders" or "Certificatehold-
ers," as such terms are used in the Indenture or Trust
Agreement, as applicable, and Securityholders will be
permitted to exercise the rights of Securityholders 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 is required to receive and transmit
distributions of principal and interest on the Securi-
ties. Participants and Indirect Participants with which
Securityholders have accounts with respect to their
respective Securities similarly are required to make
book-entry transfers and receive and transmit such pay-
ments on behalf of their respective Securityholders.
Accordingly, although Securityholders will not possess
their respective Securities, the Rules provide a mecha-
nism 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 otherwise take actions with respect
to such Securities, may be limited due to the lack of a
physical certificate for such Securities.
DTC will advise the Administrator in respect of each
Trust that it will take any action permitted to be taken
by a Securityholder under the related Indenture or Trust
Agreement, as applicable, only at the direction of one or
more Participants to whose accounts with DTC such Securi-
ties 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.
Cedel is incorporated under the laws of Luxembourg
as a professional depository. Cedel holds securities for
its participating organizations ("Cedel Participants")
and facilitates the clearance and settlement of securi-
ties transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Par-
ticipants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled by
Cedel in any of 28 currencies, including United States
dollars. Cedel provides to its Cedel Participants, among
other things, services for safekeeping, administration,
clearance and settlement of internationally traded secu-
rities and securities lending and borrowing. Cedel
interfaces with domestic markets in several countries.
As a professional depository, Cedel is subject to regula-
tions by the Luxembourg Monetary Institute. Cedel Par-
ticipants are recognized financial institutions around
the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations
and certain other organizations and may include any of
the underwriters of any series of Securities. Indirect
access to Cedel is also available to others, such as
banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Cedel
Participant, either directly or indirectly.
The Euroclear System ("Euroclear" or the "Euroclear
System") was created in 1968 to hold securities for its
participants ("Euroclear Participants") and to clear and
settle transactions between Euroclear Participants
through simultaneous electronic book-entry delivery
against payment, thereby eliminating the need for physi-
cal movement of certificates and the risk from transfers
of securities and cash that are not simultaneous.
The Euroclear System has subsequently been extended
to clear and settle transactions between Euroclear Par-
ticipants and counterparties both in Cedel and in many
domestic securities markets. Transactions may now be
settled in any of 32 currencies. In addition to safe-
keeping (custody) and securities clearance and settle-
ment, the Euroclear System includes securities lending
and borrowing and money transfer services. The Euroclear
System is operated by the Brussels, Belgium office of
Morgan Guaranty Trust Company of New York (the "Euroclear
Operator"), under contract with Euroclear Clearance
System, S.C., a Belgian cooperative corporation that
establishes policy on behalf of Euroclear Participants.
The Euroclear Operator is the Belgian branch of a New
York banking corporation which is a member bank of the
Federal Reserve System. As such, it is regulated and
examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well
as the Belgian Banking Commission.
All operations are conducted by the Euroclear Opera-
tor and all Euroclear securities clearance accounts and
cash accounts are accounts with the Euroclear Operator.
They are governed by the Terms and Conditions Governing
Use of Euroclear and the related Operating Procedures of
the Euroclear System and applicable Belgian law (collec-
tively, the "Terms and Conditions"). The Terms and
Conditions govern all transfers of securities and cash,
both within the Euroclear System, and receipts and with-
drawals of securities and cash. All securities in the
Euroclear System are held on a fungible basis without
attribution of specific certificates to specific securi-
ties clearance accounts.
Euroclear Participants include banks (including
central banks), securities brokers and dealers and other
professional financial intermediaries and may include any
of the underwriters of any series of Securities. Indi-
rect access to the Euroclear System is also available to
other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either direct-
ly or indirectly. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Partici-
pants and has no record of or relationship with persons
holding through Euroclear Participants.
Unless and until Definitive Securities are issued
under the limited circumstances described herein or in
the related Prospectus Supplement, no Securityholder will
be entitled to receive a physical certificate represent-
ing a Book-Entry Security. All references herein and in
the related Prospectus Supplement to actions by
Securityholders shall refer to actions taken by DTC upon
instructions from its Participants, and all references
herein and in the related Prospectus Supplement to dis-
tributions, notices, reports and statements to
Securityholders shall refer to distributions, notices,
reports and statements to DTC or its nominee as the
registered holder of the Book-Entry Securities, as the
case may be, for distribution to Book-Entry
Securityholders in accordance with DTC's procedures with
respect thereto.
In the event that any of DTC, Cedel or Euroclear
should discontinue its services, the Administrator would
seek an alternative depository (if available) or cause
the issuance of Definitive Securities to Securityholders
or their nominees in the manner described under " Defini-
tive Securities."
Except as required by law, none of the Administra-
tor, if any, the applicable Trustee or 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 Securi-
ties of any series held by DTC's Nominee, or for main-
taining, supervising or reviewing any records relating to
such beneficial ownership interests.
DEFINITIVE SECURITIES
With respect to any series of Notes and any series
of Certificates issued in book-entry form, such Notes or
Certificates will be issued in fully registered, certifi-
cated form ("Definitive Notes" and "Definitive Certifi-
cates," respectively, and collectively referred to herein
as "Definitive Securities") to Noteholders or Certifi-
cateholders 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 respon-
sibilities 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 noti-
fies the Applicable Trustee in writing), (ii) the Admin-
istrator or Trustee, as applicable, at its option, elects
to terminate the book-entry system through DTC or (iii)
after the occurrence of an Event of Default or an Event
of Servicing Termination with respect to such Securities,
holders representing at least a majority of the outstand-
ing 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 availabili-
ty of Definitive Securities. Upon surrender by DTC of
the definitive certificates representing the correspond-
ing 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 applica-
ble, directly to holders of Definitive Securities in
whose names the Definitive Securities were registered at
the close of business on the applicable Record Date
specified for such Securities in the related Prospectus
Supplement. Such distributions will be made by check
mailed to the address of such holder as it appears on the
register maintained by the Applicable Trustee. The final
payment on any such Definitive Security, however, will be
made only upon presentation and surrender of such Defini-
tive 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 suffi-
cient to cover any tax or other governmental charge
imposed in connection therewith.
REPORTS TO SECURITYHOLDERS
With respect to each series of Securities that
includes Notes, on or prior to each Distribution Date,
the Servicer will prepare and provide to the related
Indenture Trustee a statement to be delivered to the
related Noteholders on such Distribution Date. With
respect to each series of Securities, on or prior to each
Distribution Date, the Servicer will prepare and provide
to the related Trustee a statement to be delivered to the
related Certificateholders on such Distribution Date.
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 Distribution Date or the period since the previ-
ous Distribution Date, as applicable, and each such
statement to be delivered to Certificateholders will
include (to the extent applicable) the following informa-
tion (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 applica-
ble:
(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 Certifi-
cates;
(ii) the amount of the distribution allocable
to interest on or with respect to each class of
Securities of such series;
(iii) the amount of the distribution allocable
to draws from the Reserve Account (if any), the
Yield Supplement Amount (if any) or payments in
respect of any other credit or cash flow enhancement
arrangement;
(iv) the Pool Balance as of the close of
business on the last day of the preceding Collection
Period;
(v) the aggregate outstanding principal bal-
ance and the Note Pool Factor for each class of such
Notes, and the Certificate Balance and the Certifi-
cate Pool Factor for each class of such Certifi-
cates, each after giving effect to all payments
reported under clause (i) above on such date;
(vi) the amount of the Servicing Fee paid to
the Servicer with respect to the related Collection
Period or Collection Periods, as the case may be;
(vii) the amount of the aggregate Realized
Losses (as defined in the related Prospectus Supple-
ment), if any, for such Collection Period;
(viii) the Noteholders' Interest Carryover
Shortfall, the Noteholders' Principal Carryover
Shortfall, the Certificateholders' Interest Carry-
over 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 Re-
ceivables, if any, that were repurchased in such
Collection Period;
(x) the balance of the Reserve Account (if
any) on such date, after giving effect to changes
therein on such date;
(xi) the balance of the Yield Supplement
Account (if any) on such date, after giving effect
to changes therein on such date;
(xii) the amount of Advances or Advance Re-
serve Withdrawals on such date;
(xiii) for each such date during the Funding
Period (if any), the remaining Pre-Funded Amount;
and
(xiv) for the first such date that is on or
immediately following the end of the Funding Period
(if any), the amount of any remaining Pre-Funded
Amount that has not been used to fund the purchase
of Subsequent Receivables and is being passed
through as payments of principal on the Securities
of such series; and
(xv) the Note Interest Rate and/or Certificate
Rate for the next period for any class of Notes or
Certificates of such series with variable or adjust-
able rates.
Each amount set forth pursuant to subclauses (i),
(ii), (iii), (vi) and (ix) with respect to the Notes or
the Certificates of any series will be expressed as a
dollar amount per $1,000 of the initial principal balance
of such Notes or the initial Certificate Balance of such
Certificates, as applicable.
Within the prescribed period of time for federal
income tax reporting purposes after the end of each
calendar year during the term of each Trust, the Applica-
ble Trustee will mail to each person who at any time
during such calendar year has been a Securityholder with
respect to such Trust and received any payment thereon a
statement containing certain information for the purposes
of such Securityholder's preparation of federal income
tax returns. See "Federal Income Tax Consequences"
herein and in the related Prospectus Supplement.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of
each Sale and Servicing Agreement or Pooling and Servic-
ing Agreement pursuant to which a Trust will purchase
Receivables from the Sellers and the Servicer will agree
to service such Receivables, each Trust Agreement (in the
case of a grantor trust, the Pooling and Servicing Agree-
ment) pursuant to which a Trust will be created and
Certificates will be issued and each Administration
Agreement pursuant to which NationsBank, N.A. will under-
take certain administrative duties with respect to a
Trust that issues Notes (collectively, the "Transfer and
Servicing Agreements"). Forms of the Transfer and Ser-
vicing Agreements have been filed as exhibits to the
Registration Statement of which this Prospectus forms a
part. This summary does not purport to be complete and
is subject to, and qualified in its entirety by reference
to, all the provisions of the Transfer and Servicing
Agreements.
SALE AND ASSIGNMENT OF RECEIVABLES
Prior to the time of issuance of the Securities of a
given Trust, pursuant to a related Sale and Servicing
Agreement or Pooling and Servicing Agreement, the Sellers
will sell and assign to the Trustee, without recourse,
their entire interest in the Initial Receivables, if any,
of the related Receivables Pool, including their security
interests in the related Financed Vehicles. Each such
Receivable will be identified in a schedule to the relat-
ed Sale and Servicing Agreement or Pooling and Servicing
Agreement. The applicable Trustee will not independently
verify the existence and qualification of any Receiv-
ables. The Trustee will, concurrently with such sale and
assignment, execute, authenticate, and deliver the relat-
ed Notes and/or Certificates to the Sellers in exchange
for the Receivables. If so provided in the related
Prospectus Supplement, the net proceeds received by the
Sellers from the sale of the Certificates and the Notes
of a given series will be applied to the deposit of the
Pre-Funded Amount into the Pre-Funding Account, if any,
and to make the initial deposit into the Reserve Account,
if any. The related Prospectus Supplement for a given
Trust will specify whether, and the terms, conditions and
manner under which, Subsequent Receivables will be sold
by the Sellers to the applicable Trust from time to time
during any Funding Period on each date specified as a
transfer date in the related Prospectus Supplement (each,
a "Subsequent Transfer Date").
If so specified in the related Prospectus Supple-
ment, all or a portion of the Receivables may be pur-
chased by the Trust from the Sellers for a purchase price
which is less than the aggregate principal balance
thereof. If any Receivables are purchased for a purchase
price less than their respective principal balances, a
portion of the collections or proceeds in respect of
principal from such Receivables may be deemed collections
or proceeds in respect of interest on such Receivables
for the purposes of allocating distributions on the
Securities.
In each Sale and Servicing Agreement or Pooling and
Servicing Agreement the Sellers will represent and war-
rant to the applicable Trust, among other things, as of
the applicable Closing Date (or the applicable Subsequent
Transfer Date) (unless otherwise indicated): (i) the
Receivable has been fully and properly executed by the
parties thereto and (a) has been originated or purchased
by such Seller in the ordinary course of its business and
in accordance with such Seller's underwriting standards
to finance the retail sale by a Dealer of the Financed
Vehicle, (b) is secured by a valid, subsisting, and
enforceable security interest in favor of such Seller in
the Financed Vehicle (subject to administrative delays
and clerical errors on the part of the applicable govern-
ment agency and to any statutory or other lien arising by
operation of law after the Closing Date which is prior to
such security interest) prior in right to the security
interest of any other creditor, which security interest
is assignable together with such Receivable, and has been
so assigned, by such Seller to the Trustee, (c) contains
customary and enforceable provisions such that the rights
and remedies of the holder thereof are adequate for
realization against the collateral of the benefits of the
security, (d) provided, at origination, for level monthly
payments (although the amount of the last payment may be
different), which fully amortize the initial principal
balance of the Receivable over the original term and (e)
provides for interest at the related contractual interest
rate ("Contract Rate"); (ii) the information set forth in
the Schedule of Receivables was true and correct as of
the close of business on the applicable Cut-Off Date (or
the applicable Subsequent Transfer Date); (iii) to the
knowledge of such Seller, the Receivable complied at the
time it was originated or made, and will comply as of the
Closing Date (or the applicable Subsequent Transfer
Date), in all material respects with all requirements of
applicable federal, state and local laws, and regulations
thereunder; provided, however that if notwithstanding the
knowledge of the Seller, the representation set forth in
this clause is untrue, the Seller shall repurchase such
Receivable in accordance with the terms of the applicable
Transfer and Servicing Agreement; (iv) the Receivable
constitutes the genuine, legal, valid and binding payment
obligation in writing of the Obligor, enforceable in all
material respects by the holder thereof in accordance
with its terms, and except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganiza-
tion, moratorium, conservatorship, receivership, liquida-
tion and other similar laws affecting creditors' rights
in general, the Receivable is not subject to any right of
rescission, setoff, counterclaim or defense, including
the defense of usury, and the operation of any of the
terms of the Receivable, or the exercise of any right
thereunder, will not render the Receivable unenforceable
in whole or in part or subject to any right of rescis-
sion, setoff, counterclaim or defense, including the
defense of usury, and such Seller has not received writ-
ten notice that any right of rescission, setoff, counter-
claim or defense has been asserted with respect thereto;
(v) such Seller has taken no action which would have the
effect of releasing the related Financed Vehicle from the
lien granted by the Receivable in whole or in part; (vi)
no material provision of the Receivable has been amended,
waived, altered or modified in any respect, except such
waivers as would be permitted under the applicable Trans-
fer and Servicing Agreement, and no amendment, waiver,
alteration or modification causes such Receivable not to
conform to the other representations or warranties con-
tained in this paragraph; (vii) such Seller has not
received notice of any liens or claims, including liens
for work, labor, materials or unpaid state or Federal
taxes relating to the Financed Vehicle securing the
Receivable, that are or may be prior to or equal to or
coordinate with the lien granted by the Receivable;
(viii) except for payment delinquencies continuing for a
period of not more than 30 days as of the Cut-Off Date
(or the applicable Subsequent Transfer Date), to the
knowledge of such Seller, (a) no default, breach, viola-
tion or event permitting acceleration under the terms of
any Receivable exists and (b) no continuing condition
that with notice or lapse of time, or both, would consti-
tute a default, breach, violation or event permitting
acceleration under the terms of the Receivable has aris-
en; provided, however, that if notwithstanding the knowl-
edge of the Seller, any of the events specified in (a) or
(b) of this clause exists or has arisen with respect to a
Receivable, the Seller shall repurchase such Receivable
in accordance with the terms of the applicable Transfer
and Servicing Agreement; (ix) immediately prior to the
transfer and assignment therein contemplated, the Receiv-
able has not been sold, assigned, pledged or otherwise
conveyed by such Seller to any person other than the
Trust, and such Seller had good and marketable title to
the Receivable free and clear of any encumbrance, equity,
lien, pledge, charge, claim, security interest or other
right or interest of any other person and had full right
and power to transfer and assign the Receivable to the
Trust and immediately upon the transfer and assignment of
the Receivable to the Trust, the Trust will have good and
marketable title to the Receivable, free and clear of any
encumbrance, equity, lien, pledge, charge, claim, securi-
ty interest or other right or interest of any other
person and, if such transfer to the Trust is deemed to be
a transfer for security, the Trust's interest in the
Receivable resulting from the transfer has been perfected
under the UCC; (x) such Seller has duly fulfilled all
obligations on its part to be fulfilled under the Receiv-
able; and (xi) only one original of each Receivable was
executed and, immediately prior to the Closing Date, the
Servicer or NSI will have possession of the Receivable
File.
In the event of a breach or failure to be true of
any representation or warranty by a Seller with respect
to the Receivables described above, which breach or
failure materially and adversely affects the interests of
the related Trust in a Receivable (it being understood
that any such breach or failure with respect to certain
representations and warranties which does not affect the
ability of the Trust to receive and retain payment in
full on the Receivable will not be deemed to have such a
material and adverse effect), such Seller, unless such
breach or failure has been cured by the last day of the
Collection Period which includes the 60th day after the
date on which such Seller becomes aware of, or receives
written notice from the Trustee or the Servicer of, such
breach or failure, will be required to repurchase the
Receivable from the Trustee for the Purchase Amount;
provided, however, that if such breach or failure occurs
solely as a result of NationsBank, N.A.'s practice of
retaining original Motor Vehicle Loan documents only in
microfilm form, NationsBank, N.A. will not be required to
repurchase the affected Receivable unless the related
Dealer enters into bankruptcy, and the bankruptcy trustee
or a creditor of such Dealer asserts that NationsBank,
N.A. did not have, or the Trust does not have, a first
priority perfected ownership interest in such Receivable
as a result of such practice. The Purchase Amount is
payable on the next Deposit Date. The repurchase obliga-
tion will constitute the sole remedy available to the
Certificateholders, the Noteholders, the Indenture Trust-
ee or the Trust against such Seller for any such uncured
breach or failure.
The "Purchase Amount" of any Receivable means, with
respect to any Deposit Date, an amount equal to the sum
of (i) the outstanding principal balance of such Receiv-
able as of the last day of the preceding Collection
Period and (ii) the amount of accrued and unpaid interest
on such principal balance at the related Contract Rate
from the date a payment was last made by or on behalf of
the Obligor through and including the last day of such
preceding Collection Period, in each case after giving
effect to the receipt of monies collected on such Receiv-
able in such preceding Collection Period.
Pursuant to each Sale and Servicing Agreement or
Pooling and Servicing Agreement, and in order to assure
uniform quality in servicing the Receivables and to
reduce administrative costs, the Trustee will appoint NSI
as initial custodian of the Receivables. NSI, as custodi-
an with respect to a particular Seller's Receivables,
will hold such Receivables and physical registration or
evidence of registration as is customary within each
state, including any motor vehicle certificates of title
or ownership relating thereto (each, a "Receivable
File"), on behalf of the applicable Trustee. The Receiv-
ables will not be stamped or otherwise marked to reflect
the sale and assignment of the Receivables to the appli-
cable Trust and will not be segregated from other receiv-
ables held by NSI. The Sellers', the Servicer's and their
respective affiliates' accounting records and computer
systems will reflect the sale and assignment of the
Receivables to the applicable Trust, and UCC financing
statements with respect to such sale and assignment will
be filed. See "The Trusts" and "The Receivables Pools
General" and "Certain Legal Aspects of the Receiv-
ables Security Interests in Vehicles."
ACCOUNTS
With respect to each Trust that issues Notes, the
Servicer will establish and maintain with the related
Indenture Trustee one or more accounts, in the name of
the Indenture Trustee on behalf of the related
Noteholders and Certificateholders, into which all pay-
ments 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 re-
leased from the Collection Account and any Pre-Funding
Account, Reserve Account or other credit enhancement for
payment to such Noteholders will be deposited and from
which all distributions to such Noteholders will be made
(the "Note Payment Account"). The Servicer will estab-
lish and maintain with the related Trustee an account, in
the name of such Trustee on behalf of such Certificate-
holders, into which amounts released from the Collection
Account and any Pre-Funding Account, Yield Supplement
Account, Reserve Account or other credit or cash flow
enhancement for distribution to such Certificateholders
will be deposited and from which all distributions to
such Certificateholders will be made (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 Pre-Funding Account, Yield Supple-
ment Account or Reserve Account, will be described in the
related Prospectus Supplement.
For any series of Securities, funds in the Collec-
tion Account, the Note Payment Account and any
Pre-Funding Account, Yield Supplement Account, Reserve
Account and other accounts identified as such in the
related Prospectus Supplement (collectively, the "Trust
Accounts") will be invested as provided in the related
Sale and Servicing Agreement or Pooling and Servicing
Agreement in Permitted Investments. "Permitted Invest-
ments" means (i) direct obligations of, and obligations
fully guaranteed as to timely payment by, the United
States of America or its agencies; (ii) demand deposits,
time deposits, certificates of deposit or bankers' accep-
tances of certain depository institutions or trust compa-
nies having the highest rating from the applicable Rating
Agency; (iii) commercial paper having, at the time of the
Trust's investment, a rating in the highest rating cate-
gory from the applicable Rating Agency; and (iv) invest-
ments in money market funds having the highest rating
from the applicable Rating Agency; provided, that no such
Permitted Investment shall be of a type such that the
investment therein by the applicable Trust would result
in such Trust being required to register as an investment
company under the Investment Company Act of 1940, as
amended. Permitted Investments are generally 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 distribu-
tion 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 re-
quired 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. Investment earnings on
funds deposited in the Trust Accounts, net of losses and
investment expenses (collectively, "Investment Earn-
ings"), shall be deposited in the applicable Collection
Account or distributed as provided in the related Pro-
spectus Supplement.
The Trust Accounts will be maintained as Eligible
Deposit Accounts. "Eligible Deposit Account" means
either (a) a segregated account with an Eligible Institu-
tion 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 relat-
ed Trustee, as applicable, or (b) a depository institu-
tion 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 depos-
it rating acceptable to the Rating Agencies and (ii)
whose deposits are insured by the Federal Deposit Insur-
ance Corporation.
COLLECTIONS
With respect to each Trust, the Servicer will depos-
it all payments on the related Receivables received from
Obligors and all proceeds of the related Receivables
collected during each collection period specified in the
related Prospectus Supplement (each, a "Collection Peri-
od") into the related Collection Account not later than
two business days after receipt. However, so long as
NationsBank, N.A. is the Servicer and provided that (i)
there exists no Event of Servicing Termination and (ii)
each other condition to making monthly deposits as may be
required by the related Sale and Servicing Agreement or
Pooling and Servicing Agreement is satisfied, the
Servicer may retain such amounts until the business day
prior to the applicable Distribution Date (the "Deposit
Date"). The Servicer or the Sellers, as the case may be,
will remit the aggregate Purchase Amount of any Receiv-
ables to be purchased from a Trust to the related Collec-
tion Account on the applicable Deposit Date. Pending
deposit into the Collection Account, collections may be
employed by the Servicer at its own risk and for its own
benefit and will not be segregated from its own funds.
To the extent set forth in the related Prospectus Supple-
ment, the Servicer may, in order to satisfy the require-
ments 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 Receiv-
ables and payment of the aggregate Purchase Amount with
respect to Receivables purchased by the Servicer.
The Sellers and the Servicer will also deposit into
the Collection Account on or before each Deposit Date the
Purchase Amount of each Receivable to be repurchased or
purchased by them pursuant to an obligation that arose
during the preceding Collection Period. The Servicer will
be entitled to retain, or to be reimbursed from, amounts
otherwise payable into, or on deposit in, the Collection
Account but later determined to have resulted from mis-
taken deposits or postings or checks returned for insuf-
ficient funds.
ADVANCES AND ADVANCE RESERVE WITHDRAWALS
Servicer Advances. If so provided in the related
Prospectus Supplement, as of the last day of each Collec-
tion Period, the Servicer will, subject to the limita-
tions described in the following sentence, make a payment
(an "Advance") with respect to each Receivable (other
than a Receivable which the Servicer, on behalf of the
applicable Trust, has determined to charge-off during
such Collection Period, in accordance with its customary
servicing practices (a "Defaulted Receivable")) equal to
the excess, if any, of (x) the amount of interest due on
such Receivable at its applicable Contract Rate, over (y)
the interest actually received by the Servicer with
respect to such Receivable (whether from the Obligor, the
Yield Supplement Agreement (if applicable) or payments of
the Purchase Amount) during or with respect to such
Collection Period. The Servicer may elect not to make an
Advance of due and unpaid interest with respect to a
Receivable to the extent that the Servicer, in its sole
discretion, determines that such Advance is not recover-
able from subsequent payments on such Receivable or from
funds in the Reserve Account. Advances by the Servicer
will not be required to be made pursuant to any Sale and
Servicing Agreement, except to the extent specified in
the related Prospectus Supplement.
To the extent that the amount set forth in clause
(y) above with respect to a Receivable is greater than
the amount set forth in clause (x) above with respect
thereto, such amount shall be distributed to the Servicer
on the related Distribution Date. Any such payment will
only be from accrued interest due from the Obligor under
such Receivable.
The Servicer will deposit Advances, if any, into the
Collection Account on the applicable Deposit Date.
Advance Reserve Withdrawals. To the extent provided
in the related Prospectus Supplement, and only to the
extent that such Prospectus Supplement does not provide
for Advances to be made by the Servicer, the Servicer
may, as of the last day of the Collection Period, with-
draw from the Reserve Account funds in an amount with
respect to each Receivable (other than a Defaulted Re-
ceivable) equal to the excess, if any, of (x) the amount
of interest due on such Receivable at its applicable
Contract Rate, over (y) the interest actually received by
the Servicer with respect to such Receivable (whether
from the Obligor, the Yield Supplement Agreement (if
applicable) or payments of the Purchase Amount) during or
with respect to such Collection Period (an "Advance
Reserve Withdrawal"). The Servicer will deposit Advance
Reserve Withdrawals, if any, into the Collection Account
on the applicable Deposit Date. Advance Reserve With-
drawals will not be required to be made pursuant to any
Sale and Servicing Agreement, except to the extent speci-
fied in the related Prospectus Supplement.
SERVICING PROCEDURES
With respect to a Trust, the Servicer will make
reasonable efforts to collect all payments due with
respect to the Receivables in a manner consistent with
the terms described in the Sale and Servicing Agreement
or the Pooling and Servicing Agreement and will exercise
the degree of skill and care that the Servicer exercises
with respect to similar motor vehicle installment sales
contracts serviced by the Servicer for itself or others
and that are consistent with prudent industry standards.
Consistent with its normal procedures, the Servicer may,
in its discretion, arrange with the Obligor on a Receiv-
able to defer or modify the payment schedule. Some of
such arrangements may cause the Servicer to purchase the
Receivable while others may result in Advance Reserve
Withdrawals or the Servicer making Advances with respect
to the Receivable. If the Servicer determines that
eventual payment in full of a Receivable is unlikely, the
Servicer will follow its normal practices and procedures
to realize upon the Receivable, including the reposses-
sion and disposition of the Financed Vehicle securing the
Receivable at a public or private sale, or the holding of
any other action permitted by applicable law. The
Servicer shall be permitted to delegate (i) any and all
of its servicing duties to any of its affiliates (includ-
ing the Sellers) or (ii) specific duties to subcontrac-
tors who are in the business of performing such duties;
provided, however, the Servicer will remain obligated and
liable to the Trustee and the Certificateholders for
servicing and administering the Receivables in accordance
with the Sales and Servicing Agreement or the Pooling and
Servicing Agreement as if the Servicer alone were servic-
ing the Receivables.
With respect to any Trust, the Servicer will cove-
nant in the Sale and Servicing Agreement and in the
Pooling and Servicing Agreement that: (i) the Servicer
will not release the Financed Vehicle from the security
interest granted by the related Receivable in whole or in
part, except upon payment in full of the Receivable or as
otherwise contemplated by the Sale and Servicing Agree-
ment and in the Pooling and Servicing Agreement; (ii) the
Servicer will not impair in any material respect the
rights of the Securityholders in the Receivables, the
Dealer Agreements or the physical damage insurance poli-
cies; and (iii) the Servicer will not (a) extend a Re-
ceivable beyond the last day of the Collection Period
immediately preceding the applicable Final Scheduled
Distribution Date specified in the applicable Prospectus
Supplement, (b) amend or modify the principal balance or
Contract Rate of any Receivable, or (c) amend, waive or
otherwise modify any material term of a Receivable,
except in the case of certain extensions explicitly
permitted by the Sale and Servicing Agreement and in the
Pooling and Servicing Agreement.
MANDATORY REPURCHASE OF RECEIVABLES
In the event of a breach by the Servicer of any
covenant described above that materially and adversely
affects the interests of the Trust and the
Securityholders in a Receivable, the Servicer, unless
such breach has been cured by the last day of the Collec-
tion Period which includes the 60th day following the
date on which the Servicer becomes aware of, or receives
written notice of such breach, or earlier in certain
circumstances, will be required to purchase the Receiv-
able from the Trustee on the Deposit Date immediately
following such Collection Period or earlier under certain
circumstances. The purchase price will be the Purchase
Amount as of the last day of the Collection Period pre-
ceding the date of such purchase. The purchase obligation
will constitute the sole remedy available to the
Noteholders, the Certificateholders, the Trust or the
Trustee against the Servicer for any such uncured breach,
except with respect to certain indemnities of the
Servicer under the Agreement related thereto. See "
Event of Servicing Termination" below.
The Sale and Servicing Agreement and in the Pooling
and Servicing Agreement will also generally require the
Servicer to charge off a Receivable as a Defaulted Re-
ceivable in accordance with its customary standards and
to follow such of its normal collection practices and
procedures as it deems necessary or advisable, and that
are consistent with the standard of care required by the
Agreement, to realize upon any Receivable. The Servicer
may sell the Financed Vehicle securing such Receivable at
judicial sale or take any other action permitted by
applicable law. See "Certain Legal Aspects of the Receiv-
ables."
The Sale and Servicing Agreement and the Pooling
and Servicing Agreement will provide that the Servicer
will defend and indemnify the Trust and the Certificate-
holders against any and all costs, expenses, losses,
damages, claims and liabilities, including reasonable
fees and expenses of counsel and expenses of litigation,
arising out of or resulting from (i) the use, ownership
or operation by the Servicer or any affiliate thereof of
any Financed Vehicle occurring in connection with any
repossession of a Financed Vehicle or (ii) the willful
misfeasance, negligence or bad faith of the Servicer in
the performance of its duties under the Agreement. The
Servicer's obligations to indemnify the Trust and the
Certificateholders for the Servicer's actions or omis-
sions will survive the removal of the Servicer, but will
not apply to any action or omission of a successor
Servicer.
SERVICING COMPENSATION AND EXPENSES
The Servicer will be entitled to receive a servicing
fee (the "Servicing Fee") for each Collection Period
equal to a specified percentage (the "Servicing Fee
Rate") of the Pool Balance as of the first day of such
Collection Period. The Servicer also will be entitled to
receive a supplemental servicing fee (the "Supplemental
Servicing Fee") for each Collection Period equal to any
late, prepayment, and other administrative fees and
expenses collected during such Collection Period. To the
extent specified in the related Prospectus Supplement,
the Supplemental Servicing Fee will include Investment
Earnings on funds deposited in the Trust Accounts and
other accounts with respect to a Trust. The Servicer
will be paid the Servicing Fee and the Supplemental
Servicing Fee for each Collection Period on the applica-
ble Distribution Date.
The Servicing Fee and the Supplemental Servicing Fee
(collectively, the "Servicer Fee") are intended to com-
pensate the Servicer for performing the functions of a
third party servicer of the Receivables as an agent for
their beneficial owner, including collecting and posting
all payments, responding to inquiries of Obligors on the
Receivables, investigating delinquencies, sending payment
coupons to Obligors, reporting federal income tax infor-
mation to Obligors, paying costs of collections, and
policing the collateral. The Servicer Fee will also
compensate the Servicer for administering the particular
Receivables Pool, including making Advances, accounting
for collections, furnishing monthly and annual statements
to the related Trustee and Indenture Trustee with respect
to distributions, and generating federal income tax
information for the Trust. The Servicer Fee also will
reimburse the Servicer for certain taxes, the fees of the
related Trustee and Indenture Trustee, accounting fees,
outside auditor fees, data processing costs, and other
costs incurred in connection with administering the
applicable Receivables.
DISTRIBUTIONS
With respect to each series of Securities, beginning
on the Distribution Date specified in the related Pro-
spectus Supplement, distributions of principal and inter-
est (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, calcula-
tion, allocation, order, source, priorities of and re-
quirements 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 Prospec-
tus Supplement.
With respect to each Trust, on each Distribution
Date, collections on the related Receivables will be
transferred from the Collection Account to the Note
Payment 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 short-
falls in the amount available for distribution on such
date to the extent specified in the related Prospectus
Supplement. As more fully described in the related
Prospectus Supplement, distributions in respect of prin-
cipal of a class of Securities of a given series may 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.
Allocation of Collections on Receivables. Distribu-
tions of principal on the Securities of a series may be
based on the amount of principal collected or due, or the
amount of Realized Losses incurred, in a Collection
Period. On or before the fifth Business Day preceding
each Distribution Date (a "Determination Date"), the
Indenture Trustee, if any, or, otherwise, the Trustee
shall determine the amount in the Collection Account
available for distribution on the related Distribution
Date. Such amount shall be allocated to interest and to
principal as described in the applicable Prospectus
Supplement. Payments to Securityholders shall be made on
each Distribution Date in accordance with such alloca-
tions, together with the statement described under "Book-
Entry and Definitive Securities; Reports to
Securityholders Reports to Securityholders."
CREDIT AND CASH FLOW ENHANCEMENT
The amounts and types of credit and cash flow en-
hancement 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 agree-
ments, repurchase obligations, yield supplement agree-
ments, other agreements with respect to third party
payments or other support, cash deposits or such other
arrangements as may be described in the related Prospec-
tus Supplement or any combination of two or more of the
foregoing. If specified in the applicable Prospectus
Supplement, credit or cash flow enhancement for a class
of Securities may cover one or more other classes of
Securities of the same series, and credit or cash flow
enhancement for a series of Securities may cover one or
more other series of Securities.
The presence of a Reserve Account and other forms of
credit enhancement for the benefit of any class or series
of Securities is intended to enhance the likelihood of
receipt by the Securityholders of such class or series of
the full amount of principal and interest due thereon and
to decrease the likelihood that such Securityholders will
experience losses. The credit enhancement for a class or
series of Securities may not provide protection against
all risks of loss and may 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 en-
hancement, 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.
The Sellers may replace the credit enhancement for
any class of Securities with another form of credit
enhancement without the consent of Securityholders,
provided the applicable Rating Agencies confirm in writ-
ing that substitution will not result in the reduction or
withdrawal of the rating of such class of Securities or
any other class of Securities of the related series.
Reserve Account. If so provided in the related
Prospectus Supplement, pursuant to the related Sale and
Servicing Agreement or Pooling and Servicing Agreement,
the Sellers will establish for a series or class of
Securities an account, as specified in the related Pro-
spectus Supplement (the "Reserve Account"), which will be
maintained with the related Trustee or Indenture Trustee,
as applicable. If so provided in the related Prospectus
Supplement, the Reserve Account will be funded by an
initial deposit by the Sellers on the Closing Date in the
amount set forth in the related Prospectus Supplement
and, if the related series has a Funding Period, will
also be funded on each Subsequent Transfer Date to the
extent described in the related Prospectus Supplement.
As further described in the related Prospectus Supple-
ment, the amount on deposit in the Reserve Account will
be increased on each Distribution 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 after the pay-
ment of all other required payments and distributions on
such date. The related Prospectus Supplement will de-
scribe the circumstances and manner under which distribu-
tions may be made out of the Reserve Account, either to
holders of the Securities covered thereby or to the
Sellers.
The Sellers may at any time, without consent of the
Securityholders, sell, transfer, convey or assign in any
manner its rights to and interests in distributions from
the Reserve Account provided that (i) the Rating Agencies
confirm in writing that such action will not result in a
reduction or withdrawal of the rating of any class of
Securities, (ii) the Sellers provide to the applicable
Trustee and any Indenture Trustee an opinion of indepen-
dent counsel that such action will not cause the related
Trust to be classified as an association (or publicly
traded partnership) taxable as a corporation for federal
income tax purposes and (iii) such transferee or assignee
agrees in writing to take positions for federal income
tax purposes consistent with the federal income tax
positions agreed to be taken by the Sellers.
Yield Supplement Account; Yield Supplement Agree-
ment. If so provided in the related Prospectus Supple-
ment, pursuant to the related Sale and Servicing Agree-
ment or Pooling and Servicing Agreement, the Sellers will
establish for a series an account, as specified in the
related Prospectus Supplement (the "Yield Supplement
Account"), which will be maintained with the same entity
at which the related Collection Account is maintained
and, if so specified in the related Prospectus Supple-
ment, will be created with an initial deposit by the
Sellers of the Yield Supplement Initial Deposit. Each
Yield Supplement Account will be designed solely to hold
funds to be applied by the Indenture Trustee or applica-
ble Trustee to provide payments to Securityholders in
respect of Receivables the Contract Rate of which is less
than the Required Rate.
On each Distribution Date, the Seller shall deposit
to the related Collection Account, or the related Inden-
ture Trustee or applicable Trustee, as the case may be,
will transfer to the related Collection Account, from
monies on deposit in the Yield Supplement Account, an
amount equal to the Yield Supplement Amount (as such term
is defined in the related Prospectus Supplement, the
"Yield Supplement Amount") in respect of the Receivables
for such Distribution Date. If so specified in the
related Prospectus Supplement, amounts on deposit on any
Distribution Date in the Yield Supplement Account in
excess of the Required Yield Supplement Amount, after
giving effect to all distributions to be made on such
Distribution Date, will be released to the Sellers.
Monies on deposit in the Yield Supplement Account may be
invested in Permitted Investments under the circumstances
and in the manner described in the related Sale and
Servicing Agreement or Pooling and Servicing Agreement,
as applicable. If so specified in the related Prospectus
Supplement, Investment Earnings on investment of funds in
a Yield Supplement Account will be deposited into such
Yield Supplement Account. If so specified in the related
Prospectus Supplement, any monies remaining on deposit in
a Yield Supplement Account upon the termination of the
related Trust pursuant to its terms shall be released to
the Sellers.
If a Yield Supplement Account is established with
respect to any Trust as to which a Pre-Funding Account
has been established, the Sellers and the related Inden-
ture Trustee or applicable Trustee, will enter into a
Yield Supplement Agreement pursuant to which, on each
Subsequent Transfer Date, the Sellers will deposit into
the Yield Supplement Account the Additional Yield Supple-
ment Amount in respect of the related Subsequent Receiv-
ables. Each Yield Supplement Agreement will affect only
Receivables having Contract Rates less than the related
Required Rate.
NET DEPOSITS
As an administrative convenience and for so long as
certain conditions are satisfied (see " Collections"
above), the Servicer will be permitted to make the depos-
it of collections, aggregate Advances, if any, and Pur-
chase Amounts for any Trust for or with respect to the
related Collection Period, net of distributions to the
Servicer as reimbursement of Advances or payment of the
Servicer Fee with respect to such Collection Period. The
Servicer, however, will account to the Trustee, any
Indenture Trust, the Noteholders, if any, and the Certif-
icateholders with respect to each Trust as if all depos-
its, distributions, and transfers were made individually.
STATEMENTS TO TRUSTEES AND TRUST
Prior to each Distribution Date with respect to each
series of Securities, the Servicer will provide to the
applicable Indenture Trustee, if any, and the applicable
Trustee as of the close of business on the last day of
the preceding Collection Period a statement setting forth
substantially the same information as is required to be
provided in the periodic reports provided to
Securityholders of such series described under "Book-
Entry and Definitive Securities; Reports to
Securityholders Reports to Securityholders."
EVIDENCE AS TO COMPLIANCE
Each Sale and Servicing Agreement and Pooling and
Servicing Agreement will provide that a firm of certified
independent public accountants will furnish to the relat-
ed Trust and Indenture Trustee or Trustee, as applicable,
annually a statement as to compliance in all material
respects 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 appli-
cable, 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
Events of Servicing Termination under the related Sale
and Servicing Agreement or Pooling and Servicing Agree-
ment, 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 NationsBank, N.A.
may not resign from its obligations and duties as
Servicer thereunder, except upon determination that
NationsBank, N.A.'s performance of such duties is no
longer permissible under applicable law. No such resig-
nation will become effective until the related Indenture
Trustee or Trustee, as applicable, or a successor
servicer has assumed NationsBank, N.A.'s servicing obli-
gations and duties under such Sale and Servicing Agree-
ment 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 judg-
ment; 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 liabil-
ity. Each of the Sale and Servicing Agreement and the
Pooling and Servicing Agreement will provide that the
Servicer will be liable only to the extent of the obliga-
tions specifically undertaken by it under each such
agreement and will have no other obligations or liabili-
ties thereunder. The Servicer may, however, undertake
any reasonable action that it may deem necessary or
desirable in respect of a particular Sale and Servicing
Agreement or Pooling and Servicing Agreement, the rights
and duties of the parties thereto, and the interests of
the related Securityholders thereunder. In such event,
the legal expenses and costs of such action and any
liability resulting therefrom will be expenses, costs,
and liabilities of the Servicer, and the Servicer will
not be entitled to be reimbursed therefor.
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 (where
the Servicer is not the surviving entity and where such
entity assumes all obligations of the Servicer, will be
the successor of the Servicer under such Sale and Servic-
ing Agreement or Pooling and Servicing Agreement.
EVENT OF SERVICING TERMINATION
"Events of Servicing Termination" under each Sale
and Servicing Agreement and Pooling and Servicing Agree-
ment will consist of (i) any failure by the Servicer or
the applicable Seller, as the case may be, to deliver to
the Applicable Trustee for distribution to the
Securityholders of the related series or for deposit in
any of the Trust Accounts or the Certificate Distribution
Account any required payment, which failure continues
unremedied for five business days after written notice
from the Applicable Trustee is received by the Servicer
or the applicable Seller, as the case may be, or after
discovery by an officer of the Servicer or the applicable
Seller, as the case may be; (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 Agree-
ment 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 90 days after
the giving of written notice of such failure (A) to the
Servicer or the Seller, as the case may be, by the Appli-
cable 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 not less than a majority in principal amount
of such outstanding Notes or of such Certificate Balance;
(iii) certain events of bankruptcy, receivership, insol-
vency or similar proceedings and certain actions of the
Servicer indicating its insolvency pursuant to bankrupt-
cy, readjustment, receivership, conservatorship, insol-
vency, marshalling of assets and liabilities or similar
proceedings or its inability to pay its obligations as
they become due (any such event with respect to any
Person, an "Insolvency Event"); and (iv) such other
events, if any, set forth in the related Prospectus
Supplement.
RIGHTS UPON EVENT OF SERVICING TERMINATION
In the case of any Trust that has issued Notes, as
long as an Event of Servicing Termination under a Sale
and Servicing Agreement remains unremedied, the related
Indenture Trustee or holders of Notes of the related
series evidencing not less than a majority of principal
amount of such Notes then outstanding (or if no Notes are
outstanding, the Trustee or holders of Certificates of
the related Series evidencing not less than a majority of
principal amount of such Certificates then outstanding)
may terminate all the rights and obligations of the
Servicer under such Sale and Servicing Agreement, where-
upon such Indenture Trustee or a successor servicer
appointed by such Indenture Trustee will succeed to all
the responsibilities, duties and liabilities of the
Servicer under such Sale and Servicing Agreement and will
be entitled to similar compensation arrangements. In the
case of any Trust that has not issued Notes, as long as
an Event of Servicing Termination under the related Sale
and Servicing Agreement or Pooling and Servicing Agree-
ment remains unremedied, the related Trustee or holders
of Certificates of the related series evidencing not less
than a majority of the principal amount of such Certifi-
cates then outstanding may terminate all the rights and
obligations of the Servicer under such Sale and Servicing
Agreement or Pooling and Servicing Agreement, whereupon
such Trustee or a successor servicer appointed by such
Trustee will succeed to all the responsibilities, duties
and liabilities of the Servicer under such Sale and
Servicing Agreement or Pooling and Servicing Agreement
and will be entitled to similar compensation arrange-
ments. If, however, a receiver or similar official has
been appointed for the Servicer, and no Event of Servic-
ing Termination 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 at least
$50,000,000 and whose regular business includes the
servicing of motor vehicle receivables. Such Indenture
Trustee or Trustee may make such arrangements for compen-
sation 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 EVENTS OF SERVICING TERMINATION
With respect to each Trust that has issued Notes,
the holders of Notes evidencing at least a majority in
principal amount of the then outstanding Notes of the
related series (or the holders of the Certificates of
such series evidencing not less than a majority of the
outstanding Certificate Balance, in the case of any Event
of Servicing Termination which does not adversely affect
the related Indenture Trustee or such Noteholders) may,
on behalf of all such Noteholders and Certificateholders,
waive any Event of Servicing Termination under the relat-
ed Sale and Servicing Agreement and its consequences,
except an Event of Servicing Termination consisting of a
failure to make any required deposits to or payments from
any of the Trust Accounts or to the Certificate Distribu-
tion Account 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 Event of
Servicing Termination under the related Sale and Servic-
ing Agreement or Pooling and Servicing Agreement, except
an Event of Servicing Termination consisting of a failure
to make any required deposits to or payments from the
Certificate Distribution Account or the related Trust
Accounts in accordance with such Sale and Servicing
Agreement or Pooling and Servicing Agreement. No such
waiver will impair such Noteholders' or Certificateholders'
rights with respect to subsequent defaults.
AMENDMENT
Each of the Transfer and Servicing Agreements may be
amended by the parties thereto, without the consent of
the related Noteholders or Certificateholders, for the
purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of such
Transfer and Servicing Agreements or of modifying in any
manner the rights of such Noteholders or Certificatehold-
ers; provided that such action will not, in the opinion
of counsel (which may be an employee of a Seller, the
Servicer or any of their affiliates) satisfactory to the
related Trustee or Indenture Trustee, as applicable,
materially and adversely affect the interest of any such
Noteholder or Certificateholder, and provided that an
opinion of counsel as to certain tax matters is deliv-
ered, if required. The Transfer and Servicing Agreements
may also be amended by the Sellers, 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 majori-
ty 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, collec-
tions of payments on the related Receivables or distribu-
tions 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 amend-
ment, without the consent of the holders of all the
outstanding Notes or Certificates, as the case may be, of
such series, and provided that an opinion of counsel as
to certain tax matters is delivered, if required.
INSOLVENCY EVENT OR DISSOLUTION
With respect to a Trust that is not a grantor trust,
if an Insolvency Event or a dissolution occurs with
respect to [NB-SPC], the related Receivables of such
Trust will be liquidated and the Trust will be terminated
90 days after the date of such Insolvency Event or disso-
lution, unless, before the end of such 90-day period, the
related Trustee shall have received written instructions
from (i) the Noteholders (other than [NB-SPC], the Sell-
ers, the Servicer or their affiliates) of Notes of such
series representing a majority of the aggregate unpaid
principal amount of each class of all such Notes and the
right to receive interest thereon, (ii) the Certificate-
holders (other than [NB-SPC]) of Certificates of such
series representing not less than a majority of the
aggregate Certificate Balance of each class of Certifi-
cates, and (iii) not less than a majority of the holders
(other than [NB-SPC], the Sellers, the Servicer or their
affiliates) of certain interests, if any, in the Reserve
Account and any other person specified in a Prospectus
Supplement with respect to such Trust, to the effect that
each such party disapproves of the liquidation of such
Receivables and termination of such Trust and in connec-
tion therewith, the related Trustee (x) appoints an
entity acceptable to NationsBank Corporation to acquire
an interest in such Trust and to act as a substitute
"general partner" for federal income tax purposes and (y)
obtains an opinion of counsel that such Trust will there-
after not be classified as an association taxable as a
corporation for federal income tax and applicable state
tax purposes. Promptly after the occurrence of an Insol-
vency Event or a dissolution with respect to [NB-SPC],
notice thereof is required to be given to such
Noteholders, Certificateholders and holders of interests
in the Reserve Account; provided that any failure to give
such required notice will not prevent or delay termina-
tion of such Trust. Upon termination of any Trust, the
related Trustee shall, or shall direct the related Inden-
ture Trustee to, promptly sell the assets of such Trust
(other than the Trust Accounts and the Certificate Dis-
tribution Account) in a commercially reasonable manner
and on commercially reasonable terms. The proceeds from
any such sale, disposition or liquidation of the Receiv-
ables 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 Payment Account (if any) and the Certificate Distri-
bution 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 applica-
ble Trustee does not have the power to commence a volun-
tary proceeding in bankruptcy with respect to the related
Trust without the unanimous prior approval of all Certif-
icateholders (including the Sellers) of such Trust and
the delivery to such Trustee by each such Certificate-
holder (including the Sellers) of a certificate certify-
ing 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 Certifi-
cateholders 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.
[NB-SPC] LIABILITY
Under each Trust Agreement, [NB-SPC] 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 Certifi-
cateholder 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 arrange-
ment created a partnership under the Delaware Revised
Uniform Limited Partnership Act in which [NB-SPC] acted
as general partner.
TERMINATION
With respect to each Trust, the obligations of the
Servicer, the Sellers, the related Trustee and the relat-
ed 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 Receiv-
ables, (ii) the payment to Noteholders, if any, and
Certificateholders of the related series of all amounts
required to be paid to them pursuant to the Transfer and
Servicing Agreements and (iii) the occurrence of either
event described below.
In order to avoid excessive administrative expense,
the Servicer will be permitted at its option to purchase
from each Trust, as of the end of any applicable Collec-
tion 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 Bal-
ance"), all remaining related Receivables at a price
equal to the aggregate of the Purchase Amounts thereof as
of the end of such Collection Period.
To the extent provided in the related Prospectus
Supplement with respect to a Trust, the Servicer will,
within ten days following a Distribution 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 a commercial-
ly reasonable manner and on commercially reasonable
terms. The minimum price of any such bid which may be
accepted shall be an amount not less than the sum of (i)
the amount of all accrued and unpaid interest on the
outstanding Notes, if any, issued by such Trust to the
next succeeding Distribution Date, (ii) the unpaid prin-
cipal amount of all outstanding Notes, if any, issued by
such Trust, (iii) the amount of all accrued and unpaid
interest on the outstanding Certificates issued by such
Trust to the next succeeding Distribution Date, and (iv)
the principal balance of all outstanding Certificates
issued by such Trust. The Applicable Trustee's interest
in such Receivables will not be released or terminated
except upon receipt of payment of the purchase price
therefor. If two or more bids are received, each of
which are at least equal to the amount described above,
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 entity acting as Servicer, in its capacity as
administrator (the "Administrator"), will enter into an
agreement (as amended and supplemented from time to time,
an "Administration Agreement") with each Trust that
issues Notes and the related Indenture Trustee pursuant
to which the Administrator will agree, to the extent
provided in such Administration Agreement, to provide the
notices and to perform other administrative obligations
required by the related Indenture. With respect to any
such Trust, the Servicing Fee will provide compensation
for the performance of the Administrator's obligations
under the applicable Administration Agreement and as
reimbursement for its expenses related thereto.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
RIGHTS IN THE RECEIVABLES
The Receivables are "chattel paper" as defined in
the UCC. Pursuant to the UCC, for most purposes, a sale
of chattel paper is treated in a manner similar to a
transaction creating a security interest in chattel
paper. The Sellers will cause appropriate financing
statements to be filed with the appropriate governmental
authorities in the states of North Carolina, Texas,
Georgia and Florida to perfect the interest of the Trust
in its purchase of the Receivables from the Sellers.
Pursuant to the Transfer and Servicing Agreements,
NSI will hold the Receivables and the Receivable Files as
custodian for the Trustee following the sale and assign-
ment of the Receivables to the Trust. The Sellers will
take such action as is required to perfect the rights of
the Trustee in the Receivables (subject to the following
two paragraphs). The Receivables will not be stamped, or
otherwise marked, to indicate that they have been sold to
the Trust; however, the Servicer, the Sellers and their
respective affiliates will indicate in their computer
records that the Receivables have been sold to the Trust.
If, through inadvertence or otherwise, another party
purchases (or takes a security interest in) the Receiv-
ables for new value in the ordinary course of business
and takes possession of the Receivables without actual
knowledge of the Trust's interest, the purchaser (or
secured party) will acquire an interest in the Receiv-
ables superior to the interest of the Trust.
As part of its normal operating procedures since at
least 1979 until January 4, 1996, after receiving Motor
Vehicle Loan documents from Dealers and after reviewing
those documents, NationsBank, N.A. has microfilmed the
manually signed original Motor Vehicle Loan document and
then destroyed the manually signed original document;
however, certificates of title were not destroyed as part
of these procedures. The applicable Prospectus Supplement
will identify the percentage of Receivables contributed
by NationsBank, N.A. by principal balance as of the
applicable Cut-Off date. The lack of manually signed
original documents has not materially impaired
NationsBank, N.A.'s enforcement of its rights under the
Motor Vehicle Loans.
It is possible however, that, in the event of a
bankruptcy of a Dealer, a creditor of such Dealer or the
bankruptcy trustee of such Dealer could assert that
NationsBank, N.A., to the extent NationsBank, N.A. was
relying solely on possession as a means of perfecting a
first priority perfected ownership interest in the af-
fected Receivable, no longer had a first priority per-
fected ownership interest in such Receivable because it
no longer had the manually signed original Receivable
document as a result of its destruction of the manually
signed original Receivable document. If successful, such
assertion would render NationsBank, N.A. an unsecured
creditor of the Dealer in bankruptcy and as a result, the
transfer by NationsBank, N.A. to the Trust would be
effective only to transfer such unsecured claim rather
than a first priority perfected ownership interest in
such Receivable. Historically, NationsBank, N.A. has
perfected its interest in approximately 50% (by original
principal balance) of its Motor Vehicle Loans by filing
financing statements with respect to such Motor Vehicle
Loans naming certain Dealers as debtors, although it has
not been determined whether any such filings resulted in
a first priority perfected ownership interest or a junior
interest in any affected Receivable, and there can be no
assurance that continuation statements with respect to
such filings will be filed in the future. NationsBank,
N.A. has agreed that if, after the bankruptcy of a Deal-
er, the bankruptcy trustee of such Dealer or a creditor
of such dealer asserts that NationsBank, N.A. did not
have, or the Trust does not have, a first priority per-
fected ownership interest in any Receivable acquired by
NationsBank, N.A. from such Dealer and such assertion is
related to NationsBank, N.A.'s practice of retaining
original Motor Vehicle Loan documents only in microfilm
form, NationsBank, N.A. will repurchase such Receivable
from the Trust at the Purchase Amount. To NationsBank,
N.A.'s knowledge, its interest in a Motor Vehicle Loan
has never been challenged in a Dealer bankruptcy based on
the lack of manually signed original Motor Vehicle Loan
documents.
Under the Agreement, the Servicer will be obligated
from time to time to take such actions as are necessary
to protect and perfect the Trust's interest in the Re-
ceivables and their proceeds.
SECURITY INTERESTS IN VEHICLES
In all states in which the Receivables have been
originated, retail motor vehicle installment sales con-
tracts such as the Receivables evidence the credit sale
of automobiles and light trucks by dealers to obligors;
the contracts also constitute personal property security
agreements and include grants of security interests in
the vehicles under the Uniform Commercial Code (the
"UCC"). Perfection of security interests in the vehicles
is generally governed by the motor vehicle registration
laws of the state in which the vehicle is located. In
most states in which the Receivables have been originat-
ed, a security interest in a vehicle is perfected by
notation of the secured party's lien on the vehicle's
certificate of title. Each Receivable prohibits the sale
or transfer of the Financed Vehicle without the applica-
ble Seller's and the Servicer consent.
With respect to each Trust, pursuant to the related
Dealer Agreement, the Dealer will assign its security
interests in the Financed Vehicles securing the related
Receivables to a Seller and, pursuant to the related Sale
and Servicing Agreement or Pooling and Servicing Agree-
ment, the Sellers will assign their security interests in
the Financed Vehicles securing such Receivables to the
Trust. However, because of the administrative burden and
expense, the Servicer, the Sellers and the Trust will not
amend any certificate of title to identify the Trust as
the new secured party on the certificates of title relat-
ing to the Financed Vehicles. Also, NSI will hold any
certificates of title relating to the Financed Vehicles
in its possession as custodian for the 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 Receiv-
ables."
In most states, assignments such as those under the
Sale and Servicing Agreement or Pooling and Servicing
Agreement, as applicable, relating to each Trust, togeth-
er with a perfected security interest in the chattel
paper are an effective conveyance of a security interest
in the vehicles subject to the chattel paper 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. 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 Seller'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 a Seller failed to obtain a perfected security
interest, its security interest would be subordinate to,
among others, subsequent purchasers of the Financed
Vehicles and holders of perfected security interests.
Such a failure would constitute a breach of the Sellers'
warranties under the related Sale and Servicing Agreement
or Pooling and Servicing Agreement, as applicable, and
would create an obligation of the Sellers under such Sale
and Servicing Agreement or Pooling and Servicing Agree-
ment to repurchase the related Receivable unless the
breach is cured. See "Description of the Transfer and
Servicing Agreements Sale and Assignment of Receivables."
By not identifying the Trust as the secured party on the
certificate of title, the Trust's interest in the chattel
paper may not have the benefit of the security interest
in the Financed Vehicle in all states or such security
interest could be defeated through fraud or negligence.
The Sellers will assign their rights under each Dealer
Agreement to the related Trust.
Under the laws of most states, the perfected secu-
rity interest in a vehicle would continue for four months
after a vehicle is moved to a state other than the state
in which it is initially registered and thereafter until
the vehicle owner 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 vehicles registered in states 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 inter-
est 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-regis-
tration could defeat perfection. In the ordinary course
of servicing receivables, the Servicer takes steps to
effect re-perfection upon receipt of notice of re-regis-
tration 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 or
Pooling and Servicing Agreement, the Servicer will be
obligated to take appropriate steps, at the Servicer
expense, to maintain perfection of security interests in
the Financed Vehicles.
Under the laws of most states, liens for repairs
performed on a motor vehicle and liens for certain unpaid
taxes take priority over even a perfected security inter-
est in a Financed Vehicle. The Internal Revenue Code of
1986, as amended, also grants priority to certain federal
tax liens over the lien of a secured party. Federal law
and the laws of certain states permit the confiscation of
motor vehicles under certain circumstances if used in
unlawful activities, which may result in the loss of a
secured party's perfected security interest in the con-
fiscated motor vehicle. With respect to each Trust, the
Sellers will represent to the Trust that each security
interest in a Financed Vehicle is or will be prior to all
other present liens (other than tax liens and liens that
arise by operation of law) upon and security interests in
such Financed Vehicle. However, liens for repairs or
taxes, or the confiscation of a Financed Vehicle, could
arise or occur at any time during the term of a Receiv-
able. No notice will be given to the applicable Trustee
or Certificateholders and any Indenture Trustee or
Noteholders, if any, in the event such a lien arises or
confiscation occurs.
REPOSSESSION
In the event of default by vehicle purchasers, the
holder of a Receivable has all the remedies of a secured
party under the UCC, except where specifically limited by
other state laws or by contract. The UCC remedies for a
secured party include the right to repossession by self-
help means, unless such means would constitute a breach
of the peace. Unless a vehicle is voluntarily surren-
dered, self-help repossession is the method employed by
the Servicer in the majority of instances in which a
default occurs and is accomplished simply by retaking
possession of the financed vehicle. 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
In the event of default by the obligor, some juris-
dictions require that the obligor be notified of the
default and be given a time period within which the
obligor may cure the default prior to repossession.
Generally, this cure right may be exercised on a limited
number of occasions in any one-year period.
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 collat-
eral prior to actual sale by paying the secured party the
unpaid principal balance of the obligation plus reason-
able expenses for repossessing, holding, and preparing
the collateral for disposition and arranging for this
sale, plus, in some jurisdictions, reasonable attorneys'
fees, or, in some states, a right to reinstatement by
payment of delinquent installments or the unpaid balance.
Repossessed vehicles are generally resold by the Servicer
through automobile auctions which are attended principal-
ly by dealers.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the repossessed vehicles
generally will be applied to the expenses of resale and
repossession and then to the satisfaction of the indebt-
edness of the obligor on the receivable. While some
states impose prohibitions or limitations on the pursuit
of deficiencies and deficiency judgments if the unpaid
balance does not exceed a specified amount of the indebt-
edness, 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 repos-
session. 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 indebtedness, there is a surplus of
funds. In that case, the UCC requires the lender to
remit the surplus to any holder of any lien with respect
to the vehicle or if no such lienholder exists or there
are remaining funds, the UCC requires the lender to remit
the surplus to the former obligor.
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 Reporting Act, the Fair Debt Collection
Practices Act, the Magnuson-Moss Warranty Act, the Feder-
al Reserve Board's Regulations B and Z, state adaptations
of the National Consumer Act and of the Uniform Consumer
Credit Code, the Soldiers and Sailors Civil Relief Act of
1940, and state motor vehicle retail installment sales
acts, retail installment sales acts, state lemon laws and
other similar laws. Also, state laws impose finance
charge ceilings and other restrictions on consumer trans-
actions and require contract disclosures in addition to
those required under federal law. The requirements
impose specific statutory liabilities upon creditors who
fail to comply with their provisions. In some cases,
this liability could affect an assignee's ability to
enforce consumer finance contracts such as the Receiv-
ables.
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 state statutes, or the common law in
certain states, has the effect of subjecting a seller
(and certain related lenders and their assignees) in a
consumer credit transaction and any assignee of the
seller 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 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 Receiv-
able. Under most state motor vehicle dealer licensing
laws, sellers of motor vehicles are required to be li-
censed to sell motor vehicles at retail sale. Further-
more, Federal Odometer Regulations promulgated under the
Motor Vehicle Information and Cost Savings Act require
that all sellers of new and used vehicles furnish a
written statement signed by the seller certifying the
accuracy of the odometer reading. If a seller is not
properly licensed or if an Odometer Disclosure Statement
was not provided to the purchaser of the related financed
vehicle, the obligor may be able to assert a defense
against the seller of the vehicle. If an obligor were
successful in asserting any such claim or defense, such
claim or defense would constitute a breach of the
Sellers' representations and warranties under the related
Sale and Servicing Agreement or Pooling and Servicing
Agreement and would create an obligation of the related
Seller to repurchase the Receivable unless the breach is
cured. See "Description of the Transfer and Servicing
Agreements Sale and Assignment of the Receivables."
Courts have imposed general equitable principles on
secured parties pursuing repossession of collateral or
litigation involving deficiency balances. These equita-
ble principles may have the effect of relieving an obli-
gor from some or all of the legal consequences of a
default.
In several cases, obligors 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 credi-
tor do not involve sufficient state action to afford
constitutional protection to consumers.
The Sellers will warrant under the applicable Sale
and Servicing Agreement or Pooling and Servicing Agree-
ment that each Receivable complies with all requirements
of law in all material respects. Accordingly, if an
obligor has a claim against a Trust for violation of any
law and such claim materially and adversely affects such
Trust's interest in a Receivable, such violation would
constitute a breach of warranty under the related Sale
and Servicing Agreement or Pooling and Servicing Agree-
ment and would create an obligation of the applicable
Seller to repurchase the Receivable unless the breach is
cured. See "Description of the Transfer and Servicing
Agreements Sale and Assignment of the Receivables."
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting
deficiency judgments, numerous other statutory provi-
sions, including federal bankruptcy laws and related
state laws, may interfere with or affect the ability of a
lender to realize upon collateral or enforce a deficiency
judgment. For example, in a Chapter 13 proceeding under
the federal bankruptcy law, a court may prevent a lender
from repossessing a motor vehicle, and, as part of the
rehabilitation plan, reduce the amount of the secured
indebtedness to the market value of the motor vehicle at
the time of bankruptcy (as determined by the court),
leaving the party providing financing as a general unse-
cured 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.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of material
anticipated federal income tax consequences of the pur-
chase, ownership and disposition of the Notes and the
Certificates of a series. The summary does not purport
to deal with federal income tax consequences applicable
to all categories of holders, some of which may be sub-
ject to special rules. For example, it does not discuss
the tax treatment of Noteholders or Certificateholders
that are insurance companies, regulated investment compa-
nies or dealers in securities. Moreover, there are no
cases or Internal Revenue Service ("IRS") rulings on
similar transactions involving both debt instruments and
equity interests issued by a trust with terms similar to
those of the Notes and the Certificates. As a result,
the IRS may disagree with all or a part of the discussion
below. Prospective investors are urged to consult their
own tax advisors in determining the federal, state,
local, foreign and any other tax consequences to them of
the purchase, ownership and disposition of the Notes and
the Certificates of any series.
The following summary is based upon current provi-
sions of the Internal Revenue Code of 1986, as amended
(the "Code"), the Treasury regulations promulgated there-
under 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 special federal
tax counsel to each Trust specified in the related Pro-
spectus Supplement ("Special Tax Counsel"), regarding
certain federal income tax matters discussed below. An
opinion of Special 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 purpos-
es 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, Certifi-
cates and related terms, parties and documents applicable
to such Trust.
The federal income tax consequences to Certificate-
holders will vary depending on whether the Trust is
intended to be treated as a partnership under the Code or
whether the Trust will be treated as a grantor trust.
The Prospectus Supplement for each series of Certificates
will specify whether the Trust is intended to be treated
as a partnership or as a grantor trust.
SCOPE OF THE TAX OPINIONS
Special Tax Counsel will, upon issuance of a series
of Notes and/or Certificates, deliver its opinion that
the applicable Trust will not be classified as an associ-
ation (or publicly traded partnership) taxable as a
corporation for federal income tax purposes. Further,
with respect to each series of Notes, Special Tax Counsel
will opine that the Notes will be classified as debt for
federal income tax purposes. Any such opinion will be
filed either as an exhibit to the registration statement
of which this Prospectus forms a part or will be filed as
an exhibit to a Form 8K filed in connection with the
establishment of the related Trust and issuance of Secu-
rities.
In addition, Special Tax Counsel will render its
opinion that it has prepared or reviewed the statements
herein and in the related Prospectus Supplement under the
heading "Summary Tax Status" relating to federal income
tax matters and under the heading "Federal Income Tax
Consequences," and is of the opinion that such statements
are correct in all material respects. Such statements
are intended as an explanatory discussion of the possible
effects of the classification of the Trust as a partner-
ship or a grantor trust, as the case may be, for federal
income tax purposes on investors generally and of related
tax matters affecting investors generally, but do not
purport to furnish information in the level of detail or
with the attention to the investor's specific tax circum-
stances that would be provided by an investor's own tax
adviser. Accordingly, each investor is advised to con-
sult its own tax advisers with regard to the tax conse-
quences to it of investing in the Certificates.
ERISA CONSIDERATIONS
ERISA and Section 4975 of the Code impose certain
restrictions on (a) employee benefit plans (as defined in
Section 3(3) of ERISA), (b) plans described in section
4975(e)(1) of the Code, including individual retirement
accounts or Keogh plans, (c) any entities whose underly-
ing assets include plan assets by reason of a plan's
investment in such entities (each of (a), (b) and (c), a
"Plan") and (d) persons who have certain specified rela-
tionships to such Plans ("Parties in Interest" under
ERISA and "Disqualified Persons" under the Code). More-
over, based on the reasoning of the United States Supreme
Court in John Hancock Life Ins. Co. v. Harris Trust and
Sav. Bank, 114 S. Ct. 517 (1993), an insurance company's
general account may be deemed to include assets of the
Plans investing in the general account (e.g., through the
purchase of an annuity contract), and the insurance
company might be treated as a Party in Interest with
respect to a Plan by virtue of such investment. ERISA
also imposes certain duties on persons who are fiducia-
ries of Plans subject to ERISA and prohibits certain
transactions between a Plan and Parties in Interest or
Disqualified Persons with respect to such Plans. Viola-
tion of these rules may result in the imposition of an
excise tax or penalty.
A fiduciary of any Plan should carefully review with
its legal and other advisors whether the purchase or
holding of any Securities of a series could give rise to
a transaction prohibited or otherwise impermissible under
ERISA or the Code, and should refer to "ERISA Consider-
ations" in the related Prospectus Supplement regarding
any restrictions on the purchase and/or holding of the
Securities offered thereby.
Certain employee benefit plans, such as governmental
plans (as defined in Section 3(32) of ERISA) and certain
church plans (as defined in Section 3(33) of ERISA) are
not subject to the prohibited transaction provisions of
ERISA and Section 4975 of the Code. Accordingly, assets
of such plans may, subject to the provisions of any other
applicable federal and state law, be invested in Securi-
ties of any series without regard to the factors de-
scribed herein and under "ERISA Considerations" in the
related Prospectus Supplement. It should be noted,
however, that any such plan that is qualified and exempt
from taxation under Sections 401(a) and 501(a) of the
Code is subject to the prohibited transaction rules set
forth in Section 503 of the Code.
Certain transactions involving a Trust might be
deemed to constitute prohibited transactions under ERISA
and the Code if assets of the Trust were deemed to be
assets of a Plan investing in Securities issued by the
Trust. Under a regulation (the "Plan Assets Regulation")
issued by the United States Department of Labor ("DOL"),
29 C.F.R. SECTION 2510.3-101, the assets of the Trust would be
treated as plan assets of a Plan for purposes of ERISA
and the Code only if the Plan acquires an "Equity Inter-
est" in the Trust and none of the exceptions contained in
the Plan Assets Regulation is 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 Certificates will most
likely be deemed Equity Interests for purposes of ERISA.
It should be noted, however, as discussed below, that the
purchase of Notes by a Plan may also give rise to poten-
tial prohibited transactions, and all prospective inves-
tors should review the discussion herein with their legal
advisors
CERTIFICATES ISSUED BY TRUSTS THAT ISSUE ONLY CERTIFI-
CATES
The ERISA considerations that apply with respect to
Securities issued by a Trust differ depending on whether
the Trust issuing the Securities (i) issues both Notes
and Certificates or (ii) issues only Certificates. The
discussion in this section " Certificates Issued by
Trusts That Issue Only Certificates" applies only with
respect to Certificates issued by a Trust that issues
only Certificates.
Senior Certificates. The following discussion
applies only to nonsubordinated Certificates (referred to
herein as "Senior Certificates") issued by a Trust that
does not issue Notes.
Except to the extent otherwise specified in the
related Prospectus Supplement, the DOL has issued an
individual exemption, Prohibited Transaction Exemption
93-31, to NationsBank Corporation and its affiliates as
one or more of the underwriters of the Senior Certifi-
cates (the "Exemption"). The Exemption generally exempts
from the application of the prohibited transaction provi-
sions of Section 406 of ERISA and the excise taxes im-
posed on such prohibited transactions pursuant to Sec-
tions 4975(a) and (b) of the Code and Section 502(i) of
ERISA certain transactions relating to the initial pur-
chase, holding and subsequent resale by Plans of certifi-
cates in pass-through trusts that consist of certain
receivables, loans and other obligations that meet the
conditions and requirements set forth in the Exemption.
The receivables covered by the Exemption include fixed
rate [simple interest] retail 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 Plan from the applicable under-
writers, provided that specified conditions (certain of
which are described below) are met. The Sellers believe
that the Exemption will apply to the acquisition and
holding of the Senior Certificates by a Plan and that all
conditions of the Exemption other than those within the
control of the investors have been or will be met.
The Exemption sets forth six general conditions that
must be satisfied for a transaction involving the acqui-
sition of the Senior Certificates by a Plan to be eligi-
ble for the exemptive relief thereunder:
(1) the acquisition of the Senior Certificates
by a Plan is on terms (including the price for the
Senior Certificates) that are at least as favorable
to the Plan as they would be in an arm's-length
transaction with an unrelated party;
(2) the rights and interests evidenced by the
Senior Certificates acquired by a Plan are not
subordinated to the rights and interests evidenced
by other certificates of the Trust;
(3) the Senior Certificates acquired by the
Plan have received a rating at the time of such
acquisition that is in one of the three highest
generic rating categories from any one of four
Rating Agencies;
(4) the Trustee is not an affiliate of any
other member of the "Restricted Group," which con-
sists of the applicable underwriters, the Sellers,
the Servicer, the Trustee and any Obligor with
respect to the Receivables included in the Trust
constituting more than 5% of the aggregate unamor-
tized principal balance of the assets of the Trust
as of the date of initial issuance of the Senior
Certificates, and any affiliate of such parties;
(5) the sum of all payments made to and re-
tained by the applicable underwriters in connection
with the distribution or placement of the Senior
Certificates represents not more than reasonable
compensation for underwriting or placing the Senior
Certificates. The sum of all payments made to and
retained by the Sellers pursuant to the sale of the
Receivables to the Trust represents not more than
the fair market value of such Receivables. The sum
of all payments made to and retained by the Servicer
represents not more than reasonable compensation for
the Servicer services under the Agreement and reim-
bursement of the Servicer reasonable expenses in
connection therewith; and
(6) the Plan investing in the Senior Certifi-
cates must be an "accredited investor" as defined in
Rule 501(a)(1) of Regulation D of the Commission
under the Securities Act.
Because the rights and interests evidenced by the
Senior Certificates acquired by a Plan are not subordi-
nated to the rights and interests evidenced by other
certificates of the Trust, the second general condition
set forth above is satisfied. It is a condition of the
issuance of the Senior Certificates that they be rated in
the highest rating category by a Rating Agency. A fidu-
ciary of a Plan contemplating purchasing a Senior Certif-
icate must make its own determination that at the time of
such acquisition, the Senior Certificates continue to
satisfy the third general condition set forth above. The
Sellers and the Servicer expect that the fourth general
condition set forth above will be satisfied with respect
to the Senior Certificates. A fiduciary of a Plan contem-
plating purchasing a Senior Certificate must make its own
determination that the first, fifth and sixth general
conditions set forth above will be satisfied with respect
to the Senior Certificates.
In addition the Trust must satisfy the following
requirements:
(a) the corpus of the Trust must consist solely
of assets of the type which have been included in
other investment pools,
(b) certificates in such other investment pools
must have been rated in one of the three highest
generic rating categories of one of the Rating
Agencies for at least one year prior to the Plan's
acquisition of Senior Certificates, and
(c) certificates evidencing interests in such
other investments pools must have been purchased by
investors other than Plans for at least one year
prior to any Plan's acquisition of Senior Certifi-
cates.
If the general conditions of the Exemption are
satisfied, the Exemption may provide relief from the
restrictions imposed by Sections 406(a) and 407(a) of
ERISA as well as the excise taxes imposed by Sections
4975(a) and (b) of the Code by reason of Sections
4975(c)(1)(A) through (D) of the Code, in connection with
the direct or indirect sale, exchange, transfer or hold-
ing of the Senior Certificates by a Plan. However, no
exemption is provided from the restrictions of Sections
406(a)(1)(E), 406(a)(2) and 407 of ERISA for the acquisi-
tion or holding of a Senior Certificate on behalf of an
"Excluded Plan" by any person who has discretionary
authority or renders investment advice with respect to
the assets of such Excluded Plan. For purposes of the
Senior Certificates, an Excluded Plan is a Plan sponsored
by any member of the Restricted Group.
If certain specific conditions of the Exemption are
also satisfied, the Exemption may provide relief from the
restrictions imposed by Sections 406(b)(1) and (b)(2) and
407(a) of ERISA and the taxes imposed by Sections 4975(a)
and (b) of the Code by reason of Section 4975(c)(1)(E) of
the Code in connection with the direct or indirect sale,
exchange, transfer or holding of Senior Certificates in
the initial issuance of Senior Certificates between the
Sellers or Underwriters and a Plan other than an Excluded
Plan when the person who has discretionary authority or
renders investment advice with respect to the investment
of Plan assets in the Senior Certificates is (a) an
Obligor with respect to 5% or less of the fair market
value of the Receivables or (b) an affiliate of such
person. The Sellers expect such specific conditions to
be satisfied with respect to the issuance of Senior
Certificates.
The Exemption also applies to transactions in con-
nection with the servicing, management and operation of
the Trust, provided that, in addition to the general
requirements described above, (a) such transactions are
carried out in accordance with the terms of a binding
pooling and servicing agreement and (b) the pooling and
servicing agreement is provided to, or described in all
material respects in the prospectus provided to, invest-
ing Plans before their purchase of Senior Certificates
issued by the Trust. The Agreement is a pooling and
servicing agreement as defined in the Exemption. All
transactions relating to the servicing, management and
operations of the Trust will be carried out in accordance
with the Agreement. See "Description of the Transfer and
Servicing Agreements" herein and in the related Prospec-
tus Supplement.
The Exemption also may provide relief from the
restrictions imposed by Sections 406(a) and 407(a) of
ERISA and the taxes imposed by Sections 4975(c)(1)(A)
through (D) of the Code if such restrictions are deemed
to otherwise apply merely because a person is deemed to
be a party in interest or a disqualified person with
respect to an investing Plan by virtue of providing
services to a Plan (or by virtue of having certain speci-
fied relationships to such a person) solely as a result
of such Plan's ownership of Senior Certificates.
Any Plan fiduciary considering whether to purchase a
Senior Certificate on behalf of a Plan should consult
with experienced legal counsel regarding the applicabili-
ty of the Exemption and other applicable issues and
whether the Senior Certificates are an appropriate in-
vestment for a Plan under ERISA and the Code.
Pre-Funding Accounts. The Exemption in its current
form [does not apply with respect to Pre-Funding Ac-
counts. However, the DOL has under consideration a
proposal to amend the Exemption to extend its application
to Pre-Funding Accounts. If the Exemption does not apply
to Pre-Funding Accounts, assets held in any Pre-Funding
Account maintained in connection with a Trust that issues
only Certificates could be deemed to be Plan assets,
which could give rise to prohibited transaction liabili-
ty. Investors considering the purchase of Senior Certif-
icates issued by a Trust that maintains a Pre-Funding
Account should consult with their legal advisors concern-
ing this issue.]
Subordinated Certificates. The following discussion
applies only to subordinated Certificates (referred to
herein as "Subordinated Certificates") issued by a Trust
that does not issue Notes.
Because the Subordinated Certificates are subordi-
nate interests, the Exemption will not apply to exempt
the purchase and subsequent holding of the Subordinated
Certificates by or on behalf of a Plan from the prohibit-
ed transaction provisions of ERISA and the Code. However,
certain other administrative exemptions may be available
with respect to the purchase and subsequent holding of
the Subordinated Certificates by or on behalf of a Plan.
These exemptions include PTE 95-60, which applies to
certain transactions involving insurance company general
accounts, PTE 90-1, which applies to certain transactions
involving insurance company pooled separate accounts, PTE
91-38, which applies to certain transactions involving
bank collective investment funds, and PTE 84-14, which
applies to certain transactions entered into on behalf of
a Plan by qualified professional asset managers.
PTE 95-60 in particular, among other things, pro-
vides an exemption for transactions in connection with
the servicing, management, and operation of a trust in
which an insurance company general account has an inter-
est as a result of its acquisition of certificates issued
by the trust. PTE 95-60 would apply to the acquisition of
the Class B Certificates issued by the Trust provided
that certain conditions are met, including the require-
ment that the Trust is described in and otherwise meets
the requirements of an "underwriter exemption," such as
PTE 93-31, other than the requirements relating to the
nonsubordination and rating of the Subordinated Certifi-
cates. Accordingly, an insurance company may acquire the
Subordinated Certificates on behalf of its general ac-
count if the conditions of PTE 95-60 are otherwise satis-
fied.
Any Plan fiduciary considering the purchase of a
Subordinated Certificate on behalf of a Plan should
consult with experienced legal counsel regarding the
applicability of any such exemption from the prohibited
transaction rules, other relevant issues, and whether the
Subordinated Certificates would be an appropriate invest-
ment for the Plan under ERISA and the Code.
Each investor purchasing the Subordinated Certifi-
cates by or on behalf of a Plan will be deemed to have
represented that an exemption from the prohibited trans-
action rules applies such that the acquisition and subse-
quent holding of the Subordinated Certificates by or on
behalf of such Plan will not constitute a non-exempt
prohibited transaction in violation of Section 406 of
ERISA or Section 4975 of the Code by reason of the appli-
cation of one or more statutory or administrative exemp-
tions from the prohibited transaction rules.
SECURITIES ISSUED BY TRUSTS THAT ISSUE BOTH NOTES AND
CERTIFICATES
The discussion in this section " Securities Issued
by Trusts That Issue Both Notes and Certificates" applies
only to Securities issued by a Trust that issues both
Notes and Certificates.
The Notes. The Sellers believe that the Notes of
any series should be treated as indebtedness without
substantial equity features for purposes of the Plan
Assets Regulation. However, without regard to whether
the Notes of a series are treated as an Equity Interest
for such purposes, the acquisition or holding of such
Notes by or on behalf of a Plan could be considered to
give rise to a prohibited transaction if the applicable
Trust, Trustee, Indenture Trustee, any holder of the
Certificates of such series or any of their respective
affiliates, is or becomes a Party in Interest or a Dis-
qualified Person with respect to such Plan. In such
case, certain exemptions from the prohibited transaction
rules could be applicable depending on the type and
circumstances of the Plan fiduciary making the decision
to acquire a Note. Included among these exemptions are
PTCE 90-1,which exempts certain transactions involving
insurance company pooled separate accounts; PTCE 95-60,
PTCE 91-38, and PTCE 84-14, as described above.
The Certificates. Because the Certificates issued
by a Trust that also issues Notes will most likely be
treated as Equity Interests under the Plan Assets Regula-
tion, such Certificates may not be acquired by (i) an
employee benefit plan (as defined in Section 3(3) of
ERISA) that is subject to Title I of ERISA, (ii) a plan
described in Section 4975(e)(1) of the Code, (iii) a
governmental plan, as defined in Section 3(32) of ERISA,
subject to any Federal, state or local law which is, to a
material extent, similar to the provisions of Section 406
of ERISA or Section 4975 of the Code, (iv) an entity
whose underlying assets include plan assets by reason of
a plan's investment in the entity (within the meaning of
Department of Labor Regulation 29 C.F.R. SECTION 2510.3-101),
or (v) a person investing "plan assets" of any such plan
(excluding, for purposes of this clause (v), any entity
registered under the Investment Company Act of 1940, as
amended) (each, a "Plan Investor").
In addition, investors other than Plan Investors
should be aware that a prohibited transaction could be
deemed to occur if any holder of the Certificates or any
of their respective affiliates, is or becomes a Party in
Interest or a Disqualified Person with respect to any
Plan that purchases and holds the related Notes without
being covered by one or more of the exemptions described
above in "The Notes."
GENERAL INVESTMENT CONSIDERATIONS
Prospective investors who are Plan Investors should
consult with their legal advisors concerning the impact
of ERISA and the Code and the potential consequences of
making an investment in any Securities of a series with
respect to such investors' specific circumstances.
Moreover, each Plan fiduciary should take into account,
among other considerations, whether the fiduciary has the
authority to make the investment; the composition of the
Plan's portfolio with respect to diversification by type
of asset; the Plan's funding objectives; the tax effects
of the investment; and whether under the general fiducia-
ry standards of investment procedure and diversification
an investment in any Securities of a series is appropri-
ate for the Plan, taking into account the overall invest-
ment policy of the Plan and the composition of the Plan's
investment portfolio.
PLAN OF DISTRIBUTION
On the terms and conditions set forth in an under-
writing 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 Sellers 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 pur-
chase, the principal amount of each class of Notes and
Certificates, as the case may be, of the related series
set forth therein and in the related Prospectus Supple-
ment.
In each of the Underwriting Agreements with respect
to any given series of Securities, the several underwrit-
ers will agree, subject to the terms and conditions set
forth therein, to purchase all the Notes and Certifi-
cates, 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 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 con-
cessions may be changed.
The Sellers and the Servicer 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 Permitted Investments acquired
from such underwriters or from one or more of the Sell-
ers.
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.
LEGAL OPINIONS
Certain legal matters relating to the Securities of
any series will be passed upon for the related Trust, the
Sellers and the Servicer by Robert W. Long, Jr., Esq.,
Assistant General Counsel of NationsBank Corporation.
Certain legal matters relating to the Securities will be
passed upon for the underwriters by Skadden, Arps, Slate,
Meagher & Flom (or such other counsel specified in the
related Prospectus Supplement). Certain federal income
tax matters and other matters will be passed upon for the
Sellers by Skadden, Arps, Slate, Meagher & Flom (or such
other counsel specified in the Prospectus Supplement).
Skadden, Arps, Slate, Meagher & Flom has represented and
may in the future represent one or more of the Sellers.
INDEX OF TERMS
Set forth below is a list of the defined terms used
in this Prospectus and the pages on which the definitions
of such terms may be found herein:
Additional Yield Supplement Amount . . . . . . . . . 11
Administration Agreement . . . . . . . . . . . . . . 60
Administrator . . . . . . . . . . . . . . . . . . . . 60
Advance . . . . . . . . . . . . . . . . . . . . . . 12,51
Advance Reserve Withdrawal . . . . . . . . . . . . 12,51
Applicable Trustee . . . . . . . . . . . . . . . . . 43
Balloon Receivables . . . . . . . . . . . . . . . . . 25
Bank . . . . . . . . . . . . . . . . . . . . . . . . . 5
Banks . . . . . . . . . . . . . . . . . . . . . . . . . 5
Base Rate . . . . . . . . . . . . . . . . . . . . . . 38
Basic Documents . . . . . . . . . . . . . . . . . . . 35
BHCA . . . . . . . . . . . . . . . . . . . . . . . . 29
Book-Entry Certificates . . . . . . . . . . . . . . . 42
Book-Entry Notes . . . . . . . . . . . . . . . . . . 42
Book-Entry Securities . . . . . . . . . . . . . . . . 42
Calculation Agent . . . . . . . . . . . . . . . . . . 38
Calculation Date . . . . . . . . . . . . . . 39, 40, 42
CD Rate . . . . . . . . . . . . . . . . . . . . . . . 38
CD Rate Determination Date . . . . . . . . . . . . . 38
CD Rate Security . . . . . . . . . . . . . . . . . . 38
CDs (Secondary Market) . . . . . . . . . . . . . . . 38
Cede . . . . . . . . . . . . . . . . . . . . . . . . . 9
Cedel . . . . . . . . . . . . . . . . . . . . . . . . 42
Cedel Participants . . . . . . . . . . . . . . . . . 43
Certificate Balance . . . . . . . . . . . . . . . . . . 8
Certificate Distribution Account . . . . . . . . . . 49
Certificate Owners . . . . . . . . . . . . . . . . . . 3
Certificate Pool Factor . . . . . . . . . . . . . . . 29
Certificate Rate . . . . . . . . . . . . . . . . . . . 8
Certificateholders . . . . . . . . . . . . . . . . . . 3
Certificates . . . . . . . . . . . . . . . . . . . . . 1
Certificates of Deposit . . . . . . . . . . . . . . . 39
Closing Date . . . . . . . . . . . . . . . . . . . . . 5
Code . . . . . . . . . . . . . . . . . . . . . . 14, 64
Collection Account . . . . . . . . . . . . . . . . . 49
Collection Period . . . . . . . . . . . . . . . . . . 50
Commercial Paper . . . . . . . . . . . . . . . . . . 39
Commercial Paper Rate . . . . . . . . . . . . . . . . 39
Commercial Paper Rate Determination Date . . . . . . 39
Commercial Paper Rate Security . . . . . . . . . . . 38
Commission . . . . . . . . . . . . . . . . . . . . . . 3
Composite Quotations . . . . . . . . . . . . . . . . 38
Contract Rate . . . . . . . . . . . . . . . . . . . . 48
Dealer Agreements . . . . . . . . . . . . . . . . . . 23
Dealers . . . . . . . . . . . . . . . . . . . . . . . . 6
Defaulted Receivable . . . . . . . . . . . . . . . . 51
Definitive Certificates . . . . . . . . . . . . . . . 45
Definitive Notes . . . . . . . . . . . . . . . . . . 45
Definitive Securities . . . . . . . . . . . . . . . . 45
Deposit Date . . . . . . . . . . . . . . . . . . . . 50
Depositaries . . . . . . . . . . . . . . . . . . . . 42
Depository . . . . . . . . . . . . . . . . . . . . . 31
Determination Date . . . . . . . . . . . . . . . . . 53
DFSG . . . . . . . . . . . . . . . . . . . . . . . . 24
Disqualified Persons . . . . . . . . . . . . . . . . 65
Distribution Date . . . . . . . . . . . . . . . . . . 37
DOL . . . . . . . . . . . . . . . . . . . . . . . . . 66
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . 3
DTC's Nominee . . . . . . . . . . . . . . . . . . . . . 9
Eligible Deposit Account . . . . . . . . . . . . . . 50
Eligible Institution . . . . . . . . . . . . . . . . 50
Equity Interest . . . . . . . . . . . . . . . . . . . 66
ERISA . . . . . . . . . . . . . . . . . . . . . . . . 14
Euroclear . . . . . . . . . . . . . . . . . . . . . . 44
Euroclear Operator . . . . . . . . . . . . . . . . . 44
Euroclear Participants . . . . . . . . . . . . . . . 44
Euroclear System . . . . . . . . . . . . . . . . . . 44
Events of Default . . . . . . . . . . . . . . . . . . 33
Events of Servicing Termination . . . . . . . . . . . 56
Exemption . . . . . . . . . . . . . . . . . . . . . . 66
Excluded Plan . . . . . . . . . . . . . . . . . . . . 68
FDIC . . . . . . . . . . . . . . . . . . . . . . . . 17
Federal Funds Rate . . . . . . . . . . . . . . . . . 40
Federal Funds Rate Determination Date . . . . . . . . 40
Federal Funds Rate Security . . . . . . . . . . . . . 38
Final Scheduled Maturity Date . . . . . . . . . . . . 12
Financed Vehicles . . . . . . . . . . . . . . . . . . . 5
FIRREA . . . . . . . . . . . . . . . . . . . . . . . 17
Fixed Rate Securities . . . . . . . . . . . . . . . . 37
Floating Rate Securities . . . . . . . . . . . . . . 37
FTC Rule . . . . . . . . . . . . . . . . . . . . . . 63
Funding Period . . . . . . . . . . . . . . . . . . . . 8
H.15(519) . . . . . . . . . . . . . . . . . . . . . . 38
Indenture . . . . . . . . . . . . . . . . . . . . . . . 7
Indenture Trustee . . . . . . . . . . . . . . . . . . . 1
Index Maturity . . . . . . . . . . . . . . . . . . . 38
Indirect Participants . . . . . . . . . . . . . . . . 42
Initial Cut-Off Date . . . . . . . . . . . . . . . . . 5
Initial Pool Balance . . . . . . . . . . . . . . . . 59
Initial Receivables . . . . . . . . . . . . . . . . . . 5
Insolvency Event . . . . . . . . . . . . . . . . . . 57
Interest Reset Date . . . . . . . . . . . . . . . . . 38
Interest Reset Period . . . . . . . . . . . . . . . . 38
Investment Earnings . . . . . . . . . . . . . . . . . 50
IRS . . . . . . . . . . . . . . . . . . . . . . . . . 64
Issuer . . . . . . . . . . . . . . . . . . . . . . . . 5
LIBO . . . . . . . . . . . . . . . . . . . . . . . . 40
LIBOR . . . . . . . . . . . . . . . . . . . . . . . . 40
LIBOR Determination Date . . . . . . . . . . . . . . 40
LIBOR Security . . . . . . . . . . . . . . . . . . . 38
London Banking Day . . . . . . . . . . . . . . . . . 40
Money Market Yield . . . . . . . . . . . . . . . . . 39
Motor Vehicle Loans . . . . . . . . . . . . . . . . . 24
NationsBank South . . . . . . . . . . . . . . . . . . . 5
NationsBank Texas . . . . . . . . . . . . . . . . . . . 5
NB-SPC . . . . . . . . . . . . . 6,11,18,20,29,30,58,59
Note Interest Rate . . . . . . . . . . . . . . . . . . 7
Note Payment Account . . . . . . . . . . . . . . . . 49
Note Pool Factor . . . . . . . . . . . . . . . . . . 29
Noteholders . . . . . . . . . . . . . . . . . . . . . . 3
Notes . . . . . . . . . . . . . . . . . . . . . . . . . 1
NSI . . . . . . . . . . . . . . . . . . . . . . . . . 16
Obligors . . . . . . . . . . . . . . . . . . . . . . 23
Participants . . . . . . . . . . . . . . . . . . . 31,42
Parties in Interest . . . . . . . . . . . . . . . . . 65
Permitted Investments . . . . . . . . . . . . . . . . 50
Plan . . . . . . . . . . . . . . . . . . . . . . . . 65
Plan Assets Regulation . . . . . . . . . . . . . . . 66
Plan Investor . . . . . . . . . . . . . . . . . . . . 69
Pool Balance . . . . . . . . . . . . . . . . . . . . 29
Pooling and Servicing Agreement . . . . . . . . . . . . 5
Prospectus Supplement . . . . . . . . . . . . . . . . . 1
Purchase Amount . . . . . . . . . . . . . . . . . . . 49
Rating Agencies . . . . . . . . . . . . . . . . . . . 35
Receivable File . . . . . . . . . . . . . . . . . . . 49
Receivables . . . . . . . . . . . . . . . . . . . . 1, 5
Receivables Pool . . . . . . . . . . . . . . . . . . 23
Registration Statement . . . . . . . . . . . . . . . . 3
Required Initial Yield Supplement Amount . . . . . . 11
Required Subsequent Yield Supplement Amount . . . . . 11
Required Rate . . . . . . . . . . . . . . . . . . . . 11
Required Yield Supplement Amount . . . . . . . . . . 11
Reserve Account . . . . . . . . . . . . . . . . . . . 54
Restricted Group . . . . . . . . . . . . . . . . . . 67
Reuters Screen LIBO Page . . . . . . . . . . . . . . 40
Rules . . . . . . . . . . . . . . . . . . . . . . . . 43
Sale and Servicing Agreement . . . . . . . . . . . . . 5
Securities . . . . . . . . . . . . . . . . . . . . . . 1
Securities Act . . . . . . . . . . . . . . . . . . . . 3
Securityholders . . . . . . . . . . . . . . . . . . . 10
Seller . . . . . . . . . . . . . . . . . . . . . . 1, 5
Sellers . . . . . . . . . . . . . . . . . . . . . . 1. 5
Senior Certificates . . . . . . . . . . . . . . . . . 66
Servicer . . . . . . . . . . . . . . . . . . . . . 1, 5
Servicer Fee . . . . . . . . . . . . . . . . . . . . 53
Servicing Fee . . . . . . . . . . . . . . . . . . . . 52
Servicing Fee Rate . . . . . . . . . . . . . . . . . 52
Simple Interest Receivables . . . . . . . . . . . . . 25
Special Tax Counsel . . . . . . . . . . . . . . . . . 65
Spread . . . . . . . . . . . . . . . . . . . . . . . 38
Spread Multiplier . . . . . . . . . . . . . . . . . . 38
Statistical Release H.15(519) . . . . . . . . . . . . 38
Strip Certificates . . . . . . . . . . . . . . . . . . 9
Strip Notes . . . . . . . . . . . . . . . . . . . . . . 7
Subordinated Certificates . . . . . . . . . . . . . . 68
Subsequent Receivables . . . . . . . . . . . . . . 1, 6
Subsequent Transfer Date . . . . . . . . . . . . . . 47
Supplemental Servicing Fee . . . . . . . . . . . . . 52
Terms and Conditions . . . . . . . . . . . . . . . . 44
Transfer and Servicing Agreements . . . . . . . . . . 47
Treasury bills . . . . . . . . . . . . . . . . . . . 41
Treasury Rate . . . . . . . . . . . . . . . . . . . . 41
Treasury Rate Determination Date . . . . . . . . . . 41
Treasury Rate Security . . . . . . . . . . . . . . . 38
Trust . . . . . . . . . . . . . . . . . . . . . . . 1, 5
Trust Accounts . . . . . . . . . . . . . . . . . . . 49
Trust Agreement . . . . . . . . . . . . . . . . . . . . 5
Trustee . . . . . . . . . . . . . . . . . . . . . . . . 1
UCC . . . . . . . . . . . . . . . . . . . . . . . 16, 61
Underwriting Agreements . . . . . . . . . . . . . . . 70
Yield Supplement Account . . . . . . . . . . . . 11, 54
Yield Supplement Agreement . . . . . . . . . . . . . 11
Yield Supplement Amount . . . . . . . . . . . . . 11, 55
Yield Supplement Initial Deposit . . . . . . . . . . 11
TABLE OF CONTENTS
Page
REPORTS TO SECURITYHOLDERS . . . . . . . . . . . . . 3
AVAILABLE INFORMATION . . . . . . . . . . . . . . . 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . 3
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . 5
RISK FACTORS . . . . . . . . . . . . . . . . . . . . 16
THE TRUSTS . . . . . . . . . . . . . . . . . . . . . 23
THE RECEIVABLES POOLS . . . . . . . . . . . . . . . . 24
MATURITY AND PREPAYMENT CONSIDERATIONS . . . . . . . 27
POOL FACTORS AND TRADING INFORMATION . . . . . . . . 29
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . 29
THE BANKS, NATIONSBANK CORPORATION AND [NB-SPC] . . . 29
THE SERVICER . . . . . . . . . . . . . . . . . . . . 30
DESCRIPTION OF THE NOTES . . . . . . . . . . . . . . 30
DESCRIPTION OF THE CERTIFICATES . . . . . . . . . . . 36
DESCRIPTION OF FIXED AND FLOATING RATE OPTIONS . . . 37
BOOK-ENTRY AND DEFINITIVE SECURITIES;
REPORTS TO SECURITYHOLDERS . . . . . . . . . . . . . 42
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS 47
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES . . . . . . 60
FEDERAL INCOME TAX CONSEQUENCES . . . . . . . . . . . 64
ERISA CONSIDERATIONS . . . . . . . . . . . . . . . . 65
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . 70
LEGAL OPINIONS . . . . . . . . . . . . . . . . . . . 71
[FLAG]
The information contained herein is subject to completion or amendment.
A registration statement relating to these securities has been filed
with the Securities and Exchange Commission. These securities may not
be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This prospectus supplement
and the accompanying prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any sale of
these securities in any State in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of any such State
SUBJECT TO COMPLETION, DATED _____ __, 1996
PROSPECTUS SUPPLEMENT
(To Prospectus dated , 1996)
$
NATIONSBANK AUTO OWNER TRUST 199
$ % [CLASS A-1] ASSET BACKED NOTES
[$ % FLOATING RATE CLASS A-2 ASSET BACKED NOTES]
[$ % CLASS A-3 ASSET BACKED NOTES]
[$ % ASSET BACKED CERTIFICATES]
[NationsBank Logo]
NATIONSBANK, N.A
NATIONSBANK, N.A. (SOUTH
NATIONSBANK OF TEXAS, N.A
SELLERS
NATIONSBANK, N.A
SERVICER
The NationsBank Auto Owner Trust 199 - (the "Trust") will be
governed by a Trust Agreement, to be dated as of , 199 , among
NationsBank, N.A., NationsBank, N.A. (South), NationsBank of Texas,
N.A. (each, a "Seller" and a "Bank" and collectively, the "Sellers"
and the "Banks") and , as Owner Trustee. The Trust will issue $
aggregate initial principal amount of [Class A-1] % Asset
Backed Notes (the "[Class A-1] Notes")[, $ aggregate initial
principal amount of Class A-2 Floating Rate Asset Backed Notes (the
"Class A-2 Notes") and $ aggregate initial principal amount of
Class A-3 % 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 , 199 , between
the Trust and , as Indenture Trustee. The Trust will also issue
$ aggregate initial principal balance of % Asset Backed
Certificates (the "Certificates" and, together with the Notes, the
"Securities"). The assets of the Trust will include a pool of retail
motor vehicle installment sales contracts (the "Receivables") secured
by security interests in the motor vehicles financed thereby,
including
(continued on following page)
PROSPECTIVE INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE
INFORMATION SET FORTH IN "RISK FACTORS" BEGINNING ON PAGE S-
HEREIN AND ON PAGE OF THE ACCOMPANYING PROSPECTUS. THE
NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REP-
RESENT BENEFICIAL INTERESTS IN, THE TRUST ONLY AND DO
NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN, AND
ARE NOT GUARANTEED OR INSURED BY, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, ANY GOVERN-
MENTAL AGENCY, ANY OF THE SELLERS, THE
SERVICER OR NATIONSBANK CORPORATION
OR ANY OF THEIR RESPECTIVE
AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
PROCEEDS TO
PRICE TO UNDERWRITING THE SELLER
PUBLIC (1) DISCOUNT (1)(2)
Per [Class A-1] Note . % % %
[Per Class A-2 Note . . % % %]
[Per Class A-3 Note . . % % %]
[Per Certificate . . . % % %]
Total . . . . . . . . . $ $ $
(1) Plus accrued interest, if any, from , 199 .
(2) Before deducting expenses, estimated to be $ .
[This Prospectus Supplement and the related Prospectus may be
used by NationsBanc Capital Markets, Inc., an affiliate of the sellers
and the Servicer, in connection with offers and sales related to market-
making transactions in the Notes and the Certificates. NationsBanc
Capital markets, Inc. may act as principal or agent in such transactions.
Such sales will be made at prices related to prevailing markets prices at
the time of sale or otherwise. Certain information in this Prospectus
Supplement and the Prospectus will be updated from time to time as
described in "Incorporation of Certain Documents by Reference" in the
Prospectus.]
The Notes and the Certificates are offered by the Underwriters
when, as and if issued and accepted by the Underwriters and subject to
their right to reject orders in whole or in part. It is expected that
delivery of the Notes and the Certificates will be made in book-entry
form only through the Same Day Funds Settlement System of The
Depository Trust Company, or through Cedel Bank, societe anonyme or
the Euroclear System, on or about the Closing Date.
The date of this Prospectus Supplement is , 199 .
(continued from previous page)
certain monies received thereunder after the related Cut-Off Date (as
defined herein), which will be purchased by the Trust from the Seller
on or prior to the Closing Date, [monies on deposit in a trust account
(the "Pre-Funding Account") to be established with the Indenture
Trustee] and certain other property, as more fully described herein.
See "Summary The Trust Property" herein. [Additional retail motor
vehicle installment sales contracts (the "Subsequent Receivables")
will be purchased by the Trust from the Seller from time to time on or
before , 199 , from funds on deposit in the Pre-Funding Account.]
The Notes will be secured by the assets of the Trust pursuant to the
Indenture. (Certain capitalized terms used in this Prospectus
Supplement are defined elsewhere in this Prospectus Supplement on the
pages indicated in the "Index of Terms.")
Interest on [the] [all classes of] Notes [other than the Class A-
2 Notes] will accrue at the fixed per annum interest rates specified
above. [The Class A-2 Notes will accrue interest at a rate of %
per annum for the period from the Closing Date through 199 .
Thereafter, the Class A-2 Notes will accrue interest at a per annum
rate equal to [LIBOR] plus %.] Interest on the Notes will
generally be payable [quarterly] on the day of each [month] [
, , and ] (each, a "[Distribution] [Payment] Date"),
commencing , 199 . Interest will accrue from and including the
Closing Date (in the case of the first [Distribution] [Payment] Date),
or from the most recent [Distribution] [Payment] Date on which
interest has been paid to but excluding the following [Distribution]
[Payment] Date (each an "Interest Period"). [With respect to the
Class A-2 Rate, the "Index Maturity" for [LIBOR] will be [one month,
in the case of monthly Payment Dates] [three months (in the case of
quarterly Payment Dates)] and] the "Interest Reset Period" for such
calculation will be the Interest Period. See "Description of Fixed
and Floating Rate Options Floating Rate Securities" in the
Prospectus.] Principal on the Notes will be payable on each
[Distribution] [Payment] Date to the extent described herein[;
however, 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].
The Certificates will represent [fractional undivided] interests
in the Trust. Interest, to the extent of the Certificate Rate
specified above, will be distributed to the Certificateholders on
[each Distribution Date] [the day of each month (each, a
"Distribution Date"), commencing , 199 ]. Principal,
to the extent described herein, will be distributed to the
Certificateholders on each Distribution Date commencing with the later
of (i) the Distribution Date next succeeding the Distribution Date on
which the [Class A-1] Notes are paid in full and (ii) the , 199
Distribution Date. Distributions of principal and interest on the
Certificates will be subordinated in priority to payments due on the
Notes [to the extent] [as] described herein. In addition, upon the
occurrence and during the continuation of an Event of Default which
has resulted in an acceleration of the Notes or following an
Insolvency Event or a dissolution with respect to [NB-SPC],
distributions of any amounts on the Certificates will be subordinated
in priority of payment to payment in full of principal of the Notes.
[Moreover, upon any downgrading or withdrawal by any Rating Agency of
its rating of any class of Notes, no distributions of principal on the
Certificates will be made until all the Notes have been paid in full,
unless such rating has been restored.]
[The] [Class A-1] Notes will be payable in full on the
[Payment] [Distribution] Date[, the Class A-2 Notes will be payable in
full on the [Payment] [Distribution] Date and the Class A-3
Notes will be payable in full on the [Payment] [Distribution]
Date. The final scheduled Distribution Date with respect to the
Certificates will be the Distribution Date (the "Final
Scheduled Distribution Date"). However, payment in full of [the] [a
class of] Notes or of the Certificates could occur earlier or later
than such dates as described herein. In addition, the [Class A-3]
Notes will be subject to redemption in whole, but not in part, and the
Certificates will be subject to prepayment in whole, but not in part,
on any Distribution Date on which 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. [One or more classes of the
Notes will be subject to partial mandatory redemption and the
Certificates may be subject to partial mandatory prepayment, at a
premium described herein, in the event that funds remain in the
Pre-Funding Account at the end of the Funding Period (as defined
herein).]
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION
ABOUT THE OFFERING OF THE NOTES AND THE CERTIFICATES. ADDITIONAL
INFORMATION IS CONTAINED IN THE PROSPECTUS AND PROSPECTIVE INVESTORS
ARE URGED TO READ BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS
IN FULL. SALES OF THE NOTES OR THE CERTIFICATES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT
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.
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Notes or Definitive Certificates are
issued, monthly and annual unaudited reports containing information
concerning the Receivables will be prepared by the Servicer and sent
on behalf of the Trust only to Cede & Co. ("Cede"), as nominee of The
Depository Trust Company ("DTC") and registered holder of the Notes
and the Certificates. See "Book-Entry and Definitive Securities;
Reports to Securityholders Book-Entry Registration" and " Reports to
Securityholders" in the accompanying Prospectus (the "Prospectus").
Such reports will not constitute financial statements prepared in
accordance with generally accepted accounting principles. The
Servicer, on behalf 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 (the
"Exchange Act"), and the rules and regulations of the Commission
thereunder.
The Sellers have filed with the Commission, on behalf of the
Trust, a Registration Statement under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Certificates
offered pursuant to this Prospectus. For further information,
reference is made to such Registration Statement, and the exhibits
thereto, which are available for inspection without charge at the
public reference facilities of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, as well as the Midwest Regional Offices
of the Commission at the Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511, and at the Northeast
Regional Office of the Commission at 7 World Trade Center, Suite 1300,
New York, New York 10048. Copies of such information can be obtained
from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In
addition, the Commission maintains a public access site on the
Internet through the World Wide Web at which site reports, information
statements and other information, including all electronic filings,
regarding the Sellers and NationsBank Corporation, the parent
corporation of each of the Sellers, may be viewed. The Internet
address of such World Wide Web site is http://www.sec.gov. See
"Available Information" in the Prospectus. See "Available Information"
in the Prospectus.
SUMMARY
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.
ISSUER . . . . . NationsBank Auto Owner Trust 199 - (the
"Trust" or the "Issuer"), a Delaware
business trust to be formed by the Sellers
and the Trustee pursuant to a trust
agreement, (as amended, and supplemented
from time to time, the "Trust Agreement")
dated as of , 199 , among the
Sellers and the Owner Trustee.
SELLER . . . . . NationsBank, N.A., NationsBank, N.A. (South)
("NationsBank South") and NationsBank of
Texas, N.A. ("NationsBank Texas") (each a
"Seller" and a "Bank" and, collectively,
the "Sellers" and the "Banks").
SERVICER . . . . NationsBank, N.A., in its capacity as
servicer (the "Servicer").
INDENTURE TRUSTEE , a , as trustee under the
Indenture (the "Indenture Trustee").
OWNER TRUSTEE . . , a , as trustee under the
Trust Agreement (the "Owner Trustee").
THE NOTES . . . . The Trust will issue [ %] Asset Backed
Notes (the "Notes") pursuant to an
Indenture to be dated as of , 199
(as amended, modified and supplemented from
time to time, the "Indenture"), between the
Issuer and the Indenture Trustee[, as
follows: (1) Class A-1 % Asset-Backed
Notes (the "Class A-1 Notes") in the
aggregate initial principal amount of $
; (2) Class A-2 [Floating Rate]
Asset Backed Notes (the "Class A-2 Notes")
in the aggregate initial principal amount
of $ ; and (3) Class A-3 %
Asset Backed Notes (the "Class A-3 Notes")
in the aggregate initial principal amount
of $ ].
The Notes will be secured by the assets of
the Trust pursuant to the Indenture.
The Notes will be available for purchase in
book entry form only in minimum
denominations of $1,000 and integral
multiples thereof. The Noteholders will
not be entitled to receive Definitive Notes
except in the limited circumstances
described herein. See "Book-Entry and
Definitive Securities; Reports to
Securityholders Definitive Securities" in
the Prospectus.
THE CERTIFICATES The Trust will issue % Asset-Backed
Certificates (the "Certificates" and,
together with the Notes, the "Securities")
with an aggregate initial Certificate
Balance of $ . The Certificates
will represent [fractional undivided]
interests in the Trust and will be issued
pursuant to the Trust Agreement.
$_________ aggrgegate principal amount of
Certificates will initially be held by [NB-
SPC] amd are not offerred hereby..
The Certificates will be available for
purchase in book entry form only in minimum
denominations of $1,000 and integral
multiples thereof. The Certificateholders
will not be entitled to receive Definitive
Certificates except in the limited
circumstances described herein. See "Book-
Entry and Definitive Securities; Reports to
Securityholders Definitive Securities" in
the Prospectus. The rights of the
Certificateholders to receive distributions
with respect to the Certificates will be
subordinated to the rights of the
Noteholders to receive principal and
interest on the Notes [to the extent] [as]
described herein.
THE TRUST PROPERTY The property of the Trust (the "Trust
Property") includes a pool of fixed rate
simple interest retail motor vehicle
installment sales contracts purchased by
the Sellers from motor vehicle dealers
(the "Dealers") that provide for the
allocation of payments between principal
and interest according to the simple
interest method (collectively, the
"Receivables"), all monies received
under the [Initial] Receivables after
the close of business of the Servicer on
, 1996 (the "[Initial] Cut-Off
Date") [and all monies received under
the Subsequent Receivables after the
close of business of the Servicer on
each applicable Subsequent Transfer
Date] and will also include: (i) such
amounts as from time to time are on
deposit in one or more accounts
maintained pursuant to the Sale and
Servicing Agreement to be dated as of
, 199 (as amended and supplemented
from time to time, the "Sale and
Servicing Agreement"), among the Trust,
the Sellers and the Servicer [and the
Collateral Agent], as described herein,
including the Reserve Account[, the
Yield Supplement Account][and the Pre-
Funding Account]; (ii) security
interests in the new and used
automobiles, vans and light-duty trucks
financed thereby (collectively, the
"Financed Vehicles") and any accessions
thereto; (iii) the Sellers' rights (if
any) to receive proceeds from claims
under certain insurance policies
covering the Financed Vehicles or the
obligors under the Receivables (each, an
"Obligor"), as the case may be; (iv)
[certain rights of the Trust to receive
payments pursuant to the Yield
Supplement Agreement as described
below;] (v) any property that shall have
secured a Receivable and shall have been
acquired by the Trust; (vi) each
Seller's rights relating to the
repurchase of Receivables under
agreements between each Seller and the
Dealers that sold the Financed Vehicles
to the Obligors and any assignments and
other documents related thereto
(collectively, the "Dealer Agreements")
and under the documents and instruments
contained in the Receivable Files; (vii)
certain rebates of premiums and other
amounts relating to certain insurance
policies and other items financed under
the Receivables; (viii) the rights of
the Trust under the Sale and Servicing
Agreement; and (ix) any and all proceeds
of the foregoing.
THE RECEIVABLES . On , 199 (the "Closing Date"), the
Trust will purchase Receivables (the
"[Initial] Receivables") having an
aggregate principal balance (the "[Initial]
Pool Balance") of approximately $
as of , 199 (the "[Initial] Cut-Off
Date") from the Sellers pursuant to a Sale
and Servicing Agreement. As of the
[Initial] Cut-Off Date, the weighted
average annual percentage rate of the
[Initial] Receivables was approximately
%, the weighted average remaining maturity
of the [Initial] Receivables was
approximately months and the weighted
average original maturity of the [Initial]
Receivables was approximately months.
[On and following the Closing Date, pursuant
to the Sale and Servicing Agreement, the
Sellers will be obligated, subject only to
the availability thereof, to sell, and the
Trust will be obligated to purchase,
subject to the satisfaction of certain
conditions set forth therein, additional
Receivables (the "Subsequent Receivables")
from time to time during the Funding Period
having an aggregate principal balance equal
to approximately $ (such amount
being equal to an amount on deposit in the
Pre-Funding Account (the "Pre-Funded
Amount") on the Closing Date). The Sellers
will designate as a cut-off date (each a
"Subsequent Cut-Off Date") each date as of
which payments in respect of particular
Subsequent Receivables are conveyed to the
Trust. It is expected that certain of the
Subsequent Receivables arising between the
Initial Cut-Off Date and the Closing Date
will be conveyed to the Trust on the
Closing Date and that other Subsequent
Receivables will be conveyed to the Trust
as frequently as daily thereafter on dates
specified by the Sellers (each date on
which Subsequent Receivables are conveyed
to the Trust being referred to as a
"Subsequent Transfer Date") occurring
during the Funding Period. See
"Description of the Transfer and Servicing
Agreements Sale and Assignment of
Receivables; Subsequent Receivables"
herein.] [Coincident with each such
transfer of Subsequent Receivables, the
Yield Supplement Agreement will require the
Sellers to deposit into the Yield
Supplement Account an amount equal to the
Additional Yield Supplement Amount, if any,
in respect of such Subsequent Receivables.
See "Description of the Transfer and
Servicing Agreements Yield Supplement
Account; Yield Supplement Agreement"
herein.]
The [Initial] Receivables [and the
Subsequent Receivables] arise or will
arise from loans originated by Dealers
and purchased by the Sellers pursuant to
Dealer Agreements. The [Initial]
Receivables have been selected[, and the
Subsequent Receivables will be
selected,] from the contracts owned by
Sellers based on the criteria specified
in the Sale and Servicing Agreement and
described herein and in the Prospectus.
No [Initial] Receivable has[, and no
Subsequent Receivable will have,] a
scheduled maturity later than (the
"Final Scheduled Maturity Date")
[Subsequent Receivables may be originated by
the Dealers at a later date using credit
criteria different from those which were
applied to the Initial Receivables and may
be of a different credit quality and
seasoning. In addition, following the
transfer of Subsequent Receivables to the
Trust, the characteristics of the entire
pool of Receivables included in the Trust
may vary significantly from those of the
Initial Receivables. See "Risk Factors The
Subsequent Receivables and the Pre-Funding
Account" and "The Receivables Pool"
herein.]
The Receivable Pool may contain both Simple
Interest Receivables and Balloon
Receivables. See "The Receivables Pools,"
"Risk Factors General," " Subsequent
Receivables" and " Balloon Receivables;
Final Scheduled Payment Risk" in the
Prospectus.
The "Pool[/Pre-Funding] Balance" at any time
[will represent] [is the sum of (i)] the
aggregate principal balance of the
Receivables at the end of the preceding
Collection Period, after giving effect to
all payments received from Obligors,
Liquidation Proceeds, and Purchase Amounts
to be remitted by the Servicer or the
Seller, as the case may be, all for such
Collection Period and all [Realized Losses]
during such Collection Period [(such
amount, the "Pool Balance") and (ii) the
amount on deposit in the Pre-Funding
Account (excluding any Investment
Earnings)].
TERMS OF THE NOTES The principal terms of the Notes will be as
described below:
A. [DISTRIBUTION] [PAYMENT]
DATES . . . . . . Payments of interest and principal on the
Notes will be made [quarterly] on the
day of each [month] [ , ,
and ] or, if any such day is not a
Business Day, on the next succeeding
Business Day (each, a "[Distribution]
[Payment] Date"), commencing ,
199 . [Under certain limited
circumstances, such payments will be made
monthly rather than quarterly.] Payments
will be made to holders of record of the
Notes (the "Noteholders") as of the day
immediately preceding such [Distribution]
[Payment] Date or, if Definitive Notes are
issued, as of the 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.
B. NOTE INTEREST RATES The [Class A-1] Notes will bear
interest at the rate of %
per annum (the ["Note Interest
Rate"] ["Class A-1 Rate"])
[and the Class A-3 Notes will
bear interest at the rate of
% per annum (the "Class A-3
Rate"). The rate of interest
with respect to the Class A-2
Notes (the "Class A-2 Rate"
and, together with the Class
A-1 Rate and the Class A-3
Rate, the "Note Interest
Rates") will be % per annum
for the period from the
Closing Date to but excluding
the first [Distribution]
[Payment] Date, and will be
equal to [LIBOR] for the
applicable Interest Reset
Period plus % for each
[Distribution] [Payment] Date
thereafter[; provided that the
Class A-2 Rate shall not
exceed % per annum]].
C. INTEREST . . On each [Distribution] [Payment] Date, the
Indenture Trustee will distribute pro rata
to Noteholders [of each class of Notes]
accrued interest at the [applicable] Note
Interest Rate generally to the extent of
funds available following payment of the
Servicing Fee from the Available Funds and
the Reserve Account. Interest on the
outstanding principal amount of the Notes
[of each class] will accrue at the
[applicable] Note Interest Rate from and
including the Closing Date (in the case of
the first [Distribution] [Payment] Date) or
from and including the most recent
[Distribution] [Payment] Date on which
interest has been paid to but excluding the
following [Distribution] [Payment] Date
(each an "Interest Period"). [Interest on
the Class A-1 Notes will be calculated on
the basis of actual days elapsed and a 365-
or 366-day year, as applicable.] Interest
on the [[Class A-1 Notes and] Class A-3]
Notes will be calculated on the basis of a
360-day year of twelve 30-day months.
[Interest on the Class A-2 Notes will be
calculated on the basis of actual days
elapsed and a 360-day year.] See
"Description of the Notes Payments of
Interest" herein.
D. PRINCIPAL . . Principal of the Notes will be payable
[quarterly] on each [Distribution]
[Payment] Date in an amount equal to [the
sum of] the Noteholders' Principal Payment
Amount for [each of] the [three] calendar
month[s] ([the] [each, a] "Collection
Period") preceding such [Distribution]
[Payment] Date (in the case of the first
[Distribution] [Payment] Date, including
the period from , 199 to and
including , 199 ) to the extent
of funds available therefor. The
"Noteholders' Principal Payment Amount"
[with respect to a Collection Period] will
generally be the sum of (i) the
[Noteholders' Percentage of the] Regular
Principal (such "Regular Principal" being
the sum of (a) the principal portion of all
payments collected, and (b) the principal
balance of each Receivable purchased by the
Servicer, repurchased by the Sellers or
liquidated by the Servicer, each with
respect to [the preceding] [such]
Collection Period), plus (ii) % of the
portion, if any, of the Available Funds for
such Collection Period that remains after
payment of (a) the Servicing Fee, (b) the
interest [due] [accrued] on the Notes, (c)
the portion of the Regular Principal
allocated to the Noteholders pursuant to
clause (i), (d) the interest due on the
Certificates, (e) the portion of the
Regular Principal distributed to the
Certificateholders as described below under
"Description of the Certificates Distributions
of Principal Payments" herein, and (f) the
amount, if any, required to be deposited in the
Reserve Account on [such] [the related]
Distribution Date [plus the excess of the
amount on deposit in the Reserve Account on
such Distribution Date (after giving effect
to all deposits or withdrawals therefrom on
such Distribution Date) over the Specified
Reserve Account Balance)] (such percentage
of the remaining portion of Available Funds
[plus such excess], the "Noteholders'
Accelerated Principal"). [Or, state other
method for determining the amount of
principal to be paid on the Notes.]
On the Business Day immediately preceding
each Distribution Date (a "Determination
Date") the Indenture Trustee will determine
the amount in the Collection Account
allocable to interest and the amount
allocable to principal on the basis
described under "Description of the
Transfer and Servicing
Agreements Distributions Allocation of
Collections on Receivables" in the
Prospectus, and payments to Securityholders
on the following Distribution Date will be
based on such allocation.
Payments of principal on the Notes will be
made on each [Distribution] [Payment] Date
in the amounts and subject to the
priorities described in "Description of the
Notes Payments of Principal" herein.
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] [Payment] Date")[, the
outstanding principal amount of the Class
A-2 Notes, to the extent not previously
paid, will be payable on (the
"Class A-2 Final Scheduled [Distribution]
[Payment] Date") and the outstanding
principal amount of the Class A-3 Notes, to
the extent not previously paid, will be
payable on (the "Class
A-3 Final Scheduled [Distribution]
[Payment] Date")].
E.SIGNIFICANT
CHARACTERISTICS
OF CLASS _
NOTES . . . . . . [Interest will accrue on the Class _ Notes
from [the Closing Date] but no interest
will be payable on the Class _ Notes until
[[the ____ Distribution] [Payment] Date]]
[the [Distribution] [Payment] Date on or
after which the Class _ Notes have been
paid in full]. [The Class _ Notes [do not
bear interest] [bear interest at a nominal
rate] and principal thereon is due and
payable on [and after] [the [Distribution]
[Payment] Date following the [Distribution]
[Payment] Date on or after which the Class
_ Notes have been paid in full] [each
[Distribution] [Payment] Date to the extent
that principal available to be paid on the
Class _ Notes exceeds the amount necessary
to reduce the outstanding principal balance
of the Class _ Notes to the [planned
balance] for such [Distribution] [Payment]
Date. [No principal is payable with respect
to the Class _ Notes. The Class _ Notes
are entitled only to interest on the
[nominal] [notional] amount thereof, as
described above under "Principal."] As a
result the yield to maturity on the Class _
Notes will be particularly sensitive to the
rate and timing of repayment, repurchase
and defaults on the Receivables.] [See
"Risk Factors" and "The Receivables Pool --
Weighted Average Life of the Securities."]
F. OPTIONAL
REDEMPTION The [Class A-3] Notes will be
redeemed in whole, but not in
part, on any Distribution Date
[after all the other classes
of Notes have been paid in
full] 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 at least
equal to the unpaid principal
amount of the [Class A-3]
Notes plus accrued and unpaid
interest thereon. See
"Description of the
Notes Optional Redemption"
herein. The "Initial Pool
Balance" will equal [the sum
of (i)] the aggregate
principal balance of the
[Initial] Receivables as of
the [Initial] Cut-Off Date
[plus (ii) the aggregate
principal balances of all
Subsequent Receivables added
to the Trust on or prior to
such date as of their
respective Subsequent Cut-Off
Dates].
[G. MANDATORY
REDEMPTION FROM
PRE-FUNDING ACCOUNT [The] [A class or classes of] Notes
then outstanding will be
redeemed in part on the
Distribution Date on or
immediately following the last
day of the Funding Period in
the event that amounts remain
on deposit in the Pre-Funding
Account after giving effect to
the purchase of all
Receivables, including any
such purchase on such date (a
"Mandatory Redemption"). If
the amount on deposit in the
Pre-Funding Account on such
date is equal to $
or less, then such amount will
be used to redeem the [Class
A-1] Notes [up to an amount
not to exceed their
outstanding balance, with any
remaining amount used to
redeem the Class A-2 Notes].
Otherwise the amount on
deposit in the Pre-Funding
Account on such date will be
used to redeem [each class of]
the Notes and the
Certificates. The aggregate
principal amount of [each
class of] the Notes to be
redeemed will be an amount
equal to [the Notes'] [such
class'] Pre-Funded Percentage
of the amount then on deposit
in the Pre-Funding Account.
The "Pre-Funded Percentage"
with respect to [the] [a class
of] Notes or the Certificates
is the percentage derived from
the fraction, the numerator of
which is the initial principal
amount of [the] [such class
of] Notes or the initial
Certificate Balance, as the
case may be, and the
denominator of which is the
sum of the initial principal
amount of the Notes and the
initial Certificate Balance.]
[A limited recourse mandatory prepayment
premium (the "Note Prepayment Premium")
will be payable by the Trust to the
Noteholders pursuant to a Mandatory
Redemption if the amount on deposit in the
Pre-Funding Account exceeds $ .
The Note Prepayment Premium [for each class
of Notes] will equal the excess, if any,
discounted as described below, of (i) the
amount of interest that would accrue on
[the Notes'] [such class'] portion of any
remaining Pre-Funded Amount (the "Note
Prepayment Amount") at the Note Interest
Rate borne by [the] [such class of] Notes
during the period commencing on and
including the Distribution Date on which
such Note prepayment amount is required to
be distributed to Noteholders [of such
class] to but excluding [, in the
case of the Class A-1 Notes, , in
the case of the Class A-2 Notes and
, in the case of the Class A-3 Notes],
over (ii) the amount of interest that would
have accrued on such Note Prepayment Amount
over the same period at a per annum rate of
interest equal to the bond equivalent yield
to maturity on the Determination Date
preceding such Distribution Date on the
[, in the case of the Class A-1 Notes,
the , in the case of the Class
A-2 Notes, and the , in the case
of the Class A-3 Notes]. Such excess shall
be discounted to present value to such
Distribution Date at the applicable yield
described in clause (ii) above. Pursuant
to the Sale and Servicing Agreement, the
Sellers will be obligated to pay the sum of
the Note Prepayment Premium [for each class
of Notes] and the Certificate Prepayment
Premium to the Trust as liquidated damages
for the failure to deliver Subsequent
Receivables having an aggregate principal
balance equal to the Pre-Funded Amount.
The Trust's obligation to pay the Note
Prepayment Premium [for each class of
Notes] and the Certificate Prepayment
Premium will be limited to funds received
from the Sellers pursuant to the preceding
sentence. In the event that such funds are
insufficient to pay the Note Prepayment
Premium [for each class of Notes] and the
Certificate Prepayment Premium in full,
Noteholders [of each class of Notes] will
receive their ratable share (based upon the
aggregate Note Prepayment Premium [for such
class]) of the aggregate amount available
to be distributed in respect of the Note
Prepayment Premium and the Certificate
Prepayment Premium. No other assets of the
Trust will be available for the purpose of
making such payment.]][Or, state other
method for determining the amount of
principal to be paid on the Notes.]
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] [the
day of each month or, if any
such day is not a Business
Day, on the next succeeding
Business Day (each, a
"Distribution Date")],
commencing , 199 .
Distributions will be made to
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 day of
the month if Definitive
Certificates are issued)] [as
of the day immediately
preceding such Distribution
Date or, if Definitive
Certificates are issued, as of
the day of the preceding
month].
B. CERTIFICATE
RATE % per annum (the "Certificate Rate").
C. INTEREST . . On each Distribution Date, the Owner Trustee
will distribute pro rata to
Certificateholders accrued interest at the
Certificate Rate on the outstanding
Certificate Balance generally to the extent
of funds available following payment of the
Servicing Fee and distributions in respect
of the Notes from the Available Funds and
the Reserve Account; provided, however,
that upon the occurrence and during the
continuation of an Event of Default which
has resulted in an acceleration of the
Notes or following an Insolvency Event or a
dissolution with respect to [NB-SPC],
distributions of any amounts on the
Certificates will be subordinated in
priority of payment to payment in full of
principal of the Notes. Interest in
respect of a Distribution Date will accrue
from and including the Closing Date (in the
case of the first Distribution Date) or
from and including the most recent
Distribution Date on which interest has
been paid to but excluding the following
Distribution Date. Interest will be
calculated on the basis of a 360-day year
consisting of twelve 30-day months.
D. PRINCIPAL . . On each Distribution Date commencing on the
later of (i) the 199 Distribution Date
and (ii) the Distribution Date next
succeeding the Distribution Date on which
the [Class A-1] Notes are paid in full,
principal of the Certificates will be
payable in an amount generally equal to the
Certificateholders' Principal Distribution
Amount for the Collection Period preceding
such Distribution Date, to the extent of
funds available therefor following payment
of the Servicing Fee and payments of
interest and principal in respect of the
Notes and the distribution of interest in
respect of the Certificates; provided,
however, that upon the occurrence and
during the continuation of an Event of
Default which has resulted in an
acceleration of the Notes or following an
Insolvency Event or a dissolution with
respect to [NB-SPC], distributions of any
amounts on the Certificates will be
subordinated in priority of payment to
payment in full of principal of the Notes[;
and provided further that upon any
reduction or withdrawal by any Rating
Agency of its rating of [the] [any class
of] Notes, no distributions of principal on
the Certificates will be made until all the
Notes have been paid in full or until such
rating has been restored]. The
Certificateholders' Principal Distribution
Amount will be based on the
Certificateholders' Percentage of the
Regular Principal, and will be calculated
by the Servicer in the manner described
under "Description of the Transfer and
Servicing Agreements Distributions" herein.
The outstanding principal balance, if any,
of the Certificates will be payable in full
on , 199 (the "Final Scheduled
Distribution Date").
E. OPTIONAL
PREPAYMENT If 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, the Certificateholders will receive an
amount in respect of the Certificates equal to
the Certificate Balance together with accrued interest
at the Certificate Rate, and the Certificates will be
retired. See "Description of the Certificates Optional
Prepayment" herein.
[F. MANDATORY
REPURCHASE
FROM PRE-
FUNDING
ACCOUNT The Certificates will be prepaid, in part,
pro rata on the basis of their initial principal
amounts, on the Distribution Date on or immediately
following the last day of the Funding Period in
the event that the amount on deposit in
the Pre-Funding Account after giving effect to the
purchase of all Receivables, including any such
purchase on such date exceeds $ (a
"Mandatory Repurchase"). The aggregate principal
amount of Certificates to be prepaid will be an
amount equal to the Certificates' Pre-Funded
Percentage of the amount then on deposit in the
Pre-Funding Account.
[A limited recourse mandatory prepayment
premium (the "Certificate Prepayment
Premium") will be payable by the Trust to
the Certificateholders at the time of any
prepayment of the Certificates pursuant to
a Mandatory Repurchase. The Certificate
Prepayment Premium will equal the excess,
if any, discounted as described below, of
(i) the amount of interest that would
accrue on the Certificates' portion of any
remaining Pre-Funded Amount (the
"Certificate Prepayment Amount") at the
Certificate Rate during the period
commencing on and including the
Distribution Date on which such Certificate
Prepayment Amount is required to be
distributed to Certificateholders to but
excluding , over (ii) the amount
of interest that would have accrued on such
Certificate Prepayment Amount over the same
period at a per annum rate of interest
equal to the bond equivalent yield to
maturity on the Determination Date
preceding such Distribution Date on the
. Such excess will be discounted to
present value to such Distribution Date at
the yield described in clause (ii) above.
Pursuant to the Sale and Servicing
Agreement, the Sellers will be obligated to
pay the sum of the Note Prepayment Premium
[for each class of Notes] and the
Certificate Prepayment Premium to the Trust
as liquidated damages for the failure to
deliver Subsequent Receivables having an
aggregate principal balance equal to the
Pre-Funded Amount. The Trust's obligation
to pay the Note Prepayment Premium [for
each class of Notes] and the Certificate
Prepayment Premium will be limited to funds
received from the Sellers pursuant to the
preceding sentence. In the event that such
funds are insufficient to pay the Note
Prepayment Premium [for each class of
Notes] and the Certificate Prepayment
Premium in full, Certificateholders will
receive their ratable share (based upon the
aggregate Certificate Prepayment Premium)
of the aggregate amount available to be
distributed in respect of the Note
Prepayment Premium and the Certificate
Prepayment Premium. No other assets of the
Trust will be available for the purpose of
making such payment.]
[INTEREST RATE
CAP On the Closing Date, the Sellers will enter
into an Interest Rate Cap in respect of
the Class A-2 Notes with (the
"Interest Rate Cap Provider"). Pursuant
to the Interest Rate Cap, the Interest
Rate Cap Provider will make a payment to
the Trust on each [Distribution]
[Payment] Date on which [the Class A-2
Rate] [LIBOR] for the preceding
[Distribution] [Payment] Date exceeds
the Cap Rate in an amount equal to the
product of (i) the difference between
[such Class A-2 Rate] [LIBOR] and the
Cap Rate, (ii) the Cap Notional Amount
and (iii) the actual number of days from
and including the preceding
[Distribution] [Payment] Date to but
excluding such [Distribution] [Payment]
Date divided by 360. The Cap Notional
Amount on any [Distribution] [Payment]
Date will equal at least the principal
amount of the Class A-2 Notes as of the
close of the preceding [Distribution]
[Payment] Date. See "Description of the
Transfer and Servicing
Agreements Interest Rate Cap" herein.
Payments received by the Indenture
Trustee pursuant to the Interest Rate
Cap will be deposited in the Collection
Account for the benefit of all
Securityholders.]
[INTEREST RATE
SWAP On the Closing Date, the Indenture Trustee,
on behalf of the Trust, will enter into
one or more Interest Rate Swap
Agreements (collectively, the "Interest
Rate Swap") with (the "Swap
Counterparty"). Pursuant to the
Interest Rate Swap, the Swap
Counterparty will pay to the Trust, on
each [Distribution] [Payment] Date,
interest at a per annum rate equal to
[the Class A-2 Rate] [LIBOR] on the Swap
Notional Amount. The Swap Notional
Amount on any [Distribution] [Payment]
Date will equal the principal amount of
the Class A-2 Notes as of the close of
the preceding [Distribution] [Payment]
Date. In exchange for such payments,
the Trust will pay to the Swap
Counterparty, on each [Distribution]
[Payment] Date, interest at a per annum
rate equal to [the lesser of] [ %]
[and] [the Prime Rate less %], on the
outstanding principal amount of the
Notes as of the close of the preceding
[Distribution] [Payment] Date [, which
rate will be reset [on various dates in]
each [month] [Interest Period]]. With
respect to each [Distribution] [Payment]
Date, any difference between the
[monthly] [quarterly] payment by the
Swap Counterparty to the Trust and the
[monthly] [quarterly] payment by the
Trust to the Swap Counterparty will be
referred to herein as the "Net Trust
Swap Receipt," if such difference is a
positive number, and the "Net Trust Swap
Payment," if such difference is a
negative number. Net Trust Swap
Receipts, if any, will be deposited in
the Collection Account for the benefit
of all Securityholders and Net Trust
Swap Payments, if any, will be paid from
the Collection Account in the same
manner and priority as accrued and
unpaid interest on the Notes on each
[Distribution] [Payment] Date. See
"Description of the Transfer and
Servicing Agreements Interest Rate
Swap."]
[PRE-FUNDING
ACCOUNT During the period (the "Funding Period")
from and including the Closing Date
until the earliest of (a) the
Determination Date on which the
amount on deposit in the
Pre-Funding Account is equal to $
or less, (b) the occurrence
of an Event of Default under the
Indenture or an Event of Servicing
Termination under the Sale and
Servicing Agreement, (c) the
occurrence of certain events of
insolvency or dissolution with
respect to [NB-SPC] and (d) the
Determination Date with respect to
the , 199 Distribution
Date, the Pre-Funded Amount will be
maintained as an account in the
name of the Indenture Trustee (the
"Pre-Funding Account"). The
Pre-Funded Amount will initially
equal approximately $ ,
and, during the Funding Period,
will be reduced by the amount
thereof used to purchase Subsequent
Receivables in accordance with the
Sale and Servicing Agreement and
the amount thereof deposited in the
Reserve Account in connection with
the purchase of such Subsequent
Receivables. The Sellers expect
that the Pre-Funded Amount will be
reduced to $ or less by
the Distribution Date.
Any Pre-Funded Amount remaining at
the end of the Funding Period will
be payable to the Noteholders and
Certificateholders as described
above.]
RESERVE ACCOUNT . An account (the "Reserve Account") will be
created with an initial deposit by the
Sellers on the Closing Date of cash or
Permitted Investments having a value at
least equal to % of the [Initial Pool
Balance] [Pool Balance as of the Initial
Cut-Off Date] [plus an amount attributable
to the difference between the anticipated
investment earnings on the Pre-Funded
Amount and the weighted average interest
expense on the portion of the Notes and
Certificates represented by the Pre-Funded
Amount]. [On each Subsequent Transfer
Date, cash or Permitted Investments having
a value approximately equal to % of the
aggregate principal balance of the
Subsequent Receivables conveyed to the
Trust on such Subsequent Transfer Date will
be withdrawn from the Pre-Funding Account
from amounts otherwise distributable to the
Sellers in connection with the sale of
Subsequent Receivables and shall be
deposited in the Reserve Account.] The
amount initially deposited in the Reserve
Account by the Sellers [and the aggregate
amount transferred from the Pre-Funding
Account to the Reserve Account on each
Subsequent Transfer Date] is referred to as
the "Reserve Account Initial Deposit" [and
the "Additional Reserve Account Deposit,"
respectively.] The Reserve Account will be
maintained as an account in the name of the
Indenture Trustee for the benefit of
Securityholders.
Funds will be withdrawn from the Reserve
Account up to the Available Reserve Amount
to the extent that the Available Funds with
respect to any Collection Period remaining
after the Servicing Fee is paid is less
than the Noteholders' Payment Amount and
will be deposited in the Note Payment
Account for distribution to the Noteholders
on the related [Distribution] [Payment]
Date. In addition, funds will be withdrawn
from the Reserve Account up to the
Available Reserve Amount (as reduced by any
withdrawal pursuant to the preceding
sentence) to the extent that the Available
Funds remaining after payment of the
Servicing Fee and the deposit of the
Noteholders' Payment Amount in the Note
Payment Account is less than the
Certificateholders' Distribution Amount and
will be deposited in the Certificate
Distribution Account for distribution to
the Certificateholders.
On each Distribution Date, the Reserve
Account will be reinstated up to the
Specified Reserve Account Balance to the
extent, if any, of the Available Funds
remaining after payment of the Servicing
Fee, the deposit of the Noteholders'
Payment Amount into the Note Payment
Account and the deposit of the
Certificateholders' Distribution Amount
into the Certificate Distribution Account.
Certain amounts in the Reserve Account on any
Distribution Date (after giving effect to
all distributions to be made on such
Distribution Date) in excess of the
Specified Reserve Account Balance for such
Distribution Date will be released to [the
Sellers][NB-SPC] (except to the extent
described under "Description of the
Transfer and Servicing Agreements Reserve
Account" herein). Subject to reduction as
described below, the "Specified Reserve
Account Balance" with respect to any
Distribution Date generally will be equal
to the sum of (i) % of the [Initial Pool
Balance] [Pool Balance as of the Initial
Cut-Off Date] [, plus an amount related to
the difference between anticipated
investment earnings on the remaining
Pre-Funded Amount and the weighted average
interest expense on the portion of the
Notes and Certificates represented by the
remaining Pre-Funded Amount] and (ii) %
of the Pool Balance on the first day of the
related Collection Period. [However, so
long as on any Distribution Date (except
the first Distribution Date) the
outstanding principal amount of the
Securities (after giving effect to
distributions made on the prior
Distribution Date) is less than or equal to
% of [the sum of] [(a)] the Pool Balance on
the first day of the related Collection
Period [and (b) the Pre-Funded Amount on
such date],) then the portion of the
Specified Reserve Account Balance set forth
in clause (i) above will be reduced to
% of the [Initial Pool Balance] [Pool
Balance as of the Initial Cut-Off Date].]
[In addition, so long as on any
Distribution Date (except the first
Distribution Date) the outstanding
principal amount of the Securities (after
giving effect to distributions made on the
prior Distribution Date) is less than or
equal to % of [the sum of] [(a)] the Pool
Balance on the first day of the related
Collection Period [and (b) the Pre-Funded
Amount on such day], then such portion of
the Specified Reserve Account Balance set
forth in clause (i) above will be reduced
to % of the [Initial Pool Balance]
[Pool Balance as of the Initial Cut-Off
Date].] [With respect to the portion of
the Specified Reserve Account Balance set
forth in clause (ii) above, so long as on
any Distribution Date (except the first
Distribution Date) the outstanding
principal amount of the Securities (after
giving effect to distributions made on the
prior Distribution Date) is less than or
equal to % of [the sum of] [(a)] the
Pool Balance on the first day of the
related Collection Period [and (b) the
Pre-Funded Amount on such day], then such
portion will be reduced to an amount equal
to the product of (I) the Pool Balance on
the first day of the related Collection
Period and (II) the percentage (which shall
not be greater than % or less than
zero) equal to (X) the percentage derived
from the fraction, the numerator of which
is the outstanding principal amount of the
Securities (after giving effect to
distributions made on the prior
Distribution Date) and the denominator of
which is such Pool Balance less (Y)
%.] [The Specified Reserve Account Balance
is further subject to adjustment in certain
circumstances described herein.]
[YIELD SUPPLEMENT
ACCOUNT;
YIELD SUPPLEMENT
AGREEMENT If any Receivable has, as of the Cutoff Date, a
Contract Rate below the sum of (i) the weighted
average of the Note Interest Rates and
Certificate Rate and (ii) the Servicing Fee Rate
(the "Required Rate"), the Sellers, the Servicer
and the Trust will enter into a yield supplement
agreement (the "Yield Supplement Agreement").
The Yield Supplement Agreement will, with
respect to each Receivable subject
thereto, provide for payment by the applicable
Seller, on the each Deposit Date, of an
amount calculated by the Servicer to be equal to
one-twelfth of the excess, if any, of (i)
interest on such Receivable's principal
balance as of the first day of the preceding
Collection Period at a rate equal to the
Required Rate over (ii) interest at the Contract
Rate on such Receivable's principal balance as of
the first day of the related Collection Period
(in the aggregate for all Receivables with respect
to any Deposit Date, the "Yield Supplement
Amount"). The Sellers will establish a yield
supplement account with the Indenture Trustee for
the benefit of the Securityholders (the
"Yield Supplement Account"). The Yield
Supplement Account is designed solely to hold
funds to provide security for the payment by the
Sellers of the Yield Supplement Amount on any
Deposit Date. The Yield Supplement Account will
be created with a deposit
by [the Sellers][NB-SPC][a third party] in an
amount equal to the Required [Initial] Yield
Supplement Amount. [Pursuant to the Yield
Supplement Agreement, on each Subsequent Transfer
Date, [the Sellers][NB-SPC][a third party] will
deposit an amount into the Yield Supplement
Account (the "Additional Yield Supplement
Amount") equal to the aggregate Yield
Supplement Amounts in respect of the such
Subsequent Receivable for the period
commencing with the related Subsequent Cut-
Off Date and ending with the scheduled
maturity of each such Subsequent
Receivable, assuming that payments on such
Receivables are made as scheduled and no
prepayments are made. See "Description of
the Transfer and Servicing Agreements Yield
Supplement Account; Yield Supplement
Agreement" herein.]]
COLLECTION ACCOUNT Except under certain conditions described
herein, the Servicer will be required to
remit collections received with respect
to the Receivables not later than the [
] Business Day after receipt to one or
more accounts in the name of the
Indenture Trustee (the "Collection
Account"). Pursuant to the Sale and
Servicing Agreement, the Servicer will
have the power, revocable at the
discretion of the Indenture Trustee or
at the discretion of the Owner Trustee
with the consent of the Indenture
Trustee, 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 for the prior
Collection Period and any overdue
Servicing Fees to the Servicer, (ii) the
Accrued Note Interest and the
Noteholders' Principal Payment Amount
into the Note Payment Account, (iii) the
Accrued Certificate Interest and,
commencing on the later of (a) the
199 Distribution Date and (b) the
Distribution Date next succeeding the
Distribution Date on which the [Class
A-1] Notes are paid in full, the
Certificateholders' Principal
Distribution Amount into the Certificate
Distribution Account and (iv) the
remaining balance, if any, to the
Reserve Account; provided, however, that
on each Distribution Date following the
occurrence of an Event of Default which
has resulted in acceleration of the
Notes or following an Insolvency Event
or a dissolution with respect to [NB-
SPC], the principal of the Notes must be
paid in full prior to the distribution
of any amounts on the Certificates.
[GUARANTEED RATE
AGREEMENT Amounts on deposit in the [Collection] [Note
Payment] Account will be invested from the date of
deposit to the related [Distribution] [Payment]
Date by the Indenture Trustee at the direction
of (the "Investment Provider") in
certain eligible investments pursuant to a
Guaranteed Rate Agreement, which provides
that the Investment Provider will guarantee a
rate of return on such amounts equal to the
weighted average of the Note Interest Rates [and
the Certificate Rate] and will be entitled to
receive any Investment Earnings in excess of
such guaranteed return. See "Description of the
Transfer and Servicing Agreements Guaranteed
Rate Agreement."]
SERVICER FEE . . The Servicer will receive each month a fee
for servicing the Receivables equal to (a)
the product of one-twelfth of [1.00]% (the
"Servicing Fee Rate") and the Pool Balance
outstanding at the beginning of the
previous month, plus (b) any late,
prepayment, and other administrative fees
and expenses collected during such month
[plus (c) reinvestment proceeds on any
payments received in respect of the
Receivables].
MATURITY AND
PREPAYMENT
CONSIDERATIONS . The [Class A-2 Notes, the Class A-3 Notes and
the] Certificates will not receive any
principal payments until the [Class A-1]
Notes have been paid in full[, and the
Class A-3 Notes will not receive any
principal payments until the Class A-2
Notes have been paid in full]. In
addition, no principal payments on the
Certificates will be made until the later
of (i) the 199 Distribution
Date and (ii) the Distribution
Date next succeeding the Distribution Date
on which the [Class A-1] Notes are paid in
full. As the rate of payment of principal
of [the] [each class of] Notes and the
Certificates depends on the rate of payment
(including prepayments) of the principal
balance of the Receivables, final payment
of [the] [any class of] Notes and the final
distribution in respect of the Certificates
could occur significantly earlier than the
respective [Final Scheduled Distribution
Dates] [final scheduled Payment Dates or
Distribution Date]. In addition, the rate
of payment of principal of [the] [each
Class of] Notes and the Certificates will
be affected by the application of the
Noteholders' Accelerated Principal to pay
the principal of the Notes. Reinvestment
risk associated with early payment of the
Notes and the Certificates will be borne
exclusively by the Noteholders and the
Certificateholders, respectively.
It is expected that the final payment of
[the] [each class of] Notes and the final
distribution in respect of the Certificates
will occur on or prior to the respective
[Final Scheduled Distribution Dates] [final
scheduled Payment Dates or Distribution
Date]. However, if sufficient funds are
not available to pay [the] [any class of]
Notes or the Certificates in full on or
prior to the respective [Final Scheduled
Distribution Dates] [final scheduled
Payment Dates or Distribution Date], final
payment of [the] [such class of] Notes and
the final distribution in respect of the
Certificates could occur later than such
dates.
All of the Receivables are prepayable at
any time. Prepayments will shorten the
weighted average remaining term of the
Receivables and the weighted average
life of the Securities. Such
prepayments, to the extent allocable to
principal, will be included in the
Noteholders' Principal Payment Amount or
the Certificateholders' Principal
Distribution Amount and will be payable
to the Securityholders as set forth in
the priority of distributions herein.
See "Description of the Transfer and
Servicing Agreements Distributions"
herein.
CLEARANCE AND
SETTLEMENT Securityholders may elect to hold their Notes or
Certificates through any of DTC (in the
United States) or Cedel or Euroclear (in Europe).
Transfers within DTC, Cedel or Euroclear, as the
case may be, will be in accordance with the
usual rules and operation procedures of the relevant
system. Cross-market transfers between persons
olding directly or indirectly through DTC, on the
one hand, and counterparties holding directly or
indirectly through Cedel or Euroclear, on the other,
will be effected in DTC through the relevant
Depositaries of Cedel or Euroclear. See "Book-Entry
and Definitive Securities; Reports to
Securityholders Book-Entry Registration" in the
Prospectus [and Annex 1 to this Prospectus Supplement,
"Global Clearance, Settlement and Tax Documentation
Procedures."].
TAX STATUS . . . In the opinion of ("Special Tax
Counsel"), for federal income tax purposes,
the Notes will be characterized as debt,
and the Trust will not be characterized as
an association (or publicly traded
partnership) taxable as a corporation.
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 tax purposes.
Alternative characterizations of the Trust
and the Certificates are possible, but
would not result in materially adverse tax
consequences to Certificateholders.
Certificateholders may be allocated income
equal to the amount of interest accruing on
the Certificates at the Certificate Rate
even though the Trust may not have
sufficient cash to make current cash
distributions of such amount. See "Federal
Income Tax Consequences" herein and in the
Prospectus for additional information
concerning the application of federal
income tax laws to the Trust and the
Securities.
ERISA
CONSIDERATIONS Subject to the considerations discussed
under "ERISA Considerations" herein
and in the Prospectus, the Notes
may, in general, be purchased by or
on behalf of employee benefit plans
subject to the Employee Retirement
Income Security Act of 1974, as
amended ("ERISA"). Any employee
benefit plan fiduciary considering
a purchase of Notes should, among
other things, consult with legal
counsel regarding the availability
of a statutory or administrative
exemption from the prohibited
transaction rules of ERISA and the
Internal Revenue Code of 1986, as
amended (the "Code").
The Certificates may not be acquired by an
employee benefit plan subject to ERISA or
Section 4975 of the Code, or by an
individual retirement account. Any
investor considering the purchase of
Certificates should be aware that such
purchase and subsequent holding could,
under certain circumstances, be deemed to
involve an indirect prohibited transaction
if a plan with respect to which the
investor is a "party in interest" or
"disqualified person" purchases the
Certificates without the benefit of an
exemption from the prohibited transaction
rules. See "ERISA Considerations" herein
and in the Prospectus.
[LEGAL INVESTMENT The [Class A-1] Notes will be eligible
securities for purchase by money market
funds under paragraph (a)(5) of Rule 2a-7
under the Investment Company Act of 1940,
as amended.]
RATING[S] OF THE
NOTES It is a condition to the issuance of the
[Class A-1,] [Class A-2] [and Class A-3]
Notes that they be rated in [one of the
[four] [the] highest investment rating
[category][categories] by at least two
nationally recognized rating agencies.
[However, the rating agencies do not
evaluate, and the rating does not address,
the likelihood that the Note Prepayment
Premium will be paid.] There can be no
assurance that a rating will not be lowered
or withdrawn by a rating agency if circumstances
so warrant.
RATING[S] OF THE
CERTIFICATES It is condition of the issuance of the
Certificates that they be rated [at least]
" " or its equivalent by at
least two nationally recognized rating
agencies. [However, the rating agencies
do not evaluate, and the rating
does not address, the likelihood that the
Certificate Prepayment
Premium will be paid.] There can be no
assurance that a rating will not be
lowered or withdrawn by a rating agency if
circumstances so warrant.
RISK FACTORS . . Prospective investors should consider the
factors set forth under "Risk Factors"
on pages S-__ through S-__.
RISK FACTORS
LIMITED LIQUIDITY
There is currently no secondary market for the Securities.
Each Underwriter currently intends to make a market in the
Securities for which it is an Underwriter, but it is under no
obligation to do so. There can be no assurance that a secondary
market will develop or, if a secondary market does develop, that
it will provide the Securityholders with liquidity of investment
or that it will continue for the life of the Securities.
[THE SUBSEQUENT RECEIVABLES AND THE PRE-FUNDING ACCOUNT
On the Closing Date, the Sellers will transfer to the Trust
the approximately $ of Initial Receivables and the
approximately $ Pre-Funded Amount on deposit in the
Pre-Funding Account. If the principal amount of eligible
Receivables originated by the Sellers during the Funding Period
is less than the Pre-Funded Amount, the Sellers will have
insufficient Receivables to sell to the Trust on the Subsequent
Transfer Dates, thereby resulting in a prepayment of principal to
the Noteholders and the Certificateholders as described in the
following paragraph. See "Risk Factors Trust's Relationship to
Sellers, NationsBank Corporation and their Affiliates" in the
Prospectus. In addition, any conveyance of Subsequent
Receivables is subject to the satisfaction, on or before the
related Subsequent Transfer Date, of the following conditions
precedent, among others: (i) each such Subsequent Receivable must
satisfy the eligibility criteria specified in the Sale and
Servicing Agreement; (ii) the Sellers will not select such
Subsequent Receivables in a manner that it believes is adverse to
the interests of the Noteholders or the Certificateholders; (iii)
as of the related Subsequent Cut-Off Date, the Receivables in the
Trust at that time, including the Subsequent Receivables to be
conveyed by the Sellers as of such Subsequent Cut-Off Date, will
satisfy the parameters described under "The Receivables Pool"
herein and under "The Receivables Pools" in the Prospectus; (iv)
the applicable Additional Reserve Account Deposit [and the
applicable Additional Yield Supplement Amount, if any] for such
Subsequent Transfer Date shall have been made; and (v) the
Sellers shall have executed and delivered to the Trust (with a
copy to the Indenture Trustee) a written assignment conveying
such Subsequent Receivables to the Trust (including a schedule
identifying such Subsequent Receivables). Moreover, any such
conveyance of Subsequent Receivables made during any given
Collection Period will also be subject to the satisfaction, on or
about the fifteenth day of the month following such Collection
Period, of the following conditions subsequent, among others: (a)
the Sellers will deliver certain opinions of counsel to the Owner
Trustee, Indenture Trustee and the Rating Agencies with respect
to the validity of the conveyance of all such Subsequent
Receivables conveyed during such Collection Period; (b) the Trust
and the Indenture Trustee shall have received written
confirmation from a firm of independent certified public
accountants that, as of the end of the preceding Collection
Period, the Receivables in the Trust at that time, including the
Subsequent Receivables conveyed by the Sellers during such
Collection Period, satisfied the parameters described under "The
Receivables Pool" herein and under "The Receivables Pools" in the
Prospectus; and (c) the Rating Agencies shall have each notified
the Sellers in writing that, following the addition of all such
Subsequent Receivables, [each class of] the Notes and the
Certificates will be rated in the same rating category as they
were rated by the Rating Agencies on the Closing Date. The
Sellers will immediately repurchase any Subsequent Receivable, at
a price equal to the Purchase Amount thereof, upon the failure of
the Sellers to satisfy any of the foregoing conditions subsequent
with respect thereto. Such confirmation of the ratings of the
Notes and the Certificates may depend on factors other than the
characteristics of the Subsequent Receivables, including the
delinquency, repossession and net loss experience on the
automobile, van and light truck receivables in the portfolio
serviced by the Servicer.
To the extent that amounts on deposit in the Pre-Funding
Account have not been fully applied to the conveyance of
Subsequent Receivables to the Trust by the end of the Funding
Period and such amount exceeds $ , the Noteholders and
the Certificateholders will receive, on the Distribution Date on
or immediately following the last day of the Funding Period, a
prepayment of principal in an amount equal to the applicable
Pre-Funded Percentage, in respect of [a class of] the Notes or
the Certificates, of the Pre-Funded Amount remaining in the
Pre-Funding Account following the purchase of any Subsequent
Receivables on such Distribution Date. Otherwise such remaining
Pre-Funded Amount will be paid as principal of the [Class A-1]
Notes [up to an amount not to exceed their outstanding principal
amount, with any remaining amount used to redeem the Class A-2
Notes]. It is anticipated that the principal balance of
Subsequent Receivables sold to the Trust will not be exactly
equal to the amount on deposit in the Pre-Funding Account and
that therefore there will be at least a nominal amount of
principal prepaid to the [Class A-1] Noteholders.
Each Subsequent Receivable must satisfy the eligibility
criteria specified in the Sale and Servicing Agreement and any
additional criteria specified by the Rating Agencies at the time
of its addition. However, Subsequent Receivables may have been
originated by the Sellers at a later date using credit criteria
different from those which were applied to the Initial
Receivables and may be of a different credit quality and
seasoning. [In addition, an increasing percentage of the
Subsequent Receivables may be Balloon Receivables.] Therefore,
following the transfer of Subsequent Receivables to the Trust,
the characteristics of the entire Receivables Pool included in
the Trust may vary significantly from those of the Initial
Receivables. See "The Receivables Pool" herein and "The
Receivables Pools" in the Prospectus.
None of the Sellers is generally obligated to make any
payments in respect of the Notes, the Certificates or the
Receivables. [However, the ability of the Sellers to convey
Subsequent Receivables on Subsequent Transfer Dates is completely
dependent upon the generation of additional receivables by the
Sellers. The ability of the Sellers to generate Subsequent
Receivables is largely dependent upon the Sellers' ability to
offer competitive rates of interest on motor vehicle installment
sales contracts to be acquired by the Sellers. In addition, the
number of Dealers from which the Sellers' acquire retail motor
vehicle installment sales contracts may effect the Sellers'
ability to generate Subsequent Receivables. The level of retail
sales of automobiles, vans and light trucks may change as a
result of a variety of social and economic factors. Economic
factors include interest rates, unemployment levels, the rate of
inflation and consumer perceptions of economic conditions
generally. Social factors influencing the level of retail motor
vehicle sales include an increasing awareness of environmental
consequences derived from regional and national dependence on
private motor vehicles for transportation and the local and
regional political commitment to develop and encourage reliance
on mass transit and alternative transportation projects, such as
light rail, high occupancy vehicle highways and, in certain
communities, an expanding network of bicycle lanes. There can be
no assurance, therefore, that the Sellers will continue to
generate receivables at the same rate as in prior years. The
Sellers are unable to determine and have no basis to predict to
what extent these factors will affect the Sellers' ability to
generate Subsequent Receivables.] In addition, if NationsBank,
N.A. 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 Noteholders
and Certificateholders.
NationsBank Corporation and the Trust are subject to the
informational requirements of the Exchange Act and in accordance
therewith file, and will cause to be filed, reports and other
information with the Commission. For further information
regarding NationsBank Corporation and the Trust, reference is
made to such reports and other information which are available as
described under "Available Information" in the Prospectus.]
LIMITED ASSETS
The Trust will not have, nor is it permitted or expected to
have, any significant assets or sources of funds other than the
Receivables[, the Pre-Funding Account] [, the Yield Supplement
Account] and the Reserve Account [and the payments, if any,
received pursuant to the [Interest Rate Cap,] [the Interest Rate
Swap] [and the] [Guaranteed Rate Agreement]]. 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 [Pre-Funding Account][, the Yield Supplement
Account] [and the] Reserve Account [and the payments, if any,
received pursuant to the [Interest Rate Cap,] [the Interest Rate
Swap] [and the] [Guaranteed Rate Agreement]]. [The Pre-Funding
Account will be available only during the Funding Period and is
designed solely to cover obligations of the Trust relating to a
portion of its funds not invested in Receivables and is not
designed to cover losses on the Receivables.] [The Yield
Supplement Account is designed solely to hold funds to be applied
to provide payments to the Securityholders in respect of
Receivables the Contract Rate of which is less than the Required
Rate.] 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.
However, amounts to be deposited in the [Pre-Funding Account[,
the Yield Supplement Account] and the] Reserve Account are
limited in amount. If the [Pre-Funding Account[, the Yield
Supplement Account] and the] Reserve Account is [are] exhausted,
the Trust will depend solely on current distributions on the
Receivables [and the payments, if any, received pursuant to the
[Interest Rate Cap,] [the Interest Rate Swap] [and the]
[Guaranteed Rate Agreement]] to make payments on the Notes and
the Certificates. [Payments under [the Interest Rate Cap,] [the
Interest Rate Swap] [and the Guaranteed Rate Agreement] will be
received only under certain circumstances. See "Description of
the Transfer and Servicing Agreements[ Interest Rate Cap,"]
[" Interest Rate Swap"] [and " Guaranteed Rate Agreement."]]
SUBORDINATION
Distributions of interest and principal on the Certificates
will be subordinated in priority of payment to interest and
principal due on the Notes, [and distributions of interest on the
[Class Notes] are subordinated in priority of payment to
interest [and principal] due on the [Class Notes] [and the Class
Notes]. Consequently, the Certificateholders will not receive
any distributions on a Distribution Date until the full amount of
interest on and principal of the Notes on such Distribution Date
has been deposited in the Note Payment Account. The
Certificateholders will not receive any distributions of
principal until after the later to occur of (i) the
Distribution Date next succeeding the Distribution Date on which
the [Class A-1] Notes were paid in full and (ii) the
Distribution Date. However, upon the occurrence and during the
continuation of an Event of Default which has resulted in an
acceleration of the Notes or following an Insolvency Event or a
dissolution with respect to [NB-SPC], distributions of any
amounts on the Certificates will be subordinated in priority of
payment to payment in full of principal of the Notes. [In
addition, upon any reduction or withdrawal by any Rating Agency
of its rating of [the] [any class of] Notes (see " Ratings of the
Securities" below), the Certificateholders will not receive any
distributions of principal until after all the Notes have been
paid in full or until such rating has been restored]. [The
[Class ] Noteholders will not receive any distributions of
interest on a [Distribution] [Payment] Date unless the full
amount of interest on the [Class Notes] [and the Class Notes]
due on such [Distribution] [Payment] Date has been or will be
paid on such [Distribution] [Payment] Date.]
If an Event of Default occurs, the Indenture Trustee or the
holders of a majority of the aggregate principal amount of all
the Notes may declare the principal of the Notes to be
immediately due and payable, and the Indenture Trustee may
institute or be required to institute proceedings to collect
amounts due or exercise its remedies as a secured party
(including foreclosure or sale of the Receivables). In the event
of a sale of Receivables by the Indenture Trustee following an
Event of Default or following an Insolvency Event or a
dissolution with respect to [NB-SPC], there is no assurance that
the proceeds of such sale will be equal to or greater than the
aggregate outstanding principal amount of the Notes and the
Certificates plus accrued interest. Because neither interest nor
principal is distributed to Certificateholders upon sale of the
Receivables following an Event of Default and acceleration of the
Notes under the Indenture or following an Insolvency Event or a
dissolution with respect to [NB-SPC] until all the Notes have
been paid in full, the interests of Noteholders and the
Certificateholders may conflict, and the exercise by the
Indenture Trustee of its right to sell the Receivables or
exercise other remedies under the Indenture and applicable law
may cause the Certificateholders to suffer a loss of all or part
of their investment. See "Description of the Notes The
Indenture Events of Default; Rights upon Event of Default" and
"Description of the Transfer and Servicing Agreements Insolvency
Event or Dissolution" in the Prospectus.
In general, the Sellers may, and in certain circumstances
the Certificateholders may, direct the Owner Trustee in the
administration of the Trust. However, because the Trust has
pledged the Trust Property to the Indenture Trustee to secure the
payment of the Notes, including in such pledge certain rights of
the Trust under the Sale and Servicing Agreement, the Indenture
Trustee and not the Sellers or the Certificateholders has the
power to direct the Trust to take certain actions in connection
with the administration of the Trust Property until the Notes
have been paid in full and the lien of the Indenture has been
released. In addition, the Sellers and Certificateholders are
not allowed to direct the Owner Trustee to take any action which
conflicts with the provisions of any of the Basic Documents. The
Indenture specifically prohibits the Owner Trustee from taking
any action which would impair the Indenture Trustee's security
interest in the Trust and requires the Owner Trustee to obtain
the consent of the Indenture Trustee or the holders of a majority
of the aggregate principal amount of the Notes before modifying,
amending, supplementing, waiving or terminating any Basic
Document or any provision of any Basic Document. Therefore,
until the Notes have been paid in full, the ability to direct the
Trust with respect to certain actions permitted to be taken by it
under the Basic Documents rests with the Indenture Trustee and
the Noteholders instead of the Sellers or the Certificateholders.
If an Event of Servicing Termination were to occur, the
holders of a majority of the outstanding principal amount of the
Notes, or the Indenture Trustee acting on behalf of the
Noteholders, and not the Sellers or the Certificateholders, would
have the right to terminate the Servicer as the servicer of the
Receivables without consideration of the effect such termination
would have on Certificateholders. In addition, the holders of
not less than a majority of the outstanding principal amount of
the Notes would have the right to waive certain Events of
Servicing Termination, without consideration of the effect such
waiver would have on Certificateholders. After all the Notes
have been paid in full and the lien of the Indenture has been
released, upon the occurrence of an Event of Servicing
Termination, the holders of a majority of the outstanding
Certificate Balance, or the Owner Trustee acting on behalf of the
Certificateholders, may terminate the Servicer. See "Description
of the Transfer and Servicing Agreements Waiver of Past Events of
Servicing Termination" and " Rights Upon Event of Servicing
Termination" in the Prospectus.
MATURITY AND PREPAYMENT CONSIDERATIONS
The [Class A-2 Notes, the Class A-3 Notes and the]
Certificates will not receive any principal payments until the
[Class A-1] Notes have been paid in full[, and the Class A-3
Notes will not receive any principal payments until the Class A-2
Notes have been paid in full]. In addition, no principal
payments on the Certificates will be made until the later of (i)
the 199 Distribution Date and (ii) the
Distribution Date next succeeding the Distribution Date on which
the [Class A-1] Notes are paid in full. As the rate of payment
of principal of [the] [each class of] Notes and the Certificates
depends on the rate of payment (including prepayments) of the
principal balance of the Receivables, final payment of [the] [any
class of] Notes and the final distribution in respect of the
Certificates could occur significantly earlier than the
respective [Final Scheduled Distribution Dates] [final scheduled
Payment Dates or Distribution Date]. In addition, the rate of
payment of principal of [the] [each Class of] Notes and the
Certificates will be affected by the application of the
Noteholders' Accelerated Principal to pay the principal of the
Notes. It is expected that final payment of [the] [each class
of] Notes and the final distribution in respect of the
Certificates will occur on or prior to the respective [Final
Scheduled Distribution Dates] [final scheduled Payment Dates or
Distribution Date]. However, if sufficient funds are not
available to pay [the] [any class of] Notes or the Certificates
in full on or prior to the respective [Final Scheduled
Distribution Dates] [final scheduled Payment Dates or
Distribution Date], final payment of [the] [such class of] Notes
and the final distribution in respect of the Certificates could
occur later than such dates. See "Maturity and Prepayment
Considerations" herein and in the Prospectus.
[THE YIELD ON THE CLASS _ NOTES WILL BE EXTREMELY SENSITIVE
TO THE RATE AND TIMING OF PAYMENTS (INCLUDING PREPAYMENTS) ON THE
RECEIVABLES. [AN INVESTOR PURCHASING A CLASS _ NOTE AT A
SIGNIFICANT PREMIUM COULD, UNDER CERTAIN PREPAYMENT SCENARIOS,
FAIL TO RECOUP ITS ORIGINAL INVESTMENT.] [THE YIELD TO MATURITY
ON THE CLASS _ NOTES WILL BE ADVERSELY AFFECTED BY A LOWER THAN
ANTICIPATED RATE OF PAYMENT ON THE RECEIVABLES.] [The
reinvestment risk to an investor in the Class _ Notes may be
exacerbated in the event of [an increase in the rate of payment
on the Receivables in a decreasing interest rate environment] [a
decrease in the rate of payment on the Receivables in an
increasing rate environment]. Any ratings assigned to the Class
_ Notes by a Rating Agency will reflect only such Rating Agency's
assessment of the likelihood that timely distributions will be
made with respect to the Class _ Notes in accordance with the
Sale and Servicing Agreement and the Indenture. Such rating will
not constitute an assessment of the likelihood that principal
prepayments on the Receivables will occur or of the degree to
which the rate of such prepayments might differ from that
originally anticipated. As a result, such rating will not
address the possibility that prepayment rates higher or lower
than anticipated by an investor may cause [such investor to
experience a lower than anticipated yield] [an investor
purchasing a Class _ Note at a significant premium might fail to
recoup its investment]. See "The Receivable Pool -- Sensitivity
of the Class _ Notes to Prepayments."]
Geographic Concentration
Economic conditions in states where Obligors reside may
affect the delinquency, loan loss and repossession experience of
the Trust with respect to the Receivables. As of the Cut-Off
Date, the Sellers' records indicate that the mailing addresses of
Obligors with respect to approximately __%, __%, __%, __% and __%
by principal balance of the Receivables were in [Texas, North
Carolina, Florida, Georgia and South Carolina], respectively. As
a result, economic conditions in such states may have a
disproportionate impact on the Trust. In particular, an economic
downturn in one or more of such states could adversely affect the
performance of the Trust (even if national economic conditions
remain unchanged or improve) as Obligors in such state or states
experience the effects of such a downturn and face greater
difficulty in making payments on their Financed Vehicles. See
"The Receivables Pool."
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 [one of the [four]] [the] highest rating
[category][catagories], and the Certificates be rated [at least]
" " 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. [However, the Rating
Agencies do not evaluate, and the ratings of the Securities do
not address, the likelihood that the Note Prepayment Premium or
the Certificate Prepayment Premium will be paid.] There can be
no assurance that a rating will remain for any given period of
time or that a rating will not be lowered or withdrawn entirely
by a Rating Agency if in its judgment circumstances in the future
so warrant.
THE TRUST
GENERAL
The Issuer, NationsBank Auto Trust 199 - , is a business
trust formed under the laws of the State of Delaware pursuant to
the Trust Agreement for the transactions described in this
Prospectus Supplement. After its formation, the Trust will not
engage in any activity other than (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 the Notes and
the Certificates. Certificates with an original principal
balance of $ will be issued to [NB-SPC] and the
remaining Certificates will be sold to third party investors that
are expected to be unaffiliated with the Sellers, the Servicer or
their affiliates or the Trust. The proceeds from the issuance of
the Notes and the Certificates will be used by the Trust to
purchase the [Initial] Receivables from the Sellers pursuant to
the Sale and Servicing Agreement [and to fund the deposit of the
Pre-Funded Amount] and to fund the initial deposit of the Reserve
Account.
If the protection provided to the investment of the
Noteholders and Certificateholders by the [Yield Supplement
Account and the] Reserve Account is insufficient, the Trust would
have to look principally to the Obligors on the Receivables and
the proceeds from the repossession and sale of Financed Vehicles
which secure defaulted Receivables [and from the Pre-Funding
Account]. In such event, certain factors, such as the 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 Noteholders and
Certificateholders. See "Description of the Transfer and
Servicing Agreements Distributions" [, " Yield Supplement
Account; Yield Supplement Agreement"] and " Reserve Account"
herein and "Certain Legal Aspects of the Receivables" in the
Prospectus.
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the
Trust as of the Closing Date, as if the issuance and sale of the
Notes and the Certificates had taken place on such date:
[Class A-1] Notes . . . $
[Class A-2 Notes] . . . [ ]
[Class A-3 Notes] . . . [ ]
Certificates . . . . . . _____________
Total . . . . . . . . . $
THE OWNER TRUSTEE
is the Owner Trustee under the Trust
Agreement. is a Delaware and its principal
offices are located at , Delaware. Each of the
Sellers and their 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
include the [Initial] Receivables purchased as of the [Initial]
Cut-Off Date [and will include any Subsequent Receivables
purchased as of any Subsequent Cut-Off Date (the Initial Cut-Off
Date or any Subsequent Cut-Off Date being individually referred
to herein as a "Cut-Off Date")]. The [Initial] Receivables were
purchased[, and the Subsequent Receivables were or will be
purchased,] by the Sellers from Dealers in the ordinary course of
business. The Receivables were randomly selected from among the
Motor Vehicle Loans owned by the Sellers. The Sellers will
warrant in the Sale and Servicing Agreement that all the
Receivables have the following individual characteristics, among
others: (i) the obligation of the related Obligor under each
Receivable is secured by a security interest in either a new or
used automobile, van or light-duty truck; (ii) each Receivable
has a contractual interest rate ("Contract Rate") of at least
% and no more than %]; (iii) each Receivable has a remaining
maturity, as of the Cut-Off Date, of not less than months and
not more than months; (iv) no Receivable was more than
days past due as of the Cut-Off Date; (v) each Receivable is a
Simple Interest Receivable (as defined below) that [(except for
those Receivables which are Balloon Receivables)], at
origination, provides for level monthly payments that fully
amortize the amount financed over the original term; (vi) as of
the Cut-Off Date, each Receivable has a remaining principal
balance of no less than $ and no more than $ ; (vii) each
Receivable is not a Defaulted Receivable; and (viii) each
Receivable is not related to a motor vehicle that is the subject
of forced-placed insurance. "Forced-placed insurance" is
insurance placed on a motor vehicle by the lienholder to protect
the motor vehicle as collateral for a loan when there is evidence
that the borrower has neglected to do so as required by the
applicable loan agreement. See " Certain Characteristics of
the [Initial] Receivables" below. No selection procedures
believed by the Sellers to be adverse to the Noteholders or
Certificateholders were [or will be] used in selecting the
Receivables. [As of the [Initial] Cut-Off Date, % at the
[Initial Receivables, by principal balance, were Balloon
Receivables.]
[The obligation of the Trust to purchase the Subsequent
Receivables on a Subsequent Transfer Date will be subject to the
Receivables in the Trust, including the Subsequent Receivables to
be conveyed to the Trust on such Subsequent Transfer Date,
meeting the following criteria: (i) not more than % of the
principal balance of the Receivables in the Trust will represent
vehicles financed at [less than] [more than ___%]; [and] (ii) the
weighted average Contract Rate of the Receivables in the Trust
will not be less than % [and (iii) not more that % at the
principal balance of the Receivables in the Trust will be Balloon
Receivables], unless the Sellers increase the Reserve Account
Initial Deposit by the amounts, if any, specified by the Rating
Agencies to maintain the ratings of the Certificates. In
addition, such obligation will be subject to the Receivables,
including the Subsequent Receivables to be transferred to the
Trust on such Subsequent Transfer Date, having a weighted average
remaining term not greater than months. Such criteria
will be based on the characteristics of the Initial Receivables
on the Initial Cut-Off Date and any Subsequent Receivables on the
related Subsequent Cut-Off Dates.]
[The Initial Receivables will represent approximately %
of the aggregate initial principal balance of the Notes and the
Certificates. However, except for the criteria described in the
preceding paragraphs and the criteria, if any, specified by the
Rating Agencies to maintain the ratings of the Certificates,
there will be no required characteristics of the Subsequent
Receivables. Therefore, following the transfer of Subsequent
Receivables to the Trust, the aggregate characteristics of the
entire Receivables Pool, including the composition of the
Receivables, the distribution by Contract Rate and the geographic
distribution described in the following tables, may vary
significantly from those of the Initial Receivables.]
NationsBank, N.A., through DFSG and units in predecessor
banks of NationsBank, N.A., has been servicing indirect motor
vehicle loan portfolios since 1970. The indirect motor vehicle
loan portfolio serviced either directly by NationsBank, N.A. or
through its affiliates was approximately $5.5 billion as of March
31, 1996. DFSG also services other indirect and direct consumer
loan portfolios totalling over $25.3 billion (including the
indirect motor vehicle loan portfolio) as of March 31, 1996.
CERTAIN CHARACTERISTICS OF THE [INITIAL] RECEIVABLES
As of the Cut-Off Date, the [Initial] Receivables had, in
the aggregate, the following characteristics: (i) approximately [
]% of the [Initial] Receivables] was attributable to loans for
purchases of new Financed Vehicles and approximately [ ]% of the
[Initial] Pool Balance was attributable to loans for purchases of
used Financed Vehicles; (ii) the weighted average Contract Rate
of the [Initial] Receivables was [ ]%; (iii) there were [ ]
[Initial] Receivables being conveyed by the Sellers to the Trust;
(iv) the average principal balance of the [Initial] Receivables,
as of the Cut-Off Date, was $[ ]; and (v) the weighted
average original term and weighted average remaining term of the
[Initial] Receivables were [ . ] months and [ . ] months,
respectively. Approximately % of the [Initial] Receivables by
principal balance as of the [Initial] Cut-Off Date were
contributed to the Trust by NationsBank, N.A.
The Composition of the [Initial] Receivables, Distribution
of the [Initial] Receivables by New/Used Motor Vehicles,
Distribution of the Receivables by Contract Rate, Distribution of
the [Initial] Receivables by Remaining Term, Distribution of the
[Initial] Receivables by Principal Balance and Geographic
Distribution of the [Initial] Receivables, each as of the
[Initial] Cut-Off Date, are set forth in the following tables.
COMPOSITION OF THE [INITIAL] RECEIVABLES
Weighted Average Contract Rate . . . . . . .
Range of Contract Rates . . . . . . . . . . .
Aggregate Principal Balance . . . . . . . . .
Number of Receivables . . . . . . . . . . . .
Weighted Average Remaining Term . . . . . . .
Range of Remaining Terms . . . . . . . . . .
Weighted Average Original Term . . . . . . .
Range of Original Terms . . . . . . . . . . .
Average Principal Balance . . . . . . . . . .
Average Original Amount Financed . . . . . .
Range of Original Amounts Financed . . . . .
DISTRIBUTION OF THE [INITIAL] RECEIVABLES BY NEW/USED MOTOR VEHICLES
WEIGHTED
AGGREGATE ORIGINAL AVERAGE
NUMBER OF PRINCIPAL PRINCIPAL CONTRACT
RECEIVABLES BALANCE BALANCE RATE(%)
New Autos, Vans and
Light-Duty Trucks . . .
Used Autos, Vans and
Light-Duty Trucks . . .
All Receivables . . . . .
DISTRIBUTION OF THE [INITIAL] RECEIVABLES BY CONTRACT RATE
% OF
AGGREGATE AGGREGATE
NUMBER OF % OF TOTAL PRINCIPAL PRINCIPAL
RECEIVABLES RECEIVABLES BALANCE BALANCE
7.50 to 7.99% . . . .
8.00 to 8.99% . . . .
9.00 to 9.99% . . . .
10.00 to 10.99% . . . .
11.00 to 11.99% . . . .
12.00 to 12.99% . . . .
13.00 to 13.99% . . . .
14.00 to 14.99% . . . .
15.00 to 15.99% . . . .
16.00 to 16.99% . . . .
17.00 to 17.99% . . . .
18.00 to 18.99% . . . .
19.00 to 19.99% . . . .
20.00 to 21.00% . . . .
Total . . . .
DISTRIBUTION OF THE [INITIAL] RECEIVABLES BY REMAINING TERM
% OF
AGGREGATE AGGREGATE
NUMBER OF % OF PRINCIPAL PRINCIPAL
RECEIVABLES RECEIVABLES BALANCE BALANCE
12 to 18 months . . . .
19 to 24 months . . . .
25 to 30 months . . . .
31 to 36 months . . . .
37 to 42 months . . . .
43 to 48 months . . . .
49 to 54 months . . . .
55 to 60 months . . . .
61 to 66 months . . . .
67 to 72 months . . . .
Total . . . .
DISTRIBUTION OF THE [INITIAL] RECEIVABLES BY PRINCIPAL BALANCE
% OF
AGGREGATE AGGREGATE
NUMBER OF % OF PRINCIPAL PRINCIPAL
RECEIVABLES RECEIVABLES BALANCE BALANCE
$ 2,000 to $ 9,999 .
$10,000 to $19,999 .
$20,000 to $29,999 .
$30,000 to $39,999 .
$40,000 to $49,999 .
Total . . .
GEOGRAPHIC DISTRIBUTION OF THE [INITIAL] RECEIVABLES
% OF
AGGREGATE AGGREGATE
NUMBER OF % OF PRINCIPAL PRINCIPAL
State(1) RECEIVABLES RECEIVABLES BALANCE BALANCE
Florida . . . . . . . . .
Georgia . . . . . . . . .
North Carolina . . . . .
South Carolina . . . . .
Texas . . . . . . . . . .
Other(2) . . . . . . . .
Total . . . . .
_________
(1) Receivables are categorized by the Sellers' records of the
mailing addresses of the Obligors as of the [Initial] Cut-
Off Date.
(2) Each other state represents less than [5]% of the total
number of Receivables.
DELINQUENCY AND LOSS EXPERIENCE
The tables set forth below indicate the delinquency and
credit loss/repossession experience for each of the last three
calendar years and for the three month periods ending [March 31],
1996 and 1995 of the Banks' portfolio of Motor Vehicle Loans from
which the Receivables have been selected [(which portfolio
excludes certain Motor Vehicle Loans acquired by the Banks in
acquisitions)]. No assurance can be made, however, that the
delinquency and loss experience for the Motor Vehicle Loans or
the Receivables in the future will be similar to the historical
experience set forth in the following tables.
DELINQUENCY EXPERIENCE (DOLLARS IN THOUSANDS)(1)
AS OF [MARCH] AS OF DECEMBER 31,
1996 1995 1995 1994 1993
NUMBER NUMBER NUMBER NUMBER NUMBER
OF OF OF OF OF
LOANS LOANS LOANS LOANS LOANS
Total Serviced
Portfolio at the
Period End
Delinquency(2)
30-59 Days . . . . . . .
60-89 Days . . . . . . .
90 Days or More . . . .
Total Delinquencies . . .
Total Delinquencies as a
Percentage of the Total
Serviced Portfolio . . .
________________
(1) Delinquencies shown in dollars include principal amounts
only.
(2) The period of delinquencies is based on the number of days
payments are contractually past due until the applicable
Motor Vehicle Loan is charged off.
CREDIT LOSS/REPOSSESSION EXPERIENCE (DOLLARS IN THOUSANDS)
[THREE] MONTHS ENDED YEAR ENDED
[MARCH 31], DECEMBER 31,
1996 1995 1995 1994 1993
Period End Outstandings(1) . .
Average Amount Outstanding
During the Period(2) . . . .
Average Number of Loans
Outstanding During the
Period(3) . . . . . . . . .
Gross Charge-offs(4)
Recoveries on Losses(5). . . .
Net Charge-offs. . . . . . . .
Net Charge-offs as a
Percentage of the Period
End Outstandings(6). . . . .
Net Charge-offs as a
Percentage of the
Average Amount
Outstanding(6) . . . . . . .
__________
(1) Amount represents principal amounts only.
(2) Amount represents principal amounts only and reflects a
daily weighted average of such amounts during the periods
shown.
(3) Amount based on the average outstanding for the period
divided by the average loan amount. the average loan amount
was derived from the month end outstanding balances divided
by month end number of loans.
(4) Amount of charge-off is the remaining principal balance
less the net proceeds from sale of loan collateral.
(5) Recoveries include post-disposition monies and are net of
any related expenses.
(6) Figures for the [three] months ended [March 31], 1996 and
[March 31], 1995 are annualized.
[PAYMENTS ON THE RECEIVABLES
The entire Initial Pool Balance is attributable to
Receivables that provide for the allocation of payments according
to the "Simple Interest" method (each a "Simple Interest
Receivable"). See "The Receivables Pools General" in the
Prospectus for a description of the application of payments
received on Simple Interest Receivables.
The Receivables are prepayable at any time. Prepayments may
also result from liquidations due to default, the receipt of
monthly installments earlier than the scheduled due dates for
such installments, the receipt of proceeds from credit life,
disability, theft or physical damage insurance, repurchases by
the Sellers as a result of certain uncured breaches of the
warranties made by them in the Sale and Servicing Agreement with
respect to the Receivables, purchases by the Servicer as a result
of certain uncured breaches of the covenants made by it in the
Sale and Servicing Agreement with respect to the Receivables, or
the Servicer exercising its option to purchase all of the
remaining Receivables. The rate of prepayments on the Receivables
may be influenced by a variety of economic, social and other
factors, including Obligor refinancings resulting from decreases
in interest rates and the fact that the Obligor is generally not
permitted to sell or transfer the Financed Vehicle securing a
Receivable without the consent of the relevant Seller.]
[Neither DFSG, the Servicer, the Sellers nor any of their
affiliates maintains records adequate to provide quantitative
data regarding prepayment experience on the Sellers' portfolio of
Motor Vehicle Loans. However, the Sellers (i) believe that the
actual rate of prepayments will result in a substantially shorter
weighted average life than the scheduled weighted average life
and (ii) estimate that the actual weighted average life of its
portfolio of Motor Vehicle Loans ranges between [60% and 70%] of
their scheduled weighted average life. See "Maturity and
Prepayment Considerations" herein and in the Prospectus.]
[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 the Certificates will depend on the rate of payment
(including prepayments) of the principal balance of the
Receivables, final payment of any class of Notes and the final
distribution in respect of the Certificates could occur
significantly earlier than the respective [Final Scheduled
Distribution Dates] [final scheduled Payment Dates or
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
Amount or Initial Certificate Balance at Various ABS Percentages"
(the "ABS Table") has been prepared on the basis of the
characteristics of the [Initial] Receivables [and certain assumed
characteristics with respect to the Subsequent 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 [are made on each
Payment Date] and distributions on the Certificates are made on
each Distribution Date (and each such date is assumed to be the
day of [the month in which such Payment Date or Distribution
Date occurs] [each applicable month]), (iv) the balance in the
Reserve Account on each [Payment Date and] Distribution Date is
equal to the Specified Reserve Account Balance, and (v) the
Sellers exercise their option to purchase the Receivables on the
first Distribution Date on which it is permitted to do so, as
described herein. [State assumed characteristics with respect to
the Subsequent Receivables.][And/or, state other assumptions on
which the ABS Table is based.] The pools have an assumed cut-off
date of , 199 . 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
[Payment Dates or] Distribution Dates shown at various constant
ABS percentages. [State assumed characteristics with respect
to the hypothetical pools of Subsequent Receivables.]
The ABS Table also assumes that the [Initial] Receivables
have been aggregated into hypothetical pools with all of the
[Initial] Receivables within each such pool having the following
characteristics and that the level scheduled monthly payment for
each of the pools (which is based on its aggregate principal
balance, Contract Rate, original term to maturity and remaining
term to maturity as of the [Initial] Cut-Off Date) will be such
that each pool will be fully amortized by the end of its
remaining term to maturity.
ORIGINAL TERM REMAINING TERM
AGGREGATE CONTRACT TO MATURITY TO MATURITY
POOL PRINCIPAL BALANCE RATE (IN MONTHS) (IN MONTHS)
1 . . . . . . $ %
2 . . . . . .
3 . . . . . .
4 . . . . . .
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 hypothetical
pools could produce slower or faster principal distributions than
indicated in the ABS Table at the various constant percentages of
ABS specified, even if the original and remaining terms to
maturity of the Receivables are as assumed. Any difference
between such assumptions and the actual characteristics and
performance of the Receivables, or actual prepayment experience,
will affect the percentages of initial balances outstanding over
time and the weighted average lives of each class of Notes and
the Certificates.
[Remainder of page intentionally blank]
<TABLE>
<CAPTION>
PERCENT OF INITIAL NOTE PRINCIPAL AMOUNT OR
INITIAL CERTIFICATE BALANCE AT VARIOUS ABS PERCENTAGES
Class A-1 Notes Class A-2 Notes Class A-3 Notes
------------------------------------------------------------------------------------------------
[Payment] [Distribution] 0.5% 1.0% 1.5% 1.8% 0.5% 1.0% 1.5% 1.8% 0.5% 1.0% 1.5% 1.8%
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Date
06/15/96 . . . 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000 100.000
07/15/96 . . .
08/15/96 . . .
09/15/96 . . .
10/15/96 . . .
11/15/96 . . .
12/15/96 . . .
01/15/97 . . .
02/15/97 . . .
03/15/97 . . .
04/15/97 . . .
05/15/97 . . .
06/15/97 . . .
07/15/97 . . .
08/15/97 . . .
09/15/97 . . .
10/15/97 . . .
11/15/97 . . .
12/15/97 . . .
01/15/98 . . .
02/15/98 . . .
03/15/98 . . .
04/15/98 . . .
05/15/98 . . .
06/15/98 . . .
07/15/98 . . .
08/15/98 . . .
09/15/98 . . .
10/15/98 . . .
11/15/98 . . .
12/15/98 . . .
01/15/99 . . .
02/15/99 . . .
03/15/99 . . .
04/15/99 . . .
05/15/99 . . .
06/15/99 . . .
07/15/99 . . .
Weighted Average
Life (years)(1) . .
<FN>
(1) The weighted average life of a Class A-1 Note, Class A-2 Note, or
Class A-3 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 [Payment] [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 [INITIAL] RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS
AND PERFORMANCE THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE OR
INITIAL CERTIFICATE BALANCE AT VARIOUS ABS PERCENTAGES
Certificates
Distribution 0.5% 1.0% 1.5% 1.8%
Date
06/15/96 . . . 100.000 100.000 100.000 100.000
07/15/96 . . .
08/15/96 . . .
09/15/96 . . .
10/15/96 . . .
11/15/96 . . .
12/15/96 . . .
01/15/97 . . .
02/15/97 . . .
03/15/97 . . .
04/15/97 . . .
05/15/97 . . .
06/15/97 . . .
07/15/97 . . .
08/15/97 . . .
09/15/97 . . .
10/15/97 . . .
11/15/97 . . .
12/15/97 . . .
01/15/98 . . .
02/15/98 . . .
03/15/98 . . .
04/15/98 . . .
05/15/98 . . .
06/15/98 . . .
07/15/98 . . .
08/15/98 . . .
09/15/98 . . .
10/15/98 . . .
11/15/98 . . .
12/15/98 . . .
01/15/99 . . .
02/15/99 . . .
03/15/99 . . .
04/15/99 . . .
05/15/99 . . .
06/15/99 . . .
07/15/99 . . .
Weighted Average
Life (years)(1)(2.
(1) The weighted average life of a Certificate is determined by (i)
multiplying the amount of each distribution in respect of the
Certificate Balance of a Certificate by the number of years from the
date of the issuance of the Certificate to the related Distribution
Date, (ii) adding the results and (iii) dividing the sum by the
original Certificate Balance of the Certificate.
THE ABS TABLE HAS BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF
THE [INITIAL] RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS
AND PERFORMANCE THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.]
[SENSITIVITY OF THE CLASS _ NOTES TO PREPAYMENTS
[Describe method of calculating principal and interest
payable on the Class _ Notes, including setting forth notional
balance for each [Distribution] [Payment] Date, if applicable.
Set forth in tabular form relationship between yield to maturity
of the Class _ Notes and assumed prepayment speeds. State
assumptions, including as to purchase price of the Class _ Notes,
if applicable, used in calculating the data set forth in the
table.]
POOL FACTORS
The "Note Pool Factor" for [the] [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
indicating the remaining outstanding principal amount of such
[class of] Notes, as of the applicable [Distribution] [Payment]
Date (after giving effect to payments to be made on such
[Distribution] [Payment] Date), as a fraction of the initial
outstanding principal amount of such [class of] Notes. The
"Certificate Pool Factor" for the Certificates will be a
seven-digit decimal which the Servicer will compute prior to each
distribution with respect to the Certificates indicating the
remaining Certificate Balance, 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. [The] [Each] Note Pool Factor and the Certificate Pool
Factor will initially be 1.0000000 and thereafter will decline to
reflect reductions in the outstanding principal amount of the
[applicable class of] Notes, or the reduction of the Certificate
Balance, as the case may be, as a result of scheduled payments,
prepayments and liquidations of the Receivables [(and also as a
result of a prepayment arising from application of the Pre-
Funding Account)]. [The] [Each] Note Pool Factor and the
Certificate Pool Factor will not change as a result of the
addition of Subsequent Receivables. A Noteholder's portion of
the aggregate outstanding principal amount 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 Certificates is the product of (a)
the original denomination of such Certificateholder's Certificate
and (b) the Certificate Pool Factor.
MATURITY AND PREPAYMENT CONSIDERATIONS
Information regarding certain maturity and prepayment
considerations with respect to the Securities is set forth under
"Maturity and Prepayment Considerations" in the Prospectus. In
addition, the [Class A-2 Notes, the Class A-3 Notes and the]
Certificates will not receive any principal payments until the
[Class A-1] Notes have been paid in full[, and the Class A-3
Notes will not receive any principal payments until the Class A-2
Notes have been paid in full]. In addition, no principal
payments on the Certificates will be made until the later of (i)
the 199 Distribution Date and (ii) the
Distribution Date next succeeding the Distribution Date on which
the [Class A-1] Notes are 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 [the] [each class of] Notes and
the Certificates depends on the rate of payment (including
prepayments) of the principal balance of the Receivables, final
payment of [the] [any class of] Notes and the final distribution
in respect of the Certificates could occur significantly earlier
than the respective [Final Scheduled Distribution Dates] [final
scheduled Payment Dates or Distribution Date]. In addition, the
rate of payment of principal of [the] [each Class of] Notes and
the Certificates will be affected by the application of the
Noteholders' Accelerated Principal to pay principal of the Notes.
It is expected that final payment of [the] [each class of]
Notes and the final distribution in respect of the Certificates
will occur on or prior to the respective [Final Scheduled
Distribution Dates] [final scheduled Payment Dates or
Distribution Date]. Failure to make final payment of [the] [any
class of] Notes on or prior to the respective Final Scheduled
[Payment] [Distribution] Dates would constitute an Event of
Default under the Indenture. See "Description of the Notes The
Indenture Events of Default; Rights upon Event of Default". In
addition, the Sale and Servicing Agreement requires that any
remaining Certificate Balance be paid in full on the Final
Scheduled Distribution Date. However, no assurance can be given
that sufficient funds will be available to pay [the] [each class
of] Notes and the Certificates in full on or prior to the
respective [Final Scheduled Distribution Dates] [final scheduled
Payment Dates or Distribution Date]. If sufficient funds are not
available, final payment of [the] [any class of] Notes and the
final distribution in respect of the Certificates could occur
later than such dates.
The rate of prepayments of the Receivables may be
influenced by a variety of economic, social and other factors,
and under certain circumstances relating to breaches of
representations, warranties or covenants, the Sellers and/or the
Servicer will be obligated to repurchase Receivables from the
Trust. See "Maturity and Prepayment Considerations" in the
Prospectus. A higher than anticipated rate of prepayments will
reduce the aggregate principal balance of the Receivables more
quickly than expected and thereby reduce anticipated aggregate
interest payments on the Securities. Any reinvestment risks
resulting from a faster or slower incidence of prepayment of
Receivables will be borne entirely by the Noteholders and the
Certificateholders as set forth in the priority of distributions
herein. Such reinvestment risks include the risk that interest
rates may be lower at the time such holders received payments
from the Trust than interest rates would otherwise have been had
such prepayments not been made or had such prepayments been made
at a different time.
Holders of Securities should consider, in the case of
Securities purchased at a discount, the risk that a slower than
anticipated rate of principal payments on the Receivables could
result in an actual yield that is less than the anticipated yield
and, in the case of Securities purchased at a premium, the risk
that a faster than anticipated rate of principal payments on the
Receivables could result in an actual yield that is less than the
anticipated yield.
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, which are
hereby incorporated by reference. The following summary
supplements the description of the general terms and provisions
of the Notes of any given series and the related Indenture set
forth under the headings "Description of the Notes" and
"Description of Fixed and Floating Rate Options" in the
Prospectus, to which description reference is hereby made.
PAYMENTS OF INTEREST
[The] [Each class of] Notes [other than the Class A-2
Notes] will constitute Fixed Rate Securities, as such term is
defined under "Description of Fixed and Floating Rate
Options Fixed Rate Securities" in the Prospectus. [The Class A-2
Notes will constitute Floating Rate Securities which are [LIBOR]
Securities, as such terms are defined under "Description of Fixed
and Floating Rate Options Floating Rate Securities" in the
Prospectus.] Interest on the principal amount[s] of the [classes
of the] Notes will accrue at the [respective] per annum Note
Interest Rate[s] and will be payable to the Noteholders [monthly]
[quarterly] on each [Distribution] [Payment] Date commencing
, 199 . [However, if on any two consecutive Distribution
Dates any amount is withdrawn from the Reserve Account to cover
shortfalls on the Notes or the Certificates, then each following
Distribution Date will constitute a Payment Date, until the
quarterly Payment Date following the first Distribution Date on
which (i) no amount is withdrawn from the Reserve Account to
cover shortfalls and (ii) the amount on deposit in the Reserve
Account is equal to the Specified Reserve Account Balance.]
[However, if the commercial paper rating or certificate of
deposit rating of the Investment Provider is at any time reduced
below A-1+ or P1 by the applicable Rating Agency and the Servicer
is unable to obtain a Replacement Guaranteed Rate Agreement or a
pledge of securities or otherwise satisfy the applicable Rating
Agency within 60 days of receiving notice of such decline, then
each following Distribution Date will constitute a Payment Date.
See "Description of the Transfer and Servicing
Agreements Guaranteed Rate Agreement" herein.] Interest will
accrue from and including the Closing Date (in the case of the
first [Distribution] [Payment] Date), or from the most recent
[Distribution] [Payment] Date on which interest has been paid to
but excluding the following [Distribution] [Payment] Date (each
an "Interest Period"). [Interest on the Class A-1 Notes will be
calculated on the basis of actual days elapsed and a 365- or 366-
day year, as applicable.] Interest on the [Class A-1 Notes and]
Class A-3] Notes will be calculated on the basis of a 360-day
year of twelve 30-day months. [Interest on the Class A-2 Notes
will be calculated on the basis of actual days elapsed and a 360-
day year.] Interest accrued as of any [Distribution] [Payment]
Date but not paid on such [Distribution] [Payment] Date will be
due on the next [Distribution] [Payment] Date, together with
interest on such amount at the [applicable] Note Interest Rate
[plus 2.00%] (to the extent lawful). [With respect to the Class
A-2 Rate, the "Index Maturity" for [LIBOR] will be [one] [three]
month[s] [(in the case of quarterly Payment Dates) and one month
(in the case of monthly Payment Dates)] and the "Interest Reset
Period" for such calculation will be the Interest Period. See
"Description of Fixed and Floating Rate Options Floating Rate
Securities" in the Prospectus.] Interest payments on the Notes
will generally be derived from the Available Funds 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 to all classes of Noteholders will have the
same priority. Under certain circumstances, the amount available
for interest payments could be less than the amount of interest
payable on the Notes on any [Distribution] [Payment] Date, in
which case each class of Noteholders will receive their ratable
share (based upon the aggregate amount of interest due to such
class of Noteholders) of the aggregate amount available to be
distributed in respect of interest on the Notes.] [The [Class ]
Noteholders will not receive any distributions of interest on a
[Distribution] [Payment] Date unless the full amount of interest
on the [Class Notes] [and the Class Notes] due on such
[Distribution] [Payment] Date has been or will be paid on such
[Distribution] [Payment] Date.]
PAYMENTS OF PRINCIPAL
Principal payments will be made [quarterly] to the
Noteholders on each [Distribution] [Payment] Date in an amount
generally equal to the sum [, for each of the three Collection
Periods preceding such Payment Date,] of (i) the Noteholders'
Percentage of the amount (such amount, the "Regular Principal")
equal to the sum of (a) the principal portion of all payments
collected, and (b) the principal balance of each Receivable
purchased by the Servicer, repurchased by the Sellers or
liquidated by the Servicer, each with respect to the preceding
Collection Period, plus (ii) % of the portion, if any, of the
Available Funds for such Collection Period that remains after
payment of (a) the Servicing Fee, (b) the Accrued Note Interest,
(c) the portion of the Regular Principal allocated to the
Noteholders pursuant to clause (i), (d) the Accrued Certificate
Interest, (e) the portion of the Regular Principal distributed to
Certificateholders as described under "Description of the
Certificates Distributions of Principal Payments" herein, and (f)
the amount, if any, required to be deposited in the Reserve
Account on [such] [the related] Distribution Date [plus the
excess of the amount on deposit in the Reserve Account on such
Distribution Date (after giving effect to all deposits or
withdrawals therefrom on such Distribution Date) over the
Specified Reserve Account Balance)] (such percentage of the
remaining portion of Available Funds [plus such excess], the
"Noteholders' Accelerated Principal"). [Principal] [Amounts
deposited in the Note Payment Account on each Distribution Date
in respect of principal] payments on the Notes generally will be
derived from the Available Funds and the amount, if any, in the
Reserve Account up to the Available Reserve Amount remaining
after the payment of the Servicing Fee and the Accrued Note
Interest and, in the case of the Noteholders' Accelerated
Principal, the Certificateholders' Distribution Amount and the
amount, if any, required to be deposited into the Reserve
Account. See "Description of the Transfer and Servicing
Agreements Distributions" and " Reserve Account" herein.
On the fifth Business Day preceding each Distribution Date
(a "Determination Date") the Indenture Trustee will determine the
amount in the Collection Account allocable to interest and the
amount allocable to principal on the basis described under
"Description of the Transfer and Servicing
Agreements Distributions" in the Prospectus, and payments to
Securityholders on the following Distribution Date will be based
on such allocation.
[On each Distribution Date, the Indenture Trustee will
deposit into the Note Payment Account amounts set aside for the
payment of principal and interest on the Notes on the related
Payment Date, as described under "Description of the Transfer and
Servicing Agreements Distributions" herein. Such amounts will be
invested from the date of deposit to the related Payment Date by
the Indenture Trustee in [Permitted Investments] [certain
eligible investments pursuant to the Guaranteed Rate Agreement].
[See "Description of the Transfer and Servicing
Agreements Guaranteed Rate Agreement" herein.]]
Principal payments on the Notes will be applied on each
[Distribution] [Payment] Date [, first,] to the principal amount
of the [Class A-1] Notes until such principal amount is reduced
to zero[, then second, to the principal amount of the Class A-2
Notes until such principal amount is reduced to zero and then
third, to the principal amount of the Class A-3 Notes until such
principal amount is reduced to zero]. The principal amount of
the [Class A-1] Notes, to the extent not previously paid, will be
due on the [Class A-1] Final Scheduled [Distribution] [Payment]
Date[, the principal amount of the Class A-2 Notes, to the extent
not previously paid, will be due on the Class A-2 Final Scheduled
[Distribution] [Payment] Date, and the principal amount of the
Class A-3 Notes, to the extent not previously paid, will be due
on the Class A-3 Final Scheduled [Distribution] [Payment] Date].
The actual date on which the aggregate outstanding principal
amount of [the] [any class of] Notes is paid may be earlier or
later than the [respective] Final Scheduled [Distribution]
[Payment] Date[s] set forth above based on a variety of factors,
including those described under "Maturity and Prepayment
Considerations" herein and in the Prospectus.
[MANDATORY REDEMPTION
[The] [A class or classes of] Notes will be redeemed in
part on the Distribution Date on or immediately following the
last day of the Funding Period in the event that amounts remain
on deposit in the Pre-Funding Account after giving effect to the
purchase of all Subsequent Receivables, including any such
purchase on such date (a "Mandatory Redemption"). If the amount
on deposit in the Pre-Funding Account is less than or equal to $
, then such amount will be used to redeem the [Class A-1]
Notes [up to an amount not to exceed their outstanding principal
amount and then to redeem the Class A-2 Notes]. Otherwise the
amount on deposit in the Pre-Funding Account on such date will be
used to redeem [each class of] the Notes and the Certificates,
and the aggregate principal amount of [each class of] the Notes
to be redeemed will be an amount equal to [the Notes'] [such
class'] Pre-Funded Percentage of the amount then on deposit in
the Pre-Funding Account.
[The Note Prepayment Premium will be payable by the Trust
to the Noteholders pursuant to a Mandatory Redemption if the
amount on deposit in the Pre-Funding Account exceeds $ .
The Note Prepayment Premium [for each class of Notes] will equal
the excess, if any, discounted as described below, of (i) the
amount of interest that would accrue on [the Notes'] [such
class'] Pre-Funded Percentage of any remaining Pre-Funded Amount
(the "Note Prepayment Amount") at the Note Interest Rate borne by
[the] [such class of] Notes during the period commencing on and
including the Distribution Date on which such Note Prepayment
Amount is required to be distributed to the Noteholders [of such
Class] to but excluding [, in the case of the Class A-1
Notes, , in the case of the Class A-2 Notes and
, in the case of the Class A-3 Notes], over (ii) the amount of
interest that would have accrued on such Note Prepayment Amount
over the same period at a per annum rate of interest equal to the
bond equivalent yield to maturity on the Determination Date
preceding such Distribution Date on the [, in the case
of the Class A-1 Notes, the , in the case of the Class
A-2 Notes and the , in the case of the Class A-3
Notes]. Such excess shall be discounted to present value to such
Distribution Date at the applicable yield described in clause
(ii) above. Pursuant to the Sale and Servicing Agreement, the
Sellers will be obligated to pay the sum of the Note Prepayment
Premium [for each class of Notes] and the Certificate Prepayment
Premium to the Trust as liquidated damages for the failure to
deliver Subsequent Receivables having an aggregate principal
balance equal to the Pre-Funded Amount. The Trust's obligation
to pay the Note Prepayment Premium [for each class of Notes] and
the Certificate Prepayment Premium will be limited to funds
received from the Sellers pursuant to the preceding sentence. In
the event that such funds are insufficient to pay the Note
Prepayment Premium [for each class of Notes] and the Certificate
Prepayment Premium in full, Noteholders [of each class of Notes]
will receive their ratable share (based upon the aggregate Note
Prepayment Premium [for such class]) of the aggregate amount
available to be distributed in respect of the Note Prepayment
Premium and the Certificate Prepayment Premium. No other assets
of the Sellers or the Trust will be available for the purpose of
making such payment.]]
OPTIONAL REDEMPTION
The [Class A-3] Notes will be redeemed in whole, but not in
part, on any Distribution Date [after all the other classes of
Notes have been paid in full] on which the Servicer exercises its
option to purchase the Receivables. The Servicer may purchase
the Receivables when 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 (the "Redemption Price"). No
prepayment premium will be payable to Noteholders in connection
with any such optional redemption.
STATEMENTS TO NOTEHOLDERS AND NOTE OWNERS
Unless and until Definitive Notes are issued, unaudited
monthly and annual reports concerning the Receivables and each
Trust, prepared by the Servicer and delivered by the Indenture
Trustee, on behalf of the Trust, will be sent to each Noteholder
pursuant to the Indenture. Such reports will not contain audited
financial statements with respect to the Trust. Note Owners may
obtain the monthly statements and annual tax statement and tax
information provided to the Noteholders and the Indenture Trustee
by the Servicer free of charge (except for copying and postage
costs) by request in writing to the Indenture Trustee at [
, Attention:
.] See "Book-Entry and Definitive Securities;
Reports to Securityholders Reports to Securityholders" in the
Prospectus for a description of such statements.
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 the
description of the general terms and provisions of the
Certificates of any given series and the related Trust Agreement
set forth under the headings "Description of the Certificates,"
"Description of Fixed and Floating Rate Options," "Book-Entry and
Definitive Securities; Reports to Securityholders" and
"Description of the Transfer and Servicing Agreements" in the
Prospectus, to which description reference is hereby made.
DISTRIBUTIONS OF INTEREST INCOME
On each Distribution Date, commencing , 199 , the
Certificateholders will be entitled to distributions in an amount
equal to the amount of interest that would accrue on the
Certificate Balance at the Certificate Rate. The Certificates
will constitute Fixed Rate Securities, as such term is defined
under "Description of Fixed and Floating Rate Options Fixed Rate
Securities" in the Prospectus. Interest in respect of a
Distribution Date will accrue from and including the Closing Date
(in the case of the first Distribution Date) or from and
including the most recent Distribution Date on which interest has
been paid to but excluding the following Distribution Date, and
will be calculated on the basis of a 360-day year of twelve
30-day months. Interest distributions due for any Distribution
Date but not distributed on such Distribution Date will be due on
the next Distribution Date increased by an amount equal to
interest on such amount at the Certificate Rate (to the extent
lawful). Interest distributions with respect to the Certificates
will generally be funded from the portion of the Available Funds
and the funds in the Reserve Account remaining after the
distribution of the Servicing Fee and the Noteholders' Payment
Amount. Following the occurrence of an Event of Default
resulting in an acceleration of the Notes or following an
Insolvency Event or a dissolution with respect to [NB-SPC], the
Noteholders will be entitled to be paid in full before any
distributions may be made on the Certificates. See "Description
of the Transfer and Servicing Agreements Distributions" and
" Reserve Account" herein.
DISTRIBUTIONS OF PRINCIPAL PAYMENTS
Certificateholders will be entitled to distributions on each
Distribution Date, commencing with the later of (i) the
Distribution Date and (ii) the Distribution Date next
succeeding the Distribution Date on which the [Class A-1] Notes
are paid in full, in an amount generally equal to the
Certificateholders' Percentage of the Regular Principal.
Distributions with respect to principal payments will generally
be funded from the portion of the Available Funds and funds in
the Reserve Account remaining after the distribution of the
Servicing Fee, the Noteholders' Payment Amount and the Accrued
Certificate Interest. See "Description of the Transfer and
Servicing Agreements Distributions" and " Reserve Account"
herein. However, following the occurrence of an Event of Default
resulting in an acceleration of the Notes or following an
Insolvency Event or a dissolution with respect to [NB-SPC], the
Noteholders will be entitled to be paid in full before any
distributions may be made on the Certificates. [In addition,
upon any reduction or withdrawal by any Rating Agency of its
rating of [any class of] the Notes, then, with respect to each
Distribution Date thereafter, the Certificateholders will not
receive any distributions of principal until all the Notes have
been paid in full or such rating has been restored. There can be
no assurance that a rating will remain for a 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.]
[MANDATORY REPURCHASE OF CERTIFICATES
Cash distributions to Certificateholders will be made, on a
pro rata basis, on the Distribution Date on or immediately
following the last day of the Funding Period in the event that
the amount on deposit in the Pre-Funding Account after giving
effect to the purchase of all Subsequent Receivables, including
any such purchase on such date, exceeds $ (a "Mandatory
Repurchase"). The aggregate principal balance of the
Certificates to be repurchased will be an amount equal to the
Certificates' Pre-Funded Percentage of the amount then on deposit
in the Pre-Funding Account.
[The Certificate Prepayment Premium will be payable by the
Trust to the Certificateholders at the time of any prepayment of
the Certificates pursuant to a Mandatory Repurchase. The
Certificate Prepayment Premium for the Certificates will equal
the excess, if any, discounted as described below, of (i) the
amount of interest that would accrue on the Certificates' share
of any remaining Pre-Funded Amount (the "Certificate Prepayment
Amount") at the Certificate Rate during the period commencing on
and including the Distribution Date on which such Certificate
Prepayment Amount is required to be distributed to
Certificateholders to but excluding , over (ii) the
amount of interest that would have accrued on such Certificate
Prepayment Amount over the same period at a per annum rate of
interest equal to the bond equivalent yield to maturity on the
Determination Date preceding such Distribution Date on the
. Such excess shall be discounted to present value to such
Distribution Date at the yield described in clause (ii) above.
Pursuant to the Sale and Servicing Agreement, the Sellers will be
obligated to pay the sum of the Note Prepayment Premium [for each
class of Notes] and the Certificate Prepayment Premium to the
Trust as liquidated damages for the failure to deliver Subsequent
Receivables having an aggregate principal balance equal to the
Pre-Funded Amount. The Trust's obligation to pay the Note
Prepayment Premium [for each class of Notes] and the Certificate
Prepayment Premium will be limited to funds received from the
Sellers pursuant to the preceding sentence. In the event that
such funds are insufficient to pay the Note Prepayment Premium
[for each class of Notes] and the Certificate Prepayment Premium
in full, Certificateholders will receive their ratable share
(based upon the aggregate Certificate Prepayment Premium) of the
aggregate amount available to be distributed in respect of the
Note Prepayment Premium and the Certificate Prepayment Premium.
No other assets of the Trust will be available for the purpose of
making such payment.]]
OPTIONAL PREPAYMENT
If the Servicer exercises its option to purchase the
Receivables when 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
Certificate Rate, which distribution shall effect the early
retirement of the Certificates. See "Description of the Transfer
and Servicing Agreements Termination" in the Prospectus. No
prepayment premium will be payable to Certificateholders in
connection with any such prepayment.
STATEMENTS TO CERTIFICATEHOLDERS AND CERTIFICATE OWNERS
Unless and until Definitive Certificates are issued,
unaudited monthly and annual reports concerning the Receivables
and each Trust, prepared by the Servicer and delivered by the
Indenture Trustee, on behalf of the Trust, will be sent to each
Certifcateholder pursuant to the Trust Agreement. Such reports
will not contain audited financial statements with respect to the
Trust. Certificate Owners may obtain the monthly statements and
annual tax statement and tax information provided to the
Certificateholders by the Servicer free of charge (except for
copying and postage costs) by request in writing to the Indenture
Trustee at [ ,
Attention: .] See "Book-Entry
and Definitive Securities; Reports to Securityholders Reports to
Securityholders" in the Prospectus for a description of such
statements.
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 Transfer and Servicing Agreements 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 the description of the general terms and provisions
of the Transfer and Servicing Agreements set forth under the
headings "Description of the Transfer and Servicing Agreements"
in the Prospectus, to which description reference is hereby made.
[SALE AND ASSIGNMENT OF RECEIVABLES; SUBSEQUENT RECEIVABLES
Certain information with respect to the conveyance of the
Initial Receivables from the Sellers to the Trust on the Closing
Date pursuant to the Sale and Servicing Agreement is set forth
under "Description of the Transfer and Servicing Agreements Sale
and Assignment of Receivables" in the Prospectus. In addition,
during the Funding Period, pursuant to the Sale and Servicing
Agreement, the Sellers will be obligated to sell to the Trust
Subsequent Receivables having an aggregate principal balance
equal to approximately $ (such amount being equal to the
initial Pre-Funded Amount) to the extent that such Subsequent
Receivables are available.
During the Funding Period on each Subsequent Transfer Date,
subject to the conditions described below, the Sellers will sell
and assign to the Trust, without recourse, the Sellers' entire
interest in the Subsequent Receivables designated by the Sellers
as of the related Subsequent Cut-Off Date and identified in a
schedule attached to a subsequent transfer assignment relating to
such Subsequent Receivables executed on such date by the Seller.
It is expected that on the Closing Date, subject to the
conditions described below, certain of the Subsequent Receivables
designated by the Sellers and arising between the Initial Cut-Off
Dates and the Closing Date will be conveyed to the Trust. Upon
the conveyance of Subsequent Receivables to the Trust on a
Subsequent Transfer Date, (i) the Pool Balance will increase in
an amount equal to the aggregate principal balances of the
Subsequent Receivables, (ii) an amount equal to % of the
aggregate principal balance of such Subsequent Receivables will
be withdrawn from the Pre-Funding Account and will be deposited
in the Reserve Account and (iii) an amount equal to the excess of
the aggregate principal balances of such Subsequent Receivables
over the amount described in clause (ii) will be withdrawn from
the Pre-Funding Account and paid to the Sellers.] [Coincident
with each such transfer of Subsequent Receivables, the Yield
Supplement Agreement will require the Sellers to deposit into the
Yield Supplement Account an amount equal to the Additional Yield
Supplement Amount, if any, in respect of such Subsequent
Receivables. See " Yield Supplement Account; Yield Supplement
Agreement" herein.]
[Any conveyance of Subsequent Receivables is subject to the
satisfaction, on or before the related Subsequent Transfer Date,
of the following conditions precedent, among others: (i) each
such Subsequent Receivable must satisfy the eligibility criteria
specified in the Sale and Servicing Agreement; (ii) the Sellers
will not have selected such Subsequent Receivables in a manner
that they believe is adverse to the interests of the Noteholders
or the Certificateholders; (iii) as of the related Subsequent
Cut-Off Date, the Receivables, including any Subsequent
Receivables conveyed by the Sellers as of such Subsequent Cut-Off
Date, satisfy the criteria described under "The Receivables Pool"
herein and "The Receivables Pools" in the Prospectus; (iv) the
applicable Additional Reserve Account Deposit [and the applicable
Additional Yield Supplement Amount, if any] for such Subsequent
Transfer Date shall have been made; and (v) the Sellers shall
have executed and delivered to the Trust (with a copy to the
Indenture Trustee) a written assignment conveying such Subsequent
Receivables to the Trust (including a schedule identifying such
Subsequent Receivables). Moreover, any such conveyance of
Subsequent Receivables made during any given Collection Period
will also be subject to the satisfaction, on or before the
fifteenth day of the month following the end of such Collection
Period, of the following conditions subsequent, among others: (i)
the Sellers will have delivered certain opinions of counsel to
the Owner Trustee, the Indenture Trustee and the Rating Agencies
with respect to the validity of the conveyance of all such
Subsequent Receivables conveyed during such Collection Period;
(ii) the Trust and the Indenture Trustee shall have received
written confirmation from a firm of independent certified public
accountants that, as of the end of the preceding Collection
Period, the Receivables in the Trust at that time, including the
Subsequent Receivables conveyed by the Sellers during each
Collection Period, satisfied the parameters described under "The
Receivables Pool" herein and under "The Receivables Pools" in the
Prospectus; and (iii) each of the Rating Agencies shall have
notified the Sellers in writing that, following the addition of
all such Subsequent Receivables, each class of the Notes and the
Certificates will be rated by the Rating Agencies in the same
rating category as they were rated by the Rating Agencies on the
Closing Date. The Sellers will immediately repurchase any
Subsequent Receivable, at a price equal to the Purchase Amount
thereof, upon the failure of the Sellers to satisfy any of the
foregoing conditions subsequent with respect thereto.]
[Subsequent Receivables may have been originated by the
Sellers at a later date using credit criteria different from
those which were applied to the Initial Receivables. See "Risk
Factors The Subsequent Receivables and the Pre-Funding Account"
and "The Receivables Pool" herein.]]
ACCOUNTS
In addition to the Accounts referred to under "Description
of the Transfer and Servicing Agreements Accounts" in the
Prospectus, the Servicer will also establish and will maintain
with the Indenture Trustee [the Pre-Funding Account] [the Yield
Supplement Account] [and] the Reserve Account, in the name of the
Indenture Trustee on behalf of the Noteholders and the
Certificateholders.
SERVICING COMPENSATION AND EXPENSES
The Servicing Fee Rate with respect to the Servicing Fee for
the Servicer will be [1.00]% per annum of the Pool Balance as of
the first day of the related Collection Period. The Servicing
Fee (together with any portion of the Servicing Fee that remains
unpaid from prior Distribution Dates) will be paid on each
Distribution Date solely to the extent of the Available Interest.
The Servicer is also entitled to receive a supplemental servicing
fee (the "Supplemental Servicing Fee") for each Collection Period
equal to any late, prepayment, and other administrative fees and
expenses collected during the Collection Period[, plus any
interest earned during the Collection Period on deposits made
with respect to the Receivables]. See "Description of the
Transfer and Servicing Agreements Servicing Compensation and
Expenses" in the Prospectus.
[ADVANCES] [ADVANCE RESERVE WITHDRAWALS]
[Servicer Advances. As of the last day of each Collection
Period, the Servicer will, subject to the limitations described
in the following sentence, make a payment (an "Advance") with
respect to each Receivable (other than a Defaulted Receivable) in
an amount equal to the excess, if any, of (x) the amount of
interest due on such Receivable at its applicable Contract Rate,
over (y) the interest actually received by the Servicer with
respect to such Receivable (whether from the Obligor, [the Yield
Supplement Agreement] or payments of the Purchase Amount) during
or with respect to such Collection Period. The Servicer may elect
not to make an Advance of due and unpaid interest with respect to
a Receivable to the extent that the Servicer, in its sole
discretion, determines that such Advance is not recoverable from
subsequent payments on such Receivable or from funds in the
Reserve Account.
To the extent that the amount set forth in clause (y) above
with respect to a Receivable is greater than the amount set forth
in clause (x) above with respect thereto, such amount shall be
distributed to the Servicer on the related Distribution Date. Any
such payment will only be from accrued interest due from the
Obligor under such Receivable.
The Servicer will deposit Advances, if any, into the
Collection Account on the applicable Deposit Date.]
[Advance Reserve Withdrawals. The Servicer shall, as of the
last day of the Collection Period, withdraw from the Reserve
Account funds in an amount with respect to each Receivable (other
than a Defaulted Receivable) equal to the excess, if any, of (x)
the amount of interest due on such Receivable at its applicable
Contract Rate, over (y) the interest actually received by the
Servicer with respect to such Receivable (whether from the
Obligor, [the Yield Supplement Agreement] or payments of the
Purchase Amount) during or with respect to such Collection Period
(the "Advance Reserve Withdrawal"). The Servicer will deposit
Advance Reserve Withdrawals, if any, into the Collection Account
on the applicable Deposit Date.]
DISTRIBUTIONS
Deposits to Collection Account. On or before each
Determination Date, the Servicer will provide the Trustee with a
certificate (the "Servicer's Certificate") containing certain
information with respect to the preceding Collection Period,
including the amount of aggregate collections on the Receivables
during such Collection Period, the aggregate amount of
Receivables which became Defaulted Receivables during such
Collection Period, [the Yield Supplement Amount,] the aggregate
Purchase Amounts of Receivables to be repurchased by the Sellers
or to be purchased by the Servicer on the related Deposit Date
[and the aggregate amount to be withdrawn from the Reserve
Account].
On or before each Deposit Date (a) the Servicer will cause
all Collections and Liquidation Proceeds and Recoveries to be
deposited into the Collection Account and will deposit into the
Collection Account all Purchase Amounts of Receivables to be
purchased by the Servicer on such Deposit Date, (b) the Sellers
will deposit into the Collection Account all Purchase Amounts of
Receivables to be repurchased by the Sellers on such Deposit
Date, (c) the Servicer will deposit [all Advances for the related
Distribution Date into the Collection Account] [the amount of the
Advance Reserve Withdrawal with respect to the related
Distribution Date] [and (d) the Sellers (or, in certain
circumstances, the Indenture Trustee) will deposit the Yield
Supplement Amount for the related Distribution Date into the
Collection Account].
"Available Funds" means, with respect to a Distribution
Date, the sum of the Available Interest and the Available
Principal.
"Available Interest" means, with respect to any Distribution
Date, [the excess of (a)] the sum of (i) Interest Collections for
such Distribution Date, [(ii) the Yield Supplement Amount for
such Distribution Date], [(iii) [all Advances][the proceeds of
any Advance Reserve Withdrawal] made by the Servicer with respect
to such Distribution Date], [(iv) Investment Earnings for such
Distribution Date,] [(v) the payments, if any, received under the
Interest Rate Cap for such Distribution Date,] [and (vi) the Net
Trust Swap Receipt, if any, for such Distribution Date], [over
(b) the amount of certain Advances previously made but not
reimbursed (each, an "Outstanding Advance") to be reimbursed on
or with respect to such Distribution Date].
"Available Principal" means, with respect to any
Distribution Date, 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 in
accordance with the terms of the Receivables and the Servicer's
customary servicing procedures; (ii) to the extent attributable
to principal, the Purchase Amount received with respect to each
Receivable repurchased by the Sellers or purchased by the
Servicer under an obligation which arose during the related
Collection Period; and (iii) all Liquidation Proceeds, to the
extent allocable to principal, received during such Collection
Period. "Available Principal" on any Distribution Date shall
exclude all payments and proceeds of any Receivables the Purchase
Amount of which has been distributed on a prior Distribution
Date.
"Collections" mean, with respect to any Distribution Date,
all collections on the Receivables.
"Defaulted Receivable" means, with respect to any Collection
Period, a Receivable (other than a Purchased Receivable) which
the Servicer, on behalf of the Trust, has determined to charge
off during such Collection Period in accordance with its
customary servicing practices.
"Interest Collections" mean, with respect to any
Distribution Date, 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 in
accordance with the terms of the Receivables and the Servicer's
customary servicing procedures; (ii) all Liquidation Proceeds, to
the extent allocable to interest, received during such Collection
Period; (iii) all Recoveries on Receivables which became
Defaulted Receivables received during any Collection Period
following the Collection Period in which such Receivable became a
Defaulted Receivable; and (iv) to the extent attributable to
accrued interest, the Purchase Amount with respect to each
Receivable repurchased by the Sellers or purchased by the
Servicer under an obligation which arose during such Collection
Period. "Interest Collections" for any Distribution Date shall
exclude all payments and proceeds of any Receivables the Purchase
Amount of which has been distributed on a prior Distribution
Date.
"Liquidation Proceeds" mean, with respect to any
Distribution Date and a Receivable that has become a Defaulted
Receivable during a related Collection Period, (i) insurance
proceeds received during such Collection Period by the Servicer,
with respect to insurance policies relating to the Financed
Vehicle or the Obligor, (ii) amounts received by the Servicer
during such Collection Period from a Dealer in connection with
such Defaulted Receivable pursuant to the exercise of rights
under a Dealer Agreement, and (iii) the monies collected by the
Servicer (from whatever source, including, but not limited to
proceeds of a sale of a Financed Vehicle or deficiency balance
recovered after the charge off of the related Receivable) during
such Collection Period on such Defaulted Receivable net of any
fees, costs and expenses incurred by the Servicer in connection
therewith and any payments required by law to be remitted to the
Obligor. Liquidation Proceeds shall be applied first to accrued
and unpaid interest on the Receivable and then to the principal
balance thereof.
"Purchased Receivable" means, at any time, a Receivable as
to which payment of the Purchase Amount has previously been made
by the Sellers or the Servicer pursuant to the Sale and Servicing
Agreement.
"Recoveries" mean, with respect to any Collection Period,
all monies received by the Servicer with respect to any Defaulted
Receivable during any Collection Period following the Collection
Period in which such Receivable became a Defaulted Receivable,
net of any fees, costs and expenses incurred by the Servicer in
connection with the collection of such Receivable and any
payments required by law to be remitted to the Obligor.
[The Available Interest and the Available Principal on any
Distribution Date shall exclude the following: (i) amounts
received in respect of interest on Simple Interest Receivables
during the preceding Collection Period in excess of the amount of
interest that would have been due during the Collection Period on
Simple Interest Receivables at their respective Contract Rates
(assuming that a payment is received on each Simple Interest
Receivable on the due date thereof), [and] (ii) Liquidation
Proceeds with respect to a Simple Interest Receivable
attributable to accrued and unpaid interest thereon (but not
including interest for the then current Collection Period) but
only to the extent of any unreimbursed Outstanding Advances[, and
(iii) amounts released from the Pre-Funding Account.]]
Monthly Withdrawals from Collection Account. On each
Distribution Date, the Servicer will allocate amounts on deposit
in the Collection Account as described under "Description of the
Transfer and Servicing Agreements Distributions Allocation of
Collections on Receivables" 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 Available Interest (as
so allocated), the Servicing Fee and all unpaid Servicing
Fees from prior Collection Periods;
(ii) to the Note Payment Account, from the Available
Funds remaining after the application of clause (i), the
Accrued Note Interest [and the Net Trust Swap Payment, if
any];
(iii) to the Note Payment Account, from the Available
Funds remaining after the application of clauses (i) and
(ii), the Noteholders' Principal Payment Amount;
(iv) to the Certificate Distribution Account, from the
Available Funds remaining after the application of clauses
(i) through (iii), the Accrued Certificate Interest;
(v) to the Certificate Distribution Account, from the
Available Funds remaining after the application of clauses
(i) through (iv), the Certificateholders' Principal
Distribution Amount; and
(vi) to the Reserve Account, the Available Funds
remaining after the application of clauses (i) through (v).
Notwithstanding the foregoing, following the occurrence and
during the continuation of an Event of Default which has resulted
in an acceleration of the Notes or following an Insolvency Event
with respect to [NB-SPC], the Available Funds remaining after the
application of clauses (i) and (ii) above will be deposited in
the Note Payment Account to the extent necessary to reduce the
principal amount of all the Notes to zero, and the
Certificateholders will not receive any distributions until the
principal amount and accrued interest on the Notes has been paid
in full.
On each Determination Date (other than the first
Determination Date), the Servicer will provide 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, the aggregate
Advances to be made by the Servicer and the aggregate Purchase
Amount of Receivables to be repurchased by the Sellers or to be
purchased by the Servicer.
For purposes hereof, the following terms shall have the
following meanings:
"Accrued Note Interest" means, with respect to any
Distribution Date, the sum of the Noteholders' Monthly Accrued
Interest for such Distribution Date and the Noteholders' Interest
Carryover Shortfall for such Distribution Date.
"Noteholders' Interest Carryover Shortfall" means, with
respect to any Distribution Date, the excess of the Noteholders'
Monthly Accrued Interest 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 Payment Account
on such preceding Distribution Date, plus interest on the amount
of interest due but not paid to Noteholders on the preceding
[Distribution] [Payment] Date, to the extent permitted by law, at
the [respective] Note Interest Rate[s] borne by [each class of]
the Notes for the [related Interest Period] [period from and
including the prior Distribution Date to but excluding such
Distribution Date] [plus 2.00% per annum].
"Noteholders' Monthly Accrued Interest" means, with respect
to any Distribution Date, interest accrued for the [related
Interest Period] [period from and including the Closing Date (in
the case of the first Distribution Date) or from and including
the prior Distribution Date to but excluding such Distribution
Date] on [the] [each class of] Notes at the [respective] Note
Interest Rate [for such class] on the outstanding principal
amount of the Notes [of such class] on the immediately preceding
[Distribution] [Payment] Date after giving effect to all payments
of principal to the Noteholders [of such class] on or prior to
such [Distribution] [Payment] Date (or, in the case of the first
[Distribution] [Payment] Date, on the Closing Date).
"Noteholders' Monthly Principal" means, with respect to any
Distribution Date, the sum of (i) the Noteholders' Percentage of
the Regular Principal and (ii) the Noteholders' Accelerated
Principal. [Or, state other formula for determining the
Noteholders' Monthly Principal.]
"Noteholders' Payment Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Principal Payment
Amount and the Accrued Note Interest.
"Noteholders' Percentage" means (i) 100% for each
Distribution Date to and including the later to occur of (x) the
Distribution Date next succeeding the Distribution Date, on which
the principal amount of the [Class A-1] Notes is reduced to zero
[and (y) the 199 Distribution Date], (ii) for each
Distribution Date thereafter to and including the Distribution
Date on which the principal amount of the [Class A-3] Notes is
reduced to zero, the percentage equivalent of a fraction, the
numerator of which is the outstanding principal amount of the
Notes on the Distribution Date immediately preceding the
Distribution Date for which the Noteholders' Percentage is being
calculated (after giving effect to all distributions made on such
immediately preceding Distribution Date) and the denominator of
which is the Pool[/Pre-Funding] Balance on the last day of the
Collection Period second preceding the Distribution Date for
which the Noteholders' Percentage is being calculated, [unless
the Reserve Account balance is less than [ % of] the Specified
Reserve Account Balance, then the Noteholders' Percentage shall
be %,] and (iii) zero for each Distribution Date thereafter [;
provided, however, upon any reduction or withdrawal by any Rating
Agency of its rating of [the] [any class of] Notes, then, with
respect to each Distribution Date thereafter until the principal
amount of all the Notes is paid in full or such rating is
restored, the Noteholders' Percentage shall mean 100%]. [Or,
state other methods for determining the Noteholders' Percentage.]
"Noteholders' Principal Carryover Shortfall" means, as of
the close of any Distribution Date, the excess of the
Noteholders' Monthly Principal 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 Payment Account.
"Noteholders' Principal Payment Amount" means, with respect
to any Distribution Date, the sum of the Noteholders' Monthly
Principal 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 Payment Amount shall not exceed the outstanding
principal amount of the Notes; and provided, further, that (i)
the Noteholders' Principal Payment Amount on the [Class A-1]
Final Scheduled [Distribution] [Payment] Date shall not be less
than the amount that is necessary (after giving effect to other
amounts [on deposit and] to be deposited in the Note Payment
Account on such Distribution Date and allocable to principal) to
reduce the outstanding principal amount of the [Class A-1] Notes
to zero[; (ii) the Noteholders' Principal Payment Amount on the
Class A-2 Final Scheduled [Distribution] [Payment] Date shall not
be less than the amount that is necessary (after giving effect to
other amounts [on deposit and] to be deposited in the Note
Payment Account on such Distribution Date and allocable to
principal) to reduce the outstanding principal amount of the
Class A-2 Notes to zero; and (iii) on the Class A-3 Final
Scheduled [Distribution] [Payment] Date the Noteholders'
Principal Payment Amount shall not be less than the amount that
is necessary (after giving effect to other amounts [on deposit
and] to be deposited in the Note Payment Account on such
Distribution Date and allocable to principal) to reduce the
outstanding principal amount of the Class A-3 Notes to zero].
"Accrued Certificate Interest" means, with respect to any
Distribution Date, the sum of the Certificateholders' Monthly
Accrued Interest for such Distribution Date and the
Certificateholders' Interest Carryover Shortfall for such
Distribution Date.
"Certificate Balance" equals, initially, $ and,
thereafter, equals the initial Certificate Balance, reduced by
all amounts allocable to principal previously distributed to
Certificateholders.
"Certificateholders' Distribution Amount" means, with
respect to any Distribution Date, the sum of the
Certificateholders' Principal Distribution Amount and the Accrued
Certificate Interest.
"Certificateholders' Interest Carryover Shortfall" means,
with respect to any Distribution Date, the excess of the
Certificateholders' Monthly Accrued Interest for the preceding
Distribution Date and any outstanding Certificateholders'
Interest Carryover Shortfall on such preceding Distribution Date,
over the amount in respect of interest that is actually deposited
in the Certificate Distribution Account on such preceding
Distribution Date, plus interest on such excess, to the extent
permitted by law, at the Certificate Rate for the related
Interest Period.
"Certificateholders' Monthly Accrued Interest" means, with
respect to any Distribution Date, 30 days of interest (or, in the
case of the first Distribution Date, interest accrued from and
including the Closing Date to but excluding such Distribution
Date) at the Certificate Rate on the Certificate Balance on the
immediately preceding Distribution Date, after giving effect to
all payments allocable to the reduction of the Certificate
Balance made on or prior to such Distribution Date (or, in the
case of the first Distribution Date, on the Closing Date).
"Certificateholders' Monthly Principal" means, with respect
to any Distribution Date, the Certificateholders' Percentage of
the Regular Principal. [Or, state other method for determining
the Certificateholders' Monthly Principal.]
"Certificateholders' Percentage" means (i) for each
Distribution Date to and including the later to occur of (x) the
Distribution Date next succeeding the Distribution Date on which
the principal amount of [all classes of] the [Class A-1] Notes is
reduced to zero [and (y) the 199 Distribution Date], zero,
and (ii) for each Distribution Date thereafter to and including
the Distribution Date on which the Certificate Balance is reduced
to zero, the percentage equivalent of a fraction, the numerator
of which is the outstanding Certificate Balance on the
Distribution Date immediately preceding the Distribution Date for
which the Certificateholders' Percentage is being calculated
(after giving effect to all distributions made on such
immediately preceding Distribution Date) and the denominator of
which is the Pool[/Pre-Funding] Balance on the last day of the
Collection Period second preceding the Distribution Date for
which the Certificateholders' Percentage is being calculated,
[unless the Reserve Account balance is less than [ % of] the
Specified Reserve Account Balance, then the Certificateholders'
Percentage shall be %] [; provided, however, upon any reduction
or withdrawal by any Rating Agency of its rating of [the] [any
class of] Notes, then, with respect to each Distribution Date
thereafter until the principal amount of all the Notes is paid in
full or such rating is restored, the Certificateholders'
Percentage shall mean zero]. [Or, state other methods for
determining the Certificateholders' Percentage.]
"Certificateholders' Principal Carryover Shortfall" means,
as of the close of any Distribution Date, the excess of the
Certificateholders' Monthly Principal 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.
"Certificateholders' Principal Distribution Amount" means,
with respect to any Distribution Date, the sum of the
Certificateholders' Monthly Principal 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 Distribution Amount shall
not exceed the Certificate Balance. In addition, on the Final
Scheduled Distribution Date, the principal required to be
distributed to Certificateholders will include the lesser of (a)
any principal due and remaining unpaid on each Simple Interest
Receivable, in each case, in the Trust as of the Final Scheduled
Maturity Date or (b) the portion of the amount required to be
advanced under clause (a) above 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, and, in the
case of clauses (a) and (b), remaining after any required
distribution in respect of the Notes.
On each [Distribution] [Payment] Date, all amounts on
deposit in the Note Payment Account [(other than [any] Investment
Earnings [in excess of the weighted average of the Note Interest
Rates] [and the Certificate Rate])] will be paid in the following
order of priority:
(i) to the [applicable] Noteholders, accrued and
unpaid interest on the outstanding principal amount of the
[applicable class of] Notes at the [applicable] Note
Interest Rate [and to the Swap Counterparty, the Net Trust
Swap Payment, if any, for such [Distribution] [Payment]
Date, on a pro rata basis with the amount[s] payable to the
Noteholders pursuant to this clause (i)]; [and]
(ii) to the [Class A-1] Noteholders in reduction of
principal until the principal amount 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 amount 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 amount 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.
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 Sellers][NB-SPC][a
third party] on the Closing Date [and thereafter with deposits
from funds in the Pre-Funding Account that would otherwise be
payable to the Sellers on each Subsequent Transfer Date] (such
deposit[s, respectively], the "Reserve Account Initial Deposit"
[and the "Additional Reserve Account Deposit."]). The initial
deposit on the Closing Date will also include the amount
specified in clause (b) of the following paragraph.
Subject to reduction as hereafter described, the "Specified
Reserve Account Balance" with respect to any Distribution Date
means the sum of (i) [the sum of (a)] % of the [Initial Pool
Balance] [Pool Balance as of the Initial Cut-Off Date] [, plus
(b) an amount related to the difference between anticipated
investment earnings on the remaining Pre-Funded Amount and the
weighted average interest expense on the portion of the Notes and
Certificates represented by the remaining Pre-Funded Amount] and
(ii) % of the Pool Balance on the first day of the related
Collection Period. [However, so long as on any Distribution Date
(except the first Distribution Date) the outstanding principal
amount of the Securities (after giving effect to distributions
made on the prior Distribution Date) is less than or equal to %
of [the sum of] [(a)] the Pool Balance on the first day of the
related Collection Period [and (b) the Pre-Funded Amount on such
date]], then the portion of the Specified Reserve Account Balance
set forth in clause (i) above will be reduced to % of the
[Initial Pool Balance] [Pool Balance as of the Initial Cut-Off
Date].] [In addition, so long as on any Distribution Date
(except the first Distribution Date) the outstanding principal
amount of the Securities (after giving effect to distributions
made on the prior Distribution Date) is less than or equal to %
of [the sum of] [(a)] the Pool Balance on the first day of the
related Collection Period [and (b) the Pre-Funded Amount on such
day]], then such portion of the Specified Reserve Account Balance
set forth in clause (i) above will be reduced to % of the
[Initial Pool Balance] [Pool Balance as of the Initial Cut-Off
Date].] [With respect to the portion of the Specified Reserve
Account Balance set forth in clause (ii) above, so long as on any
Distribution Date (except the first Distribution Date) the
outstanding principal amount of the Securities (after giving
effect to distributions made on the prior Distribution Date) is
less than or equal to % of [the sum of] [(a)] the Pool Balance
on the first day of the related Collection Period [and (b) the
Pre-Funded Amount on such day]], then such portion will be
reduced to an amount equal to the product of (I) the Pool Balance
on the first day of the related Collection Period and (II) the
percentage (which shall not be greater than % or less than
zero) equal to (X) the percentage derived from the fraction, the
numerator of which is the outstanding principal amount of the
Securities (after giving effect to distributions made on the
prior Distribution Date) and the denominator of which is such
Pool Balance less (Y) %.] The portion of the Specified
Reserve Account Balance specified in clause (ii) above may be
invested in motor vehicle sale contracts originated by the
Sellers and secured by motor vehicles financed thereby that are
not included in the Pool Balance. [The Specified Reserve Account
Balance is further subject to adjustment in certain circumstances
described herein.]
[The Specified Reserve Account Balance would also be
increased to the extent that the Receivables in the Trust on a
Subsequent Transfer Date, including the Subsequent Receivables to
be conveyed to the Trust on such Subsequent Transfer Date, have a
weighted average Contract Rate of less than %. See "The
Receivables Pool" herein. In addition, subject to certain
limitations, the Sellers have the option to increase the
Specified Reserve Account Balance in connection with the addition
of Subsequent Receivables.]
If the amount on deposit in the Reserve Account on any
Distribution Date (after giving effect to all deposits or
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 will instruct the Indenture Trustee to [distribute such
excess to [the Sellers] [[NB-SPC]] [apply such excess as
Noteholders' Accelerated Principal]. Upon any distribution to
[the Sellers] [[NB-SPC]] 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
[the] [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 Payment Account
for payment to Noteholders as an accelerated payment of principal
on [such Distribution] [the related Payment] Date.] [Or, state
other methods for determining the Specified Reserve Account
Balance and applying such excess amounts.]
Amounts held from time to time in the Reserve Account will
be held for the benefit of Noteholders and Certificateholders.
[On each Distribution Date, funds will be withdrawn from the
Reserve Account up to the Available Reserve Amount to the extent
of the amount of the Advance Reserve Withdrawal for such
Distribution Date.] On each Distribution Date, funds will be
withdrawn from the Reserve Account up to the Available Reserve
Amount to the extent that the [part of the] Available Funds
(after the payment of the Servicing Fee) with respect to any
Collection Period is less than the Noteholders' Payment Amount
and will be deposited in the Note Payment Account. In addition,
funds will be withdrawn from the Reserve Account up to the
Available Reserve Amount (as reduced by any withdrawal pursuant
to the [preceding sentence][two preceding sentences]) to the
extent that the Available Funds remaining after the payment of
the Servicing Fee and the deposit of the Noteholders' Payment
Amount in the Note Payment Account is less than the
Certificateholders' Distribution 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 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.] On each
Distribution Date, the Reserve Account will be reinstated up to
the Specified Reserve Account Balance to the extent, if any, of
the Available Funds remaining after payment of the Servicing Fee,
the deposit of the Noteholders' Payment Amount into the Note
Payment Account and the deposit of the Certificateholders'
Distribution Amount into the Certificate Distribution Account.
"Available Reserve Amount" means, with respect to any
Distribution Date, the amount of funds on deposit in the Reserve
Account on such Distribution Date [(other than Investment
Earnings)] [ 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) $ 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) % 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 " " or its equivalent, or withdrawal by any Rating
Agency, of its rating of [the] [any class of] Notes, unless such
rating has been restored].]
If on any Distribution Date the entire Noteholders' Payment
Amount for such Distribution Date (after giving effect to any
amounts withdrawn from the Reserve Account) is not deposited in
the Note Payment Account, the Certificateholders generally will
not receive any distributions.
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 amount of the Securities, any
funds remaining on deposit in the Reserve Account, subject to
certain limitations, will be paid to [the Sellers] [[NB-SPC]].
The Reserve Account is intended to enhance the likelihood of
receipt by the Noteholders and the Certificateholders of the full
amount of principal and interest due them and to decrease the
likelihood that the Noteholders and the Certificateholders will
experience losses. In addition, the subordination of the
Certificates to the Notes is intended to enhance further 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. 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 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.
[YIELD SUPPLEMENT ACCOUNT; YIELD SUPPLEMENT AGREEMENT
If any Receivable has, as of the Cutoff Date, a Contract
Rate below the Required Rate, the Sellers, the Servicer and the
Indenture Trustee will, simultaneously with the sale and
assignment of the Receivables, enter into the Yield Supplement
Agreement. The Yield Supplement Agreement will, with respect to
each Receivable subject thereto, if any, provide for the payment
into the Collection Account by the applicable Seller on or prior
to each Deposit Date of an amount calculated by the Servicer
equal to one-twelfth of the excess, if any, of (i) interest on
such Receivable's principal balance as of the first day of the
preceding Collection Period at a rate equal to the Required Rate
over (ii) interest at the Contract Rate on such Receivable's
principal balance as of the first day of such Collection Period
(in the aggregate for all Receivables with respect to any Deposit
Date, the "Yield Supplement Amount").
Each Seller's obligations under the Yield Supplement
Agreement will be secured by funds, if any, deposited by [the
Sellers][NB-SPC][a third party] on the Closing Date in an
Eligible Deposit Account to be maintained by the Indenture
Trustee for the benefit of the holders of the Notes and the
Certificates (the "Yield Supplement Account"). The amount
required to be retained (to the extent of funds available
therefor) in the Yield Supplement Account on any Distribution
Date will be equal to the Specified Yield Supplement Balance.
Funds, if any, on deposit in the Yield Supplement Account
may be invested in Permitted Investments in the manner permitted
by the Sale and Servicing Agreement
Amounts on deposit in the Yield Supplement Account will be
released to [the Sellers] [[NB-SPC]] each Distribution Date to
the extent the amount on deposit in the Yield Supplement Account
exceeds the Required Yield Supplement Balance. The "Required
[Initial] Yield Supplement Balance," on any date of
determination, is the sum of all projected Yield Supplement
Amounts for all future Distribution Dates, assuming that future
scheduled payments on the [Initial] Receivables are made on their
scheduled due dates. No funds will be deposited in the Yield
Supplement Account, however, if the amount on deposit therein is
less than the Required [Initial] Yield Supplement Balance. [All
investment earnings attributable to the Yield Supplement Account
to be distributed on each Distribution Date to [the Sellers]
[[NB-SPC]]. Upon any release of amounts from the Yield
Supplement Account, the Securityholders will not have any rights
in, or claims to, such amounts. Any monies remaining on deposit
in the Yield Supplement Account upon the termination of the Trust
will be paid to [the Sellers] [NB-SPC]].
[Pursuant to the Yield Supplement Agreement, on each
Subsequent Transfer Date, [the Sellers][NB-SPC][a third party]
will deposit into the Yield Supplement Account an amount equal to
the Additional Yield Supplement Amount. The aggregate of the
Additional Yield Supplement Amounts in respect of Subsequent
Receivables, if any, is referred to herein as the "Required
Subsequent Yield Supplement Amount" and, together with the
Required Initial Yield Supplement Amount, the "Required Yield
Supplement Amount."]]
[INTEREST RATE CAP
With respect to the Class A-2 Notes, the Sellers will enter
into an Interest Rate Cap, dated as of the Closing Date (the
"Interest Rate Cap") with the Interest Rate Cap Provider. The
notional amount of the Interest Rate Cap on any [Distribution]
[Payment] Date (the "Cap Notional Amount") will be at least equal
to the outstanding principal amount of the Class A-2 Notes as of
the close of the preceding [Distribution] [Payment] Date.
Pursuant to the Interest Rate Cap, on each [Distribution]
[Payment] Date on which [the Class A-2 Rate] [LIBOR] for the
preceding [Distribution] [Payment] Date exceeds % (the "Cap
Rate"), the Interest Rate Cap Provider will make a payment to the
Indenture Trustee, on behalf of the Trust, in an amount equal to
the product of (i) the difference between [such Class A-2 Rate]
[LIBOR] and the Cap Rate, (ii) the Cap Notional Amount and (iii)
the actual number of days from and including the preceding
[Distribution] [Payment] Date to but excluding such
[Distribution] [Payment] Date divided by 360. The Interest Rate
Cap will terminate on the Class A-2 Scheduled Final
[Distribution] [Payment] Date. Payments received by the
Indenture Trustee pursuant to the Interest Rate Cap will be
deposited in the Collection Account for the benefit of all
Securityholders.
The payment obligations of the Interest Rate Cap Provider
under the Interest Rate Cap constitute general unsecured
obligations of the Interest Rate Cap Provider. No assurance can
be given that the Trust will receive the payments due to be
received under the Interest Rate Cap when due. A failure by the
Interest Rate Cap Provider to make such payments or to make such
payments on a timely basis would reduce amounts available for
distributions to Securityholders, and in such event
Securityholders could incur a loss on their investment.
The Interest Rate Cap will be provided by (the
"Interest Rate Cap Provider"). The Interest Rate Cap Provider
was incorporated in . The Interest Rate Cap Provider is
engaged in the business of . As of , 199 , the
Interest Rate Cap Provider had total consolidated assets of $
, total consolidated liabilities of $ and total
consolidated stockholders' equity of $ .
THE INFORMATION SET FORTH IN THE PRECEDING PARAGRAPH HAS
BEEN PROVIDED BY THE INTEREST RATE CAP PROVIDER. THE SELLERS
MAKE NO REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF
SUCH INFORMATION.]
[INTEREST RATE SWAP
With respect to the Class A-2 Notes, the Indenture Trustee,
on behalf of the Trust, will enter into one or more Interest Rate
Swap Agreements, dated as of the Closing Date (collectively, the
"Interest Rate Swap") with the Swap Counterparty. The notional
amount of the Interest Rate Swap on any [Distribution] [Payment]
Date (the "Swap Notional Amount") will equal the outstanding
principal amount of the Class A-2 Notes as of the close of the
preceding [Distribution] [Payment] Date. Pursuant to the terms
of the Interest Rate Swap, the Swap Counterparty will pay to the
Trust, on each [Distribution] [Payment] Date, interest at a per
annum rate equal to [the Class A-2 Rate] [LIBOR] on the Swap
Notional Amount. In exchange for such payments, the Trust will
pay to the Swap Counterparty, on each [Distribution] [Payment]
Date, interest at a per annum rate equal to [the lesser of] [
%] [and] [the Prime Rate less %], on the Swap Notional Amount[,
which rate will be reset [on various dates in] each [month]
[Interest Period]]. With respect to each [Distribution]
[Payment] Date, any difference between the [monthly] [quarterly]
payment by the Swap Counterparty to the Trust and the [monthly]
[quarterly] payment by the Trust to the Swap Counterparty will be
referred to herein as the "Net Trust Swap Receipt," if such
difference is a positive number, and the "Net Trust Swap
Payment," if such difference is a negative number. Net Trust
Swap Receipts, if any, will be deposited in the Collection
Account for the benefit of all Securityholders and Net Trust Swap
Payments, if any, will be paid from the Collection Account in the
same manner and priority as accrued and unpaid interest on the
Notes on each [Distribution] [Payment] Date.
The payment obligations of the Swap Counterparty under the
Interest Rate Swap constitute general unsecured obligations of
the Swap Counterparty. No assurance can be given that the Trust
will receive the payments due to be received under the Interest
Rate Swap when due. A failure by the Swap Counterparty to make
such payments or to make such payments on a timely basis would
reduce amounts available for distributions to Securityholders,
and in such event Securityholders could incur a loss on their
investment.
The Interest Rate Swap will be provided by (the
"Swap Counterparty"). The Swap Counterparty was incorporated in
. The Swap Counterparty is engaged in the business of
. As of , 199 , the Swap Counterparty had total
consolidated assets of $ , total consolidated liabilities
of $ and total consolidated stockholders' equity of $
.
THE INFORMATION SET FORTH IN THE PRECEDING PARAGRAPH HAS
BEEN PROVIDED BY THE SWAP COUNTERPARTY. THE SELLERS MAKE NO
REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF SUCH
INFORMATION.]
[GUARANTEED RATE AGREEMENT
The Sellers will enter into an Guaranteed Rate Agreement,
dated as of the Closing Date (the "Guaranteed Rate Agreement")
with the Investment Provider. Pursuant to the Guaranteed Rate
Agreement, amounts on deposit in the [Collection] [Note Payment]
Account will be invested from the date of deposit to the related
[Distribution] [Payment] Date by the Indenture Trustee at the
direction of the Investment Provider in certain eligible
investments (which are substantially similar to Permitted
Investments). Amounts invested pursuant to the Guaranteed Rate
Agreement will continue to be held in the name of the Indenture
Trustee for the benefit of Securityholders and will remain assets
of the Trust for purposes of bankruptcy, tax and other applicable
laws. The Guaranteed Rate Agreement provides that the Investment
Provider will guarantee a rate of return on such amounts equal to
the weighted average of the Note Interest Rates [and the
Certificate Rate] and will be entitled to receive any Investment
Earnings in excess of such guaranteed return.
If the commercial paper rating or certificate of deposit
rating of the Investment Provider is at any time reduced below A-
1+ or P1 by the applicable Rating Agency, within 60 days of
receiving notice of such decline, the Servicer will either (i)
with the prior written assurance of each Rating Agency that such
action will not result in a reduction of the rating of any of the
Notes or the Certificates, cause the Investment Provider to
pledge securities, in a manner conferring on the Indenture
Trustee a perfected first lien in such securities, securing the
Investment Provider's performance of its obligations under the
Guaranteed Rate Agreement, (ii) direct the Indenture Trustee to
terminate the Guaranteed Rate Agreement and to obtain a
Replacement Guaranteed Rate Agreement or (iii) establish any
other arrangement satisfactory to each Rating Agency such that
such Rating Agency will not reduce the rating of any of the Notes
or the Certificates. A "Replacement Guaranteed Rate Agreement"
means an agreement (i) which is substantially similar to the
original Guaranteed Rate Agreement, (ii) the obligor of which is
an insurance company, trust company, commercial bank or other
entity which has a commercial paper or certificate of deposit
rating of at least A-1+ or P1 by the applicable Rating Agency and
(iii) which provides for either the payment of interest on funds
invested pursuant thereto at a rate per annum at least equal to
the weighted average of the Note Interest Rates [and the
Certificate Rate]. If the Servicer is unable to obtain a
Replacement Guaranteed Rate Agreement or a pledge of securities
or otherwise satisfy the applicable Rating Agency within such 60-
day period, then each following Distribution Date will constitute
a Payment Date and distributions in respect of the Notes and the
Certificates will be made monthly. See "Description of the
Notes Payments of Interest" herein.
The payment obligations of the Investment Provider under the
Guaranteed Rate Agreement constitute general unsecured
obligations of the Investment Provider. No assurance can be
given that the Trust will receive the payments due to be received
under the Guaranteed Rate Agreement when due. A failure by the
Investment Provider to make such payments or to make such
payments on a timely basis would reduce amounts available for
distributions to Securityholders, and in such event
Securityholders could incur a loss on their investment.
The Guaranteed Rate Agreement will be provided by
(the "Investment Provider"). The Investment Provider was
incorporated in . The Investment Provider is engaged in
the business of . As of , 199 , the Investment
Provider had total consolidated assets of $ , total
consolidated liabilities of $ and total consolidated
stockholders' equity of $ . The Investment Provider is
currently rated / .
THE INFORMATION SET FORTH IN THE PRECEDING PARAGRAPH HAS
BEEN PROVIDED BY THE INVESTMENT PROVIDER. THE SELLERS MAKE NO
REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF SUCH
INFORMATION.]
FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of material anticipated
federal income tax consequences of the purchase, ownership and
disposition of the Notes and the Certificates. The summary does
not purport to deal with 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 ("RIC's") or
dealers in securities. Moreover, there are no cases or Internal
Revenue Service ("IRS") rulings on similar transactions involving
both debt instruments and equity interests issued by a trust with
terms similar to those of the Notes and the Certificates. As a
result, the IRS may disagree with all or a part of the discussion
below. Prospective investors are urged to consult their own tax
advisors in determining the federal, state, local, foreign and
any other tax consequences to them of the purchase, ownership and
disposition of the Notes and the Certificates.
The following summary is based upon current provisions of
the Internal Revenue Code of 1986, as amended (the "Code"), the
Treasury regulations promulgated thereunder and judicial or
ruling authority, all of which are subject to change, which
change may be retroactive. The Trust will be provided with an
opinion of Special Tax Counsel regarding certain federal income
tax matters discussed below. An opinion of Special 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.
SCOPE OF THE TAX OPINIONS; TAX CHARACTERIZATION OF THE TRUST
Special Tax Counsel will, upon issuance of the Notes and
Certificates deliver its opinion that the Trust will not be
classified as an association (or publicly traded partnership)
taxable as a corporation for federal income tax purposes. Any
such opinion will be filed either as an exhibit to the
registration statement of which this Prospectus forms a part or
will be filed as an exhibit to a Form 8-K filed in connection
with the establishment of the related Trust and issuance of
Securities. This opinion is based on the assumption that the
terms of the Trust Agreement and related documents will be
complied with, and on counsel's conclusions that (1) the Trust
does not have certain characteristics necessary for a business
trust to be classified as an association taxable as a corporation
and (2) either the nature of the income of the Trust will exempt
it from the provisions of the Code requiring certain publicly
traded partnerships to be taxed as corporations or the Trust will
otherwise qualify for an exemption from the rules governing
publicly traded partnerships. Further, with respect to the
Notes, Special Tax Counsel will opine that the Notes will be
classified as debt for federal income tax purposes.
In addition, Special Tax Counsel has prepared or reviewed
the statements under the heading "Summary Tax Status" relating to
federal income tax matters and under the heading "Federal Income
Tax Consequences" herein and "Federal Income Tax Consequences" in
the Prospectus and is of the opinion that such statements are
correct in all material respects. Such statements are intended
as an explanatory discussion of the possible effects of the
classification of the Trust as a partnership for federal income
tax purposes on investors generally and of related tax matters
affecting investors generally, but do not purport to furnish
information in the level of detail or with the attention to the
investor's specific tax circumstances that would be provided by
an investor's own tax adviser. Accordingly, each investor is
advised to consult its own tax advisers with regard to the tax
consequences to it of investing in the certificates.
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 of its income on the Receivables, possibly
reduced by its interest expense on the Notes. Any such corporate
income tax could materially reduce the amount of 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 Noteholders
will be deemed to have agreed by their purchase of the Notes, to
treat the Notes as debt for federal income tax purposes. The
discussion below assumes that this characterization of the Notes
is correct.
Original Issue Discount. A Note will be treated as issued
with Original Issue Discount ("OID") if the excess of the Note's
"stated redemption price at maturity" over the issue price equals
or exceeds a de minimis amount equal to 1/4 of 1 percent of the
Note's stated redemption price at maturity multiplied by the
number of complete years (based on the anticipated weighted
average life of a Note) to its maturity.
In general, OID, if any, will equal the difference between
the stated redemption price at maturity of a Note and its issue
price. A holder of a Note must include such OID in gross income
as ordinary interest income as it accrues under a method taking
into account an economic accrual of the discount. In general,
OID must be included in income in advance of the receipt of the
cash representing that income. The amount of OID on a Note will
be considered to be zero if it is less than a de minimis amount
determined as described above.
However, the amount of any de minimis OID must be included
in income as principal payments are received on a Note, in the
proportion that each such payment bears to the original principal
amount of the Note. The issue price of a Note will generally be
the initial offering price at which a substantial amount of the
Notes are sold. The Trust intends to treat the issue price as
including, in addition, the amount paid by the Noteholder for
accrued interest that relates to a period prior to the Closing
Date of such Note. Under applicable Treasury regulations
governing the accrual of OID (the "OID Regulations"), the stated
redemption price at maturity is the sum of all payments on the
Note other than any "qualified stated interest" payments.
Qualified stated interest is defined as any one of a series of
payments equal to the product of the outstanding principal
balance of the Note and a single fixed rate, or certain variable
rates of interest that is unconditionally payable at least
annually.
The Holder of a Note issued with OID must include in gross
income, for all days during its taxable year on which it holds
such Note, the sum of the "daily portions" of such OID. Such
daily portions are computed by allocating to each day during a
taxable year a pro rata portion of the OID that accrued during
the relevant accrual period. In the case of an obligation the
principal on which is subject to prepayment as a result of
prepayments on the underlying collateral, (a "Prepayable
Obligation"), such as the Notes, OID is computed by taking into
account the anticipated rate of prepayments assumed in pricing
the debt instrument (the "Prepayment Assumption"). The
Prepayment Assumption that will be used in determining the rate
of accrual of original issue discount, premium and market
discount, if any, is ___% ABS. The amount of OID that will
accrue during an accrual period (generally the period between
interest payments or compounding dates) is the excess (if any) of
the sum of (a) the present value of all payments remaining to be
made on the Note as of the close of the accrual period and (b)
the payments during the accrual period of amounts included in the
stated redemption price of the Note, over the "adjusted issue
price" of the Note at the beginning of the accrual period. An
"accrual period" is the period over which OID accrues, and may be
of any length, provided that each accrual period is no longer
than one year and each scheduled payment of interest or principal
occurs on either the last day or the first day of an accrual
period. The Issuer intends to report OID on the basis of an
accrual period that corresponds to the interval between payment
dates. The adjusted issue price of a Note is the sum of its
issue price plus prior accruals of OID, reduced by the total
payments made with respect to such Note in all prior periods,
other than qualified stated interest payments. The present value
of the remaining payments is determined on the basis of three
factors: (i) the original yield to maturity of the Note
(determined on the basis of compounding at the end of each
accrual period and properly adjusted for the length of the
accrual period), (ii) events which have occurred before the end
of the accrual period and (iii) the assumption that the remaining
payments will be made in accordance with the original Prepayment
Assumption.
The effect of this method is to increase the portions of OID
required to be included in income by a Noteholder to take into
account prepayments on the Receivables at a rate that exceeds the
Prepayment Assumption, and to decrease (but not below zero for
any period) the portions of OID required to be included in income
by a Noteholder to take into account prepayments with respect to
the Receivables at a rate that is slower than the Prepayment
Assumption. Although OID will be reported to Noteholders based
on the Prepayment Assumption, no representation is made to
Noteholders that Receivables will be prepaid at that rate or at
any other rate.
A holder of a Note that acquires the Note for an amount that
exceeds its stated redemption price will not include any OID in
gross income. A subsequent holder of a Note which acquires the
Notes for an amount that is less than its stated redemption price
will be required to include OID in gross income, but such a
holder who purchases such Note for an amount that exceeds its
adjusted issue price will be entitled (as will an initial holder
who pays more than a Note's issue price) to reduce the amount of
OID included in income in each period by the amount of OID
multiplied by a fraction, the numerator of which is the excess of
(w) the purchaser's adjusted basis in the Note immediately after
purchase thereof over (x) the adjusted issue price of the Note,
and the denominator of which is the excess of (y) all amounts
remaining to be paid on the Note after the purchase date, other
than qualified stated interest, over (z) the adjusted issue price
of the Note.
Total Accrual Election. As an alternative to separately
accruing stated interest, OID, de minimis OID, market discount,
de minimis market discount, unstated interest, premium, and
acquisition premium, a holder of a Note may elect to include all
income that accrues on the Note using the constant yield method.
If a Noteholder makes this election, income on a Note will be
calculated as though (i) the issue price of the Note were equal
to the Noteholder's adjusted basis in the Note immediately after
its acquisition by the Noteholder; (ii) the Note were issued on
the Noteholder's acquisition date; and (iii) none of the interest
payments on the Note were "qualified stated interest." A
Noteholder may make such an election for a Note that has premium
or market discount, respectively, only if the Noteholder makes,
or has previously made, an election to amortize bond premium or
to include market discount in income currently. See " Market
Discount" and " Amortizable Bond Premium."
Market Discount. The Notes, whether or not issued with
original issue discount, will be subject to the "market discount
rules" of section 1276 of the Code. In general, these rules
provide that if the Note Owner purchases a Note at a market
discount (that is, a discount from its stated redemption price at
maturity or, if the Notes were issued with OID, its original
issue price plus any accrued original issue discount that exceeds
a de minimis amount specified in the Code) and thereafter (a)
recognizes gain upon a disposition, or (b) receives payments of
principal, the lesser of (i) such gain or principal payment or
(ii) the accrued market discount will be taxed as ordinary
interest income. Generally, the accrued market discount will be
the total market discount on the Note multiplied by a fraction,
the numerator of which is the number of days the Note Owner held
the Note and the denominator of which is the number of days from
the date the Note Owner acquired the Note until its maturity
date. The Note Owner may elect, however, to determine accrued
market discount under the constant-yield method.
Limitations imposed by the Code which are intended to match
deductions with the taxation of income may defer deductions for
interest on indebtedness incurred or continued, or short-sale
expenses incurred, to purchase or carry a Note with accrued
market discount. A Note Owner may elect to include market
discount in gross income as it accrues and, if the Note Owner
makes such an election, is exempt from this rule. Any such
election will apply to all debt instruments acquired by the
taxpayer on or after the first day of the first taxable year to
which such election applies. The adjusted basis of a Note
subject to such election will be increased to reflect market
discount included in gross income, thereby reducing any gain or
increasing any loss on a sale or taxable disposition.
Amortizable Bond Premium. In general, if a Note Owner
purchases a Note at a premium (that is, an amount in excess of
the amount payable upon the maturity thereof), such Note Owner
will be considered to have purchased such Note with "amortizable
bond premium" equal to the amount of such excess. Such Note
Owner may elect to amortize such bond premium as an offset to
interest income and not as a separate deduction item as it
accrues under a constant-yield method over the remaining term of
the Note. Such Note Owner's tax basis in the Note will be
reduced by the amount of the amortized bond premium. Any such
election shall apply to all debt instruments (other than
instruments the interest on which is excludible from gross
income) held by the Note Owner at the beginning of the first
taxable year for which the election applies or thereafter
acquired and is irrevocable without the consent of the IRS. Bond
premium on a Note held by a Note Owner who does not elect to
amortize the premium will decrease the gain or increase the loss
otherwise recognized on the disposition of the Note.
Short-Term Obligations. Under the Code, special rules apply
to Notes that have a maturity of one year or less from their date
of original issuance ("Short-Term Notes"). Such Notes are
treated as issued with "acquisition discount" which is calculated
and included in income under principles similar to those
governing OID except that "acquisition discount" is equal to the
excess of all payments of principal and interest on the Short-
Term Notes over their issue price. In general, an individual or
other cash basis holder of a short-term obligation is not
required to accrue acquisition discount for federal income tax
purposes unless it elects to do so. Accrual basis Noteholders
and certain other Noteholders, including banks, regulated
investment companies, dealers in securities and cash basis
Noteholders who so elect, are required to accrue acquisition
discount on Short-Term Notes on either a straight-line basis or
under a constant yield method (based on daily compounding), at
the election of the Noteholder. In the case of a Noteholder not
required and not electing to include acquisition discount in
income currently, any gain realized on the sale or retirement of
the Short-Term Notes will be ordinary income to the extent of the
acquisition discount accrued on a straight-line basis (unless an
election is made to accrue the acquisition discount under the
constant yield method) through the date of sale or retirement.
Noteholders who are not required and do not elect to accrue
acquisition discount on Short-Term Notes will be required to
defer deductions for interest on borrowings allocable to short
term obligations in an amount not exceeding the deferred income
until the deferred income is realized.
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 generally 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
any bond premium previously amortized and 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, accrued market discount or OID that has not previously
accrued, in each case to the extent not previously included in
income. Capital losses incurred on sale or disposition of a Note
generally may be used only to offset capital gains.
Non-U.S. Note Owners. In general, a non-U.S. Note Owner
will not be subject to U.S. federal income tax on interest
(including OID) on a beneficial interest in a Note unless (i) the
non-U.S. Note Owner actually or constructively owns 10 percent or
more of the total combined voting power of all classes of stock
of the Sellers (or affiliate of the Seller) entitled to vote (or
of a profits or capital interest of the Trust), (ii) the non-U.S.
Note Owner is a controlled foreign corporation that is related to
the Sellers (or the Trust) through stock ownership, (iii) the
non-U.S. Note Owner is a bank receiving interest described in
Code Section 881(c)(3)(A), (iv) such interest is contingent
interest described in Code Section 871(h)(4), or (v) the non-U.S.
Note Owner bears certain relationships to any Certificate Owner.
To qualify for the exemption from taxation, the Note Owner must
comply with applicable certification requirements.
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 tax and
withholding tax, provided that (i) such gain is not effectively
connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an
individual foreign person, the foreign person is not present in
the United States for 183 days or more in the taxable year.
Backup Withholding. Each holder of a Note (other than an
exempt holder such as a corporation, tax-exempt organization,
qualified pension and profit-sharing trust, individual retirement
account or nonresident alien who provides certification as to
status as a nonresident) will be required to provide, under
penalties of perjury, a certificate containing the holder's name,
address, correct 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.
Possible Alternative Treatments of the Notes. If, contrary
to the opinion of Special 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, 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. federal tax and U.S. federal
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.
TAX CONSEQUENCES TO HOLDERS OF OFFERED CERTIFICATES
Treatment of the Trust as a Partnership. The Sellers and
the Servicer will agree, and the Certificateholders of the Trust
will agree by their purchase of Certificates, 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 of the Trust (including, potentially, the
Sellers and NB-SPC), and the Notes being debt of the partnership.
However, the proper characterization of the arrangement involving
the Trust, the Certificates evidencing interests in the Trust,
the Notes, the Sellers and the Servicer is not clear because
there is no authority on transactions closely comparable to those
contemplated herein.
A variety of alternative characterizations of the
Certificates are possible. For example, because the Certificates
of beneficial interest in the Trust generally will have certain
features characteristic of debt, the Certificates issued by the
Trust might be considered debt of [NB-SPC] or the Trust. Any
such characterization would not result in materially adverse tax
consequences to Certificateholders as compared to the
consequences from treatment of the Certificates as equity in a
partnership, described below. The following discussion assumes
that the Certificates represent equity interests in a
partnership.
The following discussion assumes that all payments on the
Certificates are denominated in U.S. dollars, the Certificates
are not Indexed Securities or Strip Certificates, and that a
Series of Securities includes a single class of Certificates.
Partnership Taxation. Assuming that the Trust is classified
as a partnership, the Trust will not be subject to federal income
tax, but each Certificateholder will be required to take into
account separately such holder's allocated share of income,
gains, losses, deductions and credits of the Trust. The Trust's
income will consist primarily of interest accrued on the
Receivables (including appropriate adjustments for market
discount (as discussed below), and any OID and bond premium),
investment income from investments of collections held between
Distribution Dates, any gain upon, or with respect to, collection
or disposition of the Receivables and any income earned on any
notional principal contracts. The Trust's deductions will
consist primarily of interest accruing on the Notes, servicing
and other fees and losses or deductions upon, or with respect to,
collection or the disposition of the Receivables.
The tax items of a partnership are allocable to the partners
in accordance with the Code, Treasury regulations and the
partnership agreement. In the Trust Agreement, the
Certificateholders of the Trust will agree that the yield on a
Certificate is intended to qualify as a "guaranteed payment" and
not as a distributive share of partnership income. A guaranteed
payment would be treated by a Certificateholder as ordinary
income, but may well not be treated as interest income. The
Trust Agreement will provide that, to the extent that such
treatment is not respected, the Certificateholders will be
allocated ordinary gross income of the Trust for each interest
period equal to the sum of (i) the amount of interest that
accrues on the Certificates for such interest period based on the
Certificate Rate; (ii) an amount equivalent to interest that
accrues during such interest period on amounts previously due on
the Certificates but not yet distributed; and (iii) 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. All remaining
taxable income of the Trust generally will be allocated to the
[the Sellers] [[NB-SPC]], [[as "] [the] [general partner]["] of
the Trust].
Except as set forth below, losses and deductions generally
will not be allocated to the Certificateholders of the Trust
except to the extent the Certificateholders of the Trust are
reasonably expected to bear the economic burden of such losses or
deductions. Further, losses and deductions will not be be
allocated to Certificateholders of a particular class of
Certificates except to the extent the Certificateholders of such
class of Certificates are expected to bear the economic burden of
such losses or deductions. Any such losses could be
characterized as capital losses deductible by the
Certificateholder only against capital gain income, while any
such deductions would be subject to the limitations set forth
below. Accordingly, a Certificateholder's taxable income from
the Trust could exceed the cash it is entitled to receive from
the Trust.
Although the allocation of gross income to
Certificateholders provided above as an alternative to the
characterization of the yield on the Certificates as guaranteed
payments is intended to comply with applicable Treasury
regulations and other authorities, no assurance can be given that
the IRS would not instead require that Certificateholders be
allocated a distributive share of partnership net income or loss.
Moreover, if losses or deductions were allocated to
Certificateholders, such losses or deductions would, to the
extent that funds were available therefor, later be reimbursed
through allocations of ordinary income.
It is believed that allocating partnership income on the
foregoing basis should comport with the partners' economic
interests in the partnership, although no assurance can be given
that the IRS would not require a greater amount of income to be
allocated to Certificateholders of the Trust. Moreover, under
this alternative method of allocation, Certificateholders may be
allocated income equal to the amount of interest accruing on the
Certificates based on the Certificate Rate even though the Trust
might not have sufficient cash to make current cash distributions
of such amount or Certificateholders may have no right to cash
equal to such amount. Thus, cash basis Certificateholders 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 allocation
and tax reporting will be done on a uniform basis for all
Certificateholders of the Trust but Certificateholders of the
Trust 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.
Certificateholders will be required to report items of
income, loss and deduction allocated to them by the Trust in the
Certificateholder's taxable year in which or with which the
taxable year of the Trust to which such allocations relate ends.
The Code prescribes certain rules for determining the taxable
year of the Trust. It is likely that, under these rules, the
taxable year of the Trust will be the calendar year. However, in
the event that all of the Certificateholders possessing a 5
percent or greater interest in the equity or the profits of the
Trust share a taxable year that is other than the calendar year,
the Trust would be required to use that year as its taxable
year.
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. The
characterization under the Trust Agreement of yield on the
Certificates as a guaranteed payment could adversely affect
taxpayers, such as RICs and real estate investment trusts
("REITs"), that expect to earn "interest" income.
Limitations on Losses. Under the "passive activity" rules
of the Code, any loss allocated to a Certificateholder who is a
natural person, estate, trust, closely held "C" corporation or
personal service corporation would be a passive activity loss
while, for purposes of those rules, income allocated to such a
Certificateholder would be "portfolio income."
In addition a taxpayer that is an individual, trust or
estate may generally deduct miscellaneous itemized deductions
(which do not include interest expense) only to the extent they
exceed two percent of the individual's adjusted gross income.
Those limitations would apply to an individual
Certificateholder's share of expenses of the Trust (including
fees paid to the Servicer) and might result in such holder having
net taxable 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] [were] issued with OID or imputed interest, and,
therefore, the Trust should not have OID or imputed interest
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.
Distributions to Certificateholders. Certificateholders
generally will not recognize gain or loss with respect to
distributions from the Trust. A Certificateholder will, however,
recognize gain to the extent any money distributed exceeds the
Certificateholder's adjusted basis in the Certificates (as
described below under "Disposition of Certificates") immediately
before distribution, and a Certificateholder will recognize loss
upon termination of the Trust or termination of the
Certificateholder's interest in the Trust if the Trust only
distributes money to the Certificateholder and the amount
distributed is less than the Certificateholder's adjusted basis
in the Certificates. Any such gain or loss would be long-term
capital gain or loss if the holding period of the Certificates
were more than one year, assuming that the Certificates are held
as capital assets.
Disposition of Certificates. 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 federal income 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
miscellaneous itemized deductions described above) over the life
of the Certificates that exceeds the aggregate cash distributions
with respect thereto, such excess will generally give rise to a
capital loss upon the retirement of the Certificates.
Allocations Between Transferors and Transferees. In
general, the Trust's taxable income and losses will be determined
monthly and the tax items for a particular calendar month will be
apportioned among the Certificateholders in proportion to the
principal amount of Certificates owned by them as of the close of
the last day of such month. As a result, a holder purchasing
Certificates may be allocated tax items (which will affect its
tax liability and tax basis) attributable to periods before the
actual transaction.
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 Sellers are
authorized to revise the Trust's method of allocation between
transferors and transferees to conform to a method permitted by
future Treasury 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 Owner Trustee is required to
keep or have kept complete and accurate books of the Trust. Such
books will be maintained for financial reporting and federal
income tax purposes on an accrual basis and the fiscal year of
the Trust will be the calendar year. The Trustee will file a
partnership information return (Form 1065) with the IRS for each
taxable year of the Trust and will report each
Certificateholder's allocable share of items of Trust income and
expense to holders and the IRS on Schedule K-1. The Trust will
provide the Schedule K-1 information to nominees that fail to
provide the Trust with the information statement described below
and such nominees will be required to forward such information to
the beneficial owners of the Certificates. Generally, holders
must file federal income 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 federal taxpayer identification number of the nominee
and (ii) as to each beneficial owner (x) the name, address and
federal taxpayer 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 Code provides for administrative examination of a
partnership as if the partnership were a separate taxpayer.
Under these audit procedures, the tax treatment of items of Trust
income, gain, loss, deduction and credit would be determined at
the Trust level in a unified proceeding, rather than in separate
proceedings with each Certificateholder. Generally, the statute
of limitations for Trust items does not expire before three years
after the date on which the partnership information return is
filed. The General Partner will be designated the "tax matters
partner" for the Trust and, as such, is designated to receive
notice on behalf of, and to provide notice to those
Certificateholders not receiving notice from, the IRS, and to
represent the Certificateholders in any dispute with the IRS.
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 while
the Certificateholders may participate in any adjudicative
process that is undergone at the Trust level in arriving at such
a determination, such Certificateholders will be precluded from
separately litigating a proposed adjustment to the items of the
Trust. As the tax matters partner, the General Partner may enter
into a binding settlement on behalf of all Certificateholders
with a less than a 1 percent interest in the Partnership (except
for any group of such Certificateholders with an aggregate
interest of 5 percent or more in Trust profits that elects to
form a notice group or Certificateholders who otherwise notify
the IRS that the General Partner is not authorized to settle on
their behalf). In the absence of a proceeding at the Trust
level, a Certificateholder under certain circumstances may pursue
a claim for credit or refund on his own behalf by filing a
request for administrative adjustment of a Trust item. Each
Certificateholder is advised to consult its own tax advisor with
respect to the impact of these procedures on its particular case.
Backup Withholding. Distributions made on the Certificates
and proceeds from the sale of the Certificates will not be
subject to a "backup" withholding tax of 31% unless, in general,
the Certificateholder fails to comply with certain identification
procedure and is not an exempt recipient under applicable
provisions of the Code.
TAX CONSEQUENCES TO NON-U.S. CERTIFICATEHOLDERS
The Certificates may not be purchased by persons other than
U.S. persons and non-U.S. persons who will satisfy the Sellers
and the Trustee of the Trust that such non-U.S. person will be
taxed with respect to its ownership of Certificates as if it were
a U.S. person. However, in the case of such a non-U.S. person,
the Trust will withhold U.S. income tax at the highest marginal
rate.
THE FEDERAL 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
THE NOTES
The Notes may, in general, be purchased by or on behalf of
(i) "employee benefit plans" (as defined in Section 3(3) of
ERISA), (ii) "plans" described in Section 4975(e)(1) of the Code,
including individual retirement accounts and Keogh Plans, or
(iii) entities whose underlying assets include plan assets by
reason of a plan's investment in such entity (each, a "Plan").
However, the acquisition and holding of Notes by or on behalf of
a Plan could be considered to give rise to a prohibited
transaction under ERISA and the Code if the Trust, the Owner
Trustee, the Indenture Trustee, any holder of the Certificates or
any of their respective affiliates, is or becomes a "party in
interest" or a "disqualified person" (as defined in ERISA and the
Code, respectively) with respect to such Plan. In such case,
certain exemptions from the prohibited transaction rules could be
applicable to such acquisition and holding by a Plan depending on
the type and circumstances of the Plan fiduciary making the
decision to acquire a Note. For additional information regarding
treatment of the Notes under ERISA, see "ERISA Considerations" in
the Prospectus.
THE CERTIFICATES
The Certificates may not be acquired by a Plan or a person
investing "plan assets" of a Plan (excluding, for this purpose,
any entity registered under the Investment Company Act of 1940,
as amended) (each, a "Plan Investor"). In addition, investors
other than Plan Investors should be aware that a prohibited
transaction under ERISA and the Code could be deemed to occur if
any holder of the Certificates or any of their respective
affiliates, is or becomes a party in interest or a disqualified
person with respect to any Plan that acquires and holds the Notes
without such Plan being covered by one or more exemptions from
the prohibited transaction rules. 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 "Note Underwriting Agreement"), the
Sellers have agreed to cause the Trust to sell to each of the
Note Underwriters named below (collectively, the "Note
Underwriters"), and each of the Note Underwriters has severally
agreed to purchase, the initial principal amount of Notes set
forth opposite its name below:
PRINCIP [PRINCI [PRINCI
AL PAL PAL
AMOUNT AMOUNT AMOUNT
OF OF OF
[CLASS CLASS CLASS
A-1] A-2 A-3
NOTE UNDERWRITERS NOTES NOTES] NOTES]
NationsBanc Capital Markets, $ $[ ] $[ ]
Inc. . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . [ ] [ ]
. . . . . . . . . . . . . . . [ ] [ ]
[ ] [ ]
Total . . . . . . . . . . . . . . $ $[ ] $[ ]
The Sellers have been advised by the Note Underwriters that
they propose initially to offer the Notes to the public at the
prices set forth herein, and to certain dealers at such prices
less the initial concession not in excess of % per [Class A-1]
Note[, % per Class A-2 Note and % per Class A-3 Note]. The
Note Underwriters may allow, and such dealers may reallow, a
concession not in excess of % per [Class A-1] Note[, % per
Class A-2 Note and % per Class A-3 Note] to certain other
dealers. After the initial public offering of the Notes, the
public offering price and such concessions may be changed.
Subject to the terms and conditions set forth in an
Underwriting Agreement (the "Certificate Underwriting
Agreement"), the Sellers have agreed to cause the Trust to sell
to each of the Certificate Underwriters named below (the
"Certificate Underwriters" and, together with the Note
Underwriters, the "Underwriters"), and each of the Certificate
Underwriters has severally agreed to purchase, the initial
Certificate Balance of Certificates set forth opposite its name
below:
CERTIFICATE
BALANCE OF
CERTIFICATE UNDERWRITERS CERTIFICATES
NationsBanc Capital Markets, Inc.. .$
Total . . . . . . . . . . . . . . $
The Sellers have been advised by the Certificate
Underwriters that they propose initially to offer the
Certificates to the public at the price set forth herein, and to
certain dealers at such price less the initial concession not in
excess of % per Certificate. The Certificate Underwriters may
allow, and such dealers may reallow, a concession not in excess
of % per Certificate to certain other dealers. After the
initial public offering of the Certificates, the public offering
price and such concessions may be changed.
NationsBanc Capital Markets, Inc. ("NCMI") is a separate
subsidiary of NationsBank Corporation. NCMI is a registered
broker-dealer and not a bank. Any obligations of NCMI are the
sole responsibility of NCMI and do not create any obligation or
guarantee on the part of any affiliate of NCMI.
[This Prospectus Supplement and the related Prospectus may
be used by NCMI in connection with offers and sales related to
market-making transactions in the Notes and the Certificates.
NCMI may act as principal or agent in such transactions. Such
sales will be made at prices related to prevailing markets prices
at the time of sale or otherwise. NCMI does not have any
obligation to make a market in the Notes or the Certificates,
and it may discontinue any such market-making activities at any
time without notice, in its sole discretion. NCMI is among the
underwriters participating in the initial distribution of the
Notes and the Certificates.]
LEGAL OPINIONS
In addition to the legal opinions described in the
Prospectus, certain legal matters relating to the Notes and the
Certificates will be passed upon for the Underwriters and certain
federal income tax and other matters will be passed upon for the
Trust by [ ].
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally
offered NationsBank Auto Owner Trust % [Class A-1] Asset Backed
Notes[, Floating Rate Class A-2 Asset Backed Notes and % Class
A-3 Asset Backed Notes] (collectively, [the "Global Notes") and
% Asset Backed Certificates (the "Global Certificates" and
together with the Global Notes,] the "Global Securities") will be
available only in book-entry form. Investors in the Global
Securities may hold such Global Securities through any of The
Depository Trust Company ("DTC"), Cedel Bank, societe anonyme
("Cedel") or the Euroclear System ("Euroclear"). The Global
Securities will be tradeable as home market instruments in both
the European and U.S. domestic markets. Initial settlement and
all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global
Securities through Cedel and Euroclear will be conducted in the
ordinary way in accordance with their normal rules and operating
procedures and in accordance with conventional eurobond practice
(i.e., seven calendar day settlement).
Secondary market trading between investors holding Global
Securities through DTC will be conducted according to the rules
and procedures applicable to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear
and DTC Participants holding Global Securities will be effected
on a delivery-against-payment basis through the respective
Depositaries of Cedel and Euroclear (in such capacity) and as DTC
Participants.
Non-U.S. holders (as described below) of Global Securities
will be subject to U.S. withholding taxes unless such holders
meet certain requirements and deliver appropriate U.S. tax
documents to the securities clearing organizations or their
participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC
in the name of Cede & Co. as nominee of DTC. Investors'
interests in the Global Securities will be represented through
financial institutions acting on their behalf as direct and
indirect Participants in DTC. As a result, Cedel and Euroclear
will hold positions on behalf of their participants through their
respective Depositaries, which in turn will hold such positions
in accounts as DTC Participants.
Investors electing to hold their Global Securities through
DTC will follow the settlement practices applicable to U.S.
corporate debt obligations. Investor securities custody accounts
will be credited with their holdings against payment in same-day
funds on the settlement date.
Investors electing to hold their Global Securities through
Cedel or Euroclear accounts will follow the settlement procedures
applicable to conventional eurobonds, except that there will be
no temporary global security and no "lock-up" or restricted
period. Global Securities will be credited to the securities
custody accounts on the settlement date against payment in same-
day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is
important to establish at the time of the trade where both the
purchaser's and seller's accounts are located to ensure that
settlement can be made on the desired value date.
Trading between DTC Participants. Secondary market trading
between DTC Participants will be settled using the procedures
applicable to U.S. corporate debt obligations in same-day funds.
Trading between Cedel and/or Euroclear Participants.
Secondary market trading between Cedel Participants or Euroclear
Participants will be settled using the procedures applicable to
conventional eurobonds in same-day funds.
Trading between DTC seller and Cedel or Euroclear purchaser.
When Global Securities are to be transferred from the account of
a DTC Participant to the account of a Cedel Participant or a
Euroclear Participant, the purchaser will send instructions to
Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. Cedel
or Euroclear will instruct the respective Depositary, as the case
may be, to receive the Global Securities against payment.
Payment will include interest accrued on the Global Securities
from and including the last coupon payment date to and excluding
the settlement date. Payment will then be made by the respective
Depositary to the DTC Participant's account against delivery of
the Global Securities. After settlement has been completed, the
Global Securities will be credited to the respective clearing
system and by the clearing system, in accordance with its usual
procedures, to the Cedel Participant's or Euroclear Participant's
account. The securities credit will appear the next day
(European time) and the cash debit will be back-valued to, and
the interest on the Global Securities will accrue from, the value
date (which would be the preceding day when settlement occurred
in New York). If settlement is not completed on the intended
value date (i.e., the trade fails), the Cedel or Euroclear cash
debit will be valued instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to
make available to the respective clearing systems the funds
necessary to process same-day funds settlement. The most direct
means of doing so is to pre-position funds for settlement, either
from cash on hand or existing lines of credit, as they would for
any settlement occurring within Cedel or Euroclear. Under this
approach, they may take on credit exposure to Cedel or Euroclear
until the Global Securities are credited to their accounts one
day later.
As an alternative, if Cedel or Euroclear has extended a line
of credit to them, Cedel Participants or Euroclear Participants
can elect not to pre-position funds and allow that credit line to
be drawn upon to finance settlement. Under this procedure, Cedel
Participants or Euroclear Participants purchasing Global
Securities would incur overdraft charges for one day, assuming
they cleared the overdraft when the Global Securities were
credited to their accounts. However, interest on the Global
Securities would accrue from the value date. Therefore, in many
cases the investment income on the Global Securities earned
during that one-day period may substantially reduce or offset the
amount of such overdraft charges, although this result will
depend on each Cedel Participant's or Euroclear Participant's
particular cost of funds.
Since the settlement is taking place during New York
business hours, DTC Participants can employ their usual
procedures for sending Global Securities to the respective
Depositary for the benefit of Cedel Participants or Euroclear
Participants. The sale proceeds will be available to the DTC
seller on the settlement date. Thus, to the DTC Participant a
cross-market transaction will settle no differently than a trade
between two DTC Participants.
Trading between Cedel or Euroclear seller and DTC purchaser.
Due to time zone differences in their favor, Cedel Participants
and Euroclear Participants may employ their customary procedures
for transactions in which Global Securities are to be transferred
by the respective clearing system, through the respective
Depositary, to a DTC Participant. The seller will send
instructions to Cedel or Euroclear through a Cedel Participant or
Euroclear Participant at least one business day prior to
settlement. In these cases, Cedel or Euroclear will instruct the
respective Depositary, as appropriate, to deliver the bonds to
the DTC Participant's account against payment. Payment will
include interest accrued on the Global Securities from and
including the last coupon payment date to and excluding the
settlement date. The payment will then be reflected in the
account of the Cedel Participant or Euroclear Participant the
following day, and receipt of the cash proceeds in the Cedel
Participant's or Euroclear Participant's account would be back-
valued to the value date (which would be the preceding day, when
settlement occurred in New York). Should the Cedel Participant
or Euroclear Participant have a line of credit with its
respective clearing system and elect to be in debit in
anticipation of receipt of the sale proceeds in its account, the
back-valuation will extinguish any overdraft charges incurred
over that one-day period. If settlement is not completed on the
intended value date (i.e., the trade fails), receipt of the cash
proceeds in the Cedel Participant's or Euroclear Participant's
account would instead be valued as of the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that
purchase Global Securities from DTC Participants for delivery to
Cedel Participants or Euroclear Participants should note that
these trades would automatically fail on the sale side unless
affirmative action were taken. At least three techniques should
be readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day
(until the purchase side of the day trade is reflected in
their Cedel or Euroclear accounts) in accordance with the
clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a
DTC Participant no later than one day prior to settlement,
which would give the Global Securities sufficient time to be
reflected in their Cedel or Euroclear account in order to
settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell
sides of the trade so that the value date for the purchase
from the DTC Participant is at least one day prior to the
value date for the sale to the Cedel Participant or
Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
[Global Notes]
A beneficial owner of Global [Securities] [Notes] holding
securities through Cedel or Euroclear (or through DTC if the
holder has an address outside the U.S.) will be subject to the
30% U.S. withholding tax that generally applies to payments of
interest (including original issue discount) on registered debt
issued by U.S. Persons, unless (i) each clearing system, bank or
other financial institution that holds customers' securities in
the ordinary course of its trade or business in the chain of
intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification
requirements and (ii) such beneficial owner takes one of the
following steps to obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial
owners of Global [Securities] [Notes] that are non-U.S. Persons
can obtain a complete exemption from the withholding tax by
filing a signed Form W-8 (Certificate of Foreign Status). If the
information shown on Form W-8 changes, a new Form W-8 must be
filed within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected
income (Form 4224). A non-U.S. Person, including a non-U.S.
corporation or bank with a U.S. branch, for which the interest
income is effectively connected with its conduct of a trade or
business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding
of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States).
Exemption or reduced rate for non-U.S. Persons resident in
treaty countries (Form 1001). Non-U.S. Persons that are
beneficial owners of Global [Securities] [Notes] residing in a
country that has a tax treaty with the United States can obtain
an exemption or reduced tax rate (depending on the treaty terms)
by filing Form 1001 (Ownership, Exemption or Reduced Rate
Certificate). If the treaty provides only for a reduced rate,
withholding tax will be imposed at that rate unless the filer
alternatively files Form W-8. Form 1001 may be filed by the
beneficial owner of Global [Securities] [Notes] or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can
obtain a complete exemption from the withholding tax by filing
Form W-9 (Payer's Request for Taxpayer Identification Number and
Certification).
U.S. Federal Income Tax Reporting Procedure. The beneficial
owner of a Global [Security] [Note] or in the case of a Form 1001
or a Form 4224 filer, his agent, files by submitting the
appropriate form to the person through whom it holds (the
clearing agency, in the case of persons holding directly on the
books of the clearing agency). Form W-8 and Form 1001 are
effective for three calendar years and Form 4224 is effective for
one calendar year.
[Global Certificates
The Global Certificates may not be purchased by persons
other than U.S. Persons and non-U.S. Persons who will have
satisfied the Sellers and the Owner Trustee that such non-U.S.
Person will be taxed with respect to its beneficial ownership of
Global Certificates as if it were a U.S. Person.]
The term "U.S. Person" means (i) a citizen or resident of
the United States, (ii) a corporation or partnership organized in
or under the laws of the United States or any political
subdivision thereof or (iii) an estate or trust the income of
which is includible in gross income for United States tax
purposes, regardless of its source. This summary does not deal
with all aspects of U.S. federal income tax withholding that may
be relevant to foreign holders of the Global [Securities]
[Notes]. Investors are advised to consult their own tax advisers
for specific tax advice concerning their holding and disposing of
the Global Securities.
INDEX OF TERMS
Set forth below is a list of the defined terms used in this
Prospectus Supplement and defined herein and the pages on which
the definitions of such terms may be found herein. Certain
defined terms used in this Prospectus Supplement are defined in
the Prospectus. See "Index of Terms" in the Prospectus.
ABS . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-30
ABS Table . . . . . . . . . . . . . . . . . . . . . . . . . S-30
Accrued Certificate Interest . . . . . . . . . . . . . . . S-46
Accrued Note Interest . . . . . . . . . . . . . . . . . . . S-45
Additional Yield Supplement Amount . . . . . . . . . . . . S-16
Additional Reserve Account Deposit . . . . . . . . . S-14, S-48
Available Funds . . . . . . . . . . . . . . . . . . . . . . S-43
Available Interest . . . . . . . . . . . . . . . . . . . . S-43
Available Principal . . . . . . . . . . . . . . . . . . . . S-43
Available Reserve Amount . . . . . . . . . . . . . . . . . S-49
Bank, Banks . . . . . . . . . . . . . . . . . . . . . . S-1, S-4
Business Day . . . . . . . . . . . . . . . . . . . . . . . . S-7
Cap Notional Amount . . . . . . . . . . . . . . . . . . . . S-51
Cap Rate . . . . . . . . . . . . . . . . . . . . . . . . . S-51
Cede . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
CEDEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Certificate Balance . . . . . . . . . . . . . . . . . . . . S-46
Certificate Interest Reserve Amount . . . . . . . . . . . . S-49
Certificate Pool Factor . . . . . . . . . . . . . . . . . . S-35
Certificate Prepayment Amount . . . . . . . . . . . . S-12, S-40
Certificate Prepayment Premium . . . . . . . . . . . . . . S-12
Certificate Rate . . . . . . . . . . . . . . . . . . . . . S-11
Certificate Underwriters . . . . . . . . . . . . . . . . . S-63
Certificate Underwriting Agreement . . . . . . . . . . . . S-63
Certificateholders . . . . . . . . . . . . . . . . . . . . S-11
Certificateholders' Distribution Amount . . . . . . . . . . S-47
Certificateholders' Interest Carryover Shortfall . . . . . S-47
Certificateholders' Monthly Accrued Interest . . . . . . . S-47
Certificateholders' Monthly Principal . . . . . . . . . . . S-47
Certificateholders' Percentage . . . . . . . . . . . . . . S-47
Certificateholders' Principal Carryover Shortfall . . . . . S-47
Certificateholders' Principal Distribution Amount . . . . . S-47
Certificates . . . . . . . . . . . . . . . . . . . . . S-1, S-4
[Class A-1] Final Scheduled [Distribution] [Payment] Date . . S-8
Class A-1 Notes . . . . . . . . . . . . . . . . . . . . . . . S-4
[Class A-1] Notes . . . . . . . . . . . . . . . . . . . . . . S-1
[Class A-1 Rate] . . . . . . . . . . . . . . . . . . . . . . S-7
Class A-2 Final Scheduled [Distribution] [Payment] Date . . . S-8
Class A-2 Notes . . . . . . . . . . . . . . . . . . . . S-1, S-4
Class A-2 Rate . . . . . . . . . . . . . . . . . . . . . . . S-7
Class A-3 Final Scheduled [Distribution] [Payment] Date . . . S-9
Class A-3 Notes . . . . . . . . . . . . . . . . . . . . S-1, S-4
Class A-3 Rate . . . . . . . . . . . . . . . . . . . . . . . S-7
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . S-5
Code . . . . . . . . . . . . . . . . . . . . . . . . S-18, S-53
Collection Account . . . . . . . . . . . . . . . . . . . . S-16
Collection Period . . . . . . . . . . . . . . . . . . . . . . S-8
Collections . . . . . . . . . . . . . . . . . . . . . . . . S-44
Commission . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Contract Rate . . . . . . . . . . . . . . . . . . . . . . . S-25
Cut-Off Date . . . . . . . . . . . . . . . . . . . . . . . S-25
Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Dealer Agreements . . . . . . . . . . . . . . . . . . . . . . S-5
Dealers . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Defaulted Receivable . . . . . . . . . . . . . . . . . . . S-44
Determination Date . . . . . . . . . . . . . . . . . . S-8, S-37
Disposition of Certificates . . . . . . . . . . . . . . . . S-58
Distribution Date . . . . . . . . . . . . . . . . . . . S-2, S-10
[Distribution] [Payment] Date . . . . . . . . . . . . . S-2, S-7
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . S-2, I-1
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . S-18
Euroclear . . . . . . . . . . . . . . . . . . . . . . . . . . I-1
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . S-3
Final Scheduled Distribution Date . . . . . . . . . . . S-2, S-11
Final Scheduled Maturity Date . . . . . . . . . . . . . . . . S-6
Financed Vehicles . . . . . . . . . . . . . . . . . . . . . . S-5
Forced-Placed Insurance . . . . . . . . . . . . . . . . . . S-25
Funding Period . . . . . . . . . . . . . . . . . . . . . . S-13
Global Certificates . . . . . . . . . . . . . . . . . . . . . I-1
Global Notes . . . . . . . . . . . . . . . . . . . . . . . . I-1
Global Securities . . . . . . . . . . . . . . . . . . . . . . I-1
Guaranteed Rate Agreement . . . . . . . . . . . . . . . . . S-52
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . S-4
Index Maturity . . . . . . . . . . . . . . . . . . . . S-2, S-37
[Initial] Cut-Off Date . . . . . . . . . . . . . . . . . . . S-5
Initial Pool Balance . . . . . . . . . . . . . . . . . . . . S-9
[Initial] Pool Balance . . . . . . . . . . . . . . . . . . . S-5
[Initial] Receivables . . . . . . . . . . . . . . . . . . . . S-5
Interest Collections . . . . . . . . . . . . . . . . . . . S-44
Interest Period . . . . . . . . . . . . . . . . . S-2, S-7, S-36
Interest Rate Cap . . . . . . . . . . . . . . . . . . . . . S-51
Interest Rate Cap Provider . . . . . . . . . . . . . S-12, S-51
Interest Rate Swap . . . . . . . . . . . . . . . . . S-13, S-51
Interest Reset Period . . . . . . . . . . . . . . . . . S-2, S-37
Investment Provider . . . . . . . . . . . . . . . . . S-17, S-53
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-53
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . S-44
Mandatory Redemption . . . . . . . . . . . . . . . . . S-9, S-38
Mandatory Repurchase . . . . . . . . . . . . . . . . S-12, S-40
NationsBank South . . . . . . . . . . . . . . . . . . . . . . S-4
NationsBank Texas . . . . . . . . . . . . . . . . . . . . . . S-4
Net Trust Swap Payment . . . . . . . . . . . . . . . S-13, S-52
Net Trust Swap Receipt . . . . . . . . . . . . . . . S-13, S-52
Note Interest Rate[s] . . . . . . . . . . . . . . . . . . . . S-7
Note Pool Factor . . . . . . . . . . . . . . . . . . . . . S-35
Note Prepayment Amount . . . . . . . . . . . . . . . S-10, S-38
Note Prepayment Premium . . . . . . . . . . . . . . . . . . S-10
Note Underwriters . . . . . . . . . . . . . . . . . . . . . S-63
Note Underwriting Agreement . . . . . . . . . . . . . . . . S-62
Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Noteholders' Accelerated Principal . . . . . . . . . . S-8, S-37
Noteholders' Interest Carryover Shortfall . . . . . . . . . S-45
Noteholders' Monthly Accrued Interest . . . . . . . . . . . S-45
Noteholders' Monthly Principal . . . . . . . . . . . . . . S-46
Noteholders' Payment Amount . . . . . . . . . . . . . . . . S-46
Noteholders' Percentage . . . . . . . . . . . . . . . . . . S-46
Noteholders' Principal Carryover Shortfall . . . . . . . . S-46
Noteholders' Principal Payment Amount . . . . . . . . . S-8, S-46
Notes . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-4
Obligor . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
OID . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-54
OID Regulations . . . . . . . . . . . . . . . . . . . . . . S-54
Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . S-4
Payment Date . . . . . . . . . . . . . . . . . . . . S-35, S-50
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . S-62
Plan Investor . . . . . . . . . . . . . . . . . . . . . . . S-62
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . S-7
Pool [/Prefunding] Balance . . . . . . . . . . . . . . . . . S-7
Pre-Funded Amount . . . . . . . . . . . . . . . . . . . . . . S-6
Pre-Funded Percentage . . . . . . . . . . . . . . . . . . . S-10
Pre-Funding Account . . . . . . . . . . . . . . . . . . S-2, S-13
Prepayable Obligation . . . . . . . . . . . . . . . . . . . S-54
Prepayment Assumption . . . . . . . . . . . . . . . . . . . S-54
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Purchase Receivable . . . . . . . . . . . . . . . . . . . . S-44
Rating Agencies . . . . . . . . . . . . . . . . . . . . . . S-24
Receivables . . . . . . . . . . . . . . . . . . . . . . S-1, S-5
Receivables Pool . . . . . . . . . . . . . . . . . . . . . S-25
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . S-44
Redemption Price . . . . . . . . . . . . . . . . . . . . . S-39
Regular Principal . . . . . . . . . . . . . . . . . . . S-8, S-37
Replacement Guaranteed Rate Agreement . . . . . . . . . . . S-52
Required Rate . . . . . . . . . . . . . . . . . . . . . . . S-15
Required Subsequent Yield Supplement Amount . . . . . . . . S-51
Required Yield Supplement Amount . . . . . . . . . . . . . S-49
Required [Initial] Yield Supplement Amount . . . . . . . . S-50
Reserve Account . . . . . . . . . . . . . . . . . . . . . . S-14
Reserve Account Initial Deposit . . . . . . . . . . . S-14, S-48
Sale and Servicing Agreement . . . . . . . . . . . . . . . . S-5
Securities . . . . . . . . . . . . . . . . . . . . . . S-1, S-4
Securities Act . . . . . . . . . . . . . . . . . . . . . . . S-3
Securityholders . . . . . . . . . . . . . . . . . . . . . . S-11
Seller, Sellers . . . . . . . . . . . . . . . . . . . . S-1, S-4
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Servicer's Certificate . . . . . . . . . . . . . . . . . . S-43
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . S-17
Short-Term Notes . . . . . . . . . . . . . . . . . . . . . S-56
Simple Interest Receivable . . . . . . . . . . . . . . . . S-29
Special Tax Counsel . . . . . . . . . . . . . . . . . . . . S-18
Specified Reserve Account Balance . . . . . . . . . . S-15, S-47
Subsequent Cut-Off Date . . . . . . . . . . . . . . . . . . . S-6
Subsequent Receivables . . . . . . . . . . . . . . . . S-2, S-6
Subsequent Transfer Date . . . . . . . . . . . . . . . . . . S-6
Supplemental Servicing Fee . . . . . . . . . . . . . . . . S-42
Swap Counterparty . . . . . . . . . . . . . . . . . . S-13, S-52
Swap Notional Amount . . . . . . . . . . . . . . . . . . . S-51
Transfer and Servicing Agreements . . . . . . . . . . . . . S-41
Trust . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-4
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . S-4
Trust Property . . . . . . . . . . . . . . . . . . . . . . . S-5
U.S. Person . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Underwriters . . . . . . . . . . . . . . . . . . . . . . . S-63
Yield Supplement Account . . . . . . . . . . . . . . S-16, S-50
Yield Supplement Agreement . . . . . . . . . . . . . . . . S-15
Yield Supplement Amount . . . . . . . . . . . . . . . S-16, S-50
Yield Supplement Initial Deposit . . . . . . . . . . . . . S-15
NO DEALER, SALESMAN OR OTHER $
PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE NationsBank
ANY REPRESENTATIONS OTHER THAN Auto Owner Trust 199 -
THOSE CONTAINED OR INCORPORATED $
BY REFERENCE IN THIS PROSPECTUS % Asset Backed
SUPPLEMENT OR THE PROSPECTUS Notes[, Class A-1]
AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS [$
MUST NOT BE RELIED UPON. THIS Floating Rate Asset
PROSPECTUS SUPPLEMENT AND THE Backed
PROSPECTUS DO NOT CONSTITUTE AN Notes, Class A-2]
OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY [$
SECURITIES OTHER THAN THE % Asset Backed
SECURITIES OFFERED HEREBY, NOR Notes, Class A-3]
AN OFFER OF THE SECURITIES IN
ANY STATE OR JURISDICTION IN $
WHICH, OR TO ANY PERSON TO % Asset Backed
WHOM, SUCH OFFER WOULD BE Certificates
UNLAWFUL. THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS AT ANY TIME DOES NOT NATIONSBANK, N.A.
IMPLY THAT INFORMATION HEREIN NATIONSBANK, N.A. (SOUTH)
OR THEREIN IS CORRECT AS OF ANY NATIONSBANK OF TEXAS,
TIME SUBSEQUENT TO ITS DATE. N.A.
____________________ SELLERS
NATIONSBANK, N.A.
TABLE OF CONTENTS
SERVICER
PAGE
PROSPECTUS SUPPLEMENTReports to
Securityholders . . . . . . S-2
Summary . . . . . . . . . . S-4
PROSPECTUS
Risk Factors . . . . . . S-20
SUPPLEMENT
The Trust . . . . . . . . S-24
The Receivables Pool . . S-25
Pool Factors . . . . . . S-35
Maturity and Prepayment
Considerations . . . . . S-35
Description of the Notes S-36
Description of the Certificates
S-39
Description of the Transfer and
Servicing Agreements . . S-41
Federal Income Tax Consequences
S-53
ERISA Considerations . . S-62
Underwriting . . . . . . S-62
Legal Opinions . . . . . S-64
Annex I Global Clearance,
Settlement and Tax
Documentation Procedures I-1
Index of Terms . . . . . . . i
PROSPECTUS
Reports to Securityholders. . 3
Available Information . . . . 3
Incorporation of Certain
Documents by Reference . . . 3
Summary . . . . . . . . . . . 5
Risk Factors . . . . . . . 16
The Trusts . . . . . . . . 23
The Receivables Pools . . . 24
Maturity and Prepayment
Considerations . . . . . . 27
Pool Factors and Trading
Information . . . . . . . 29
Use of Proceeds . . . . . . 29
The Banks, NationsBank
Corporation and [NB-SPC]. . 29
The Servicer . . . . . . . 30
Description of the Notes. . 30
Description of the
Certificates . . . . . . . 36
Description of Fixed and
Floating Rate Options . . . 37
Book-Entry and Definitive
Securities; Reports to
Securityholders . . . . . . 42
Description of the Transfer
and Servicing Agreements. . 47
Certain Legal Aspects of the
Receivables . . . . . . . . 60
Federal Income Tax
Consequences . . . . . . . . 64
ERISA Considerations .. . . 65
Plan of Distribution .. . . 70
Legal Opinions . . . .. . . 71
Index of Terms . . . .. . . 72
UNTIL , 199 (90 DAYS AFTER THE DATE OF THIS
PROSPECTUS SUPPLEMENT), ALL DEALERS EFFECTING TRANSAC-
TIONS IN THE NOTES OR THE CERTIFICATES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER
A PROSPECTUS SUPPLEMENT AND A PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
SUPPLEMENT AND A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
[FLAG]
The information contained herein is subject to completion or amendment.
A registration statement relating to these securities has been filed
with the Securities and Exchange Commission. These securities may not
be sold nor may offers to buy be accepted prior to the time the
registration statement becomes effective. This prospectus supplement
and the accompanying prospectus shall not constitute an offer to sell
or the solicitation of an offer to buy nor shall there be any sale of
these securities in any State in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under
the securities laws of any such State
SUBJECT TO COMPLETION, DATED _____ __, 1996
PROSPECTUS SUPPLEMENT
(To Prospectus dated , 1996)
$
NATIONSBANK AUTO GRANTOR TRUST 199_
$ % ASSET BACKED CERTIFICATES, CLASS A
[$ % ASSET BACKED CERTIFICATES, CLASS B]
[NationsBank Logo]
NATIONSBANK, N.A
NATIONSBANK, N.A. (SOUTH
NATIONSBANK OF TEXAS, N.A
SELLERS
NATIONSBANK, N.A
SERVICER
The NationsBank Auto Grantor Trust 199 - (the "Trust") will be
formed pursuant to a Pooling and Servicing Agreement (the "Agreement"),
to be dated as of , 199 , among NationsBank, N.A.,
NationsBank, N.A. (South) and NationsBank of Texas, N.A. (each, "Sell-
er" and collectively, the "Sellers"), NationsBank, N.A. (the
"Servicer") and , as Trustee, and will issue $
aggregate initial principal balance of % Asset Backed Certificates,
Class A (the "Class A Certificates") and $ aggregate initial
principal balance of % Asset Backed Certificates, Class B (the
"Class B Certificates" and, together with the Class A Certificates, the
"Certificates"). [Only the Class A Certificates are being offered
hereby.] The Class A Certificates will evidence in the aggregate an
undivided ownership interest of approximately % in the Trust. The
Class B Certificates will evidence in the aggregate an undivided
ownership interest of approximately % in the Trust. The rights of
the Class B Certificateholders to receive distributions with respect to
the Receivables are subordinated to the rights of the Class A Certifi-
cateholders to the extent described herein. The Trust property will
include a pool of fixed rate simple interest retail motor vehicle
installment sales contracts originated by Dealers and purchased by the
Sellers (the "Receivables") secured by security interests in the motor
vehicles financed thereby, including certain monies due or received
thereunder on , 199 (the "Cut-Off Date"), other than the portion
thereof payable to the Servicer as its Servicing Fee as described
herein and certain other property, as more fully described herein. See
"Summary The Trust Property" herein. [The Trustee also will hold
monies on deposit in a trust account (the "Pre-Funding Account").
Additional retail motor vehicle installment sales contracts (the
"Subsequent Receivables") will be purchased by the Trust from the
Seller from time to time on or before , 199 out of funds
on deposit in the Pre-Funding Account.] (Certain capitalized terms
used in this Prospectus Supplement are defined elsewhere in this
Prospectus Supplement on the pages indicated in the "Index of Terms.")
Principal and interest to the extent of the [applicable] Certifi-
cate Rate generally will be distributed on the day of each month
(the "Distribution Date"), commencing , 199 . The final
scheduled Distribution Date on the [Class A] Certificates will be
, 199 (the "Final Scheduled Distribution Date").
PROSPECTIVE INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE
INFORMATION SET FORTH IN "RISK FACTORS" ON PAGE S-__ HEREIN
AND ON PAGE OF THE ACCOMPANYING PROSPECTUS
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST
ONLY AND DO NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN, AND ARE NOT
GUARANTEED OR INSURED BY, NATIONSBANK, N.A., NATIONSBANK, N.A. (SOUTH),
NATIONSBANK OF TEXAS, N.A. OR NATIONSBANK CORPORATION
OR ANY OF THEIR RESPECTIVE AFFILIATES
A CERTIFICATE IS NOT A DEPOSIT AND NEITHER THE CERTIFICATES NOR THE
RECEIVABLES ARE INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER 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
PROCEEDS TO
PRICE TO UNDERWRITING THE SELLER
PUBLIC (1) DISCOUNT (1)(2)
Per Class A Certificate
% % %
[Per Class B Certificate % % %
Total . . . . . . . . . $ $ $]
(1) Plus accrued interest, if any, from , 199 .
(2) Before deducting expenses, estimated to be $ .
The [Class A] Certificates are offered by the Underwriters when,
as and if issued and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that
delivery of the [Class A] Certificates will be made in book-entry form
only through the Same Day Funds Settlement System of The Depository
Trust Company, or through Cedel Bank, societe anonyme or the Euroclear
System on or about the Closing Date.The date of this Prospectus Supple-
ment is , 199 .
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFOR-
MATION ABOUT THE OFFERING OF THE [CLASS A] CERTIFICATES. ADDI-
TIONAL 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 [CLASS A] CERTIFICATES MAY
NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY
OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICES OF THE [CLASS A] CERTIFICATES AT LEVELS ABOVE THOSE
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZ-
ING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
REPORTS TO CERTIFICATEHOLDERS
Unless and until Definitive Certificates are issued, monthly
and annual unaudited reports containing information concerning
the Receivables will be prepared by the Servicer and sent on
behalf of the Trust only to Cede & Co. ("Cede"), as nominee of
The Depository Trust Company ("DTC") and registered holder of the
[Class A] Certificates. See "Book-Entry and Definitive Securi-
ties Book-Entry Registration" and " Reports to Securityholders"
in the accompanying Prospectus (the "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 (the "Exchange Act"), and the rules and regulations of
the Commission thereunder.
<R/>
The Sellers have filed with the Commission, on behalf of the
Trust, a Registration Statement under the Securities Act of 1933,
as amended (the "Securities Act"), with respect to the Certifi-
cates offered pursuant to this Prospectus. For further informa-
tion, reference is made to such Registration Statement, and the
exhibits thereto, which are available for inspection without
charge at the public reference facilities of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, as well as the
Midwest Regional Offices of the Commission at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511, and at the
Northeast Regional Office of the Commission at 7 World Trade
Center, Suite 1300, New York, New York 10048. Copies of such
information can be obtained from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. In addition, the Commission maintains a
public access site on the Internet through a World Wide Web at
which reports, information statements and other information,
including all electronic filings, regarding the Sellers and
NationsBank Corporation, the parent corporation of each of the
Sellers, may be viewed. The Internet address of such World Wide
Web site is http://www.sec.gov. See "Available Information" in
the Prospectus. The Servicer, on behalf of the Trust, will also
file or cause to be filed with the Commission such periodic
reports as may be required under the Exchange Act, and the rules
and regulations of the Commission thereunder.
<R/>
SUMMARY
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.
ISSUER . . . . . NationsBank Auto Grantor Trust 199 - (the
"Trust" or the "Issuer"), a trust to be
formed by the Sellers and the Trustee pur-
suant to the Agreement.
SELLERS . . . . . NationsBank, N.A., NationsBank, N.A. (South)
("NationsBank South"), and NationsBank of
Texas, N.A. ("NationsBank Texas") (each a
"Seller" and a "Bank" and, collectively,
the "Sellers" and the "Banks").
SERVICER . . . . NationsBank, N.A., in its capacity as
servicer (the "Servicer").
TRUSTEE . . . . . , a , as trustee under
the Agreement (the "Trustee").
COLLATERAL AGENT , a , in its capacity
as collateral agent (the "Collateral
Agent").
THE TRUST PROPERTY The property of the Trust (the "Trust Prop-
erty") includes a pool of fixed rate
simple interest retail motor vehicle
installment sales contracts purchased by
the Sellers from motor vehicle dealers
(the "Dealers") that provide for the
allocation of payments between principal
and interest according to the simple
interest method (collectively, the "Re-
ceivables"), all monies received under
the [Initial] Receivables after the
close of business of the Servicer on
, 1996 (the "[Initial] Cut-Off
Date") [and all monies received under
the Subsequent Receivables after the
close of business of the Servicer on
each applicable Subsequent Transfer
Date] and will also include: (i) such
amounts as from time to time are on
deposit in one or more accounts main-
tained pursuant to the Pooling and Ser-
vicing Agreement to be dated as of
, 199_ (as amended and supplemented from
time to time, the "Agreement") among the
Banks, as Sellers, the Servicer, the
Trustee and the Collateral Agent, as
described herein[, including the Yield
Supplement Account][and the Pre-Funding
Account]; (ii) security interests in the
new and used automobiles, vans and
light-duty trucks financed thereby (col-
lectively, the "Financed Vehicles") and
any accessions thereto; (iii) the
Sellers' rights (if any) to receive
proceeds from claims under certain in-
surance policies covering the Financed
Vehicles or the obligors under the Re-
ceivables (each, an "Obligor"), as the
case may be; (iv) certain rights of the
Trust to receive payments from the Re-
serve Account [and pursuant to the Yield
Supplement Agreement] as described be-
low; (v) any property that shall have
secured a Receivable and shall have been
acquired by the Trust; (vi) each
Seller's rights relating to the repur-
chase of Receivables under agreements
between each Seller and the Dealers that
sold the Financed Vehicles to the
Obligors and any assignments and other
documents related thereto (collectively,
the "Dealer Agreements") and under the
documents and instruments contained in
the Receivable Files; (vii) certain
rebates of premiums and other amounts
relating to certain insurance policies
and other items financed under the Re-
ceivables; (viii) all other rights of
the Trust under the Agreement; and (ix)
any and all proceeds of the foregoing.
The Reserve Account [and the Yield Sup-
plement Account,] and any amounts there-
in, will not be property of the Trust,
but such accounts will be pledged to and
held by ________ acting in its capacity
as property-holding agent for the bene-
fit of the Certificateholders (the "Col-
lateral Agent").
THE CERTIFICATES The Trust will issue Asset Backed Certifi-
cates (the "Certificates") in an aggregate
initial balance of $ . The Cer-
tificates represent fractional undivided
interests in the Trust and will be issued
pursuant to the Agreement.
The Certificates will consist of $
aggregate initial principal amount
of % Asset Backed Certificates, Class
A (the "Class A Certificates") [and $
aggregate initial principal amount
of % Asset Backed Certificates, Class
B (the "Class B Certificates")]. [Only the
Class A Certificates are being offered
hereby.] Each Certificate will represent a
fractional undivided ownership interest in
the Trust.
The [Class A] Certificates will be available
for purchase in book entry form only in
minimum denominations of $1,000 and inte-
gral multiples thereof. The [Class A] Cer-
tificateholders will not be entitled to
receive Definitive Certificates except in
the limited circumstances described herein.
See "Book-Entry and Definitive Securities;
Reports to Securityholders Definitive Secu-
rities" in the Prospectus.
<R/>
[The Class A Certificates will evidence in
the aggregate an undivided ownership inter-
est (the "Class A Percentage") of approxi-
mately % in the Trust (initially rep-
resenting $ ) and the Class B
Certificates will evidence in the aggregate
an undivided ownership interest (the "Class
B Percentage") of approximately % in
the Trust (initially representing $
). The Class B Certificates are subor-
dinated to the Class A Certificates to the
extent described herein.] [The Class B
Certificates are not being offered hereby.]
REGISTRATION OF
CERTIFICATES . . Except in certain limited circumstances, the
Certificates will be available only in
book-entry form and will each be represent-
ed initially by global certificates regis-
tered in the name of Cede & Co. ("Cede"),
as nominee of The Depository Trust Company
("DTC")(for Certificates held in the United
States), [Cedel Bank, societe anonyme
("Cedel") or the Euroclear System
("Euroclear")(for Certificates held in Eu-
rope). No person acquiring a beneficial
ownership interest in the Certificates (a
"Certificate Owner") will be entitled to
receive a Definitive Certificate represent-
ing such person's interest in the Trust
except under certain limited circumstances.
Under the terms of the Agreement, Certifi-
cate Owners will not be recognized as Cer-
tificateholders and will be permitted to
exercise the rights of the Certificatehold-
ers only indirectly through DTC. See "Risk
Factors Form of Certificates; Certificate
Owners Not Recognized as Certificatehold-
ers" and "Description of the Certificates
Book-Entry Registration," " Definitive
Certificates" and Annex I to this Prospec-
tus Supplement, "Global Clearance, Settle-
ment and Tax Documentation Procedures."
THE RECEIVABLES . On , 199 (the "Closing Date"), the
Trust will purchase Receivables (the "[Ini-
tial] Receivables") having an aggregate
principal balance of approximately $
as of , 199 (the "[Initial]
Cut-Off Date"), from the Sellers pursuant
to the Agreement. As of the [Initial] Cut-
Off Date, the weighted average annual per-
centage rate of the [Initial] Receivables
was approximately %, the weighted av-
erage remaining maturity of the [Initial]
Receivables was approximately months and
the weighted average original maturity of
the [Initial] Receivables was approximately
months.
[On and following the Closing Date, pursuant
to the Agreement, the Sellers will be obli-
gated, subject only to the availability
thereof, to sell, and the Trust will be
obligated to purchase, subject to the sat-
isfaction of certain conditions set forth
therein, additional Receivables (the "Sub-
sequent Receivables") from time to time
during the Funding Period having an aggre-
gate principal balance equal to approxi-
mately $ (such amount being
equal to an amount on deposit in the
Pre-Funding Account (the "Pre-Funded
Amount") on the Closing Date). The Sellers
will designate as a Cut-Off Date (each a
"Subsequent Cut-Off Date") the date as of
which Subsequent Receivables are conveyed
to the Trust. It is expected that certain
of the Subsequent Receivables arising be-
tween the Initial Cut-Off Date and the
Closing Date will be conveyed to the Trust
on the Closing Date and that other Subse-
quent Receivables will be conveyed to the
Trust as frequently as daily thereafter on
dates specified by the Sellers (each date
on which Subsequent Receivables are con-
veyed to the Trust being referred to as a
"Subsequent Transfer Date") occurring dur-
ing the Funding Period. See "Description
of the Certificates Sale and Assignment of
Receivables; Subsequent Receivables" here-
in.]
The [Initial] Receivables [and the Subsequent
Receivables] arise or will arise from loans
originated by Dealers and purchased by the
Sellers pursuant to Dealer Agreements. The
[Initial] Receivables have been selected[,
and the Subsequent Receivables will be se-
lected,] from the contracts owned by Sell-
ers based on the criteria specified in the
Agreement and described herein and in the
Prospectus. No Initial Receivable has[,
and no Subsequent Receivable will have,] a
scheduled maturity later than _______ (the
"Final Scheduled Maturity Date").
[Subsequent Receivables may be originated by
the Dealers and purchased by the Sellers at
a later date using credit criteria differ-
ent from those which were applied to the
Initial Receivables and may be of a differ-
ent credit quality and seasoning. In addi-
tion, following the transfer of Subsequent
Receivables to the Trust, the characteris-
tics of the entire pool of Receivables in-
cluded in the Trust may vary significantly
from those of the Initial Receivables. See
"Risk Factors The Subsequent Receivables
and the Pre-Funding Account" and "The Re-
ceivables Pool" herein.]
The "Pool[/Pre-Funding] Balance" at any time
[will represent] [is the sum of (i)] the
aggregate principal balance of the Receiv-
ables at the end of the preceding Collec-
tion Period, after giving effect to all
payments received from Obligors, Liquida-
tion Proceeds and Purchase Amounts to be
remitted by the Servicer or the Sellers, as
the case may be, all for such Collection
Period and all Realized Losses during such
Collection Period [(such amount, the "Pool
Balance") and (ii) the amount on deposit in
the Pre-Funding Account (excluding any In-
vestment Earnings)].
DISTRIBUTION DATES Distributions with respect to the Certifi-
cates will be made on the day of
each month or, if any such day is not a
Business Day, on the next succeeding
Business Day (each, a "Distribution
Date") commencing , 199 .
Distributions will be made to holders of
the [Class A] Certificates (the "[Class
A] Certificateholders") of record as of
the day immediately preceding such Dis-
tribution Date or, if Definitive Certif-
icates are issued, as of the day of
the preceding month (a "Record Date").
A "Business Day" is a day that in The
City of New York or in the city in which
the corporate trust office of the Trust-
ee is located is neither a legal holiday
nor a day on which banking institutions
are authorized by law, regulation or
executive order to be closed.
CERTIFICATE RATE % per annum with respect to the Class A
certificates (the "[Class A] Certificate
Rate"), [and % per annum with respect to
the Class B Certificates (the "[Class B]
Certificate Rate"), in each case] calculated
on the basis of a 360-day year consisting of
twelve 30-day months. [The Class A Certifi-
cate Rate and the Class B Certificate Rate
are both sometimes referred to as the appli-
cable "Pass-Through Rate."]
INTEREST . . . . On each Distribution Date, interest at one-
twelfth of the applicable Pass-Through Rate,
calculated on the basis of a 360-day year
consisting of twelve 30-day months, on the
Class A Certificate Balance [and the Class B
Certificate Balance, respectively, in each
case] as of the preceding Distribution Date
(after giving effect to all payments of prin-
cipal made on such preceding Distribution
Date) or, in the case of the first Distribu-
tion Date, as of the Closing Date, will be
distributed to the registered holders of the
Class A Certificates (the "Class A Certifi-
cateholders") [and the registered holders of
the Class B Certificates (the "Class B Cer-
tificateholders" and, together with the Class
A Certificateholders,] the "Certificatehold-
ers") as of the day immediately preceding
such Distribution Date (or, if Definitive
Certificates are issued, the last day of the
related Collection Period) (in each case, the
"Record Date"), to the extent that sufficient
funds are on deposit in the Certificate Ac-
count or available in the Reserve Account to
make such distribution. A "Collection Period"
means the calendar month preceding each Dis-
tribution Date. See "Description of the Cer-
tificates Distributions on Certificates"
and " Reserve Account." [The rights of the
Class B Certificateholders to receive distri-
butions of interest will be subordinated to
the rights of the Class A Certificateholders
to receive distributions of interest to the
extent described herein. See "Risk Factors
Limited Assets" and " Subordination of Class
B Certificates."]
PRINCIPAL . . . . On each Distribution Date, as described more
fully herein, all payments of principal on
the Receivables received by the Servicer
during the preceding Collection Period, plus
an amount equal to the principal balance of
any Receivables which became Defaulted Re-
ceivables during the preceding Collection
Period, will be distributed by the Trustee to
the Class A Certificateholders [and to the
Class B Certificateholders] of record on the
preceding Record Date, to the extent that
sufficient funds are available therefor on
deposit in the Certificate Account or avail-
able in the Reserve Account to make such
distribution. See "The Certificates Distri-
butions on Certificates" and " Reserve Ac-
count." [The rights of the Class B Certifi-
cateholders to receive distributions of prin-
cipal will be subordinated to the rights of
the Class A Certificateholders to receive
distributions of interest and principal to
the extent described herein.]
[SUBORDINATION OF CLASS
B CERTIFICATES . Distributions of interest on the Class B
Certificates will be subordinated in prior-
ity of payment to distributions of interest
(but not principal) due on the Class A Cer-
tificates, and distributions of principal
on the Class B Certificates will be subor-
dinated in priority of payment to distribu-
tions of interest and principal due on the
Class A Certificates, in the event of de-
faults on the Receivables to the extent
described herein. The Class B Certificate-
holders will not receive any distributions
of interest with respect to a Collection
Period until the full amount of interest on
the Class A Certificates relating to such
Collection Period has been deposited in the
Distribution Account. The Class B Certifi-
cateholders will not receive any distribu-
tions of principal with respect to a Col-
lection Period until the full amount of
interest on and principal of the Class A
Certificates relating to such Collection
Period has been deposited in the Distribu-
tion Account. See "Risk Factors Limited
Assets" and " Subordination of the Class B
Certificates" herein.]
OPTIONAL PURCHASE If the Servicer exercises its option to pur-
chase the Receivables, which can occur af-
ter the Pool Balance declines to 5% or less
of the Initial Pool Balance, the Class A
Certificateholders will receive an amount
equal to the Class A Certificate Balance
together with accrued interest at the
[Class A] Certificate Rate, [the Class B
Certificateholders will receive and amount
equal to the Class B Certificate Balance
together with accrued interest at the Class
B Certificate Rate] and the [Class A] Cer-
tificates will be retired. The "Initial
Pool Balance" will equal [the sum of (i)]
the Pool Balance as of the [Initial] Cut-
Off Date [plus (ii) the aggregate principal
balances of all Subsequent Receivables add-
ed to the Trust as of their respective Sub-
sequent Cut-Off Dates]. See "Description
of the Certificates Optional Purchase"
herein.
[MANDATORY REPURCHASE FROM
PRE-FUNDING ACCOUNT The [Class A] Certificates will be prepaid,
in part, on the Distribution Date on or
immediately following the last day of
the Funding Period in the event that any
amount remains on deposit in the
Pre-Funding Account after giving effect
to the purchase of all Subsequent Re-
ceivables, including any such purchase
on such date (a "Mandatory Repurchase").
The aggregate principal balance of
[Class A] Certificates to be prepaid
will be an amount equal to the amount
then on deposit in the Pre-Funding Ac-
count.
A limited recourse mandatory prepayment pre-
mium (the "Certificate Prepayment Premium")
will be payable by the Trust to the [Class
A] Certificateholders if the aggregate
principal balance of [Class A] Certificates
to be prepaid pursuant to a Mandatory Re-
purchase exceeds $ . The Certifi-
cate Prepayment Premium will equal the ex-
cess, if any, discounted as described be-
low, of (i) the amount of interest that
would accrue on the remaining Pre-Funded
Amount (the "Certificate Prepayment
Amount") at the related Certificate Rate
during the period commencing on and includ-
ing the Distribution Date on which such
Certificate Prepayment Amount is required
to be distributed to Certificateholders to
but excluding , over (ii) the
amount of interest that would have accrued
on such Certificate Prepayment Amount over
the same period at a per annum rate of in-
terest equal to the bond equivalent yield
to maturity on the Determination Date pre-
ceding such Distribution Date on the
, in the case of a Class A Certificate,
and on the , in the case of a Class
B Certificate. Such excess shall be dis-
counted to present value to such Distribu-
tion Date at the applicable yield described
in clause (ii) above. Pursuant to the
Agreement, the Sellers will be obligated to
pay the Certificate Prepayment Premium to
the Trust as liquidated damages for the
failure to deliver Subsequent Receivables
having an aggregate principal balance equal
to the Pre-Funded Amount. The Trust's ob-
ligation to pay the Certificate Prepayment
Premium will be limited to funds received
from the Sellers pursuant to the preceding
sentence. In the event that such funds are
insufficient to pay the aggregate Certifi-
cate Prepayment Premium in full, [Class A]
Certificateholders [of each class of Cer-
tificates] will receive their ratable share
[(based upon the Certificate Prepayment
Premium for each class of Certificates)] of
the aggregate amount available to be dis-
tributed in respect of the Certificate Pre-
payment Premium. No other assets of the
Trust will be available for the purpose of
making such payment.]
[PRE-FUNDING ACCOUNT During the period (the "Funding Period")
from and including the Closing Date
until the earliest of (i) the date
on which (a) the amount on deposit
in the Pre-Funding Account is less
than $ , (b) an Event of
Default occurs under the Agreement
or (c) certain events of insolvency
occur with respect to any of the
Sellers or the Servicer or (ii) the
close of business on the
Distribution Date, the Pre-Funded
Amount will be maintained as an
account in the name of the Trustee
(the "Pre-Funding Account"). The
Pre-Funded Amount will initially
equal approximately $ ,
and, during the Funding Period,
will be reduced by the amount
thereof used to purchase Subsequent
Receivables in accordance with the
Agreement and the amount thereof
deposited in the Reserve Account in
connection with the purchase of
such Subsequent Receivables. The
Sellers expect that the Pre-Funded
Amount will be reduced to less than
$ by the Distri-
bution Date. Any Pre-Funded Amount
remaining at the end of the Funding
Period will be payable to the Cer-
tificateholders pro rata in propor-
tion to their initial principal
balances.]
[YIELD SUPPLEMENT ACCOUNT;
YIELD SUPPLEMENT
AGREEMENT . . . . If any Receivable has, as of the Cutoff Date,
a Contract Rate below the sum of (i) the
weighted average of the Certificate Rates
and (ii) the Servicing Fee Rate (the "Re-
quired Rate"), the Sellers, the Servicer
and the Trustee will enter into a yield
supplement agreement (the "Yield Supplement
Agreement"). The Yield Supplement Agree-
ment will, with respect to each Receivable
subject thereto, provide for payment by the
applicable Seller, on the each Deposit
Date, of an amount calculated by the
Servicer to be equal to one-twelfth of the
excess, if any, of (i) interest on such
Receivable's principal balance as of the
first day of the preceding Collection Peri-
od at a rate equal to the Required Rate
over (ii) interest at the Contract Rate on
such Receivable's principal balance as of
the first day of the related Collection
Period (in the aggregate for all Receiv-
ables with respect to any Deposit Date, the
"Yield Supplement Amount"). The Sellers
will establish a yield supplement account
with ____________ (the "Collateral Agent")
for the benefit of the Certificateholders
(the "Yield Supplement Account"). The
Yield Supplement Account is designed solely
to hold funds to provide security for the
payment by the Sellers of the Yield Supple-
ment Amount on any Deposit Date. The Yield
Supplement Account will be created with a
deposit by the Sellers in an amount equal
to the Required [Initial] Yield Supplement
Amount.
[Pursuant to the Yield Supplement Agreement,
on each Subsequent Transfer Date, the Sell-
ers will deposit an amount into the Yield
Supplement Account (the "Additional Yield
Supplement Amount") equal to the aggregate
Yield Supplement Amounts in respect of the
such Subsequent Receivable for the period
commencing with the related Subsequent Cut-
Off Date and ending with the scheduled ma-
turity of each such Subsequent Receivable,
assuming that payments on such Receivables
are made as scheduled and no prepayments
are made. See "Description of the Certifi-
cates Yield Supplement Account; Yield Sup-
plement Agreement" herein.]]
RESERVE ACCOUNT . A reserve account (the "Reserve Account")
will be established by the Sellers and
maintained by the Collateral Agent with an
initial deposit (the "Reserve Account Ini-
tial Deposit") of cash of at least $
[plus an amount attributable to the differ-
ence between the anticipated investment
earnings on the Pre-Funded Amount and the
weighted average interest expense on the
portion of the Certificates represented by
the Pre-Funded Amount]. [On each Subse-
quent Transfer Date, cash or Permitted In-
vestments having a value approximately
equal to % of the aggregate principal
balance of the Subsequent Receivables con-
veyed to the Trust on such Subsequent
Transfer Date will be withdrawn from the
Pre-Funding Account from amounts otherwise
distributable to the Sellers in connection
with the sale of Subsequent Receivables and
shall be deposited in the Reserve Account.
The aggregate amount transferred from the
Pre-Funding Account to the Reserve Account
on each Subsequent Transfer Date is re-
ferred to as the "Additional Reserve Ac-
count Deposit."] On each Distribution Date,
any amounts on deposit in the Certificate
Account with respect to the related Collec-
tion Period after all payments to the Cer-
tificateholders and the Servicer have been
made will be deposited into the Reserve
Account until the amount on deposit in the
Reserve Account is equal to the Specified
Reserve Account Balance.
On each Distribution Date, the Collateral
Agent will withdraw funds from the Reserve
Account, to the extent of the funds therein
(exclusive of any investment earnings on
such funds), [(i) first to reimburse the
Servicer for certain Advances previously
made but not reimbursed ("Outstanding Ad-
vances") and (ii) second] to make available
to Certificateholders the excess, if any,
of (x) the sum of the amounts required to
be distributed to Certificateholders and
the Servicer on the related Distribution
Date over (y) the amount to be deposited in
the Certificate Account with respect to the
preceding Collection Period (exclusive of
investment earnings thereon). If the amount
in the Reserve Account is reduced to zero,
Certificateholders will bear directly the
credit and other risks associated with own-
ership of the Receivables, including the
risk that the Trust may not have a perfect-
ed security interest in the Financed Vehi-
cles. See "Risk Factors" herein and in the
Prospectus, "The Certificates Reserve
Account" herein and "Certain Legal Aspects
of the Receivables; Repurchase Obligations"
in the Prospectus.
SPECIFIED RESERVE ACCOUNT
BALANCE . . . . On any Distribution Date, the "Specified
Reserve Account Balance" will equal % (or
% under certain circumstances described
herein) of the Pool Balance as of the last
day of the preceding Collection Period, but
in any event not less than the lesser of
(i) $ and (ii) the sum of the
Pool Balance and an amount sufficient to
pay interest on such Pool Balance at a rate
equal to the weighted average Pass-Through
Rate plus the Servicing Fee Rate through
the Final Scheduled Distribution Date. The
Specified Reserve Account Balance may be
reduced to a lesser amount as determined by
the Sellers, provided that each Rating
Agency shall have confirmed in writing that
such action will not result in a withdrawal
or reduction in its rating of the Certifi-
cates (the "Rating Agency Condition").
Amounts in the Reserve Account on any Dis-
tribution Date (after giving effect to all
distributions made on that date) in excess
of the Specified Reserve Account Balance
will be paid to the Servicer on behalf of
the Sellers.
SERVICER FEE . . The Servicer will receive each month a fee
for servicing the Receivables equal to (a)
the product of one-twelfth of [1.00]% (the
"Servicing Fee Rate") and the Pool Balance
outstanding at the beginning of the previ-
ous month, plus (b) any late, prepayment,
and other administrative fees and expenses
collected during such month [plus reinvest-
ment proceeds on any payments received in
respect of the Receivables].
PREPAYMENT
CONSIDERATIONS The weighted average life of the Certificates
may be reduced by full or partial prepay-
ments on the Receivables. The Receivables
are prepayable at any time. Prepayments may
also result from liquidations due to de-
fault, the receipt of monthly installments
earlier than the scheduled due dates for
such installments, the receipt of proceeds
from credit life, credit disability, theft
or physical damage insurance, repurchases
by the Sellers as a result of certain un-
cured breaches of the warranties made by
them in the Agreement with respect to the
Receivables, purchases by the Servicer as a
result of certain uncured breaches of the
covenants made by it in the Agreement with
respect to the Receivables, or the Servicer
exercising its option to purchase all of
the remaining Receivables. The rate of pre-
payments on the Receivables may be influ-
enced by a variety of economic, social and
other factors, including Obligor
refinancings resulting from decreases in
interest rates and the fact that the Obli-
gor is generally not permitted to sell or
transfer the Financed Vehicle securing a
Receivable without the consent of the rele-
vant Seller. No prediction can be made as
to the actual prepayment rates which will
be experienced on the Receivables. If pre-
payments were to occur after a decline in
interest rates, investors seeking to rein-
vest their distributed funds might be re-
quired to invest at a rate of return lower
than the applicable Pass-Through Rate. Cer-
tificate Owners will bear all reinvestment
risk resulting from prepayment of the Re-
ceivables. See "Risk Factors Effects of
Prepayments of Receivables" herein and "Ma-
turity and Prepayment Considerations" here-
in.
CLEARANCE AND SETTLEMENT [Class A] Certificateholders may
elect to hold their [Class A]
Certificates through any of
DTC (in the United States) or
Cedel or Euroclear (in Eu-
rope). Transfers within DTC,
Cedel or Euroclear, as the
case may be, will be in accor-
dance with the usual rules and
operation procedures of the
relevant system. Cross-market
transfers between persons
holding directly or indirectly
through DTC, on the one hand,
and counterparties holding
directly or indirectly through
Cedel or Euroclear, on the
other, will be effected in DTC
through the relevant Deposi-
taries of Cedel or Euroclear.
See "Book-Entry and Definitive
Securities; Reports to
Securityholders Book-Entry
Registration" in the Prospec-
tus and Annex I to this Pro-
spectus Supplement, "Global
Clearance, Settlement and Tax
Documentation Procedures."
TAX STATUS . . . In the opinion of [Skadden, Arps, Slate,
Meagher & Flom, special tax counsel to the
Sellers] ("Special Tax Counsel"), the Trust
will be treated as a grantor trust for fed-
eral income tax purposes and will not be
subject to federal income tax. Certificate
Owners will report their pro rata share of
all income earned on the Receivables (other
than amounts, if any, treated as "stripped
coupons") and, subject to certain limita-
tions in the case of Certificate Owners who
are individuals, trusts, or estates, may
deduct their pro rata share of reasonable
servicing and other fees paid or incurred
by the Trust. See "Federal Income Tax Con-
sequences" herein and in the Prospectus for
additional information concerning the ap-
plication of federal income tax laws, re-
spectively, to the Trust and the Certifi-
cates.
ERISA CONSIDERATIONS The Class A Certificates may, in gener-
al, be purchased by employee bene-
fit plans that are subject to the
Employee Retirement Income Security
Act of 1974, as amended ("ERISA"),
upon satisfaction of certain condi-
tions described under "ERISA Con-
siderations" herein and in the
Prospectus with respect to the
Exemption. [However, as set forth
in "ERISA Considerations" in the
Prospectus, certain special consid-
erations may apply with respect to
the Pre-Funding Account.]
[The Exemption does not apply to the Class B
Certificates, which may be purchased by
employee benefit plans subject to ERISA
only if some other statutory or administra-
tive exemption from the prohibited transac-
tion rules of ERISA and the Internal Reve-
nue Code of 1986, as amended (the "Code")
applies to such purchases. These exemp-
tions may apply with respect to, inter
alia, purchases by certain insurance compa-
ny general accounts, insurance company
pooled separate accounts, and bank collec-
tive investment funds, and on behalf of
employee benefit plans by certain qualified
professional asset managers.]
Any benefit plan fiduciary considering a
purchase of [Class A] Certificates should,
among other things, consult with legal
counsel in determining whether all required
conditions with respect to the various ex-
emptions have been satisfied. See "ERISA
Considerations" herein and in the Prospec-
tus.
RATINGS OF THE CERTIFICATES
It is a condition to the issuance of
the Class A Certificates that they be
rated in the highest investment rating catego-
ry by at least two nationally recognized rat-
ing agencies[, and it is a condition to the issu-
ance of the Class B Certificates that they be
rated by at least two nationally recognized
rating agencies [at least] " " or its
equivalent]. [However, the rating agencies do
not evaluate, and the ratings do not address,
the likelihood that the Certificate Prepayment
Premium will be paid.] There can be no assurance
that a rating will not be lowered or withdrawn by a
rating agency if circumstances so warrant.
RISK FACTORS . . Prospective investors should consider the
factors set forth under "Risk Factors" on
pages S-__ through S-__.
RISK FACTORS
LIMITED LIQUIDITY
There is currently no secondary market for the Class A
Certificates [or the Class B Certificates]. The Underwriters
currently intend to make a market in the Class A Certificates
[and the Class B Certificates], but they are 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 [Class A] Certificateholders with liquidity of
investment or that it will continue for the life of the Class A
Certificates [or the Class B Certificates].
[THE SUBSEQUENT RECEIVABLES AND THE PRE-FUNDING ACCOUNT
On the Closing Date, the Sellers will transfer to the Trust
the approximately $ of Initial Receivables and approxi-
mately $ Pre-Funded Amount on deposit in the Pre-Funding
Account. If the principal balance of eligible Receivables
originated by the Sellers during the Funding Period is less than
the Pre-Funded Amount, the Sellers will have insufficient Receiv-
ables to sell to the Trust on the Subsequent Transfer Dates,
thereby resulting in a prepayment of principal to the Certifi-
cateholders as described in the following paragraph. See "Risk
Factors Trust's Relationship to Sellers, NationsBank Corporation
and their Affiliates" in the Prospectus. In addition, any
conveyance of Subsequent Receivables is subject to the satisfac-
tion, on or before the related Subsequent Transfer Date, of the
following conditions precedent, among others: (i) each such
Subsequent Receivable must satisfy the eligibility criteria
specified in the Agreement; (ii) the Sellers will not select such
Subsequent Receivables in a manner believed by the Sellers to be
adverse to the interests of the Certificateholders; (iii) as of
the related Subsequent Cut-Off Date, the Receivables in the Trust
at that time, including the Subsequent Receivables to be conveyed
by the Sellers as of such Subsequent Cut-Off Date, will satisfy
the parameters described under "The Receivables Pool" herein and
under "The Receivables Pools" in the Prospectus; (iv) the appli-
cable Additional Reserve Account Deposit [and any applicable
Additional Yield Supplement Amount] for such Subsequent Transfer
Date shall have been made; and (v) the Sellers shall have execut-
ed and delivered to the Trustee a written assignment conveying
such Subsequent Receivables to the Trustee (including a schedule
identifying such Subsequent Receivables). Moreover, any such
conveyance of Subsequent Receivables made during any given
Collection Period will also be subject to the satisfaction, on or
about the fifteenth day of the month following the end of such
Collection Period, of the following conditions subsequent, among
others: (a) the Sellers will deliver certain opinions of counsel
to the Trustee and the Rating Agencies with respect to the
validity of the conveyance of all such Subsequent Receivables
conveyed during such Collection Period; (b) the Trustee shall
have received written confirmation from a firm of independent
certified public accountants that, as of the end of the preceding
Collection Period, the Receivables in the Trust at that time,
including the Subsequent Receivables conveyed by the Sellers
during such Collection Period, satisfied the parameters described
under "The Receivables Pool" herein and under "The Receivables
Pools" in the Prospectus; and (c) the Rating Agencies shall have
each notified the Sellers in writing that, following the addition
of all such Subsequent Receivables, the Certificates will be
rated by the Rating Agencies in the same respective rating
categories in which they were rated on the Closing Date. The
Sellers will immediately repurchase any Subsequent Receivable, at
a price equal to the Purchase Amount thereof, upon the failure of
the Sellers to satisfy any of the foregoing conditions subsequent
with respect thereto. Such confirmation of the ratings of the
Certificates may depend on factors other than the characteristics
of the Subsequent Receivables, including the delinquency, repos-
session and net loss experience on the automobile, van and light
truck receivables in the portfolio serviced by the Servicer.
To the extent that amounts on deposit in the Pre-Funding
Account have not been fully applied to the conveyance of Subse-
quent Receivables to the Trust by the end of the Funding Period,
the Certificateholders will receive, on the Distribution Date on
or immediately following the last day of the Funding Period, a
prepayment of principal in an amount equal to the Pre-Funded
Amount remaining in the Pre-Funding Account following the pur-
chase of any Subsequent Receivables on such Distribution Date.
It is anticipated that the principal balance of Subsequent
Receivables sold to the Trust will not be exactly equal to the
amount on deposit in the Pre-Funding Account and that therefore
there will be at least a nominal amount of principal prepaid to
the Certificateholders.
Each Subsequent Receivable must satisfy the eligibility
criteria specified in the Agreement and any additional criteria
specified by the Rating Agencies at the time of its addition.
However, Subsequent Receivables may have been originated by the
Sellers at a later date using credit criteria different from
those which were applied to the Initial Receivables and may be of
a different credit quality and seasoning. [In addition, an
increasing percentage of the Subsequent Receivables may be
Balloon Receivables.] Therefore, following the transfer of
Subsequent Receivables to the Trust, the characteristics of the
entire Receivables Pool included in the Trust may vary signifi-
cantly from those of the Initial Receivables. See "The Receiv-
ables Pool" herein and "The Receivables Pools" in the Prospectus.
The ability of the Sellers to generate Subsequent Receivables is
largely dependent upon the Sellers' ability to offer competitive
rates of interest on motor vehicle installment sales contracts to
be acquired by the Sellers. In addition, the number of Dealers
from which the Sellers acquire motor vehicle installment sales
contracts may effect the Sellers' ability to generate Subsequent
Receivables. In addition, the level of retail sales of automo-
biles, vans and light-duty trucks may change as a result of a
variety of social and economic factors. Economic factors include
interest rates, unemployment levels, the rate of inflation and
consumer perceptions of economic conditions generally. There can
be no assurance, therefore, that the Sellers will be able to
generate receivables at the same rate as in prior years. The
Sellers are unable to determine and have no basis to predict to
what extent these factors will affect the Sellers' ability to
generate Subsequent Receivables.
LIMITED ASSETS
The Trust will not have, nor is it permitted or expected to
have, any significant assets or sources of funds other than the
Receivables[, the Pre-Funding Account] [, the Yield Supplement
Account] and the Reserve Account. Holders of the Certificates
must rely for repayment upon payments on the Receivables and, if
and to the extent available, amounts on deposit in the
[Pre-Funding Account[, the Yield Supplement Account] and the]
Reserve Account. [The Pre-Funding Account will be available only
during the Funding Period and is designed solely to cover obliga-
tions of the Trust relating to a portion of its funds not invest-
ed in Receivables and is not designed to cover losses on the
Receivables.] [The Yield Supplement Account is designed solely
to hold funds to be applied to provide payments to the Certifi-
cateholders in respect of Receivables the Contract Rate of which
is less than the Required Rate.] Funds in the Reserve Account
will be available on each Distribution Date to cover shortfalls
in distributions of interest and principal on the Certificates.
However, amounts to be deposited in the [Pre-Funding Account[,
the Yield Supplement Account] and the] Reserve Account are
limited in amount. If the [Pre-Funding Account[, the Yield
Supplement Account] and the] Reserve Account is [are] exhausted[,
and in the case of the Reserve Account,] and not replenished, the
Trust will depend solely on current distributions on the Receiv-
ables to make distributions on the Certificates, and Certificate-
holders will bear directly, without any additional credit en-
hancement (except to the extent that the Reserve Account is
replenished from Collections on Receivables), the risk of delin-
quencies, loan losses and repossessions with respect to the
Receivables. There can be no assurance that the future delinquen-
cy, loan loss and repossession experience of the Trust with
respect to the Receivables will be better or worse than that set
forth herein with respect to the total portfolio of Motor Vehicle
Loans currently and historically owned and serviced by the Banks
and thus whether the credit enhancement available to Certificate-
holders will be sufficient. See "The Receivables Pool Delin-
quency and Loss Experience," "Description of the Certificates
Reserve Account" and " Distributions on Certificates."
[SUBORDINATION OF THE CLASS B CERTIFICATES
Distributions of interest on the Class B Certificates will
be subordinated in priority of payment to distributions of
interest on the Class A Certificates, and distributions of
principal on the Class B Certificates will be subordinated to
distributions of interest and principal on the Class A Certifi-
cates, to the extent described herein. In particular, the Class B
Certificateholders will not receive any distributions of interest
with respect to a Collection Period until the full amount of
interest on the Class A Certificates relating to such Collection
Period has been deposited in the Class A Distribution Account.
Class B Certificateholders will not receive any distributions of
principal with respect to a Collection Period until the full
amount of interest on and principal of the Class A Certificates
relating to such Collection Period has been deposited in the
Class A Distribution Account. However, distributions of interest
on the Class B Certificates, to the extent of collections on the
Receivables allocable to interest and the amounts on deposit in
the Reserve Account available after the distribution of interest
on the Class A Certificates has been made, will not be subordi-
nated to the distribution of principal of the Class A Certifi-
cates. See "Description of the Certificates Distributions on
Certificates."]
EFFECTS OF PREPAYMENTS OF RECEIVABLES
The weighted average life of the Certificates may be reduced
by full or partial prepayments on the Receivables. Such a reduc-
tion in the weighted average life of the Certificates would mean
that Certificateholders would not receive the benefit of the
applicable Pass-Through Rate for the period of time originally
expected. The Receivables are prepayable at any time. Prepayments
may also result from liquidations due to default, the receipt of
monthly installments earlier than the scheduled due dates for
such installments, the receipt of proceeds from credit life,
credit disability, theft or physical damage insurance, repurchas-
es by the Sellers as a result of certain uncured breaches of the
warranties made by them in the Agreement with respect to the
Receivables, purchases by the Servicer as a result of certain
uncured breaches of the covenants made by it in the Agreement
with respect to the Receivables, or the Servicer exercising its
option to purchase all of the remaining Receivables. The rate of
prepayments on the Receivables may be influenced by a variety of
economic, social and other factors, including changes in interest
rates, general or regional economic conditions, the conditions of
the resale market for motor vehicles and the fact that the
Obligor is generally not permitted to sell or transfer the
Financed Vehicle securing a Receivable without the consent of the
relevant Seller. The Sellers have no basis on which to assess the
specific effects of the foregoing factors (or the magnitude of
such effects) on the rate of prepayment on the Banks' portfolio
of Motor Vehicle Loans generally or on the Receivables. No
prediction can be made as to the actual prepayment rates which
will be experienced on the Receivables. If prepayments were to
occur after a decline in interest rates, investors seeking to
reinvest their funds might be required to invest their distribut-
ed funds at a rate of return lower than the applicable Pass-
Through Rate. Certificate Owners will bear all reinvestment risk
resulting from prepayment of the Receivables. See "Maturity and
Prepayment Considerations" herein and in the Prospectus.
GEOGRAPHIC CONCENTRATION
Economic conditions in states where Obligors reside may
affect the delinquency, loan loss and repossession experience of
the Trust with respect to the Receivables. As of the Cut-Off
Date, the Sellers' records indicate that the mailing addresses of
Obligors with respect to approximately __%, __%, __%, __% and __%
by principal balance of the Receivables were in [Texas, North
Carolina, Florida, Georgia and South Carolina], respectively. As
a result, economic conditions in such states may have a dispro-
portionate impact on the Trust. In particular, an economic
downturn in one or more of such states could adversely affect the
performance of the Trust (even if national economic conditions
remain unchanged or improve) as Obligors in such state or states
experience the effects of such a downturn and face greater
difficulty in making payments on their Financed Vehicles. See
"The Receivables Pool."
[FEDERAL INCOME TAX; EFFECTS OF SUBORDINATION ON CLASS B CERTIFI-
CATEHOLDERS
It is expected that, for federal income tax purposes,
amounts otherwise distributable to the Class B Certificate Owners
that are paid to the Class A Certificate Owners pursuant to the
subordination provisions described above under " Subordination
of Class B Certificates" will be deemed to have been received by
the Class B Certificate Owners and then paid by them to the Class
A Certificate Owners pursuant to a guaranty. See generally
"Federal Income Tax Consequences Tax Characterization of the
Trust as a Grantor Trust" herein.
If the Class B Certificate Owners received distributions of
less than their share of the Trust's receipts of principal or
interest (the "Shortfall Amount") because of the subordination of
the Class B Certificates, holders of Class B Certificates would
probably be treated for federal income tax purposes as if they
had (1) received as distributions their full share of such
receipts, (2) paid over to the Class A Certificate Owners an
amount equal to such Shortfall Amount and (3) retained the right
to reimbursement of such amounts to the extent of future collec-
tions otherwise available for deposit in the Reserve Account.
Under this analysis (1) Class B Certificate Owners would be
required to accrue as current income any interest or OID income
of the Trust that was a component of the Shortfall Amount, even
though such amount was in fact paid to the Class A Certificate
Owners, (2) a loss would only be allowed to the Class B Certifi-
cate Owners when their right to receive reimbursement of such
Shortfall Amount became worthless (i.e., when it becomes clear
that such Shortfall Amount will not be reimbursed from any
source) and (3) reimbursement of such Shortfall Amount prior to
such a claim of worthlessness would not be taxable income to
Class B Certificate Owners because such amount was previously
included in income. Those results should not significantly affect
the inclusion of income for Class B Certificate Owners on the
accrual method of accounting, but could accelerate inclusion of
income to Class B Certificate Owners on the cash method of
accounting by, in effect, placing them on the accrual method.
Moreover, the character and timing of loss deductions is un-
clear.]
FEDERAL INCOME TAX; TAX ACCOUNTING ISSUES
There is uncertainty regarding a number of issues that could
affect the amount, character, and timing of income required to be
reported by Certificateholders because there are no judicial or
administrative authorities addressing substantially similar
facts. Such issues, in general, include: the possibility that the
Trust could be treated as holding a debt obligation of the
Sellers rather than an ownership interest in the Receivables; the
allocation of basis among the assets of the Trust; the method
(including assumptions) of calculating original issue discount;
whether any portion of the Servicing Fee exceeds reasonable
compensation for the services performed by the Servicer and thus
would be treated as additional "stripped coupons" under Section
1286 of the Code; the interaction of the "imputed interest" and
market discount rules of the Code; [accounting for the Class B
Certificates (see "Federal Income Tax; Effects of Subordination
of the Class B Certificateholders" above);][ and the proper
manner of allocating basis to, amortizing basis in, and calculat-
ing income attributable to the Yield Supplement Agreement.]
Furthermore, for administrative convenience the Servicer has
adopted certain conventions for calculating income on the Receiv-
ables, which include estimation of accrued amounts and aggrega-
tion of all of the Receivables and the Yield Supplement Agree-
ment, if applicable. The use of such methods could result in the
income reported to Certificateholders for any period being
different from the income that would be reported if income were
reported on a Receivable-by-Receivable basis over the period
during which income accrues on each Receivable. If reporting on
such basis resulted in under-reporting of income, or if the
Internal Revenue Service were to take a position different from
that adopted by the Trust with respect to any issue, a Certifi-
cate Owner could be required to pay interest on overdue amounts
and could be subject to penalties for under-reporting of income.
For a further discussion of the foregoing, see "Federal Income
Tax Consequences" herein and in the Prospectus.
FORM OF CERTIFICATES; CERTIFICATE OWNERS NOT RECOGNIZED AS
CERTIFICATEHOLDERS
The Class A Certificates [and the Class B Certificates] will
[each] be represented initially by global certificates registered
in the name of Cede, as nominee of DTC (for Certificates held in
the United States), [Cedel Bank, societe anonyme ("Cedel") or the
Euroclear System ("Euroclear")(for Certificates held in Europe)].
No Certificate Owner will be entitled to receive a Definitive
Certificate representing such person's interest in the Trust
except in certain limited circumstances. Under the terms of the
Agreement, Certificate Owners will not be recognized as Certifi-
cateholders, and will be permitted to exercise the rights of the
Certificateholders only indirectly through DTC. See "Description
of the Certificates Book-Entry Registration" and " Definitive
Certificates" herein and in the Prospectus and Annex I to this
Prospectus Supplement, "Global Clearance, Settlement and Tax
Documentation Procedures."
RATINGS
It is a condition to the issuance of the [Class A] Certifi-
cates that the Class A Certificates be rated in the highest
rating category [and the Class B Certificates be rated [at least]
" " 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 Certificates, inasmuch
as such rating does not comment as to market price or suitability
for a particular investor. The ratings of the Certificates
address the likelihood of the payment of principal and interest
on the Certificates pursuant to their terms. [However, the
Rating Agencies do not evaluate, and the ratings of the Certifi-
cates do not address, the likelihood that the Certificate Prepay-
ment Premium will be paid.] There can be no assurance that a
rating will remain for any given period of time or that a rating
will not be lowered or withdrawn entirely by a Rating Agency if
in its judgment circumstances in the future so warrant.
THE TRUST
GENERAL
The Sellers will establish the Trust by selling and assign-
ing the Trust property, as described below, to the Trustee in
exchange for the Certificates. Prior to such sale and assign-
ment, the Trust will have no assets or obligations or any operat-
ing history. The Servicer will service the Receivables, either
directly or through subservicers, pursuant to the Agreement and
will be compensated for acting as the Servicer. See "Description
of the Certificates Servicing Compensation and Expenses" herein.
The Servicer will hold or appoint its affiliate, NSI, to hold the
Receivables and Receivable Files as custodian for the Trustee.
Although the Receivables will not be marked or stamped to indi-
cate that they have been sold to the Trust, and the certificates
of title or ownership for the Financed Vehicles will not be
endorsed or otherwise amended to identify the Trust as the new
secured party, the Servicer and the Sellers will indicate in
their computer records that the Receivables have been sold to the
Trust. Under such circumstances and in certain jurisdictions, the
Trust's interest in the Receivables and the Financed Vehicles may
be defeated. See "Certain Legal Aspects of the Receivables" in
the Prospectus.
If the protection provided to the [Class A] Certificatehold-
ers by the [Yield Supplement Account and the] Reserve Account
and[, in the case of the Class A Certificateholders,] the subor-
dination of the Class B Certificates is insufficient, the Trust
would have to look to the Obligors on the Receivables, the
proceeds from the repossession and sale of Financed Vehicles
which secure defaulted Receivables [and from the Pre-Funding
Account]. In such event, certain factors, such as the 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 Certificateholders. See
"Description of the Certificates Distributions on Certificates"
[, " Yield Supplement Account; Yield Supplement Agreement"] and "
Reserve Account" herein and "Certain Legal Aspects of the
Receivables" in the Prospectus.
Each [Class A] Certificate represents a fractional undivided
ownership interest in the Trust. The Trust property includes the
Receivables and all monies received under the [Initial] Receiv-
ables after the [Initial] Cut-Off Date [and all monies received
under the Subsequent Receivables after the close of business of
the Servicer on each applicable Subsequent Transfer Date] and
also includes (i) such amounts as from time to time may be held
in one or more accounts maintained pursuant to the Agreement [and
the Yield Supplement Agreement], as described herein[, including
the Yield Supplement Account] [and the Pre-Funding Account]; (ii)
security interests in the Financed Vehicles and any accessions
thereto; (iii) the rights to proceeds from claims on certain
physical damage, credit life, credit disability or other insur-
ance policies, if any, covering the Financed Vehicles or the
Obligors; (iv) certain rights under the Agreement, including the
right to receive payments from the Reserve Account [and pursuant
to the Yield Supplement Agreement]; (v) any property that shall
have secured a Receivable and shall have been acquired by the
Trust; (vi) certain rights of each of the Sellers relating to the
repurchase of Receivables under each Dealer Agreement and under
the documents and instruments contained in the Receivable Files;
(vii) certain rebates of premiums and other amounts relating to
certain insurance policies and other items financed under the
Receivables; (viii) all other rights of the Trust under the
Agreement; and (ix) any and all proceeds of the foregoing. The
property of the Trust does not include [the Yield Supplement
Account] and the Reserve Account[, but such account[s] will be
pledged to and held by the Collateral Agent, as secured party for
the benefit of the Certificateholders].
THE RECEIVABLES POOL
The pool of Receivables (the "Receivables Pool") will
include the [Initial] Receivables purchased as of the [Initial]
Cut-Off Date [and will include any Subsequent Receivables pur-
chased as of any Subsequent Cut-Off Date (the Initial Cut-Off
Date or any Subsequent Cut-Off Date being individually referred
to herein as a "Cut-Off Date")]. The [Initial] Receivables were
purchased[, and the Subsequent Receivables were or will be
purchased,] by the Sellers from Dealers in the ordinary course of
business. The Receivables were randomly selected from among the
Motor Vehicle Loans owned by the Sellers. The Sellers will
warrant in the Agreement that all the Receivables have the
following individual characteristics, among others: (i) the
obligation of the related Obligor under each Receivable is
secured by a security interest in either a new or used automo-
bile, van or light-duty truck; (ii) each Receivable has a con-
tractual interest rate ("Contract Rate") of at least % and no
more than %; (iii) each Receivable has a remaining maturity,
as of the Cut-Off Date, of not less than months and not more
than months]; (iv) no Receivable was more than __ days past
due as of the Cut-Off Date; (v) each Receivable is a Simple
Interest Receivable (as defined below) that [(except for those
Receivables which are Balloon Receivables)], at origination,
provides for level monthly payments that fully amortize the
amount financed over the original term; (vi) as of the Cut-Off
Date, each Receivable has a remaining principal balance of no
less than $ and no more than $ ; (vii) each Receivable
is not a Defaulted Receivable; and (viii) each Receivable is not
related to a motor vehicle that is the subject of forced-placed
insurance. "Forced-placed insurance" is insurance placed on a
motor vehicle by the lienholder to protect the motor vehicle as
collateral for a loan when there is evidence that the borrower
has neglected to do so as required by the applicable loan agree-
ment. See " Certain Characteristics of the [Initial] Receiv-
ables" below. No selection procedures believed by the Sellers to
be adverse to the Certificateholders were [or will be] used in
selecting the Receivables. [As of the [Initial] Cut-Off Date,
% of the [Initial] Receivables, by aggregate principal balance,
were Balloon Receivables.]
[The obligation of the Trust to purchase the Subsequent
Receivables on a Subsequent Transfer Date will be subject to the
Receivables in the Trust, including the Subsequent Receivables to
be conveyed to the Trust on such Subsequent Transfer Date,
meeting the following criteria: (i) not more than % of the
principal balances of the Receivables in the Trust will represent
vehicles financed at [less than] [more than ___%]; and (ii) the
weighted average Contract Rate of the Receivables in the Trust
will not be less than %, [and (iii) not more than % of the
aggregate principal balance of the Receivables in the Trust will
be Balloon Receivables] unless the Sellers increase the Reserve
Account Initial Deposit by the amounts, if any, specified by the
Rating Agencies to maintain the ratings of the Certificates. In
addition, such obligation will be subject to the Receivables,
including the Subsequent Receivables to be transferred to the
Trust on such Subsequent Transfer Date, having a weighted average
remaining term not greater than months. Such criteria
will be based on the characteristics of the Initial Receivables
on the Initial Cut-Off Date and any Subsequent Receivables on the
related Subsequent Cut-Off Dates.]
[The Initial Receivables will represent approximately %
of the aggregate initial principal balance of the Certificates.
However, except for the criteria described in the preceding
paragraphs and the criteria, if any, specified by the Rating
Agencies to maintain the ratings of the Certificates, there will
be no required characteristics of the Subsequent Receivables.
Therefore, following the transfer of Subsequent Receivables to
the Trust, the aggregate characteristics of the entire Receiv-
ables Pool, including the composition of the Receivables, the
distribution by Contract Rate and the geographic distribution
described in the following tables, may vary significantly from
those of the Initial Receivables.]
THE SERVICER
NationsBank, N.A., through DFSG and units in predecessor
banks of NationsBank, N.A., has been servicing indirect motor
vehicle loan portfolios since 1970. The indirect motor vehicle
loan portfolio serviced either directly by NationsBank, N.A. or
through its affiliates was approximately $5.5 billion as of March
31, 1996. DFSG also services other indirect and direct consumer
loan portfolios totalling over $25.3 billion (including the
indirect motor vehicle loan portfolio) as of March 31, 1996.
CERTAIN CHARACTERISTICS OF THE [INITIAL] RECEIVABLES
As of the [Initial] Cut-Off Date, the [Initial] Receivables
had, in the aggregate, the following characteristics: (i) approx-
imately [ ]% of the [Initial] Receivables was attributable to
loans for purchases of new Financed Vehicles and approximately [
]% of the Initial Pool Balance was attributable to loans for
purchases of used Financed Vehicles; (ii) the weighted average
Contract Rate of the [Initial] Receivables was [ ]%; (iii)
there were [ ] [Initial] Receivables being conveyed by the
Sellers to the Trust; (iv) the average principal balance of the
[Initial] Receivables, as of the [Initial] Cut-Off Date, was $[
]; and (v) the weighted average original term and weighted
average remaining term of the [Initial] Receivables were [ . ]
months and [ . ] months, respectively. Approximately % of the
[Initial] Receivables by principal balance as of the [Initial]
Cut-Off Date were contributed to the Trust by NationsBank, N.A.
The Composition of the [Initial] Receivables, Distribution
of the [Initial] Receivables by New/Used Motor Vehicles, Distri-
bution of the [Initial] Receivables by Contract Rate, Distribu-
tion of the [Initial] Receivables by Remaining Term, Distribution
of the [Initial] Receivables by Principal Balance and Geographic
Distribution of the [Initial] Receivables, each as of the Cut-Off
Date, are set forth in the following tables.
COMPOSITION OF THE [INITIAL] RECEIVABLES
Weighted Average Contract Rate . . . . . . .
Range of Contract Rates . . . . . . . . . . .
Aggregate Principal Balance . . . . . . . . .
Number of [Initial] Receivables . . . . . . .
Weighted Average Remaining Term . . . . . . .
Range of Remaining Terms . . . . . . . . . .
Weighted Average Original Term . . . . . . .
Range of Original Terms . . . . . . . . . . .
Average Principal Balance . . . . . . . . . .
Average Original Amount Financed . . . . . .
Range of Original Amounts Financed . . . . .
DISTRIBUTION OF THE [INITIAL] RECEIVABLES BY NEW/USED MOTOR
VEHICLES
NUMBER WEIGHTED
OF AGGREGATE ORIGINAL AVERAGE
RECEIV- PRINCIPAL PRINCIPAL CONTRACT
ABLES BALANCE BALANCE RATE(%)
New Autos, Vans and
Light-Duty
Trucks . . . . . . . .
Used Autos, Vans and
Light-Duty
Trucks . . . . . . . .
All [Initial] Receivables
DISTRIBUTION OF THE [INITIAL] RECEIVABLES BY CONTRACT RATE
% OF
AGGREGATE AGGREGATE
NUMBER % OF TO- PRINCIPAL PRINCIPAL
OF TAL
RE- RECEIV- BALANCE BALANCE
CEIV- ABLES
ABLES
7.50 to 7.99% . . . .
8.00 to 8.99% . . . .
9.00 to 9.99% . . . .
10.00 to 10.99% . . . .
11.00 to 11.99% . . . .
12.00 to 12.99% . . . .
13.00 to 13.99% . . . .
14.00 to 14.99% . . . .
15.00 to 15.99% . . . .
16.00 to 16.99% . . . .
17.00 to 17.99% . . . .
18.00 to 18.99% . . . .
19.00 to 19.99% . . . .
20.00 to 21.00% . . . .
Total . . . .
DISTRIBUTION OF THE [INITIAL] RECEIVABLES BY REMAINING TERM
% OF
AGGREGATE AGGREGATE
NUMBER % OF PRINCIPAL PRINCIPAL
OF
RE- RECEIV- BALANCE BALANCE
CEIV- ABLES
ABLES
12 to 18 months . . . .
19 to 24 months . . . .
25 to 30 months . . . .
31 to 36 months . . . .
37 to 42 months . . . .
43 to 48 months . . . .
49 to 54 months . . . .
55 to 60 months . . . .
61 to 66 months . . . .
67 to 72 months . . . .
Total . . . .
DISTRIBUTION OF THE [INITIAL] RECEIVABLES BY PRINCIPAL BALANCE
% OF
AGGREGATE AGGREGATE
NUMBER % OF PRINCIPAL PRINCIPAL
OF
RECEIV- RECEIV- BALANCE BALANCE
ABLES ABLES
$ 2,000 to $ 9,999 .
$10,000 to $19,999 .
$20,000 to $29,999 .
$30,000 to $39,999 .
$40,000 to $49,999 .
Total . . .
GEOGRAPHIC DISTRIBUTION OF THE [INITIAL] RECEIVABLES
% OF
AGGREGATE AGGRE-
GATE
NUMBER % OF PRINCIPAL PRINCI-
OF PAL
STATE(1) RE- RECEIV- BALANCE BALANCE
CEIV- ABLES
ABLES
Florida . . . . . . . . .
Georgia . . . . . . . . .
North Carolina . . . . .
South Carolina . . . . .
Texas . . . . . . . . . .
Other(2) . . . . . . . .
Total . . . . .
_________
(1) Receivables are categorized by the Sellers' records of the
mailing addresses of the Obligors as of the Cut-Off Date.
(2) Each other state represents less than [5]% of the total
number of Receivables.
DELINQUENCY AND LOSS EXPERIENCE
The tables set forth below indicate the delinquency and
credit loss/repossession experience for each of the last three
calendar years and for the three month periods ending March 31,
1996 and 1995 of the Banks' portfolio of Motor Vehicle Loans from
which the Receivables have been selected (which portfolio ex-
cludes certain Motor Vehicle Loans acquired by the Banks in
acquisitions). No assurance can be made, however, that the
delinquency and loss experience for the Motor Vehicle Loans or
the Receivables in the future will be similar to the historical
experience set forth in the following tables.
DELINQUENCY EXPERIENCE (DOLLARS IN THOUSANDS)(1)
<TABLE>
<CAPTION>
AS OF [MARCH 31], AS OF DECEMBER 31,
1996 1995 1995 1994 1993
NUMBER NUMBER NUMBER NUMBER NUMBER
OF OF OF OF OF
LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS AMOUNT
<S> <C><C><C><C><C>
Total Serviced
Portfolio at
the Period End...
Delinquency(2)
30-59 Days . . .
60-89 Days . . .
90 Days
or More . . . . .
Total Delinquencies
Total Delinquencies
as a Percentage
of the Total
Serviced
Portfolio . . . . .
__________
<FN>
(1) Delinquencies shown in dollars include principal amounts
only.
(2) The period of delinquencies is based on the number of days
payments are contractually past due until the applicable
Motor Vehicle Loan is charged off.
</TABLE>
CREDIT LOSS/REPOSSESSION EXPERIENCE (DOLLARS IN THOUSANDS)
THREE MONTHS YEAR
ENDED ENDED
[MARCH 31], DECEMBER 31,
1996 1995 1995 1994 1993
Period End
Outstandings(1) . . .
Average Amount Out-
standing During
the Period(2) . . . .
Average Number of
Loans Outstanding
During the Period(3) .
Gross Charge-offs(4)
Recoveries on Loss-
es(5) . . . . . . . .
Net Charge-offs . . .
Net Charge-offs as a
Percentage of the
Period End Out-
standing(6) . . . . .
Net Charge-offs as a
Percentage of the
Average Amount Out-
standing(6) . . . . .
__________
(1) Amount represents principal amounts only.
(2) Amount represents principal amounts only and reflects a
daily weighted average of such amounts during the periods
shown.
(3) Amount based on the average outstanding for the period
divided by the average loan amount. the average loan amount
was derived from the month end outstanding balances divided
by month end number of loans.
(4) Amount of charge-off is the remaining principal balance
less the net proceeds from sale of loan collateral.
(5) Recoveries include post-disposition monies and are net of
any related expenses.
(6) Figures for the [three] months ended [March 31], 1996 and
[March 31], 1995 are annualized.
PAYMENTS ON THE RECEIVABLES
[The entire Initial Pool Balance is attributable to Receiv-
ables that provide for the allocation of payments according to
the "Simple Interest" method (each a "Simple Interest Receiv-
able"). See "The Receivables Pool General" in the Prospectus for
a description of the application of payments received on Simple
Interest Receivables.]
[The Receivables are prepayable at any time. Prepayments may
also result from liquidations due to default, the receipt of
monthly installments earlier than the scheduled due dates for
such installments, the receipt of proceeds from credit life,
credit disability, theft or physical damage insurance, repurchas-
es by the Sellers as a result of certain uncured breaches of the
warranties made by them in the Agreement with respect to the
Receivables, purchases by the Servicer as a result of certain
uncured breaches of the covenants made by it in the Agreement
with respect to the Receivables, or the Servicer exercising its
option to purchase all of the remaining Receivables. The rate of
prepayments on the Receivables may be influenced by a variety of
economic, social and other factors, including Obligor
refinancings resulting from decreases in interest rates and the
fact that the Obligor is generally not permitted to sell or
transfer the Financed Vehicle securing a Receivable without the
consent of the relevant Seller.]
[Neither DFSG, the Servicer, the Sellers nor any of their
affiliates maintain records adequate to provide quantitative data
regarding prepayment experience on the Sellers' portfolio of
Motor Vehicle Loans. However, the Sellers (i) believe that the
actual rate of prepayments will result in a substantially shorter
weighted average life than the scheduled weighted average life
and (ii) estimate that the actual weighted average life of its
portfolio of Motor Vehicle Loans ranges between [60% and 70%] of
their scheduled weighted average life. See "Maturity and Prepay-
ment Considerations" herein and in the Prospectus.]
POOL FACTORS
The "Certificate Pool Factor" for [the Class A] [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 indicating 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. [The]
[Each] Certificate Pool Factor will initially be 1.0000000 and
thereafter will decline to reflect reductions of the Certificate
Balance of the [Class A] [applicable class of] Certificates as a
result of scheduled payments, prepayments and liquidations of the
Receivables [(and also as a result of a prepayment arising from
application of the Pre-Funding Account)]. [[The] [Each] Certif-
icate Pool Factor will not change as a result of the addition of
Subsequent Receivables.] A Certificateholder's portion of the
aggregate outstanding Certificate Balance for the [Class A]
[related class of] Certificates is the product of (a) the origi-
nal denomination of such Certificateholder's Certificate and (b)
the [applicable] Certificate Pool Factor.
MATURITY AND PREPAYMENT CONSIDERATIONS
Information regarding certain maturity and prepayment
considerations with respect to the Certificates is set forth
under "Maturity and Prepayment Considerations" in the Prospectus.
It is expected that the final distribution in respect of the
Certificates will occur on or prior to the Final Scheduled
Distribution Date. However, if sufficient funds are not avail-
able to reduce the aggregate Certificate Balance of [either class
of] the Certificates to zero on or prior to the Final Scheduled
Distribution Date, the final distribution in respect of [such
class of] the Certificates could occur later than such date. In
addition, full or partial prepayments on the Receivables will
have the effect of reducing the weighted average life of the
Certificates, while delinquencies by Obligors under the Receiv-
ables, as well as extensions and deferrals on the Receivables,
will have the effect of increasing the weighted average life of
the Certificates. The Receivables may be prepaid at any time and
mandatory prepayments of a Receivable may result from, among
other things, the sale, insured loss or other disposition of the
Financed Vehicle or the Receivable becoming a Defaulted Receiv-
able.
No prediction can be made as to the prepayment rates that
will be experienced on the Receivables. The rate of prepayments
of the Receivables may be influenced by a variety of economic,
social and other factors, and under certain circumstances relat-
ing to breaches of representations, warranties or covenants, the
Sellers and/or the Servicer will be obligated to repurchase
Receivables from the Trust. See "The Receivables Pool" herein
and "Description of the Transfer and Servicing Agreements Sale
and Assignment of Receivables" in the Prospectus. A higher than
anticipated rate of prepayments will reduce the aggregate princi-
pal balance of the Receivables more quickly than expected and
thereby reduce anticipated aggregate distributions of interest on
the Certificates. Any reinvestment risks resulting from a faster
or slower incidence of prepayment of Receivables will be borne
entirely by the Certificateholders. Such reinvestment risks
include the risk that interest rates may be lower at the time
such holders received payments from the Trust than interest rates
would otherwise have been had such prepayments not been made or
had such prepayments been made at a different time.
Holders of Certificates should consider, in the case of
Certificates purchased at a discount, the risk that a slower than
anticipated rate of principal payments on the Receivables could
result in an actual yield that is less than the anticipated yield
and, in the case of Certificates purchased at a premium, the risk
that a faster than anticipated rate of principal payments on the
Receivables could result in an actual yield that is less than the
anticipated yield.
YIELD CONSIDERATIONS
On each Distribution Date, interest on the Certificates will
be distributed at the applicable Pass-Through Rate on the Class A
Certificate Balance and the Class B Certificate Balance, respec-
tively, as of the preceding Distribution Date (after giving
effect to all distributions made on such preceding Distribution
Date) or, in the case of the first Distribution Date, as of the
Closing Date. In the event of a principal prepayment on a Receiv-
able during a Collection Period, Certificateholders will receive
their pro rata share of interest for the full Collection Period
with respect to the unpaid principal balance of such Receivable
as of the first day of such Collection Period to the extent that
amounts on deposit in the Certificate Account and in the Reserve
Account are available for such purpose. The Receivables are
Simple Interest Receivables and, to the extent that payments of
the fixed monthly installments thereunder are received prior to
the scheduled due dates for such installments, the portions of
such installments allocable to interest will be less than they
would be if the payments were received as scheduled [(although
the Servicer will make an advance for the shortfall)][(although
an Advance Reserve Withdrawal may be made for the shortfall)]. If
the Reserve Account is exhausted, the amount of interest distrib-
uted to the Class B Certificateholders and, in certain circum-
stances, the Class A Certificateholders, may be less than that
described above. See "Description of the Certificates Distribu-
tions on Certificates."
[Although the Receivables have different Contract Rates,
disproportionate rates of prepayments between Receivables with
Contract Rates greater than or less than a rate equal to the sum
of the highest Pass-Through Rate and the Servicing Fee Rate
should generally not affect the yield to Certificateholders
because the Sellers will, if there are any Receivables having a
Contact Rate, as of the [Initial] Cut-Off Date, below the sum of
the highest Pass-Through Rate and the Servicing Fee Rate, enter
into the Yield Supplement Agreement with the Trust. Pursuant to
the Yield Supplement Agreement the Sellers will be obligated to
pay to the Trust an amount equal to the excess of (i) interest on
the affected Receivable's principal balance at a rate equal to
the sum of the highest Pass-Through Rate and the Servicing Fee
Rate over (ii) interest on such Receivable's principal balance at
its Contract Rate. Thus, even a Receivable with a Contract Rate
below the sum of the highest Pass-Through Rate and the Servicing
Fee Rate will, when payments with respect to such Receivable are
made by the Obligor under the Receivable and by the applicable
Seller under the Yield Supplement Agreement, yield enough to
support payments on the Certificates. However, higher rates of
prepayments of Receivables with higher Contract Rates will
decrease the amount available to cover delinquencies and defaults
on the Receivables. See "Description of the Certificates
Distributions on Certificates."]
USE OF PROCEEDS
The Sellers will receive the Certificates in exchange for
the contribution to the Trust of the Receivables and the other
Trust Property. The net proceeds to be received by the Sellers
from the sale of the Certificates will be added to their general
corporate funds and will be used [to purchase additional Motor
Vehicle Loans and] for general corporate purposes.
DESCRIPTION OF THE CERTIFICATES
The [Class A] Certificates will be issued pursuant to the
terms of the Agreement, a form of which has been filed as an
exhibit to the Registration Statement. Copies of the Agreement
may be obtained free of charge (except for copying and postage
costs) by the Certificateholders and Certificate Owners upon
written request to the Trustee at [ , New
York, New York 100__, Attention: .] A copy of
the Agreement will be filed with the Commission following the
issuance of the [Class A] Certificates. The following summary
describes certain terms of the [Class A] Certificates and the
Agreement. The summary does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all
the provisions of the [Class A] Certificates and the Agreement.
The following summary supplements the description of the general
terms and provisions of the [Class A] Certificates of any given
series and the related Agreement set forth in the Prospectus, to
which description reference is hereby made.
GENERAL
The Certificates will evidence interests in the Trust
created pursuant to the Agreement. The Class A Certificates will
evidence in the aggregate an undivided fractional ownership
interest (the "Class A Percentage") of approximately % in the
Trust [and the Class B Certificates will evidence in the aggre-
gate an undivided fractional ownership interest (the "Class B
Percentage") of approximately % in the Trust.]
The Certificates will be offered for purchase in denomina-
tions of $1,000 and integral multiples thereof and will be
represented initially by global certificates registered in the
name of Cede, as nominee of DTC. No Certificate Owner will be
entitled to receive a Definitive Certificate representing such
person's interest in the Trust unless Definitive Certificates are
issued under the limited circumstances described herein. Unless
and until Definitive Certificates are issued, all references to
actions by Certificateholders shall refer to actions taken by DTC
upon instructions from its Direct Participants and all references
to distributions, notices, reports and statements to Certificate-
holders shall refer to distributions, notices, reports and
statements to DTC. See " Definitive Certificates."
[MANDATORY REPURCHASE OF CERTIFICATES
Cash distributions to Certificateholders will be made, on a
pro rata basis, on the Distribution Date on or immediately
following the last day of the Funding Period in the event that
the amount on deposit in the Pre-Funding Account after giving
effect to the purchase of all Subsequent Receivables, including
any such purchase on such date, exceeds $ (a "Mandatory
Repurchase").
[The Certificate Prepayment Premium will be payable by the
Trust to the Certificateholders pursuant to a Mandatory Repur-
chase if the amount on deposit in the Pre-Funding Account exceeds
$ . The Certificate Prepayment Premium will equal the
excess, if any, discounted as described below, of (i) the amount
of interest that would accrue on the remaining Pre-Funded Amount
(the "Certificate Prepayment Amount") at the Class A Certificate
Rate or Class B Certificate Rate, as applicable, during the
period commencing on and including the Distribution Date on which
such Certificate Prepayment Amount is required to be distributed
to Certificateholders to but excluding over (ii) the
amount of interest that would have accrued on such Certificate
Prepayment Amount over the same period at a per annum rate of
interest equal to the bond equivalent yield to maturity on the
Determination Date preceding such Distribution Date on the
, in the case of a Class A Certificate, and on the ,
in the case of a Class B Certificate. Such excess shall be
discounted to present value to such Distribution Date at the
applicable yield described in clause (ii) above. Pursuant to the
Agreement, the Sellers will be obligated to pay the Certificate
Prepayment Premium to the Trust as liquidated damages for the
failure to deliver Subsequent Receivables having an aggregate
principal balance equal to the Pre-Funded Amount. The Trust's
obligation to pay the Certificate Prepayment Premium will be
limited to funds received from the Sellers pursuant to the
preceding sentence. In the event that such funds are insuffi-
cient to pay the aggregate Certificate Prepayment Premium in
full, [Class A] Certificateholders [of each class of Certifi-
cates] will receive their ratable share [(based upon the Certifi-
cate Prepayment Premium for each class of Certificates)] of the
aggregate amount available to be distributed in respect of the
Certificate Prepayment Premium. No other assets of the Trust
will be available for the purpose of making such payment.]]
OPTIONAL PURCHASE
If the Servicer exercises its option to purchase the Receiv-
ables when the Pool Balance declines to [5]% or less of the
Initial Pool Balance, the Class A Certificateholders will receive
an amount in respect of the Class A Certificates equal to the
outstanding Class A Certificate Balance together with accrued
interest at the [Class A] Certificate Rate, [the Class B Certifi-
cateholders will receive an amount in respect of the Class B
Certificates equal to the outstanding Class B Certificate Balance
together with accrued interest at the Class B Certificate Rate,]
which distributions shall effect early retirement of the Certifi-
cates. See "Description of the Transfer and Servicing Agree-
ments Termination" in the Prospectus.
BOOK-ENTRY REGISTRATION
For information related to the settlement and clearance
procedures for the Certificates, investors should refer to Annex
I to this Prospectus Supplement, "Global Clearance, Settlement
and Tax Documentation Procedures and "Book-Entry and Definitive
Securities; Reports to Securityholders Book-Entry Registration"
in the Prospectus.
DEFINITIVE CERTIFICATES
The Certificates will be issued in fully registered, certif-
icated form ("Definitive Certificates") to Certificate Owners or
their nominees, rather than to DTC or its nominee, only if (i)
the Sellers advise the Trustee in writing that DTC is no longer
willing or able to discharge properly its responsibilities as
depository with respect to the Certificates and the Trustee or
the Sellers are unable to locate a qualified successor, (ii) the
Sellers, at their option, elect to terminate the book-entry
system through DTC or (iii) after the occurrence of an Event of
Servicing Termination, Certificate Owners representing in the
aggregate not less than a majority of the aggregate outstanding
principal balance of the Certificates advise the Trustee and DTC
through Direct Participants in writing that the continuation of a
book-entry system through DTC (or a successor thereto) is no
longer in the Certificate Owners' best interests.
Upon the occurrence of any event described in the immediate-
ly preceding paragraph, DTC is required to notify all Direct
Participants of the availability through DTC of Definitive
Certificates. Upon surrender by DTC to the Trustee of the global
certificates representing the Certificates and receipt by the
Trustee of instructions for re-registration, the Trustee will
reissue the Certificates as Definitive Certificates and thereaf-
ter the Trustee will recognize the holders of such Definitive
Certificates as Certificateholders under the Agreement ("Hold-
ers").
[SALE AND ASSIGNMENT OF RECEIVABLES; SUBSEQUENT RECEIVABLES
Certain information with respect to the conveyance of the
Initial Receivables from the Sellers to the Trust on the Closing
Date pursuant to the Agreement is set forth under "Description of
the Transfer and Servicing Agreements Sale and Assignment of
Receivables" in the Prospectus. In addition, during the Funding
Period, pursuant to the Agreement, the Sellers will be obligated
to sell to the Trust Subsequent Receivables having an aggregate
principal balance equal to approximately $ (such amount
being equal to the initial Pre-Funded Amount) to the extent that
such Subsequent Receivables are available.
During the Funding Period on each Subsequent Transfer Date,
subject to the conditions described below, the Sellers will sell
and assign to the Trust, without recourse, the Sellers' entire
interest in the Subsequent Receivables designated by the Sellers
as of the related Subsequent Cut-Off Date and identified in a
schedule attached to a subsequent transfer assignment relating to
such Subsequent Receivables executed on such date by the Sellers.
It is expected that on the Closing Date, subject to the condi-
tions described below, certain of the Subsequent Receivables
designated by the Sellers and arising between the Initial Cut-Off
Date and the Closing Date will be conveyed to the Trust. Upon
the conveyance of Subsequent Receivables to the Trust on a
Subsequent Transfer Date, (i) the Pool Balance will increase in
an amount equal to the aggregate principal balance of the Subse-
quent Receivables, (ii) an amount equal to % of the aggregate
principal balance of such Subsequent Receivables will be with-
drawn from the Pre-Funding Account and will be deposited in the
Reserve Account (each, an "Additional Reserve Account Deposit")
and (iii) an amount equal to the excess of the aggregate princi-
pal balance of such Subsequent Receivables over the amount
described in clause (ii) will be withdrawn from the Pre-Funding
Account and paid to the Sellers. [Coincident with each such
transfer of Subsequent Receivables, the Yield Supplement Agree-
ment will require the Sellers to deposit into the Yield Supple-
ment Account an amount equal to the Additional Yield Supplement
Amount, if any, in respect of such Subsequent Receivables. See
" Yield Supplement Account; Yield Supplement Agreement" herein.]
[Any conveyance of Subsequent Receivables is subject to the
satisfaction, on or before the related Subsequent Transfer Date,
of the following conditions precedent, among others: (i) each
such Subsequent Receivable must satisfy the eligibility criteria
specified in the Agreement; (ii) the Sellers will not have
selected such Subsequent Receivables in a manner that they
believe is adverse to the interests of the Certificateholders;
(iii) as of the related Subsequent Cut-Off Date, the Receivables,
including any Subsequent Receivables conveyed by the Sellers as
of such Subsequent Cut-Off Date, satisfy the criteria described
under "The Receivables Pool" herein and "The Receivables Pools"
in the Prospectus; (iv) the applicable Additional Reserve Account
Deposit [and any Additional Yield Supplement Amount] for such
Subsequent Transfer Date shall have been made; and (v) the
Sellers shall have executed and delivered to the Trustee a
written assignment conveying such Subsequent Receivables to the
Trust (including a schedule identifying such Subsequent Receiv-
ables). Moreover, any such conveyance of Subsequent Receivables
made during any Collection Period will also be subject to the
satisfaction, on or about the fifteenth day of the month follow-
ing the end of such Collection Period, of the following condi-
tions subsequent, among others: (i) the Sellers will have deliv-
ered certain opinions of counsel to the Trustee and the Rating
Agencies with respect to the validity of the conveyance of all
such Subsequent Receivables conveyed during such Collection
Period; (ii) the Trustee shall have received written confirmation
from a firm of independent certified public accountants that, as
of each applicable Subsequent Cut-Off Date, the Receivables in
the Trust at that time, including the Subsequent Receivables
conveyed by the Sellers as of such Subsequent Cut-Off Date,
satisfied the parameters described under "The Receivables Pool"
herein and under "The Receivables Pools" in the Prospectus; and
(iii) the Rating Agencies shall have each notified the Sellers in
writing that, following the addition of all such Subsequent
Receivables, the Class A Certificates are rated in the same
rating categories in which they were rated at the Closing Date.
The Sellers will immediately repurchase any Subsequent Receiv-
able, at a price equal to the Purchase Amount thereof, upon the
failure of the Sellers to satisfy any of the foregoing conditions
subsequent with respect thereto.
[Subsequent Receivables may have been originated by the
Sellers at a later date using credit criteria different from
those which were applied to the Initial Receivables. See "Risk
Factors The Subsequent Receivables and the Pre-Funding Account"
and "The Receivables Pool" herein.]]
ACCOUNTS
In addition to the accounts referred to under "Description
of the Transfer and Servicing Agreements--Accounts" in the
Prospectus, the Trustee will also establish and maintain [the
Prefunding Account] [the Yield Supplement Account] [and] the
Reserve Account . The Reserve Account [and the Yield Supplement
Account] will not be part of the Trust. In addition, the
Trustee will establish a segregated account in the name of the
Trustee on behalf of the Trust and for the benefit of the Certif-
icateholders (the "Distribution Account") from which all distri-
butions with respect to the Certificates will be made.
SERVICING COMPENSATION AND EXPENSES
The Servicing Fee Rate with respect to the Servicing Fee for
the Servicer will be [1.00]% per annum of the Pool Balance as of
the first day of the Collection Period (after giving effect to
distributions to be made on the following Distribution Date).
The Servicing Fee (together with any portion of the Servicing Fee
that remains unpaid from prior Distribution Dates) will be paid
on each Distribution Date solely to the extent of the Available
Interest. The Servicer is also entitled to receive a supplemen-
tal servicing fee (the "Supplemental Servicing Fee") for each
Collection Period equal to any late, prepayment, and other
administrative fees and expenses collected during the Collection
Period[, plus any interest earned during the Collection Period on
deposits made with respect to the Receivables]. See "Description
of the Transfer and Servicing Agreements Servicing Compensation
and Expenses" in the Prospectus.
[ADVANCES] [ADVANCE RESERVE WITHDRAWALS]
[Servicer Advances. As of the last day of each Collection
Period, the Servicer will, subject to the limitations described
in the following sentence, make a payment (an "Advance") with
respect to each Receivable (other than a Defaulted Receivable) in
an amount equal to the excess, if any, of (x) the amount of
interest due on such Receivable at its applicable Contract Rate,
over (y) the interest actually received by the Servicer with
respect to such Receivable (whether from the Obligor, [the Yield
Supplement Agreement] or payments of the Purchase Amount) during
or with respect to such Collection Period. The Servicer may elect
not to make an Advance of due and unpaid interest with respect to
a Receivable to the extent that the Servicer, in its sole discre-
tion, determines that such Advance is not recoverable from
subsequent payments on such Receivable or from funds in the
Reserve Account.
To the extent that the amount set forth in clause (y) above
with respect to a Receivable is greater than the amount set forth
in clause (x) above with respect thereto, such amount shall be
distributed to the Servicer on the related Distribution Date. Any
such payment will only be from accrued interest due from the
Obligor under such Receivable.
The Servicer will deposit Advances, if any, into the Collec-
tion Account on the applicable Deposit Date.]
[Advance Reserve Withdrawals. The Servicer shall, as of the
last day of the Collection Period, withdraw from the Reserve
Account funds in an amount with respect to each Receivable (other
than a Defaulted Receivable) equal to the excess, if any, of (x)
the amount of interest due on such Receivable at its applicable
Contract Rate, over (y) the interest actually received by the
Servicer with respect to such Receivable (whether from the
Obligor, [the Yield Supplement Agreement] or payments of the
Purchase Amount) during or with respect to such Collection Period
(the "Advance Reserve Withdrawal"). The Servicer will deposit
Advance Reserve Withdrawals, if any, into the Collection Account
on the applicable Deposit Date.]
RESERVE ACCOUNT
The Reserve Account will be created with an initial deposit
of cash having a value of at least the Reserve Account Initial
Deposit. In addition, on each Distribution Date, any amounts on
deposit in the Collection Account with respect to the preceding
Collection Period after payments to the Certificateholders and
the Servicer have been made will be deposited into the Reserve
Account until the amount of the Reserve Account is equal to the
Specified Reserve Account Balance.
The Reserve Account will be an Eligible Account which the
Sellers shall establish and maintain in the name of, and under
the control of, the Collateral Agent. Funds on deposit in the
Reserve Account will be invested in Permitted Investments. See
"Description of the Transfer and Servicing Agreements --Accounts"
in the Prospectus.
On each Distribution Date, the amount available in the
Reserve Account (the "Available Reserve Amount") will equal the
lesser of (i) the amount on deposit in the Reserve Account
[(exclusive of Investment Earnings)] and (ii) the Specified
Reserve Account Balance. On each Deposit Date, the Collateral
Agent will withdraw funds from the Reserve Account to make
available to Certificateholders the excess, if any, of (x) the
sum of the amounts required to be distributed to Certificatehold-
ers, any accrued and unpaid Servicing Fees payable to the
Servicer on such Distribution Date [and any amounts required to
reimburse any Outstanding Advances (excluding Advances made as a
result of prepayments by Obligors)] over (y) the amounts to be
deposited in the Collection Account with respect to the preceding
Collection Period [(exclusive of Investment Earnings)]. Such
deficiencies in the Collection Account may result from, among
other things, Receivables becoming Defaulted Receivables or the
failure by a Servicer to make any remittance required to be made
under the Agreement. The aggregate amount to be withdrawn from
the Reserve Account on any Distribution Date will not exceed the
Available Reserve Amount with respect to the related Distribution
Date. The Collateral Agent will deposit the proceeds of such
withdrawal from the Reserve Account into the Distribution Account
or pay such proceeds to the Servicer, as applicable, on the
Distribution Date with respect to which such withdrawal was made.
The Specified Reserve Account Balance on any Distribution
Date will equal % of the Pool Balance as of the last day of the
preceding Collection Period, but in any event will not be less
than the lesser of (i) $ and (ii) the sum of such
Pool Balance plus an amount sufficient to pay interest on such
Pool Balance at a rate equal to the sum of the weighted average
Pass-Through Rate and the Servicing Fee Rate through the Final
Scheduled Distribution Date; provided, however, that the Speci-
fied Reserve Account Balance will be calculated using a percent-
age of % for any Distribution Date (beginning on the
199 Distribution Date) [on which the [Average Net
Loss Ratio] exceeds % or the [Average Delinquency Ratio]
exceeds %] [describe alternative test].
"Average Delinquency Ratio" means, as of any Distribution
Date, the average of the Delinquency Ratios for the preceding
[three] Collection Periods.
["Average Net Loss Ratio" means, as of any Distribution
Date, the average of the Net Loss Ratios for the preceding three
Collection Periods.]
"Defaulted Receivable" means, with respect to any Collection
Period, a Receivable (other than a Purchased Receivable) which
the Servicer, on behalf of the Trust, has determined to charge
off during such Collection Period in accordance with its custom-
ary servicing practices.
["Delinquency Ratio" means, for any Collection Period, the
ratio, expressed as a percentage, of (i) the principal amount of
all outstanding Receivables (other than Purchased Receivables and
Defaulted Receivables) which are 60 or more days delinquent as of
the end of such Collection Period, determined in accordance with
the Servicer's customary practices, divided by (ii) the Pool
Balance as of the last day of such Collection Period.]
"Liquidation Proceeds" mean, with respect to any Distribu-
tion Date and a Receivable that has become a Defaulted Receivable
during a related Collection Period, (i) insurance proceeds
received during such Collection Period by the Servicer, with
respect to insurance policies relating to the Financed Vehicle or
the Obligor, (ii) amounts received by the Servicer during such
Collection Period from a Dealer in connection with such Defaulted
Receivable pursuant to the exercise of rights under a Dealer
Agreement, and (iii) the monies collected by the Servicer (from
whatever source, including, but not limited to proceeds of a sale
of a Financed Vehicle or deficiency balance recovered after the
charge off of the related Receivable) during such Collection
Period on such Defaulted Receivable net of any fees, costs and
expenses incurred by the Servicer in connection therewith and any
payments required by law to be remitted to the Obligor. Liquida-
tion Proceeds shall be applied first to accrued and unpaid
interest on the Receivable and then to the principal balance
thereof.
["Net Loss Ratio" means, for any Collection Period, an
amount, expressed as an annualized percentage, equal to (i)
Realized Losses minus Recoveries for such Collection Period,
divided by (ii) the average of the Pool Balances on the first day
of such Collection Period and the last day of such Collection
Period.]
"Recoveries" mean, with respect to any Collection Period,
all monies received by the Servicer with respect to any Defaulted
Receivable during any Collection Period following the Collection
Period in which such Receivable became a Defaulted Receivable,
net of any fees, costs and expenses incurred by the Servicer in
connection with the collection of such Receivable and any pay-
ments required by law to be remitted to the Obligor.
The Specified Reserve Account Balance may be reduced to a
lesser amount as determined by the Sellers, subject to satisfac-
tion of the Rating Agency Condition. Amounts on deposit in the
Reserve Account will be released to the Servicer on each Distri-
bution Date to the extent that the amount on deposit in the
Reserve Account would exceed the Specified Reserve Account
Balance. The Collateral Agent will cause all investment earnings
attributable to the Reserve Account to be distributed on each
Distribution Date to the Servicer on behalf of the Sellers. Upon
any distribution to the Servicer of amounts from the Reserve
Account, the Certificateholders will not have any rights in, or
claims to, such amounts.
In the event that the funds in the Reserve Account are
reduced to zero, the Certificateholders will bear directly the
credit and other risks associated with ownership of the Receiv-
ables. In such a case, the amount available for distribution may
be less than that described below, and the Certificateholders may
experience delays or suffer losses as a result of, among other
things, defaults or delinquencies by the Obligors or previous
extensions made by the Servicer.
DISTRIBUTIONS ON CERTIFICATES
Deposits to Collection Account. On or before each Determi-
nation Date, the Servicer will provide the Trustee with a certif-
icate (the "Servicer's Certificate") containing certain informa-
tion with respect to the preceding Collection Period, including
the amount of aggregate collections on the Receivables during
such Collection Period, the aggregate amount of Receivables which
became Defaulted Receivables during such Collection Period, [the
Yield Supplement Amount,] the aggregate Purchase Amounts of
Receivables to be repurchased by the Sellers or to be purchased
by the Servicer on the related Deposit Date [and the aggregate
amount to be withdrawn from the Reserve Account].
On or before each Deposit Date (a) the Servicer will cause
all Collections and Liquidation Proceeds and Recoveries to be
deposited into the Collection Account and will deposit into the
Collection Account all Purchase Amounts of Receivables to be
purchased by the Servicer on such Deposit Date, (b) the Sellers
will deposit into the Collection Account all Purchase Amounts of
Receivables to be repurchased by the Sellers on such Deposit
Date, (c) the Servicer will deposit [all Advances for the related
Distribution Date] [the amount of the Advance Reserve Withdrawal
with respect to the related Distribution Date] into the Collec-
tion Account [and (d) the Sellers (or, in certain circumstances,
the Collateral Agent) will deposit the Yield Supplement Amount
for the related Distribution Date into the Collection Account].
"Available Interest" means, with respect to any Distribution
Date, [the excess of (a)] the sum of (i) Interest Collections for
such Distribution Date, [(ii) the Yield Supplement Amount for
such Distribution Date], [(iii) [all Advances][the proceeds of
any Advance Reserve Withdrawal] made by the Servicer with respect
to such Distribution Date], and [(iv) Investment Earnings for
such Distribution Date,] [over (b) the amount of Outstanding
Advances to be reimbursed on or with respect to such Distribution
Date].
"Available Principal" means, with respect to any Distribu-
tion Date, 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 in accordance with the
terms of the Receivables and the Servicer's customary servicing
procedures; (ii) to the extent attributable to principal, the
Purchase Amount received with respect to each Receivable repur-
chased by the Sellers or purchased by the Servicer under an
obligation which arose during the related Collection Period; and
(iii) all Liquidation Proceeds, to the extent allocable to
principal, received during such Collection Period. "Available
Principal" on any Distribution Date shall exclude all payments
and proceeds of any Receivables the Purchase Amount of which has
been distributed on a prior Distribution Date.
"Collections" mean, with respect to any Distribution Date,
all collections on the Receivables.
"Interest Collections" mean, with respect to any Distribu-
tion Date, 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 in accordance with the
terms of the Receivables and the Servicer's customary servicing
procedures; (ii) all Liquidation Proceeds, to the extent alloca-
ble to interest, received during such Collection Period; (iii)
all Recoveries on Receivables which became Defaulted Receivables
received during any Collection Period following the Collection
Period in which such Receivable became a Defaulted Receivable;
and (iv) to the extent attributable to accrued interest, the
Purchase Amount with respect to each Receivable repurchased by
the Sellers or purchased by the Servicer under an obligation
which arose during such Collection Period. "Interest Collections"
for any Distribution Date shall exclude all payments and proceeds
of any Receivables the Purchase Amount of which has been distrib-
uted on a prior Distribution Date.
"Purchased Receivable" means, at any time, a Receivable as
to which payment of the Purchase Amount has previously been made
by the Sellers or the Servicer pursuant to the Sale and Servicing
Agreement.
Deposits to the Distribution Account. On each Distribution
Date, [after making reimbursements of Outstanding Advances to the
Servicer from Available Interest to the extent then reimbursable
pursuant to the Agreement], the Trustee will make the following
deposits and distributions, to the extent of Available Interest
and any Available Reserve Amount remaining after such reimburse-
ments (and, in the case of shortfalls occurring under clause (ii)
below in the Class A Interest Distribution, the Class B Percent-
age of Available Principal to the extent of such shortfalls), in
the following priority:
(i) to the Servicer, first from Available Interest, and then,
if necessary, from the Available Reserve Amount, any
unpaid Servicing Fee for the related Collection Period and
all unpaid Servicing Fees from prior Collection Periods;
(ii) to the Distribution Account, first from Available
Interest, then, if necessary, from the Available
Reserve Amount, and finally, if necessary, from
the Class B Percentage of Available Principal, the
Class A Interest Distribution for such Distribu-
tion Date; and
(iii) to the Distribution Account, first from Available
Interest and then, if necessary, from the Avail-
able Reserve Amount, the Class B Interest Distri-
bution for such Distribution Date.
On each Distribution Date, the Trustee will make the follow-
ing deposits and distributions, to the extent of the portion of
Available Principal, Available Interest and Available Reserve
Amount (to be applied in that order of priority) remaining after
the application of clauses (i), (ii) and (iii) above, in the
following priority:
(iv) to the Distribution Account, the Class A Principal
Distribution for such Distribution Date;
(v) to the Distribution Account, the Class B Principal
Distribution for such Distribution Date;
(vi) to the Reserve Account, any amounts remaining, until
the amount on deposit in the Reserve Account equals the
Specified Reserve Account Balance; and
(vii) to the Sellers, any amounts remaining.
On each Distribution Date, from amounts on deposit in the
Distribution Account, the Class A Interest Distribution and the
Class A Principal Distribution will be distributed to the Class A
Certificateholders and the Class B Interest Distribution and the
Class B Principal Distribution will be distributed to the Class B
Certificateholders by the Trustee.
"Class A Certificate Balance," at any time, equals the
Original Class A Certificate Balance, as reduced by all principal
amounts distributed to Class A Certificateholders prior to such
time.
"Class A Interest Carryover Shortfall" means, (i) with
respect to the initial Distribution Date, zero, and (ii) with
respect to any other Distribution Date, the excess of Class A
Monthly Interest for the preceding Distribution Date and any
outstanding Class A Interest Carryover Shortfall on such preced-
ing Distribution Date, over the amount in respect of interest
that was actually distributed on the Class A Certificates on such
preceding Distribution Date, plus 30 days of interest on such
excess, to the extent permitted by law, at the Class A Pass-
Through Rate.
"Class A Interest Distribution" means, with respect to any
Distribution Date, the sum of Class A Monthly Interest for such
Distribution Date and the Class A Interest Carryover Shortfall
for such Distribution Date.
"Class A Monthly Interest" means, with respect to any
Distribution Date, one-twelfth of the Class A Pass-Through Rate
multiplied by the Class A Certificate Balance as of the preceding
Distribution Date (after giving effect to all payments of princi-
pal made on such Distribution Date) or, in the case of the first
Distribution Date, as of the Closing Date.
"Class A Monthly Principal" means, with respect to any
Distribution Date, the Class A Percentage of Available Principal
for such Distribution Date plus the Class A Percentage of Real-
ized Losses with respect to the related Collection Period.
"Class A Percentage" means %.
"Class A Principal Carryover Shortfall" means, (i) with
respect to the initial Distribution Date, zero, and (ii) with
respect to any other Distribution Date, the excess of Class A
Monthly Principal for such Distribution Date and any outstanding
Class A Principal Carryover Shortfall from the preceding Distri-
bution Date over the amount in respect of principal that was
actually distributed on the Class A Certificates on such Distri-
bution Date.
"Class A Principal Distribution" means, with respect to any
Distribution Date, the sum of Class A Monthly Principal for such
Distribution Date and, in the case of any Distribution Date other
than the initial Distribution Date, the Class A Principal Carry-
over Shortfall as of the preceding Distribution Date. In addi-
tion, on the Final Scheduled Distribution Date, the Class A
Principal Distribution shall include any additional amount
required to reduce the outstanding principal balance of the Class
A Certificates to zero.
"Class B Certificate Balance", at any time, equals the
Original Class B Certificate Balance, as reduced by all principal
amounts distributed to Class B Certificateholders prior to such
time.
"Class B Interest Carryover Shortfall" means, (i) with
respect to the initial Distribution Date, zero, and (ii) with
respect to any other Distribution Date, the excess of Class B
Monthly Interest for the preceding Distribution Date and any
outstanding Class B Interest Carryover Shortfall on such preced-
ing Distribution Date, over the amount in respect of interest
that was actually distributed on the Class B Certificates on such
preceding Distribution Date, plus 30 days of interest on such
excess, to the extent permitted by law, at the Class B Pass-
Through Rate.
"Class B Interest Distribution" means, with respect to any
Distribution Date, the sum of Class B Monthly Interest for such
Distribution Date and the Class B Interest Carryover Shortfall
for such Distribution Date.
"Class B Monthly Interest" means, with respect to any
Distribution Date, one-twelfth of the Class B Pass-Through Rate
multiplied by the Class B Certificate Balance as of the preceding
Distribution Date (after giving effect to all payments of princi-
pal made on such Distribution Date) or, in the case of the first
Distribution Date, as of the Closing Date.
"Class B Monthly Principal" means, with respect to any
Distribution Date, the Class B Percentage of Available Principal
for such Distribution Date plus the Class B Percentage of Real-
ized Losses with respect to the related Collection Period.
"Class B Percentage" means %.
"Class B Principal Carryover Shortfall" means, (i) with
respect to the initial Distribution Date, zero and (ii) with
respect to any other Distribution Date, the excess of Class B
Monthly Principal for such Distribution Date and any outstanding
Class B Principal Carryover Shortfall from the preceding Distri-
bution Date over the amount in respect of principal that was
actually distributed on the Class B Certificates on such Distri-
bution Date.
"Class B Principal Distribution" means, with respect to any
Distribution Date, the sum of Class B Monthly Principal for such
Distribution Date and, in the case of any Distribution Date other
than the initial Distribution Date, the Class B Principal Carry-
over Shortfall as of the preceding Distribution Date. In addi-
tion, on the Final Scheduled Distribution Date, the Class B
Principal Distribution will include any additional amount re-
quired to reduce the outstanding principal balance of the Class B
Certificates to zero.
"Realized Losses" mean, for any Collection Period and for
each Receivable that became a Defaulted Receivable during such
Collection Period, the excess of the aggregate principal balance
of such Receivable over Liquidation Proceeds received with
respect to such Receivable during such Collection Period, to the
extent allocable to principal.
The following chart sets forth an example of the application
of the foregoing provisions to a hypothetical monthly distribu-
tion:
March 1 March 31...Collection Period. The Servicer receives
monthly payments, pre-payments and other
proceeds in respect of the Receivables.
April 8..............Determination Date. On or before this date,
the Servicer delivers to the Trustee
the Servicer's Certificate, which notifies the
Trustee of the amounts required to
be distributed and the amounts available for
distribution on the next Distribution Date.
April 14.............Record Date. Distributions on
the next Distribution Date are made to
Certificateholders of record as of the close of
business on this date (or, if Definitive
Certificates are issued, the last day of the
preceding Collection Period,
in this example March 31).
April 14.............Deposit Date. All Collections,
[Advances], Purchase Amounts [and
any Yield Supplement Amount] relating to the
preceding Collection Period
are required to be deposited in the Collection
Account on or before this date.
April 15.............Distribution Date. The Trustee
distributes to Certificateholders amounts payable
in respect of the Certificates, pays the Servic-
ing Fee [and reimburses Outstanding
Advances to the Servicer to the extent then
reimbursable], withdraws funds from the
Reserve Account to the extent necessary, deposits
any excess funds to the Reserve
Account and, if the amount on deposit in the
Reserve Account is equal to the Specified
Reserve Account Balance, pays any remaining funds
to the Sellers.
[YIELD SUPPLEMENT ACCOUNT; YIELD SUPPLEMENT AGREEMENT
If any Receivable has, as of the Cutoff Date, a Contract
Rate below the Required Rate, the Sellers, the Servicer and the
Trustee will, simultaneously with the sale and assignment of the
Receivables, enter into the Yield Supplement Agreement. The
Yield Supplement Agreement will, with respect to each Receivable
subject thereto, if any, provide for the payment into the Collec-
tion Account by the applicable Seller on or prior to each Deposit
Date of an amount calculated by the Servicer equal to one-twelfth
of the excess, if any, of (i) interest on such Receivable's
principal balance as of the first day of the preceding Collection
Period at a rate equal to the Required Rate over (ii) interest at
the Contract Rate on such Receivable's principal balance as of
the first day of such Collection Period (in the aggregate for all
Receivables with respect to any Deposit Date, the "Yield Supple-
ment Amount").
Each Seller's obligations under the Yield Supplement Agree-
ment will be secured by funds, if any, deposited by the Sellers
on the Closing Date in an Eligible Deposit Account to be main-
tained by the Collateral Agent for the benefit of the holders of
the Certificates (the "Yield Supplement Account"). The amount
required to be retained (to the extent of funds available there-
for) in the Yield Supplement Account on any Distribution Date
will be equal to the Specified Yield Supplement Balance.
Funds, if any, on deposit in the Yield Supplement Account
may be invested in Permitted Investments in the manner permitted
by the Pooling and Servicing Agreement
Amounts on deposit in the Yield Supplement Account will be
released to the Seller each Distribution Date to the extent the
amount on deposit in the Yield Supplement Account exceeds the
Required Yield Supplement Balance. The "Required [Initial] Yield
Supplement Balance," on any date of determination, is the sum of
all projected Yield Supplement Amounts for all future Distribu-
tion Dates, assuming that future scheduled payments on the
[Initial] Receivables are made on their scheduled due dates. No
funds will be deposited in the Yield Supplement Account, however,
if the amount on deposit therein is less than the Required
[Initial] Yield Supplement Balance. [All investment earnings
attributable to the Yield Supplement Account to be distributed on
each Distribution Date to the Sellers]. Upon any release of
amounts from the Yield Supplement Account, the Certificateholders
will not have any rights in, or claims to, such amounts. Any
monies remaining on deposit in the Yield Supplement Account upon
the termination of the Trust will be paid to the Sellers.
[Pursuant to the Yield Supplement Agreement, on each Subse-
quent Transfer Date, the Sellers will deposit into the Yield
Supplement Account an amount equal to the Additional Yield
Supplement Amount. The aggregate of the Additional Yield Supple-
ment Amounts in respect of Subsequent Receivables, if any, is
referred to herein as the "Required Subsequent Yield Supplement
Amount" and, together with the Required Initial Yield Supplement
Amount, the "Required Yield Supplement Amount."]]
STATEMENTS TO CERTIFICATEHOLDERS
Certificate Owners may obtain the monthly statements and
annual tax statement and tax information provided to the Trustee
by the Servicer free of charge (except for copying and postage
costs) by request in writing to the Trustee at [
, Attention:
.] See "Description of Transfer and Servicing Agreements--
Statements to Trustee and Trust" in the Prospectus for a descrip-
tion of such statements.
TERMINATION
The Trust, and the respective obligations of the Sellers,
the Servicer, the Trustee and the Collateral Agent under the
Agreement will, except with respect to certain reporting require-
ments, terminate upon the earliest of (i) the Distribution Date
next succeeding the Servicer's purchase of the remaining Trust
Property, as described below, (ii) payment to Certificateholders
of all amounts required to be paid to them pursuant to the
Agreement and (iii) the Distribution Date next succeeding the
month which is six months after the maturity or liquidation of
the last Receivable and the disposition of any amounts received
upon liquidation of any property remaining in the Trust in
accordance with the terms and priorities set forth in the Agree-
ment.
The Trustee will give written notice of termination of the
Trust to each Certificateholder of record at such time. The final
distribution to any Certificateholder will be made only upon
surrender and cancellation of such holder's Certificate (whether
a Definitive Certificate or the physical certificate representing
the Certificates) at the office or agency of the Trustee speci-
fied in the notice of termination. Any funds remaining in the
Trust after setting aside all funds required to be distributed to
Certificateholders will be distributed to the Sellers or as
otherwise provided in the Agreement.
THE TRUSTEE
[ ] a [ banking
corporation], will be the Trustee. The Trustee, in its individual
capacity or otherwise, and any of its affiliates, may hold
Certificates in their own names or as pledgee. In addition, for
the purpose of meeting the legal requirements of certain juris-
dictions, the Servicer and the Trustee, acting jointly (or in
some instances, the Trustee, acting alone), will have the power
to appoint co-trustees or separate trustees of all or any part of
the Trust. In the event of such appointment, all rights, powers,
duties, and obligations conferred or imposed upon the Trustee by
the Agreement will be conferred or imposed upon the Trustee and
such co-trustee or separate trustee jointly, or, in any jurisdic-
tion where the Trustee is incompetent or unqualified to perform
certain acts, singly upon such co-trustee or separate trustee who
shall exercise and perform such rights, powers, duties and
obligations solely at the direction of the Trustee. The Agreement
will provide that the Servicer will pay the Trustee's reasonable
fees, costs and expenses.
The Trustee may resign at any time upon thirty (30) days
prior written notice to the Servicer, in which event the Servicer
will be obligated to appoint a successor Trustee. The Servicer
may also remove the Trustee if the Trustee ceases to be eligible
to serve, becomes legally unable to act, is adjudged insolvent or
is placed in receivership or similar proceedings. In such circum-
stances, the Servicer will be obligated to appoint a successor
Trustee. Any resignation or removal of the Trustee and appoint-
ment of a successor Trustee will not become effective until
acceptance of the appointment by the successor Trustee.
The Trustee's Corporate Trust Office is located at [
.] The Sellers,
the Servicer and their respective affiliates may have other
banking relationships with the Trustee and its affiliates in the
ordinary course of their business.
DUTIES OF THE TRUSTEE
The Trustee will make no representations as to the validity
or sufficiency of the Agreement, the Certificates (other than the
execution and authentication of the Certificates), the Receiv-
ables, or any related documents, and will not be accountable for
the use or application by the Sellers or the Servicer of any
funds paid to the Sellers or the Servicer in respect of the
Certificates or the Receivables or for any monies prior to the
time such monies are deposited into the Certificate Account. The
Trustee will not independently verify the existence or status of
the Receivables.
If no Event of Servicing Termination has occurred and is
continuing, the Trustee will be required to perform only those
duties specifically required of it under the Agreement. General-
ly, those duties are limited to the receipt of the various
certificates, reports or other instruments required to be fur-
nished by the Servicer to the Trustee under the Agreement, in
which case the Trustee will only be required to examine such
instruments to determine whether they conform to the requirements
of the Agreement.
The Trustee will be under no obligation to exercise any of
the rights or powers vested in it by the Agreement or to insti-
tute, conduct or defend any litigation thereunder or in relation
thereto at the request, order, or direction of any of the Certif-
icateholders, unless such Certificateholders have offered the
Trustee reasonable security or indemnity against the fees, costs,
expenses and liabilities which may be incurred therein or there-
by. No Class A Certificateholder or Class B Certificateholder
will have any right under the Agreement to institute any proceed-
ing with respect to the Agreement, unless such holder has given
the Trustee written notice of default and unless, with respect to
the Class A Certificates, the holders of Class A Certificates
evidencing not less than a majority of the aggregate outstanding
principal balance of the Class A Certificates [or with respect to
the Class B Certificates, the holders of Class B Certificates
evidencing not less than a majority of the aggregate outstanding
principal balance of the Class B Certificates,] have made a
written request to the Trustee to institute such proceeding in
its own name as Trustee thereunder and have offered to the
Trustee reasonable security or indemnity, and the Trustee for 30
days has neglected or refused to institute any such proceeding.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material anticipated
United States federal income tax consequences of the purchase,
ownership, and disposition of Certificates. This summary is based
upon laws, regulations, rulings, and decisions currently in
effect, all of which are subject to change. The discussion does
not deal with all federal income tax consequences applicable to
all categories of investors, some of which may be subject to
special rules. Consequences to individual investors of investment
in the Certificates will vary according to circumstances. In
addition, this summary is generally limited to investors who will
hold the Certificates as "capital assets" (generally, property
held for investment) within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended (the "Code"). Prospec-
tive investors should note that no rulings have been or will be
sought from the Internal Revenue Service (the "IRS") with respect
to any of the federal income tax consequences discussed below,
and no assurance can be given that the IRS will not take contrary
positions.
INVESTORS ARE URGED TO CONSULT WITH THEIR OWN TAX ADVISERS
TO DETERMINE THE FEDERAL, STATE, LOCAL, AND OTHER TAX CONSEQUENC-
ES TO THEM OF THEIR PURCHASE, OWNERSHIP AND DISPOSITION OF THE
CERTIFICATES.
TAX STATUS OF THE TRUST; SCOPE OF TAX OPINION
In the opinion of Skadden, Arps, Slate, Meagher & Flom,
special tax counsel to the Sellers ("Special Tax Counsel"), the
Trust will not be classified as an association taxable as a
corporation for federal income tax purposes, but will be classi-
fied as a grantor trust, and each Certificate Owner will be
subject to federal income taxation as if it owned directly its
interest in each asset owned by the Trust and paid directly its
share of reasonable expenses paid by the Trust. In addition,
Special Tax Counsel has prepared or reviewed the statements in
this Prospectus under the headings "Prospectus Summary Tax
Status" and "Federal Income Tax Consequences," and is of the
opinion that such statements are correct in all material re-
spects. Such statements are intended as an explanatory discussion
of the possible effects of the classification of the Trust as a
grantor trust for federal income tax purposes on investors
generally and of related tax matters affecting investors general-
ly, but do not purport to furnish information in the level of
detail or with the attention to an investor's specific tax
circumstances that would be provided by an investor's own tax
adviser. Accordingly, each investor is advised to consult its own
tax advisers with regard to the tax consequences to it of invest-
ing in the Certificates.
TAX CHARACTERIZATION OF THE TRUST AS A GRANTOR TRUST
Special Tax Counsel will deliver its opinion that the Trust
will not be classified as an association taxable as a corporation
but that such Trust will be classified as a grantor trust under
subpart E, Part I of subchapter J of the Code. In this case,
owners of Certificates (referred to herein as "Grantor Trust
Certificateholders"), subject to the discussion of stripped
coupons below under " Tax Consequences to Holders of Offered
Certificates Characterization of Fees," 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."
TAX CONSEQUENCES TO HOLDERS OF OFFERED CERTIFICATES
Income on the Receivables. If the Receivables are not
characterized as "stripped bonds" or otherwise recharacterized,
each Grantor Trust Certificateholder will be required to report
on its federal income tax return its pro rata share of the entire
income of the Trust indicated herein for the period during which
it owns a Grantor Trust Certificate, including interest or
finance charges earned on the Receivables, and any gain or loss
upon collection or disposition of the Receivables. Because the
Receivables, when originally issued by the Obligors to the
Dealers, are believed to have had adequate stated interest, the
OID and imputed interest rules should not apply to the Receiv-
ables except to the extent that a Receivable is treated as a
"stripped bond," as discussed below. The portion of each monthly
payment to a Grantor Trust Certificateholder that is allocable to
principal on the Receivables will represent a recovery of capi-
tal, which will reduce the tax basis of such Grantor Trust
Certificateholder's undivided interest in the Receivables. In
computing its federal income tax liability, a Grantor Trust
Certificateholder will be entitled to deduct, consistent with its
method of accounting, its pro rata share of reasonable servicing
fees, and other fees paid or incurred by the Trust as provided in
Section 162 or 212 of the Code. If a Grantor Trust Certificate-
holder is an individual, estate or trust the deduction for his
pro rata share of such fees will be allowed only to the extent
that all of his miscellaneous itemized deductions, including his
share of such fees, exceed 2% of his adjusted gross income. In
addition, in the case of Grantor Trust Certificateholders who are
individuals, otherwise allowable itemized deductions will be
reduced, but not more than 80%, by an amount equal to 3% of the
Grantor Trust Certificateholder's adjusted gross income in excess
of statutorily defined threshold ($117,950 in the case of a
married couple filing jointly for taxable years beginning in
1996, which amount will be adjusted for inflation). Because the
Servicer will not report to holders of Grantor Trust Certificates
offered by Prospectus Supplement the amount of income or deduc-
tions attributable to the Supplemental Servicing Fee, such a
Grantor Trust Certificateholder may effectively underreport his
net taxable income. To the extent that the Receivables are
characterized as "stripped bonds," as discussed below, the
portion of interest treated as retained by the Sellers or the
Servicer would not be included in the income of Grantor Trust
Certificateholders. See " Characterization of Fees" below.
To the extent that the purchase price of a Grantor Trust
Certificate allocated to a Grantor Trust Certificateholder's
undivided interest in a Receivable is greater than or less than
the portion of the principal balance of the Receivable allocable
to the Grantor Trust Certificate, such interest in the Receivable
will have been acquired at a premium or discount, as the case may
be. In determining whether a Grantor Trust Certificateholder has
purchased its interest in the Receivables (or any Receivable) at
a discount, a portion of the purchase price for a Grantor Trust
Certificate may be allocated to accrued interest on each Receiv-
able and to amounts held in the Collection Account pending
distribution to Certificateholders at the time of purchase as
though such accrued interest and collections on the Receivables
were separate assets purchased by the Grantor Trust Certificate-
holder, thus reducing the portion of the purchase price allocable
to a Grantor Trust Certificateholder's undivided interest in each
Receivable (the "Purchase Price") and increasing the potential
discount on the Receivables.
Characterization of Fees. The Servicer intends to report
income to Grantor Trust Certificateholders on the assumption that
the holders of the Grantor Trust Certificates ("Offered Grantor
Trust Certificates") own an interest (equal to the percentage
indicated in the related Prospectus Supplement) in all of the
principal and interest derived from the Receivables. However, to
the extent that the amounts paid to the Servicer or the Sellers
exceed reasonable fees for services rendered, by reason of the
extent to which either the weighted average Contract Rate of the
Receivables, or the individual stated Contract Rates of some of
the Receivables, exceed the Certificate Rate, such amounts will
be treated as an interest in the Receivables retained by the
Sellers or the Servicer. There are no authoritative pronounce-
ments for federal income tax purposes as to either the maximum
amount of compensation that may be considered reasonable for
servicing Receivables or performing other services in the context
of transactions involving receivables such as the Receivables,
although the Service has issued such guidelines in the context of
mortgage loans. To the extent that amounts paid to the Servicer
or the Sellers exceed reasonable compensation for services
provided, they would be viewed as having retained for federal
income tax purposes an ownership interest in a portion of each
interest payment with respect to the certain Receivables (each
such payment, a "stripped coupon"). As a result, such Receiv-
ables would be treated as "stripped bonds" within the meaning of
the Code.
To the extent that the Receivables are characterized as
"stripped bonds," the income and deductions of the Trust alloca-
ble to holders of Offered Grantor Trust Certificates will not
include the portion of the interest on the Receivables treated as
having been retained by the Sellers (or other holder of non-
Offered Grantor Trust Certificates) and the Trust's deductions
will be limited to reasonable servicing and other fees. In
addition, a holder of Offered Grantor Trust Certificates will not
be subject to the market discount rules discussed below with
respect to the stripped Receivables, but instead will be subject
to the OID rules. However, if the price at which such a Certifi-
cateholder were deemed to have acquired a stripped Receivable is
less than the remaining principal balance of such Receivable by
an amount which is less than a statutorily defined de minimis
amount, such Receivable would not be treated as having OID. In
general, the amount of OID on a Receivable treated as a "stripped
bond" will be de minimis if it is less than 1/4 of one percent
for each remaining full year of weighted average life of the
Receivable (probably based on a prepayment assumption) remaining
after the purchase date until the final maturity of the Receiv-
able. If the amount of OID is de minimis under this rule, the
actual amount of OID on such a Receivable would be includible in
income proportionately as principal payments are received on the
Receivable in the proportion that the amount of the principal
payment made bears to the total principal amount of the Receiv-
able.
If the OID on a Receivable, which may differ for each
Receivable, based on the Purchase Price paid by a holder of an
Offered Grantor Trust Certificate, is not treated as being de
minimis, such a Certificateholder will be required to include any
OID on a Receivable in income as it accrues, regardless of when
cash payments are received, using a method reflecting a constant
yield to maturity on the Receivable. It is possible that the IRS
could require use of a prepayment assumption in computing the
yield of a stripped Receivable. If a stripped Receivable is
deemed to be acquired by a holder of an Offered Grantor Trust
Certificate at a greater than de minimis OID, such treatment
would accelerate the accrual of income by such holder. Prospec-
tive investors are advised to consult their own tax advisors
regarding the extent to which a portion of the amounts paid to
the Servicer (or other holder of non-Offered Grantor Trust
Certificates) could be characterized other than as compensation
for services rendered for federal income tax purposes and the
calculation of OID on the Receivables.
It is also possible that any fees deemed to be excessive
could be characterized as deferred purchase price payable to the
Sellers by holders of Offered Grantor Trust Certificates in
exchange for the Receivables. The likely effect of such
recharacterization would be to accelerate realization of taxable
income by such a holder.
Market Discount. If the Receivables are not treated as
"stripped bonds," the interest of a holder of Offered Grantor
Trust Certificates in each Receivable whose Purchase Price is
less than the original issue price (plus OID, if any, previously
includible in the income of any holder) of the Receivable will be
treated as having been purchased at a "market discount". The
market discount on a Receivable will be considered to be zero if
it is less than a statutorily defined de minimis amount.
In general, under the market discount provisions of the
Code, principal payments received by the Trust, and all or a
portion of the gain recognized upon a sale or other disposition
of a Receivable or upon the sale or other disposition of an
Offered Grantor Trust Certificate by a holder thereof, will be
taxable as ordinary income to the extent of accrued market
discount, and a portion of the interest deductions attributable
to indebtedness treated as incurred or continued to purchase or
carry a Receivable or an Offered Grantor Trust Certificate must
be deferred. The ordinary income treatment on dispositions and
deferral of interest deductions described in the preceding
sentence will not apply if a holder of an Offered Grantor Trust
Certificate elects to include market discount in income currently
as it accrues for each taxable year during which it holds the
Offered Grantor Trust Certificate. Market discount will accrue
in the manner to be provided in Treasury regulations, but the
Conference Report accompanying the Tax Reform Act of 1986 states
that, until such regulations are issued, it is intended that
taxpayers may elect to accrue market discount either (i) under a
constant yield (economic accrual) method or (ii) at the election
of the taxpayer, in the proportion that the stated interest paid
on the obligation for the current period bears to total remaining
interest on the obligation. As described above, if the Offered
Grantor Trust Certificates are characterized as "stripped bonds,"
any discount would be treated as OID, the amount and timing of
which should be comparable to the amount and timing of market
discount if an election is made to include market discount in
income currently on the constant yield method. See " Character-
ization of Fees" above. Due to the complexity of the market
discount rules, the holders of Offered Grantor Trust Certificates
are urged to consult their tax advisors as to whether market
discount will result from the acquisition of Offered Grantor
Trust Certificates, and as to the tax treatment of any such
discount.
Premium. In the event that a Receivable is treated as
purchased at a premium (i.e., the Purchase Price exceeds the sum
of principal payments to be made thereon), such premium will be
amortizable by a holder of an Offered Grantor Trust Certificate
as an offset to interest income (with a corresponding reduction
in such holder's basis) under a constant yield method over the
term of the Receivable if an election under Section 171 of the
Code is made (or previously in effect in accordance with the
provisions of the Tax Reform Act of 1986) with respect to the
Offered Grantor Trust Certificates. Any such election will also
apply to debt instruments held by the taxpayer during the year in
which the election is made and all debt instruments acquired
thereafter.
Sale of a Class A Certificate or a Receivable. If an
Offered Grantor Trust Certificate is sold, gain or loss will be
recognized equal to the difference between the amount realized on
the sale and the adjusted basis of the holder of the Offered
Grantor Trust Certificate in the Receivables and any other assets
held by the Trust. A holder of an Offered Grantor Trust
Certificate's adjusted basis will equal such holder's cost for
the Offered Grantor Trust Certificate, increased by any discount
previously included in income, and decreased by any deduction
previously allowed for accrued premium and by the amount of
principal payments previously received on the Receivables. Any
gain or loss will be capital gain or loss if the Offered Grantor
Trust Certificate was held as a capital asset, except that gain
will be treated in whole or in part as ordinary interest income
to the extent of the seller's interest in accrued market discount
not previously taken into income on Receivables having a fixed
maturity date of more than one year from the date of origination.
Under proposed Treasury regulations, the grant of an exten-
sion of the maturity of a Receivable to the Obligor thereon could
be treated as an exchange if it changes the yield on the Receiv-
able by more than a de minimis amount, potentially resulting in
taxable gain or loss to Certificateholders. Reports to Certifi-
cateholders will not include information sufficient to calculate
any such gain or loss and accordingly, in the event that an
extension were to result in a deemed exchange, a Certificatehold-
er could underreport its taxable income. No assurance can be
given as to whether the proposed regulations will be adopted as
final regulations in their present form or whether, if adopted,
they will apply to the Receivables.
Foreign Class A Certificate Owners. Interest attributable
to Receivables which is received by a foreign holder of an
Offered Grantor Trust Certificate will generally not be subject
to the 30% withholding tax imposed with respect to payments of
interest, provided that such foreign holder is not engaged in a
trade or business in the United States and that such foreign
holder fulfills certain certification requirements. Under such
requirements, the holder must certify, under penalties of perju-
ry, that it is not a "United States person" and provide its name
and address. For this purpose, "United States person" means a
citizen or resident of the U.S., a corporation, partnership, or
other entity created or organized in or under the laws of the
U.S. or any political subdivision thereof, or an estate or trust
the income of which is includible in gross income for U.S.
federal income tax purposes, regardless of its source.
Backup Withholding. Payments made on the Offered Grantor
Trust Certificates and proceeds from the sale of the Offered
Grantor Trust Certificates will not be subject to a "backup"
withholding tax of 31% unless, in general, a holder of an Offered
Grantor Trust Certificate fails to comply with certain reporting
procedures and is not an exempt recipient under applicable
provisions of the Code.
THE FEDERAL TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON
A 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 DISPOSI-
TION 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
[THE CLASS A CERTIFICATES]
The Class A Certificates may, in general, be purchased by or
on behalf of (i) "employee benefit plans" (as defined in Section
3(3) of ERISA), (ii) "plans" described in Section 4975(e)(1) of
the Code, including individual retirement accounts and Keogh
Plans, or (iii) entities whose underlying assets include plan
assets by reason of a plan's investment in such entity (each, a
"Plan"), provided that certain conditions are met with respect to
an individual administrative exemption issued by the United
States Department of Labor to , , (the
"Underwriters' Exemption"). The Sellers believes that the
Exemption will apply to the acquisition and holding of the Class
A Certificates by a Plan and that all conditions of the Exemption
other than those within the control of the investors have been or
will be met. Any Plan fiduciary considering whether to purchase
a Class A Certificate on behalf of a Plan should consult with its
counsel regarding the applicability of the Underwriters' Exemp-
tion and other relevant issues. For additional information
regarding treatment of the Class A Certificates under ERISA,
[including certain special considerations that apply with respect
to the Pre-Funding Account,] see "ERISA Considerations" in the
Prospectus.
[THE CLASS B CERTIFICATES
Because the Class B Certificates are subordinated to the
Class A Certificates in certain respects, the Exemption will not
apply to the purchase of Class B Certificates by or on behalf of
a Plan. However, other prohibited transaction exemptions may be
applicable. These exemptions may apply with respect to, inter
alia, purchases by certain insurance company general accounts,
insurance company pooled separate accounts and bank collective
investment funds, and on behalf of employee benefit plans by
certain qualified professional asset managers. Any Plan fiducia-
ry considering whether to purchase a Class B Certificate on
behalf of a Plan should consult with its counsel regarding the
applicability of one or more of such exemptions to such purchase.
For additional information regarding treatment of the Class B
Certificates under ERISA, see "ERISA Considerations" in the
Prospectus.]
UNDERWRITING
Subject to the terms and conditions set forth in an Under-
writing Agreement (the "Underwriting Agreement"), the Sellers
have agreed to cause the Trust to sell to each of the Underwrit-
ers named below (the "Underwriters"), and each of the Underwrit-
ers has severally agreed to purchase, the principal balance of
the Class A Certificates [and Class B Certificates] set forth
opposite its name below:
PRINCIPAL
BALANCE OF
CLASS A
UNDERWRITERS CERTIFICATES
NationsBanc Capital
Markets, Inc. . . . . $
. . . . .
Total . . . $
PRINCIPAL
BALANCE OF
CLASS B
[UNDERWRITERS CERTIFICATES]
NationsBanc Capital
Markets, Inc. . . . . $
. . . . .
Total . . . $
The Sellers have been advised by the Underwriters that they
propose initially to offer the Class A Certificates to the public
at the prices set forth herein, and to certain dealers at such
price less the initial concession not in excess of % per Class
A Certificate. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of % per Class A Certifi-
cate to certain other dealers. After the initial public offering
of the Class A Certificates, the public offering prices and such
concessions may be changed.
[The Sellers have been advised by the Underwriters that they
propose initially to offer the Class B Certificates to the public
at the prices set forth herein, and to certain dealers at such
price less the initial concession not in excess of % per Class
B Certificate. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of % per Class B Certifi-
cate to certain other dealers. After the initial public offering
of the Class B Certificates, the public offering prices and such
concessions may be changed.]
The Sellers will indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or
contribute to payments the Underwriters may be required to make
in respect thereof.
NationsBanc Capital Markets, Inc. ("NCMI") is a separate
subsidiary of NationsBank Corporation. NCMI is a registered
broker/dealer and not a bank. Any obligations of NCMI are the
sole responsibility of NCMI and do not create any obligation or
guarantee on the part of any affiliate of NCMI.
[This Prospectus Supplement and the related Prospectus may be
used by NCMI in connection with offers and sales related to market-
making transactions in the Certificates. NCMI may act as principal
or agent in such transactions. Such sales will be made at prices
related to prevailing markets prices at the time of sale of
otherwise. NCMI does not have any obligation to make a market in
the Certificates, and it may discontinue any such market-making
activities at any time without notice, in its sole discretion.
NCMI is among the underwriters participating in the initial
distribution of the Certificates.]
LEGAL OPINIONS
In addition to the legal opinions described in the Prospec-
tus, certain legal matters relating to the Certificates will be
passed upon for the Underwriters and certain federal income tax
and other matters will be passed upon for the Trust by
. [ has represented
and may from time to time in the future render legal services to
one or more of the Sellers and their affiliates.]
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally
offered NationsBank Auto Grantor Trust % Asset Backed Certifi-
cates, Class A [and % Asset Backed Certificates, Class B]
([collectively,] the "Global Securities") will be available only
in book-entry form. Investors in the Global Securities may hold
such Global Securities through any of The Depository Trust
Company ("DTC"), Cedel Bank, societe anonyme ("Cedel") or the
Euroclear System ("Euroclear"). The Global Securities will be
tradeable as home market instruments in both the European and
U.S. domestic markets. Initial settlement and all secondary
trades will settle in same-day funds.
Secondary market trading between investors holding Global
Securities through Cedel and Euroclear will be conducted in the
ordinary way in accordance with their normal rules and operating
procedures and in accordance with conventional eurobond practice
(i.e., seven calendar day settlement).
Secondary market trading between investors holding Global
Securities through DTC will be conducted according to the rules
and procedures applicable to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear
and DTC Participants holding Global Securities will be effected
on a delivery-against-payment basis through the respective
Depositaries of Cedel and Euroclear (in such capacity) and as DTC
Participants.
Non-U.S. holders (as described below) of Global Securities
will be subject to U.S. withholding taxes unless such holders
meet certain requirements and deliver appropriate U.S. tax
documents to the securities clearing organizations or their
participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC
in the name of Cede & Co. as nominee of DTC. Investors' inter-
ests in the Global Securities will be represented through finan-
cial institutions acting on their behalf as direct and indirect
Participants in DTC. As a result, Cedel and Euroclear will hold
positions on behalf of their participants through their respec-
tive Depositaries, which in turn will hold such positions in
accounts as DTC Participants.
Investors electing to hold their Global Securities through
DTC will follow the settlement practices applicable to U.S.
corporate debt obligations. Investor securities custody accounts
will be credited with their holdings against payment in same-day
funds on the settlement date.
Investors electing to hold their Global Securities through
Cedel or Euroclear accounts will follow the settlement procedures
applicable to conventional eurobonds, except that there will be
no temporary global security and no "lock-up" or restricted
period. Global Securities will be credited to the securities
custody accounts on the settlement date against payment in same-
day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is
important to establish at the time of the trade where both the
purchaser's and seller's accounts are located to ensure that
settlement can be made on the desired value date.
Trading between DTC Participants. Secondary market trading
between DTC Participants will be settled using the procedures
applicable to U.S. corporate debt obligations in same-day funds.
Trading between Cedel and/or Euroclear Participants.
Secondary market trading between Cedel Participants or Euroclear
Participants will be settled using the procedures applicable to
conventional eurobonds in same-day funds.
Trading between DTC seller and Cedel or Euroclear purchaser.
When Global Securities are to be transferred from the account of
a DTC Participant to the account of a Cedel Participant or a
Euroclear Participant, the purchaser will send instructions to
Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. Cedel
or Euroclear will instruct the respective Depositary, as the case
may be, to receive the Global Securities against payment.
Payment will include interest accrued on the Global Securities
from and including the last coupon payment date to and excluding
the settlement date. Payment will then be made by the respective
Depositary to the DTC Participant's account against delivery of
the Global Securities. After settlement has been completed, the
Global Securities will be credited to the respective clearing
system and by the clearing system, in accordance with its usual
procedures, to the Cedel Participant's or Euroclear Participant's
account. The securities credit will appear the next day (Europe-
an time) and the cash debit will be back-valued to, and the
interest on the Global Securities will accrue from, the value
date (which would be the preceding day when settlement occurred
in New York). If settlement is not completed on the intended
value date (i.e., the trade fails), the Cedel or Euroclear cash
debit will be valued instead as of the actual settlement date.
Cedel Participants and Euroclear Participants will need to
make available to the respective clearing systems the funds
necessary to process same-day funds settlement. The most direct
means of doing so is to pre-position funds for settlement, either
from cash on hand or existing lines of credit, as they would for
any settlement occurring within Cedel or Euroclear. Under this
approach, they may take on credit exposure to Cedel or Euroclear
until the Global Securities are credited to their accounts one
day later.
As an alternative, if Cedel or Euroclear has extended a line
of credit to them, Cedel Participants or Euroclear Participants
can elect not to pre-position funds and allow that credit line to
be drawn upon to finance settlement. Under this procedure, Cedel
Participants or Euroclear Participants purchasing Global Securi-
ties would incur overdraft charges for one day, assuming they
cleared the overdraft when the Global Securities were credited to
their accounts. However, interest on the Global Securities would
accrue from the value date. Therefore, in many cases the invest-
ment income on the Global Securities earned during that one-day
period may substantially reduce or offset the amount of such
overdraft charges, although this result will depend on each Cedel
Participant's or Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York busi-
ness hours, DTC Participants can employ their usual procedures
for sending Global Securities to the respective Depositary for
the benefit of Cedel Participants or Euroclear Participants. The
sale proceeds will be available to the DTC seller on the settle-
ment date. Thus, to the DTC Participant a cross-market transac-
tion will settle no differently than a trade between two DTC
Participants.
Trading between Cedel or Euroclear seller and DTC purchaser.
Due to time zone differences in their favor, Cedel Participants
and Euroclear Participants may employ their customary procedures
for transactions in which Global Securities are to be transferred
by the respective clearing system, through the respective Deposi-
tary, to a DTC Participant. The seller will send instructions to
Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. In
these cases, Cedel or Euroclear will instruct the respective
Depositary, as appropriate, to deliver the bonds to the DTC
Participant's account against payment. Payment will include
interest accrued on the Global Securities from and including the
last coupon payment date to and excluding the settlement date.
The payment will then be reflected in the account of the Cedel
Participant or Euroclear Participant the following day, and
receipt of the cash proceeds in the Cedel Participant's or
Euroclear Participant's account would be back-valued to the value
date (which would be the preceding day, when settlement occurred
in New York). Should the Cedel Participant or Euroclear Partici-
pant have a line of credit with its respective clearing system
and elect to be in debit in anticipation of receipt of the sale
proceeds in its account, the back-valuation will extinguish any
overdraft charges incurred over that one-day period. If settle-
ment is not completed on the intended value date (i.e., the trade
fails), receipt of the cash proceeds in the Cedel Participant's
or Euroclear Participant's account would instead be valued as of
the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that
purchase Global Securities from DTC Participants for delivery to
Cedel Participants or Euroclear Participants should note that
these trades would automatically fail on the sale side unless
affirmative action were taken. At least three techniques should
be readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day
(until the purchase side of the day trade is reflected in
their Cedel or Euroclear accounts) in accordance with the
clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a
DTC Participant no later than one day prior to settlement,
which would give the Global Securities sufficient time to be
reflected in their Cedel or Euroclear account in order to
settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell
sides of the trade so that the value date for the purchase
from the DTC Participant is at least one day prior to the
value date for the sale to the Cedel Participant or
Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities
through Cedel or Euroclear (or through DTC if the holder has an
address outside the U.S.) will be subject to the 30% U.S. with-
holding tax that generally applies to payments of interest
(including original issue discount) on registered debt issued by
U.S. Persons, unless (i) each clearing system, bank or other
financial institution that holds customers' securities in the
ordinary course of its trade or business in the chain of interme-
diaries between such beneficial owner and the U.S. entity re-
quired to withhold tax complies with applicable certification
requirements and (ii) such beneficial owner takes one of the
following steps to obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial
owners of Global Securities that are non-U.S. Persons can obtain
a complete exemption from the withholding tax by filing a signed
Form W-8 (Certificate of Foreign Status). If the information
shown on Form W-8 changes, a new Form W-8 must be filed within 30
days of such change.
Exemption for non-U.S. Persons with effectively connected
income (Form 4224). A non-U.S. Person, including a non-U.S.
corporation or bank with a U.S. branch, for which the interest
income is effectively connected with its conduct of a trade or
business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding
of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States).
Exemption or reduced rate for non-U.S. Persons resident in
treaty countries (Form 1001). Non-U.S. Persons that are benefi-
cial owners of Global Securities residing in a country that has a
tax treaty with the United States can obtain an exemption or
reduced tax rate (depending on the treaty terms) by filing Form
1001 (Ownership, Exemption or Reduced Rate Certificate). If the
treaty provides only for a reduced rate, withholding tax will be
imposed at that rate unless the filer alternatively files Form W-
8. Form 1001 may be filed by the beneficial owner of Global
Securities or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can
obtain a complete exemption from the withholding tax by filing
Form W-9 (Payer's Request for Taxpayer Identification Number and
Certification).
U.S. Federal Income Tax Reporting Procedure. The beneficial
owner of a Global Security or in the case of a Form 1001 or a
Form 4224 filer, his agent, files by submitting the appropriate
form to the person through whom it holds (the clearing agency, in
the case of persons holding directly on the books of the clearing
agency). Form W-8 and Form 1001 are effective for three calendar
years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of
the United States, (ii) a corporation or partnership organized in
or under the laws of the United States or any political subdivi-
sion thereof or (iii) an estate or trust the income of which is
includible in gross income for United States tax purposes,
regardless of its source. This summary does not deal with all
aspects of U.S. federal income tax withholding that may be
relevant to foreign holders of the Global Securities. Investors
are advised to consult their own tax advisers for specific tax
advice concerning their holding and disposing of the Global
Securities.
INDEX OF TERMS
Set forth below is a list of the defined terms used in this
Prospectus Supplement and defined herein and the pages on which
the definitions of such terms may be found herein. Certain
defined terms used in this Prospectus Supplement are defined in
the Prospectus. See "Index of Terms" in the Prospectus.
Additional Yield Supplement Amount . . . . . . . . . . . . . S-9
Additional Reserve Account Deposit . . . . . . . . . . S-9, S-26
Advance . . . . . . . . . . . . . . . . . . . . . . . . . . S-27
Advance Reserve Withdrawal . . . . . . . . . . . . . . . . S-28
Agreement . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Available Interest . . . . . . . . . . . . . . . . . . . . S-30
Available Principal . . . . . . . . . . . . . . . . . . . . S-30
Available Reserve Amount . . . . . . . . . . . . . . . . . S-28
Average Delinquency Ratio . . . . . . . . . . . . . . . . . S-29
Average Net Loss Ratio . . . . . . . . . . . . . . . . . . S-29
Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Business Day . . . . . . . . . . . . . . . . . . . . . . . . S-6
Cede . . . . . . . . . . . . . . . . . . . . . . . . . S-2, S-4
Cedel . . . . . . . . . . . . . . . . . . . . . . S-4, S-16, I-1
Certificate Owner . . . . . . . . . . . . . . . . . . . . . . S-4
Certificate Pool Factor . . . . . . . . . . . . . . . . . . S-23
Certificate Prepayment Amount . . . . . . . . . . . . . S-8, S-25
Certificate Prepayment Premium . . . . . . . . . . . . . . . S-8
Certificateholders . . . . . . . . . . . . . . . . . . . . . S-6
Certificates . . . . . . . . . . . . . . . . . . . . . S-1, S-4
Class A Certificate Balance . . . . . . . . . . . . . . . . S-31
[Class A] Certificate Rate . . . . . . . . . . . . . . . . . S-6
Class A Certificateholders . . . . . . . . . . . . . . . . . S-6
Class A Certificates . . . . . . . . . . . . . . . . . S-1, S-4
Class A Interest Carryover Shortfall . . . . . . . . . . . S-31
Class A Interest Distribution . . . . . . . . . . . . . . . S-31
Class A Monthly Interest . . . . . . . . . . . . . . . . . S-32
Class A Monthly Principal . . . . . . . . . . . . . . . . . S-32
Class A Percentage . . . . . . . . . . . . . . . S-4, S-25, S-32
Class A Principal Carryover Shortfall . . . . . . . . . . . S-32
Class A Principal Distribution . . . . . . . . . . . . . . S-32
Class B Certificate Balance . . . . . . . . . . . . . . . . S-32
[Class B ]Certificate Rate . . . . . . . . . . . . . . . . . S-6
Class B Certificateholders . . . . . . . . . . . . . . . . . S-6
Class B Certificates . . . . . . . . . . . . . . S-1, S-4, S-39
Class B Interest Carryover Shortfall . . . . . . . . . . . S-32
Class B Interest Distribution . . . . . . . . . . . . . . . S-32
Class B Monthly Interest . . . . . . . . . . . . . . . . . S-32
Class B Monthly Principal . . . . . . . . . . . . . . . . . S-32
Class B Percentage . . . . . . . . . . . . . . . S-4, S-25, S-32
Class B Principal Carryover Shortfall . . . . . . . . . . . S-32
Class B Principal Distribution . . . . . . . . . . . . . . S-33
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . S-5
Code . . . . . . . . . . . . . . . . . . . . . . . . S-12, S-36
Collateral Agent . . . . . . . . . . . . . . . . . . . S-3, S-4
Collection Account . . . . . . . . . . . . . . . . . . . . S-11
Collection Period . . . . . . . . . . . . . . . . . . . . . . S-6
Collections . . . . . . . . . . . . . . . . . . . . . . . . S-30
Commission . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Contract Rate . . . . . . . . . . . . . . . . . . . . S-18, S-31
Cut-Off Date . . . . . . . . . . . . . . . . . . S-1, S-3, S-18
Dealer Agreements . . . . . . . . . . . . . . . . . . . . . . S-3
Dealers . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Defaulted Receivable . . . . . . . . . . . . . . . . . . . S-29
Definitive Certificates . . . . . . . . . . . . . . . . . . S-26
Delinquency Ratio . . . . . . . . . . . . . . . . . . . . . S-29
Distribution Account . . . . . . . . . . . . . . . . . . . S-27
Distribution Date . . . . . . . . . . . . . . . . . . . S-1, S-6
DTC . . . . . . . . . . . . . . . . . . . . . . . . S-2, S-4, I-1
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . S-12
Euroclear . . . . . . . . . . . . . . . . . . . . S-4, S-16, I-1
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . S-2
Final Scheduled Maturity Date . . . . . . . . . . . . . . . . S-5
Final Scheduled Distribution Date . . . . . . . . . . . . . . S-1
Financed Vehicles . . . . . . . . . . . . . . . . . . . . . . S-3
"Forced-placed insurance" . . . . . . . . . . . . . . . . . S-18
Funding Period . . . . . . . . . . . . . . . . . . . . . . . S-8
Global Securities . . . . . . . . . . . . . . . . . . . . . . I-1
Grantor Trust Certificateholders . . . . . . . . . . . . . S-36
Grantor Trust Certificates. . . . . . . . . . . . . . . . . S-36
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . S-26
[Initial] Cut-Off Date . . . . . . . . . . . . . . . . S-3, S-5
[Initial] Receivables . . . . . . . . . . . . . . . . . . . S-5
Interest Collections . . . . . . . . . . . . . . . . . . . S-30
IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-36
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . S-29
Mandatory Repurchase . . . . . . . . . . . . . . . . . S-7, S-25
market discount . . . . . . . . . . . . . . . . . . . . . . S-38
NationsBank South . . . . . . . . . . . . . . . . . . . . . . S-3
NationsBank Texas . . . . . . . . . . . . . . . . . . . . . . S-3
NCMI . . . . . . . . . . . . . . . . . . . . . . . . . . . S-41
Net Loss Ratio . . . . . . . . . . . . . . . . . . . . . . S-29
Obligor . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Offered Grantor Trust Certificates . . . . . . . . . . . . S-37
Outstanding Advances . . . . . . . . . . . . . . . . . . . S-10
Pass-Through Rate. . . . . . . . . . . . . . . . . . . . . . S-6
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . S-39
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . S-6
Pool[/Pre-Funding] Balance . . . . . . . . . . . . . . . . . S-6
Pre-Funded Amount . . . . . . . . . . . . . . . . . . . . . . S-5
Pre-Funding Account . . . . . . . . . . . . . . . . . . S-1, S-8
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Purchase Price . . . . . . . . . . . . . . . . . . . . . . S-37
Purchased Receivable . . . . . . . . . . . . . . . . . . . S-31
Rating Agencies . . . . . . . . . . . . . . . . . . . . . . S-17
Rating Agency Condition . . . . . . . . . . . . . . . . . . S-10
Realized Losses . . . . . . . . . . . . . . . . . . . . . . S-33
Receivables . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Receivables Pool . . . . . . . . . . . . . . . . . . . . . S-18
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . S-30
Required [Initial] Yield Supplement Amount . . . . . . S-9, S-35
Required Subsequent Yield Supplement Amount . . . . . . S-9, S-35
Required Rate . . . . . . . . . . . . . . . . . . . . . . . S-10
Required Yield Supplement Amount. . . . . . . . . . . . S-9, S-35
Reserve Account . . . . . . . . . . . . . . . . . . . . . . S-10
Reserve Account Initial Deposit . . . . . . . . . . . . . . S-10
Securities Act . . . . . . . . . . . . . . . . . . . . . . . S-3
Seller . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Sellers . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Servicer . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Servicer's Certificate . . . . . . . . . . . . . . . . . . S-31
Servicing Fee Rate . . . . . . . . . . . . . . . . . . . . S-11
Shortfall Amount . . . . . . . . . . . . . . . . . . . . . S-16
Simple Interest Receivable . . . . . . . . . . . . . . . . S-23
Special Tax Counsel . . . . . . . . . . . . . . . . . S-12, S-36
Specified Reserve Account Balance . . . . . . . . . . . . . S-11
Subsequent Cut-Off Date . . . . . . . . . . . . . . . . . . . S-6
Subsequent Receivables . . . . . . . . . . . . . . . . S-1, S-5
Subsequent Transfer Date . . . . . . . . . . . . . . . . . . S-6
Supplemental Servicing Fee . . . . . . . . . . . . . . . . S-28
Trust . . . . . . . . . . . . . . . . . . . . . . . . . S-1, S-3
Trust Property . . . . . . . . . . . . . . . . . . . . . . . S-4
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
U.S. Person . . . . . . . . . . . . . . . . . . . . . . . . . I-4
Underwriters . . . . . . . . . . . . . . . . . . . . . . . S-40
Underwriters' Exemption . . . . . . . . . . . . . . . . . . S-40
Underwriting Agreement . . . . . . . . . . . . . . . . . . S-40
United States person . . . . . . . . . . . . . . . . . . . S-39
Yield Supplement Amount . . . . . . . . . . . . . . . . S-9, S-33
Yield Supplement Agreement . . . . . . . . . . . . . . . . . S-9
Yield Supplement Account . . . . . . . . . . . . . . . . . . S-9
Yield Supplement Initial Deposit . . . . . . . . . . . . . . S-9
NO DEALER, SALESMAN OR OTHER $
PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO NationsBank
MAKE ANY REPRESENTATIONS OTHER Auto Grantor Trust 199 -
THAN THOSE CONTAINED OR INCOR-
PORATED BY REFERENCE IN THIS $
PROSPECTUS SUPPLEMENT OR THE % Asset Backed
PROSPECTUS AND, IF GIVEN OR Certificates, Class A
MADE, SUCH INFORMATION OR REP-
RESENTATIONS MUST NOT BE RE- [$
LIED UPON. THIS PROSPECTUS % Asset Backed
SUPPLEMENT AND THE PROSPECTUS Certificates, Class B]
DO NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES
OTHER THAN THE SECURITIES OF- *
FERED HEREBY, NOR AN OFFER OF NATIONSBANK, N.A.
THE SECURITIES IN ANY STATE OR NATIONSBANK, N.A. (SOUTH)
JURISDICTION IN WHICH, OR TO NATIONSBANK OF TEXAS, N.A.
ANY PERSON TO WHOM, SUCH OFFER
WOULD BE UNLAWFUL. THE DELIV- SELLERS
ERY OF THIS PROSPECTUS SUPPLE- NATIONSBANK, N.A.
MENT OR THE PROSPECTUS AT ANY SERVICER
TIME DOES NOT IMPLY THAT IN-
FORMATION HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SUBSE-
QUENT TO ITS DATE.
PROSPECTUS
____________________
SUPPLEMENT
TABLE OF CONTENTS
PAGE
PROSPECTUS SUPPLEMENTReports
to Certificateholders . . S-2
Summary . . . . . . . . . S-3
Risk Factors . . . . . . S-13
The Trust . . . . . . . . S-17
The Receivables Pool . . S-18
Pool Factors . . . . . . S-23
Maturity and Prepayment Con-
siderations . . . . . . . S-23
Yield Considerations . . S-24
Use of Proceeds . . . . . S-24
Description of the Certifi-
cates . . . . . . . . . . S-24
Federal Income Tax Consequenc-
es . . . . . . . . . . . S-36
ERISA Considerations . . S-40
Underwriting . . . . . . S-40
Legal Opinions . . . . . S-41
Annex I Global Clearance, Set-
tlement and Tax
Documentation Procedures I-1
Index of Terms . . . . . . i
PROSPECTUS
Reports to Securityholders. 3
Available Information . . . 3
Incorporation of Certain Docu-
ments by Reference . . . . 3
Summary . . . . . . . . . . 5
Risk Factors . . . . . . . 16
The Trusts . . . . . . . . 23
The Receivables Pools . . . 24
Maturity and Prepayment
Considerations . . . . . . 27
Pool Factors and Trading
Information . . . . . . . 29
Use of Proceeds . . . . . . 29
The Banks, NationsBank
Corporation and [NB-SPC]. . 29
The Servicer . . . . . . . 30
Description of the Notes. . 30
Description of the
Certificates . . . . . . . 36
Description of Fixed and
Floating Rate Options . . . 37
Book-Entry and Definitive
Securities; Reports to
Securityholders . . . . . . 42
Description of the Transfer
and Servicing Agreements. . 47
Certain Legal Aspects of the
Receivables . . . . . . . . 60
Federal Income Tax
Consequences . . . . . . . . 64
ERISA Considerations .. . . 65
Plan of Distribution .. . . 70
Legal Opinions . . . .. . . 71
Index of Terms . . . .. . . 72
UNTIL , 199 (90 DAYS AFTER THE DATE OF THIS
PROSPECTUS SUPPLEMENT), ALL DEALERS EFFECTING TRANSAC-
TIONS IN THE CERTIFICATES, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PRO-
SPECTUS SUPPLEMENT AND A PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
SUPPLEMENT AND A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the actual and estimated
expenses in connection with the offering described in this
Registration Statement.
Securities and Exchange Commission registration fee$ 344.83
Rating agency fees . . . . . . . . . . . . . . $______*
Printing (estimated) . . . . . . . . . . . . . $______*
Legal fees and expenses (estimated) . . . . . . $______*
Accountants' fees (estimated) . . . . . . . . . $______*
Fees and expenses of Indenture Trustee (estimated) $______*
Fees and expenses of applicable Trustee (estimated)$______*
Miscellaneous expenses (estimated) . . . . . . $______*
Total . . . . . . . . . . . . . . . . . . $ *
* To be completed by amendment
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Articles of Association of NationsBank, N.A. provide as
follows:
TENTH. To the fullest extent permitted by the laws of
the state in which the bank's holding company is incorporat-
ed, subject only to the limits of the corporate powers of a
national association, a director of the association shall
not be personally liable to the association, its sharehold-
ers or otherwise for monetary damage for breach of duty as a
director. Any repeal or modification of this article shall
be prospective only and shall not adversely affect any
limitation on the personal liability of a director of the
association existing at the time of such repeal or modifica-
tion.
The association shall indemnify and hold harmless any
director, officer, employee, or agent of the association and
its subsidiaries against all liability and expenses to the
fullest extent permitted by the laws of the state in which
the association's holding company is incorporated, and in
addition to the indemnification otherwise provided by law,
the association shall indemnify and hold harmless such
directors, officers, employees, or agents against all lia-
bility and expenses, including reasonable attorney's fees,
in any proceeding (including without limitation a proceeding
brought by or on behalf of the association itself) arising
out of their status as directors, officers, employees, or
agents, or their service at the association's request as a
director, officer, partner, trustee, employee or agent of
another foreign or domestic corporation, association, part-
nership, joint venture, trust, employee benefit plan or
other enterprise, or their activities in any such capacity.
The extent of indemnification provided for in this
section and the procedures for implementation of that indem-
nification shall be in accordance with the provisions of the
bylaws of NationsBank Corporation. The association may also
provide insurance for such indemnification relating to the
directors, officers, employees or agent's service to the
association in accordance with the provisions of the bylaws
of NationsBank Corporation. To the extent that indemnifica-
tion or insurance coverage is prohibited or limited by
lawful and binding regulations of the Office of the Comp-
troller of the Currency, such regulations shall govern this
indemnification provision.
The Articles of Association of NationsBank, N.A. (South)
provide as follows:
TENTH. To the fullest extent permitted by the laws of
the state in which the bank's holding company is incorporat-
ed, subject only to the limits of the corporate powers of a
national association, a director of the association shall
not be personally liable to the association, its sharehold-
ers or otherwise for monetary damage for breach of duty as a
director. Any repeal or modification of this article shall
be prospective only and shall not adversely affect any
limitation of the personal liability of a director of the
association existing at the time of such repeal or modifica-
tion.
The association shall indemnify and hold harmless any
director, officer, employee, or agent of the association and
its subsidiaries against all liability and expenses to the
fullest extent permitted by the laws of the state in which
the association's holding company is incorporated, and in
addition to the indemnification otherwise provided by law,
the association shall indemnify and hold harmless such
directors, officers, employees, or agents against all lia-
bility and expenses, including reasonable attorney's fees,
in any proceeding (including without limitation a proceeding
brought by or on behalf of the association itself) arising
out of their status as directors, officers, employees, or
agents, or their service at the associations's request as a
director, officer, partner, trustee, employee or agent of
another foreign or domestic corporation, association, part-
nership, joint venture, trust, employee benefit plan or
other enterprise, or their activities in any such capacity.
The extent of indemnification provided for in this
section and the procedures for implementation of that indem-
nification shall be in accordance with the provisions of the
bylaws of NationsBank Corporation. The association may also
provide insurance for such indemnification relating to the
directors, officers, employees or agent's service to the
association in accordance with the provisions of the bylaws
of NationsBank Corporation. To the extent that indemnifica-
tion or insurance coverage is prohibited or limited by
lawful and binding regulations of the Office of the Comp-
troller of the Currency, such regulations shall govern this
indemnification provision.
The Articles of Association of NationsBank of Texas, N.A.
provide as follows:
ELEVENTH. (a) The Association shall indemnify and hold
harmless each person who was or is a Director of the Associ-
ation who was or is made a party or is threatened to be made
a party to or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), other than a
proceeding by or in the right of the Association, whether
the basis of such proceeding is alleged action by such
person (i) in an official capacity as a Director of the
Association or (ii) while such person is also serving as a
Director of the Association, in the capacity of an officer,
employee or agent of the Association, including service with
respect to an employee benefit plan, against all expense,
liability and loss (including, without limitation,
Attorneys' Fees [as defined in the last sentence of this
Section 11(a)], judgments, fines or penalties and amounts
paid in settlement) actually and reasonably incurred or
suffered by such person in connection therewith; provided
that such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the
best interests of the Association and, with respect to any
criminal proceeding, had no reasonable cause to believe such
person's conduct was unlawful. Reasonable expenses incurred
by such person in defending a proceeding shall be paid or
reimbursed by the Association in advance of the final dispo-
sition of such proceeding and without any determination that
such person has met the standard of conduct referred to in
this Section 11(a); provided that the Association receives a
written undertaking by such person that such person has a
good faith belief that he has met the standard of conduct
necessary for indemnification under this section [sic] 11(a)
and receives a written undertaking by or on behalf of such
person to repay the amount paid or reimbursed if it is
ultimately determined that such person has not met such
standard of conduct. Such written undertaking with respect
to repayment need not be secured and shall be acceptable
without reference to financial ability to make repayment.
Indemnification and payment or reimbursement of expenses
shall continue as to any person who has ceased to be a
Director and shall inure to the benefit of, and be binding
upon, such person's heirs, executors and administrators. As
used in this Article Eleventh, the term "Attorneys' Fees"
shall mean, in the context of a particular proceeding, the
reasonable attorneys' fees incurred by an individual in
connection with the defense of such individual in such
proceeding, the reasonable expenses of such attorneys in
such defense and court costs incurred in connection there-
with.
(b) The Association shall indemnify and hold harmless
each person who was or is an officer, employee or agent
(each of the foregoing being referred to as an "Officer") of
the Association who was or is made a party or is threatened
to be made a party to or is otherwise involved in any pro-
ceeding, other than a proceeding by or in the right of the
Association, whether the basis of such proceeding is alleged
action by such person (i) in an official capacity as an
Officer of the Association, including service with respect
to an employee benefit plan, or (ii) as a Designated Repre-
sentative (as defined in the following sentence), against
all expense, liability and loss (including, without limita-
tion, Attorneys' Fees, judgments, fines or penalties and
amounts paid in settlement) actually and reasonably incurred
or suffered by such person in connection therewith; provided
that such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the
best interests of the Association and, with respect to any
criminal proceeding, had no reasonable cause to believe such
person's conduct was unlawful; and provided further, that
the Association shall not indemnify and hold harmless such
person against any expense (other than Attorneys' Fees),
liability or loss (including, without limitation, judgments,
fines or penalties and amounts paid in settlement) to the
extent that such expense (other than Attorneys' Fees),
liability or loss (including, without limitation, judgments,
fines or penalties and amounts paid in settlement) arose
from such person's acts or failures to act prior to July 30,
1988 ("Prior Acts"). A person shall be acting as a Designat-
ed Representative for purposes of this Article Eleventh if
such person is serving at the written request of the Associ-
ation made pursuant to specific authority of the Board of
Directors, in the capacity of a director, officer, employee
or agent of any corporation, partnership, joint venture,
trust or other enterprise other than the Association. Rea-
sonable expenses incurred by a person who was or is an
Officer of the Association in defending a proceeding shall
be paid or reimbursed by the Association in advance of the
final disposition of a proceeding and without any determina-
tion that such person has met the standard of conduct re-
ferred to in this Section 11(b); provided that the Associa-
tion receives a written undertaking by such person that such
person has a good faith belief that he has met the standard
of conduct necessary for indemnification under this section
[sic] 11(b) and receives a written undertaking by or on
behalf of such person to repay the amount paid or reimbursed
if it is ultimately determined that such person has not met
such standard of conduct. Such written undertaking with
respect to repayment need not be secured and shall be ac-
ceptable without reference to financial ability to make
repayment. Indemnification and payment or reimbursement of
expenses shall continue as to any person who has ceased to
be an Officer of the Association and shall inure to the
benefit of, and be binding upon, such person's heirs, execu-
tors and administrators.
(c) The Association may indemnify and hold harmless any
person who was or is a Director or Officer who was or is
made a party or is threatened to be made a party to or is
otherwise involved in any proceeding by or in the right of
the Association to procure a judgment in its favor by reason
of the fact that he is or was a Director, Officer or Desig-
nated Representative against expenses (including, without
limitation, Attorneys' Fees) actually and reasonably in-
curred by him in connection with the defense or settlement
of such proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best
interests of the Association, and except that no indemnifi-
cation shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to
be liable to the Association unless and only to the extent
that a court of competent jurisdiction shall determine upon
application that, despite the adjudication of liability but
in view of all the circumstances of the proceeding, such
person is fairly and reasonably entitled to indemnity for
such expenses which the court shall deem proper. Reasonable
expenses incurred by such person in defending a proceeding
may be paid or reimbursed by the Association in advance of
the final disposition of such proceeding and without any
determination that such person has met the standard of
conduct referred to in this Section 11(c); provided that the
Association receives a written undertaking by such person
that such person has a good faith belief that he has met the
standard of conduct necessary for indemnification under this
Section 11(c) and receives a written undertaking by or on
behalf of such person to repay the amount paid or reimbursed
if it is ultimately determined that such person has not met
such standard of conduct (but subject to the determination,
by a court of competent jurisdiction, as to indemnity for
expenses described in the immediately preceding sentence).
Such written undertaking with respect to repayment need not
be secured and shall be acceptable without reference to
financial ability to make repayment. Indemnification for,
and payment or reimbursement of, expenses shall continue as
to any person who has ceased to be a Director or Officer and
shall inure to the benefit of, and be binding upon, such
person's heirs, executors and administrators.
(d) Notwithstanding the provisions of Section 11(a),
Section 11(b) or Section 11(c), the Association shall not
indemnify any Director or Officer (each of the foregoing
being referred to as an "indemnitee") against expenses,
penalties or any other payments incurred in an administra-
tive proceeding or action instituted by an appropriate bank
regulatory agency, which proceeding or action results in a
final order assessing civil money penalties or requiring
affirmative action by the indemnitee in the form of payments
to the Association.
(e) To the extent that an indemnitee has been wholly
successful on the merits or otherwise in defense of any
proceeding referred to in Section 11(a), Section 11(b) or
Section 11(c), the Association shall indemnify, and pay or
reimburse, such indemnitee for expenses (including, without
limitation, Attorneys' Fees) actually and reasonably in-
curred by such indemnitee in connection therewith.
(f) Any indemnification under Section 11(a), Section
11(b) or Section 11(c) (unless ordered by a court of compe-
tent jurisdiction) shall be made by the Association only as
authorized in the specific case upon a determination that
indemnification of the indemnitee is proper in the circum-
stances because the indemnitee has met the applicable stan-
dard of conduct referred to in Section 11(a), Section 11(b)
or Section 11(c), as the case may be. Such determination
shall be made in any of the following manners: (1) by the
Board of Directors by a majority vote of a quorum consisting
of Directors who were not named defendants or respondents in
such proceeding (a "Disinterested Board Majority"), or if
such a quorum is not obtainable, by a majority vote of a
committee of the Board of Directors, designated to act in
the matter by a majority vote of all Directors, consisting
solely of two or more Directors who at the time are not
named defendants or respondents in the proceeding (a "Disin-
terested Committee Majority"); (2) by special legal counsel
selected by a Disinterested Board Majority or a Disinterest-
ed Committee Majority, as the case may be, or, if neither a
Disinterested Board Majority nor a Disinterested Committee
Majority can be obtained, by a majority vote of all Direc-
tors; or (3) by shareholders by a majority vote that ex-
cludes the shares held by Directors who are named defendants
or respondents in such proceeding, in the event that the
issue is submitted to the shareholders of the Association
for determination by a Disinterested Board Majority or a
Disinterested Committee Majority, as the case may be, or if
neither a Disinterested Board Majority nor a Disinterested
Committee Majority can be obtained, by a majority vote of
all Directors.
(g) The rights to indemnification and to the payment or
reimbursement of expenses conferred in this Article Eleventh
shall not be exclusive of any other right which any indemni-
tee may have or hereafter acquire under any statute, bylaw,
agreement, vote of shareholders or disinterested Directors
or otherwise, including, without limitation, rights granted
by the Federal Deposit Insurance Corporation in connection
with the formation of the Association.
(h) The Association may maintain insurance, at its
expense, to protect itself and any indemnitee against any
expense, liability or loss, whether or not the Association
would have the power to indemnify such person against such
expense, liability or loss under this Article Eleventh;
provided, however, the Association shall not maintain insur-
ance coverage for a formal order assessing civil money
penalties against an indemnitee.
Each of NationsBank, N.A., NationsBank, N.A. (South) and
NationsBank of Texas, N.A. provides liability insurance coverage
for its respective directors and officers.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS.
(a) EXHIBITS:
1.1 - Form of Underwriting Agreement for the Notes.
1.2 - Form of Underwriting Agreement for the Certificates.
4.1 - Form of Indenture between the Trust and the Indenture
Trustee (including forms of Notes).
4.2 - Form of Trust Agreement among the Sellers and the Owner
Trustee (including forms of Certificates).
4.3 - Form of Pooling and Servicing Agreement among the Sell-
ers, the Servicer and the Trustee (including forms of
Certificates).
5.1 - Opinion of Skadden, Arps, Slate, Meagher & Flom with
respect to legality.
8.1 - Opinion of Skadden, Arps, Slate, Meagher & Flom with
respect to tax matters.
23.1 - Consent of Skadden, Arps, Slate, Meagher & Flom (includ-
ed as part of Exhibit 5.1).
23.2 - Consent of Skadden, Arps, Slate, Meagher & Flom (includ-
ed as part of Exhibit 8.1).
24.1 - Powers of Attorney.*
25.1 - Form of T-1 Statement of Eligibility under the Trust
Indenture Act of 1939 of The Chase Manhattan Bank (Na-
tional Association)
99.1 - Form of Sale and Servicing Agreement among the Sellers,
the Servicer and the Trust.
99.2 - Form of Administration Agreement among the Trust, the
Administrator and the Indenture Trustee.
99.3 - Form of Dealer Agreement between a Dealer and a Seller.**
* Previously filed.
** Incorporated herein by reference to Exhibit 4(b) filed under
Registration Statement No. 33-97436.
ITEM 17.UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration
statement; (i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933; (ii) to reflect in the
prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in
the registration statement; (iii) to include any material infor-
mation with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to
such information in the registration statement; provided, howev-
er, that (a)(i) and (a)(ii) will not apply if the information
required to be included in a post-effective amendment thereby is
contained in periodic reports filed pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.
(b) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(d) That, for purposes of determining any liability
under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Securi-
ties Exchange Act of 1934 (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporat-
ed by reference in the registration statement shall be deemed to
be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(e) To provide to the underwriters at the closing
specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the
underwriters to permit prompt delivery to each purchaser.
(f) That insofar as indemnification for liabilities
arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the registrant
pursuant to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the regis-
trant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudica-
tion of such issue.
(g) That, for purposes of determining any liability
under the Securities Act of 1933, the information omitted from
the form of prospectus filed as part of this Registration State-
ment in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act of 1933 shall be deemed to
be part of this Registration Statement as of the time it was
declared effective.
(h) That, for the purpose of determining any liability
under the Securities Act of 1933, each post-effective amendment
that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered there-
in, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(i) To file an application for the purpose of determin-
ing the eligibility of the Indenture Trustee to act as trustee
under subsection (a) of Section 310 of the Trust Indenture Act in
accordance with the rules and regulations prescribed by the
Commission under Section 305(b)(2) of the Act.
SIGNATURES
Pursuant to the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has
duly caused this Amendment Number 1 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Charlotte, State of North Carolina, on
June 27, 1996.
NATIONSBANK, N.A.
By: *
___________________________________
Name: James H. Hance, Jr.
Title: Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment Number 1 to the Registration Statement has
been signed on June 27, 1996 by the following persons in the
capacities indicated.
SIGNATURE TITLE
__________*_________________ Principal Executive Officer
F. William Vandiver, Jr. Director
__________*_________________ Principal Financial Officer
James H. Hance, Jr. Director
__________*_________________ Principal Accounting Officer
Marc D. Oken
__________*_________________ Director
H.W. McKay Belk
__________*_________________ Director
Joseph R. Hendrick, III
__________*_________________ Director
William L. Jews
__________*_________________ Director
Thomas G. Johnson, Jr.
__________*_________________ Director
Edgar H. Lawton, Jr.
__________*_________________ Director
Kenneth D. Lewis
__________*_________________ Director
George V. McGowan
__________*_________________ Director
Anna Spangler Nelson
__________*_________________ Director
John S. Rainey
__________*_________________ Director
George P. Ramsey, Jr.
__________*_________________ Director
Dr. Morton I. Rapoport
__________*_________________ Director
James T. Rhodes
__________*_________________ Director
A. Pope Shuford
__________*_________________ Director
William E. Simms
__________*_________________ Director
Joel A. Smith, III
__________*_________________ Director
Hugh R. Stallard
__________*_________________ Director
R. Eugene Taylor
__________*_________________ Director
Stephen J. Trachtenberg
__________*_________________ Director
James S. Watkinson
* The undersigned, by signing his name hereto, does hereby sign
this Amendment Number 1 to the Registration Statement on
behalf of each of the above-indicated directors and officers
of the Registrant pursuant to a power of attorney signed by
such directors and officers and included herein as Exhibit
24.1.
/s/ Robert W. Long, Jr.
____________________________
Robert W. Long, Jr.
Attorney-in-Fact
Pursuant to the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has
duly caused this Amendment Number 1 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Charlotte, State of North Carolina, on
June 27, 1996.
NATIONSBANK, N.A. (SOUTH)
By: *
_________________________________
Name: James H. Hance, Jr.
Title: Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment Number 1 to the Registration Statement has
been signed on June 27, 1996 by the following persons in the
capacities indicated.
SIGNATURE TITLE
_____*_______________ Principal Executive Officer
Kenneth D. Lewis Director
_____*_______________ Principal Financial Officer
James H. Hance, Jr.
_____*_______________ Principal Accounting Officer
Marc D. Oken
_____*_______________ Director
William H. Allen, Jr.
_____*_______________ Director
R. Mark Bostick
_____*_______________ Director
Betty Castor
_____*_______________ Director
Hugh M. Chapman
_____*_______________ Director
Dr. Johnetta B. Cole
_____*_________________ Director
Harold A. Dawson
_____*_________________ Director
H. Michael Dye
_____*_________________ Director
W. Douglas Ellis, Jr.
_____*_________________ Director
Earl L. Frye
_____*_________________ Director
Jeffrey D. Gargiulo
_____*_________________ Director
L.L. Gellerstedt III
_____*_______________ Director
Cecil S. Harrell
_____*_______________ Director
Neil H. Hightower
_____*_______________ Director
James R. Jolly
_____*_______________ Director
James R. Lientz, Jr.
_____*_______________ Director
Carol Ellis Martin
_____*_______________ Director
Douglas B. Mitchell
_____*_______________ Director
Jorge M.Perez
_____*_______________ Director
Joe W. Rogers, Jr.
________________________ Director
Jerry R. Satrum
_____*_______________ Director
Adelaide A. Sink
_____*_______________ Director
Hugh M. Tarbutton
_____*_______________ Director
Dr. Israel Tribble, Jr.
_____*_______________ Director
Karen L. Wrenn
* The undersigned, by signing his name hereto, does hereby sign
this Amendment Number 1 to the Registration Statement on
behalf of each of the above-indicated directors and officers
of the Registrant pursuant to a power of attorney signed by
such directors and officers and included herein as Exhibit
24.1.
/s/ Robert W. Long, Jr.
__________________________________
Robert W. Long, Jr.
Attorney-in-Fact
Pursuant to the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has
duly caused this Amendment Number 1 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Charlotte, State of North Carolina, on
June 27, 1996.
NATIONSBANK OF TEXAS, N.A.
By: *
________________________________
Name: James H. Hance, Jr.
Title: Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment Number 1 to Registration Statement has
been signed on June 27, 1996 by the following persons in the
capacities indicated.
SIGNATURE TITLE
_____*_______________ Principal Executive Officer
Robert B. Lane Director
_____*_______________ Principal Financial Officer
James H. Hance, Jr.
_____*_______________ Principal Accounting Officer
Marc D. Oken
_____*_______________ Director
Samuel J. Atkins, III
_____________________ Director
James M. Berry
_____*_______________ Director
Guy S. Bodine, III
_____*_______________ Director
Lee Drain
_____________________ Director
James R. Erwin
_____*_______________ Director
Robert L. Kirby
_____*_______________ Director
Kenneth D. Lewis
_____________________ Director
Joseph R. Musolino
* The undersigned, by signing his name hereto, does hereby sign
this Amendment Number 1 to the Registration Statement on
behalf of each of the above-indicated directors and officers
of the Registrant pursuant to a power of attorney signed by
such directors and officers and included herein as Exhibit
24.1.
/s/ Robert W. Long, Jr.
______________________________
Robert W. Long, Jr.
Attorney-in-Fact
EXHIBIT INDEX
EXHIBITS DESCRIPTION
PAGE
1.1 - Form of Underwriting Agreement for the Notes.
1.2 - Form of Underwriting Agreement for the Certificates.
4.1 - Form of Indenture between the Trust and the Indenture
Trustee (including forms of Notes).
4.2 - Form of Trust Agreement among the Sellers and the Owner
Trustee (including forms of Certificates).
4.3 - Form of Pooling and Servicing Agreement among the Sellers,
the Servicer and the Trustee (including forms of Certifi-
cates).
5.1 - Opinion of Skadden, Arps, Slate, Meagher & Flom with re-
spect to legality.
8.1 - Opinion of Skadden, Arps, Slate, Meagher & Flom with re-
spect to tax matters.
23.1 - Consent of Skadden, Arps, Slate, Meagher & Flom (included
as part of Exhibit 5.1).
23.2 - Consent of Skadden, Arps, Slate, Meagher & Flom (included
as part of Exhibit 8.1).
24.1 - Powers of Attorney.*
25.1 - Form of T-1 Statement of Eligibility under the Trust In-
denture Act of 1939 of The Chase Manhattan Bank (National
Association).
99.1 - Form of Sale and Servicing Agreement among the Sellers,
the Servicer and the Trust.
99.2 - Form of Administration Agreement among the Trust, the
Administrator and the Indenture Trustee.
99.3 - Form of Dealer Purchase Agreement between a Dealer and a
Seller.**
* Previously filed.
** Incorporated herein by reference to Exhibit 4(b) filed under
Registration Statement No. 33-97436.
Exhibit 1.1
[FORM OF UNDERWRITING AGREEMENT FOR NOTES]
NATIONSBANK, N.A.
NATIONSBANK, N.A. (SOUTH)
NATIONSBANK OF TEXAS, N.A.
SELLERS
NATIONSBANK AUTO OWNER TRUST 199__-__
UNDERWRITING AGREEMENT
____________ ___, 199_
NationsBanc Capital Markets, Inc.
NationsBank Corporate Center
100 North Tryon Street, NC1-007-10-01
Charlotte, North Carolina 28255
Ladies and Gentlemen:
NationsBank, N.A., NationsBank, N.A. (South), and NationsBank of
Texas, N.A., each a national banking association (each, a "Company" and
collectively, the "Companies"), propose to form a trust entitled the
NationsBank Auto Owner Trust 199_-_ (the "Trust") pursuant to the terms of a
proposed Amended and Restated Trust Agreement, to be dated as of _________ __,
199_, among each of the Companies, as Depositors, and ________ _____, as Owner
Trustee (the "Trust Agreement"). It is further proposed that the Owner Trustee
will enter into an Indenture, to be dated as of ________ ______, 199__, with
________ ____, as Indenture Trustee (the "Indenture Trustee"), pursuant to
which certain _____ % Asset Backed Notes, Class A-1 (the "Class A-1 Notes")
and certain _____% Asset Backed Notes, Class A-2 (the "Class A-2 Notes" and
collectively with the Class A-1 Notes, the "Notes") will be issued. The
property of the Trust includes a pool of fixed rate simple interest retail
motor vehicle installment sale contracts indirectly originated by the
Companies (collectively, the "Receivables"), certain monies received under the
Receivables after _________ ___, 199_, security interests in the new and used
automobiles, vans and light-duty trucks financed thereby, certain rights of
the Trust under the Sale and Servicing Agreement, certain amounts from time to
time on deposit in certain accounts maintained by the Indenture Trustee for
the benefit of the Noteholders and the Companies' rights to payments under
agreements with dealers of Financed Vehicles and insurance policies relating
to the Receivables. To the extent not defined herein, capitalized terms used
herein shall have the meanings specified in the Trust Agreement.
The Companies propose to sell to the underwriters identified on
Schedule I hereto (the "Underwriters") for whom you are acting as
representative (the "Representative") the principal amount of the Notes
identified in Schedule I hereto.
1. Representations and Warranties. Each Company represents and
warrants to, and agrees with, each Underwriter that:
(a) The Companies have filed with the Securities and
Exchange Commission (the "Commission") a registration statement on
Form S-1, registration number 333-3557, under the Securities Act of
1933, as amended (the "Act"), which has become effective, for the
registration under the Act of the Notes. The Companies propose to
file with the Commission pursuant to Rule 424 under the Act a final
prospectus relating to the Notes and the plan of distribution thereof
and have previously advised the Representative of all further
information (financial and other) with respect to the Companies to be
set forth therein. Such registration statement, including the
exhibits thereto, as amended to the date of this Agreement, is
hereinafter called the "Registration Statement"; such prospectus in
the form in which it appears in the Registration Statement is
hereinafter called the "Preliminary Prospectus"; and such final form
of prospectus, in the form in which it shall be filed with the
Commission pursuant to Rule 424, is hereinafter called the "Final
Prospectus."
(b) As of the date hereof, when the Final Prospectus is
first filed pursuant to Rule 424 under the Act, when, prior to the
Closing Date (as hereinafter defined in Section 3), any amendment to
the Registration Statement becomes effective (including the filing of
any document incorporated by reference in the Registration
Statement), when any supplement to the Final Prospectus is filed with
the Commission and at the Closing Date, (i) the Registration
Statement, as amended as of any such time, and the Final Prospectus,
as amended or supplemented as of any such time, will comply in all
material respects with the applicable requirements of the Act and the
Exchange Act and the respective rules thereunder, (ii) the
Registration Statement, as amended as of any such time, will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading, and (iii) the Final
Prospectus, as amended or supplemented as of any such time, will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the
Companies make no representations or warranties as to the information
contained in or omitted from the Registration Statement or the Final
Prospectus or any amendment thereof or supplement thereto in reliance
upon and in conformity with information furnished in writing to the
Companies by or on behalf of any Underwriter through the
Representative specifically for use in connection with the
preparation of the Registration Statement and the Final Prospectus.
(c) Such Company has been duly incorporated and is validly
existing as a national banking association under the laws of the
United States and has corporate and other power and authority to own
its properties and conduct its business, as now conducted by it, and
to enter into and perform its obligations under this Agreement, the
Trust Agreement and the Sale and Servicing Agreement and, in the case
of NationsBank, N.A., the Administration Agreement.
(d) Such Company is not aware of (i) any request by the
Commission for any further amendment of the Registration Statement or
for any additional information or (ii) the issuance by the Commission
of any stop order suspending the effectiveness of the Registration
Statement.
(e) (i) This Agreement, the Trust Agreement and the Sale and
Servicing Agreement, and in the case of NationsBank, N.A., the
Administration Agreement, have been duly authorized, executed and
delivered by such Company, and each of this Agreement, the Trust
Agreement, and the Sale and Servicing Agreement, and, in the case of
NationsBank, N.A., the Administration Agreement, when executed and
delivered by such Company, does or will, as the case may be,
constitute a legal, valid and binding agreement of such Company,
enforceable against such Company in accordance with its terms,
subject, as to the enforcement of remedies, to applicable bankruptcy,
insolvency, reorganization, moratorium, receivership and similar laws
affecting creditors' rights generally and to general principles of
equity (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law); and (ii) the Notes,
when duly executed by the Owner Trustee, on behalf of the Trust, and
authenticated by the Indenture Trustee and delivered in accordance
with the Indenture Agreement and delivered and paid for as provided
herein, will be validly issued and outstanding and entitled to the
benefits and security afforded by the Indenture.
2. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, each
Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Companies, the principal
amount of the Notes set forth opposite such Underwriter's name in Schedule I
hereto at the purchase price of ________% of the principal amount of such
Notes with respect to the Class A-1 Notes and __________% of the principal
amount of such Notes with respect to the Class A-2 Notes, plus, in each case,
accrued interest from and including __________ ___, 199__ through and
including the date prior to the Closing Date.
3. Delivery and Payment. Delivery of and payment for the Notes shall
be made at the offices of Skadden, Arps, Slate, Meagher & Flom, 919 Third
Avenue, New York, New York 10022, at 10:00 a.m. New York time on ________ __,
199_ or such other place as shall be agreed by the Company and the
Underwriters, and which date and time may be postponed by agreement between
the Representative and the Companies or as provided in Section 9 hereof (such
date and time of delivery and payment for the Notes being herein called the
"Closing Date"). Delivery of the Notes shall be made to the Representative for
the respective accounts of the several Underwriters against payment by the
several Underwriters through the Representative of the purchase price thereof
by one or more wires of immediately available funds to an account designated
by the Companies. Delivery of the Notes shall be made through the facilities
of The Depository Trust Company.
4. Representations and Warranties of the Underwriters. Each
Underwriter represents and warrants to, and agrees with, each Company that it
will not, in connection with the offering and sale of the Notes, use (i) any
"Computational Materials" within the meaning of the no-action letter, dated
May 20, 1994, issued by the Division of Corporation Finance of the Commission
to Kidder, Peabody Acceptance Corporation I, Kidder, Peabody & Co.
Incorporated, and Kidder Structured Asset Corporation and the no-action
letter, dated May 27, 1994, issued by the Division of Corporation Finance of
the Commission to the Public Securities Association or (ii) any "ABS Term
Sheets" within the meaning of the no-action letter, dated February 17, 1995,
issued by the Division of Corporation Finance of the Commission to the Public
Securities Association.
5. Agreements. Each Company agrees with the several Underwriters that:
(a) Prior to the termination of the offering of the Notes,
such Company will not file any amendment to the Registration
Statement or supplement to the Final Prospectus unless such Company
has furnished the Representative a copy of such amendment or
supplement for its review prior to filing and will not file any such
proposed amendment or supplement to which the Representative
reasonably objects. Subject to the foregoing sentence, such Company
will cause the Final Prospectus to be filed with the Commission
pursuant to Rule 424. Such Company will advise the Representative
promptly (i) when the Final Prospectus shall have been filed with the
Commission pursuant to Rule 424, (ii) when any amendment to the
Registration Statement relating to the Notes shall have become
effective, (iii) of any request by the Commission for any amendment
of the Registration Statement or amendment of or supplement to the
Final Prospectus or for any additional information, (iv) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose, and (v) of the
receipt by such Company of any notification with respect to the
suspension of the qualification of the Notes for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose. Such Company will use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Notes
is required to be delivered under the Act, any event occurs as a
result of which the Final Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, or if it shall be necessary to amend or supplement the
Final Prospectus to comply with the Act or the Exchange Act or the
respective rules thereunder, such Company promptly will prepare and
file with the Commission, subject to the first sentence of paragraph
(a) of this Section 5, an amendment or supplement which will correct
such statement or omission or an amendment which will effect such
compliance and will use its best efforts to cause any required
post-effective amendment to the Registration Statement containing
such amendment to be made effective as soon as possible.
(c) Such Company will make generally available to its
security holders and to the Representative as soon as practicable,
but not later than 60 days after the close of the period covered
thereby, an earnings statement (in form complying with the provisions
of Rule 158 of the regulations under the Act) covering a twelve-month
period beginning not later than the first day of such Company's
fiscal quarter next following the "effective date" (as defined in
said Rule 158) of the Registration Statement.
(d) Such Company will furnish to the Representative and
counsel for the Underwriters, without charge, executed copies of the
Registration Statement (including exhibits thereto) and each
amendment thereto which shall become effective on or prior to the
Closing Date and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Act, as many copies of
any Preliminary Prospectus and the Final Prospectus and any
amendments thereof and supplements thereto as the Representative may
reasonably request. Such Company will pay the expenses of printing
all documents relating to the initial offering, provided that any
additional expenses incurred in connection with the requirement of
delivery of a market-making prospectus will be borne by the
Representative.
(e) Such Company will arrange for the qualification of the
Notes for sale under the laws of such jurisdictions as the
Representative may reasonably designate, will maintain such
qualifications in effect so long as required for the distribution of
the Notes and will arrange for the determination of the legality of
the Notes for purchase by institutional investors; provided, however,
that such Company shall not be required to qualify to do business in
any jurisdiction where it is not now so qualified or to take any
action which would subject it to general or unlimited service of
process in any jurisdiction where it is not now so subject.
6. Conditions to the Obligations of the Underwriters. The obligations
of the Underwriters to purchase the Notes shall be subject to the accuracy of
the representations and warranties on the part of each Company contained
herein as of the date hereof, as of the date of the effectiveness of any
amendment to the Registration Statement filed prior to the Closing Date
(including the filing of any document incorporated by reference therein) and
as of the Closing Date, to the accuracy of the statements of each Company made
in any certificates delivered pursuant to the provisions hereof, to the
performance by each Company of its obligations hereunder and to the following
additional conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement, as amended from time to time, shall have been
issued and no proceedings for that purpose shall have been instituted
or threatened; and the Final Prospectus shall have been filed or
mailed for filing with the Commission within the time period
prescribed by the Commission.
(b) The Companies shall have furnished to the Representative
the opinion of [Issuer's counsel], counsel for the Companies, dated
the Closing Date, to the effect of paragraphs (i), (ii), (iv), (v),
(vi) and (vii) below, and the opinion of Skadden, Arps, Slate,
Meagher & Flom, special counsel to the Companies, dated the Closing
Date, to the effect of paragraphs (iii) and (viii) below:
(i) each Company is a duly organized and validly
existing national banking association in good standing under
the laws of the United States, has the corporate power and
authority to own its properties and conduct its business as
described in the Final Prospectus, and had at all relevant
times and now has, the power, authority and legal right to
acquire and own the Receivables transferred to the Trust,
and, with respect to NationsBank, N.A., to service such
Receivables, and this Agreement, the Trust Agreement and the
Sale and Servicing Agreement, and, with respect to
NationsBank, N.A., the Administration Agreement, and the
issuance and sale of the Notes have been duly authorized by
each Company;
(ii) the Notes conform in all material respects to
the description thereof contained in the Final Prospectus;
(iii) each of this Agreement, the Trust Agreement
and the Sale and Servicing Agreement and, in the case of
NationsBank, N.A., the Administration Agreement, constitutes
a legal, valid and binding instrument of each Company
enforceable against each Company in accordance with its
terms except as such enforceability may be limited by (A)
bankruptcy, insolvency, liquidation, reorganization,
moratorium, conservatorship, receivership or other similar
laws now or hereafter in effect relating to the enforcement
of creditors' rights in general, as such laws would apply in
the event of a bankruptcy, insolvency, liquidation,
reorganization, moratorium, conservatorship, receivership or
similar occurrence affecting each Company, and (B) general
principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law) as well as concepts of reasonableness, good faith and
fair dealing;
(iv) to the best knowledge of such counsel, there
is no pending or threatened action, suit or proceeding
before any court or governmental agency, authority or body
or any arbitrator involving any Company of a character
required to be disclosed in the Registration Statement which
is not adequately disclosed in the Final Prospectus, and
there is no franchise, contract or other document of a
character required to be described in the Registration
Statement or Final Prospectus, or to be filed as an exhibit,
which is not described or filed as required;
(v) the Registration Statement has become effective
under the Act; to the best knowledge of such counsel no stop
order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that
purpose have been instituted or threatened; the Registration
Statement, the Final Prospectus and each amendment thereof
or supplement thereto (other than the financial statements
and other financial and statistical information contained
therein or incorporated by reference therein, as to which
such counsel need express no opinion) comply as to form in
all material respects with the applicable requirements of
the Act and the Exchange Act and the respective rules
thereunder;
(vi) no consent, approval, authorization or order
of any court or governmental agency or body is required,
with respect to any Company, for the consummation of the
transactions contemplated herein, or in the Trust Agreement,
the Sale and Servicing Agreement, or the Administration
Agreement, except such as have been obtained under the Act
and such as may be required under the blue sky laws of any
jurisdiction in connection with the purchase and
distribution of the Notes by the Underwriters and such other
approvals (specified in such opinion) as have been obtained;
(vii) neither the consummation of any of the
transactions herein contemplated or in the Trust Agreement,
the Indenture, or the Administration Agreement, nor the
fulfillment of the terms hereof or thereof will conflict
with, result in a breach of, or constitute a default under
the articles of association or by-laws of any Company or, to
the best knowledge of such counsel, the terms of any
indenture or other agreement or instrument known to such
counsel and to which such Company is a party or bound, or
any order or regulation known to such counsel to be
applicable to such Company of any court, regulatory body,
administrative agency, governmental body or arbitrator
having jurisdiction over such Company; and
(viii) the Trust Agreement has been duly qualified
under the Trust Indenture Act of 1939, as amended, and the
Trust is not, and immediately following the sale of the
Notes pursuant hereto, will not be, required to be
registered under the Investment Company Act of 1940, as
amended.
[Issuer's counsel] shall also state that he has no reason to
believe that the Registration Statement or any amendment thereof at
the time it became effective contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Final Prospectus, as amended or supplemented,
as of its date and as of the Closing Date, contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other
than (i) the United States or the general corporation laws of the
State of Delaware, (ii) with respect to [Issuer's counsel], the State
of ______________, and (iii) with respect to Skadden, Arps, Slate,
Meagher & Flom, the State of New York, to the extent deemed proper
and specified in such opinion, upon the opinion of other counsel of
good standing believed to be reliable and who are satisfactory to
counsel for the Underwriters; and (B) as to matters of fact, to the
extent deemed proper, on certificates of responsible officers of the
Companies or their affiliates and public officials.
(c) The Companies shall have furnished to the Representative
an opinion of Skadden, Arps, Slate, Meagher & Flom, special counsel
for the Companies, dated the Closing Date, to the effect that:
(i) the statements in the Final Prospectus under
the heading "Federal Income Tax Consequences" and the
summary thereof under the heading "Prospectus Summary -- Tax
Status," to the extent they constitute matters of Federal
law or legal conclusions with respect thereto, have been
reviewed by such counsel and are correct in all material
respects; and
(ii) the statements in the Final Prospectus under
the headings "Certain Legal Aspects of the Receivables" and
"ERISA Considerations," to the extent they constitute
matters of Federal law or legal conclusions with respect
thereto, have been reviewed by such counsel and are correct
in all material respects.
(d) The Companies shall have furnished to the Representative
(i) an opinion or opinions of Skadden, Arps, Slate, Meagher & Flom,
special counsel for the Companies, dated the Closing Date, with
respect to certain matters relating to the effect of receivership of
any Company on such interest in the Receivables and with respect to
other related matters and (ii) opinions of local counsel to each of
the Companies, dated the Closing Date, with respect to the perfection
of the Trust's interest in the Receivables, in each case in a form
previously approved by the Representative and its counsel. In
addition, the Representative shall have received a reliance letter
with respect to any opinion that the Companies are required to
deliver to each Rating Agency.
(e) The Representatives shall have received from Skadden,
Arps, Slate, Meagher & Flom, special counsel for the Underwriters,
such opinion or opinions, dated the Closing Date, in form and
substance satisfactory to the Representative, with respect to the
validity of the Notes, the Registration Statement, the Final
Prospectus and other related matters as the Representative may
require, and the Companies shall have furnished to such counsel such
documents as they may reasonably request for the purpose of enabling
them to pass upon such matters.
(f) The Representative shall have received an opinion of
counsel to the Owner Trustee, dated the Closing Date, to the effect
that:
(i) the Owner Trustee has been duly incorporated
and is validly existing as a banking corporation under the
laws of the State of _______ and has the power and authority
to enter into and to perform all actions required of it
under the Trust Agreement, the Indenture, the Sale and
Servicing Agreement and the Administration Agreement;
(ii) the Trust Agreement, the Indenture, the Sale
and Servicing Agreement and the Administration Agreement
have been duly authorized, executed and delivered by the
Owner Trustee, and each constitutes a legal, valid and
binding obligation of the Owner Trustee, enforceable against
the Owner Trustee in accordance with its terms except as
such enforceability may be limited by (A) bankruptcy,
insolvency, liquidation, reorganization, moratorium,
conservatorship, receivership or other similar laws now or
hereafter in effect relating to the enforcement of
creditors' rights in general, as such laws would apply in
the event of a bankruptcy, insolvency, liquidation,
reorganization, moratorium, conservatorship, receivership or
similar occurrence affecting the Owner Trustee, and (B)
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law) as well as concepts of reasonableness, good faith and
fair dealing;
(iii) the execution and delivery of the Trust
Agreement, and on behalf of the Trust, the Indenture, the
Sale and Servicing Agreement, the Administration Agreement,
and the Notes, by the Owner Trustee and the performance by
the Owner Trustee of the terms thereof do not conflict with
or result in a violation of (A) any law or regulation of the
United States or the State of _________ governing the
banking or trust powers of the Owner Trustee or (B) the
certificate of incorporation or articles of association or
by-laws of the Owner Trustee;
(iv) no approval, authorization or other action by,
or filing with, any governmental authority of the United
States or the State of ____________ having jurisdiction over
the banking or trust powers of the Owner Trustee is required
in connection with the execution and delivery by the Owner
Trustee of the Trust Agreement and the Indenture and the
execution, on behalf of the Trust, of the Notes or the
performance by the Owner Trustee thereunder;
(v) the Trust Agreement duly creates for the
benefit of the Companies and the Noteholders the interests
in the Owner Trust Estate which the Trust Agreement purports
to create, and the trust purported to be created by the
Trust Agreement is validly formed and is validly existing as
a business trust in good standing under the laws of the
State of Delaware;
(vi) the Trust Agreement authorizes the Trust to
execute and deliver the Indenture, the Sale and Servicing
Agreement and the Administration Agreement, to issue the
Notes and to grant the Indenture Trust Estate to the
Indenture Trustee as security for the Notes; and
(vii) the Owner Trustee has duly authorized,
issued, executed and delivered each of the Notes pursuant to
the terms and provisions of the Indenture; each of such
Notes is a legal, valid and binding obligation of the Owner
Trustee, enforceable against the Owner Trustee in accordance
with its terms and the terms of the Indenture; and each of
such Notes is entitled to the benefits and security afforded
by the Indenture in accordance with the terms of the
Indenture.
(g) The Representatives, shall have received an opinion of
counsel to the Indenture Trustee, dated the Closing Date, to the
effect that:
(i) the Indenture Trustee has been duly
incorporated and is validly existing as a banking
corporation under the laws of the State of _______ and has
the power and authority to enter into and to perform all
actions required of it under the Indenture;
(ii) the Indenture has been duly authorized,
executed and delivered by the Indenture Trustee, and
constitutes a legal, valid and binding obligation of the
Indenture Trustee, enforceable against the Indenture Trustee
in accordance with its terms except as such enforceability
may be limited by (A) bankruptcy, insolvency, liquidation,
reorganization, moratorium, conservatorship, receivership or
other similar laws now or hereafter in effect relating to
the enforcement of creditors' rights in general, as such
laws would apply in the event of a bankruptcy, insolvency,
liquidation, reorganization, moratorium, conservatorship,
receivership or similar occurrence affecting the Indenture
Trustee, and (B) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law) as well as concepts of reasonableness,
good faith and fair dealing;
(iii) the Notes have been duly authenticated and
delivered by the Indenture Trustee;
(iv) the execution and delivery of the Indenture
and the authentication and delivery of the Notes by the
Indenture Trustee and the performance by the Indenture
Trustee of the terms of the Indenture do not conflict with
or result in a violation of (A) any law or regulation of the
United States or the State of _________ governing the
banking or trust powers of the Indenture Trustee, or (B) the
certificate of incorporation or articles of association or
by-laws of the Indenture Trustee; and
(v) no approval, authorization or other action by,
or filing with, any governmental authority of the United
States or the State of ____________ having jurisdiction over
the banking or trust powers of the Indenture Trustee is
required in connection with the execution and delivery by
the Indenture Trustee of the Indenture and the
authentication and delivery of the Notes or the performance
by the Indenture Trustee of the terms of the Indenture.
(h) The Companies shall have furnished to the
Representatives a certificate of each Company, signed by any two of
the Chairman of the Board, the President, any Executive Vice
President, the principal treasury officer, the principal financial
officer or the principal accounting officer of such Company, dated
the Closing Date, to the effect that the signers of such certificate
have carefully examined the Registration Statement (excluding any
other documents incorporated by reference therein), the Final
Prospectus and this Agreement and that, to the best of their
knowledge:
(i) the representations and warranties of such
Company in this Agreement are true and correct in all
material respects on and as of the Closing Date with the
same effect as if made on the Closing Date and such Company
has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or
prior to the Closing Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement, as amended, has been issued, and
no proceedings for that purpose have been instituted or
threatened; and
(iii) since the respective dates as of which
information is given in the Final Prospectus, there has been
no material adverse change in the condition (financial or
other), earnings, business or properties of such Company,
whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated
in the Final Prospectus.
(i) On the date hereof and on the Closing Date, Price
Waterhouse LLP and/or any other firm of certified independent public
accountants acceptable to the Representative shall have furnished to
the Representative a letter, dated the date hereof and the date of
the Closing Date, respectively, in form and substance satisfactory to
the Representative, confirming that they are independent accountants
within the meaning of the Act and the Exchange Act and the respective
applicable published rules and regulations thereunder, and stating in
effect that using the assumptions and methodology used by each
Company, all of which shall be described in such letter, they have
recalculated such numbers and percentages set forth in the Final
Prospectus as the Representative may reasonably request and agreed to
by Price Waterhouse LLP, compared the results of their calculations
to the corresponding items in the Final Prospectus, and found each
such number and percentage set forth in the Final Prospectus to be in
agreement with the results of such calculations. To the extent
historical financial information with respect to each Company and/or
historical financial, delinquency or related information with respect
to one or more servicers is included in the Final Prospectus, such
letter or letters shall also relate to such information.
(j) The Class A-1 Notes shall have received the rating of
"_____" from ______, and the Class A-2 Notes shall have received the
rating of at least "_____" from _______.
(k) Prior to the Closing Date, the Companies shall have
furnished to the Representative such further information,
certificates and documents as the Representative may reasonably
request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representative and its counsel, this
Agreement and all obligations of the Underwriters hereunder may be canceled
at, or at any time prior to, the Closing Date by the Representative. Notice of
such cancellation shall be given to the Companies in writing or by telephone
or telegraph confirmed in writing.
7. Reimbursement of Underwriters' Expenses. If the sale of the Notes
provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied
or because of any refusal, inability or failure on the part of the Companies
to perform any agreement herein or comply with any provision hereof other than
by reason of a default by any of the Underwriters, the Companies will
reimburse, subject to paragraph (e) of Section 8 below, the Underwriters
severally upon demand for all out-of-pocket expenses (including reasonable
fees and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Notes.
8. Indemnification and Contribution.
(a) Subject to paragraph (e) of this Section 8, the
Companies agree to indemnify and hold harmless each Underwriter and
each person who controls any Underwriter within the meaning of either
the Act or the Exchange Act against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of
them may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement for the registration of the Notes as
originally filed or in any amendment thereof, or in, any Preliminary
Prospectus or the Final Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and agrees to reimburse each such indemnified party for
any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that (i) no Company will be
liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any
Underwriter through the Representative specifically for use in
connection with the preparation thereof and (ii) such indemnity with
respect to any Preliminary Prospectus shall not inure to the benefit
of any Underwriter (or any person controlling such Underwriter) from
whom the person asserting any such loss, claim, damage or liability
purchased the Notes which are the subject thereof if such person did
not receive a copy of the Final Prospectus (or the Final Prospectus
as amended or supplemented) at or prior to the confirmation of the
sale of such Notes to such person in any case where such delivery is
required by the Act and the untrue statement or omission of a
material fact contained in any Preliminary Prospectus was corrected
in the Final Prospectus (or the Final Prospectus as amended or
supplemented). This indemnity agreement will be in addition to any
liability which the Companies may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold
harmless each Company, each of its directors, each of its officers
who signs the Registration Statement, and each person who controls a
Company within the meaning of either the Act or the Exchange Act, to
the same extent as the foregoing indemnity from the Company to each
Underwriter, but only with reference to written information relating
to such Underwriter furnished to the Companies by or on behalf of
such Underwriter through the Representative specifically for use in
the preparation of the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any
liability which any Underwriter may otherwise have. The Companies
acknowledge that the statements set forth under the heading
"Underwriting" constitute the only information furnished in writing
by or on behalf of the several Underwriters for inclusion in the
documents referred to in the foregoing indemnity, and you, as the
Representative, confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise
than under this Section 8. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein, and, to the extent that it may elect by written
notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include
both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be
legal defenses available to it and/or other indemnified parties which
are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the
right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to
assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other
expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party
shall have employed separate counsel in connection with the assertion
of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than
one separate counsel, approved by the Representative in the case of
subparagraph (a), representing the indemnified parties under
subparagraph (a) who are parties to such action), (ii) the
indemnifying party shall not have employed counsel satisfactory to
the indemnified party to represent the indemnified party within a
reasonable time after notice of commencement of the action or (iii)
the indemnifying party has authorized the employment of counsel for
the indemnified party at the expense of the indemnifying party; and
except that if clause (i) or (iii) is applicable, such liability
shall be only in respect of the counsel referred to in such clause
(i) or (iii). After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable for the
costs and expenses of any settlement of such action effected by such
indemnified party without the consent of the indemnifying party,
which will not be unreasonably withheld, unless such indemnifying
party waived its rights under this Section 8 in writing in which case
the indemnified party may effect such a settlement without such
consent. No indemnifying party may avoid its duty to indemnify under
this Section 8 if such indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement or
compromise of, or consent to the entry of any judgment in, any
pending or threatened action in respect of which any indemnified
party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement
includes an unconditional release of such indemnified party from all
liability on all claims that are the subject matter of such action.
An indemnifying party shall not be liable for any settlement of any
claim effected without its consent unless its right to consent under
this Section 8 has been waived in writing.
(d) To provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph
(a) or (b) of this Section 8 is due in accordance with its terms but
is for any reason held by a court to be unavailable from the
Companies or the Underwriters on the grounds of policy or otherwise,
the Companies, subject to paragraph (e) of this Section 8, and the
Underwriters shall contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending same) to which
the Companies and one or more of the Underwriters may be subject, in
such proportion so that the Underwriters are responsible for that
portion represented by the percentage that the underwriting discount
bears to the sum of such discount and the purchase price of the Notes
specified in Schedule I hereto and the Companies are responsible for
the balance; provided, however, that in no case shall any Underwriter
(except as may be provided in any agreement among underwriters
relating to the offering of the Notes) be responsible for any amount
in excess of the underwriting discount applicable to the Notes
purchased by such Underwriter hereunder.
Notwithstanding anything to the contrary in this paragraph
(d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who
controls an Underwriter within the meaning of either the Act or the
Exchange Act shall have the same rights to contribution as such
Underwriter, and each person who controls a Company within the
meaning of either the Act or the Exchange Act, each officer of a
Company who shall have signed the Registration Statement and each
director of a Company shall have the same rights to contribution as
that Company, subject in each case to the preceding sentence of this
paragraph (d). Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this
paragraph (d), notify such party or parties from whom contribution
may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have hereunder or
otherwise than under this paragraph (d).
(e) Notwithstanding any other provisions of this Agreement
to the contrary, with respect to its obligations to reimburse
expenses pursuant to Section 7 herein, to indemnify each Underwriter
pursuant to Section 8(a) herein, and to provide contribution pursuant
to Section 8(d) herein, each Company will only be responsible for the
percentage of such expenses, indemnification or contribution, as the
case may be, set forth opposite its name below (which percentages
represent such Company's proportional contribution of Receivables to
the Trust):
NationsBank, N.A. _____%
NationsBank, N.A. (South) _____%
NationsBank of Texas, N.A._____%
9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Notes agreed to be purchased by such
Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Notes set forth
opposite their names in Schedule I hereto bear to the aggregate amount of
Notes set forth opposite the names of all the remaining Underwriters) the
Notes which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Notes which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Notes set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Notes, and
if such nondefaulting Underwriters do not purchase all the Notes, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Companies. In the event of a default by any Underwriter as set forth in
this Section 9, the Closing Date shall be postponed for such period, not
exceeding seven days, as the Representative shall determine in order that the
required changes in the Registration Statement and the Final Prospectus or in
any other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its liability, if any,
to the Companies and any nondefaulting Underwriter for damages occasioned by
its default hereunder.
10. Termination. This Agreement shall be subject to termination in
the absolute discretion of the Representative, by notice given to the
Companies prior to delivery of and payment for the Notes, if prior to such
time (i) trading in securities generally on the New York Stock Exchange shall
have been suspended or limited or minimum prices shall have been established
on such Exchange, (ii) a banking moratorium shall have been declared either by
Federal or North Carolina, Florida, Georgia and Texas State authorities or
(iii) there shall have occurred any outbreak or material escalation of
hostilities or other calamity or crisis the effect of which on the financial
markets of the United States is such as to make it, in the judgment of the
Representative, impracticable to market the Notes.
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of
each of the Companies or their officers and of the Underwriters set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or the
Companies or any of the officers, directors or controlling persons referred to
in Section 8 hereof, and will survive delivery of and payment for the Notes.
The provisions of Section 7 and 8 hereof and this Section 11 shall survive the
termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representative, will be mailed,
delivered or telegraphed to NationsBanc Capital Markets, Inc., NationsBank
Corporate Center, 100 North Tryon Street, Charlotte, North Carolina 28255,
Attention: William A. Glenn, Managing Director, and to any other Underwriter
at such address, if any, as is specified in writing to the Company for notices
hereunder; or, if sent to any Company, will be mailed, delivered or
telegraphed and confirmed to it at NationsBank Corporate Center, 100 North
Tryon Street, Charlotte, North Carolina, 28255, Attention: John E. Mack,
Senior Vice President, with a copy to: NationsBank Corporation, Legal
Department, NC1-007-20-01, NationsBank Corporate Center, 100 North Tryon
Street, Charlotte, North Carolina, 28255, Attention: Paul J. Polking,
General Counsel.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8
hereof, and no other person will have any right or obligation hereunder.
14. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICT OF LAWS.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Companies and the several Underwriters.
Very truly yours,
NATIONSBANK, N.A.
By:_________________________
John E. Mack
Senior Vice President
NATIONSBANK, N.A. (SOUTH)
By:_________________________
John E. Mack
Senior Vice President
NATIONSBANK OF TEXAS, N.A.
By:_________________________
John E. Mack
Senior Vice President
The foregoing Agreement is hereby confirmed and accepted as of the date first
written above.
NATIONSBANC CAPITAL MARKETS, INC.,
as Representative
By: NATIONSBANC CAPITAL MARKETS, INC.
By:_______________________________________
William A. Glenn
Managing Director
For itself and the other several Underwriters, if any, named in Schedule I to
the foregoing Agreement.
SCHEDULE I
Principal Amount
of Class A-1 Notes to
Underwriters be Purchased
NationsBanc Capital Markets, Inc. .................$______________
Total...................................$________________
Principal Amount
of Class A-2 Notes to
Underwriters be Purchased
NationsBanc Capital Markets, Inc. ..................$_____________
Total......................................$_____________
Exhibit 1.2
[FORM OF UNDERWRITING AGREEMENT FOR CERTIFICATES]
NATIONSBANK, N.A.
NATIONSBANK, N.A. (SOUTH)
NATIONSBANK OF TEXAS, N.A.
SELLERS
NATIONSBANK AUTO GRANTOR TRUST 199_-_
UNDERWRITING AGREEMENT
_______________ __, 199_
NationsBanc Capital Markets, Inc.
NationsBank Corporate Center
100 North Tryon Street, NC1-007-10-01
Charlotte, North Carolina 28255
Ladies and Gentlemen:
NationsBank, N.A., NationsBank, N.A. (South) and NationsBank of
Texas, N.A., each a national banking association (each, a "Company" and
collectively, the "Companies"), propose to form a trust entitled the
NationsBank Auto Grantor Trust 199_-_ (the "Trust") pursuant to the terms of a
proposed Pooling and Servicing Agreement, to be dated as of ____________,
199_, among each of the Companies, as Sellers, NationsBank, N.A., as Servicer,
and _________________, as Trustee (the "Pooling and Servicing Agreement"),
pursuant to which certain ____ % Asset Backed Certificates, Class A (the
"Class A Certificates") and certain ____% Asset Backed Certificates, Class B
(the "Class B Certificates" and collectively with the Class A Certificates,
the "Certificates") will be issued. Each Certificate will evidence a
fractional, undivided percentage interest in the Trust. The property of the
Trust includes a pool of fixed rate simple interest retail motor vehicle
installment sale contracts indirectly originated by the Companies
(collectively, the "Receivables"), certain monies received under the
Receivables after _______ __, 199_, security interests in the new and used
automobiles, vans and light-duty trucks financed thereby, certain rights of
the Trust under the Pooling and Servicing Agreement, certain amounts from time
to time on deposit in certain accounts maintained by the Trustee for the
benefit of the Certificateholders and the Companies' rights to payments under
agreements with dealers of Financed Vehicles and insurance policies relating
to the Receivables. To the extent not defined herein, capitalized terms used
herein shall have the meanings specified in the Pooling and Servicing
Agreement.
The Companies propose to sell to the underwriters identified on
Schedule I hereto (the "Underwriters") for whom you are acting as
representative (the "Representative") the principal amount of the Certificates
identified in Schedule I hereto.
1. Representations and Warranties. Each Company represents
and warrants to, and agrees with, each Underwriter that:
(a) The Companies have filed with the Securities and
Exchange Commission (the "Commission") a registration statement on
Form S-1, registration number 333-3557, under the Securities Act of
1933, as amended (the "Act"), which has become effective, for the
registration under the Act of the Certificates. The Companies propose
to file with the Commission pursuant to Rule 424 under the Act a
final prospectus relating to the Certificates and the plan of
distribution thereof and have previously advised the Representative
of all further information (financial and other) with respect to the
Companies to be set forth therein. Such registration statement,
including the exhibits thereto, as amended to the date of this
Agreement, is hereinafter called the "Registration Statement"; such
prospectus in the form in which it appears in the Registration
Statement is hereinafter called the "Preliminary Prospectus"; and
such final form of prospectus, in the form in which it shall be filed
with the Commission pursuant to Rule 424, is hereinafter called the
"Final Prospectus."
(b) As of the date hereof, when the Final Prospectus is
first filed pursuant to Rule 424 under the Act, when, prior to the
Closing Date (as hereinafter defined in Section 3), any amendment to
the Registration Statement becomes effective (including the filing of
any document incorporated by reference in the Registration
Statement), when any supplement to the Final Prospectus is filed with
the Commission and at the Closing Date, (i) the Registration
Statement, as amended as of any such time, and the Final Prospectus,
as amended or supplemented as of any such time, will comply in all
material respects with the applicable requirements of the Act and the
Exchange Act and the respective rules thereunder, (ii) the
Registration Statement, as amended as of any such time, will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading, and (iii) the Final
Prospectus, as amended or supplemented as of any such time, will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that the
Companies make no representations or warranties as to the information
contained in or omitted from the Registration Statement or the Final
Prospectus or any amendment thereof or supplement thereto in reliance
upon and in conformity with information furnished in writing to the
Companies by or on behalf of any Underwriter through the
Representative specifically for use in connection with the
preparation of the Registration Statement and the Final Prospectus.
(c) Such Company has been duly incorporated and is validly
existing as a national banking association under the laws of the
United States and has corporate and other power and authority to own
its properties and conduct its business, as now conducted by it, and
to enter into and perform its obligations under this Agreement and
the Pooling and Servicing Agreement.
(d) Such Company is not aware of (i) any request by the
Commission for any further amendment of the Registration Statement or
for any additional information or (ii) the issuance by the Commission
of any stop order suspending the effectiveness of the Registration
Statement.
(e) (i) This Agreement and the Pooling and Servicing
Agreement have been duly authorized by such Company, and this
Agreement and the Pooling and Servicing Agreement have been duly
executed and delivered by such Company, and each of this Agreement
and the Pooling and Servicing Agreement, when executed and delivered
by such Company, does or will, as the case may be, constitute a
legal, valid and binding agreement of such Company, enforceable
against such Company in accordance with its terms, subject, as to the
enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium, receivership and similar laws affecting
creditors' rights generally and to general principles of equity
(regardless of whether the enforcement of such remedies is considered
in a proceeding in equity or at law); and (ii) the Certificates have
been duly authorized by such Company, and when duly executed by the
Trustee on behalf of the Trust, authenticated by the Trustee and
delivered in accordance with the Pooling and Servicing Agreement and
delivered and paid for as provided herein, will be validly issued and
outstanding and entitled to the benefits and security afforded by the
Pooling and Servicing Agreement.
2. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, each
Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Companies, the principal
amount of the Certificates set forth opposite such Underwriter's name in
Schedule I hereto at the purchase price of _______% of the principal amount of
such Certificates with respect to the Class A Certificates and _______% of the
principal amount of such Certificates with respect to the Class B
Certificates, plus, in each case, accrued interest from and including
___________ __, 199_ through and including the date prior to the Closing Date.
3. Delivery and Payment. Delivery of and payment for the Certificates
shall be made at the offices of Skadden, Arps, Slate, Meagher & Flom, 919
Third Avenue, New York, New York 10022, at 10:00 a.m. New York time on
________ __, 199_ or such other place as shall be agreed by the Company and
the Underwriters, and which date and time may be postponed by agreement
between the Representative and the Companies or as provided in Section 9
hereof (such date and time of delivery and payment for the Certificates being
herein called the "Closing Date"). Delivery of the Certificates shall be made
to the Representative for the respective accounts of the several Underwriters
against payment by the several Underwriters through the Representative of the
purchase price thereof by one or more wires of immediately available funds to
an account designated by the Companies. Delivery of the Certificates shall be
made through the facilities of The Depository Trust Company.
4. Representations and Warranties of the Underwriters. Each
Underwriter represents and warrants to, and agrees with, each Company that it
will not, in connection with the offering and sale of the Certificates, use
(i) any "Computational Materials" within the meaning of the no-action letter,
dated May 20, 1994, issued by the Division of Corporation Finance of the
Commission to Kidder, Peabody Acceptance Corporation I, Kidder, Peabody & Co.
Incorporated, and Kidder Structured Asset Corporation and the no-action
letter, dated May 27, 1994, issued by the Division of Corporation Finance of
the Commission to the Public Securities Association or (ii) any "ABS Term
Sheets" within the meaning of the no-action letter, dated February 17, 1995,
issued by the Division of Corporation Finance of the Commission to the Public
Securities Association.
5. Agreements. Each Company agrees with the several Underwriters that:
(a) Prior to the termination of the offering of the
Certificates, such Company will not file any amendment to the
Registration Statement or supplement to the Final Prospectus unless
such Company has furnished the Representative a copy of such
amendment or supplement for its review prior to filing and will not
file any such proposed amendment or supplement to which the
Representative reasonably objects. Subject to the foregoing sentence,
such Company will cause the Final Prospectus to be filed with the
Commission pursuant to Rule 424. Such Company will advise the
Representative promptly (i) when the Final Prospectus shall have been
filed with the Commission pursuant to Rule 424, (ii) when any
amendment to the Registration Statement relating to the Certificates
shall have become effective, (iii) of any request by the Commission
for any amendment of the Registration Statement or amendment of or
supplement to the Final Prospectus or for any additional information,
(iv) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose, and (v) of the
receipt by such Company of any notification with respect to the
suspension of the qualification of the Certificates for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose. Such Company will use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the
Certificates is required to be delivered under the Act, any event
occurs as a result of which the Final Prospectus as then amended or
supplemented would include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading, or if it shall be necessary to amend or
supplement the Final Prospectus to comply with the Act or the
Exchange Act or the respective rules thereunder, such Company
promptly will prepare and file with the Commission, subject to the
first sentence of paragraph (a) of this Section 5, an amendment or
supplement which will correct such statement or omission or an
amendment which will effect such compliance and will use its best
efforts to cause any required post-effective amendment to the
Registration Statement containing such amendment to be made effective
as soon as possible.
(c) Such Company will make generally available to its
security holders and to the Representative as soon as practicable,
but not later than 60 days after the close of the period covered
thereby, an earnings statement (in form complying with the provisions
of Rule 158 of the regulations under the Act) covering a twelve-month
period beginning not later than the first day of such Company's
fiscal quarter next following the "effective date" (as defined in
said Rule 158) of the Registration Statement.
(d) Such Company will furnish to the Representative and
counsel for the Underwriters, without charge, executed copies of the
Registration Statement (including exhibits thereto) and each
amendment thereto which shall become effective on or prior to the
Closing Date and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Act, as many copies of
any Preliminary Prospectus and the Final Prospectus and any
amendments thereof and supplements thereto as the Representative may
reasonably request. Such Company will pay the expenses of printing
all documents relating to the initial offering, provided that any
additional expenses incurred in connection with the requirement of
delivery of a market-making prospectus will be borne by the
Representative.
(e) Such Company will arrange for the qualification of the
Certificates for sale under the laws of such jurisdictions as the
Representative may reasonably designate, will maintain such
qualifications in effect so long as required for the distribution of
the Certificates and will arrange for the determination of the
legality of the Certificates for purchase by institutional investors;
provided, however, that such Company shall not be required to qualify
to do business in any jurisdiction where it is not now so qualified
or to take any action which would subject it to general or unlimited
service of process in any jurisdiction where it is not now so
subject.
6. Conditions to the Obligations of the Underwriters. The obligations
of the Underwriters to purchase the Certificates shall be subject to the
accuracy of the representations and warranties on the part of each Company
contained herein as of the date hereof, as of the date of the effectiveness of
any amendment to the Registration Statement filed prior to the Closing Date
(including the filing of any document incorporated by reference therein) and
as of the Closing Date, to the accuracy of the statements of each Company made
in any certificates delivered pursuant to the provisions hereof, to the
performance by each Company of its obligations hereunder and to the following
additional conditions:
(a) No stop order suspending the effectiveness of the
Registration Statement, as amended from time to time, shall have been
issued and no proceedings for that purpose shall have been instituted
or threatened; and the Final Prospectus shall have been filed or
mailed for filing with the Commission within the time period
prescribed by the Commission.
(b) The Companies shall have furnished to the Representative
the opinion of [Issuer's counsel], counsel for the Companies, dated
the Closing Date, to the effect of paragraphs (i), (ii), (iv), (v),
(vi) and (vii) below, and the opinion of Skadden, Arps, Slate,
Meagher & Flom, special counsel to the Companies, dated the Closing
Date, to the effect of paragraphs (iii) and (viii) below:
(i) each Company is a duly organized and validly
existing national banking association in good standing under
the laws of the United States, has the corporate power and
authority to own its properties and conduct its business as
described in the Final Prospectus, and had at all relevant
times and now has, the power, authority and legal right to
acquire and own the Receivables transferred to the Trust,
and, with respect to NationsBank, N.A., to service such
Receivables, and this Agreement and the Pooling and
Servicing Agreement and the issuance and sale of the
Certificates have been duly authorized by the Company;
(ii) the Certificates conform in all material
respects to the description thereof contained in the Final
Prospectus;
(iii) each of this Agreement and the Pooling and
Servicing Agreement constitutes a legal, valid and binding
instrument of each Company enforceable against the Company
in accordance with its terms except as such enforceability
may be limited by (A) bankruptcy, insolvency, liquidation,
reorganization, moratorium, conservatorship, receivership or
other similar laws now or hereafter in effect relating to
the enforcement of creditors' rights in general, as such
laws would apply in the event of a bankruptcy, insolvency,
liquidation, reorganization, moratorium, conservatorship,
receivership or similar occurrence affecting each Company,
and (B) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity
or at law) as well as concepts of reasonableness, good faith
and fair dealing;
(iv) to the best knowledge of such counsel, there
is no pending or threatened action, suit or proceeding
before any court or governmental agency, authority or body
or any arbitrator involving any Company of a character
required to be disclosed in the Registration Statement which
is not adequately disclosed in the Final Prospectus, and
there is no franchise, contract or other document of a
character required to be described in the Registration
Statement or Final Prospectus, or to be filed as an exhibit,
which is not described or filed as required;
(v) the Registration Statement has become effective
under the Act; to the best knowledge of such counsel no stop
order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that
purpose have been instituted or threatened; the Registration
Statement, the Final Prospectus and each amendment thereof
or supplement thereto (other than the financial statements
and other financial and statistical information contained
therein or incorporated by reference therein, as to which
such counsel need express no opinion) comply as to form in
all material respects with the applicable requirements of
the Act and the Exchange Act and the respective rules
thereunder;
(vi) no consent, approval, authorization or order
of any court or governmental agency or body is required,
with respect to any Company, for the consummation of the
transactions contemplated herein, or in the Pooling and
Servicing Agreement, except such as have been obtained under
the Act and such as may be required under the blue sky laws
of any jurisdiction in connection with the purchase and
distribution of the Certificates by the Underwriters and
such other approvals (specified in such opinion) as have
been obtained;
(vii) neither the issue and sale of the
Certificates, nor the consummation of any other of the
transactions herein contemplated or in the Pooling and
Servicing Agreement, nor the fulfillment of the terms hereof
or thereof will conflict with, result in a breach of, or
constitute a default under the articles of association or
by-laws of any Company or, to the best knowledge of such
counsel, the terms of any indenture or other agreement or
instrument known to such counsel and to which such Company
is a party or bound, or any order or regulation known to
such counsel to be applicable to such Company of any court,
regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over such Company; and
(viii) the Pooling and Servicing Agreement will not
be required to be qualified under the Trust Indenture Act of
1939, as amended, and the Trust is not, and immediately
following the sale of the Certificates pursuant hereto, will
not be required to be, registered under the Investment
Company Act of 1940, as amended.
[Issuer's counsel] shall also state that he has no reason to
believe that the Registration Statement or any amendment thereof at
the time it became effective contained any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or that the Final Prospectus, as amended or supplemented,
as of its date and as of the Closing Date, contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws of any jurisdiction other
than (i) the United States or the general corporation laws of the
State of Delaware, (ii) with respect to [Issuer's counsel], the State
of _______________, and (iii) with respect to Skadden, Arps, Slate,
Meagher & Flom, the State of New York, to the extent deemed proper
and specified in such opinion, upon the opinion of other counsel of
good standing believed to be reliable and who are satisfactory to
counsel for the Underwriters; and (B) as to matters of fact, to the
extent deemed proper, on certificates of responsible officers of the
Companies or their affiliates and public officials.
(c) The Companies shall have furnished to the Representative
an opinion of Skadden, Arps, Slate, Meagher & Flom, special counsel
for the Companies, dated the Closing Date, to the effect that:
(i) the statements in the Final Prospectus under
the heading "Federal Income Tax Consequences" and the
summary thereof under the heading "Prospectus Summary -- Tax
Status," to the extent they constitute matters of Federal
law or legal conclusions with respect thereto, have been
reviewed by such counsel and are correct in all material
respects; and
(ii) the statements in the Final Prospectus under
the headings "Certain Legal Aspects of the Receivables" and
"ERISA Considerations," to the extent they constitute
matters of Federal law or legal conclusions with respect
thereto, have been reviewed by such counsel and are correct
in all material respects.
(d) The Companies shall have furnished to the Representative
(i) an opinion or opinions of Skadden, Arps, Slate, Meagher & Flom,
special counsel for the Companies, dated the Closing Date, with
respect to certain matters relating to the effect of receivership of
any Company on such interest in the Receivables and with respect to
other related matters and (ii) opinions of local counsel to each of
the Companies, dated the Closing Date, with respect to the perfection
of the Trust's interest in the Receivables, in each case in a form
previously approved by the Representative and its counsel. In
addition, the Representative shall have received a reliance letter
with respect to any opinion that the Companies are required to
deliver to each Rating Agency.
(e) The Representative shall have received from Skadden,
Arps, Slate, Meagher & Flom, special counsel for the Underwriters,
such opinion or opinions, dated the Closing Date, in form and
substance satisfactory to the Representative, with respect to the
validity of the Certificates, the Registration Statement, the Final
Prospectus and other related matters as the Representative may
require, and the Companies shall have furnished to such counsel such
documents as they may reasonably request for the purpose of enabling
them to pass upon such matters.
(f) The Representative shall have received an opinion of
counsel to the Trustee, dated the Closing Date, to the effect that:
(i) the Trustee has been duly incorporated and is
validly existing as a banking corporation under the laws of
the State of ______________ and has the power and authority
to enter into and to perform all actions required of it
under the Pooling and Servicing Agreement;
(ii) the Pooling and Servicing Agreement has been
duly authorized, executed and delivered by the Trustee, and
constitutes a legal, valid and binding obligation of the
Trustee, enforceable against the Trustee in accordance with
its terms except as such enforceability may be limited by
(A) bankruptcy, insolvency, liquidation, reorganization,
moratorium, conservatorship, receivership or other similar
laws now or hereafter in effect relating to the enforcement
of creditors' rights in general, as such laws would apply in
the event of a bankruptcy, insolvency, liquidation,
reorganization, moratorium, conservatorship, receivership or
similar occurrence affecting the Trustee, and (B) general
principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law) as well as concepts of reasonableness, good faith and
fair dealing;
(iii) the Certificates have been duly executed on
behalf of the Trust, authenticated and delivered by the
Trustee;
(iv) the execution and delivery of the Pooling and
Servicing Agreement and the Certificates by the Trustee and
the performance by the Trustee of the terms thereof do not
conflict with or result in a violation of (A) any law or
regulation of the United States or the State of ___________
governing the banking or trust powers of the Trustee or (B)
the certificate of incorporation or articles of association
or by-laws of the Trustee; and
(v) no approval, authorization or other action by,
or filing with, any governmental authority of the United
States or the State of _________________ having jurisdiction
over the banking or trust powers of the Trustee is required
in connection with the execution and delivery by the Trustee
of the Pooling and Servicing Agreement, or the execution on
behalf of the Trust, and delivery of the Certificates or the
performance by the Trustee thereunder.
(g) The Companies shall have furnished to the Representative
a certificate of each Company, signed by any two of the Chairman of
the Board, the President, any Executive Vice President, the principal
treasury officer, the principal financial officer or the principal
accounting officer of such Company, dated the Closing Date, to the
effect that the signers of such certificate have carefully examined
the Registration Statement (excluding any other documents
incorporated by reference therein), the Final Prospectus and this
Agreement and that, to the best of their knowledge:
(i) the representations and warranties of such
Company in this Agreement are true and correct in all
material respects on and as of the Closing Date with the
same effect as if made on the Closing Date and such Company
has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or
prior to the Closing Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement, as amended, has been issued, and
no proceedings for that purpose have been instituted or
threatened; and
(iii) since the respective dates as of which
information is given in the Final Prospectus, there has been
no material adverse change in the condition (financial or
other), earnings, business or properties of such Company,
whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated
in the Final Prospectus.
(h) On the date hereof and on the Closing Date, Price
Waterhouse LLP and/or any other firm of certified independent public
accountants acceptable to the Representative shall have furnished to
the Representative a letter, dated the date hereof and the date of
the Closing Date, respectively, in form and substance satisfactory to
the Representative, confirming that they are independent accountants
within the meaning of the Act and the Exchange Act and the respective
applicable published rules and regulations thereunder, and stating in
effect that using the assumptions and methodology used by each
Company, all of which shall be described in such letter, they have
recalculated such numbers and percentages set forth in the Final
Prospectus as the Representative may reasonably request and agreed to
by Price Waterhouse LLP, compared the results of their calculations
to the corresponding items in the Final Prospectus, and found each
such number and percentage set forth in the Final Prospectus to be in
agreement with the results of such calculations. To the extent
historical financial information with respect to each Company and/or
historical financial, delinquency or related information with respect
to one or more servicers is included in the Final Prospectus, such
letter or letters shall also relate to such information.
(i) The Class A Certificates shall have received the rating
of _______ from ___________________________, and the Class B
Certificates shall have received the rating of at least _____ from
___________________________.
(j) Prior to the Closing Date, the Companies shall have
furnished to the Representative such further information,
certificates and documents as the Representative may reasonably
request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representative and its counsel, this
Agreement and all obligations of the Underwriters hereunder may be canceled
at, or at any time prior to, the Closing Date by the Representative. Notice of
such cancellation shall be given to the Companies in writing or by telephone
or telegraph confirmed in writing.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Certificates provided for herein is not consummated because any condition to
the obligations of the Underwriters set forth in Section 6 hereof is not
satisfied or because of any refusal, inability or failure on the part of the
Companies to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Underwriters, the Companies
will reimburse, subject to paragraph (e) of Section 8 below, the Underwriters
severally upon demand for all out-of-pocket expenses (including reasonable
fees and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Certificates.
8. Indemnification and Contribution.
(a) Subject to paragraph (e) of this Section 8, the
Companies agree to indemnify and hold harmless each Underwriter and
each person who controls any Underwriter within the meaning of either
the Act or the Exchange Act against any and all losses, claims,
damages or liabilities, joint or several, to which they or any of
them may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement for the registration of the Certificates
as originally filed or in any amendment thereof, or in, any
Preliminary Prospectus or the Final Prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and agrees to reimburse each such indemnified
party for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that (i) no Company
will be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any
Underwriter through the Representative specifically for use in
connection with the preparation thereof and (ii) such indemnity with
respect to any Preliminary Prospectus shall not inure to the benefit
of any Underwriter (or any person controlling such Underwriter) from
whom the person asserting any such loss, claim, damage or liability
purchased the Certificates which are the subject thereof if such
person did not receive a copy of the Final Prospectus (or the Final
Prospectus as amended or supplemented) at or prior to the
confirmation of the sale of such Certificates to such person in any
case where such delivery is required by the Act and the untrue
statement or omission of a material fact contained in any Preliminary
Prospectus was corrected in the Final Prospectus (or the Final
Prospectus as amended or supplemented). This indemnity agreement will
be in addition to any liability which the Companies may otherwise
have.
(b) Each Underwriter severally agrees to indemnify and hold
harmless each Company, each of its directors, each of its officers
who signs the Registration Statement, and each person who controls a
Company within the meaning of either the Act or the Exchange Act, to
the same extent as the foregoing indemnity from the Company to each
Underwriter, but only with reference to written information relating
to such Underwriter furnished to the Companies by or on behalf of
such Underwriter through the Representative specifically for use in
the preparation of the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any
liability which any Underwriter may otherwise have. The Companies
acknowledge that the statements set forth under the heading
"Underwriting" constitute the only information furnished in writing
by or on behalf of the several Underwriters for inclusion in the
documents referred to in the foregoing indemnity, and you, as the
Representative, confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party otherwise
than under this Section 8. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein, and, to the extent that it may elect by written
notice delivered to the indemnified party promptly after receiving
the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel satisfactory to such indemnified party;
provided, however, that if the defendants in any such action include
both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be
legal defenses available to it and/or other indemnified parties which
are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the
right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to
assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other
expenses subsequently incurred by such indemnified party in
connection with the defense thereof unless (i) the indemnified party
shall have employed separate counsel in connection with the assertion
of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than
one separate counsel, approved by the Representative in the case of
subparagraph (a), representing the indemnified parties under
subparagraph (a) who are parties to such action), (ii) the
indemnifying party shall not have employed counsel satisfactory to
the indemnified party to represent the indemnified party within a
reasonable time after notice of commencement of the action or (iii)
the indemnifying party has authorized the employment of counsel for
the indemnified party at the expense of the indemnifying party; and
except that if clause (i) or (iii) is applicable, such liability
shall be only in respect of the counsel referred to in such clause
(i) or (iii). After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable for the
costs and expenses of any settlement of such action effected by such
indemnified party without the consent of the indemnifying party,
which will not be unreasonably withheld, unless such indemnifying
party waived its rights under this Section 8 in writing in which case
the indemnified party may effect such a settlement without such
consent. No indemnifying party may avoid its duty to indemnify under
this Section 8 if such indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement or
compromise of, or consent to the entry of any judgment in, any
pending or threatened action in respect of which any indemnified
party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement
includes an unconditional release of such indemnified party from all
liability on all claims that are the subject matter of such action.
An indemnifying party shall not be liable for any settlement of any
claim effected without its consent unless its right to consent under
this Section 8 has been waived in writing.
(d) To provide for just and equitable contribution in
circumstances in which the indemnification provided for in paragraph
(a) or (b) of this Section 8 is due in accordance with its terms but
is for any reason held by a court to be unavailable from the
Companies or the Underwriters on the grounds of policy or otherwise,
the Companies, subject to paragraph (e) of this Section 8, and the
Underwriters shall contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending same) to which
the Companies and one or more of the Underwriters may be subject, in
such proportion so that the Underwriters are responsible for that
portion represented by the percentage that the underwriting discount
bears to the sum of such discount and the purchase price of the
Certificates specified in Schedule I hereto and the Companies are
responsible for the balance; provided, however, that in no case shall
any Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Certificates) be
responsible for any amount in excess of the underwriting discount
applicable to the Certificates purchased by such Underwriter
hereunder.
Notwithstanding anything to the contrary in this paragraph
(d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who
controls an Underwriter within the meaning of either the Act or the
Exchange Act shall have the same rights to contribution as such
Underwriter, and each person who controls a Company within the
meaning of either the Act or the Exchange Act, each officer of a
Company who shall have signed the Registration Statement and each
director of a Company shall have the same rights to contribution as
that Company, subject in each case to the preceding sentence of this
paragraph (d). Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this
paragraph (d), notify such party or parties from whom contribution
may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have hereunder or
otherwise than under this paragraph (d).
(e) Notwithstanding any other provisions of this Agreement
to the contrary, with respect to its obligations to reimburse
expenses pursuant to Section 7 herein, to indemnify each Underwriter
pursuant to Section 8(a) herein, and to provide contribution pursuant
to Section 8(d) herein, each Company will only be responsible for the
percentage of such expenses, indemnification or contribution, as the
case may be, set forth opposite its name below (which percentages
represent such Company's proportional contribution of Receivables to
the Trust):
NationsBank, N.A. _____%
NationsBank, N.A. (South) _____%
NationsBank of Texas, N.A._____%
9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Certificates agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Certificates
set forth opposite their names in Schedule I hereto bear to the aggregate
amount of Certificates set forth opposite the names of all the remaining
Underwriters) the Certificates which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the
event that the aggregate amount of Certificates which the defaulting
Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of
the aggregate amount of Certificates set forth in Schedule I hereto, the
remaining Underwriters shall have the right to purchase all, but shall not be
under any obligation to purchase any, of the Certificates, and if such
nondefaulting Underwriters do not purchase all the Certificates, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Companies. In the event of a default by any Underwriter as set forth in
this Section 9, the Closing Date shall be postponed for such period, not
exceeding seven days, as the Representative shall determine in order that the
required changes in the Registration Statement and the Final Prospectus or in
any other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its liability, if any,
to the Companies and any nondefaulting Underwriter for damages occasioned by
its default hereunder.
10. Termination. This Agreement shall be subject to termination in
the absolute discretion of the Representative, by notice given to the
Companies prior to delivery of and payment for the Certificates, if prior to
such time (i) trading in securities generally on the New York Stock Exchange
shall have been suspended or limited or minimum prices shall have been
established on such Exchange, (ii) a banking moratorium shall have been
declared either by Federal or North Carolina, Florida, Georgia and Texas State
authorities or (iii) there shall have occurred any outbreak or material
escalation of hostilities or other calamity or crisis the effect of which on
the financial markets of the United States is such as to make it, in the
judgment of the Representative, impracticable to market the Certificates.
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of
each of the Companies or their officers and of the Underwriters set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter or the
Companies or any of the officers, directors or controlling persons referred to
in Section 8 hereof, and will survive delivery of and payment for the
Certificates. The provisions of Section 7 and 8 hereof and this Section 11
shall survive the termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representative, will be mailed,
delivered or telegraphed to NationsBanc Capital Markets, Inc., NationsBank
Corporate Center, 100 North Tryon Street, Charlotte, North Carolina 28255,
Attention: William A. Glenn, Managing Director, and to any other Underwriter
at such address, if any, as is specified in writing to the Company for notices
hereunder; or, if sent to any Company, will be mailed, delivered or
telegraphed and confirmed to it at NationsBank Corporate Center, 100 North
Tryon Street, Charlotte, North Carolina, 28255, Attention: John E. Mack,
Senior Vice President, with a copy to: NationsBank Corporation, Legal
Department, NC1-007-20-01, NationsBank Corporate Center, 100 North Tryon
Street, Charlotte, North Carolina, 28255, Attention: Paul J.
Polking, General Counsel.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8
hereof, and no other person will have any right or obligation hereunder.
14. APPLICABLE LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICT OF LAWS.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Companies and the several Underwriters.
Very truly yours,
NATIONSBANK, N.A.
By:_________________________
John E. Mack
Senior Vice President
NATIONSBANK, N.A. (SOUTH)
By:_________________________
John E. Mack
Senior Vice President
NATIONSBANK OF TEXAS, N.A.
By:_________________________
John E. Mack
Senior Vice President
The foregoing Agreement is hereby confirmed and accepted as of the date first
written above.
NATIONSBANC CAPITAL MARKETS, INC.,
as Representative
By: NATIONSBANC CAPITAL MARKETS, INC.
By:_______________________________________
William A. Glenn
Managing Director
For itself and the other several Underwriters, if any, named in Schedule I to
the foregoing Agreement.
SCHEDULE I
Principal Amount
of Class A Certificates to
Underwriters be Purchased
NationsBanc Capital Markets, Inc. .....................$________________
Total ............................................$________________
Principal Amount
of Class B Certificates to
Underwriters be Purchased
NationsBanc Capital Markets, Inc.........................$________________
Total ............................................$________________
Exhibit 4.1
INDENTURE
between
NATIONSBANK AUTO OWNER TRUST ____-_,
as Issuer
and
_________________________________________,
as Indenture Trustee
Dated as of ________ __, ____
CROSS REFERENCE TABLE1
TIA Indenture
Section Section
310 (a)(1) . . . . . . . . . . . . . . . . . . . 6.11
(a)(2) . . . . . . . . . . . . . . . . . . . 6.11
(a)(3) . . . . . . . . . . . . . . . . . . . 6.10
(a)(4) . . . . . . . . . . . . . . . . . . N.A.2
(a)(5) . . . . . . . . . . . . . . . . . . . 6.11
(b) . . . . . . . . . . . . . . . . . . 6.8;6.11
(c) . . . . . . . . . . . . . . . . . . . . N.A.
311 (a) . . . . . . . . . . . . . . . . . . . . 6.12
(b) . . . . . . . . . . . . . . . . . . . . 6.12
(c) . . . . . . . . . . . . . . . . . . . . N.A.
312 (a) . . . . . . . . . . . . . . . . . . . . 7.1
(b) . . . . . . . . . . . . . . . . . . . . 7.2
(c) . . . . . . . . . . . . . . . . . . . . 7.2
(d) . . . . . . . . . . . . . . . . . . . . 7.4
313 (a) . . . . . . . . . . . . . . . . . . . . 7.4
(b)(1) . . . . . . . . . . . . . . . . . . . 7.4
(b)(2) . . . . . . . . . . . . . . . . . . . 11.5
(c) . . . . . . . . . . . . . . . . . . . . 7.4
(d) . . . . . . . . . . . . . . . . . . . . 7.3
314 (a) . . . . . . . . . . . . . . . . . . . . 11.15
(b) . . . . . . . . . . . . . . . . . . . . 11.1
(c)(1) . . . . . . . . . . . . . . . . . . . 11.1
(c)(2) . . . . . . . . . . . . . . . . . . . 11.1
(c)(3) . . . . . . . . . . . . . . . . . . . 11.1
(d) . . . . . . . . . . . . . . . . . . . . 11.1
(e) . . . . . . . . . . . . . . . . . . . . 11.1
(f) . . . . . . . . . . . . . . . . . . . . 11.1
315 (a) . . . . . . . . . . . . . . . . . . . . 6.1
(b) . . . . . . . . . . . . . . . . . . . 6.5;11.5
(c) . . . . . . . . . . . . . . . . . . . . 6.1
(d) . . . . . . . . . . . . . . . . . . . . 6.1
(e) . . . . . . . . . . . . . . . . . . . . 5.13
316 (a) (last sentence) . . . . . . . . . . . . . 2.8
(a)(1)(A) . . . . . . . . . . . . . . . . . . 5.11
(a)(1)(B) . . . . . . . . . . . . . . . . . . 5.12
(a)(2) . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . 5.7
(c) . . . . . . . . . . . . . . . . . . . . N.A
317 (a)(1) . . . . . . . . . . . . . . . . . . . 5.3
(a)(2) . . . . . . . . . . . . . . . . . . . 5.3
(b) . . . . . . . . . . . . . . . . . . . . 3.3
318 (a) . . . . . . . . . . . . . . . . . . . . 11.7
_______________________
1 Note: This Cross Reference Table shall not, for any
purpose, be deemed to be part of this Indenture.
2 N.A. means Not Applicable.
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS, USAGE AND INCORPORATION BY REFERENCE 3
SECTION 1.1. Definitions and Usage . . . . . . . 3
SECTION 1.2. Incorporation by Reference of Trust In-
denture Act . . . . . . . . . . . . 3
ARTICLE II
THE NOTES
SECTION 2.1. Form . . . . . . . . . . . . . . . . 4
SECTION 2.2. Execution, Authentication and Delivery
4
SECTION 2.3. Temporary Notes . . . . . . . . . . 5
SECTION 2.4. Tax Treatment . . . . . . . . . . . 6
SECTION 2.5. Registration; Registration of Transfer
and Exchange . . . . . . . . . . . . 6
SECTION 2.6. Mutilated, Destroyed, Lost or Stolen
Notes . . . . . . . . . . . . . . . 8
SECTION 2.7. Persons Deemed Owners . . . . . . . 9
SECTION 2.8. Payment of Principal and Interest;
Defaulted Interest . . . . . . . . . 9
SECTION 2.9. Cancellation . . . . . . . . . . . . 10
SECTION 2.10. Release of Collateral . . . . . . . 11
SECTION 2.11. Book-Entry Notes . . . . . . . . . . 11
SECTION 2.12. Notices to Clearing Agency . . . . . 13
SECTION 2.13. Definitive Notes . . . . . . . . . . 13
SECTION 2.14. Authenticating Agents . . . . . . . 13
ARTICLE III
COVENANTS
SECTION 3.1. Payment of Principal and Interest . 15
SECTION 3.2. Maintenance of Office or Agency . . 15
SECTION 3.3. Money for Payments To Be Held in Trust
15
SECTION 3.4. Existence . . . . . . . . . . . . . 18
SECTION 3.5. Protection of Indenture Trust Estate 18
SECTION 3.6. Opinions as to Indenture Trust Estate
19
SECTION 3.7. Performance of Obligations;
Servicing of Receivables . . . . . . 19
SECTION 3.8. Negative Covenants . . . . . . . . . 22
SECTION 3.9. Annual Statement as to Compliance . 23
SECTION 3.10. Issuer May Consolidate, etc., Only on
Certain Terms . . . . . . . . . . . 24
SECTION 3.11. Successor of Transferee . . . . . . 26
SECTION 3.12. No Other Business . . . . . . . . . 27
SECTION 3.13. No Borrowing . . . . . . . . . . . . 27
SECTION 3.14. Servicer's Obligations . . . . . . . 27
SECTION 3.15. Guarantees, Loans, Advances and Other
Liabilities . . . . . . . . . . . . 27
SECTION 3.16. Capital Expenditures . . . . . . . . 27
SECTION 3.17. Further Instruments and Acts . . . . 27
SECTION 3.18. Restricted Payments . . . . . . . . 28
SECTION 3.19. Notice of Events of Default . . . . 28
SECTION 3.20. Removal of Administrator . . . . . . 28
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture
29
SECTION 4.2. Satisfaction, Discharge and Defeasance
of Notes . . . . . . . . . . . . . . 30
SECTION 4.3. Application of Trust Money . . . . . 32
SECTION 4.4. Repayment of Monies Held by Note Paying
Agent . . . . . . . . . . . . . . . 32
ARTICLE V
REMEDIES
SECTION 5.1. Events of Default . . . . . . . . . 33
SECTION 5.2. Acceleration of Maturity; Rescission and
Annulment . . . . . . . . . . . . . 35
SECTION 5.3. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee . . 36
SECTION 5.4. Remedies; Priorities . . . . . . . . 39
SECTION 5.5. Optional Preservation of the Receivables
41
SECTION 5.6. Limitation of Suits . . . . . . . . 41
SECTION 5.7. Unconditional Rights of Noteholders To
Receive Principal and Interest . . . 42
SECTION 5.8. Restoration of Rights and Remedies . 43
SECTION 5.9. Rights and Remedies Cumulative . . . 43
SECTION 5.10. Delay or Omission Not a Waiver . . . 43
SECTION 5.11. Control by Noteholders . . . . . . . 43
SECTION 5.12. Waiver of Past Defaults . . . . . . 44
SECTION 5.13. Undertaking for Costs . . . . . . . 45
SECTION 5.14. Waiver of Stay or Extension Laws . . 45
SECTION 5.15. Action on Notes . . . . . . . . . . 46
SECTION 5.16. Performance and Enforcement of Certain
Obligations . . . . . . . . . . . . 46
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.1. Duties of Indenture Trustee . . . . 48
SECTION 6.2. Rights of Indenture Trustee . . . . 49
SECTION 6.3. Individual Rights of Indenture Trustee
50
SECTION 6.4. Indenture Trustee's Disclaimer . . . 50
SECTION 6.5. Notice of Defaults; Insolvency or
Dissolution of Depositor or General
Partner . . . . . . . . . . . . . . 51
SECTION 6.6. Reports by Indenture Trustee to
Noteholders . . . . . . . . . . . . 52
SECTION 6.7. Compensation and Indemnity . . . . . 52
SECTION 6.8. Replacement of Indenture Trustee . . 53
SECTION 6.9. Successor Indenture Trustee by Merger
54
SECTION 6.10. Appointment of Co-Indenture Trustee or
Separate Indenture Trustee . . . . . 55
SECTION 6.11. Eligibility; Disqualification . . . 57
SECTION 6.12. Preferential Collection of
Claims Against Issuer . . . . . . . 57
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1. Issuer To Furnish Indenture Trustee
Names
and Addresses of Noteholders . . . . 58
SECTION 7.2. Preservation of Information;
Communications to Noteholders . . . 58
SECTION 7.3. Reports by Issuer . . . . . . . . . 59
SECTION 7.4. Reports by Indenture Trustee . . . . 59
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES . . . 61
SECTION 8.1. Collection of Money . . . . . . . . 61
SECTION 8.2. Trust Accounts, the Reserve Account and
the
Yield Supplement Account . . . . . . 61
SECTION 8.3. General Provisions Regarding Accounts
63
SECTION 8.4. Release of Indenture Trust Estate . 64
SECTION 8.5. Opinion of Counsel . . . . . . . . . 65
ARTICLE IX
SUPPLEMENTAL INDENTURES . . . . . . 66
SECTION 9.1. Supplemental Indentures Without
Consent of Noteholders . . . . . . . 66
SECTION 9.2. Supplemental Indentures with
Consent of Noteholders . . . . . . . 68
SECTION 9.3. Execution of Supplemental Indentures 70
SECTION 9.4. Effect of Supplemental Indenture . . 71
SECTION 9.5. Conformity with Trust Indenture Act 71
SECTION 9.6. Reference in Notes to Supplemental In-
dentures . . . . . . . . . . . . . . 71
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1. Redemption . . . . . . . . . . . . . 72
SECTION 10.2. Form of Redemption Notice . . . . . 72
SECTION 10.3. Notes Payable on Redemption Date . . 73
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Compliance Certificates and Opinions,
etc. . . . . . . . . . . . . . . . . 74
SECTION 11.2. Form of Documents Delivered to Indenture
Trustee . . . . . . . . . . . . . . 76
SECTION 11.3. Acts of Noteholders . . . . . . . . 77
SECTION 11.4. Notices, etc., to Indenture Trustee,
Issuer and Rating
Agencies . . . . . . . . . . . . . . 78
SECTION 11.5. Notices to Noteholders; Waiver . . . 79
SECTION 11.6. Alternate Payment and Notice Provisions
80
SECTION 11.7. Conflict with Trust Indenture Act . 80
SECTION 11.8. Effect of Headings and Table of Contents
81
SECTION 11.9. Successors and Assigns . . . . . . . 81
SECTION 11.10. Separability . . . . . . . . . . . . 81
SECTION 11.11. Benefits of Indenture . . . . . . . 81
SECTION 11.12. Legal Holiday . . . . . . . . . . . 81
SECTION 11.13. Governing Law . . . . . . . . . . . 81
SECTION 11.14. Counterparts . . . . . . . . . . . . 82
SECTION 11.15. Recording of Indenture . . . . . . . 82
SECTION 11.16. Trust Obligation . . . . . . . . . . 82
SECTION 11.17. No Petition . . . . . . . . . . . . 83
SECTION 11.18. Inspection . . . . . . . . . . . . . 83
EXHIBIT A-1 Form of Class A-1 Note . . . . . A-1-1
[EXHIBIT A-2 Form of Class A-2 Note . . . . . A-2-1]
[EXHIBIT A-3 Form of Class A-3 Note . . . . . A-3-1]
[EXHIBIT B Form of Note Depository Agree-
ment . . . . . . . . . . . . . . . . . . . . . . . B-1]
SCHEDULE A Schedule of Receivables . . . . . SA-1
APPENDIX A Definitions and Usage . . . . . . AA-1
INDENTURE, dated as of _________ __, ____, (as
from time to time amended, supplemented or otherwise
modified and in effect, this "Indenture") between
NATIONSBANK AUTO OWNER TRUST ____-_, a Delaware business
trust (the "Issuer"), and
_________________________________________, a ________
banking corporation, as trustee and not in its individual
capacity (in such capacity, the "Indenture Trustee").
Each party agrees as follows for the benefit of
the other party and for the equal and ratable benefit of
the holders of the Issuer's [Class A-1] ____% Asset
Backed Notes (the ["Class A-1 Notes"), Class A-2 _____%
Asset Backed Notes (the "Class A-2 Notes") and Class A-3
___% Asset Backed Notes (the "Class A-3 Notes" and,
together with the Class A-1 Notes and the Class A-2
Notes, the] "Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture
Trustee at the Closing Date, as Indenture Trustee for the
benefit of the Noteholders, all of the Issuer's right,
title and interest in, to and under, whether now owned or
existing or hereafter acquired or arising in (a) all of
the Issuer's accounts (as defined in the UCC); (b) all of
the Issuer's chattel paper (as defined in the UCC); (c)
all of the Issuer's general intangibles (as defined in
the UCC), [including without limitation, any of the
Issuer's personal property (including choses-in-action)
other than goods, accounts, chattel paper, documents,
instruments, and money (with each such term having the
definition given in the UCC)]; (d) all of the Issuer's
instruments, documents, goods and inventory (as each such
term is defined in the UCC); (e) the Receivables and the
other Owner Trust Property; and (f) all present and
future claims, demands, causes of action and choses in
action in respect of any or all of the foregoing and all
payments on or under, and all proceeds of every kind and
nature whatsoever in respect of any or all of the forego-
ing, including all proceeds of the conversion thereof,
voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights
to payment of any and every kind and other forms of
obligations and receivables, instruments and other prop-
erty which at any time constitute all or part of or are
included in the proceeds of any of the foregoing (collec-
tively, the "Collateral"), it being understood that
nothing described heretofore or represented by the Col-
lateral shall include the property or proceeds (or rights
thereto) contained in or rerpresented by the Certificate
Distribution Account.
The foregoing Grant is made in trust to secure
the payment of principal of and interest on, and any
other amounts owing in respect of, the Notes, equally and
ratably without prejudice, priority or distinction, and
to secure compliance with the provisions of this Inden-
ture, all as provided in this Indenture.
The Indenture Trustee, as Indenture Trustee on
behalf of the Noteholders, acknowledges such Grant,
accepts the trusts under this Indenture in accordance
with the provisions of this Indenture and agrees to
perform its duties required in this Indenture to the best
of its ability to the end that the interests of the
Noteholders may be adequately and effectively protected.
ARTICLE I.
DEFINITIONS, USAGE AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions and Usage. Except as
otherwise specified herein or as the context may other-
wise require, capitalized terms used but not otherwise
defined herein are defined in Appendix A hereto, which
also contains rules as to usage that shall be applicable
herein.
SECTION 1.2. Incorporation by Reference of Trust
Indenture Act. Whenever this Indenture refers to a
provision of the TIA, the provision is incorporated by
reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the
following meanings:
"indenture securities" shall mean the Notes.
"indenture security holder" shall mean a
Noteholder.
"indenture to be qualified" shall mean this
Indenture.
"indenture trustee" or "institutional trustee"
shall mean the Indenture Trustee.
"obligor" on the indenture securities shall
mean the Issuer and any other obligor on the indenture
securities.
All other TIA terms used in this Indenture that
are defined in the TIA, defined by TIA reference to
another statute or defined by Commission rule have the
meaning assigned to them by such definitions.
End of Article I
ARTICLE II.
THE NOTES
SECTION 2.1. Form. (a) The [Class A-1] Notes,
[the Class A-2 Notes and the Class A-3 Notes,] together
with the Indenture Trustee's certificates of authentica-
tion, shall be in substantially the form set forth in
Exhibit A-1, [Exhibit A-2 and Exhibit A-3, respectively,]
with such appropriate insertions, omissions, substitu-
tions and other variations as are required or permitted
by this Indenture, and may have such letters, numbers or
other marks of identification and such legends or en-
dorsements placed thereon as may, consistently herewith,
be determined by the officers executing such Notes, as
evidenced by their execution thereof. Any portion of the
text of any Note may be set forth on the reverse thereof,
with an appropriate reference thereto on the face of the
Note.
(b) The definitive Notes shall be typewritten,
printed, lithographed or engraved or produced by any
combination of these methods (with or without steel
engraved borders), all as determined by the officers
executing such Notes, as evidenced by their execution of
such Notes.
(c) Each Note shall be dated the date of its
authentication. The terms of the Notes set forth in
Exhibit A-1[, Exhibit A-2 and Exhibit A-3] are part of
the terms of this Indenture and are incorporated herein
by reference.
SECTION 2.2. Execution, Authentication and
Delivery. (a) The Notes shall be executed on behalf of
the Issuer by any of its Authorized Officers. The signa-
ture of any such Authorized Officer on the Notes may be
manual or facsimile.
(b) Notes bearing the manual or facsimile
signature of individuals who were at any time Authorized
Officers of the Issuer shall bind the Issuer, notwith-
standing that such individuals or any of them have ceased
to hold such offices prior to the authentication and
delivery of such Notes or did not hold such offices at
the date of such Notes.
(c) The Indenture Trustee shall, upon Issuer
Order, authenticate and deliver [Class A-1] Notes for
original issue in an aggregate principal amount of
$___________[, Class A-2 Notes for original issue in an
aggregate principal amount of $______ and Class A-3 Notes
for original issue in an aggregate principal amount of
$___________.] The aggregate principal amount of [Class
A-1] Notes[, Class A-2 Notes and Class A-3 Notes] out-
standing at any time may not exceed each respective
amount except as provided in Section 2.6.
(d) Each Note shall be dated the date of its
authentication. The Notes [of the same Class] shall be
issuable as registered Notes in minimum denominations of
$1,000 and in integral multiples of $1,000 in excess
thereof.
(e) No Note shall be entitled to any benefit
under this Indenture or be valid or obligatory for any
purpose, unless there appears on such Note a certificate
of authentication substantially in the form provided for
herein executed by the Indenture Trustee by the manual
signature of one of its authorized signatories, and such
certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly
authenticated and delivered hereunder.
SECTION 2.3 Temporary Notes. (a) Pending the
preparation of definitive Notes, the Issuer may execute,
and upon receipt of an Issuer Order the Indenture Trustee
shall authenticate and deliver, temporary Notes that are
printed, lithographed, typewritten, mimeographed or
otherwise produced, of the tenor of the definitive Notes
in lieu of which they are issued and with such variations
not inconsistent with the terms of this Indenture as the
officers executing the temporary Notes may determine, as
evidenced by their execution of such temporary Notes.
If temporary Notes are issued, the Issuer shall
cause definitive Notes to be prepared without unreason-
able delay. After the preparation of definitive Notes,
the temporary Notes shall be exchangeable for definitive
Notes upon surrender of the temporary Notes at the office
or agency of the Issuer to be maintained as provided in
Section 3.2, without charge to the Noteholder. Upon
surrender for cancellation of any one or more temporary
Notes, the Issuer shall execute, and the Indenture Trust-
ee shall authenticate and deliver in exchange therefor, a
like principal amount of definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes
shall in all respects be entitled to the same benefits
under this Indenture as definitive Notes.
SECTION 2.4. Tax Treatment. The Issuer has
entered into this Indenture, and the Notes shall be
issued, with the intention that, for federal, state and
local income and franchise tax purposes, the Notes shall
qualify as indebtedness of the Issuer secured by the
Indenture Trust Estate. The Issuer, by entering into
this Indenture, and each Noteholder, by its acceptance of
a Note (and each Note Owner by its acceptance of an
interest in the applicable Book-Entry Note), agree to
treat the Notes for federal, state and local income and
franchise tax purposes as indebtedness of the Issuer.
SECTION 2.5. Registration; Registration of
Transfer and Exchange. (a) The Issuer shall cause to be
kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the
Issuer shall provide for the registration of Notes and
the registration of transfers of Notes. The Indenture
Trustee initially shall be the "Note Registrar" for the
purpose of registering Notes and transfers of Notes as
herein provided. Upon any resignation of any Note Regis-
trar, the Issuer shall promptly appoint a successor or,
if it elects not to make such an appointment, assume the
duties of Note Registrar.
(b) If a Person other than the Indenture Trust-
ee is appointed by the Issuer as Note Registrar, (i) the
Issuer shall give the Indenture Trustee prompt written
notice of the appointment of such Note Registrar and of
the location, and any change in the location, of the Note
Register, (ii) the Indenture Trustee shall have the right
to inspect the Note Register at all reasonable times and
to obtain copies thereof, and (iii) the Indenture Trustee
shall have the right to rely upon a certificate executed
on behalf of the Note Registrar by an Executive Officer
thereof as to the names and addresses of the Noteholders
and the principal amounts and number of such Notes.
(c) Upon surrender for registration of transfer
of any Note at the office or agency of the Issuer to be
maintained as provided in Section 3.2, if the require-
ments of Section 8-401(l) of the UCC are met the Issuer
shall execute, and the Indenture Trustee shall authenti-
cate and the Noteholder shall obtain from the Indenture
Trustee, in the name of the designated transferee or
transferees, one or more new Notes of the same Class in
any authorized denomination, of a like aggregate princi-
pal amount.
(d) At the option of the Noteholder, Notes may
be exchanged for other Notes of the same Class in any
authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at
such office or agency. Whenever any Notes are so surren-
dered for exchange, if the requirements of Section 8-
401(l) of the UCC are met, the Issuer shall execute, the
Indenture Trustee shall authenticate, and the Noteholder
shall obtain from the Indenture Trustee, the Notes which
the Noteholder making such exchange is entitled to re-
ceive.
(e) All Notes issued upon any registration of
transfer or exchange of Notes shall be the valid obliga-
tions of the Issuer, evidencing the same debt, and enti-
tled to the same benefits under this Indenture as the
Notes surrendered upon such registration of transfer or
exchange.
(f) Every Note presented or surrendered for
registration of transfer or exchange shall be duly en-
dorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee
duly executed by, the Noteholder thereof or such
Noteholder's attorney duly authorized in writing, with
such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Regis-
trar.
(g) No service charge shall be made to a
Noteholder for any registration of transfer or exchange
of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge
that may be imposed in connection with any registration
of transfer or exchange of Notes, other than exchanges
pursuant to Section 2.3 or 9.6 not involving any trans-
fer.
(h) The preceding provisions of this Section
2.5 notwithstanding, the Issuer shall not be required to
make and the Note Registrar need not register transfers
or exchanges of Notes selected for redemption or of any
Note for a period of fifteen (15) days preceding the
Distribution Date for any payment with respect to such
Note.
SECTION 2.6. Mutilated, Destroyed, Lost or
Stolen Notes. (a) If (i) any mutilated Note is surren-
dered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction,
loss or theft of any Note, and (ii) there is delivered to
the Indenture Trustee such security or indemnity as may
be required by it to hold the Issuer and the Indenture
Trustee harmless, then, in the absence of notice to the
Issuer, the Note Registrar or the Indenture Trustee that
such Note has been acquired by a bona fide purchaser, and
provided that the requirements of Section 8-405 of the
UCC are met, the Issuer shall execute, and upon its
request the Indenture Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilat-
ed, destroyed, lost or stolen Note, a replacement Note
[of the same Class]; provided, however, that if any such
destroyed, lost or stolen Note, but not a mutilated Note,
shall have become, or within seven (7) days shall be, due
and payable, or shall have been called for redemption,
instead of issuing a replacement Note, the Issuer may pay
such destroyed, lost or stolen Note when so due or pay-
able or upon the Redemption Date without surrender there-
of. If, after the delivery of such replacement Note or
payment of a destroyed, lost or stolen Note pursuant to
the proviso to the preceding sentence, a bona fide pur-
chaser of the original Note in lieu of which such re-
placement Note was issued presents for payment such
original Note, the Issuer and the Indenture Trustee shall
be entitled to recover such replacement Note (or such
payment) from the Person to whom it was delivered or any
Person taking such replacement Note from such Person to
whom such replacement Note was delivered or any assignee
of such Person, except a bona fide purchaser, and shall
be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer or the Indenture Trust-
ee in connection therewith.
(b) Upon the issuance of any replacement Note
under this Section 2.6, the Issuer may require the pay-
ment by the Noteholder of such Note of a sum sufficient
to cover any tax or other governmental charge that may be
imposed in relation thereto and any other reasonable
expenses (including the fees and expenses of the Inden-
ture Trustee) connected therewith.
(c) Every replacement Note issued pursuant to
this Section 2.6 in replacement of any mutilated, de-
stroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether
or not the mutilated, destroyed, lost or stolen Note
shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally
and proportionately with any and all other Notes duly
issued hereunder.
(d) The provisions of this Section 2.6 are
exclusive and shall preclude (to the extent lawful) all
other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.7. Persons Deemed Owners. Prior to
due presentment for registration of transfer of any Note,
the Issuer, the Indenture Trustee and any agent of the
Issuer or the Indenture Trustee may treat the Person in
whose name any Note is registered (as of the day of
determination) as the owner of such Note for the purpose
of receiving payments of principal of and interest, if
any, on such Note and for all other purposes whatsoever,
whether or not such Note be overdue, and none of the
Issuer, the Indenture Trustee or any agent of the Issuer
or the Indenture Trustee shall be affected by notice to
the contrary.
SECTION 2.8. Payment of Principal and Interest;
Defaulted Interest. (a) The Class [A-1] Notes[, the
Class A-2 Notes and the Class A-3 Notes] shall accrue
interest at the Class[ A-1] Rate[, the Class A-2 Rate and
the Class A-3 Rate, respectively,] as set forth in Exhib-
it A-1[, Exhibit A-2 and Exhibit A-3, respectively,] and
such interest shall be payable on each Distribution Date
as specified therein, subject to Section 3.1. Any in-
stallment of interest or principal, if any, payable on
any Note that is punctually paid or duly provided for by
the Issuer on the applicable Distribution Date shall be
paid to the Person in whose name such Note (or one or
more Predecessor Notes) is registered on the Record Date
[by check mailed first-class postage prepaid to such
Person's address as it appears on the Note Register on
such Record Date]; provided that, unless Definitive Notes
have been issued pursuant to Section 2.13, with respect
to Notes registered on the Record Date in the name of the
nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payment shall be made by wire transfer
in immediately available funds to the account designated
by such nominee, and except for the final installment of
principal payable with respect to such Note on a Distri-
bution Date, Redemption Date or the applicable Final
Scheduled Distribution Date, which shall be payable as
provided below. The funds represented by any such checks
returned undelivered shall be held in accordance with
Section 3.3.
(b) The principal of each Note shall be payable
in installments on each Distribution Date as provided in
the forms of Notes set forth in Exhibit A-1[, Exhibit A-2
and Exhibit A-3] hereto. Notwithstanding the foregoing,
the entire unpaid principal amount of each Class of Notes
shall be due and payable, if not previously paid, on the
date on which an Event of Default shall have occurred and
be continuing, if the Indenture Trustee or the
Noteholders of Notes evidencing not less than a majority
of the principal amount of the Notes Outstanding have
declared the Notes to be immediately due and payable in
the manner provided in Section 5.2. All principal pay-
ments on each Class of Notes shall be made pro rata to
the Noteholders of such Class entitled thereto. The
Indenture Trustee shall notify the Person in whose name a
Note is registered at the close of business on the Record
Date preceding the Distribution Date on which the Issuer
expects that the final installment of principal of and
interest on such Note shall be paid. Such notice shall
be mailed or transmitted by facsimile prior to such final
Distribution Date and shall specify that such final
installment shall be payable only upon presentation and
surrender of such Note and shall specify the place where
such Note may be presented and surrendered for payment of
such installment. Notices in connection with redemption
of Notes shall be mailed to Noteholders as provided in
Section 10.2.
(c) If the Issuer defaults in a payment of
interest on the Notes, the Issuer shall pay defaulted
interest (plus interest on such defaulted interest to the
extent lawful) at the applicable Note Interest Rate on
the Distribution Date following such default. The Issuer
shall pay such defaulted interest to the Persons who are
Noteholders on the Record Date for such following Distri-
bution Date.
SECTION 2.9. Cancellation. All Notes surren-
dered for payment, registration of transfer, exchange or
redemption shall, if surrendered to any Person other than
the Indenture Trustee, be delivered to the Indenture
Trustee and shall be promptly cancelled by the Indenture
Trustee. The Issuer may at any time deliver to the
Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer
may have acquired in any manner whatsoever, and all Notes
so delivered shall be promptly cancelled by the Indenture
Trustee. No Notes shall be authenticated in lieu of or
in exchange for any Notes cancelled as provided in this
Section 2.9, except as expressly permitted by this Inden-
ture. All cancelled Notes may be held or disposed of by
the Indenture Trustee in accordance with its standard
retention or disposal policy as in effect at the time
unless the Issuer shall direct by an Issuer Order that
they be destroyed or returned to it and so long as such
Issuer Order is timely and the Notes have not been previ-
ously disposed of by the Indenture Trustee.
SECTION 2.10. Release of Collateral. Subject to
Section 11.1 and the terms of the Basic Documents, the
Indenture Trustee shall release property from the lien of
this Indenture only upon receipt of an Issuer Request
accompanied by an Officer's Certificate, an Opinion of
Counsel and Independent Certificates in accordance with
TIA Sections 314(c) and 314(d)(1) or an Opinion of Coun-
sel in lieu of such Independent Certificates to the
effect that the TIA does not require any such Independent
Certificates. If the Commission shall issue an exemptive
order under TIA Section 304(d) modifying the Owner
Trustee's obligations under TIA Sections 314(c) and
314(d)(1), subject to Section 11.1 and the terms of the
Basic Documents, the Indenture Trustee shall release
property from the lien of this Indenture in accordance
with the conditions and procedures set forth in such
exemptive order.
SECTION 2.11. Book-Entry Notes. The Notes, upon
original issuance, shall be issued in the form of type-
written Notes representing the Book-Entry Notes, to be
delivered to The Depository Trust Company, the initial
Clearing Agency, by, or on behalf of, the Issuer. The
Book-Entry Notes shall be registered initially on the
Note Register in the name of Cede & Co., the nominee of
the initial Clearing Agency, and no Note Owner thereof
shall receive a Definitive Note (as defined below) repre-
senting such Note Owner's interest in such Note, except
as provided in Section 2.13. Unless and until defini-
tive, fully registered Notes (the "Definitive Notes")
have been issued to such Note Owners pursuant to Section
2.13:
(i) the provisions of this Section 2.11
shall be in full force and effect;
(ii) the Note Registrar and the Indenture
Trustee shall be entitled to deal with the
Clearing Agency for all purposes of this Inden-
ture (including the payment of principal of and
interest on the Notes and the giving of in-
structions or directions hereunder) as the sole
Noteholder, and shall have no obligation to the
Note Owners;
(iii) to the extent that the provisions of
this Section 2.11 conflict with any other pro-
visions of this Indenture, the provisions of
this Section 2.11 shall control;
(iv) the rights of Note Owners shall be
exercised only through the Clearing Agency and
shall be limited to those established by law
and agreements between such Note Owners and the
Clearing Agency and/or the Clearing Agency
Participants pursuant to the Note Depository
Agreement. Unless and until Definitive Notes
are issued pursuant to Section 2.13, the ini-
tial Clearing Agency shall make book-entry
transfers among the Clearing Agency Partici-
pants and receive and transmit payments of
principal of and interest on the Notes to such
Clearing Agency Participants; and
(v) whenever this Indenture requires or
permits actions to be taken based upon instruc-
tions or directions of Noteholders of Notes
evidencing a specified percentage of the prin-
cipal amount of the Notes Outstanding, the
Clearing Agency shall be deemed to represent
such percentage only to the extent that it has
received instructions to such effect from Note
Owners and/or Clearing Agency Participants
owning or representing, respectively, such
required percentage of the beneficial interest
in the Notes Outstanding and has delivered such
instructions to the Indenture Trustee.
SECTION 2.12. Notices to Clearing Agency. When-
ever a notice or other communication to the Noteholders
is required under this Indenture, unless and until Defin-
itive Notes shall have been issued to the Note Owners
pursuant to Section 2.13, the Indenture Trustee shall
give all such notices and communications specified herein
to be given to Noteholders to the Clearing Agency, and
shall have no obligation to such Note Owners.
SECTION 2.13. Definitive Notes. If (i) the
Administrator advises the Indenture Trustee in writing
that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities with respect to
the Notes and the Indenture Trustee or the Administrator
is unable to locate a qualified successor, (ii) the
Administrator, at its option, advises the Indenture
Trustee in writing that it elects to terminate the book-
entry system through the Clearing Agency or (iii) after
the occurrence of an Event of Default or an Event of
Servicing Termination, Note Owners of Notes evidencing
beneficial interests aggregating not less than a majority
of the principal amount of the Notes Outstanding advise
the Indenture Trustee and the Clearing Agency in writing
that the continuation of a book-entry system through the
Clearing Agency is no longer in the best interests of the
Note Owners, then the Clearing Agency shall notify all
Note Owners and the Indenture Trustee of the occurrence
of such event and of the availability of Definitive Notes
to Note Owners requesting the same. Upon surrender to
the Indenture Trustee of the typewritten Notes represent-
ing the Book-Entry Notes by the Clearing Agency, accompa-
nied by registration instructions, the Issuer shall
execute and the Indenture Trustee shall authenticate the
Definitive Notes in accordance with the instructions of
the Clearing Agency. None of the Issuer, the Note Regis-
trar or the Indenture Trustee shall be liable for any
delay in delivery of such instructions and may conclu-
sively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive
Notes, the Indenture Trustee shall recognize the holders
of the Definitive Notes as Noteholders.
SECTION 2.14. Authenticating Agents. (a) The
Indenture Trustee may appoint one or more Persons (each,
an "Authenticating Agent") with power to act on its
behalf and subject to its direction in the authentication
of Notes in connection with issuance, transfers and
exchanges under Sections 2.2, 2.3, 2.5 and 2.6, as fully
to all intents and purposes as though each such Authenti-
cating Agent had been expressly authorized by those
Sections to authenticate such Notes. For all purposes of
this Indenture, the authentication of Notes by an Authen-
ticating Agent pursuant to this Section 2.14 shall be
deemed to be the authentication of Notes "by the Inden-
ture Trustee."
(b) Any corporation into which any Authenticat-
ing Agent may be merged or converted or with which it may
be consolidated, or any corporation resulting from any
merger, consolidation or conversion to which any Authen-
ticating Agent shall be a party, or any corporation
succeeding to all or substantially all of the corporate
trust business of any Authenticating Agent, shall be the
successor of such Authenticating Agent hereunder, without
the execution or filing of any further act on the part of
the parties hereto or such Authenticating Agent or such
successor corporation.
(c) Any Authenticating Agent may at any time
resign by giving written notice of resignation to the
Indenture Trustee and the Owner Trustee. The Indenture
Trustee may at any time terminate the agency of any
Authenticating Agent by giving written notice of termina-
tion to such Authenticating Agent and the Owner Trustee.
Upon receiving such notice of resignation or upon such a
termination, the Indenture Trustee may appoint a succes-
sor Authenticating Agent and shall give written notice of
any such appointment to the Owner Trustee.
(d) The Administrator agrees to pay to each
Authenticating Agent from time to time reasonable compen-
sation for its services. The provisions of Sections 2.9
and 6.4 shall be applicable to any Authenticating Agent.
End of Article II
ARTICLE III.
COVENANTS
SECTION 3.1. Payment of Principal and Interest.
The Issuer shall duly and punctually pay the principal of
and interest, if any, on the Notes in accordance with the
terms of the Notes and this Indenture. Without limiting
the foregoing, the Issuer shall cause to be paid all
amounts on deposit in the Note Payment Account on a
Distribution Date deposited therein pursuant to the Sale
and Servicing Agreement (i) for the benefit of the Class
[A-1] Notes, to the Class [A-1] Noteholders, (ii) for the
benefit of the Class [A-2] Notes, to the Class [A-2]
Noteholders, and (iii) for the benefit of the Class [A-3]
Notes, to the Class [A-3] Noteholders. Amounts properly
withheld under the Code by any Person from a payment to
any Noteholder of interest and/or principal shall be
considered as having been paid by the Issuer to such
Noteholder for all purposes of this Indenture.
SECTION 3.2. Maintenance of Office or Agency.
The Issuer shall maintain in the Borough of Manhattan,
The City of New York, an office or agency where Notes may
be surrendered for registration of transfer or exchange,
and where notices and demands to or upon the Issuer in
respect of the Notes and this Indenture may be served.
The Issuer hereby initially appoints the Indenture Trust-
ee to serve as its agent for the foregoing purposes. The
Issuer shall give prompt written notice to the Indenture
Trustee of the location, and of any change in the loca-
tion, of any such office or agency. If, at any time, the
Issuer shall fail to maintain any such office or agency
or shall fail to furnish the Indenture Trustee with the
address thereof, such surrenders, notices and demands may
be made or served at the Corporate Trust Office, and the
Issuer hereby appoints the Indenture Trustee as its agent
to receive all such surrenders, notices and demands.
SECTION 3.3. Money for Payments To Be Held in
Trust. (a) As provided in Section 8.2, all payments of
amounts due and payable with respect to any Notes that
are to be made from amounts withdrawn from the Collection
Account[, the Reserve Account] and the Note Payment
Account shall be made on behalf of the Issuer by the
Indenture Trustee or by another Note Paying Agent, and no
amounts so withdrawn from the Collection Account[, the
Reserve Account] and the Note Payment Account for pay-
ments of Notes shall be paid over to the Issuer, except
as provided in this Section 3.3.
(b) On or before each Distribution Date and
Redemption Date, the Issuer shall deposit or cause to be
deposited in the Note Payment Account an aggregate sum
sufficient to pay the amounts then becoming due under the
Notes, such sum to be held in trust for the benefit of
the Persons entitled thereto, and (unless the Note Paying
Agent is the Indenture Trustee) shall promptly notify the
Indenture Trustee of its action or failure so to act.
(c) The Issuer shall cause each Note Paying
Agent other than the Indenture Trustee to execute and
deliver to the Indenture Trustee an instrument in which
such Note Paying Agent shall agree with the Indenture
Trustee (and if the Indenture Trustee acts as Note Paying
Agent, it hereby so agrees), subject to the provisions of
this Section 3.3, that such Note Paying Agent shall:
(i) hold all sums held by it for the
payment of amounts due with respect to the
Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid
to such Persons or otherwise disposed of as
herein provided and pay such sums to such Per-
sons as herein provided;
(ii) give the Indenture Trustee notice of
any default by the Issuer (or any other obligor
upon the Notes) of which it has actual knowl-
edge in the making of any payment required to
be made with respect to the Notes;
(iii) at any time during the continuance
of any such default, upon the written request
of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by
such Note Paying Agent;
(iv) immediately resign as a Note Paying
Agent and forthwith pay to the Indenture Trust-
ee all sums held by it in trust for the payment
of Notes if at any time it ceases to meet the
standards required to be met by a Note Paying
Agent at the time of its appointment; and
(v) comply with all requirements of the
Code and any state or local tax law with re-
spect to the withholding from any payments made
by it on any Notes of any applicable withhold-
ing taxes imposed thereon and with respect to
any applicable reporting requirements in con-
nection therewith.
(d) The Issuer may at any time, for the purpose
of obtaining the satisfaction and discharge of this
Indenture or for any other purpose, by Issuer Order
direct any Note Paying Agent to pay to the Indenture
Trustee all sums held in trust by such Note Paying Agent,
such sums to be held by the Indenture Trustee upon the
same trusts as those upon which the sums were held by
such Note Paying Agent; and upon such payment by any Note
Paying Agent to the Indenture Trustee, such Note Paying
Agent shall be released from all further liability with
respect to such money.
(e) Subject to applicable laws with respect to
escheat of funds, any money held by the Indenture Trustee
or any Note Paying Agent in trust for the payment of any
amount due with respect to any Note and remaining un-
claimed for two (2) years after such amount has become
due and payable shall be discharged from such trust and
be paid to the Issuer on Issuer Request; and the
Noteholder of such Note shall thereafter, as an unsecured
general creditor, look only to the Issuer for payment
thereof (but only to the extent of the amounts so paid to
the Issuer), and all liability of the Indenture Trustee
or such Note Paying Agent with respect to such trust
money shall thereupon cease; provided, however, that the
Indenture Trustee or such Note Paying Agent, before being
required to make any such repayment, shall at the expense
and direction of the Issuer cause to be published once,
in a newspaper published in the English language, custom-
arily published on each Business Day and of general
circulation in The City of New York, notice that such
money remains unclaimed and that, after a date specified
therein, which shall not be less than thirty (30) days
from the date of such publication, any unclaimed balance
of such money then remaining shall be repaid to the
Issuer. The Indenture Trustee shall also adopt and
employ, at the expense and direction of the Issuer, any
other reasonable means of notification of such repayment
(including, but not limited to, mailing notice of such
repayment to Noteholders whose Notes have been called but
have not been surrendered for redemption or whose right
to or interest in monies due and payable but not claimed
is determinable from the records of the Indenture Trustee
or of any Note Paying Agent, at the last address of
record for each such Noteholder).
SECTION 3.4. Existence. The Issuer shall keep
in full effect its existence, rights and franchises as a
business trust under the laws of the State of Delaware
(unless it becomes, or any successor Issuer hereunder is
or becomes, organized under the laws of any other State
or of the United States of America, in which case the
Issuer shall keep in full effect its existence, rights
and franchises under the laws of such other jurisdiction)
and shall obtain and preserve its qualification to do
business in each jurisdiction in which such qualification
is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Collat-
eral and each other instrument or agreement included in
the Indenture Trust Estate.
SECTION 3.5. Protection of Indenture Trust
Estate. The Issuer shall from time to time execute and
deliver all such supplements and amendments hereto and
all such financing statements, continuation statements,
instruments of further assurance and other instruments,
and shall take such other action necessary or advisable
to:
(i) maintain or preserve the lien and
security interest (and the priority thereof) of
this Indenture or carry out more effectively
the purposes hereof;
(ii) perfect, publish notice of or pro-
tect the validity of any Grant made or to be
made by this Indenture;
(iii) enforce any of the Collateral; or
(iv) preserve and defend title to the
Indenture Trust Estate and the rights of the
Indenture Trustee and the Noteholders in such
Indenture Trust Estate against the claims of
all Persons.
The Issuer hereby designates the Indenture Trustee its
agent and attorney-in-fact to execute any financing
statement, continuation statement or other instrument
required to be executed pursuant to this Section 3.5.
SECTION 3.6. Opinions as to Indenture Trust
Estate. (a) On the Closing Date, the Issuer shall fur-
nish to the Indenture Trustee an Opinion of Counsel
either stating that, in the opinion of such counsel, such
action has been taken with respect to the recording and
filing of this Indenture, any indentures supplemental
hereto, and any other requisite documents, and with
respect to the execution and filing of any financing
statements and continuation statements, as are necessary
to perfect and make effective the lien and security
interest of this Indenture and reciting the details of
such action, or stating that, in the opinion of such
counsel, no such action is necessary to make such lien
and security interest effective.
(b) On or before April 30 in each calendar
year, beginning in ____, the Issuer shall furnish to the
Indenture Trustee an Opinion of Counsel either stating
that, in the opinion of such counsel, such action has
been taken with respect to the recording, filing, re-
recording and refiling of this Indenture, any indentures
supplemental hereto and any other requisite documents and
with respect to the execution and filing of any financing
statements and continuation statements as is necessary to
maintain the lien and security interest created by this
Indenture and reciting the details of such action or
stating that in the opinion of such counsel no such
action is necessary to maintain such lien and security
interest. Such Opinion of Counsel shall also describe
the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any
other requisite documents and the execution and filing of
any financing statements and continuation statements that
shall, in the opinion of such counsel, be required to
maintain the lien and security interest of this Indenture
until April 30 in the following calendar year.
SECTION 3.7. Performance of Obligations; Servic-
ing of Receivables. (a) The Issuer shall not take any
action and shall use its best efforts not to permit any
action to be taken by others that would release any
Person from any of such Person's material covenants or
obligations under any instrument or agreement included in
the Indenture Trust Estate or that would result in the
amendment, hypothecation, subordination, termination or
discharge of, or impair the validity or effectiveness of,
any such instrument or agreement, except as expressly
provided in this Indenture and the other Basic Documents.
(b) The Issuer may contract with other Persons
to assist it in performing its duties under this Inden-
ture, and any performance of such duties by a Person
identified to the Indenture Trustee in an Officer's
Certificate of the Issuer shall be deemed to be action
taken by the Issuer. Initially, the Issuer has contract-
ed with the Servicer and the Administrator to assist the
Issuer in performing its duties under this Indenture.
(c) The Issuer shall punctually perform and
observe all of its obligations and agreements contained
in this Indenture, the other Basic Documents and in the
instruments and agreements included in the Indenture
Trust Estate, including, but not limited to, filing or
causing to be filed all financing statements and continu-
ation statements required to be filed under the UCC by
the terms of this Indenture and the Sale and Servicing
Agreement in accordance with and within the time periods
provided for herein and therein. Except as otherwise
expressly provided therein, the Issuer shall not waive,
amend, modify, supplement or terminate any Basic Document
or any provision thereof without the consent of the
Indenture Trustee or the Noteholders of Notes evidencing
not less than a majority of the principal amount of the
Notes Outstanding.
(d) If the Issuer shall have knowledge of the
occurrence of an Event of Servicing Termination under the
Sale and Servicing Agreement, the Issuer shall promptly
notify the Indenture Trustee and the Rating Agencies
thereof and shall specify in such notice the action, if
any, the Issuer is taking in respect of such default. If
an Event of Servicing Termination shall arise from the
failure of the Servicer to perform any of its duties or
obligations under the Sale and Servicing Agreement with
respect to the Receivables, the Issuer shall take all
reasonable steps available to it to remedy such failure.
(e) As promptly as possible after the giving of
notice of termination to the Servicer of the Servicer's
rights and powers pursuant to Section 8.1 of the Sale and
Servicing Agreement or the Servicer's resignation in
accordance with the terms of the Sale and Servicing
Agreement, the Issuer shall appoint a successor servicer
(the "Successor Servicer") meeting the requirements of
the Sale and Servicing Agreement, and such Successor
Servicer shall accept its appointment by a written as-
sumption in a form acceptable to the Indenture Trustee.
In the event that a Successor Servicer has not been
appointed at the time when the Servicer ceases to act as
Servicer, the Indenture Trustee without further action
shall automatically be appointed the Successor Servicer.
The Indenture Trustee may resign as the Servicer by
giving written notice of such resignation to the Issuer
and in such event shall be released from such duties and
obligations, such release not to be effective until the
date a new servicer enters into a servicing agreement
with the Issuer as provided below. Upon delivery of any
such notice to the Issuer, the Issuer shall obtain a new
servicer as the Successor Servicer under the Sale and
Servicing Agreement. Any Successor Servicer (other than
the Indenture Trustee) shall (i) be an established insti-
tution having a net worth of not less than $100,000,000
and whose regular business shall include the servicing of
automotive receivables and (ii) enter into a servicing
agreement with the Issuer having substantially the same
provisions as the provisions of the Sale and Servicing
Agreement applicable to the Servicer. If, within thirty
(30) days after the delivery of the notice referred to
above, the Issuer shall not have obtained such a new
servicer, the Indenture Trustee may appoint, or may
petition a court of competent jurisdiction to appoint, a
Successor Servicer. In connection with any such appoint-
ment, the Indenture Trustee may make such arrangements
for the compensation of such successor as it and such
successor shall agree, subject to the limitations set
forth below and in the Sale and Servicing Agreement, and,
in accordance with Section 8.2 of the Sale and Servicing
Agreement, the Issuer shall enter into an agreement with
such successor for the servicing of the Receivables (such
agreement to be in form and substance satisfactory to the
Indenture Trustee). If the Indenture Trustee shall
succeed to the Servicer's duties as servicer of the
Receivables as provided herein, it shall do so in its
individual capacity and not in its capacity as Indenture
Trustee and, accordingly, the provisions of Article VI
hereof shall be inapplicable to the Indenture Trustee in
its duties as the successor to the Servicer and the
servicing of the Receivables. In case the Indenture
Trustee shall become successor to the Servicer under the
Sale and Servicing Agreement, the Indenture Trustee shall
be entitled to appoint as Servicer any one of its Affili-
ates; provided that the Indenture Trustee, in its capaci-
ty as the Servicer, shall be fully liable for the actions
and omissions of such Affiliate in such capacity as
Successor Servicer.
(f) Upon any termination of the Servicer's
rights and powers pursuant to the Sale and Servicing
Agreement, the Issuer shall promptly notify the Indenture
Trustee. As soon as a Successor Servicer is appointed by
the Issuer, the Issuer shall notify the Indenture Trustee
of such appointment, specifying in such notice the name
and address of such Successor Servicer.
(g) Without derogating from the absolute nature
of the assignment granted to the Indenture Trustee under
this Indenture or the rights of the Indenture Trustee
hereunder, the Issuer hereby agrees that it shall not,
without the prior written consent of the Indenture Trust-
ee or the Noteholders of Notes evidencing not less than a
majority in principal amount of the Notes Outstanding,
amend, modify, waive, supplement, terminate or surrender,
or agree to any amendment, modification, supplement,
termination, waiver or surrender of, the terms of any
Collateral (except to the extent otherwise provided in
the Sale and Servicing Agreement or the other Basic
Documents).
SECTION 3.8 Negative Covenants. So long as any
Notes are Outstanding, the Issuer shall not:
(i) except as expressly permitted by
this Indenture, the Trust Agreement or the Sale
and Servicing Agreement, sell, transfer, ex-
change or otherwise dispose of any of the prop-
erties or assets of the Issuer, including those
included in the Indenture Trust Estate, unless
directed to do so by the Indenture Trustee;
(ii) claim any credit on, or make any
deduction from the principal or interest pay-
able in respect of, the Notes (other than
amounts properly withheld from such payments
under the Code) or assert any claim against any
present or former Noteholder by reason of the
payment of the taxes levied or assessed upon
the Trust;
(iii) dissolve or liquidate in whole or in
part; or
(iv) (A) permit the validity or effec-
tiveness of this Indenture to be impaired, or
permit the lien of this Indenture to be amend-
ed, hypothecated, subordinated, terminated or
discharged, or permit any Person to be released
from any covenants or obligations with respect
to the Notes under this Indenture except as may
be expressly permitted hereby, (B) permit any
lien, charge, excise, claim, security interest,
mortgage or other encumbrance (other than the
lien of this Indenture) to be created on or
extend to or otherwise arise upon or burden the
assets of the Trust or any part thereof or any
interest therein or the proceeds thereof (other
than tax liens, mechanics' liens and other
liens that arise by operation of law, in each
case on any of the Financed Vehicles and aris-
ing solely as a result of an action or omission
of the related Obligor) or (C) permit the lien
of this Indenture not to constitute a valid
first priority (other than with respect to any
such tax, mechanics' or other lien) security
interest in the Indenture Trust Estate.
SECTION 3.9. Annual Statement as to Compliance.
The Issuer shall deliver to the Indenture Trustee, within
120 days after the end of each calendar year (commencing
with the year ____), an Officer's Certificate stating, as
to the Authorized Officer signing such Officer's Certifi-
cate, that:
(i) a review of the activities of the
Issuer during such year and of its performance
under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized
Officer's knowledge, based on such review, the
Issuer has complied with all conditions and
covenants under this Indenture throughout such
year, or, if there has been a default in its
compliance with any such condition or covenant,
specifying each such default known to such
Authorized Officer and the nature and status
thereof.
SECTION 3.10. Issuer May Consolidate, etc., Only
on Certain Terms. (a) The Issuer shall not consolidate
or merge with or into any other Person, unless:
(i) the Person (if other than the Issu-
er) formed by or surviving such consolidation
or merger shall be a Person organized and ex-
isting under the laws of the United States of
America or any state thereof and shall express-
ly assume, by an indenture supplemental hereto,
executed and delivered to the Indenture Trust-
ee, in form satisfactory to the Indenture
Trustee, the due and punctual payment of the
principal of and interest on all Notes and the
performance or observance of every agreement
and covenant of this Indenture on the part of
the Issuer to be performed or observed, all as
provided herein;
(ii) immediately after giving effect to
such transaction, no Default or Event of De-
fault shall have occurred and be continuing;
(iii) the Rating Agency Condition shall
have been satisfied with respect to such trans-
action;
(iv) the Issuer shall have received an
Opinion of Counsel (and shall have delivered
copies thereof to the Indenture Trustee) to the
effect that such transaction will not have any
material adverse tax consequence to the Issuer,
any Noteholder or any Certificateholder;
(v) any action that is necessary to
maintain the lien and security interest created
by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to
the Indenture Trustee an Officer's Certificate
and an Opinion of Counsel each stating that
such consolidation or merger and such supple-
mental indenture comply with this Article III
and that all conditions precedent herein pro-
vided for relating to such transaction have
been complied with (including any filing re-
quired by the Exchange Act).
(b) Other than as specifically contemplated by
the Basic Documents, the Issuer shall not convey or
transfer any of its properties or assets, including those
included in the Indenture Trust Estate, to any Person,
unless:
(i) the Person that acquires by convey-
ance or transfer the properties and assets of
the Issuer the conveyance or transfer of which
is hereby restricted shall (A) be a United
States citizen or a Person organized and exist-
ing under the laws of the United States of
America or any state thereof, (B) expressly
assumes, by an indenture supplemental hereto,
executed and delivered to the Indenture Trust-
ee, in form satisfactory to the Indenture
Trustee, the due and punctual payment of the
principal of and interest on all Notes and the
performance or observance of every agreement
and covenant of this Indenture on the part of
the Issuer to be performed or observed, all as
provided herein, (C) expressly agrees by means
of such supplemental indenture that all right,
title and interest so conveyed or transferred
shall be subject and subordinate to the rights
of Noteholders, (D) unless otherwise provided
in such supplemental indenture, expressly
agrees to indemnify, defend and hold harmless
the Issuer against and from any loss, liability
or expense arising under or related to this
Indenture and the Notes, and (E) expressly
agrees by means of such supplemental indenture
that such Person (or if a group of Persons,
then one specified Person) shall make all fil-
ings with the Commission (and any other appro-
priate Person) required by the Exchange Act in
connection with the Notes;
(ii) immediately after giving effect to
such transaction, no Default or Event of De-
fault shall have occurred and be continuing;
(iii) the Rating Agency Condition shall
have been satisfied with respect to such trans-
action;
(iv) the Issuer shall have received an
Opinion of Counsel (and shall have delivered
copies thereof to the Indenture Trustee) to the
effect that such transaction will not have any
material adverse tax consequence to the Issuer,
any Noteholder or any Certificateholder;
(v) any action that is necessary to
maintain the lien and security interest created
by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to
the Indenture Trustee an Officer's Certificate
and an Opinion of Counsel each stating that
such conveyance or transfer and such supplemen-
tal indenture comply with this Article III and
that all conditions precedent herein provided
for relating to such transaction have been
complied with (including any filing required by
the Exchange Act).
SECTION 3.11. Successor of Transferee. (a) Upon
any consolidation or merger of the Issuer in accordance
with Section 3.10(a), the Person formed by or surviving
such consolidation or merger (if other than the Issuer)
shall succeed to, and be substituted for, and may exer-
cise every right and power of, the Issuer under this
Indenture with the same effect as if such Person had been
named as the Issuer herein.
(b) Upon a conveyance or transfer of all the
assets and properties of the Issuer pursuant to Section
3.10(b), the Issuer shall be released from every covenant
and agreement of this Indenture to be observed or per-
formed on the part of the Issuer with respect to the
Notes immediately upon the delivery of written notice to
the Indenture Trustee stating that the Issuer is to be so
released.
SECTION 3.12. No Other Business. The Issuer
shall not engage in any business other than financing,
acquiring, owning and pledging the Receivables in the
manner contemplated by this Indenture and the Basic
Documents and activities incidental thereto.
SECTION 3.13. No Borrowing. The Issuer shall not
issue, incur, assume, guarantee or otherwise become
liable, directly or indirectly, for any indebtedness
except for the Notes and the Certificates.
SECTION 3.14. Servicer's Obligations. The Issuer
shall cause the Servicer to comply with the Sale and
Servicing Agreement, including Sections 3.9, 3.10, 3.11,
3.12, 3.13, 3.14 and 4.9 and Article VII thereof.
SECTION 3.15. Guarantees, Loans, Advances and
Other Liabilities. Except as contemplated by this Inden-
ture and the other Basic Documents, the Issuer shall not
make any loan or advance or credit to, or guarantee
(directly or indirectly or by an instrument having the
effect of assuring another's payment or performance on
any obligation or capability of so doing or otherwise),
endorse or otherwise become contingently liable, directly
or indirectly, in connection with the obligations, stocks
or dividends of, or own, purchase, repurchase or acquire
(or agree contingently to do so) any stock, obligations,
assets or securities of, or any other interest in, or
make any capital contribution to, any other Person.
SECTION 3.16. Capital Expenditures. The Issuer
shall not make any expenditure (by long-term or operating
lease or otherwise) for capital assets (either realty or
personalty).
SECTION 3.17. Further Instruments and Acts. Upon
request of the Indenture Trustee, the Issuer shall exe-
cute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to
carry out more effectively the purpose of this Indenture.
SECTION 3.18. Restricted Payments. The Issuer
shall not, directly or indirectly, (i) make any distribu-
tion (by reduction of capital or otherwise), whether in
cash, property, securities or a combination thereof, to
the Owner Trustee or any owner of a beneficial interest
in the Issuer or otherwise with respect to any ownership
or equity interest or security in or of the Issuer or to
the Servicer or the Administrator, (ii) redeem, purchase,
retire or otherwise acquire for value any such ownership
or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to
be made, (x) payments to the Servicer, the Administrator,
the Owner Trustee, the Noteholders and the Certificate-
holders as contemplated by, and to the extent funds are
available for such purpose under, this Indenture and the
other Basic Documents and (y) payments to the Indenture
Trustee pursuant to Section 2(a)(ii) of the Administra-
tion Agreement. The Issuer shall not, directly or indi-
rectly, make payments to or distributions from the Col-
lection Account except in accordance with this Indenture
and the other Basic Documents.
SECTION 3.19. Notice of Events of Default. The
Issuer shall give the Indenture Trustee and the Rating
Agencies prompt written notice of each Event of Default
hereunder and of each default on the part of any party to
the Sale and Servicing Agreement with respect to any of
the provisions thereof.
SECTION 3.20. Removal of Administrator. For so
long as any Notes are Outstanding, the Issuer shall not
remove the Administrator without cause unless the Rating
Agency Condition shall have been satisfied in connection
therewith.
End of Article III
ARTICLE IV.
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of
Indenture. This Indenture shall cease to be of further
effect with respect to the Notes except as to (i) rights
of registration of transfer and exchange, (ii) substitu-
tion of mutilated, destroyed, lost or stolen Notes, (iii)
rights of Noteholders to receive payments of principal
thereof and interest thereon, (iv) Sections 3.3, 3.4,
3.5, 3.8, 3.10, 3.12 and 3.13, (v) the rights, obliga-
tions and immunities of the Indenture Trustee hereunder
(including the rights of the Indenture Trustee under
Section 6.7 and the obligations of the Indenture Trustee
under Section 4.3), and (vi) the rights of Noteholders as
beneficiaries hereof with respect to the property so
deposited with the Indenture Trustee payable to all or
any of them, and the Indenture Trustee, on demand of and
at the expense of the Issuer, shall execute proper in-
struments acknowledging satisfaction and discharge of
this Indenture with respect to the Notes, when:
(A) either
(1) all Notes theretofore
authenticated and delivered (other
than (i) Notes that have been de-
stroyed, lost or stolen and that have
been replaced or paid as provided in
Section 2.6 and (ii) Notes for whose
payment money has theretofore been
deposited in trust or segregated and
held in trust by the Issuer and
thereafter repaid to the Issuer or
discharged from such trust, as pro-
vided in Section 3.3) have been de-
livered to the Indenture Trustee for
cancellation; or
(2) all Notes not theretofore
delivered to the Indenture Trustee
for cancellation have become due and
payable and the Issuer has irrevoca-
bly deposited or caused to be irrevo-
cably deposited with the Indenture
Trustee cash or direct obligations of
or obligations guaranteed by the
United States of America (which will
mature prior to the date such amounts
are payable), in trust for such pur-
pose, in an amount sufficient to pay
and discharge the entire indebtedness
on such Notes not theretofore deliv-
ered to the Indenture Trustee for
cancellation when due to the applica-
ble Final Scheduled Distribution Date
or Redemption Date (if Notes shall
have been called for redemption pur-
suant to Section 10.1(a)), as the
case may be;
(B) the Issuer has paid or caused to be paid
all other sums payable hereunder and under any of
the other Basic Documents by the Issuer;
(C) the Issuer has delivered to the Indenture
Trustee an Officer's Certificate, an Opinion of
Counsel and (if required by the TIA or the Indenture
Trustee) an Independent Certificate from a firm of
certified public accountants, each meeting the
applicable requirements of Section 11.1(a) and,
subject to Section 11.2, each stating that all
conditions precedent herein provided for relating to
the satisfaction and discharge of this Indenture
have been complied with; and
(D) the Issuer has delivered to the Indenture
Trustee an Opinion of Counsel to the effect that the
satisfaction and discharge of the Notes pursuant to
this Section 4.1 will not cause any Noteholder to be
treated as having sold or exchanged any of its Notes
for purposes of Section 1001 of the Code.
SECTION 4.2. Satisfaction, Discharge and
Defeasance of Notes. (a) Upon satisfaction of the
conditions set forth in subsection (b) below, the Issuer
shall be deemed to have paid and discharged the entire
indebtedness on all the outstanding Notes, and the provi-
sions of this Indenture, as it relates to such Notes,
shall no longer be in effect (and the Indenture Trustee,
at the expense of the Issuer, shall execute proper in-
struments acknowledging the same), except as to (i)
rights of registration of transfer and exchange, (ii)
substitution of mutilated, destroyed, lost or stolen
Notes, (iii) rights of Noteholders to receive payments of
principal thereof and interest thereon, (iv) Sections
3.3, 3.4, 3.5, 3.8, 3.10, 3.12 and 3.13, (v) the rights,
obligations and immunities of the Indenture Trustee
hereunder (including the rights of the Indenture Trustee
under Section 6.7 and the obligations of the Indenture
Trustee under Section 4.3), and (vi) the rights of
Noteholders as beneficiaries hereof with respect to the
property so deposited with the Indenture Trustee payable
to all or any of them.
(b) The satisfaction, discharge and defeasance
of the Notes pursuant to subsection (a) of this Section
4.2 is subject to the satisfaction of all of the follow-
ing conditions:
(i) the Issuer has deposited or caused
to be deposited irrevocably (except as provided in
Section 4.4) with the Indenture Trustee as trust
funds in trust, specifically pledged as security
for, and dedicated solely to, the benefit of the
Noteholders, which, through the payment of interest
and principal in respect thereof in accordance with
their terms will provide, not later than one day
prior to the due date of any payment referred to
below, money in an amount sufficient, in the opinion
of a nationally recognized firm of independent
certified public accountants expressed in a written
certification thereof delivered to the Indenture
Trustee, to pay and discharge the entire indebted-
ness on the outstanding Notes, for principal thereof
and interest thereon to the date of such deposit (in
the case of Notes that have become due and payable)
or to the maturity of such principal and interest,
as the case may be;
(ii) the deposit described in Section
4.2(b)(i) will not result in a breach or violation
of, or constitute an event of default under, any
other agreement or instrument to which the Issuer is
bound;
(iii) no Event of Default with respect
to the Notes shall have occurred and be continuing
on the date of the deposit described in Section
4.2(b)(i) or on the ninety-first (91st) day after
such date;
(iv) the Issuer has delivered to the
Indenture Trustee an Opinion of Counsel to the
effect that the satisfaction, discharge and defea-
sance of the Notes pursuant to this Section 4.2 will
not cause any Noteholder to be treated as having
sold or exchanged any of its Notes for purposes of
Section 1001 of the Code; and
(v) the Issuer has delivered to the
Indenture Trustee an Officer's Certificate and an
Opinion of Counsel, each stating that all conditions
precedent relating to the defeasance contemplated by
this Section 4.2 have been complied with.
SECTION 4.3. Application of Trust Money. All
monies deposited with the Indenture Trustee pursuant to
Sections 4.1 and 4.2 shall be held in trust and applied
by it, in accordance with the provisions of the Notes and
this Indenture, to the payment, either directly or
through any Note Paying Agent, as the Indenture Trustee
may determine, to the Noteholders of the particular Notes
for the payment or redemption of which such monies have
been deposited with the Indenture Trustee, of all sums
due and to become due thereon for principal and interest,
but such monies need not be segregated from other funds
except to the extent required herein or in the Sale and
Servicing Agreement or required by law.
SECTION 4.4. Repayment of Monies Held by Note
Paying Agent. In connection with the satisfaction and
discharge of this Indenture with respect to the Notes,
all monies then held by any Note Paying Agent other than
the Indenture Trustee under the provisions of this Inden-
ture with respect to such Notes shall, upon demand of the
Issuer, be paid to the Indenture Trustee to be held and
applied according to Section 3.3 and thereupon such Note
Paying Agent shall be released from all further liability
with respect to such monies.
End of Article IV
ARTICLE V
REMEDIES
SECTION 5.1. Events of Default. "Event of
Default," wherever used herein, means the occurrence of
any one of the following events (whatever the reason for
such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or
governmental body):
(i) default in the payment of any in-
terest on any Note when the same becomes due
and payable, and such default shall continue
for a period of five (5) days or more; or
(ii) default in the payment of the
principal of or any installment of the princi-
pal of any Note when the same becomes due and
payable; or
(iii) default in the observance or per-
formance of any material covenant or agreement
of the Issuer made in this Indenture (other
than a covenant or agreement, a default in the
observance or performance of which is elsewhere
in this Section 5.1 specifically dealt with),
or any representation or warranty of the Issuer
made in this Indenture or in any certificate or
other writing delivered pursuant hereto or in
connection herewith proving to have been incor-
rect in any material respect as of the time
when the same shall have been made, and such
default shall continue or not be cured, or the
circumstance or condition in respect of which
such misrepresentation or warranty was incor-
rect shall not have been eliminated or other-
wise cured, for a period of sixty (60) days or
in the case of a materially incorrect represen-
tation and warranty thirty (30) days, after
there shall have been given, by registered or
certified mail, to the Issuer by the Indenture
Trustee or to the Issuer and the Indenture
Trustee by the Noteholders of Notes evidencing
not less than 25% of the principal amount of
the Notes Outstanding, a written notice speci-
fying such default or incorrect representation
or warranty and requiring it to be remedied and
stating that such notice is a notice of Default
hereunder; or
(iv) the filing of a decree or order
for relief by a court having jurisdiction in
the premises in respect of the Issuer or any
substantial part of the Indenture Trust Estate
in an involuntary case under any applicable
federal or State bankruptcy, insolvency or
other similar law now or hereafter in effect,
or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar
official of the Issuer or for any substantial
part of the Indenture Trust Estate, or ordering
the winding-up or liquidation of the Issuer's
affairs, and such decree or order shall remain
unstayed and in effect for a period of sixty
(60) consecutive days; or
(v) the commencement by the Issuer of a
voluntary case under any applicable federal or
State bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent
by the Issuer to the entry of an order for
relief in an involuntary case under any such
law, or the consent by the Issuer to the ap-
pointment or taking possession by a receiver,
liquidator, assignee, custodian, trustee, se-
questrator or similar official of the Issuer or
for any substantial part of the Indenture Trust
Estate, or the making by the Issuer of any
general assignment for the benefit of credi-
tors, or the failure by the Issuer generally to
pay its debts as such debts become due, or the
taking of any action by the Issuer in further-
ance of any of the foregoing.
The Issuer shall deliver to the Indenture Trustee, within
five (5) days after the occurrence thereof, written
notice in the form of an Officer's Certificate of any
event which with the giving of notice and the lapse of
time would become an Event of Default under clause (iii)
above, its status and what action the Issuer is taking or
proposes to take with respect thereto.
SECTION 5.2. Acceleration of Maturity; Rescis-
sion and Annulment. (a) If an Event of Default should
occur and be continuing, then and in every such case the
Indenture Trustee or the Noteholders of Notes evidencing
not less than a majority of the principal amount of the
Notes Outstanding may declare all the Notes to be immedi-
ately due and payable, by a notice in writing to the
Issuer (and to the Indenture Trustee if given by
Noteholders), and upon any such declaration the unpaid
principal amount of such Notes, together with accrued and
unpaid interest thereon through the date of acceleration,
shall become immediately due and payable.
(b) At any time after a declaration of accel-
eration of maturity has been made and before a judgment
or decree for payment of the amount due has been obtained
by the Indenture Trustee as hereinafter provided in this
Article V, the Noteholders of Notes evidencing not less
than a majority of the principal amount of the Notes
Outstanding, by written notice to the Issuer and the
Indenture Trustee, may rescind and annul such declaration
and its consequences if:
(i) the Issuer has paid or deposited
with the Indenture Trustee a sum sufficient to
pay:
(A) all payments of
principal of and interest on all
Notes and all other amounts that
would then be due hereunder or
upon such Notes if the Event of
Default giving rise to such accel-
eration had not occurred; and
(B) all sums paid or
advanced by the Indenture Trustee
hereunder and the reasonable com-
pensation, expenses, disbursements
and advances of the Indenture
Trustee and its agents and coun-
sel; and
(ii) all Events of Default, other than
the nonpayment of the principal of the Notes
that has become due solely by such accelera-
tion, have been cured or waived as provided in
Section 5.12.
No such rescission shall affect any subsequent default or
impair any right consequent thereto.
SECTION 5.3. Collection of Indebtedness and
Suits for Enforcement by Indenture Trustee. (a) The
Issuer covenants that if (i) default is made in the
payment of any interest on any Note when the same becomes
due and payable, and such default continues for a period
of five (5) days or more, or (ii) default is made in the
payment of the principal of or any installment of the
principal of any Note when the same becomes due and
payable, the Issuer shall, upon demand of the Indenture
Trustee, pay to the Indenture Trustee, for the benefit of
the Noteholders, the whole amount then due and payable on
such Notes for principal and interest, with interest upon
the overdue principal and, to the extent payment at such
rate of interest shall be legally enforceable, upon
overdue installments of interest at the rate specified in
Section 2.8 and in addition thereto such further amount
as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, ex-
penses, disbursements and advances of the Indenture
Trustee and its agents and counsel.
(b) In case the Issuer shall fail forthwith to
pay such amounts upon such demand, the Indenture Trustee,
in its own name and as trustee of an express trust, may
institute a Proceeding for the collection of the sums so
due and unpaid, and may prosecute such Proceeding to
judgment or final decree, and may enforce the same
against the Issuer or other obligor upon such Notes and
collect in the manner provided by law out of the property
of the Issuer or other obligor upon such Notes, wherever
situated, the monies adjudged or decreed to be payable.
(c) If an Event of Default occurs and is
continuing, the Indenture Trustee may, as more particu-
larly provided in Section 5.4, in its discretion, proceed
to protect and enforce its rights and the rights of the
Noteholders, by such appropriate Proceedings as the
Indenture Trustee shall deem most effective to protect
and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Inden-
ture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy or legal or
equitable right vested in the Indenture Trustee by this
Indenture or by law.
(d) In case there shall be pending, relative
to the Issuer or any other obligor upon the Notes or any
Person having or claiming an ownership interest in the
Indenture Trust Estate, Proceedings under Title 11 of the
United States Code or any other applicable federal or
State bankruptcy, insolvency or other similar law, or in
case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar
official shall have been appointed for or taken posses-
sion of the Issuer or its property or such other obligor
or Person, or in case of any other comparable judicial
Proceedings relative to the Issuer or other obligor upon
the Notes, or to the creditors or property of the Issuer
or such other obligor, the Indenture Trustee, irrespec-
tive of whether the principal of any Notes shall then be
due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Indenture
Trustee shall have made any demand pursuant to the provi-
sions of this Section 5.3, shall be entitled and empow-
ered, by intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims
for the whole amount of principal and interest
owing and unpaid in respect of the Notes and to
file such other papers or documents as may be
necessary or advisable in order to have the
claims of the Indenture Trustee (including any
claim for reasonable compensation to the Inden-
ture Trustee and each predecessor Indenture
Trustee, and their respective agents, attorneys
and counsel, and for reimbursement of all ex-
penses and liabilities incurred, and all ad-
vances made, by the Indenture Trustee and each
predecessor Indenture Trustee, except as a
result of negligence or bad faith) and of the
Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable
law and regulations, to vote on behalf of the
Noteholders in any election of a trustee, a
standby trustee or Person performing similar
functions in any such Proceedings;
(iii) to collect and receive any monies
or other property payable or deliverable on any
such claims and to pay all amounts received
with respect to the claims of the Noteholders
and of the Indenture Trustee on their behalf;
and
(iv) to file such proofs of claim and
other papers or documents as may be necessary
or advisable in order to have the claims of the
Indenture Trustee or the Noteholders allowed in
any judicial proceedings relative to the Issu-
er, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other
similar official in any such Proceeding is hereby autho-
rized by each of such Noteholders to make payments to the
Indenture Trustee and, in the event that the Indenture
Trustee shall consent to the making of payments directly
to such Noteholders, to pay to the Indenture Trustee such
amounts as shall be sufficient to cover reasonable com-
pensation to the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents, attorneys
and counsel, and all other expenses and liabilities
incurred, and all advances made, by the Indenture Trustee
and each predecessor Indenture Trustee, except as a
result of negligence or bad faith.
(e) Nothing herein contained shall be deemed
to authorize the Indenture Trustee to authorize or con-
sent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the
rights of any Noteholder or to authorize the Indenture
Trustee to vote in respect of the claim of any Noteholder
in any such proceeding except, as aforesaid, to vote for
the election of a trustee in bankruptcy or similar Per-
son.
(f) All rights of action and of asserting
claims under this Indenture, or under any of the Notes,
may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof
in any trial or other Proceedings relative thereto, and
any such action or Proceedings instituted by the Inden-
ture Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment, sub-
ject to the payment of the expenses, disbursements and
compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attor-
neys, shall be for the ratable benefit of the
Noteholders.
(g) In any Proceedings brought by the Inden-
ture Trustee (and also any Proceedings involving the
interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Inden-
ture Trustee shall be held to represent all the
Noteholders, and it shall not be necessary to make any
Noteholder a party to any such Proceedings.
SECTION 5.4. Remedies; Priorities. (a) If an
Event of Default shall have occurred and be continuing,
the Indenture Trustee may do one or more of the following
(subject to Section 5.5):
(i) institute Proceedings in its own
name and as trustee of an express trust for the
collection of all amounts then payable on the
Notes or under this Indenture with respect
thereto, whether by declaration or otherwise,
enforce any judgment obtained, and collect from
the Issuer and any other obligor upon such
Notes monies adjudged due;
(ii) institute Proceedings from time to
time for the complete or partial foreclosure of
this Indenture with respect to the Indenture
Trust Estate;
(iii) exercise any remedies of a se-
cured party under the UCC and take any other
appropriate action to protect and enforce the
rights and remedies of the Indenture Trustee
and the Noteholders; and
(iv) sell the Indenture Trust Estate or
any portion thereof or rights or interest
therein, at one or more public or private sales
called and conducted in any manner permitted by
law;
provided, however, that the Indenture Trustee may not
sell or otherwise liquidate the Indenture Trust Estate
following an Event of Default, other than an Event of
Default described in Section 5.1(i) or (ii) and other
than if required to sell the Indenture Trust Estate
pursuant to the Trust Agreement as a result of the occur-
rence of an Insolvency Event or a dissolution with re-
spect to any of the Sellers [or the General Partner],
unless (A) the Noteholders of Notes evidencing 100% of
the principal amount of the Notes Outstanding consent
thereto, (B) the proceeds of such sale or liquidation are
sufficient to pay in full the principal of and the ac-
crued interest on the outstanding Notes or (C) the Inden-
ture Trustee determines that the Indenture Trust Estate
will not continue to provide sufficient funds for the
payment of principal of and interest on the Notes as they
would have become due if the Notes had not been declared
due and payable, and the Indenture Trustee obtains the
consent of Noteholders of Notes evidencing not less than
66-2/3% of the principal amount of the Notes Outstanding.
In determining such sufficiency or insufficiency with
respect to clauses (B) and (C) above, the Indenture
Trustee may, but need not, obtain and rely upon an opin-
ion of an Independent investment banking or accounting
firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Inden-
ture Trust Estate for such purpose.
(b) If the Indenture Trustee collects any
money or property pursuant to this Article V, it shall
pay out the money or property in the following order:
(i) first, to the Indenture Trustee for
amounts due under Section 6.7;
(ii) second, to the Servicer for due
and unpaid Servicing Fees;
(iii) third, to Noteholders for amounts
due and unpaid on the Notes in respect of in-
terest, ratably, without preference or priority
of any kind, according to the amounts due and
payable on the Notes for interest;
(iv) fourth, to Noteholders of the
[Class A-1] Notes for amounts due and unpaid on
the [Class A-1] Notes for principal, ratably,
without preference or priority of any kind,
according to the amounts due and payable on the
[Class A-1] Notes for principal, until the
principal amount of the outstanding [Class A-1]
Notes is reduced to zero;
[(v) fifth, to Noteholders of the Class
A-2 Notes for amounts due and unpaid on the
Class A-2 Notes for principal, ratably, without
preference or priority of any kind, according
to the amounts due and payable on the Class A-2
Notes for principal, until the principal amount
of the outstanding Class A-2 Notes is reduced
to zero];
[(vi) sixth, to Noteholders of the
Class A-3 Notes for amounts due and unpaid on
the Class A-3 Notes for principal, ratably,
without preference or priority of any kind,
according to the amounts due and payable on the
Class A-3 Notes for principal, until the prin-
cipal amount of the outstanding Class A-3 Notes
is reduced to zero];
(vii) seventh, to the Issuer for
amounts required to be distributed to the Cer-
tificateholders pursuant to the Trust Agreement
and the Sale and Servicing Agreement.
The Indenture Trustee may fix a record date and payment
date for any payment to Noteholders pursuant to this
Section 5.4. At least fifteen (15) days before such
record date, the Issuer shall mail to each Noteholder and
the Indenture Trustee a notice that states the record
date, the payment date and the amount to be paid.
SECTION 5.5. Optional Preservation of the
Receivables. If the Notes have been declared to be due
and payable under Section 5.2 following an Event of
Default, and such declaration and its consequences have
not been rescinded and annulled, the Indenture Trustee
may, but need not, elect to maintain possession of the
Indenture Trust Estate and apply proceeds as if there had
been no declaration of acceleration; provided, however,
that Available Funds shall be applied in accordance with
such declaration of acceleration in the manner specified
in Section 4.6(c) of the Sale and Servicing Agreement.
It is the desire of the parties hereto and the
Noteholders that there be at all times sufficient funds
for the payment of principal of and interest on the
Notes, and the Indenture Trustee shall take such desire
into account when determining whether or not to maintain
possession of the Indenture Trust Estate. In determining
whether to maintain possession of the Indenture Trust
Estate, the Indenture Trustee may, but need not, obtain
and rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to
the feasibility of such proposed action and as to the
sufficiency of the Indenture Trust Estate for such pur-
pose.
SECTION 5.6. Limitation of Suits. No
Noteholder shall have any right to institute any Proceed-
ing, judicial or otherwise, with respect to this Inden-
ture or for the appointment of a receiver or trustee, or
for any other remedy hereunder, unless:
(a) such Noteholder has previously giv-
en written notice to the Indenture Trustee of a
continuing Event of Default;
(b) the Noteholders of Notes evidencing
not less than 25% of the principal amount of
the Notes Outstanding have made written request
to the Indenture Trustee to institute such
Proceeding in respect of such Event of Default
in its own name as Indenture Trustee hereunder;
(c) such Noteholder or Noteholders have
offered to the Indenture Trustee reasonable
indemnity against the costs, expenses and lia-
bilities to be incurred in complying with such
request;
(d) the Indenture Trustee for sixty
(60) days after its receipt of such notice,
request and offer of indemnity has failed to
institute such Proceedings; and
(e) no direction inconsistent with such
written request has been given to the Indenture
Trustee during such sixty-day period by the
Noteholders of Notes evidencing not less than a
majority of the principal amount of the Notes
Outstanding.
It is understood and intended that no one or more
Noteholders shall have any right in any manner whatever
by virtue of, or by availing of, any provision of this
Indenture to affect, disturb or prejudice the rights of
any other Noteholders or to obtain or to seek to obtain
priority or preference over any other Noteholders or to
enforce any right under this Indenture, except in the
manner herein provided.
In the event the Indenture Trustee shall re-
ceive conflicting or inconsistent requests and indemnity
from two or more groups of Noteholders, each evidencing
less than a majority of the principal amount of the Notes
Outstanding, the Indenture Trustee in its sole discretion
may determine what action, if any, shall be taken, not-
withstanding any other provisions of this Indenture.
SECTION 5.7. Unconditional Rights of
Noteholders To Receive Principal and Interest. Notwith-
standing any other provisions in this Indenture, any
Noteholder shall have the right, which is absolute and
unconditional, to receive payment of the principal of and
interest, if any, on its Note on or after the respective
due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the
Redemption Date) and to institute suit for the enforce-
ment of any such payment, and such right shall not be
impaired without the consent of such Noteholder.
SECTION 5.8. Restoration of Rights and Reme-
dies. If the Indenture Trustee or any Noteholder has
instituted any Proceeding to enforce any right or remedy
under this Indenture and such Proceeding has been discon-
tinued or abandoned for any reason or has been determined
adversely to the Indenture Trustee or to such Noteholder,
then and in every such case the Issuer, the Indenture
Trustee and the Noteholders shall, subject to any deter-
mination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture
Trustee and the Noteholders shall continue as though no
such Proceeding had been instituted.
SECTION 5.9. Rights and Remedies Cumulative.
No right or remedy herein conferred upon or reserved to
the Indenture Trustee or to the Noteholders is intended
to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law,
be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employ-
ment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment
of any other appropriate right or remedy.
SECTION 5.10. Delay or Omission Not a Waiver.
No delay or omission of the Indenture Trustee or any
Noteholder to exercise any right or remedy accruing upon
any Default or Event of Default shall impair any such
right or remedy or constitute a waiver of any such De-
fault or Event of Default or any acquiescence therein.
Every right and remedy given by this Article V or by law
to the Indenture Trustee or to the Noteholders may be
exercised from time to time, and as often as may be
deemed expedient, by the Indenture Trustee or by the
Noteholders, as the case may be.
SECTION 5.11. Control by Noteholders. The
Noteholders of Notes evidencing not less than a majority
of the principal amount of the Notes Outstanding shall
have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the
Indenture Trustee with respect to the Notes or exercising
any trust or power conferred on the Indenture Trustee;
provided that:
(a) such direction shall not be in con-
flict with any rule of law or with this Inden-
ture;
(b) subject to the express terms of
Section 5.4, any direction to the Indenture
Trustee to sell or liquidate the Indenture
Trust Estate shall be by Noteholders of Notes
evidencing not less than 100% of the principal
amount of the Notes Outstanding;
(c) if the conditions set forth in Sec-
tion 5.5 have been satisfied and the Indenture
Trustee elects to retain the Indenture Trust
Estate pursuant to such Section 5.5, then any
direction to the Indenture Trustee by
Noteholders of Notes evidencing less than 100%
of the principal amount of the Notes Outstand-
ing to sell or liquidate the Indenture Trust
Estate shall be of no force and effect; and
(d) the Indenture Trustee may take any
other action deemed proper by the Indenture
Trustee that is not inconsistent with such
direction.
Notwithstanding the rights of Noteholders set forth in
this Section 5.11, subject to Section 6.1, the Indenture
Trustee need not take any action that it determines might
involve it in costs, expenses and liabilities for which
it will not be adequately indemnified or might materially
adversely affect the rights of any Noteholders not con-
senting to such action.
SECTION 5.12. Waiver of Past Defaults. Prior
to the declaration of the acceleration of the maturity of
the Notes as provided in Section 5.2, the Noteholders of
Notes evidencing not less than a majority of the princi-
pal amount of the Notes Outstanding may waive any past
Default or Event of Default and its consequences except a
Default (a) in the payment of principal of or interest on
any of the Notes or (b) in respect of a covenant or
provision hereof that cannot be amended, supplemented or
modified without the consent of each Noteholder. In the
case of any such waiver, the Issuer, the Indenture Trust-
ee and the Noteholders shall be restored to their former
positions and rights hereunder, respectively; but no such
waiver shall extend to any subsequent or other Default or
impair any right consequent thereto.
Upon any such waiver, such Default shall cease
to exist and be deemed to have been cured and not to have
occurred, and any Event of Default arising therefrom
shall be deemed to have been cured and not to have oc-
curred, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other Default or
Event of Default or impair any right consequent thereto.
SECTION 5.13. Undertaking for Costs. All
parties to this Indenture agree, and each Noteholder by
such Noteholder's acceptance thereof shall be deemed to
have agreed, that any court may in its discretion re-
quire, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the
Indenture Trustee for any action taken, suffered or
omitted by it as Indenture Trustee, the filing by any
party litigant in such suit of an undertaking to pay the
costs of such suit, and that such court may in its dis-
cretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the
provisions of this Section 5.13 shall not apply to (a)
any suit instituted by the Indenture Trustee, (b) any
suit instituted by any Noteholder or group of
Noteholders, in each case holding in the aggregate more
than 10% of the principal amount of the Notes Outstanding
or (c) any suit instituted by any Noteholder for the
enforcement of the payment of principal of or interest on
any Note on or after the respective due dates expressed
in such Note and in this Indenture (or, in the case of
redemption, on or after the Redemption Date).
SECTION 5.14. Waiver of Stay or Extension
Laws. The Issuer covenants (to the extent that it may
lawfully do so) that it shall not at any time insist
upon, or plead or in any manner whatsoever, claim or take
the benefit or advantage of, any stay or extension law
wherever enacted, now or at any time hereafter in force,
that may affect the covenants or the performance of this
Indenture, and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall
not hinder, delay or impede the execution of any power
herein granted to the Indenture Trustee, but will suffer
and permit the execution of every such power as though no
such law had been enacted.
SECTION 5.15. Action on Notes. The Indenture
Trustee's right to seek and recover judgment on the Notes
or under this Indenture shall not be affected by the
seeking, obtaining or application of any other relief
under or with respect to this Indenture. Neither the
lien of this Indenture nor any rights or remedies of the
Indenture Trustee or the Noteholders shall be impaired by
the recovery of any judgment by the Indenture Trustee
against the Issuer or by the levy of any execution under
such judgment upon any portion of the Indenture Trust
Estate or upon any of the assets of the Issuer. Any
money or property collected by the Indenture Trustee
shall be applied in accordance with Section 5.4(b).
SECTION 5.16. Performance and Enforcement of
Certain Obligations. (a) Promptly following a request
from the Indenture Trustee to do so, and at the
Administrator's expense, the Issuer shall take all such
lawful action as the Indenture Trustee may request to
compel or secure the performance and observance by the
Sellers and the Servicer, as applicable, of their respec-
tive obligations to the Issuer under or in connection
with the Sale and Servicing Agreement, and to exercise
any and all rights, remedies, powers and privileges
lawfully available to the Issuer under or in connection
with the Sale and Servicing Agreement to the extent and
in the manner directed by the Indenture Trustee, includ-
ing the transmission of notices of default on the part of
the Sellers or the Servicer thereunder and the institu-
tion of legal or administrative actions or proceedings to
compel or secure performance by the Sellers or the
Servicer of each of their respective obligations under
the Sale and Servicing Agreement.
(b) If an Event of Default has occurred and is
continuing, the Indenture Trustee may, and at the direc-
tion (which direction shall be in writing or by tele-
phone, confirmed in writing promptly thereafter) of the
Noteholders of Notes evidencing not less than 66-2/3% of
the principal amount of the Notes Outstanding shall,
exercise all rights, remedies, powers, privileges and
claims of the Issuer against the Sellers or the Servicer
under or in connection with the Sale and Servicing Agree-
ment, including the right or power to take any action to
compel or secure performance or observance by the Sellers
or the Servicer of their respective obligations to the
Issuer thereunder and to give any consent, request,
notice, direction, approval, extension, or waiver under
the Sale and Servicing Agreement, and any right of the
Issuer to take such action shall be suspended.
End of Article V
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.1. Duties of Indenture Trustee. (a)
If an Event of Default has occurred and is continuing,
the Indenture Trustee shall exercise the rights and
powers vested in it by this Indenture and use the same
degree of care and skill in their exercise as a prudent
Person would exercise or use under the circumstances in
the conduct of such Person's own affairs.
(b) Except during the continuance of an Event
of Default:
(i) the Indenture Trustee undertakes to
perform such duties and only such duties as are
specifically set forth in this Indenture and no
implied covenants or obligations shall be read
into this Indenture against the Indenture
Trustee; and
(ii) in the absence of bad faith on its
part, the Indenture Trustee may conclusively
rely, as to the truth of the statements and the
correctness of the opinions expressed therein,
upon certificates or opinions furnished to the
Indenture Trustee and, if required by the terms
of this Indenture, conforming to the require-
ments of this Indenture; provided, however,
that the Indenture Trustee shall examine the
certificates and opinions to determine whether
or not they conform to the requirements of this
Indenture.
(c) The Indenture Trustee may not be relieved
from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct,
except that:
(i) this paragraph does not limit the
effect of paragraph (b) of this Section 6.1;
(ii) the Indenture Trustee shall not be
liable for any error of judgment made in good
faith by a Trustee Officer unless it is proved
that the Indenture Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not
be liable with respect to any action it takes
or omits to take in good faith in accordance
with a direction received by it pursuant to
Section 5.11.
(d) The Indenture Trustee shall not be liable
for interest on any money received by it except as the
Indenture Trustee may agree in writing with the Issuer.
(e) Money held in trust by the Indenture
Trustee need not be segregated from other funds except to
the extent required by law or the terms of this Indenture
or the Sale and Servicing Agreement.
(f) No provision of this Indenture shall
require the Indenture Trustee to expend or risk its own
funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the
exercise of any of its rights or powers, if it shall have
reasonable grounds to believe that repayment of such
funds or adequate indemnity against such risk or liabili-
ty is not reasonably assured to it.
(g) Every provision of this Indenture relating
to the conduct or affecting the liability of or affording
protection to the Indenture Trustee shall be subject to
the provisions of this Section 6.1 and to the provisions
of the TIA.
(h) The Indenture Trustee shall not be charged
with knowledge of any Event of Default unless either (1)
a Trustee Officer shall have actual knowledge of such
Event of Default or (2) written notice of such Event of
Default shall have been given to the Indenture Trustee in
accordance with the provisions of this Indenture.
SECTION 6.2. Rights of Indenture Trustee. (a)
The Indenture Trustee may rely on any document believed
by it to be genuine and to have been signed or presented
by the proper Person. The Indenture Trustee need not
investigate any fact or matters stated in any such docu-
ment.
(b) Before the Indenture Trustee acts or
refrains from acting, it may require an Officer's Certif-
icate or an Opinion of Counsel. The Indenture Trustee
shall not be liable for any action it takes or omits to
take in good faith in reliance on an Officer's Certifi-
cate or Opinion of Counsel unless it is proved that the
Indenture Trustee was negligent in such reliance.
(c) The Indenture Trustee may execute any of
the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Indenture
Trustee shall not be responsible for any misconduct or
negligence on the part of, or for the supervision of, any
such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable
for any action it takes or omits to take in good faith
which it believes to be authorized or within its rights
or powers; provided, however, that such action or omis-
sion by the Indenture Trustee does not constitute willful
misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with
counsel, and the advice or opinion of counsel with re-
spect to legal matters relating to this Indenture and the
Notes shall be full and complete authorization and pro-
tection from liability in respect to any action taken,
omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
SECTION 6.3. Individual Rights of Indenture
Trustee. The Indenture Trustee, in its individual or any
other capacity, may become the owner or pledgee of Notes
and may otherwise deal with the Issuer or its Affiliates
with the same rights it would have if it were not Inden-
ture Trustee. Any Note Paying Agent, Note Registrar, co-
registrar or co-paying agent hereunder may do the same
with like rights.
SECTION 6.4. Indenture Trustee's Disclaimer.
The Indenture Trustee (i) shall not be responsible for,
and makes no representation, as to the validity or ade-
quacy of this Indenture or the Notes and (ii) shall not
be accountable for the Issuer's use of the proceeds from
the Notes, or responsible for any statement of the Issuer
in this Indenture or in any document issued in connection
with the sale of the Notes or in the Notes other than the
Indenture Trustee's certificate of authentication.
SECTION 6.5. Notice of Defaults; Insolvency or
Dissolution of Any Depositor or the General Partner. (a)
If a Default occurs and is continuing and if it is known
to a Trustee Officer of the Indenture Trustee, the Inden-
ture Trustee shall mail to each Noteholder notice of such
Default within [ninety (90)] days after it occurs.
Except in the case of a Default in payment of principal
of or interest on any Note (including payments pursuant
to the mandatory redemption provisions of such Note), the
Indenture Trustee may withhold the notice if and so long
as a committee of its Trustee Officers in good faith
determines that withholding the notice is in the inter-
ests of Noteholders.
(b) If the Indenture Trustee receives notice
from the Owner Trustee of the occurrence of an Insolvency
Event or a dissolution with respect to the General Part-
ner pursuant to Section 9.2 of the Trust Agreement, the
Indenture Trustee shall give prompt written notice to the
Noteholders of the occurrence of such event. If the
Indenture Trustee receives notice from the Owner Trustee
pursuant to such Section 9.2 that the requisite percent-
ages of Noteholders, Certificateholders and holders of
interests, if any, in the Reserve Account disapprove of
the liquidation of the Receivables and termination of the
Trust pursuant to such Section 9.2, the Indenture Trust-
ee, at the expense of the Issuer, shall (i) appoint an
entity acceptable to [NationsBank Corporation] to acquire
an interest in the Trust and to act as substitute "gener-
al partner" of the Trust for federal income tax purposes
and (ii) obtain an Opinion of Counsel that the Trust will
not thereafter be classified as an association (or pub-
licly traded partnership) taxable as a corporation for
federal income tax and Applicable Tax State purposes. If
the Indenture Trustee is unable to locate such an entity
or obtain such Opinion of Counsel within ninety (90) days
after the date of the applicable Insolvency Event or
dissolution, the Indenture Trustee shall so notify the
Owner Trustee promptly in writing. Upon termination of
the Trust pursuant to such Section 9.2, the Indenture
Trustee shall, if so directed by the Owner Trustee, sell
the assets of the Trust (other than the Trust Accounts[,
the Reserve Account, the Yield Supplement Account] and
the Certificate Distribution Account) in a commercially
reasonable manner and on commercially reasonable terms.
The proceeds of such a sale of the assets of the Trust
shall be treated as collections of Receivables under the
Sale and Servicing Agreement and deposited in the Collec-
tion Account and the Notes and Certificates shall be paid
in accordance with Section 4.6 of the Sale and Servicing
Agreement.
SECTION 6.6. Reports by Indenture Trustee to
Noteholders. The Indenture Trustee shall deliver to each
Noteholder such information prepared by the Servicer
pursuant to Section 3.10 of the Sale and Servicing Agree-
ment as may be required to enable such Noteholder to
prepare its federal and State income tax returns.
SECTION 6.7. Compensation and Indemnity. (a)
The Issuer shall, or shall cause the Administrator to,
pay to the Indenture Trustee from time to time reasonable
compensation for its services. The Indenture Trustee's
compensation shall not be limited by any law on compensa-
tion of a trustee of an express trust. The Issuer shall,
or shall cause the Administrator to, reimburse the Inden-
ture Trustee for all reasonable out-of-pocket expenses
incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such
expenses shall include the reasonable compensation and
expenses, disbursements and advances of the Indenture
Trustee's agents, counsel, accountants and experts. The
Issuer shall, or shall cause the Administrator to, indem-
nify the Indenture Trustee against any and all loss,
liability or expense (including attorneys' fees) incurred
by it in connection with the administration of this trust
and the performance of its duties hereunder. The Inden-
ture Trustee shall notify the Issuer and the Administra-
tor promptly of any claim for which it may seek indemni-
ty. Failure by the Indenture Trustee to so notify the
Issuer and the Administrator shall not relieve the Issuer
or the Administrator of its obligations hereunder. The
Issuer shall, or shall cause the Administrator to, defend
any such claim, and the Indenture Trustee may have sepa-
rate counsel and the Issuer shall, or shall cause the
Administrator to, pay the fees and expenses of such
counsel. Neither the Issuer nor the Administrator need
reimburse any expense or indemnity against any loss,
liability or expense incurred by the Indenture Trustee
through the Indenture Trustee's own willful misconduct,
negligence or bad faith.
(b) The Issuer's payment obligations to the
Indenture Trustee pursuant to this Section 6.7 shall
survive the resignation or removal of the Indenture
Trustee and the discharge of this Indenture. When the
Indenture Trustee incurs expenses after the occurrence of
a Default specified in Section 5.1(iv) or (v) with re-
spect to the Issuer, the expenses are intended to consti-
tute expenses of administration under Title 11 of the
United States Code or any other applicable federal or
State bankruptcy, insolvency or similar law.
SECTION 6.8. Replacement of Indenture Trustee.
(a) No resignation or removal of the Indenture Trustee,
and no appointment of a successor Indenture Trustee,
shall become effective until the acceptance of appoint-
ment by the successor Indenture Trustee pursuant to this
Section 6.8. The Indenture Trustee may resign at any
time by so notifying the Issuer. The Noteholders of
Notes evidencing not less than a majority in principal
amount of the Notes Outstanding may remove the Indenture
Trustee without cause by so notifying the Indenture
Trustee and the Issuer and may appoint a successor Inden-
ture Trustee. The Issuer shall remove the Indenture
Trustee if:
(i) the Indenture Trustee fails to com-
ply with Section 6.11;
(ii) an Insolvency Event occurs with
respect to the Indenture Trustee;
(iii) a receiver or other public offi-
cer takes charge of the Indenture Trustee or
its property; or
(iv) the Indenture Trustee otherwise
becomes incapable of acting.
If the Indenture Trustee resigns or is removed or if a
vacancy exists in the office of Indenture Trustee for any
reason (the Indenture Trustee in such event being re-
ferred to herein as the retiring Indenture Trustee), the
Issuer shall promptly appoint a successor Indenture
Trustee.
(b) Any successor Indenture Trustee shall
deliver a written acceptance of its appointment to the
retiring Indenture Trustee and to the Issuer. Thereupon,
the resignation or removal of the retiring Indenture
Trustee shall become effective, and the successor Inden-
ture Trustee shall have all the rights, powers and duties
of the Indenture Trustee under this Indenture. The
successor Indenture Trustee shall mail a notice of its
succession to Noteholders. The retiring Indenture Trust-
ee shall promptly transfer all property held by it as
Indenture Trustee to the successor Indenture Trustee.
(c) If a successor Indenture Trustee does not
take office within sixty (60) days after the retiring
Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Noteholders of Notes
evidencing not less than a majority in principal amount
of the Notes Outstanding may petition any court of compe-
tent jurisdiction for the appointment of a successor
Indenture Trustee. If the Indenture Trustee fails to
comply with Section 6.11, any Noteholder may petition any
court of competent jurisdiction for the removal of the
Indenture Trustee and the appointment of a successor
Indenture Trustee.
(d) Notwithstanding the replacement of the
Indenture Trustee pursuant to this Section 6.8, the
obligations of the Issuer and the Administrator under
Section 6.7 shall continue for the benefit of the retir-
ing Indenture Trustee.
SECTION 6.9. Successor Indenture Trustee by
Merger. (a) If the Indenture Trustee consolidates with,
merges or converts into, or transfers all or substantial-
ly all its corporate trust business or assets to, another
corporation or banking association, the resulting, sur-
viving or transferee corporation or banking association
without any further act shall be the successor Indenture
Trustee; provided that such corporation or banking asso-
ciation shall be otherwise qualified and eligible under
Section 6.11. The Indenture Trustee shall provide the
Rating Agencies with prior written notice of any such
transaction.
(b) In case at the time such successor or
successors by merger, conversion or consolidation to the
Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenti-
cated but not delivered, any such successor to the Inden-
ture Trustee may adopt the certificate of authentication
of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes
shall not have been authenticated, any successor to the
Indenture Trustee may authenticate such Notes either in
the name of any predecessor hereunder or in the name of
the successor to the Indenture Trustee. In all such
cases such certificates shall have the full force which
it is anywhere in the Notes or in this Indenture provided
that the certificate of the Indenture Trustee shall have.
SECTION 6.10. Appointment of Co-Indenture
Trustee or Separate Indenture Trustee. (a) Notwith-
standing any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of
any jurisdiction in which any part of the Indenture Trust
Estate may at the time be located, the Indenture Trustee
shall have the power and may execute and deliver an
instrument to appoint one or more Persons to act as a co-
trustee or co-trustees, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest in
such Person or Persons, in such capacity and for the
benefit of the Noteholders, such title to the Indenture
Trust Estate, or any part hereof, and, subject to the
other provisions of this Section 6.10, such powers,
duties, obligations, rights and trusts as the Indenture
Trustee may consider necessary or desirable. No co-
trustee or separate trustee hereunder shall be required
to meet the terms of eligibility as a successor trustee
under Section 6.11 and no notice to Noteholders of the
appointment of any co-trustee or separate trustee shall
be required under Section 6.8 hereof.
(b) Every separate trustee and co-trustee
shall, to the extent permitted by law, be appointed and
act subject to the following provisions and conditions:
(i) all rights, powers, duties and ob-
ligations conferred or imposed upon the Inden-
ture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture
Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate
trustee or co-trustee shall not be authorized
to act separately without the Indenture Trustee
joining in such act), except to the extent that
under any law of any jurisdiction in which any
particular act or acts are to be performed the
Indenture Trustee shall be incompetent or un-
qualified to perform such act or acts, in which
event such rights, powers, duties and obliga-
tions (including the holding of title to the
Indenture Trust Estate or any portion thereof
in any such jurisdiction) shall be exercised
and performed singly by such separate trustee
or co-trustee, but solely at the direction of
the Indenture Trustee;
(ii) no trustee hereunder shall be per-
sonally liable by reason of any act or omission
of any other trustee hereunder; and
(iii) the Indenture Trustee may at any
time accept the resignation of or remove any
separate trustee or co-trustee.
(c) Any notice, request or other writing given
to the Indenture Trustee shall be deemed to have been
given to each of the then separate trustees and co-trust-
ees, as effectively as if given to each of them. Every
instrument appointing any separate trustee or co-trustee
shall refer to this Indenture and the conditions of this
Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested
with the estates or property specified in its instrument
of appointment, either jointly with the Indenture Trustee
or separately, as may be provided therein, subject to all
the provisions of this Indenture, specifically including
every provision of this Indenture relating to the conduct
of, affecting the liability of, or affording protection
to, the Indenture Trustee. Every such instrument shall
be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at
any time constitute the Indenture Trustee its agent or
attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under
or in respect of this Agreement on its behalf and in its
name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts
shall vest in and be exercised by the Indenture Trustee,
to the extent permitted by law, without the appointment
of a new or successor trustee.
SECTION 6.11. Eligibility; Disqualification.
The Indenture Trustee shall at all times satisfy the
requirements of TIA Section 310(a). The Indenture Trust-
ee or its parent shall have a combined capital and sur-
plus of at least $50,000,000 as set forth in its most
recent published annual report of condition and shall
have a long-term debt rating of investment grade by each
of the Rating Agencies or shall otherwise be acceptable
to each of the Rating Agencies. The Indenture Trustee
shall comply with TIA Section 310(b).
SECTION 6.12. Preferential Collection of
Claims Against Issuer. The Indenture Trustee shall
comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture
Trustee who has resigned or been removed shall be subject
to TIA Section 311(a) to the extent indicated.
End of Article VI
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.1. Issuer To Furnish Indenture
Trustee Names and Addresses of Noteholders. The Issuer
shall furnish or cause to be furnished to the Indenture
Trustee (a) not more than five (5) days after each Record
Date, a list, in such form as the Indenture Trustee may
reasonably require, of the names and addresses of the
Noteholders as of such Record Date and (b) at such other
times as the Indenture Trustee may request in writing,
within thirty (30) days after receipt by the Issuer of
any such request, a list of similar form and content as
of a date not more than ten (10) days prior to the time
such list is furnished; provided, however, that so long
as (i) the Indenture Trustee is the Note Registrar or
(ii) the Notes are issued as Book-Entry Notes, no such
list shall be required to be furnished.
SECTION 7.2. Preservation of Information;
Communications to Noteholders. (a) The Indenture Trust-
ee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Noteholders
contained in the most recent list furnished to the Inden-
ture Trustee as provided in Section 7.1 and the names and
addresses of Noteholders received by the Indenture Trust-
ee in its capacity as Note Registrar. The Indenture
Trustee may destroy any list furnished to it as provided
in such Section 7.1 upon receipt of a new list so fur-
nished.
(b) Noteholders may communicate pursuant to
TIA Section 312(b) with other Noteholders with respect to
their rights under this Indenture or under the Notes.
Upon receipt by the Indenture Trustee of any request by
three or more Noteholders or by one or more Noteholders
of Notes evidencing not less than 25% of the Notes Out-
standing to receive a copy of the current list of
Noteholders (whether or not made pursuant to TIA Sec-
tion 312(b)), the Indenture Trustee shall promptly notify
the Administrator thereof by providing to the Administra-
tor a copy of such request and a copy of the list of
Noteholders produced in response thereto.
(c) The Issuer, the Indenture Trustee and the
Note Registrar shall have the protection of TIA Section
312(c).
SECTION 7.3. Reports by Issuer. (a) The
Issuer shall:
(i) file with the Indenture Trustee,
within fifteen (15) days after the Issuer is
required to file the same with the Commission,
copies of the annual reports and of the infor-
mation, documents and other reports (or copies
of such portions of any of the foregoing as the
Commission may from time to time by rules and
regulations prescribe) that the Issuer may be
required to file with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee
and the Commission in accordance with the rules
and regulations prescribed from time to time by
the Commission such additional information,
documents and reports with respect to compli-
ance by the Issuer with the conditions and
covenants of this Indenture as may be required
from time to time by such rules and regula-
tions; and
(iii) supply to the Indenture Trustee
(and the Indenture Trustee shall transmit by
mail to all Noteholders described in TIA Sec-
tion 313(c)) such summaries of any information,
documents and reports required to be filed by
the Issuer pursuant to clauses (i) and (ii) of
this Section 7.3(a) and by rules and regula-
tions prescribed from time to time by the Com-
mission.
(b) Unless the Issuer otherwise determines,
the fiscal year of the Issuer shall correspond to the
calendar year.
SECTION 7.4. Reports by Indenture Trustee.
(a) If required by TIA Section 313(a), within sixty (60)
days after each March 31, beginning with March 31, ____,
the Indenture Trustee shall mail to each Noteholder as
required by TIA Section 313(c) a brief report dated as of
such date that complies with TIA Section 313(a). The
Indenture Trustee also shall comply with TIA Section
313(b).
(b) A copy of each report at the time of its
mailing to Noteholders shall be filed by the Indenture
Trustee with the Commission and each stock exchange, if
any, on which the Notes are listed. The Issuer shall
notify the Indenture Trustee if and when the Notes are
listed on any stock exchange.
End of Article VII
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.1. Collection of Money. Except as
otherwise expressly provided herein, the Indenture Trust-
ee may demand payment or delivery of, and shall receive
and collect, directly and without intervention or assis-
tance of any fiscal agent or other intermediary, all
money and other property payable to or receivable by the
Indenture Trustee pursuant to this Indenture and the Sale
and Servicing Agreement. The Indenture Trustee shall
apply all such money received by it as provided in this
Indenture and the Sale and Servicing Agreement. Except
as otherwise expressly provided in this Indenture, if any
default occurs in the making of any payment or perfor-
mance under any agreement or instrument that is part of
the Indenture Trust Estate, the Indenture Trustee may
take such action as may be appropriate to enforce such
payment or performance, including the institution and
prosecution of appropriate Proceedings. Any such action
shall be without prejudice to any right to claim a De-
fault or Event of Default under this Indenture and any
right to proceed thereafter as provided in Article V.
SECTION 8.2. Trust Accounts[, the Reserve
Account and the Yield Supplement Account]. (a) On or
prior to the Closing Date, the Issuer shall cause the
Servicer to establish and maintain the Trust Accounts[,
the Reserve Account and the Yield Supplement Account] as
provided in Sections 4.1[, 4.7 and 5.1, respectively,] of
the Sale and Servicing Agreement.
(b) On or before each Distribution Date, the
Servicer shall deposit all Available Funds with respect
to the preceding Collection Period in the Collection
Account as provided in Section 4.2 of the Sale and Ser-
vicing Agreement. On or before each Distribution Date,
all amounts required to be deposited in the Note Payment
Account with respect to the preceding Collection Period
pursuant to Sections 4.6 [and 4.7] of the Sale and Ser-
vicing Agreement shall be withdrawn by the Indenture
Trustee from the Collection Account [and/or the Reserve
Account] and deposited to the Note Payment Account for
payment to Noteholders on such Distribution Date.
(c) On each Distribution Date and Redemption
Date, the Indenture Trustee (or any other Note Paying
Agent) shall distribute all amounts deposited in the Note
Payment Account pursuant to paragraph (b) above to
Noteholders in respect of the Notes to the extent of
amounts payable on the Notes for principal and interest
in the following amounts and in the following order of
priority (except as otherwise provided in Section
5.4(b)):
(i) the [Accrued Note Interest], to the
Noteholders; provided that if there are not suffi-
cient funds received to pay the entire amount of the
[Accrued Note Interest], the amounts so received
shall be applied to the payment of such interest on
the Notes on a pro rata basis;
(ii) the Noteholders' Principal Payment
Amount, to the Noteholders [of the Class A-1 Notes]
until the principal amount of the outstanding [Class
A-1] Notes is reduced to zero; provided that if
there are not sufficient funds received to pay the
principal amount of the outstanding [Class A-1]
Notes, the amounts so received shall be applied to
the payment of principal on the [Class A-1] Notes on
a pro rata basis;
[(iii) the Noteholders' Principal
Payment Amount, to the Noteholders of the Class A-2
Notes until the principal amount of the outstanding
Class A-2 Notes is reduced to zero; provided that if
there are not sufficient funds received to pay the
principal amount of the outstanding Class A-2 Notes,
the amounts so received shall be applied to the
payment of principal on the Class A-2 Notes on a pro
rata basis; and]
[(iv) the Noteholders' Principal Payment
Amount, to the Noteholders of the Class A-3 Notes
until the principal amount of the outstanding Class
A-3 Notes is reduced to zero; provided that if there
are not sufficient funds received to pay the princi-
pal amount of the outstanding Class A-3 Notes, the
amounts so received shall be applied to the payment
of principal on the Class A-3 Notes on a pro rata
basis.]
SECTION 8.3. General Provisions Regarding
Accounts. (a) So long as no Default or Event of Default
shall have occurred and be continuing, all or a portion
of the funds in the Collection Account[, the Reserve
Account and the Yield Supplement Account] shall be in-
vested by the Indenture Trustee at the direction of the
Servicer in Permitted Investments as provided in Sections
4.1[, 4.7 and 5.1] of the Sale and Servicing Agreement.
All income or other gain (net of losses and investment
expenses) from investments of monies deposited in the
Collection Account[, the Reserve Account and the Yield
Supplement Account] shall be withdrawn by the Indenture
Trustee from such accounts[ (but only under the circum-
stances set forth in the Sale and Servicing Agreement in
the case of the Reserve Account and the Yield Supplement
Account)] and distributed as provided in Sections 4.1,
4.7 and 5.1 of the Sale and Servicing Agreement. The
Servicer shall not direct the Indenture Trustee to make
any investment of any funds or to sell any investment
held in any of the Trust Accounts [or in the Reserve
Account or the Yield Supplement Account] unless the
security interest Granted and perfected in such account
will continue to be perfected in such investment or the
proceeds of such sale, in either case without any further
action by any Person, and, in connection with any direc-
tion to the Indenture Trustee to make any such investment
or sale, if requested by the Indenture Trustee, the
Issuer shall deliver to the Indenture Trustee an Opinion
of Counsel, acceptable to the Indenture Trustee, to such
effect.
(b) Subject to Section 6.1(c), the Indenture
Trustee shall not in any way be held liable by reason of
any insufficiency in any of the Trust Accounts [or in the
Reserve Account or the Yield Supplement Account] result-
ing from any loss on any Permitted Investment included
therein, except for losses attributable to the Indenture
Trustee's failure to make payments on such Permitted
Investments issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as
trustee, in accordance with their terms.
(c) If (i) the Servicer shall have failed to
give investment directions for any funds on deposit in
the Collection Account[, the Reserve Account or the Yield
Supplement Account] to the Indenture Trustee by 11:00
a.m. New York Time (or such other time as may be agreed
by the Issuer and Indenture Trustee) on the Business Day
preceding each Distribution Date or (ii) to the knowledge
of a Trustee Officer of the Indenture Trustee, a Default
or Event of Default shall have occurred and be continuing
with respect to the Notes but the Notes shall not have
been declared due and payable pursuant to Section 5.2 or
(iii) if such Notes shall have been declared due and
payable following an Event of Default, amounts collected
or receivable from the Indenture Trust Estate are being
applied in accordance with Section 5.4 as if there had
not been such a declaration, then the Indenture Trustee
shall, to the fullest extent practicable, invest and
reinvest funds in the Collection Account[, the Reserve
Account or the Yield Supplement Account, as the case may
be,] in one or more Permitted Investments described in
clause (b) of the definition thereof.
SECTION 8.4. Release of Indenture Trust Es-
tate. (a) Subject to the payment of its fees and ex-
penses pursuant to Section 6.7, the Indenture Trustee
may, and when required by the provisions of this Inden-
ture shall, execute instruments to release property from
the lien of this Indenture, or convey the Indenture
Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provi-
sions of this Indenture. No party relying upon an in-
strument executed by the Indenture Trustee as provided in
this Article VIII shall be bound to ascertain the Inden-
ture Trustee's authority, inquire into the satisfaction
of any conditions precedent or see to the application of
any monies.
(b) The Indenture Trustee shall, at such time
as there are no Notes Outstanding and all sums due the
Indenture Trustee pursuant to Section 6.7 have been paid
in full, release any remaining portion of the Indenture
Trust Estate that secured the Notes from the lien of this
Indenture and release to the Issuer or any other Person
entitled thereto any funds then on deposit in the Trust
Accounts. The Indenture Trustee shall release property
from the lien of this Indenture pursuant to this Section
8.4(b) only upon receipt of an Issuer Request accompanied
by an Officer's Certificate, an Opinion of Counsel and
(if required by the TIA) Independent Certificates in
accordance with TIA Sections 314(c) and 314(d)(1) meeting
the applicable requirements of Section 11.1.
(c) Each Noteholder or Note Owner, by its
acceptance of a Note or, in the case of a Note Owner, a
beneficial interest in a Note, acknowledges that from
time to time the Indenture Trustee shall release the lien
of this Indenture on any Receivable to be sold to (i) the
Sellers in accordance with Section 2.4 of the Sale and
Servicing Agreement and (ii) to the Servicer in accor-
dance with Section 3.7 of the Sale and Servicing Agree-
ment.
SECTION 8.5. Opinion of Counsel. The Inden-
ture Trustee shall receive at least seven (7) days notice
when requested by the Issuer to take any action pursuant
to Section 8.4(a), accompanied by copies of any instru-
ments involved, and the Indenture Trustee shall also
require, except in connection with any action contemplat-
ed by Section 8.4(c), as a condition to such action, an
Opinion of Counsel, in form and substance satisfactory to
the Indenture Trustee, stating the legal effect of any
such action, outlining the steps required to complete the
same, and concluding that all conditions precedent to the
taking of such action have been complied with and such
action will not materially and adversely impair the
security for the Notes or the rights of the Noteholders
in contravention of the provisions of this Indenture;
provided, however, that such Opinion of Counsel shall not
be required to express an opinion as to the fair value of
the Indenture Trust Estate. Counsel rendering any such
opinion may rely, without independent investigation, on
the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connec-
tion with any such action.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without
Consent of Noteholders. (a) Without the consent of the
Noteholders but with prior notice to the Rating Agencies,
the Issuer and the Indenture Trustee, when authorized by
an Issuer Order, at any time and from time to time, may
enter into one or more indentures supplemental hereto
(which shall conform to the provisions of the Trust
Indenture Act as in force at the date of the execution
thereof), in form satisfactory to the Indenture Trustee,
for any of the following purposes:
(i) to correct or amplify the descrip-
tion of any property at any time subject to the
lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee
any property subject or required to be subject-
ed to the lien of this Indenture, or to subject
to the lien of this Indenture additional prop-
erty;
(ii) to evidence the succession, in
compliance with the applicable provisions here-
of, of another Person to the Issuer, and the
assumption by any such successor of the cove-
nants of the Issuer herein and in the Notes
contained;
(iii) to add to the covenants of the
Issuer, for the benefit of the Noteholders, or
to surrender any right or power herein con-
ferred upon the Issuer;
(iv) to convey, transfer, assign, mort-
gage or pledge any property to or with the
Indenture Trustee;
(v) to cure any ambiguity, to correct
or supplement any provision herein or in any
supplemental indenture that may be inconsistent
with any other provision herein or in any sup-
plemental indenture or to make any other provi-
sions with respect to matters or questions
arising under this Indenture or under any sup-
plemental indenture; provided that such action
shall not materially adversely affect the in-
terests of the Noteholders;
(vi) to evidence and provide for the
acceptance of the appointment hereunder by a
successor trustee with respect to the Notes and
to add to or change any of the provisions of
this Indenture as shall be necessary to facili-
tate the administration of the trusts hereunder
by more than one trustee, pursuant to the re-
quirements of Article VI; or
(vii) to modify, eliminate or add to
the provisions of this Indenture to such extent
as shall be necessary to affect the qualifica-
tion of this Indenture under the TIA or under
any similar federal statute hereafter enacted
and to add to this Indenture such other provi-
sions as may be expressly required by the TIA.
The Indenture Trustee is hereby authorized to
join in the execution of any such supplemental indenture
and to make any further appropriate agreements and stipu-
lations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when
authorized by an Issuer Order, may, also without the
consent of any of the Noteholders but with prior notice
to the Rating Agencies, enter into an indenture or inden-
tures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying
in any manner the rights of the Noteholders under this
Indenture; provided, however, that (i) such action shall
not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of any
Noteholder, (ii) the Rating Agency Condition shall have
been satisfied with respect to such action and (iii) such
action shall not, as evidenced by an Opinion of Counsel,
cause the Issuer to be characterized for federal or any
then Applicable Tax State income tax purposes as an
association taxable as a corporation or otherwise have
any material adverse impact on the federal or any then
Applicable Tax State income taxation of any Notes Out-
standing or outstanding Certificates or any Noteholder or
Certificateholder.
SECTION 9.2. Supplemental Indentures with
Consent of Noteholders. The Issuer and the Indenture
Trustee, when authorized by an Issuer Order, also may,
with prior notice to the Rating Agencies and with the
consent of the Noteholders of Notes evidencing not less
than a majority of the principal amount of the Notes
Outstanding, by Act of such Noteholders delivered to the
Issuer and the Indenture Trustee, enter into an indenture
or indentures supplemental hereto for the purpose of
adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or
modifying in any manner the rights of the Noteholders
under this Indenture; provided, however, that (i) the
Rating Agency Condition shall have been satisfied with
respect to such action and (ii) such action shall not, as
evidenced by an Opinion of Counsel, cause the Issuer to
be characterized for federal or any then Applicable Tax
State income tax purposes as an association taxable as a
corporation or otherwise have any material adverse impact
on the federal or any then Applicable Tax State income
taxation of any Notes Outstanding or outstanding Certifi-
cates or any Noteholder or Certificateholder; and provid-
ed, further, that no such supplemental indenture shall,
without the consent of the Noteholder of each Outstanding
Note affected thereby:
(i) change the Final Scheduled Distri-
bution Date or the date of payment of any in-
stallment of principal of or interest on any
Note, or reduce the principal amount thereof,
the interest rate thereon or the Redemption
Price with respect thereto, change the provi-
sions of this Indenture relating to the appli-
cation of collections on, or the proceeds of
the sale of, the Indenture Trust Estate to
payment of principal of or interest on the
Notes, or change any place of payment where, or
the coin or currency in which, any Note or the
interest thereon is payable, or impair the
right to institute suit for the enforcement of
the provisions of this Indenture requiring the
application of funds available therefor, as
provided in Article V, to the payment of any
such amount due on the Notes on or after the
respective due dates thereof (or, in the case
of redemption, on or after the Redemption
Date);
(ii) reduce the percentage of the prin-
cipal amount of the Notes Outstanding, the
consent of the Noteholders of which is required
for any such supplemental indenture, or the
consent of the Noteholders of which is required
for any waiver of compliance with certain pro-
visions of this Indenture or certain defaults
hereunder and their consequences provided for
in this Indenture;
(iii) modify or alter the provisions of
the proviso to the definition of the term "Out-
standing";
(iv) reduce the percentage of the prin-
cipal amount of the Notes Outstanding required
to direct the Indenture Trustee to sell or
liquidate the Indenture Trust Estate pursuant
to Section 5.4 if the proceeds of such sale or
liquidation would be insufficient to pay the
principal amount and accrued but unpaid inter-
est on the Notes;
(v) modify any provision of this Inden-
ture specifying a percentage of the aggregate
principal amount of the Notes necessary to
amend this Indenture or the other Basic Docu-
ments except to increase any percentage speci-
fied herein or to provide that certain addi-
tional provisions of this Indenture or the
other Basic Documents cannot be modified or
waived without the consent of the Noteholder of
each Outstanding Note affected thereby;
(vi) modify any of the provisions of
this Indenture in such manner as to affect the
calculation of the amount of any payment of
interest or principal due on any Note on any
Distribution Date (including the calculation of
any of the individual components of such calcu-
lation) or to affect the rights of the
Noteholders to the benefit of any provisions
for the mandatory redemption of the Notes con-
tained herein; or
(vii) permit the creation of any lien
ranking prior to or on a parity with the lien
of this Indenture with respect to any part of
the Indenture Trust Estate or, except as other-
wise permitted or contemplated herein, termi-
nate the lien of this Indenture on any such
collateral at any time subject hereto or de-
prive any Noteholder of the security provided
by the lien of this Indenture.
The Indenture Trustee may in its discretion determine
whether or not any Notes would be affected by any supple-
mental indenture and any such determination shall be
conclusive upon the Noteholders of all Notes, whether
theretofore or thereafter authenticated and delivered
hereunder. The Indenture Trustee shall not be liable for
any such determination made in good faith.
It shall not be necessary for any Act of
Noteholders under this Section 9.2 to approve the partic-
ular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the sub-
stance thereof.
Promptly after the execution by the Issuer and
the Indenture Trustee of any supplemental indenture
pursuant to this Section 9.2, the Indenture Trustee shall
mail to the Noteholders of the Notes to which such amend-
ment or supplemental indenture relates a notice setting
forth in general terms the substance of such supplemental
indenture. Any failure of the Indenture Trustee to mail
such notice, or any defect therein, shall not, however,
in any way impair or affect the validity of any such
supplemental indenture.
SECTION 9.3. Execution of Supplemental Inden-
tures. In executing, or permitting the additional trusts
created by, any supplemental indenture permitted by this
Article IX or the modification thereby of the trusts
created by this Indenture, the Indenture Trustee shall be
entitled to receive, and subject to Sections 6.1 and 6.2,
shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture
and that all conditions precedent to the execution and
delivery of such supplemental indenture have been satis-
fied. The Indenture Trustee may, but shall not be obli-
gated to, enter into any such supplemental indenture that
affects the Indenture Trustee s own rights, duties,
liabilities or immunities under this Indenture or other-
wise.
SECTION 9.4. Effect of Supplemental Indenture.
Upon the execution of any supplemental indenture pursuant
to the provisions hereof, this Indenture shall be and
shall be deemed to be modified and amended in accordance
therewith with respect to the Notes affected thereby, and
the respective rights, limitations of rights, obliga-
tions, duties, liabilities and immunities under this
Indenture of the Indenture Trustee, the Issuer and the
Noteholders shall thereafter be determined, exercised and
enforced hereunder subject in all respects to such modi-
fications and amendments, and all the terms and condi-
tions of any such supplemental indenture shall be and be
deemed to be part of the terms and conditions of this
Indenture for any and all purposes.
SECTION 9.5. Conformity with Trust Indenture
Act. Every amendment of this Indenture and every supple-
mental indenture executed pursuant to this Article IX
shall conform to the requirements of the Trust Indenture
Act as then in effect so long as this Indenture shall
then be qualified under the Trust Indenture Act.
SECTION 9.6. Reference in Notes to Supplemen-
tal Indentures. Notes authenticated and delivered after
the execution of any supplemental indenture pursuant to
this Article IX may, and if required by the Indenture
Trustee shall, bear a notation in form approved by the
Indenture Trustee as to any matter provided for in such
supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new Notes so modified as to
conform, in the opinion of the Indenture Trustee and the
Issuer, to any such supplemental indenture may be pre-
pared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for Out-
standing Notes.
End of Article IX
ARTICLE X
REDEMPTION OF NOTES
SECTION 10.1. Redemption. (a) The Notes are
subject to redemption in whole, but not in part, at the
direction of the Servicer pursuant to Section 9.1(a) of
the Sale and Servicing Agreement, on any Distribution
Date on which the Servicer exercises its option to pur-
chase the assets of the Issuer pursuant to such Section
9.1(a), and the amount paid by the Servicer shall be
treated as collections of Receivables and applied to pay
the unpaid principal amount of the Notes and the Certifi-
cate Balance of the Certificates plus accrued and unpaid
interest thereon. The Servicer or the Issuer shall
furnish the Rating Agencies and the Noteholders notice of
such redemption. If the Notes are to be redeemed pursu-
ant to this Section 10.1(a), the Servicer or the Issuer
shall furnish notice of such election to the Indenture
Trustee not later than twenty (20) days prior to the
Redemption Date and the Issuer shall deposit by 10:00
A.M. (New York City time) on the Redemption Date with the
Indenture Trustee in the Note Payment Account the Redemp-
tion Price of the Notes to be redeemed, whereupon all
such Notes shall be due and payable on the Redemption
Date.
(b) In the event that the assets of the Issuer
are sold pursuant to Section 9.2 of the Trust Agreement,
all amounts on deposit in the Note Payment Account shall
be paid to the Noteholders up to the unpaid principal
amount of the Notes and all accrued and unpaid interest
thereon. If the amounts in the Note Payment Account are
to be paid to Noteholders pursuant to this Section
10.1(b), the Servicer or the Issuer shall, to the extent
practicable, furnish notice of such event to the Inden-
ture Trustee not later than twenty (20) days prior to the
Redemption Date, whereupon all such amounts shall be
payable on the Redemption Date.
SECTION 10.2. Form of Redemption Notice.
Notice of redemption under Section 10.1(a) shall be given
by the Indenture Trustee by first-class mail, postage
prepaid, or by facsimile mailed or transmitted promptly
following receipt of notice from the Issuer or Servicer
pursuant to Section 10.1(a), but not later than ten (10)
days prior to the applicable Redemption Date, to each
Noteholder as of the close of business on the Record Date
preceding the applicable Redemption Date, at such
Noteholder s address or facsimile number appearing in the
Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where such Notes are to
be surrendered for payment of the Redemption
Price (which shall be the office or agency of
the Issuer to be maintained as provided in
Section 3.2).
Notice of redemption of the Notes shall be given by the
Indenture Trustee in the name and at the expense of the
Issuer. Failure to give notice of redemption, or any
defect therein, to any Noteholder shall not impair or
affect the validity of the redemption of any other Note.
SECTION 10.3. Notes Payable on Redemption
Date. The Notes to be redeemed shall, following notice
of redemption as required by Section 10.2 (in the case of
redemption pursuant to Section 10.1(a)), shall on the
Redemption Date become due and payable at the Redemption
Price and (unless the Issuer shall default in the payment
of the Redemption Price) no interest shall accrue on the
Redemption Price for any period after the date to which
accrued interest is calculated for purposes of calculat-
ing the Redemption Price.
End of Article X
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Compliance Certificates and
Opinions, etc. (a) Upon any application or request by
the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall
furnish to the Indenture Trustee (i) an Officer's Certif-
icate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed
action have been complied with, (ii) an Opinion of Coun-
sel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with and
(iii) (if required by the TIA) an Independent Certificate
from a firm of certified public accountants meeting the
applicable requirements of this Section 11.1, except
that, in the case of any such application or request as
to which the furnishing of such documents is specifically
required by any provision of this Indenture, no addition-
al certificate or opinion need be furnished.
Every certificate or opinion with respect to
compliance with a condition or covenant provided for in
this Indenture shall include:
(A) a statement that each signatory of such
certificate or opinion has read or has caused to be
read such covenant or condition and the definitions
herein relating thereto;
(B) a brief statement as to the nature and
scope of the examination or investigation upon which
the statements or opinions contained in such certif-
icate or opinion are based;
(C) a statement that, in the opinion of each
such signatory, such signatory has made such exami-
nation or investigation as is necessary to enable
such signatory to express an informed opinion as to
whether or not such covenant or condition has been
complied with; and
(D) a statement as to whether, in the opinion
of each such signatory, such condition or covenant
has been complied with.
(b)(i) Prior to the deposit of any Collateral
or other property or securities with the Indenture Trust-
ee that is to be made the basis for the release of any
property or securities subject to the lien of this Inden-
ture, the Issuer shall, in addition to any obligation
imposed in Section 11.1(a) or elsewhere in this Inden-
ture, furnish to the Indenture Trustee an Officer's
Certificate certifying or stating the opinion of each
person signing such certificate as to the fair value
(within ninety (90) days of such deposit) to the Issuer
of the Collateral or other property or securities to be
so deposited.
(ii) Whenever the Issuer is required to
furnish to the Indenture Trustee an Officer's
Certificate certifying or stating the opinion
of any signer thereof as to the matters de-
scribed in clause (i) above, the Issuer shall
also deliver to the Indenture Trustee an Inde-
pendent Certificate as to the same matters, if
the fair value to the Issuer of the securities
to be so deposited and of all other such secu-
rities made the basis of any such withdrawal or
release since the commencement of the then-
current fiscal year of the Issuer, as set forth
in the certificates delivered pursuant to
clause (i) above and this clause (ii), is ten
percent (10%) or more of the principal amount
of the Notes Outstanding, but such a certifi-
cate need not be furnished with respect to any
securities so deposited, if the fair value
thereof to the Issuer as set forth in the re-
lated Officer's Certificate is less than
$25,000 or less than one percent (1%) of the
principal amount of the Notes Outstanding.
(iii) Whenever any property or securities
are to be released from the lien of this Inden-
ture, the Issuer shall also furnish to the
Indenture Trustee an Officer's Certificate
certifying or stating the opinion of each per-
son signing such certificate as to the fair
value (within ninety (90) days of such release)
of the property or securities proposed to be
released and stating that in the opinion of
such person the proposed release will not im-
pair the security under this Indenture in con-
travention of the provisions hereof.
(iv) Whenever the Issuer is required to
furnish to the Indenture Trustee an Officer's
Certificate certifying or stating the opinion
of any signer thereof as to the matters de-
scribed in clause (iii) above, the Issuer shall
also furnish to the Indenture Trustee an Inde-
pendent Certificate as to the same matters if
the fair value of the property or securities
and of all other property, other than property
as contemplated by clause (v) below or securi-
ties released from the lien of this Indenture
since the commencement of the then-current
calendar year, as set forth in the certificates
required by clause (iii) above and this clause
(iv), equals ten percent (10%) or more of the
principal amount of the Notes Outstanding, but
such certificate need not be furnished in the
case of any release of property or securities
if the fair value thereof as set forth in the
related Officer's Certificate is less than
$25,000 or less than one percent (1%) of the
principal amount of the Notes Outstanding.
(v) Notwithstanding Section 2.10 or any
other provisions of this Section 11.1, the
Issuer may, without compliance with the re-
quirements of the other provisions of this
Section 11.1, (A) collect, liquidate, sell or
otherwise dispose of Receivables and Financed
Vehicles as and to the extent permitted or
required by the Basic Documents and (B) make
cash payments out of the Trust Accounts[, the
Reserve Account and the Yield Supplement Ac-
count] as and to the extent permitted or re-
quired by the Basic Documents.
SECTION 11.2. Form of Documents Delivered to
Indenture Trustee. (a) In any case where several mat-
ters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary
that all such matters be certified by, or covered by the
opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such
Person may certify or give an opinion with respect to
some matters and one or more other such Persons as to
other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.
(b) Any certificate or opinion of an Autho-
rized Officer of the Issuer may be based, insofar as it
relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with
respect to the matters upon which such officer's certifi-
cate or opinion is based are erroneous. Any such certif-
icate of an Authorized Officer or opinion of counsel may
be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an
officer or officers of the Servicer, the Sellers, the
Administrator or the Issuer, stating that the information
with respect to such factual matters is in the possession
of the Servicer, the Sellers, the Administrator or the
Issuer, or in the exercise of reasonable care should
know, that the certificate or opinion or representations
with respect to such matters are erroneous.
(c) Where any Person is required to make, give
or execute two or more applications, requests, comments,
certificates, statements, opinions or other instruments
under this Indenture, they may, but need not, be consoli-
dated and form one instrument.
(d) Whenever in this Indenture, in connection
with any application or certificate or report to the
Indenture Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of
such application, or as evidence of the Issuer's compli-
ance with any term hereof, it is intended that the truth
and accuracy, at the time of the granting of such appli-
cation or at the effective date of such certificate or
report (as the case may be), of the facts and opinions
stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such appli-
cation granted or to the sufficiency of such certificate
or report. The foregoing shall not, however, be con-
strued to affect the Indenture Trustee's right to rely
upon the truth and accuracy of any statement or opinion
contained in any such document as provided in Article VI.
SECTION 11.3. Acts of Noteholders. (a) Any
request, demand, authorization, direction, notice, con-
sent, waiver or other action provided by this Indenture
to be given or taken by Noteholders may be embodied in
and evidenced by one or more instruments of substantially
similar tenor signed by such Noteholders in person or by
agents duly appointed in writing; and except as herein
otherwise expressly provided such action shall become
effective when such instrument or instruments are deliv-
ered to the Indenture Trustee, and, where it is hereby
expressly required, to the Issuer. Such instrument or
instruments (and the action embodied herein and evidenced
thereby) are herein sometimes referred to as the "Act" of
the Noteholders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.1)
conclusive in favor of the Indenture Trustee and the
Issuer, if made in the manner provided in this Section
11.3.
(b) The fact and date of the execution by any
Person of any such instrument or writing may be proved in
any manner that the Indenture Trustee deems sufficient.
(c) The ownership of Notes shall be proved by
the Note Register.
(d) Any request, demand, authorization, direc-
tion, notice, consent, waiver or other action by the
Noteholder of any Notes shall bind the Noteholder of
every Note issued upon the registration thereof or in
exchange therefor or in lieu thereof, in respect of
anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon,
whether or not notation of such action is made upon such
Note.
SECTION 11.4. Notices, etc., to Indenture
Trustee, Issuer and Rating Agencies. Any request, de-
mand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other documents provided or
permitted by this Indenture shall be in writing and if
such request, demand, authorization, direction, notice,
consent, waiver or Act of Noteholders is to be made upon,
given or furnished to or filed with:
(i) the Indenture Trustee by any
Noteholder, the Servicer, the Administrator or
the Issuer shall be sufficient for every pur-
pose hereunder if made, given, furnished or
filed in writing to or with the Indenture
Trustee at its Corporate Trust office; or
(ii) the Issuer by the Indenture Trustee
or by any Noteholder shall be sufficient for
every purpose hereunder if in writing and
mailed first-class, postage prepaid to the
Issuer addressed to: NationsBank Auto Owner
Trust ____-_, in care of
______________________, Delaware, _______,
Attention: ____________] Corporate Trust De-
partment, with a copy to the Administrator at
[NationsBank, N.A., 100 North Tryon Street,
NC1-007-__-__, Charlotte, North Carolina,
28255, Attention: ___________, or at any other
address previously furnished in writing to the
Indenture Trustee by the Issuer or the Adminis-
trator. The Issuer shall promptly transmit any
notice received by it from the Noteholders to
the Indenture Trustee.
Notices required to be given to the Rating
Agencies by the Issuer, the Indenture Trustee or the
Owner Trustee shall be in writing, personally delivered,
telecopied or mailed by certified mail, return receipt
requested, to (i) in the case of Moody's, at the follow-
ing address: Moody's Investors Service, Inc., ABS Moni-
toring Department, 99 Church Street, New York, New York
10007 and (ii) in case of Standard & Poor's, at the
following address: Standard & Poor's Ratings Group, 26
Broadway (15th Floor), New York, New York 10004, Atten-
tion: Asset Backed Surveillance Department.
SECTION 11.5. Notices to Noteholders; Waiver.
(a) Where this Indenture provides for notice to
Noteholders of any event, such notice shall be suffi-
ciently given (unless otherwise herein expressly provid-
ed) if in writing and mailed, first-class, postage pre-
paid to each Noteholder affected by such event, at his
address as it appears on the Note Register, not later
than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any
case where notice to Noteholders is given by mail, nei-
ther the failure to mail such notice nor any defect in
any notice so mailed to any particular Noteholder shall
affect the sufficiency of such notice with respect to
other Noteholders, and any notice that is mailed in the
manner herein provided shall conclusively be presumed to
have been duly given.
(b) Where this Indenture provides for notice
in any manner, such notice may be waived in writing by
any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equiva-
lent of such notice. Waivers of notice by Noteholders
shall be filed with the Indenture Trustee but such filing
shall not be a condition precedent to the validity of any
action taken in reliance upon such a waiver.
(c) In case, by reason of the suspension of
regular mail service as a result of a strike, work stop-
page or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this
Indenture, then any manner of giving such notice as shall
be satisfactory to the Indenture Trustee shall be deemed
to be a sufficient giving of such notice.
(d) Where this Indenture provides for notice
to the Rating Agencies, failure to give such notice shall
not affect any other rights or obligations created here-
under, and shall not under any circumstance constitute a
Default or Event of Default.
SECTION 11.6. Alternate Payment and Notice
Provisions. Notwithstanding any provision of this Inden-
ture or any of the Notes to the contrary, the Issuer may
enter into any agreement with any Noteholder providing
for a method of payment, or notice by the Indenture
Trustee or any Note Paying Agent to such Noteholder, that
is different from the methods provided for in this Inden-
ture for such payments or notices. The Issuer shall
furnish to the Indenture Trustee a copy of each such
agreement and the Indenture Trustee shall cause payments
to be made and notices to be given in accordance with
such agreements.
SECTION 11.7. Conflict with Trust Indenture
Act. If any provision hereof limits, qualifies or con-
flicts with another provision hereof that is required to
be included in this Indenture by any of the provisions of
the Trust Indenture Act, such required provision shall
control.
The provisions of TIA Sections 310 through 317
that impose duties on any Person (including the provi-
sions automatically deemed included herein unless ex-
pressly excluded by this Indenture) are a part of and
govern this Indenture, whether or not physically con-
tained herein.
SECTION 11.8. Effect of Headings and Table of
Contents. The Article and Section headings herein and
the Table of Contents are for convenience only and shall
not affect the construction hereof.
SECTION 11.9. Successors and Assigns. All
covenants and agreements in this Indenture and the Notes
by the Issuer shall bind its successors and assigns,
whether so expressed or not. All agreements of the
Indenture Trustee in this Indenture shall bind its suc-
cessors, co-trustees and agents.
SECTION 11.10. Separability. In case any
provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legali-
ty, and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby.
SECTION 11.11. Benefits of Indenture. Nothing
in this Indenture or in the Notes, express or implied,
shall give to any Person, other than the parties hereto
and their successors hereunder, and the Noteholders, and
any other party secured hereunder, and any other Person
with an ownership interest in any part of the Indenture
Trust Estate, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 11.12. Legal Holidays. In any case
where the date on which any payment is due shall not be a
Business Day, then (notwithstanding any other provision
of the Notes or this Indenture) payment need not be made
on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on
the date on which nominally due, and no interest shall
accrued for the period from and after any such nominal
date.
SECTION 11.13. Governing Law. This Indenture
shall be construed in accordance with the laws of the
State of New York.
SECTION 11.14. Counterparts. This Indenture
may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one
and the same instrument.
SECTION 11.15. Recording of Indenture. If
this Indenture is subject to recording in any appropriate
public recording offices, such recording is to be effect-
ed by the Issuer and at its expense accompanied by an
Opinion of Counsel (which may be counsel to the Indenture
Trustee or any other counsel reasonably acceptable to the
Indenture Trustee) to the effect that such recording is
necessary either for the protection of the Noteholders or
any other Person secured hereunder or for the enforcement
of any right or remedy granted to the Indenture Trustee
under this Indenture.
SECTION 11.16. Trust Obligation. No recourse
may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the
Indenture Trustee on the Notes or under this Indenture or
any certificate or other writing delivered in connection
herewith or therewith, against (i) the Indenture Trustee
or the Owner Trustee in its individual capacity, (ii) any
owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director,
employee or agent of the Indenture Trustee or the Owner
Trustee in its individual capacity, any holder of a
beneficial interest in the Issuer, the Owner Trustee or
the Indenture Trustee or of any successor or assign of
the Indenture Trustee or the Owner Trustee in its indi-
vidual capacity, except as any such Person may have
expressly agreed (it being understood that the Indenture
Trustee and the Owner Trustee have no such obligations in
their individual capacity), and except that any such
partner, owner or beneficiary shall be fully liable, to
the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such
entity. For all purposes of this Indenture, in the
performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of
Article VI, VII and VIII of the Trust Agreement.
SECTION 11.17. No Petition. The Indenture
Trustee, by entering into this Indenture, and each
Noteholder or Note Owner, by accepting a Note or, in the
case of a Note Owner, a beneficial interest in a Note,
hereby covenant and agree that they will not at any time
institute against the General Partner or the Issuer, or
join in any institution against the General Partner or
the Issuer of, any bankruptcy, reorganization, arrange-
ment, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state
bankruptcy or similar law in connection with any obliga-
tions relating to the Notes, this Indenture or any of the
other Basic Documents.
SECTION 11.18. Inspection. The Issuer agrees
that, with reasonable prior notice, it will permit any
representative of the Indenture Trustee, during the
Issuer's normal business hours, to examine all the books
of account, records, reports and other papers of the
Issuer, to make copies and extracts therefrom, to cause
such books to be audited by Independent certified public
accountants, and to discuss the Issuer's affairs, financ-
es and accounts with the Issuer's officers, employees,
and Independent certified public accountants, all at such
reasonable times and as often as may be reasonably re-
quested. The Indenture Trustee shall and shall cause its
representatives to hold in confidence all such informa-
tion except to the extent disclosure may be required by
law (and all reasonable applications for confidential
treatment are unavailing) and except to the extent that
the Indenture Trustee may reasonably determine that such
disclosure is consistent with its obligations hereunder.
IN WITNESS WHEREOF, the Issuer and the Inden-
ture Trustee have caused this Indenture to be duly exe-
cuted by their respective officers, thereunto duly autho-
rized and duly attested, all as of the day and year first
above written.
NATIONSBANK AUTO OWNER TRUST __-__
By: ,
not in its individual
capacity but solely as Owner
Trustee
By:
Name:
Title:
,
not in its individual
capacity but solely as
Indenture Trustee
By:
Name:
Title:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, a Notary
Public in and for said county and state, on this day
personally appeared , known to me to be the
person and officer whose name is subscribed to the fore-
going instrument and acknowledged to me that the same was
the act of the said NATIONSBANK AUTO OWNER TRUST ____-_,
a Delaware business trust, for the purpose and consider-
ation therein expressed, and in the capacities therein
stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this
day of ________, ____.
Notary Public in and for
the State of New York.
[Seal]
My commission expires:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, a Notary
Public in and for said county and state, on this day
personally appeared , known to me to be the
person and officer whose name is subscribed to the fore-
going instrument and acknowledged to me that the same was
the act of ________________, a _________ banking corpora-
tion, and that such person executed the same as the act
of said corporation for the purpose and consideration
therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this
day of __________, _____.
Notary Public in and for
the State of New York.
[Seal]
My commission expires:
EXHIBIT A-1
[FORM OF [CLASS A-1] NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESEN-
TATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPO-
RATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRA-
TION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTA-
TIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRE-
SENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS
SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL
AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
REGISTERED $_____
No. CUSIP NO.__________
NATIONSBANK AUTO OWNER TRUST _____-__
____% [CLASS A-1] ASSET BACKED NOTES
NationsBank Auto Owner Trust _____-__, a busi-
ness trust organized and existing under the laws of the
State of Delaware (herein referred to as the "Issuer"),
for value received, hereby promises to pay to CEDE & CO.,
or registered assigns, the principal sum of
_____________________ DOLLARS payable on each Distribu-
tion Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is
$[INSERT INITIAL PRINCIPAL AMOUNT OF NOTE] and the denom-
inator of which is $_______________ by (ii) the aggregate
amount, if any, payable to [Class A-1] Noteholders on
such Distribution Date from the Note Payment Account in
respect of principal on the Notes pursuant to Section 3.1
of the Indenture dated as of _______ __, ____, (as from
time to time amended, supplemented or otherwise modified
and in effect, the "Indenture") between the Issuer and
__________, a ___________ banking corporation, as Inden-
ture Trustee (in such capacity the "Indenture Trustee");
provided, however, that the entire unpaid principal
amount of this Note shall be due and payable on the
earlier of the ____________ Distribution Date (the
"[Class A-1] Final Scheduled Distribution Date") and the
Redemption Date, if any, pursuant to Section 10.1(a) of
the Indenture. Capitalized terms used but not defined
herein are defined in Article I of the Indenture, which
also contains rules as to construction that shall be
applicable herein.
The Issuer shall pay interest on this Note at a
rate per annum of ____% (the "Class A-! Rate") on each
Distribution Date until the principal of this Note is
paid or made available for payment, on the principal
amount of this Note outstanding on the preceding Distri-
bution Date (after giving effect to all payments of
principal made on the preceding Distribution Date),
subject to certain limitations contained in Section 3.1
of the Indenture. Interest on this Note will accrue for
each Distribution Date from and including the previous
Distribution Date (or, in the case of the initial Distri-
bution Date, from the Closing Date) to but excluding such
Distribution Date (each, an "Accrual Period"). Interest
will be computed on the basis of a 360-day year of twelve
30-day months. Such principal of and interest on this
Note shall be paid in the manner specified on the reverse
hereof.
The principal of and interest on this Note are
payable in such coin or currency of the United States of
America as at the time of payment is legal tender for
payment of public and private debts. All payments made
by the Issuer with respect to this Note shall be applied
first to interest due and payable on this Note as provid-
ed above and then to the unpaid principal of this Note.
Reference is made to the further provisions of
this Note set forth on the reverse hereof, which shall
have the same effect as though fully set forth on the
face of this Note.
Unless the certificate of authentication hereon
has been executed by the Indenture Trustee whose name
appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to
on the reverse hereof, or be valid or obligatory for any
purpose.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the Issuer has caused this
instrument to be signed, manually or in facsimile, by its
Authorized Officer, as of the date set forth below.
Date:
NATIONSBANK AUTO OWNER TRUST ____-_,
By: ,
not in its individual capacity
but solely as Owner Trustee
under the Trust Agreement
By:
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in
the within-mentioned Indenture.
Date:
_____________________________,
not in its individual capacity but
solely as Indenture Trustee
By: ___________________________
Authorized Officer
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of
Notes of the Issuer, designated as its _____% [Class A-1]
Asset Backed Notes (the "[Class A-1] Notes") which[,
together with the Issuer's _____% Class A-2 Asset Backed
Notes (the "Class A-2 Notes") and _____% Class A-3 Asset
Backed Notes (the "Class A-3 Notes" and, together with
the [Class A-1] Notes and the Class A-2 Notes, the
"Notes"),] are issued under the Indenture, to which
Indenture and all indentures supplemental thereto refer-
ence is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the
Indenture Trustee and the Noteholders. The Notes are
subject to all terms of the Indenture.
The [Class A-1] Notes are and will be equally
and ratably secured by the collateral pledged as security
therefor as provided in the Indenture. [The [Class A-1]
Notes are senior in right of payment to the Class A-2
Notes and the Class A-3 Notes as and to the extent pro-
vided in the Indenture.]
Principal of the [Class A-1] Notes will be
payable on each Distribution Date in an amount described
on the face hereof. "Distribution Date" means the
_________ day of each month, or, if any such day is not a
Business Day, the next succeeding Business Day, commenc-
ing _________ __, _____.
As described on the face hereof, the entire
unpaid principal amount of this Note shall be due and
payable on the earlier of the [Class A-1] Final Scheduled
Distribution Date and the Redemption Date, if any, pursu-
ant to Section 10.1(a) of the Indenture. Notwithstanding
the foregoing, the entire unpaid principal amount of the
Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing
and the Indenture Trustee or the Noteholders of Notes
evidencing not less than a majority of the principal
amount of the Notes Outstanding have declared the Notes
to be immediately due and payable in the manner provided
in Section 5.2 of the Indenture. All principal payments
on the [Class A-1] Notes shall be made pro rata to the
Noteholders entitled thereto.
Payments of interest on this Note on each
Distribution Date, together with the installment of
principal, if any, to the extent not in full payment of
this Note, shall be made by check mailed to the Person
whose name appears as the Registered Noteholder of the
Note (or one or more Predecessor Notes) on the Note
Register as of the close of business on each Record Date,
except that with respect to Notes registered on the
Record Date in the name of the nominee of the Clearing
Agency (initially, such nominee to be Cede & Co.), pay-
ments will be made by wire transfer in immediately avail-
able funds to the account designated by such nominee.
Such checks shall be mailed to the Person entitled there-
to at the address of such Person as it appears on the
Note Register as of the applicable Record Date without
requiring that this Note be submitted for notation of
payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by
any payments made on any Distribution Date shall be
binding upon all future Noteholders of this Note and of
any Note issued upon the registration of transfer hereof
or in exchange hereof or in lieu hereof, whether or not
noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the
then remaining unpaid principal amount of this Note on a
Distribution Date, then the Indenture Trustee, in the
name of and on behalf of the Issuer, will notify the
Person who was the Registered Noteholder hereof as of the
Record Date preceding such Distribution Date by notice
mailed or transmitted by facsimile prior to such Distri-
bution Date, and the amount then due and payable shall be
payable only upon presentation and surrender of this Note
at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent
appointed for such purposes located in The City of New
York.
The Issuer shall pay interest on overdue in-
stallments of interest at the [Class A-1][interest] Rate
to the extent lawful.
As provided in the Indenture, the Notes may be
redeemed, in whole or in part, in the manner and to the
extent described in the Indenture and the Sale and Ser-
vicing Agreement.
As provided in the Indenture, and subject to
certain limitations set forth therein, the transfer of
this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at
the office or agency designated by the Issuer pursuant to
the Indenture, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to
the Indenture Trustee duly executed by, the Noteholder
hereof or such Noteholder's attorney duly authorized in
writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the
Note Registrar, and thereupon one or more new Notes of
authorized denominations and in the same aggregate prin-
cipal amount will be issued to the designated transferee
or transferees. No service charge will be charged for
any registration of transfer or exchange of this Note,
but the transferor may be required to pay a sum suffi-
cient to cover any tax or other governmental charge that
may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by its accep-
tance of a Note or, in the case of a Note Owner, a bene-
ficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with
respect to the obligations of the Issuer, the Owner
Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing deliv-
ered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee, each in its individual
capacity, (ii) any owner of a beneficial interest in the
Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director or employee of the Indenture Trustee or
the Owner Trustee, each in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner
Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee,
each in its individual capacity, except as any such
Person may have expressly agreed and except that any such
partner, owner or beneficiary shall be fully liable, to
the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution for
stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of
a Note or, in the case of a Note Owner, a beneficial
interest in a Note, covenants and agrees by accepting the
benefits of the Indenture that such Noteholder or Note
Owner will not at any time institute against the General
Partner or the Issuer, or join in any institution against
the General Partner or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation
proceedings under any United States federal or state
bankruptcy or similar law in connection with any obliga-
tions relating to the Notes, the Indenture or the other
Basic Documents.
The Issuer has entered into the Indenture and
this Note is issued with the intention that, for federal,
state and local income, and franchise tax purposes, the
Notes will qualify as indebtedness of the Issuer secured
by the Indenture Trust Estate. Each Noteholder, by its
acceptance of a Note (and each Note Owner by its accep-
tance of a beneficial interest in a Note), agrees to
treat the Notes for federal, state and local income,
single business and franchise tax purposes as indebted-
ness of the Issuer.
Prior to the due presentment for registration
of transfer of this Note, the Issuer, the Indenture
Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as
of the day of determination or as of such other date as
may be specified in the Indenture) is registered as the
owner hereof for all purposes, whether or not this Note
be overdue, and none of the Issuer, the Indenture Trustee
or any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions
as therein provided, the amendment thereof and the modi-
fication of the rights and obligations of the Issuer and
the rights of the Noteholders under the Indenture at any
time by the Issuer with the consent of the Noteholders of
Notes evidencing not less than a majority of the princi-
pal amount of the Notes Outstanding. The Indenture also
contains provisions permitting the Noteholders of Notes
evidencing specified percentages of the principal amount
of the Notes Outstanding, on behalf of all Noteholders,
to waive compliance by the Issuer with certain provisions
of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or
waiver by the Noteholder of this Note (or any one or more
Predecessor Notes) shall be conclusive and binding upon
such Noteholder and upon all future Noteholders of this
Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made
upon this Note. The Indenture also permits the Indenture
Trustee to amend or waive certain terms and conditions
set forth in the Indenture without the consent of the
Noteholders.
The term "Issuer", as used in this Note, in-
cludes any successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under
certain circumstances, to merge or consolidate, subject
to the rights of the Indenture Trustee and the
Noteholders under the Indenture.
The Notes are issuable only in registered form
in denominations as provided in the Indenture, subject to
certain limitations therein set forth.
This Note and the Indenture shall be governed
by, and construed in accordance with the laws of the
State of New York.
No reference herein to the Indenture, and no
provision of this Note or of the Indenture, shall alter
or impair the obligation of the Issuer, which is absolute
and unconditional, to pay the principal of and interest
on this Note at the times, place and rate, and in the
coin or currency herein prescribed.
Anything herein to the contrary notwithstand-
ing, except as expressly provided in the Basic Documents,
none of ________________, in its individual capacity,
______________________ in its individual capacity, any
owner of a beneficial interest in the Issuer, or any of
their respective partners, beneficiaries, agents, offi-
cers, directors, employees or successors or assigns shall
be personally liable for, nor shall recourse be had to
any of them for, the payment of principal or of interest
on this Note or performance of, or omission to perform,
any of the covenants, obligations or indemnifications
contained in the Indenture. The Noteholder of this Note,
by his acceptance hereof, agrees that, except as express-
ly provided in the Basic Documents, in the case of an
Event of Default under the Indenture, the Noteholder
shall have no claim against any of the foregoing for any
deficiency, loss or claim therefrom; provided, however,
that nothing contained herein shall be taken to prevent
recourse to, and enforcement against, the assets of the
Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying
number of assignee:
FOR VALUE RECEIVED, the undersigned hereby
sells, assigns and transfers unto:
(name and address of assignee)
the within Note and all rights thereunder, and hereby
irrevocably constitutes and appoints _________________,
attorney, to transfer said Note on the books kept for
registration thereof, with full power of substitution in
the premises.
Dated: */
Signature Guaranteed
*/
*/ NOTICE: The signature to this assignment must
correspond with the name of the registered owner as
it appears on the face of the within Note in every
particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed
by an "eligible guarantor institution" meeting the
requirements of the Note Registrar.
EXHIBIT A-2
[FORM OF CLASS A-2 NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESEN-
TATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPO-
RATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRA-
TION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTA-
TIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRE-
SENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS
SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL
AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
REGISTERED $_____
No. CUSIP NO.__________
NATIONSBANK AUTO OWNER TRUST _____-__
____% CLASS A-2 ASSET BACKED NOTES
NationsBank Auto Owner Trust _____-__, a busi-
ness trust organized and existing under the laws of the
State of Delaware (herein referred to as the "Issuer"),
for value received, hereby promises to pay to CEDE & CO.,
or registered assigns, the principal sum of
_____________________ DOLLARS payable on each Distribu-
tion Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is
$[INSERT INITIAL PRINCIPAL AMOUNT OF NOTE] and the denom-
inator of which is $_______________ by (ii) the aggregate
amount, if any, payable to Class A-2 Noteholders on such
Distribution Date from the Note Payment Account in re-
spect of principal on the Notes pursuant to Section 3.1
of the Indenture dated as of _______ __, ____, (as from
time to time amended, supplemented or otherwise modified
and in effect, the "Indenture") between the Issuer and
__________, a ___________ banking corporation, as Inden-
ture Trustee (in such capacity the "Indenture Trustee");
provided, however, that the entire unpaid principal
amount of this Note shall be due and payable on the
earlier of the ____________ Distribution Date (the "Class
A-2 Final Scheduled Distribution Date") and the Redemp-
tion Date, if any, pursuant to Section 10.1(a) of the
Indenture. Capitalized terms used but not defined herein
are defined in Article I of the Indenture, which also
contains rules as to construction that shall be applica-
ble herein.
The Issuer shall pay interest on this Note at a
rate per annum equal to ___% (the "Class A-2 Rate") on
each Distribution Date until the principal of this Note
is paid or made available for payment, on the principal
amount of this Note outstanding on the preceding Distri-
bution Date (after giving effect to all payments of
principal made on the preceding Distribution Date),
subject to certain limitations contained in Section 3.1
of the Indenture. Interest on this Note will accrue for
each Distribution Date from and including the previous
Distribution Date (or, in the case of the initial Distri-
bution Date, from the Closing Date) to but excluding such
Distribution Date (each, an "Accrual Period"). Interest
will be computed on the basis of a 360-day year of twelve
30-day months. Such principal of and interest on this
Note shall be paid in the manner specified on the reverse
hereof.
The principal of and interest on this Note are
payable in such coin or currency of the United States of
America as at the time of payment is legal tender for
payment of public and private debts. All payments made
by the Issuer with respect to this Note shall be applied
first to interest due and payable on this Note as provid-
ed above and then to the unpaid principal of this Note.
Reference is made to the further provisions of
this Note set forth on the reverse hereof, which shall
have the same effect as though fully set forth on the
face of this Note.
Unless the certificate of authentication hereon
has been executed by the Indenture Trustee whose name
appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to
on the reverse hereof, or be valid or obligatory for any
purpose.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the Issuer has caused this
instrument to be signed, manually or in facsimile, by its
Authorized Officer, as of the date set forth below.
Date:
NATIONSBANK AUTO OWNER TRUST ___-_,
By: ,
not in its individual capacity
but solely as Owner Trustee
under the Trust Agreement
By:
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in
the within-mentioned Indenture.
Date:
_____________________________,
not in its individual capacity but
solely as Indenture Trustee
By: ___________________________
Authorized Officer
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of
Notes of the Issuer, designated as its _____% Class A-2
Asset Backed Notes (the "Class A-2 Notes") which, togeth-
er with the Issuer's _____% [Class A-1] Asset Backed
Notes (the "[Class A-1] Notes") and _____% Class A-3
Asset Backed Notes (the "Class A-3 Notes" and, together
with the [Class A-1] Notes and the Class A-2 Notes, the
"Notes"), are issued under the Indenture, to which Inden-
ture and all indentures supplemental thereto reference is
hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture
Trustee and the Noteholders. The Notes are subject to
all terms of the Indenture.
The Class A-2 Notes are and will be equally and
ratably secured by the collateral pledged as security
therefor as provided in the Indenture. The Class A-2
Notes are subordinated in right of payment to the [Class
A-1] Notes and senior in right of payment to the Class A-
3 Notes, each as and to the extent provided in the Inden-
ture.
Principal of the Class A-2 Notes will be pay-
able on each Distribution Date in an amount described on
the face hereof. "Distribution Date" means the _________
day of each month, or, if any such day is not a Business
Day, the next succeeding Business Day, commencing
_________ __, _____.
As described on the face hereof, the entire
unpaid principal amount of this Note shall be due and
payable on the earlier of the Class A-2 Final Scheduled
Distribution Date and the Redemption Date, if any, pursu-
ant to Section 10.1(a) of the Indenture. Notwithstanding
the foregoing, the entire unpaid principal amount of the
Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing
and the Indenture Trustee or the Noteholders of Notes
evidencing not less than a majority of the principal
amount of the Notes Outstanding have declared the Notes
to be immediately due and payable in the manner provided
in Section 5.2 of the Indenture. All principal payments
on the Class A-2 Notes shall be made pro rata to the
Noteholders entitled thereto.
Payments of interest on this Note on each
Distribution Date, together with the installment of
principal, if any, to the extent not in full payment of
this Note, shall be made by check mailed to the Person
whose name appears as the Registered Noteholder of the
Note (or one or more Predecessor Notes) on the Note
Register as of the close of business on each Record Date,
except that with respect to Notes registered on the
Record Date in the name of the nominee of the Clearing
Agency (initially, such nominee to be Cede & Co.), pay-
ments will be made by wire transfer in immediately avail-
able funds to the account designated by such nominee.
Such checks shall be mailed to the Person entitled there-
to at the address of such Person as it appears on the
Note Register as of the applicable Record Date without
requiring that this Note be submitted for notation of
payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by
any payments made on any Distribution Date shall be
binding upon all future Noteholders of this Note and of
any Note issued upon the registration of transfer hereof
or in exchange hereof or in lieu hereof, whether or not
noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the
then remaining unpaid principal amount of this Note on a
Distribution Date, then the Indenture Trustee, in the
name of and on behalf of the Issuer, will notify the
Person who was the Registered Noteholder hereof as of the
Record Date preceding such Distribution Date by notice
mailed or transmitted by facsimile prior to such Distri-
bution Date, and the amount then due and payable shall be
payable only upon presentation and surrender of this Note
at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent
appointed for such purposes located in The City of New
York.
The Issuer shall pay interest on overdue in-
stallments of interest at the Class A-2 Rate to the
extent lawful.
As provided in the Indenture, the Notes may be
redeemed, in whole or in part, in the manner and to the
extent described in the Indenture and the Sale and Ser-
vicing Agreement.
As provided in the Indenture, and subject to
certain limitations set forth therein, the transfer of
this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at
the office or agency designated by the Issuer pursuant to
the Indenture, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to
the Indenture Trustee duly executed by, the Noteholder
hereof or such Noteholder's attorney duly authorized in
writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the
Note Registrar, and thereupon one or more new Notes of
authorized denominations and in the same aggregate prin-
cipal amount will be issued to the designated transferee
or transferees. No service charge will be charged for
any registration of transfer or exchange of this Note,
but the transferor may be required to pay a sum suffi-
cient to cover any tax or other governmental charge that
may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by its accep-
tance of a Note or, in the case of a Note Owner, a bene-
ficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with
respect to the obligations of the Issuer, the Owner
Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing deliv-
ered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee, each in its individual
capacity, (ii) any owner of a beneficial interest in the
Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director or employee of the Indenture Trustee or
the Owner Trustee, each in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner
Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee,
each in its individual capacity, except as any such
Person may have expressly agreed and except that any such
partner, owner or beneficiary shall be fully liable, to
the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution for
stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of
a Note or, in the case of a Note Owner, a beneficial
interest in a Note, covenants and agrees by accepting the
benefits of the Indenture that such Noteholder or Note
Owner will not at any time institute against the General
Partner or the Issuer, or join in any institution against
the General Partner or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation
proceedings under any United States federal or State
bankruptcy or similar law in connection with any obliga-
tions relating to the Notes, the Indenture or the other
Basic Documents.
The Issuer has entered into the Indenture and
this Note is issued with the intention that, for federal,
State and local income, and franchise tax purposes, the
Notes will qualify as indebtedness of the Issuer secured
by the Indenture Trust Estate. Each Noteholder, by its
acceptance of a Note (and each Note Owner by its accep-
tance of a beneficial interest in a Note), agrees to
treat the Notes for federal, State and local income,
single business and franchise tax purposes as indebted-
ness of the Issuer.
Prior to the due presentment for registration
of transfer of this Note, the Issuer, the Indenture
Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as
of the day of determination or as of such other date as
may be specified in the Indenture) is registered as the
owner hereof for all purposes, whether or not this Note
be overdue, and none of the Issuer, the Indenture Trustee
or any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions
as therein provided, the amendment thereof and the modi-
fication of the rights and obligations of the Issuer and
the rights of the Noteholders under the Indenture at any
time by the Issuer with the consent of the Noteholders of
Notes evidencing not less than a majority of the princi-
pal amount of the Notes Outstanding. The Indenture also
contains provisions permitting the Noteholders of Notes
evidencing specified percentages of the principal amount
of the Notes Outstanding, on behalf of all Noteholders,
to waive compliance by the Issuer with certain provisions
of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or
waiver by the Noteholder of this Note (or any one or more
Predecessor Notes) shall be conclusive and binding upon
such Noteholder and upon all future Noteholders of this
Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made
upon this Note. The Indenture also permits the Indenture
Trustee to amend or waive certain terms and conditions
set forth in the Indenture without the consent of the
Noteholders.
The term "Issuer", as used in this Note, in-
cludes any successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under
certain circumstances, to merge or consolidate, subject
to the rights of the Indenture Trustee and the
Noteholders under the Indenture.
The Notes are issuable only in registered form
in denominations as provided in the Indenture, subject to
certain limitations therein set forth.
This Note and the Indenture shall be governed
by, and construed in accordance with the laws of the
State of New York.
No reference herein to the Indenture, and no
provision of this Note or of the Indenture, shall alter
or impair the obligation of the Issuer, which is absolute
and unconditional, to pay the principal of and interest
on this Note at the times, place and rate, and in the
coin or currency herein prescribed.
Anything herein to the contrary notwithstand-
ing, except as expressly provided in the Basic Documents,
none of ________________, in its individual capacity,
______________________ in its individual capacity, any
owner of a beneficial interest in the Issuer, or any of
their respective partners, beneficiaries, agents, offi-
cers, directors, employees or successors or assigns shall
be personally liable for, nor shall recourse be had to
any of them for, the payment of principal or of interest
on this Note or performance of, or omission to perform,
any of the covenants, obligations or indemnifications
contained in the Indenture. The Noteholder of this Note,
by his acceptance hereof, agrees that, except as express-
ly provided in the Basic Documents, in the case of an
Event of Default under the Indenture, the Noteholder
shall have no claim against any of the foregoing for any
deficiency, loss or claim therefrom; provided, however,
that nothing contained herein shall be taken to prevent
recourse to, and enforcement against, the assets of the
Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying
number of assignee:
FOR VALUE RECEIVED, the undersigned hereby
sells, assigns and transfers unto:
(name and address of assignee)
the within Note and all rights thereunder, and hereby
irrevocably constitutes and appoints _________________,
attorney, to transfer said Note on the books kept for
registration thereof, with full power of substitution in
the premises.
Dated: */
Signature Guaranteed
*/
*/ NOTICE: The signature to this assignment must
correspond with the name of the registered owner as
it appears on the face of the within Note in every
particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed
by an "eligible guarantor institution" meeting the
requirements of the Note Registrar.
EXHIBIT A-3
[FORM OF CLASS A-3 NOTE]
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESEN-
TATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPO-
RATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRA-
TION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTA-
TIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRE-
SENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS
SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL
AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE
AMOUNT SHOWN ON THE FACE HEREOF.
REGISTERED $_____
No. CUSIP NO.__________
NATIONSBANK AUTO OWNER TRUST _____-__
____% CLASS A-3 ASSET BACKED NOTES
NationsBank Auto Owner Trust _____-__, a busi-
ness trust organized and existing under the laws of the
State of Delaware (herein referred to as the "Issuer"),
for value received, hereby promises to pay to CEDE & CO.,
or registered assigns, the principal sum of
_____________________ DOLLARS payable on each Distribu-
tion Date in an amount equal to the result obtained by
multiplying (i) a fraction the numerator of which is
$[INSERT INITIAL PRINCIPAL AMOUNT OF NOTE] and the denom-
inator of which is $_______________ by (ii) the aggregate
amount, if any, payable to Class A-3 Noteholders on such
Distribution Date from the Note Payment Account in re-
spect of principal on the Notes pursuant to Section 3.1
of the Indenture dated as of _______ __, ____, (as from
time to time amended, supplemented or otherwise modified
and in effect, the "Indenture") between the Issuer and
__________, a ___________ banking corporation, as Inden-
ture Trustee (in such capacity the "Indenture Trustee");
provided, however, that the entire unpaid principal
amount of this Note shall be due and payable on the
earlier of the ____________ Distribution Date (the "Class
A-3 Final Scheduled Distribution Date") and the Redemp-
tion Date, if any, pursuant to Section 10.1(a) of the
Indenture. Capitalized terms used but not defined herein
are defined in Article I of the Indenture, which also
contains rules as to construction that shall be applica-
ble herein.
The Issuer shall pay interest on this Note at a
rate per annum equal to ___% (the "Class A-3 Rate") on
each Distribution Date until the principal of this Note
is paid or made available for payment, on the principal
amount of this Note outstanding on the preceding Distri-
bution Date (after giving effect to all payments of
principal made on the preceding Distribution Date),
subject to certain limitations contained in Section 3.1
of the Indenture. Interest on this Note will accrue for
each Distribution Date from and including the previous
Distribution Date (or, in the case of the initial Distri-
bution Date, from the Closing Date) to but excluding such
Distribution Date (each, an "Accrual Period"). Interest
will be computed on the basis of a 360-day year of twelve
30-day months. Such principal of and interest on this
Note shall be paid in the manner specified on the reverse
hereof.
The principal of and interest on this Note are
payable in such coin or currency of the United States of
America as at the time of payment is legal tender for
payment of public and private debts. All payments made
by the Issuer with respect to this Note shall be applied
first to interest due and payable on this Note as provid-
ed above and then to the unpaid principal of this Note.
Reference is made to the further provisions of
this Note set forth on the reverse hereof, which shall
have the same effect as though fully set forth on the
face of this Note.
Unless the certificate of authentication hereon
has been executed by the Indenture Trustee whose name
appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to
on the reverse hereof, or be valid or obligatory for any
purpose.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the Issuer has caused this
instrument to be signed, manually or in facsimile, by its
Authorized Officer, as of the date set forth below.
Date:
NATIONSBANK AUTO OWNER TRUST ___-_,
By: ,
not in its individual capacity
but solely as Owner Trustee
under the Trust Agreement
By:
Authorized Officer
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in
the within-mentioned Indenture.
Date:
_____________________________,
not in its individual capacity but
solely as Indenture Trustee
By: ___________________________
Authorized Officer
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of
Notes of the Issuer, designated as its _____% Class A-3
Asset Backed Notes (the "Class A-3 Notes") which, togeth-
er with the Issuer's _____% [Class A-1] Asset Backed
Notes (the "[Class A-1] Notes") and _____% Class A-2
Asset Backed Notes (the "Class A-2 Notes" and, together
with the [Class A-1] Notes and the Class A-3 Notes, the
"Notes"), are issued under the Indenture, to which Inden-
ture and all indentures supplemental thereto reference is
hereby made for a statement of the respective rights and
obligations thereunder of the Issuer, the Indenture
Trustee and the Noteholders. The Notes are subject to
all terms of the Indenture.
The Class A-3 Notes are and will be equally and
ratably secured by the collateral pledged as security
therefor as provided in the Indenture. The Class A-3
Notes are subordinated in right of payment to the [Class
A-1] Notes and the Class A-2 Notes as and to the extent
provided in the Indenture.
Principal of the Class A-3 Notes will be pay-
able on each Distribution Date in an amount described on
the face hereof. "Distribution Date" means the _________
day of each month, or, if any such day is not a Business
Day, the next succeeding Business Day, commencing
_________ __, _____.
As described on the face hereof, the entire
unpaid principal amount of this Note shall be due and
payable on the earlier of the Class A-3 Final Scheduled
Distribution Date and the Redemption Date, if any, pursu-
ant to Section 10.1(a) of the Indenture. Notwithstanding
the foregoing, the entire unpaid principal amount of the
Notes shall be due and payable on the date on which an
Event of Default shall have occurred and be continuing
and the Indenture Trustee or the Noteholders of Notes
evidencing not less than a majority of the principal
amount of the Notes Outstanding have declared the Notes
to be immediately due and payable in the manner provided
in Section 5.2 of the Indenture. All principal payments
on the Class A-3 Notes shall be made pro rata to the
Noteholders entitled thereto.
Payments of interest on this Note on each
Distribution Date, together with the installment of
principal, if any, to the extent not in full payment of
this Note, shall be made by check mailed to the Person
whose name appears as the Registered Noteholder of the
Note (or one or more Predecessor Notes) on the Note
Register as of the close of business on each Record Date,
except that with respect to Notes registered on the
Record Date in the name of the nominee of the Clearing
Agency (initially, such nominee to be Cede & Co.), pay-
ments will be made by wire transfer in immediately avail-
able funds to the account designated by such nominee.
Such checks shall be mailed to the Person entitled there-
to at the address of such Person as it appears on the
Note Register as of the applicable Record Date without
requiring that this Note be submitted for notation of
payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by
any payments made on any Distribution Date shall be
binding upon all future Noteholders of this Note and of
any Note issued upon the registration of transfer hereof
or in exchange hereof or in lieu hereof, whether or not
noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the
then remaining unpaid principal amount of this Note on a
Distribution Date, then the Indenture Trustee, in the
name of and on behalf of the Issuer, will notify the
Person who was the Registered Noteholder hereof as of the
Record Date preceding such Distribution Date by notice
mailed or transmitted by facsimile prior to such Distri-
bution Date, and the amount then due and payable shall be
payable only upon presentation and surrender of this Note
at the Indenture Trustee's principal Corporate Trust
Office or at the office of the Indenture Trustee's agent
appointed for such purposes located in The City of New
York.
The Issuer shall pay interest on overdue in-
stallments of interest at the Class A-3 Rate to the
extent lawful.
As provided in the Indenture, the Notes may be
redeemed, in whole or in part, in the manner and to the
extent described in the Indenture and the Sale and Ser-
vicing Agreement.
As provided in the Indenture, and subject to
certain limitations set forth therein, the transfer of
this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at
the office or agency designated by the Issuer pursuant to
the Indenture, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to
the Indenture Trustee duly executed by, the Noteholder
hereof or such Noteholder's attorney duly authorized in
writing, with such signature guaranteed by an "eligible
guarantor institution" meeting the requirements of the
Note Registrar, and thereupon one or more new Notes of
authorized denominations and in the same aggregate prin-
cipal amount will be issued to the designated transferee
or transferees. No service charge will be charged for
any registration of transfer or exchange of this Note,
but the transferor may be required to pay a sum suffi-
cient to cover any tax or other governmental charge that
may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by its accep-
tance of a Note or, in the case of a Note Owner, a bene-
ficial interest in a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with
respect to the obligations of the Issuer, the Owner
Trustee or the Indenture Trustee on the Notes or under
the Indenture or any certificate or other writing deliv-
ered in connection therewith, against (i) the Indenture
Trustee or the Owner Trustee, each in its individual
capacity, (ii) any owner of a beneficial interest in the
Issuer or (iii) any partner, owner, beneficiary, agent,
officer, director or employee of the Indenture Trustee or
the Owner Trustee, each in its individual capacity, any
holder of a beneficial interest in the Issuer, the Owner
Trustee or the Indenture Trustee or of any successor or
assign of the Indenture Trustee or the Owner Trustee,
each in its individual capacity, except as any such
Person may have expressly agreed and except that any such
partner, owner or beneficiary shall be fully liable, to
the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution for
stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of
a Note or, in the case of a Note Owner, a beneficial
interest in a Note, covenants and agrees by accepting the
benefits of the Indenture that such Noteholder or Note
Owner will not at any time institute against the General
Partner or the Issuer, or join in any institution against
the General Partner or the Issuer of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation
proceedings under any United States federal or State
bankruptcy or similar law in connection with any obliga-
tions relating to the Notes, the Indenture or the other
Basic Documents.
The Issuer has entered into the Indenture and
this Note is issued with the intention that, for federal,
State and local income, and franchise tax purposes, the
Notes will qualify as indebtedness of the Issuer secured
by the Indenture Trust Estate. Each Noteholder, by its
acceptance of a Note (and each Note Owner by its accep-
tance of a beneficial interest in a Note), agrees to
treat the Notes for federal, State and local income,
single business and franchise tax purposes as indebted-
ness of the Issuer.
Prior to the due presentment for registration
of transfer of this Note, the Issuer, the Indenture
Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as
of the day of determination or as of such other date as
may be specified in the Indenture) is registered as the
owner hereof for all purposes, whether or not this Note
be overdue, and none of the Issuer, the Indenture Trustee
or any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions
as therein provided, the amendment thereof and the modi-
fication of the rights and obligations of the Issuer and
the rights of the Noteholders under the Indenture at any
time by the Issuer with the consent of the Noteholders of
Notes evidencing not less than a majority of the princi-
pal amount of the Notes Outstanding. The Indenture also
contains provisions permitting the Noteholders of Notes
evidencing specified percentages of the principal amount
of the Notes Outstanding, on behalf of all Noteholders,
to waive compliance by the Issuer with certain provisions
of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or
waiver by the Noteholder of this Note (or any one or more
Predecessor Notes) shall be conclusive and binding upon
such Noteholder and upon all future Noteholders of this
Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent or waiver is made
upon this Note. The Indenture also permits the Indenture
Trustee to amend or waive certain terms and conditions
set forth in the Indenture without the consent of the
Noteholders.
The term "Issuer", as used in this Note, in-
cludes any successor to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under
certain circumstances, to merge or consolidate, subject
to the rights of the Indenture Trustee and the
Noteholders under the Indenture.
The Notes are issuable only in registered form
in denominations as provided in the Indenture, subject to
certain limitations therein set forth.
This Note and the Indenture shall be governed
by, and construed in accordance with the laws of the
State of New York.
No reference herein to the Indenture, and no
provision of this Note or of the Indenture, shall alter
or impair the obligation of the Issuer, which is absolute
and unconditional, to pay the principal of and interest
on this Note at the times, place and rate, and in the
coin or currency herein prescribed.
Anything herein to the contrary notwithstand-
ing, except as expressly provided in the Basic Documents,
none of ________________, in its individual capacity,
______________________ in its individual capacity, any
owner of a beneficial interest in the Issuer, or any of
their respective partners, beneficiaries, agents, offi-
cers, directors, employees or successors or assigns shall
be personally liable for, nor shall recourse be had to
any of them for, the payment of principal or of interest
on this Note or performance of, or omission to perform,
any of the covenants, obligations or indemnifications
contained in the Indenture. The Noteholder of this Note,
by his acceptance hereof, agrees that, except as express-
ly provided in the Basic Documents, in the case of an
Event of Default under the Indenture, the Noteholder
shall have no claim against any of the foregoing for any
deficiency, loss or claim therefrom; provided, however,
that nothing contained herein shall be taken to prevent
recourse to, and enforcement against, the assets of the
Issuer for any and all liabilities, obligations and
undertakings contained in the Indenture or in this Note.
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying
number of assignee:
FOR VALUE RECEIVED, the undersigned hereby
sells, assigns and transfers unto:
(name and address of assignee)
the within Note and all rights thereunder, and hereby
irrevocably constitutes and appoints _________________,
attorney, to transfer said Note on the books kept for
registration thereof, with full power of substitution in
the premises.
Dated: */
Signature Guaranteed
*/
*/ NOTICE: The signature to this assignment must
correspond with the name of the registered owner as
it appears on the face of the within Note in every
particular, without alteration, enlargement or any
change whatever. Such signature must be guaranteed
by an "eligible guarantor institution" meeting the
requirements of the Note Registrar.
EXHIBIT B
[FORM OF NOTE DEPOSITORY AGREEMENT]
SCHEDULE A
Schedule of Receivables
[Provided to the Indenture Trustee at the Closing]
APPENDIX A
Definitions and Usage
Exhibit 4.2
TRUST AGREEMENT, dated as of , ,
between NationsBank, N.A., NationsBank, N.A. (South) and
NationsBank of Texas, N.A., each a national banking associa-
tion and each a Depositor, and collectively, the Depositors,
and ___________, ________, a Delaware banking corporation,
not in its individual capacity but solely as Owner Trustee.
The Depositors and the Owner Trustee hereby agree as fol-
lows:
1. The trust created hereby shall be known as
"NationsBank Auto Owner Trust 199_-_", in which name the
Owner Trustee may conduct the business of the Trust, make
and execute contracts, and sue and be sued.
2. The Depositors hereby assign, transfer,
convey and set over to the Owner Trustee the sum of $3. The
Owner Trustee hereby acknowledges receipt of such amount in
trust from the Depositors, which amount shall constitute the
initial trust estate. The Owner Trustee hereby declares
that it will hold the trust estate in trust for the Deposi-
tors. It is the intention of the parties hereto that the
Trust created hereby constitute a business trust under
Chapter 38 of Title 12 of the Delaware Code, 12 Delaware
Code SECTION 3801 et seq. and that this document constitute the
governing instrument of the Trust. The Owner Trustee is
hereby authorized and directed to execute and file a certif-
icate of trust with the Delaware Secretary of State in the
form attached hereto.
3. The Depositors and the Owner Trustee will
enter into an amended and restated Trust Agreement, satis-
factory to each such party, to provide for the contemplated
operation of the Trust created hereby. Prior to the execu-
tion and delivery of such amended and restated Trust Agree-
ment, the Owner Trustee shall not have any duty or obliga-
tion hereunder or with respect to the trust estate, except
as otherwise required by applicable law or as may be neces-
sary to obtain prior to such execution and delivery any
licenses, consents or approvals required by applicable law
or otherwise.
4. This Trust Agreement may be executed in one
or more counterparts.
5. The Owner Trustee may resign upon thirty
days' prior notice to the Depositors.
6. This Trust Agreement shall be governed by,
and construed in accordance with, the laws of the State of
Delaware (without regard to conflict of laws of principles).
7. To the fullest extent permitted by law, the
Depositors agree to indemnify and defend the Owner Trustee,
the registrar and any paying agent and their directors,
officers, employees and agents against, and hold each of
them harmless from, any liability, costs and expenses (in-
cluding reasonable attorneys' fees) that may arise out of or
in connection with the Owner Trustee acting as Owner Trustee
under this Trust Agreement except for any liability arising
out of negligence, bad faith or willful misconduct on the
art of any such person or persons.
8. In the event that the Owner Trustee is uncer-
tain as to the application or interpretation of any provi-
sion of this Trust Agreement or must choose between alterna-
tive courses of action, the Owner Trustee may seek the
instructions of the Depositors by written notice addressed
to [NationsBank, N.A. on behalf of the Depositors of the
NationsBank Auto Owner Trust 199_-_; NC1-007-20-01 100 North
Tryon Street, Charlotte, North Carolina 28255, Attention:
Mr. Robert W. Long, Jr., Esq.] requesting instructions. The
Owner Trustee shall take and be protected in taking such
action as has been directed by the Depositors, provided that
if the Owner Trustee does not receive instructions within 10
days or such shorter time (but not less than 5 days) as is
set forth in the Owner Trustee's notice, the Owner Trustee
may, but shall be under no duty to, take or refrain from
taking such action not inconsistent with this Trust Agree-
ment as it shall deem advisable.
The Owner Trustee shall not be liable for any
action or any failure to act by it in reliance upon the
advice of or information from legal counsel, accountants or
any other person believed by it in good faith to be compe-
tent to give such advice or information. The Owner Trustee
may rely and shall be protected in acting upon any written
notice, request, direction or other document believed by it
to be genuine and to have been signed or presented by the
proper party or parties.
IN WITNESS WHEREOF, the parties hereto have caused
this Trust Agreement to be duly executed by their respective
officers hereunto duly authorized, as of the day and year
first above written.
NATIONSBANK, N.A.,
as Depositor
By:
Name:
NATIONSBANK, N.A. (South),
as Depositor
By:
Name:
Title:
NATIONSBANK OF TEXAS, N.A.,
as Depositor
By:
Name:
Title:
______________, DELAWARE,
not in its individual capacity
but solely as Owner Trustee
By:
Name:
Title:
CERTIFICATE OF TRUST OF
NATIONSBANK AUTO OWNER TRUST 1996-A
This Certificate of Trust of NATIONSBANK AUTO
OWNER TRUST 199_-_ (the "Trust"), dated as of ,
, is being duly executed and filed by ________, Delaware, a
Delaware banking corporation, as trustee, to form a business
trust under the Delaware Business Trust Act (12 Delaware
Code, SECTION 3801 et seq.).
1. Name. The name of the business trust formed
hereby is NATIONSBANK AUTO OWNER TRUST 199_-_.
2. Delaware Trustee. The name and business
address of the trustee of the Trust in the State of Delaware
is ____________, Delaware, ____________, _____________,
Delaware _____.
IN WITNESS WHEREOF, the undersigned, being the
sole trustee of the Trust, has executed this Certificate of
Trust as of the date first above written.
_____________, DELAWARE,
not in its individual capacity
but solely as owner trustee
under a Trust Agreement dated
as of ,
By:
Name:
Title:
AMENDED AND RESTATED
TRUST AGREEMENT
between
NATIONSBANK, N.A.,
NATIONSBANK, N.A. (SOUTH)
and
NATIONSBANK OF TEXAS, N.A.,
each a Depositor and collectively,
the Depositors,
and
__________________,
as Owner Trustee
Dated as of _________ __, _____
AMENDED AND RESTATED TRUST AGREEMENT, dated as
of _________ __, ____ (as from time to time amended,
supplemented or otherwise modified and in effect, this
"Agreement"), between NATIONSBANK, N.A., NATIONSBANK,
N.A. (SOUTH) and NATIONSBANK OF TEXAS, N.A., each a
national banking association and each a Depositor and
collectively, the Depositors, having their respective
individual principal executive offices located in the
states of North Carolina, Georgia and Texas; and
_______________, a Delaware banking corporation, not in
its individual capacity but solely as Owner Trustee under
this Agreement, having its principal corporate trust
office at _________________.
WHEREAS, the parties hereto intend to amend and
restate that certain Trust Agreement, dated as of
, between the Depositors and the Owner Trustee, on
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premis-
es and mutual covenants herein contained, the receipt and
sufficiency of which are hereby acknowledged, the Deposi-
tors and the Owner Trustee hereby agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
Except as otherwise specified herein or as the
context may otherwise require, capitalized terms used but
not otherwise defined herein are defined in Appendix A
hereto, which also contains rules as to usage that shall
be applicable herein.
ARTICLE II
ORGANIZATION OF THE TRUST
SECTION 2.1. Name. The Trust created hereby
shall be known as "NationsBank Auto Owner Trust ____-__",
in which name the Owner Trustee may conduct the business
of the Trust, make and execute contracts and other in-
struments on behalf of the Trust and sue and be sued.
SECTION 2.2. Office. The office of the Trust
shall be in care of the Owner Trustee at the Corporate
Trust Office or at such other address in the State of
Delaware as the Owner Trustee may designate by written
notice to the Certificateholders and the Depositors.
SECTION 2.3. Purposes and Powers. (a) The
purpose of the Trust is, and the Trust shall have the
power and authority, to engage in the following activi-
ties:
(i) to issue the Notes pursuant to the Inden-
ture, and the Certificates pursuant to this Agree-
ment, and to sell the Notes and the Certificates
upon the written order of the Depositors;
(ii) with the proceeds of the sale of the
Notes and the Certificates, to fund [the Reserve
Account and the Yield Supplement Account], to pay
the organizational, start-up and transactional
expenses of the Trust, and to pay the balance to the
Depositors pursuant to the Sale and Servicing Agree-
ment;
(iii) to pay interest on and principal of the
Notes and distributions on the Certificates;
(iv) to Grant the Owner Trust Estate (other
than the Certificate Distribution Account and the
proceeds thereof) to the Indenture Trustee pursuant
to the Indenture;
(v) to enter into and perform its obligations
under the Basic Documents to which it is to be a
party;
(vi) to engage in those activities, including
entering into agreements, that are necessary, suit-
able or convenient to accomplish the foregoing or
are incidental thereto or connected therewith; and
(vii) subject to compliance with the Basic
Documents, to engage in such other activities as may
be required in connection with conservation of the
Owner Trust Estate and the making of distributions
to the Noteholders and the Certificateholders.
The Trust is hereby authorized to engage in the foregoing
activities. The Trust shall not engage in any activity
other than in connection with the foregoing or other than
as required or authorized by the terms of this Agreement
or the other Basic Documents.
SECTION 2.4. Appointment of Owner Trustee.
The Depositors [and NB-SPC] hereby appoint the Owner
Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set
forth herein.
SECTION 2.5. Initial Capital Contribution of
Owner Trust Estate. As of , , each of the
Depositors [and NB-SPC] sold, assigned, transferred,
conveyed and set over to the Owner Trustee the sum of $3.
The Owner Trustee hereby acknowledges receipt in trust
from the Depositors, as of such date, of the foregoing
contribution, which shall constitute the initial Owner
Trust Estate and shall be deposited in the Certificate
Distribution Account. The Depositors shall pay the
organizational expenses of the Trust as they may arise or
shall, upon the request of the Owner Trustee, promptly
reimburse the Owner Trustee for any such expenses paid by
the Owner Trustee.
SECTION 2.6. Declaration of Trust. The Owner
Trustee hereby declares that it will hold the Owner Trust
Estate in trust upon and subject to the conditions set
forth herein for the use and benefit of the Certificate-
holders, subject to the obligations of the Trust under
the Basic Documents. It is the intention of the parties
hereto that (i) the Trust constitute a business trust
under the Business Trust Statute and that this Agreement
constitute the governing instrument of such business
trust and (ii) for income and franchise tax purposes, the
Trust shall be treated as a partnership, with the assets
of the partnership being the Receivables and other assets
held by the Trust, the partners of the partnership being
the Certificateholders [(including the Depositors)] and
[NB-SPC], as General Partner and the Notes constituting
indebtedness of the partnership. The parties agree that,
unless otherwise required by the appropriate tax authori-
ties, [NB-SPC] on behalf of the Trust, will file or cause
to be filed annual or other necessary returns, reports
and other forms consistent with the characterization of
the Trust as a partnership for such tax purposes. Effec-
tive as of the date hereof, the Owner Trustee shall have
the rights, powers and duties set forth herein and in the
Business Trust Statute with respect to accomplishing the
purposes of the Trust. The Owner Trustee has filed the
Certificate of Trust with the Secretary of State of
Delaware.
SECTION 2.7. Liability of [NB-SPC]. (a)
Notwithstanding Section 3803 of the Business Trust Stat-
ute, [NB-SPC] in its capacity as a Certificateholder
shall be liable directly to, and will indemnify each
injured party for, all losses, claims, damages, liabili-
ties and expenses of the Trust (including Expenses, to
the extent that the assets of the Trust that would remain
if all of the Notes were paid in full would be insuffi-
cient to pay any such losses, claims, damages, liabili-
ties or expenses, or to the extent that such losses,
claims, damages, liabilities and expenses in fact are not
paid out of the Owner Trust Estate) for which such [NB-
SPC] would be liable if the Trust or the arrangement
between [NB-SPC] and the Trust were a partnership under
the Limited Partnership Act in which such Depositor were
a general partner; provided, however, that [NB-SPC] shall
not be liable to or indemnify Noteholders or Note Owners
for any losses incurred by Noteholders or Note Owners in
their capacity as holders of or beneficial owners of
interests in limited recourse debt secured by the Owner
Trust Estate or be liable to or indemnify Certificate-
holders or Certificate Owners for any losses incurred by
the Certificateholders or Certificate Owners if such
losses would nevertheless have been incurred if the
Certificates were limited recourse debt secured by the
Owner Trust Estate. In addition, any third-party credi-
tors of the Trust, or of the arrangement between [NB-SPC]
and the Trust (other than in connection with the obliga-
tions described in the preceding sentence for which [NB-
SPC] shall not be liable), shall be deemed third-party
beneficiaries of this paragraph. The obligations of [NB-
SPC] under this paragraph shall be evidenced by the
Certificates described in Section 3.10, which, for pur-
poses of the Business Trust Statute, shall be deemed to
be a separate class of Certificates from all other class-
es of Certificates issued by the Trust.
(b) No Certificateholder other than [NB-SPC]
to the extent set forth in paragraph (a) of this Section
2.7, shall have any personal liability for any liability
or obligation of the Trust.
SECTION 2.8. Title to Trust Property. Legal
title to the entirety of the Owner Trust Estate shall be
vested at all times in the Trust as a separate legal
entity, except where applicable law in any jurisdiction
requires title to any part of the Owner Trust Estate to
be vested in a trustee or trustees, in which case title
shall be deemed to be vested in the Owner Trustee, a co-
trustee and/or a separate trustee, as the case may be.
SECTION 2.9. Situs of Trust. The Trust shall
be located and administered in the State of Delaware.
All bank accounts maintained by the Owner Trustee on
behalf of the Trust shall be located in the State of
Delaware or the State of New York. The Trust shall not
have any employees in any state other than the State of
Delaware; provided, however, that nothing herein shall
restrict or prohibit the Owner Trustee from having em-
ployees within or without the State of Delaware. Pay-
ments will be received by the Trust only in Delaware or
New York, and payments will be made by the Trust only
from Delaware or New York. The only office of the Trust
will be at the Corporate Trust Office in the State of
Delaware.
SECTION 2.10. Representations and Warranties
of Each Depositors. Each Depositor hereby represents and
warrants to the Owner Trustee that:
(a) The Depositor is a national banking asso-
ciation and validly existing in good standing under the
laws of the United States, with power and authority to
own its properties and to conduct its business as such
properties are currently owned and such business is
presently conducted.
(b) The Depositor has the power and authority
to execute and deliver this Agreement and to carry out
its terms, and the Depositor has full power and authority
to sell and assign the property to be sold and assigned
to, and deposited with, the Trust, and the Depositor has
duly authorized such sale and assignment and deposit to
the Trust; and the execution, delivery and performance of
this Agreement have been duly authorized by the Deposi-
tor.
(c) This Agreement constitutes a legal, valid,
and binding obligation of the Depositor, enforceable
against the Depositor in accordance with its terms,
subject, as to enforceability, to applicable bankruptcy,
insolvency, reorganization, conservatorship, receiver-
ship, liquidation and other similar laws now or hereafter
in effect affecting the enforcement of creditors' rights
in general and the rights of creditors of national bank-
ing associations and to general equitable principles
(whether considered in a suit at law or in equity).
(d) The consummation of the transactions
contemplated by this Agreement and the fulfillment of the
terms hereof do not conflict with, result in any breach
of any of the terms and provisions of, or constitute
(with or without notice or lapse of time or both) a
default under any indenture, agreement or other instru-
ment to which the Depositor is a party or by which it is
bound; nor result in the creation or imposition of any
lien upon any of its properties pursuant to the terms of
any such indenture, agreement or other instrument (other
than pursuant to the Basic Documents); nor violate any
law or, to the best of the Depositor's knowledge, any
order, rule or regulation applicable to the Depositor of
any court or of any federal or state regulatory body,
administrative agency or other governmental instrumental-
ity having jurisdiction over the Depositor or its proper-
ties.
(e) There are no proceedings or investigations
pending or, to the Depositor's best knowledge, threatened
before any court, regulatory body, administrative agency
or other governmental instrumentality having jurisdiction
over the Depositor or its properties: (i) asserting the
invalidity of this Agreement, the Indenture, any of the
other Basic Documents, the Notes or the Certificates,
(ii) seeking to prevent the issuance of the Notes or the
Certificates or the consummation of any of the transac-
tions contemplated by this Agreement, the Indenture or
any of the other Basic Documents, (iii) seeking any
determination or ruling that might materially and ad-
versely affect the performance by the Depositors of its
obligations under, or the validity or enforceability of,
this Agreement or (iv) which might adversely affect the
federal income tax attributes, or Applicable Tax State
franchise [or income tax attributes], of the Notes and
the Certificates.
(f) The representations and warranties of the
Depositors in Section 6.1 of the Sale and Servicing
Agreement are true and correct.
SECTION 2.11. Federal Income Tax Matters. The
Certificateholders and the Certificate Owners acknowledge
that it is their intent and that they understand it is
the intent of the Depositors and the Servicer that, for
purposes of federal income, state and local income and
franchise tax and any other income taxes, the Trust will
be treated as a partnership and the Certificateholders
(including [NB-SPC]) will be treated as partners in that
partnership. The Depositors, the General Partner and the
other Certificateholders by acceptance of a Certificate
(and the Certificate Owners by acceptance of a beneficial
interest in a Certificate) agree to such treatment and
agree to take no action inconsistent with such treatment.
For purposes of federal income, state and local income
and franchise tax and any other income taxes each month:
(a) amounts paid to any Certificateholder
pursuant to Section 5.2(a)(i) shall be treated as a
guaranteed payment within the meaning of Section
707(c) of the Code;
(b) to the extent the characterization provid-
ed for in paragraph (a) of this Section 2.11 is not
respected, gross ordinary income of the Trust for
such month as determined for federal income tax
purposes shall be allocated among the Certificate-
holders as of the first Record Date following the
end of such month, in proportion to their ownership
of the aggregate Certificate Balance on such date,
in an amount up to the sum of (i) the Accrued Cer-
tificate Interest for such month, (ii) the portion
of the market discount on the Receivables accrued
during such month that is allocable to the excess,
if any, of the aggregate Initial Certificate Balance
of the Certificates over their initial aggregate
issue price and (iii) any amount expected to be
distributed to the Certificateholders pursuant to
Section 4.6(c) of the Sale and Servicing Agreement
(to the extent not previously allocated pursuant to
this paragraph (b)) to the extent necessary to
reverse any net loss previously allocated to Certif-
icateholders (to the extent not previously reversed
pursuant to this clause (iii));
(c) thereafter all remaining net income of
the Trust for such month as determined for federal
income tax purposes (and each item of income, gain,
credit, loss or deduction entering into the computa-
tion thereof) shall be allocated to the holder of
the Contingent Payment Right to the extent thereof;
and
(d) any other provision of this Agreement to
the contrary notwithstanding, [NB-SPC] shall be
allocated no less than 2% of each item of income,
gain, credit, loss and deduction (which allocation
shall be made only to the extent the other alloca-
tions of this Section 2.11 are insufficient to
provide for such 2% allocation for such month).
If the gross ordinary income of the Trust for any month
is insufficient for the allocations described in para-
graph (b) above, subsequent gross ordinary income shall
first be allocated to make up such shortfall before any
allocation pursuant to paragraph (c) above. Net losses
of the Trust, if any, for any month as determined for
federal income tax purposes (and each item of income,
gain, credit, loss or deduction entering into the compu-
tation thereof) shall be allocated to the holder of the
Contingent Payment Right and any remaining net losses
shall be allocated among the Certificateholders as of the
first Record Date following the end of such month in
proportion to their ownership of the aggregate Certifi-
cate Balance on such Record Date. The General Partner is
authorized to modify the allocations in this paragraph to
the minimum extent necessary to comply with the provi-
sions of Treasury Regulations promulgated pursuant to
Section 704 of the Code.
END OF ARTICLE II
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1. Initial Beneficial Ownership.
Upon the formation of the Trust by the contribution by
the Depositors pursuant to Section 2.5 and until the
issuance of the Certificates, the Depositors shall be the
sole beneficial owners of the Trust.
SECTION 3.2. Capital Accounts. (a) The Owner
Trustee shall establish and maintain a separate bookkeep-
ing account (a "Capital Account") for each Certificate-
holder and the holder of the Contingent Payment Right.
The Capital Account of each Certificateholder shall also
be increased by (i) the dollar amount of any additional
cash contributions made by such Certificateholder, (ii)
the fair market value of any property (other than cash)
contributed to the Trust by such Certificateholder (net
of any liabilities to which the property is subject), and
(iii) allocations to such Certificateholder of income and
gain (including income exempt from tax). The Capital
Account of each Certificateholder shall be decreased by
(i) the dollar amount of any cash distributions made to
such Certificateholder, (ii) the fair market value of any
property (other than cash) distributed to such Certifi-
cateholder (net of any liabilities to which the property
is subject), (iii) allocations to such Certificateholder
of loss or deductions (or items thereof), and (iv) any
allocations of expenditures of the Trust described in
Section 705(a)(2)(B) of the Code.
(b) Notwithstanding any other provision of
this Agreement to the contrary, the foregoing provisions
of this Section 3.2 regarding the maintenance of Capital
Accounts shall be construed so as to comply with the
provisions of Treasury Regulations promulgated pursuant
to Section 704 of the Code. The General Partner is
hereby authorized to modify these provisions to the
minimum extent necessary to comply with such regulations.
SECTION 3.3. The Certificates. The Certifi-
cates shall be issued in denominations of at least $1,000
and in integral multiples of $1,000 in excess thereof;
provided, however, that Certificates may be issued to the
General Partner pursuant to Section 3.10 in such denomi-
nations as to represent at least 2% of the Initial Cer-
tificate Balance. The Certificates shall be executed on
behalf of the Trust by manual or facsimile signature of
an authorized officer of the Owner Trustee. Certificates
bearing the manual or facsimile signatures of individuals
who were, at the time when such signatures shall have
been affixed, authorized to sign on behalf of the Trust,
shall be validly issued and entitled to the benefits of
this Agreement, notwithstanding that such individuals or
any of them shall have ceased to be so authorized prior
to the authentication and delivery of such Certificates
or did not hold such offices at the date of authentica-
tion and delivery of such Certificates.
SECTION 3.4. Authentication of Certificates.
Concurrently with the initial sale of the Receivables to
the Trust pursuant to the Sale and Servicing Agreement,
the Owner Trustee shall cause the Certificates, in an
aggregate principal balance equal to the Initial Certifi-
cate Balance, to be executed on behalf of the Trust,
authenticated and delivered to or upon the written order
executed by each of the Depositors and signed by the
chairman of the board, the president, any executive vice
president, any vice president, the secretary, any assis-
tant secretary, the treasurer or any assistant treasurer
of each Depositor], without further action by the Deposi-
tors, in authorized denominations. No Certificate shall
entitle its Certificateholder to any benefit under this
Agreement, or shall be valid for any purpose, unless
there shall appear on such Certificate a certificate of
authentication substantially in the form set forth in
Exhibit A attached hereto executed by the Owner Trustee
or ____________, as the Owner Trustee's authenticating
agent, by manual signature; such authentication shall
constitute conclusive evidence that such Certificate
shall have been duly authenticated and delivered hereun-
der. All Certificates shall be dated the date of their
authentication.
SECTION 3.5. Registration of Certificates;
Transfer and Exchange of Certificates. (a) The Certifi-
cate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.8, a
Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Trust shall provide
for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided.
_____________ shall be the initial Certificate Registrar.
No transfer of a Certificate shall be recognized except
upon registration of such transfer in the Certificate
Register.
(b) Upon surrender for registration of trans-
fer of any Certificate at the office or agency maintained
pursuant to Section 3.8, the Owner Trustee shall execute,
authenticate and deliver (or shall cause ___________, as
its authenticating agent, to authenticate and deliver),
in the name of the designated transferee or transferees,
one or more new Certificates in authorized denominations
of a like aggregate amount dated the date of authentica-
tion by the Owner Trustee or any authenticating agent.
At the option of a Certificateholder, Certificates (other
than the Certificates issued to the General Partner
pursuant to Section 3.10) may be exchanged for other
Certificates of authorized denominations of a like aggre-
gate amount upon surrender of the Certificates to be
exchanged at the office or agency maintained pursuant to
Section 3.8.
Every Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied
by a written instrument of transfer in form satisfactory
to the Owner Trustee and the Certificate Registrar, duly
executed by the Certificateholder or his attorney duly
authorized in writing, with such signature guaranteed by
a member firm of the New York Stock Exchange or a commer-
cial bank or trust company. Each Certificate surrendered
for registration of transfer or exchange shall be cancel-
led and subsequently disposed of by the Certificate
Registrar in accordance with its customary practice.
No service charge shall be made for any regis-
tration of transfer or exchange of Certificates, but the
Owner Trustee or the Certificate Registrar may require
payment of a sum sufficient to cover any tax or govern-
mental charge that may be imposed in connection with any
transfer or exchange of Certificates.
The preceding provisions of this Section 3.4
notwithstanding, the Owner Trustee shall not make and the
Certificate Registrar need not register any transfer or
exchange of Certificates for a period of fifteen (15)
days preceding any Distribution Date for any payment with
respect to the Certificates.
The Certificates and any beneficial interest in
such Certificates may not be acquired by (a) employee
benefit plans (as defined in section 3(3) of ERISA) that
are subject to the provisions of Title I of ERISA, (b)
plans described in section 4975(e)(1) of the Code, in-
cluding individual retirement accounts described in
Section 408(a) of the Code or Keogh plans, or (c) enti-
ties whose underlying assets include plan assets by
reason of a plan's investment in such entities (each, a
"Benefit Plan"). By accepting and holding a Certificate
or an interest therein, the Certificateholder thereof or
the Certificate Owner thereof shall be deemed to have
represented and warranted that it is not a Benefit Plan
and is not purchasing Certificates on behalf of a Benefit
Plan.
The Certificates and any beneficial interest in
such Certificates may not be purchased by Persons other
than U.S. Persons and non-U.S. Persons who shall have
satisfied the Depositors and the Owner Trustee that such
non-U.S. Person will be taxed with respect to its benefi-
cial ownership of Certificates as if it were a U.S.
Person. By accepting and holding a Certificate or an
interest therein, the Certificateholder thereof or the
Certificate Owner thereof shall be deemed to have repre-
sented and warranted that it is not a non-U.S. Person and
is not purchasing Certificates on behalf of a non-U.S.
Person, unless such Certificateholder or Certificate
Owner is a non-U.S. Person who shall have satisfied the
Depositors and the Owner Trustee with respect to its
taxation as a U.S. Person.
SECTION 3.6. Mutilated, Destroyed, Lost or
Stolen Certificates. If (a) any mutilated Certificate
shall be surrendered to the Certificate Registrar, or if
the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any
Certificate and (b) there shall be delivered to the
Certificate Registrar and the Owner Trustee such security
or indemnity as may be required by them to save each of
them harmless, then, in the absence of notice that such
Certificate shall have been acquired by a bona fide
purchaser, the Owner Trustee on behalf of the Trust shall
execute and the Owner Trustee, or ___________, as the
Owner Trustee's authenticating agent, shall authenticate
and deliver, in exchange for, or in lieu of, any such
mutilated, destroyed, lost or stolen Certificate a new
Certificate of like tenor and denomination. In connec-
tion with the issuance of any new Certificate under this
Section 3.5, the Owner Trustee or the Certificate Regis-
trar may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed
in connection therewith. Any duplicate Certificate
issued pursuant to this Section 3.5 shall constitute
conclusive evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
SECTION 3.7. Persons Deemed Owners of Certifi-
cates. Prior to due presentation of a Certificate for
registration of transfer, the Owner Trustee, the Certifi-
cate Registrar and any Certificate Paying Agent may treat
the Person in whose name any Certificate shall be regis-
tered in the Certificate Register as the owner of such
Certificate for the purpose of receiving distributions
pursuant to Section 5.2 and for all other purposes what-
soever, and none of the Owner Trustee, the Certificate
Registrar or any Certificate Paying Agent shall be bound
by any notice to the contrary.
SECTION 3.8. Access to List of
Certificateholders' Names and Addresses. The Owner
Trustee shall furnish or cause to be furnished to the
Servicer and the Depositors, or to the Indenture Trustee,
within fifteen (15) days after receipt by the Owner
Trustee of a written request therefor from the Servicer
or a Depositor, or the Indenture Trustee, as the case may
be, a list, in such form as the requesting party may
reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date. If
three or more Certificateholders or one or more Certifi-
cateholders of Certificates evidencing not less than 25%
of the Certificate Balance apply in writing to the Owner
Trustee, and such application states that the applicants
desire to communicate with other Certificateholders with
respect to their rights under this Agreement or under the
Certificates and such application is accompanied by a
copy of the communication that such applicants propose to
transmit, then the Owner Trustee shall, within five (5)
Business Days after the receipt of such application,
afford such applicants access during normal business
hours to the current list of Certificateholders. Each
Certificateholder, by receiving and holding a Certifi-
cate, shall be deemed to have agreed not to hold any of
the Depositors, the Certificate Registrar or the Owner
Trustee accountable by reason of the disclosure of its
name and address, regardless of the source from which
such information was derived.
SECTION 3.9. Maintenance of Office or Agency.
The Owner Trustee shall maintain in The Borough of Man-
hattan, The City of New York, an office or offices or
agency or agencies where Certificates may be surrendered
for registration of transfer or exchange and where notic-
es and demands to or upon the Owner Trustee in respect of
the Certificates and the Basic Documents may be served.
The Owner Trustee initially designates ____________,
____________, New York, New York _______ as its principal
corporate trust office for such purposes. The Owner
Trustee shall give prompt written notice to the Deposi-
tors and to the Certificateholders of any change in the
location of the Certificate Registrar or any such office
or agency.
SECTION 3.10. Appointment of Certificate
Paying Agent. The Certificate Paying Agent shall make
distributions to Certificateholders from the Certificate
Distribution Account pursuant to Section 5.2 and shall
report the amounts of such distributions to the Owner
Trustee. Any Certificate Paying Agent shall have the
revocable power to withdraw funds from the Certificate
Distribution Account for the purpose of making the dis-
tributions referred to above. The Owner Trustee may
revoke such power and remove the Certificate Paying Agent
if the Owner Trustee determines in its sole discretion
that the Certificate Paying Agent shall have failed to
perform its obligations under this Agreement in any
material respect. The Certificate Paying Agent shall
initially be , and any co-paying agent chosen by
the Owner Trustee. shall be permitted to
resign as Certificate Paying Agent upon thirty (30) days'
written notice to the Owner Trustee. In the event that
_____________ shall no longer be the Certificate Paying
Agent, the Owner Trustee shall appoint a successor to act
as Certificate Paying Agent (which shall be a bank or
trust company). The Owner Trustee shall cause such
successor Certificate Paying Agent or any additional
Certificate Paying Agent appointed by the Owner Trustee
to execute and deliver to the Owner Trustee an instrument
in which such successor Certificate Paying Agent or
additional Certificate Paying Agent shall agree with the
Owner Trustee that as Certificate Paying Agent, such
successor Certificate Paying Agent or additional Certifi-
cate Paying Agent will hold all sums, if any, held by it
for payment to the Certificateholders in trust for the
benefit of the Certificateholders entitled thereto until
such sums shall be paid to such Certificateholders. The
Certificate Paying Agent shall return all unclaimed funds
to the Owner Trustee and upon removal of a Certificate
Paying Agent such Certificate Paying Agent shall also
return all funds in its possession to the Owner Trustee.
The provisions of Sections 7.1, 7.3, 7.4 and 8.1 shall
apply to the Owner Trustee also in its role as Certifi-
cate Paying Agent, for so long as the Owner Trustee shall
act as Certificate Paying Agent and, to the extent appli-
cable, to any other paying agent appointed hereunder.
Any reference in this Agreement to the Certificate Paying
Agent shall include any co-paying agent unless the con-
text requires otherwise.
SECTION 3.11. Ownership by General Partner of
Certificates. The General Partner shall, on the Closing
Date, acquire, and shall thereafter retain, beneficial
and record ownership of, Certificates representing at
least 2% of the Certificate Balance. The holder of the
Contingent Payment Right shall be entitled to receive
amounts released from the Reserve Account and any amounts
not needed on any Distribution Date to make payments on
the Notes or the Certificates or to make deposits to the
Reserve Account pursuant to Section 4.6 of the Sale and
Servicing Agreement. [Neither] the General Partner nor
any such holder may transfer any such rights unless an
Opinion of Counsel has been received by the General
Partner [and the Depositors] that such transfer shall not
cause the Trust to be classified as an association (or
publicly traded partnership) taxable as a corporation.
Any attempted transfer of any Certificate that would
reduce the interest of the General Partner (including the
right to receive distributions in respect of interest on
the Certificates held by the General Partner) below 2% of
(x) the Certificate Balance and (y) the aggregate of the
distributions in respect of interest on the Certificate
Balance shall be null and void. The Owner Trustee shall
cause any Certificate issued to the General Partner to
contain a legend to the following effect: "THIS CERTIFI-
CATE IS NOT TRANSFERABLE AND ANY ATTEMPTED TRANSFER OF
THIS CERTIFICATE SHALL BE NULL AND VOID".
SECTION 3.12. Book-Entry Certificates. The
Certificates, upon original issuance, will be issued in
the form of a typewritten Certificate or Certificates
representing Book-Entry Certificates, to be delivered to
The Depository Trust Company, the initial Clearing Agen-
cy, by, or on behalf of, the Trust; provided, however,
that one Definitive Certificate (as defined below) [shall
be] issued to the General Partner [and to each Depositor]
pursuant to Section 3.10. Such Certificate or Certifi-
cates shall initially be registered on the Certificate
Register in the name of Cede & Co., the nominee of the
initial Clearing Agency, and no Certificate Owner will
receive a Definitive Certificate representing such Cer-
tificate Owner's interest in such Certificate, except as
provided in Section 3.13. Unless and until definitive,
fully registered Certificates (the "Definitive Certifi-
cates") have been issued to Certificate Owners pursuant
to Section 3.13:
(i) the provisions of this Section shall
be in full force and effect;
(ii) the Certificate Registrar and the
Owner Trustee shall be entitled to deal with
the Clearing Agency for all purposes of this
Agreement (including the distribution of prin-
cipal of and interest on the Certificates and
the giving of instructions or directions here-
under) as the sole Certificateholder of the
Certificates and shall have no obligation to
the Certificate Owners;
(iii) to the extent that the provisions
of this Section 3.11 conflict with any other
provisions of this Agreement, the provisions of
this Section 3.11 shall control;
(iv) the rights of Certificate Owners
shall be exercised only through the Clearing
Agency and shall be limited to those estab-
lished by law and agreements between such Cer-
tificate Owners and the Clearing Agency and/or
the Clearing Agency Participants. Pursuant to
the Certificate Depository Agreement, unless
and until Definitive Certificates are issued
pursuant to Section 3.13, the initial Clearing
Agency will make book-entry transfers among the
Clearing Agency Participants and receive and
transmit distributions in respect of principal
of and interest on the Certificates to such
Clearing Agency Participants; and
(v) whenever this Agreement requires or
permits actions to be taken based upon instruc-
tions or directions of Certificateholders of
Certificates evidencing a specified percentage
of the Certificate Balance, the Clearing Agency
shall be deemed to represent such percentage
only to the extent that it has received in-
structions to such effect from Certificate
Owners and/or Clearing Agency Participants
owning or representing, respectively, such
required percentage of the beneficial interest
in the Certificates and has delivered such
instructions to the Owner Trustee.]
SECTION 3.13. Notices to Clearing Agency.
[Whenever a notice or other communication to the Certifi-
cateholders is required under this Agreement, unless and
until Definitive Certificates shall have been issued to
Certificate Owners pursuant to Section 3.13, the Owner
Trustee shall give all such notices and communications
specified herein to be given to Certificateholders to the
Clearing Agency, and shall have no obligations to the
Certificate Owners.]
SECTION 3.14. Definitive Certificates. [If
(i) the Administrator advises the Owner Trustee in writ-
ing that the Clearing Agency is no longer willing or able
to properly discharge its responsibilities with respect
to the Certificates, and the Administrator is unable to
locate a qualified successor, (ii) the Depositors at
their option advises the Owner Trustee in writing that it
elects to terminate the book-entry system through the
Clearing Agency or (iii) after the occurrence of an Event
of Default or an Event of Servicing Termination, Certifi-
cate Owners evidencing beneficial interests aggregating
not less than a majority of the Certificate Balance
advise the Clearing Agency in writing that the continua-
tion of a book-entry system through the Clearing Agency
is no longer in the best interest of the Certificate
Owners, then the Clearing Agency shall notify all Certif-
icate Owners and the Owner Trustee of the occurrence of
any such event and of the availability of the Definitive
Certificates to Certificate Owners requesting the same.
Upon surrender to the Owner Trustee of the typewritten
Certificate or Certificates representing the Book-Entry
Certificates by the Clearing Agency, accompanied by
registration instructions, the Owner Trustee shall exe-
cute and authenticate the Definitive Certificates in
accordance with the instructions of the Clearing Agency.
Neither the Certificate Registrar nor the Owner Trustee
shall be liable for any delay in delivery of such in-
structions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the
issuance of Definitive Certificates, the Owner Trustee
shall recognize the registered holders of the Definitive
Certificates as Certificateholders. The Definitive
Certificates shall be printed, lithographed or engraved
or may be produced in any other manner as is reasonably
acceptable to the Owner Trustee, as evidenced by its
execution thereof.]
End of Article III
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1. Prior Notice to Certificatehold-
ers with Respect to Certain Matters. With respect to the
following matters, the Owner Trustee shall not take
action unless, (I) at least thirty (30) days before the
taking of such action, the Owner Trustee shall have
notified the Certificateholders and the Rating Agencies
in writing of the proposed action and (II) Certificate-
holders holding not less than a majority of the aggregate
Certificate Balance shall not have notified the Owner
Trustee in writing prior to the 30th day after such
notice is given that such Certificateholders have with-
held consent or provided alternative direction:
(a) the initiation of any material claim or
lawsuit by the Trust (except claims or lawsuits
brought by the Servicer in connection with the
collection of the Receivables) and the settlement of
any material action, claim or lawsuit brought by or
against the Trust (except with respect to the afore-
mentioned claims or lawsuits for collection by the
Servicer of the Receivables);
(b) the election by the Trust to file an
amendment to the Certificate of Trust (unless such
amendment is required to be filed under the Business
Trust Statute);
(c) the amendment of the Indenture by a sup-
plemental indenture in circumstances where the
consent of any Noteholder is required;
(d) the amendment of the Indenture by a sup-
plemental indenture in circumstances where the
consent of any Noteholder is not required and such
amendment materially adversely affects the interests
of the Certificateholders;
(e) the amendment, change or modification of
the Sale and Servicing Agreement or the Administra-
tion Agreement, except to cure any ambiguity or to
amend or supplement any provision in a manner or to
add any provision that would not materially adverse-
ly affect the interests of the Certificateholders;
or
(f) the appointment pursuant to the Indenture
of a successor Note Registrar, Note Paying Agent or
Indenture Trustee, or pursuant to this Agreement of
a successor Certificate Registrar, or the consent to
the assignment by the Note Registrar, Note Paying
Agent or Indenture Trustee or Certificate Registrar
of its obligations under the Indenture or this
Agreement, as applicable.
SECTION 4.2. Action by Certificateholders with
Respect to Certain Matters. The Owner Trustee may not,
except in accordance with the written direction of Cer-
tificateholders holding not less than a majority of the
aggregate Certificate Balance, or upon the occurrence of
an Event of Servicing Termination after the payment in
full of the Notes, (a) remove the Servicer under the Sale
and Servicing Agreement pursuant to Article VIII thereof,
(b) appoint a successor Servicer pursuant to Article VIII
of the Sale and Servicing Agreement, (c) remove the
Administrator under the Administration Agreement pursuant
to Section 9 thereof or (d) appoint a successor Adminis-
trator pursuant to Section 9 of the Administration Agree-
ment.
SECTION 4.3. Action by Certificateholders with
Respect to Bankruptcy. The Owner Trustee shall not have
the power to commence a voluntary proceeding in bankrupt-
cy relating to the Trust unless the Notes have been paid
in full and each Certificateholder (other than the Gener-
al Partner ) approves of such commencement in advance and
delivers to the Owner Trustee a certificate certifying
that such Certificateholder reasonably believes that the
Trust is insolvent.
SECTION 4.4. Restrictions on
Certificateholders' Power. The Certificateholders shall
have no authority to direct the Owner Trustee to take or
refrain from taking any action if such action or inaction
would be contrary to any obligation of the Trust or the
Owner Trustee under this Agreement or any of the other
Basic Documents or would be contrary to Section 2.3.
SECTION 4.5. Majority Control. Except as
expressly provided herein, any action that may be taken
by the Certificateholders under this Agreement may be
taken by the Certificateholders of Certificates evidenc-
ing not less than a majority of the Certificate Balance.
Except as expressly provided herein, any written notice
of the Certificateholders delivered pursuant to this
Agreement shall be effective if signed by Certificate-
holders of Certificates evidencing not less than a major-
ity of the Certificate Balance at the time of the deliv-
ery of such notice.
End of Article IV
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1. Establishment of Certificate
Distribution Account. Pursuant to Section [4.1(c)] of
the Sale and Servicing Agreement, there has been estab-
lished and there shall be maintained a segregated trust
account in the name of the Owner Trustee at a [Qualified
Institution or Qualified Trust Institution] (which shall
initially be _____________), which designated as the
"Certificate Distribution Account." The Certificate
Distribution Account shall be held in trust in the name
of the Owner Trustee for the benefit of the Certificate-
holders. Except as expressly provided in Section 3.9,
the Certificate Distribution Account shall be under the
sole dominion and control of the Owner Trustee. All
monies deposited from time to time in the Certificate
Distribution Account pursuant to the Sale and Servicing
Agreement shall be applied as provided in the Basic
Documents. In the event that the Certificate Distribu-
tion Account is no longer to be maintained at the corpo-
rate trust department of ____________, the Servicer
shall, with the Owner Trustee's assistance as necessary,
cause the Certificate Distribution Account to be moved to
a Qualified Institution or a Qualified Trust Institution
within ten (10) Business Days (or such longer period not
to exceed thirty (30) calendar days as to which each
Rating Agency may consent).
SECTION 5.2. Application of Trust Funds.
(a) On each Distribution Date, the Owner
Trustee (if other than the Certificate Paying Agent)
shall, based on the information contained in the
Servicer's Certificate delivered on the relevant Determi-
nation Date pursuant to Section [3.9] of the Sale and
Servicing Agreement, transfer the amount deposited in the
Certificate Distribution Account pursuant to Section
[4.6(c)] of the Sale and Servicing Agreement on such
Distribution Date to the Certificate Paying Agent, or the
Certificate Paying Agent, based upon such information,
shall withdraw from the Certificate Distribution Account,
for distribution to the Certificateholders on a pro rata
basis, to the extent of funds available, in the following
order of priority:
(i) first, an amount equal to the Accrued
Certificate Interest; and
(ii) second, an amount equal to the
Certificateholders' Regular Principal.
(b) On each Distribution Date, the Owner
Trustee shall, or shall cause the Certificate Paying
Agent to, send to each Certificateholder the statement
provided to the Owner Trustee by the Servicer pursuant to
Section [4.9] of the Sale and Servicing Agreement with
respect to such Distribution Date.
(c) In the event that any withholding tax is
imposed on the Trust's payment (or allocations of income)
to a Certificateholder, such tax shall reduce the amount
otherwise distributable to such Certificateholder in
accordance with this Section 5.2. The Owner Trustee and
each Certificate Paying Agent is hereby authorized and
directed to retain from amounts otherwise distributable
to the Certificateholders sufficient funds for the pay-
ment of any such withholding tax that is legally owed by
the Trust (but such authorization shall not prevent the
Owner Trustee from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if
permitted by law, pending the outcome of such proceed-
ings). The amount of any withholding tax imposed with
respect to a Certificateholder shall be treated as cash
distributed to such Certificateholder at the time it is
withheld by the Trust and remitted to the appropriate
taxing authority. If there is a possibility that with-
holding tax is payable with respect to a distribution
(such as a distribution to a non-U.S. Certificateholder),
the Owner Trustee may, in its sole discretion, withhold
such amounts in accordance with this paragraph (d). In
the event that a Certificateholder wishes to apply for a
refund of any such withholding tax, the Owner Trustee
shall reasonably cooperate with such Certificateholder in
making such claim so long as such Certificateholder
agrees to reimburse the Owner Trustee for any out-of-
pocket expenses incurred.
SECTION 5.3. Method of Payment. Subject to
Section 9.1(c), distributions required to be made to
Certificateholders on any Distribution Date shall be made
to each Certificateholder of record on the preceding
Record Date either by wire transfer, in immediately
available funds, to the account of such Certificateholder
at a bank or other entity having appropriate facilities
therefor, if (i) such Certificateholder shall have pro-
vided to the Certificate Registrar appropriate written
instructions at least five (5) Business Days prior to
such Distribution Date and such Certificateholder's
Certificates in the aggregate evidence a denomination of
not less than $1,000,000, or (ii) such Certificateholder
is the General Partner or, if not, by check mailed to
such Certificateholder at the address of such Certifi-
cateholder appearing in the Certificate Register; provid-
ed, however, that, unless Definitive Certificates have
been issued pursuant to Section 3.13, with respect to
Certificates registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such
nominee to be Cede & Co.), distributions will be made by
wire transfer in immediately available funds to the
account designated by such nominee. Notwithstanding the
foregoing, the final distribution in respect of any
Certificate (whether on the Final Scheduled Distribution
Date or otherwise) will be payable only upon presentation
and surrender of such Certificate at the office or agency
maintained for that purpose by the Owner Trustee pursuant
to Section 3.8.
SECTION 5.4. No Segregation of Monies; No
Interest. Subject to Sections 5.1 and 5.2, monies re-
ceived by the Owner Trustee hereunder need not be segre-
gated in any manner except to the extent required by law
or the Indenture or the Sale and Servicing Agreement and
may be deposited under such general conditions as may be
prescribed by law, and the Owner Trustee shall not be
liable for any interest thereon.
SECTION 5.5. Accounting and Reports to the
Noteholders, Certificateholders, the Internal Revenue
Service and Others. The Owner Trustee shall, based on
information provided by or on behalf of the Depositors,
(a) maintain (or cause to be maintained) the books of the
Trust on a calendar year basis on the accrual method of
accounting, (b) deliver (or cause to be delivered) to
each Certificateholder, as may be required by the Code
and applicable Treasury Regulations, such information as
may be required (including Schedule K-1) to enable each
Certificateholder to prepare its federal and state income
tax returns, (c) file (or cause to be filed) such tax
returns relating to the Trust (including a partnership
information return, IRS Form 1065), and make such elec-
tions as may from time to time be required or appropriate
under any applicable state or federal statute or rule or
regulation thereunder so as to maintain or confirm the
Trust's characterization as a partnership for federal
income tax purposes, (d) cause such tax returns to be
signed in the manner required by law and (e) collect (or
cause to be collected) any withholding tax as described
in and in accordance with Section 5.2(c) with respect to
income or distributions to Certificateholders. The Owner
Trustee shall elect under Section 1278 of the Code to
include in income currently any market discount that
accrues with respect to the Receivables. The Owner
Trustee shall not make the election provided under Sec-
tion 754 of the Code.
SECTION 5.6. Signature on Returns; Tax Matters
Partner. (a) [NB-SPC], as General Partner for income
tax purposes, shall sign, on behalf of the Trust, the tax
returns of the Trust.
(b) [NB-SPC] shall be designated the "tax
matters partner" of the Trust pursuant to Section
6231(a)(7)(A) of the Code and applicable Treasury Regula-
tions.
End of Article V
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1. General Authority. The Owner
Trustee is authorized and directed to execute and deliver
the Basic Documents to which the Trust is to be a party
and each certificate or other document attached as an
exhibit to or contemplated by the Basic Documents to
which the Trust is to be a party and any amendment or
other agreement, in each case, in such form as the Depos-
itors shall approve, as evidenced conclusively by the
Owner Trustee's execution thereof and the Depositors'
execution of this Agreement, and to direct the Indenture
Trustee to authenticate and deliver Notes in the aggre-
gate principal amount of $__________. In addition to the
foregoing, the Owner Trustee is authorized to take all
actions required of the Trust pursuant to the Basic
Documents. The Owner Trustee is further authorized to
take from time to time such action on behalf of the Trust
as is permitted by the Basic Documents and which the
Servicer or the Administrator recommends with respect to
the Basic Documents, except to the extent that this
Agreement expressly requires the consent of Certificate-
holders for such action.
SECTION 6.2. General Duties. It shall be the
duty of the Owner Trustee to discharge (or cause to be
discharged) all of its responsibilities pursuant to the
terms of this Agreement and the other Basic Documents to
which the Trust is a party and to administer the Trust in
the interest of the Certificateholders, subject to the
lien of the Indenture and in accordance with the provi-
sions of this Agreement and the other Basic Documents.
Notwithstanding the foregoing, the Owner Trustee shall be
deemed to have discharged its duties and responsibilities
hereunder and under the Basic Documents to the extent the
Administrator is required in the Administration Agreement
to perform any act or to discharge such duty of the Owner
Trustee or the Trust hereunder or under any other Basic
Document, and the Owner Trustee shall not be held liable
for the default or failure of the Administrator to carry
out its obligations under the Administration Agreement.
Except as expressly provided in the Basic Documents, the
Owner Trustee shall have no obligation to administer,
service or collect the Receivables or to maintain, moni-
tor or otherwise supervise the administration, servicing
or collection of the Receivables.
SECTION 6.3. Action upon Instruction. (a)
Subject to Article IV, and in accordance with the terms
of the Basic Documents, the Certificateholders may, by
written instruction, direct the Owner Trustee in the
management of the Trust.
(b) The Owner Trustee shall not be required to
take any action hereunder or under any Basic Document if
the Owner Trustee shall have reasonably determined, or
shall have been advised by counsel, that such action is
likely to result in liability on the part of the Owner
Trustee or is contrary to the terms hereof or of any
other Basic Document or is otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to
decide between alternative courses of action permitted or
required by the terms of this Agreement or any other
Basic Document, the Owner Trustee shall promptly give
notice (in such form as shall be appropriate under the
circumstances) to the Certificateholders requesting
instruction as to the course of action to be adopted, and
to the extent the Owner Trustee acts in good faith in
accordance with any [written] instruction of the Certifi-
cateholders received, the Owner Trustee shall not be
liable on account of such action to any Person. If the
Owner Trustee shall not have received appropriate in-
struction within ten (10) days of such notice (or within
such shorter period of time as reasonably may be speci-
fied in such notice or may be necessary under the circum-
stances) it may, but shall be under no duty to, take or
refrain from taking such action, not inconsistent with
this Agreement or the other Basic Documents, as it shall
deem to be in the best interests of the Certificatehold-
ers, and shall have no liability to any Person for such
action or inaction.
(d) In the event the Owner Trustee is unsure
as to the application of any provision of this Agreement
or any other Basic Document or any such provision is
ambiguous as to its application, or is, or appears to be,
in conflict with any other applicable provision, or in
the event that this Agreement permits any determination
by the Owner Trustee or is silent or is incomplete as to
the course of action that the Owner Trustee is required
to take with respect to a particular set of facts, the
Owner Trustee may give notice (in such form as shall be
appropriate under the circumstances) to the Certificate-
holders requesting instruction and, to the extent that
the Owner Trustee acts or refrains from acting in good
faith in accordance with any such written instruction
received, the Owner Trustee shall not be liable, on
account of such action or inaction, to any Person. If
the Owner Trustee shall not have received appropriate
instruction within ten (10) days of such notice (or
within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the
circumstances) it may, but shall be under no duty to,
take or refrain from taking such action not inconsistent
with this Agreement or the other Basic Documents, as it
shall deem to be in the best interests of the Certifi-
cateholders, and shall have no liability to any Person
for such action or inaction.
SECTION 6.4. No Duties Except as Specified in
this Agreement or in Instructions. The Owner Trustee
shall not have any duty or obligation to manage, make any
payment with respect to, register, record, sell, dispose
of, or otherwise deal with the Owner Trust Estate, or to
otherwise take or refrain from taking any action under,
or in connection with, any document contemplated hereby
to which the Owner Trustee or the Trust is a party,
except as expressly provided by the terms of this Agree-
ment or in any document or [written] instruction received
by the Owner Trustee pursuant to Section 6.3; and no
implied duties or obligations shall be read into this
Agreement or any other Basic Document against the Owner
Trustee. [The Owner Trustee shall have no responsibility
for filing any financing or continuation statement in any
public office at any time] or to otherwise perfect or
[maintain] the perfection of any security interest or
lien granted to it hereunder or to prepare or file any
Commission filing for the Trust or to record this Agree-
ment or any other Basic Document. The Owner Trustee
nevertheless agrees that it will, at its own cost and
expense, promptly take all action as may be necessary to
discharge any lien (other than the lien of the Indenture)
on any part of the Owner Trust Estate that results from
actions by, or claims against, the Owner Trustee that are
not related to the ownership or the administration of the
Owner Trust Estate.
SECTION 6.5. No Action Except Under Specified
Documents or Instructions. The Owner Trustee shall not
manage, control, use, sell, dispose of or otherwise deal
with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority
conferred upon the Owner Trustee pursuant to this Agree-
ment, (ii) in accordance with the other Basic Documents
to which the Trust or the Owner Trust is a party and
(iii) in accordance with any document or written instruc-
tion delivered to the Owner Trustee pursuant to Section
6.3.
SECTION 6.6. Restrictions. The Owner Trustee
shall not take any action (a) that is inconsistent with
the purposes of the Trust set forth in Section 2.3 or (b)
that, to the actual knowledge of the Owner Trustee, would
(i) affect the treatment of the Notes as indebtedness for
federal income or Applicable Tax State income or fran-
chise tax purposes, (ii) be deemed to cause a taxable
exchange of the Notes for federal income or Applicable
Tax State income or franchise tax purposes or (iii) cause
the Trust or any portion thereof to be taxable as an
association or publicly traded partnership taxable as a
corporation for federal income or Applicable Tax State
income or franchise tax purposes. The Certificateholders
shall have no authority to direct the Owner Trustee to
take action that would violate the provisions of this
Section 6.6.
End of Article VI
ARTICLE VII
REGARDING THE OWNER TRUSTEE
SECTION 7.1. Acceptance of Trusts and Duties.
The Owner Trustee accepts the trusts hereby created and
agrees to perform its duties hereunder with respect to
such trusts but only upon the terms of this Agreement.
The Owner Trustee also agrees to disburse all monies
actually received by it constituting part of the Owner
Trust Estate upon the terms of this Agreement and the
other Basic Documents to which the Trust or Owner Trustee
is a party.. The Owner Trustee shall not be answerable
or accountable hereunder or under any other Basic Docu-
ment under any circumstances, except (i) for its own
misconduct, bad faith or negligence or (ii) in the case
of the inaccuracy of any representation or warranty
contained in Section 7.3 . In particular, but not by way
of limitation (and subject to the exceptions set forth in
the preceding sentence):
(a) the Owner Trustee shall not be liable for
any error of judgment made by a responsible officer
of the Owner Trustee;
(b) the Owner Trustee shall not be liable with
respect to any action taken or omitted to be taken
by it in accordance with the instructions of any
Certificateholder, the Indenture Trustee, any Depos-
itor, the General Partner, the Administrator or the
Servicer;
(c) no provision of this Agreement or any
other Basic Document shall require the Owner Trustee
to expend or risk funds or otherwise incur any
financial liability in the performance of any of its
rights or powers hereunder or under any other Basic
Document if the Owner Trustee shall have reasonable
grounds for believing that repayment of such funds
or adequate indemnity against such risk or liability
is not reasonably assured or provided to it;
(d) under no circumstances shall the Owner
Trustee be liable for indebtedness evidenced by or
arising under any of the Basic Documents, including
the principal of and interest on the Notes or
amounts distributable on the Certificates;
(e) the Owner Trustee shall not be responsible
for or in respect of the validity or sufficiency of
this Agreement or for the due execution hereof by
any of the Depositors or for the form, character,
genuineness, sufficiency, value or validity of any
of the Owner Trust Estate or for or in respect of
the validity or sufficiency of the other Basic
Documents, other than the certificate of authentica-
tion on the Certificates, and the Owner Trustee
shall in no event assume or incur any liability,
duty, or obligation to any Noteholder or to any
Certificateholder, other than as expressly provided
for herein and in the other Basic Documents;
(f) the Owner Trustee shall not be liable for
the default or misconduct of the Servicer, the
Administrator, the Depositors or the Indenture
Trustee under any of the Basic Documents or other-
wise and the Owner Trustee shall have no obligation
or liability to perform the obligations of the Trust
under this Agreement or the other Basic Documents
that are required to be performed by the Administra-
tor under the Administration Agreement, the Servicer
under the Sale and Servicing Agreement or the Inden-
ture Trustee under the Indenture; and
(g) the Owner Trustee shall be under no obli-
gation to exercise any of the rights or powers
vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agree-
ment or otherwise or in relation to this Agreement
or any other Basic Document, at the request, order
or direction of any of the Certificateholders,
unless such Certificateholders have offered to the
Owner Trustee security or indemnity satisfactory to
it against the costs, expenses and liabilities that
may be incurred by the Owner Trustee therein or
thereby. The right of the Owner Trustee to perform
any discretionary act enumerated in this Agreement
or in any other Basic Document shall not be con-
strued as a duty, and the Owner Trustee shall not be
answerable for other than its misconduct, bad faith
or negligence in the performance of any such act.
SECTION 7.2. Furnishing of Documents. The
Owner Trustee shall furnish to the Certificateholders,
promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and any other
instruments furnished to the Owner Trustee under the
Basic Documents.
SECTION 7.3. Representations and Warranties.
The Owner Trustee hereby represents and warrants to the
Depositors, for the benefit of the Certificateholders,
that:
(a) It is a banking corporation duly organized
and validly existing in good standing under the laws
of the State of Delaware. It has all requisite
corporate power and authority to execute, deliver
and perform its obligations under this Agreement.
(b) It has taken all corporate action neces-
sary to authorize the execution and delivery by it
of this Agreement, and this Agreement will be exe-
cuted and delivered by one of its officers who is
duly authorized to execute and deliver this Agree-
ment on its behalf.
[(c) Neither the execution nor the delivery by
it of this Agreement, nor the consummation by it of
the transactions contemplated hereby nor compliance
by it with any of the terms or provisions hereof
will contravene any federal or Delaware state law,
governmental rule or regulation governing the bank-
ing or trust powers of the Owner Trustee or any
judgment or order binding on it, or constitute any
default under its charter documents or by-laws or
any indenture, mortgage, contract, agreement or
instrument to which it is a party or by which any of
its properties may be bound.]
SECTION 7.4. Reliance; Advice of Counsel. (a)
The Owner Trustee may rely upon, shall be protected in
relying upon, and shall incur no liability to anyone in
acting upon any signature, instrument, notice, resolu-
tion, request, consent, order, certificate, report,
opinion, bond, or other document or paper believed by it
in good faith to be genuine and believed by it in good
faith to be signed by the proper party or parties. The
Owner Trustee may accept a certified copy of a resolution
of the board of directors or other governing body of any
corporate party as conclusive evidence that such resolu-
tion has been duly adopted by such body and that the same
is in full force and effect. As to any fact or matter
the method of the determination of which is not specifi-
cally prescribed herein, the Owner Trustee may for all
purposes hereof rely on a certificate, signed by the
president or any vice president or by the treasurer or
other authorized officers of the relevant party, as to
such fact or matter and such certificate shall constitute
full protection to the Owner Trustee for any action taken
or omitted to be taken by it in good faith in reliance
thereon.
(b) In the exercise or administration of the
trusts hereunder and in the performance of its duties and
obligations under this Agreement or the other Basic
Documents, the Owner Trustee (i) may act directly or
through its agents or attorneys pursuant to agreements
entered into with any of them, and the Owner Trustee
shall not be liable for the conduct or misconduct of such
agents or attorneys if such agents or attorneys shall
have been selected by the Owner Trustee with reasonable
care, and (ii) may consult with counsel, accountants and
other skilled Persons to be selected with reasonable care
and employed by it. The Owner Trustee shall not be
liable for anything done, suffered or omitted in good
faith by it in accordance with the written opinion or
advice of any such counsel, accountants or other such
Persons and not contrary to this Agreement or any other
Basic Document.
SECTION 7.5. Not Acting in Individual Capaci-
ty. Except as provided in this Article VII, in accepting
the trusts hereby created, _______________ acts solely as
Owner Trustee hereunder and not in its individual capaci-
ty, and all Persons having any claim against the Owner
Trustee by reason of the transactions contemplated by
this Agreement or any other Basic Document shall look
only to the Owner Trust Estate for payment or satisfac-
tion thereof.
SECTION 7.6. Owner Trustee Not Liable for
Certificates or Receivables. The recitals contained
herein and in the Certificates (other than the signature
and countersignature of the Owner Trustee on the Certifi-
cates) shall be taken as the statements of the Deposi-
tors, and the Owner Trustee assumes no responsibility for
the correctness thereof. The Owner Trustee makes no
representations as to the validity or sufficiency of this
Agreement, of any other Basic Document or of the Certifi-
cates (other than the signature and countersignature of
the Owner Trustee on the Certificates) or the Notes
(other than the signature of the Owner Trustee thereon),
or of any Receivable or related documents. The Owner
Trustee shall at no time have any responsibility or
liability for or with respect to the legality, validity
and enforceability of any Receivable, or the perfection
and priority of any security interest created by any
Receivable in any Financed Vehicle or the maintenance of
any such perfection and priority, or for or with respect
to the sufficiency of the Owner Trust Estate or its
ability to generate the payments to be distributed to
Certificateholders under this Agreement or the
Noteholders under the Indenture, including, without
limitation: the existence, condition and ownership of
any Financed Vehicle; the existence and enforceability of
any insurance thereon; the existence and contents of any
Receivable on any computer or other record thereof; the
validity of the assignment of any Receivable to the Trust
or any intervening assignment; the completeness of any
Receivable; the performance or enforcement of any Receiv-
able; the compliance by the Depositors or the Servicer
with any warranty or representation made under any Basic
Document or in any related document, or the accuracy of
any such warranty or representation or any action of the
Indenture Trustee, the Administrator or the Servicer or
any subservicer taken in the name of the Owner Trustee.
SECTION 7.7. Owner Trustee May Own Certifi-
cates and Notes. The Owner Trustee, in its individual or
any other capacity, may become the owner or pledgee of
Certificates or Notes and may deal with any Depositor,
the Servicer, the Administrator and the Indenture Trustee
in banking transactions with the same rights as it would
have if it were not Owner Trustee.
End of Article VII
ARTICLE VIII
COMPENSATION AND INDEMNITY OF OWNER TRUSTEE
SECTION 8.1. Owner Trustee's Fees and Expens-
es. The Owner Trustee shall receive as compensation for
its services hereunder such fees as have been separately
agreed upon before the date hereof between the Depositors
and the Owner Trustee, and the Owner Trustee shall be
entitled to and reimbursed by the Depositors for its
other reasonable expenses hereunder, including the rea-
sonable compensation, expenses and disbursements of such
agents, representatives, experts and counsel as the Owner
Trustee may employ in connection with the exercise and
performance of its rights and its duties hereunder.
SECTION 8.2. Indemnification. The Depositors
shall indemnify the Owner Trustee and its successors,
assigns, agents and servants (collectively, the "Indemni-
fied Parties") from and against, any and all liabilities,
obligations, losses, damages, taxes, claims, actions and
suits, and any and all reasonable costs, expenses and
disbursements (including reasonable legal fees and ex-
penses) of any kind and nature whatsoever (collectively,
"Expenses") which may at any time be imposed on, incurred
by, or asserted against the Owner Trustee or any Indemni-
fied Party in any way relating to or arising out of this
Agreement, the other Basic Documents, the Owner Trust
Estate, the administration of the Owner Trust Estate or
the action or inaction of the Owner Trustee hereunder;
provided that the Depositors shall not be liable for or
required to indemnify an Indemnified Party from and
against Expenses arising or resulting from (i) the Indem-
nified Party's own misconduct, bad faith or negligence,
or (ii) the inaccuracy of any representation or warranty
contained in Section 7.3. The indemnities contained in
this Section 8.2 shall survive the resignation or termi-
nation of the Owner Trustee or the termination of this
Agreement. In the event of any claim, action or proceed-
ing for which indemnity will be sought pursuant to this
Section 8.2, the Owner Trustee's choice of legal counsel
shall be subject to the approval of the Depositors, which
approval shall not be unreasonably withheld. The Deposi-
tors shall not be obligated to indemnify the Indemnified
Parties for the legal fees and expenses of more than one
legal counsel. The Owner Trustee shall promptly satisfy
the Depositors of the commencement of any action in
connection with which indemnity hereunder may be sought.
SECTION 8.3. Payments to the Owner Trustee.
Any amounts paid to the Owner Trustee pursuant to this
Article VIII shall be deemed not to be a part of the
Owner Trust Estate immediately upon receipt of such
payment by the Owner Trustee.
End of Article VIII
ARTICLE IX
TERMINATION
SECTION 9.1. Termination of Trust Agreement.
(a) This Agreement (other than the provisions of Article
VIII) and the Trust shall terminate and be of no further
force or effect, (i) upon the payment to the Noteholders
and the Certificateholders of all amounts required to be
paid to them pursuant to the terms of the Indenture, the
Sale and Servicing Agreement and Article V or (ii) at the
time provided in Section 9.2. Any Insolvency Event,
liquidation, dissolution, death or incapacity with re-
spect to any Certificateholder, other than the General
Partner as described in Section 9.2, shall not (x) oper-
ate to terminate this Agreement or the Trust, nor (y)
entitle such Certificateholder's legal representatives or
heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of
all or any part of the Trust or Owner Trust Estate nor
(z) otherwise affect the rights, obligations and liabili-
ties of the parties hereto.
(b) Except as provided in Section 9.1(a), none
of the Depositors, the General Partner nor any Certifi-
cateholder shall be entitled to revoke or terminate the
Trust.
(c) Notice of any termination of the Trust,
specifying the Distribution Date upon which the Certifi-
cateholders shall surrender their Certificates to the
Certificate Paying Agent for payment of the final distri-
bution and cancellation, shall be given by the Owner
Trustee by letter to Certificateholders mailed within
five (5) Business Days of receipt of notice of such
termination from the Servicer, stating (i) the Distribu-
tion Date upon or with respect to which final payment of
the Certificates shall be made upon presentation and
surrender of the Certificates at the office of the Cer-
tificate Paying Agent therein designated, (ii) the amount
of any such final payment and (iii) that the Record Date
otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation
and surrender of the Certificates at the office of the
Certificate Paying Agent therein specified. The Owner
Trustee shall give such notice to the Certificate Regis-
trar (if other than the Owner Trustee) and the Certifi-
cate Paying Agent at the time such notice is given to
Certificateholders. Upon presentation and surrender of
the Certificates, the Certificate Paying Agent shall
cause to be distributed to Certificateholders amounts
distributable on such Distribution Date pursuant to
Section 5.2.
In the event that all of the Certificateholders
shall not surrender their Certificates for cancellation
within six (6) months after the date specified in the
above mentioned written notice, the Owner Trustee shall
give a second written notice to the remaining Certifi-
cateholders to surrender their Certificates for cancella-
tion and receive the final distribution with respect
thereto. If within one year after the second notice all
the Certificates shall not have been surrendered for
cancellation, the Owner Trustee may take appropriate
steps, or may appoint an agent to take appropriate steps,
to contact the remaining Certificateholders concerning
surrender of their Certificates and the cost thereof
shall be paid out of the funds and other assets that
shall remain subject to this Agreement. Subject to
applicable escheat laws, any funds remaining in the Trust
after exhaustion of such remedies shall be distributed by
the Owner Trustee to the Depositors.
(d) Upon final distribution of any funds
remaining in the Trust, the Owner Trustee shall cause the
Certificate of Trust to be cancelled by filing a certifi-
cate of cancellation with the Secretary of State in
accordance with the provisions of Section 3810(c) of the
Business Trust Statute.
SECTION 9.2. Dissolution upon Insolvency or
Dissolution of a Depositor or General Partner. Notwith-
standing the provisions of Section 3808 of the Business
Trust Statute, in the event that an Insolvency Event or a
dissolution shall occur with respect to [a Depositor] or
the General Partner, the Receivables, to the extent not
inconsistent with the Indenture, shall be sold and this
Agreement and the Trust shall be terminated in accordance
with Section 9.1 ninety (90) days after the date of such
Insolvency Event or dissolution, unless, before the end
of such 90-day period, the Owner Trustee shall have
received written instructions from (a) Certificateholders
(other than the Depositors, the Servicer or their Affili-
ates) of Certificates evidencing not less than a majority
of the Certificate Balance and a majority of the right to
receive distributions in respect of return on the Certif-
icate Balance, (b) the Noteholders (other than the Depos-
itors, the Servicer or their Affiliates) of Notes evi-
dencing not less than a majority of the principal amount
of the Notes Outstanding and a majority of the right to
receive interest on the Notes Outstanding, and (c) hold-
ers of other interests, if any (the existence of which
interests the Administrator will have advised the Owner
Trustee in writing), in the [Reserve Account] (other than
the Depositors, the Servicer or their Affiliates) having
interests with a value not less than a majority of the
value of all interests in the [Reserve Account], to the
effect that each such party disapproves of the liquida-
tion of the Receivables and termination of the Trust and
in connection therewith the Indenture Trustee (i) ap-
points an entity acceptable to NationsBank Corporation to
acquire an interest in the Trust and to act as substitute
"general partner" of the Trust for federal income tax
purposes and (ii) obtains an Opinion of Counsel that the
Trust will not thereafter be classified as an association
(or publicly traded partnership) taxable as a corporation
for federal income tax and Applicable Tax State purposes.
Promptly after the occurrence of any Insolvency Event or
dissolution with respect to [a Depositor or] the General
Partner, (A) such [Depositor][General Partner] shall give
the Indenture Trustee and the Owner Trustee written
notice of such Insolvency Event, (B) the Owner Trustee
shall, upon the receipt of such written notice from [such
Depositor][NB-SPC], give prompt written notice to the
Certificateholders, holders of interests, if any, in the
[Reserve Account] and the Indenture Trustee, of the
occurrence of such event, (C) the Indenture Trustee
shall, upon receipt of written notice of such Insolvency
Event or dissolution from the Owner Trustee or [a Deposi-
tor][NB-SPC], give prompt written notice to the
Noteholders of the occurrence of such event, and (D) the
Owner Trustee shall, upon receipt of written instructions
from the applicable percentages of Noteholders, Certifi-
cateholders and holders of interests, if any, in the
[Reserve Account] disapproving of liquidation and termi-
nation, give prompt written notice thereof to the Inden-
ture Trustee; provided, however, that any failure to give
a notice required by this sentence shall not prevent or
delay, in any manner, a termination of the Trust pursuant
to the first sentence of this Section 9.2. Upon a termi-
nation pursuant to this Section 9.2, the Owner Trustee
shall direct the Indenture Trustee promptly to sell the
assets of the Trust (other than the Trust Accounts, [the
Reserve Account, the Yield Supplement Account] and the
Certificate Distribution Account) in a commercially
reasonable manner and on commercially reasonable terms.
The proceeds of such a sale of the assets of the Trust
shall be treated as collections of Receivables under the
Sale and Servicing Agreement and deposited in the Collec-
tion Account and the Notes and Certificates shall be paid
in accordance with Section 4.6 of the Sale and Servicing
Agreement.
SECTION 9.3. Redemption of Certificates. (a)
The Certificates shall be redeemed in whole, but not in
part, without premium or penalty, at the direction of the
Servicer pursuant to Section 9.1(a) of the Sale and
Servicing Agreement, on any Distribution Date on which
the Servicer exercises its option to purchase the assets
of the Trust pursuant to said Section 9.1(a), and the
amount paid by the Servicer shall be treated as collec-
tions of Receivables and applied to pay the unpaid prin-
cipal amount of the Notes and the Certificates plus
accrued and unpaid interest thereon. The Servicer shall
furnish the Rating Agencies and the Certificateholders
notice of such redemption. If the Certificates are to be
redeemed pursuant to this Section 9.3(a), the Servicer
shall furnish notice of such election to the Owner Trust-
ee not later than twenty (20) days prior to the Redemp-
tion Date and the Trust shall deposit by 10:00 A.M. (New
York City time) on the Redemption Date in the Certificate
Distribution Account the Redemption Price of the Certifi-
cates to be redeemed, whereupon all such Certificates
shall be due and payable on the Redemption Date.
(b) Notice of redemption under Section 9.3(a)
shall be given by the Owner Trustee by first-class mail,
postage prepaid, or by facsimile mailed or transmitted
immediately following receipt of notice from the Trust or
Servicer pursuant to Section 9.3(a), but not later than
ten (10) days prior to the applicable Redemption Date, to
each Certificateholder as of the close of business on the
Record Date preceding the applicable Redemption Date, at
such Certificateholder s address or facsimile number
appearing in the Certificate Register.
All notices of Redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where such Certificates
are to be surrendered for payment of the
Redemption Price (which shall be the office
or agency of the Owner Trustee to be main-
tained as provided in Section 3.8).
Notice of redemption of the Certificates shall be given
by the Owner Trustee in the name and at the expense of
the Trust. Failure to give notice of redemption, or any
defect therein, to any Certificateholder shall not impair
or affect the validity of the redemption of any other
Certificate.
(c) Following notice of redemption as required
by Section 9.3(b), the Certificates shall on the Redemp-
tion Date be paid by the Trust at the Redemption Price
and (unless the Trust shall default in the payment of the
Redemption Price) no interest shall accrue on the Redemp-
tion Price for any period after the date to which accrued
interest is calculated for purposes of calculating the
Redemption Price. Following payment in full of the
Redemption Price, this Agreement and the Trust shall
terminate.
End of Article IX
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1. Eligibility Requirements for
Owner Trustee. The Owner Trustee shall at all times (i)
be a corporation satisfying the provisions of Section
3807(a) of the Business Trust Statute; (ii) be authorized
to exercise corporate trust powers; (iii) have a combined
capital and surplus of at least $50,000,000 and shall be
subject to supervision or examination by federal or state
authorities; and (iv) shall have (or shall have a parent
that has) a long-term debt rating of investment grade by
each of the Rating Agencies or be otherwise acceptable to
the Rating Agencies. If such corporation shall publish
reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or
examining authority, then for the purpose of this Section
10.1, the combined capital and surplus of such corpora-
tion shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condi-
tion so published. In case at any time the Owner Trustee
shall cease to be eligible in accordance with the provi-
sions of this Section 10.1, the Owner Trustee shall
resign immediately in the manner and with the effect
specified in Section 10.2.
SECTION 10.2. Resignation or Removal of Owner
Trustee. The Owner Trustee may at any time resign and be
discharged from the trusts hereby created by giving
written notice thereof to the Administrator. Upon re-
ceiving such notice of resignation, the Administrator
shall promptly appoint a successor Owner Trustee by
written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner
Trustee and one copy to the successor Owner Trustee. If
no successor Owner Trustee shall have been so appointed
and have accepted appointment within thirty (30) days
after the giving of such notice of resignation, the
resigning Owner Trustee may petition any court of compe-
tent jurisdiction for the appointment of a successor
Owner Trustee; provided, however, that such right to
appoint or to petition for the appointment of any such
successor shall in no event relieve the resigning Owner
Trustee from any obligations otherwise imposed on it
under the Basic Documents until such successor has in
fact assumed such appointment.
If at any time the Owner Trustee shall cease to
be eligible in accordance with the provisions of Section
10.1 and shall fail to resign after written request
therefor by the Administrator, or if at any time the
Owner Trustee shall be legally unable to act, or if at
any time an Insolvency Event with respect to the Owner
Trustee shall have occurred and be continuing, then the
Administrator may remove the Owner Trustee. If the
Administrator shall remove the Owner Trustee under the
authority of the immediately preceding sentence, the
Administrator shall promptly appoint a successor Owner
Trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the outgoing Owner
Trustee so removed and one copy to the successor Owner
Trustee, and shall pay all fees owed to the outgoing
Owner Trustee.
Any resignation or removal of the Owner Trustee
and appointment of a successor Owner Trustee pursuant to
any of the provisions of this Section 10.2 shall not
become effective until acceptance of appointment by the
successor Owner Trustee pursuant to Section 10.3, payment
of all fees and expenses owed to the outgoing Owner
Trustee and the filing of a certificate of amendment to
the Certificate of Trust if required by the Business
Trust Statute. The Administrator shall provide notice of
such resignation or removal of the Owner Trustee to the
Certificateholders, the Indenture Trustee, the
Noteholders and each of the Rating Agencies.
SECTION 10.3. Successor Owner Trustee. Any
successor Owner Trustee appointed pursuant to Section
10.2 shall execute, acknowledge and deliver to the Admin-
istrator and to its predecessor Owner Trustee an instru-
ment accepting such appointment under this Agreement.
Upon the resignation or removal of the predecessor Owner
Trustee becoming effective pursuant to Section 10.2, such
successor Owner Trustee, without any further act, deed or
conveyance, shall become fully vested with all the
rights, powers, duties, and obligations of its predeces-
sor under this Agreement, with like effect as if origi-
nally named as Owner Trustee. The predecessor Owner
Trustee shall, upon payment by the Depositors of the
Owner Trustee's accrued fees and expenses, deliver to the
successor Owner Trustee all documents and statements and
monies held by it under this Agreement, and the Adminis-
trator and the predecessor Owner Trustee shall execute
and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vest-
ing and confirming in the successor Owner Trustee all
such rights, powers, duties, and obligations.
No successor Owner Trustee shall accept ap-
pointment as provided in this Section 10.3 unless, at the
time of such acceptance, such successor Owner Trustee
shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor
Owner Trustee pursuant to this Section 10.3, the Adminis-
trator shall mail notice of the successor of such Owner
Trustee to all Certificateholders, the Indenture Trustee,
the Noteholders and the Rating Agencies. If the Adminis-
trator shall fail to mail such notice within ten (10)
days after acceptance of appointment by the successor
Owner Trustee, the successor Owner Trustee shall cause
such notice to be mailed at the expense of the Adminis-
trator.
SECTION 10.4. Merger or Consolidation of Owner
Trustee. Any corporation into which the Owner Trustee
may be merged or converted or with which it may be con-
solidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee
shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the
Owner Trustee, shall, without the execution or filing of
any instrument or any further act on the part of any of
the parties hereto, anything herein to the contrary
notwithstanding, be the successor of the Owner Trustee
hereunder; provided that such corporation shall be eligi-
ble pursuant to Section 10.1; and provided further, that
the Owner Trustee shall mail notice of such merger or
consolidation to the Rating Agencies not less than fif-
teen (15) days prior to the effective date thereof.
SECTION 10.5. Appointment of Co-Trustee or
Separate Trustee. Notwithstanding any other provisions
of this Agreement, at any time, for the purpose of meet-
ing any legal requirements of any jurisdiction in which
any part of the Owner Trust Estate or any Financed Vehi-
cle may at the time be located, the Administrator and the
Owner Trustee acting jointly shall have the power and
shall execute and deliver all instruments to appoint one
or more Persons approved by the Owner Trustee to act as
co-trustee, jointly with the Owner Trustee, or separate
trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person, in such capacity, such
title to the Owner Trust Estate, or any part thereof,
and, subject to the other provisions of this Section
10.5, such powers, duties, obligations, rights and trusts
as the Administrator and the Owner Trustee may consider
necessary or desirable. If the Administrator shall not
have joined in such appointment within fifteen (15) days
after the receipt by it of a request so to do, the Owner
Trustee alone shall have the power to make such appoint-
ment. No co-trustee or separate trustee under this
Agreement shall be required to meet the terms of eligi-
bility as a successor trustee pursuant to Section 10.1
and no notice of the appointment of any co-trustee or
separate trustee shall be required pursuant to Section
10.3.
Each separate trustee and co-trustee shall, to
the extent permitted by law, be appointed and act subject
to the following provisions and conditions:
(i) all rights, powers, duties, and obliga-
tions conferred or imposed upon the Owner Trustee
shall be conferred upon and exercised or performed
by the Owner Trustee and such separate trustee or
co-trustee jointly (it being understood that such
separate trustee or co-trustee is not authorized to
act separately without the Owner Trustee joining in
such act), except to the extent that under any law
of any jurisdiction in which any particular act or
acts are to be performed, the Owner Trustee shall be
incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties,
and obligations (including the holding of title to
the Trust or any portion thereof in any such juris-
diction) shall be exercised and performed singly by
such separate trustee or co-trustee, but solely at
the direction of the Owner Trustee;
(ii) no trustee under this Agreement shall be
personally liable by reason of any act or omission
of any other trustee under this Agreement; and
(iii) the Administrator and the Owner Trustee
acting jointly may at any time accept the resigna-
tion of or remove any separate trustee or co-trust-
ee.
Any notice, request or other writing given to
the Owner Trustee shall be deemed to have been given to
each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instru-
ment appointing any separate trustee or co-trustee shall
refer to this Agreement and the conditions of this Arti-
cle X. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of
appointment, either jointly with the Owner Trustee or
separately, as may be provided therein, subject to all
the provisions of this Agreement, specifically including
every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection
to, the Owner Trustee. Each such instrument shall be
filed with the Owner Trustee and a copy thereof given to
the Administrator.
Any separate trustee or co-trustee may at any
time appoint the Owner Trustee as its agent or attorney-
in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name.
If any separate trustee or co-trustee shall die, become
incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Owner Trustee, to the
extent permitted by law, without the appointment of a new
or successor trustee.
End of Article X
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Supplements and Amendments. (a)
This Agreement may be amended by the Depositors and the
Owner Trustee, with prior written notice to the Rating
Agencies, without the consent of any of the Noteholders
or the Certificateholders, to cure any ambiguity, to
correct or supplement any provisions in this Agreement
inconsistent with any other provision of this Agreement
or for the purpose of adding any provisions to or chang-
ing in any manner or eliminating any of the provisions in
this Agreement; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel satisfactory
to the Owner Trustee and the Indenture Trustee adversely
affect in any material respect the interests of any
Noteholder or Certificateholder; and provided further
that an Opinion of Counsel shall be furnished to the
Indenture Trustee and the Owner Trustee to the effect
that such amendment (A) will not materially adversely
affect the federal or any Applicable Tax State income or
franchise taxation of any outstanding Note or Certifi-
cate, or any Noteholder or Certificateholder and (B) will
not cause the Trust to be taxable as a corporation for
federal or any Applicable Tax State income or franchise
tax purposes.
(b) This Agreement may also be amended from
time to time by the Depositors and the Owner Trustee,
with prior written notice to the Rating Agencies, with
the consent of (i) the Noteholders of Notes evidencing
not less than a majority of the principal amount of the
Notes Outstanding and (ii) the Certificateholders of
Certificates evidencing not less than a majority of the
Certificate Balance, for the purpose of adding any provi-
sions to or changing in any manner or eliminating any of
the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificate-
holders; provided, however, that no such amendment shall
(i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, or change the alloca-
tion or priority of, collections of payments on Receiv-
ables or distributions that are required to be made for
the benefit of the Noteholders or the Certificateholders,
or (ii) reduce the aforesaid percentage of the principal
amount of the Notes Outstanding and the Certificate
Balance required to consent to any such amendment, with-
out the consent of all the Noteholders and Certificate-
holders affected thereby; and provided further, that an
Opinion of Counsel shall be furnished to the Indenture
Trustee and the Owner Trustee to the effect that such
amendment (A) will not materially adversely affect the
federal or any Applicable Tax State income or franchise
taxation of any outstanding Note or Certificate, or any
Noteholder or Certificateholder and (B) will not cause
the Trust to be taxable as a corporation for federal or
any Applicable Tax State income or franchise tax purpos-
es.
(c) Promptly after the execution of any such
amendment or consent, the Owner Trustee shall furnish
written notification of the substance of such amendment
or consent to each Certificateholder, the Indenture
Trustee and each of the Rating Agencies.
(d) It shall not be necessary for the consent
of Certificateholders, the Noteholders or the Indenture
Trustee pursuant to this Section 11.1 to approve the
particular form of any proposed amendment or consent, but
it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents
(and any other consents of Certificateholders provided
for in this Agreement or in any other Basic Document) and
of evidencing the authorization of the execution thereof
by Certificateholders shall be subject to such reasonable
requirements as the Owner Trustee may prescribe.
(e) Promptly after the execution of any amend-
ment to the Certificate of Trust, the Owner Trustee shall
cause the filing of such amendment with the Secretary of
State.
(f) Prior to the execution of any amendment to
this Agreement or the Certificate of Trust, the Owner
Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement.
The Owner Trustee may, but shall not be obligated to,
enter into any such amendment which affects the Owner
Trustee's own rights, duties or immunities under this
Agreement or otherwise.
(g) In connection with the execution of any
amendment to this Agreement or any amendment to any other
agreement to which the Trust is a party, the Owner Trust-
ee shall be entitled to receive and conclusively rely
upon an Opinion of Counsel to the effect that such amend-
ment is authorized or permitted by the Basic Documents
and that all conditions precedent in the Basic Documents
for the execution and delivery thereof by the Trust or
the Owner Trustee, as the case may be, have been satis-
fied.
SECTION 11.2. No Legal Title to Owner Trust
Estate in Certificateholders. The Certificateholders
shall not have legal title to any part of the Owner Trust
Estate. The Certificateholders shall be entitled to
receive distributions with respect to their beneficial
interests therein only in accordance with Articles V and
IX. No transfer, by operation of law or otherwise, of
any right, title, or interest of the Certificateholders
to and in their beneficial interest in the Owner Trust
Estate shall operate to terminate this Agreement or the
trusts hereunder or entitle any transferee to an account-
ing or to the transfer to it of legal title to any part
of the Owner Trust Estate.
SECTION 11.3. Limitation on Rights of Others.
Except for Section 2.7, the provisions of this Agreement
are solely for the benefit of the Owner Trustee, the
General Partner, the Depositors, the Administrator, the
Certificateholders, the Servicer and, to the extent
expressly provided herein, the Indenture Trustee and the
Noteholders, and nothing in this Agreement (other than
Section 2.7), whether express or implied, shall be con-
strued to give to any other Person any legal or equitable
right, remedy or claim in the Owner Trust Estate or under
or in respect of this Agreement or any covenants, condi-
tions or provisions contained herein.
SECTION 11.4. Notices. (a) Unless otherwise
expressly specified or permitted by the terms hereof, all
notices shall be in writing and shall be deemed given
upon receipt by the intended recipient or three Business
Days after mailing if mailed by certified mail, postage
prepaid (except that notice to the Owner Trustee shall be
deemed given only upon actual receipt by the Owner Trust-
ee), if to the Owner Trustee, addressed to the Corporate
Trust Office; if to a Depositor, addressed to
[NationsBank, N.A., on behalf of the Depositors to the
NationsBank Auto Owner Trust 19_-_, NationsBank Corporate
Plaza, 100 North Tryon Street, NC1-007-20-01, Charlotte,
North Carolina 28255, Attention: Robert W. Long, Jr.,
Esq.; or, as to each party, at such other address as
shall be designated by such party in a written notice to
each other party.
(b) Any notice required or permitted to be
given to a Certificateholder shall be given by first-
class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate Register.
Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives
such notice.
SECTION 11.5. Severability. Any provision of
this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffec-
tive to the extent of such prohibition or
unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other
jurisdiction.
SECTION 11.6. Separate Counterparts. This
Agreement may be executed by the parties hereto in sepa-
rate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts
shall together constitute but one and the same instru-
ment.
SECTION 11.7. Successors and Assigns. All
covenants and agreements contained herein shall be bind-
ing upon, and inure to the benefit of, the Depositors,
the General Partner, the Owner Trustee and its successors
and each Certificateholder and its successors and permit-
ted assigns, all as herein provided. Any request, no-
tice, direction, consent, waiver or other instrument or
action by a Certificateholder shall bind the successors
and assigns of such Certificateholder.
SECTION 11.8. No Petition. The Owner Trustee
(not in its individual capacity but solely as Owner
Trustee), by entering into this Agreement, and each
Certificateholder or Certificate Owner, by accepting a
Certificate or, in the case of a Certificate Owner, a
beneficial interest in a Certificate, hereby covenant and
agree that they will not, until after the Notes have been
paid in full, institute against the General Partner or
the Trust, or join in any institution against the General
Partner or the Trust of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or
other proceedings under any United States federal or
state bankruptcy or similar law in connection with any
obligations relating to the Certificates, the Notes, this
Agreement or any of the other Basic Documents.
SECTION 11.9. No Recourse. Each Certificate-
holder or Certificate Owner, by accepting a Certificate
or, in the case of a Certificate Owner, a beneficial
interest in a Certificate, acknowledges that such
Certificateholder's Certificates or such Certificate
Owner's beneficial interest in a Certificate represent
beneficial interests in the Trust only and do not repre-
sent interests in or obligations of the Depositors, the
General Partner, the Servicer, the Administrator, the
Owner Trustee, the Indenture Trustee or any Affiliate
thereof, and no recourse may be had against such parties
or their assets, except as may be expressly set forth or
contemplated in this Agreement, the Certificates or the
other Basic Documents.
SECTION 11.10. Headings. The headings of the
various Articles and Sections herein are for convenience
of reference only and shall not define or limit any of
the terms or provisions hereof.
SECTION 11.11. Governing Law. This Agreement
shall be construed in accordance with the laws of the
State of Delaware and the obligations, rights and reme-
dies of the parties hereunder shall be determined in
accordance with such laws.
SECTION 11.12. Maintenance of Net Worth. The
General Partner shall maintain partnership assets net of
partnership liabilities, exclusive of its partnership
interest or interests in the Trust (or any similar enti-
ty), at least equal to ___________________________.
End of Article XI
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed by their re-
spective officers hereunto duly authorized, as of the day
and year first above written.
NATIONSBANK, N.A.,
as Depositor
By:_______________________
Name:
Title:
NATIONSBANK, N.A. (SOUTH),
as Depositor
By:_______________________
Name:
Title:
NATIONSBANK OF TEXAS, N.A.,
as Depositor
By:_______________________
Name:
Title:
[NB-SPC],
as General Partner
By:_______________________
Name:
Title:
______________________________,
not in its individual capacity
but solely as Owner Trustee
By:______________________
Name:
Title:
EXHIBIT A
[FORM OF CERTIFICATE]
NUMBER $
R-_____ CUSIP NO.
[CERTIFICATE ISSUED TO CEDE CO.: UNLESS THIS CERTIFICATE
IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOS-
ITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO
THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGIS-
TERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER,PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
[CERTIFICATE ISSUED TO [EACH] DEPOSITOR [AND TO THE GENER-
AL PARTNER]: THIS CERTIFICATE IS NOT TRANSFERABLE AND ANY
ATTEMPTED TRANSFER OF THIS CERTIFICATE SHALL BE NULL AND
VOID.]
THE PRINCIPAL OF THIS CERTIFICATE IS DISTRIBUTABLE AS SET
FORTH IN THE TRUST AGREEMENT. ACCORDINGLY, THE OUTSTAND-
ING PRINCIPAL OF THIS CERTIFICATE AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
NATIONSBANK AUTO OWNER TRUST -
% ASSET BACKED CERTIFICATE
evidencing a beneficial interest in the property of the
Trust, as defined below, which property includes a pool of
retail motor vehicle installment sales contracts, secured
by security interests in the motor vehicles financed
thereby, acquired by each of NationsBank, N.A.,
NationsBank, N.A. (South) and NationsBank of Texas, N.A.
(each a "Depositor") and collectively, the "Depositors")
and sold by the Depositors to the Trust. The property of
the Trust (other than the Certificate Distribution Account
and the proceeds thereof) has been pledged to the Inden-
ture Trustee pursuant to the Indenture to secure the
payment of the Notes issued thereunder.
(This Certificate does not represent an interest in or
obligation of NationsBank Corporation, [NB-SPC], any of
the Depositors or any of their respective Affiliates,
except to the extent described below.)
THIS CERTIFIES THAT CEDE & CO. is the registered
owner of DOLLARS nonassessable, fully-paid,
beneficial interest in Certificates of NationsBank Auto
Owner Trust - (the "Trust") formed by NationsBank,
N.A., NationsBank, N.A. (South) and NationsBank of Texas,
N.A., each a national banking association (each a "Deposi-
tor" and collectively, the "Depositors"). The Certifi-
cates have an aggregate Initial Certificate Balance of $
and bear interest at a rate of % per annum
(the "Certificate Rate").
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the
within-mentioned Trust Agreement.
Dated:
,
as Owner Trustee or as Owner Trustee
By:______________________ By: , as
Authorized Officer Authenticating Agent
By:_______________________
Authorized Officer
The Trust was created pursuant to an Amended and
Restated Trust Agreement, dated as of ,
(as from time to time amended, supplemented or otherwise
modified and in effect, the "Trust Agreement"), by and
among the Depositors, [NB-SPC] and , as
owner trustee (the "Owner Trustee"), a summary of certain
of the pertinent provisions of which is set forth below.
To the extent not otherwise defined herein, the capital-
ized terms used herein have the meanings assigned to them
in the Trust Agreement.
This Certificate is one of the duly authorized
Certificates designated as " % Asset Backed Certifi-
cates" (herein called the "Certificates"). Issued under
the Indenture, dated as of , (as from
time to time amended, supplemented or otherwise modified
and in effect, the "Indenture"), between the Trust and
, as indenture trustee (in such capacity,
the "Indenture Trustee"), are the Notes designated as
% Class A-1 Asset Backed Notes [and the ______% Class A-2
Asset Backed Notes] [and the % Class A-3 Asset Backed
Notes (collectively, the "Notes"). This Certificate is
issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agree-
ment the Certificateholder of this Certificate by virtue
of the acceptance hereof assents and by which such Certif-
icateholder is bound. The property of the Trust includes
[a pool of fixed rate simple interest retail motor vehicle
installment sales contracts purchased by the Sellers from
motor vehicle dealers (the "Dealers") that provide for the
allocation of payments between principal and interest
according to the simple interest method (collectively, the
"Receivables"), all monies received under the [Initial]
Receivables after the close of business of the Servicer on
, 1996 (the "[Initial] Cut-Off Date") [and all
monies received under the Subsequent Receivables after the
close of business of the Servicer on each applicable
Subsequent Transfer Date] and will also include: (i) such
amounts as from time to time are on deposit in one or more
accounts maintained pursuant to the Sale and Servicing
Agreement to be dated as of , 199 (as amended
and supplemented from time to time, the "Sale and Servic-
ing Agreement"), among the Trust, the Sellers and the
Servicer [and the Collateral Agent], as described herein[,
including the Yield Supplement Account][and the Pre-Fund-
ing Account]; (ii) security interests in the new and used
automobiles, vans and light-duty trucks financed thereby
(collectively, the "Financed Vehicles") and any accessions
thereto; (iii) the Sellers' rights (if any) to receive
proceeds from claims under certain insurance policies
covering the Financed Vehicles or the obligors under the
Receivables (each, an "Obligor"), as the case may be; (iv)
certain rights of the Trust to receive payments from the
Reserve Account [and pursuant to the Yield Supplement
Agreement] as described below; (v) any property that shall
have secured a Receivable and shall have been acquired by
the Trust; (vi) each Seller's rights relating to the
repurchase of Receivables under agreements between each
Seller and the Dealers that sold the Financed Vehicles to
the Obligors and any assignments and other documents
related thereto (collectively, the "Dealer Agreements")
and under the documents and instruments contained in the
Receivable Files; (vii) certain rebates of premiums and
other amounts relating to certain insurance policies and
other items financed under the Receivables; (viii) the
rights of the Trust under the Sale and Servicing Agree-
ment; and (ix) any and all proceeds of the foregoing.][
The Reserve Account [and the Yield Supplement Account,]
and any amounts therein, will not be property of the
Trust, but will be pledged to and held by ________ acting
in its capacity as property-holding agent for the benefit
of the Certificateholders (the "Collateral Agent").] THE
RIGHTS OF THE OWNER TRUSTEE IN THE FOREGOING PROPERTY OF
THE TRUST (OTHER THAN THE CERTIFICATE DISTRIBUTION ACCOUNT
AND THE PROCEEDS THEREOF) HAVE BEEN PLEDGED TO THE INDEN-
TURE TRUSTEE TO SECURE THE PAYMENT OF THE NOTES.
Under the Trust Agreement, there will be dis-
tributed on the day of each month or, if
such _______________ day is not a Business Day, the next
Business Day (each, a "Distribution Date"), commencing
, , to the Person in whose name this Certifi-
cate is registered at the close of business on the day
prior to such Distribution Date or, if Definitive Certifi-
cates have been issued pursuant to Section 3.13 of the
Trust Agreement, the day of the preceding month (the
"Record Date") such Certificateholder's percentage inter-
est in the amount to be distributed to Certificateholders
on such Distribution Date; provided, however, that princi-
pal will be distributed to the Certificateholders on each
Distribution Date on (to the extent of funds remaining
after all classes of the Notes have been paid in full) and
after the date on which all classes of the Notes have been
paid in full. Notwithstanding the foregoing, following
the occurrence and during the continuation of an event of
default under the Indenture which has resulted in an
acceleration of the Notes or following certain events of
insolvency or a dissolution with respect to [any of the
Depositors or] the General Partner, no distributions of
principal or interest will be made on the Certificates
until all the Notes have been paid in full.
THE HOLDER OF THIS CERTIFICATE ACKNOWLEDGES AND
AGREES THAT ITS RIGHTS TO RECEIVE DISTRIBUTIONS IN RESPECT
OF THIS CERTIFICATE ARE SUBORDINATED TO THE RIGHTS OF THE
NOTEHOLDERS AS DESCRIBED IN THE SALE AND SERVICING AGREE-
MENT, THE INDENTURE AND THE TRUST AGREEMENT.
It is the intent of the Depositors, the General
Partner, the Servicer, the Certificateholders and the
Certificate Owners that, for purposes of federal income,
state and local income tax and any other income taxes, the
Trust will be treated as a partnership and the Certifi-
cateholders [(including the Depositors)] will be treated
as partners in that partnership. The General Partner and
the other Certificateholders by acceptance of a Certifi-
cate (and the Certificate Owners by acceptance of a bene-
ficial interest in a Certificate), agree to treat, and to
take no action inconsistent with the treatment of, the
Certificates for such tax purposes as partnership inter-
ests in the Trust.
Each Certificateholder or Certificate Owner, by
its acceptance of a Certificate or, in the case of a
Certificate Owner, a beneficial interest in a Certificate,
covenants and agrees that such Certificateholder or Cer-
tificate Owner will not at any time institute against the
General Partner or the Trust, or join in any institution
against the General Partner or the Trust of, any bankrupt-
cy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States
federal or state bankruptcy or similar law in connection
with any obligations relating to the Notes, the Certifi-
cates, the Trust Agreement or any of the other Basic
Documents.
Distributions on this Certificate will be made
as provided in the Trust Agreement by the Owner Trustee or
the Certificate Paying Agent by wire transfer or check
mailed to the Certificateholder of record in the Certifi-
cate Register without the presentation or surrender of
this Certificate or the making of any notation hereon.
Except as otherwise provided in the Trust Agreement and
notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Owner
Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the
office or agency maintained for the purpose by the Owner
Trustee in The Borough of Manhattan, The City of New York.
Reference is hereby made to the further provi-
sions of this Certificate set forth on the reverse hereof,
which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon
shall have been executed by an authorized officer of the
Owner Trustee, by manual signature, this Certificate shall
not entitle the Certificateholder hereof to any benefit
under the Trust Agreement or the Sale and Servicing Agree-
ment or be valid for any purpose.
This Certificate shall be construed in accor-
dance with the laws of the State of Delaware and the
obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
In WITNESS WHEREOF, the Owner Trustee, on behalf
of the Trust and not in its individual capacity, has
caused this Certificate to be duly executed.
NATIONSBANK AUTO OWNER
TRUST -
By: ,
not in its individual capacity
but solely as Owner Trustee
By:
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This Certificate is one of the certificates
issued pursuant to the above mentioned Trust Agreement.
By: ,
not in its individual capacity but solely as Owner
Trustee
By:
Authorized Officer
[REVERSE OF CERTIFICATE]
The Certificates do not represent an obligation
of, or an interest in, the Depositors, the General Part-
ner, the Servicer, the Administrator, the Owner Trustee or
any Affiliates of any of them and no recourse may be had
against such parties or their assets, except as may be
expressly set forth or contemplated herein, in the Trust
Agreement or in the other Basic Documents. In addition,
this Certificate is not guaranteed by any governmental
agency or instrumentality and is limited in right of
payment to certain collections with respect to the Receiv-
ables (and certain other amounts), all as more specifical-
ly set forth herein and in the Sale and Servicing Agree-
ment. A registration statement, which includes a form of
the Trust Agreement as an exhibit thereto, has been filed
with the Securities and Exchange Commission with respect
to the Notes and the Certificates.
The Trust Agreement permits, with certain excep-
tions therein provided, the amendment thereof and the
modification of the rights and obligations of the Deposi-
tors and the rights of the Certificateholders under the
Trust Agreement at any time by the Depositors and the
Owner Trustee with the consent of the Noteholders and the
Certificateholders evidencing not less than a majority of
the principal amount of the Notes Outstanding and the
Certificate Balance, respectively. Any such consent by
the Certificateholder of this Certificate shall be conclu-
sive and binding on such Certificateholder and on all
future Certificateholders of this Certificate and of any
Certificate issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or
not notation of such consent is made upon this Certifi-
cate. The Trust Agreement also permits the amendment
thereof, in certain limited circumstances, without the
consent of any of the Certificateholders.
[CERTIFICATE ISSUED TO CEDE & CO: As provided
in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of the Certificates are
registerable in the Certificate Register upon surrender of
this Certificate for registration of transfer at the
offices or agencies maintained by __________ in its capac-
ity as Certificate Registrar, or by any successor Certifi-
cate Registrar, in The Borough of Manhattan, The City of
New York, accompanied by a written instrument of transfer
in form satisfactory to the Owner Trustee and the Certifi-
cate Registrar duly executed by the holder hereof or such
holder's attorney duly authorized in writing, and thereup-
on one or more new Certificates of authorized denomina-
tions evidencing the same aggregate interest in the Trust
will be issued to the designated transferee.
Except for Certificates issued to the General
Partner [and to the Depositors], the Certificates are
issuable as registered Certificates without coupons in
denominations of at least $1,000 and in integral multiples
of $1,000 in excess thereof. Certificates are exchange-
able for new Certificates of authorized denominations
evidencing the same aggregate denomination, as requested
by the Certificateholder surrendering the same. No ser-
vice charge will be made for any such registration of
transfer or exchange, but the Owner Trustee or the Certif-
icate Registrar may require payment of a sum sufficient to
cover any tax or governmental charge payable in connection
therewith.]
[CERTIFICATE ISSUED TO THE GENERAL PARTNER [AND
TO THE DEPOSITORS]: As provided in the Trust Agreement,
the transfer of this Certificate is prohibited.]
The Owner Trustee, the Certificate Registrar and
any agent of the Owner Trustee or the Certificate Regis-
trar may treat the Person in whose name this Certificate
is registered as the owner hereof for all purposes, and
none of the Owner Trustee, the Certificate Registrar or
any such agent shall be affected by any notice to the
contrary.
The Certificate (including any beneficial inter-
ests therein) may not be acquired by or for the account of
(i) an employee benefit plan (as defined in Section 3(3)
of ERISA) that is subject to the provisions of Title I of
ERISA, (ii) a plan described in section 4975(e)(1)j of the
Internal Revenue Code of 1986, as amended (the "Code"),
including an individual retirement account described in
Section 408(a) of the Code or a Keogh plan or (iii) any
entity whose underlying assets include plan assets by
reason of a plan's investment in the entity (each, a
"Benefit Plan"). By accepting and holding this Certifi-
cate or any beneficial interest herein, the Certificate-
holder hereof (or the Certificate Owner of any beneficial
interest hereof) shall be deemed to have represented and
warranted that it is not a Benefit Plan.
The obligations and responsibilities created by
the Trust Agreement and the Trust created thereby shall
terminate upon the payment to the Noteholders and the
Certificateholders of all amounts required to be paid to
them pursuant to the Indenture, the Trust Agreement and
the Sale and Servicing Agreement and any remaining assets
of the Trust shall be distributed to the Depositors. The
Servicer of the Receivables may at its option purchase the
assets of the Trust at a price specified in the Sale and
Servicing Agreement, and such purchase of the Receivables
and other property of the Trust will effect early retire-
ment of the Notes and the Certificates; however, such
right of purchase is exercisable only as of the last day
of any Collection Period as of which the Pool Balance is
less than or equal to 5% of the Initial Pool Balance.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells,
assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________
(Please print or type name and address, including postal
zip code, of assignee)
_________________________________________________________
the within Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
_________________________________________________________
Attorney to transfer said Certificate on the books of the
Certificate Registrar, with full power of substitution in
the premises.
Dated:
_____________*_____________
Signature Guaranteed:
_____________*_____________
* NOTICE: The signature to this assignment must corre-
spond with the name as it appears upon the face of the
within Certificate in every particular, without alter-
ation, enlargement or any change whatever. Such signature
must be guaranteed by a member firm of the New York Stock
Exchange or a commercial bank or trust company.
EXHIBIT B
[FORM OF CERTIFICATE OF TRUST]
CERTIFICATE OF TRUST OF
NATIONSBANK AUTO OWNER TRUST -
This Certificate of Trust of NATIONSBANK AUTO
OWNER TRUST ____-__ (the "Trust"), dated as of __________
__, ____, is being duly executed and filed by
________________________, a Delaware banking corporation,
as trustee, to form a business trust under the Delaware
Business Trust Act (12 Del. Code, SECTION 3801 et seq.).
1. Name. The name of the business trust
formed hereby is NATIONSBANK AUTO OWNER TRUST ____-__.
2. Delaware Trustee. The name and business
address of the trustee of the Trust in the State of Dela-
ware is __________________, ________________, Delaware
_____.
IN WITNESS WHEREOF, the undersigned, being the
sole trustee of the Trust, has executed this Certificate
of Trust as of the date first above written.
______________________,
not in its individual capacity
but solely as owner trustee
under a Trust Agreement dated
as of ________ __, ____
By:
Name:
Title:
EXHIBIT C
[FORM OF CERTIFICATE DEPOSITORY AGREEMENT]
APPENDIX A
Definitions and Usage
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND USAGE . . . . . . . . . 1
ARTICLE II
ORGANIZATION OF THE TRUST
SECTION 2.1. Name . . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.2. Office . . . . . . . . . . . . . . . . . . . . 2
SECTION 2.3. Purposes and Powers . . . . . . . . . . . . . 2
SECTION 2.4. Appointment of Owner Trustee. . . . . . . . . 3
SECTION 2.5. Initial Capital Contribution of Owner
Trust Estate . . . . . . . . . . . . . . . . . 3
SECTION 2.6. Declaration of Trust . . . . . . . . . . . . . 3
SECTION 2.7. Liability of the Depositors . . . . . . . . . 4
SECTION 2.8. Title to Trust Property . . . . . . . . . . . 4
SECTION 2.9. Situs of Trust . . . . . . . . . . . . . . . . 5
SECTION 2.10. Representations and Warranties of the Depositors 5
SECTION 2.11. Federal Income Tax Matters . . . . . . . . . . 6
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1. Initial Beneficial Ownership . . . . . . . . . 9
SECTION 3.2. The Certificates . . . . . . . . . . . . . . . 9
SECTION 3.3. Authentication of Certificates . . . . . . . . 9
SECTION 3.4. Registration of Certificates; Transfer and Ex-
change of Certificates . . . . . . . . . . . . 10
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen
Certificates . . . . . . . . . . . . . . . . . 11
SECTION 3.6. Persons Deemed Owners of Certificate . . . . . 12
SECTION 3.7. Access to List of Certificateholders' Names
and Addresses . . . . . . . . . . . . . . . . 12
SECTION 3.8. Maintenance of Office or Agency . . . . . . . 12
SECTION 3.9. Appointment of Certificate Paying Agent . . . 13
SECTION 3.10. Ownership by General Partner of Certificates . 13
SECTION 3.11 Book-Entry Certificates . . . . . . . . . . . 14
SECTION 3.12. Notices to Clearing Agency . . . . . . . . . . 15
SECTION 3.13. Definitive Certificates . . . . . . . . . . . 15
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1. Prior Notice to Certificateholders with
Respect to Certain Matters . . . . . . . . . . 17
SECTION 4.2. Action by Certificateholders with Respect
to Certain Matters . . . . . . . . . . . . . . 18
SECTION 4.3. Action by Certificateholders with Respect
o Bankruptcy . . . . . . . . . . . . . . . . . 18
SECTION 4.4. Restrictions on Certificateholders'
Power . . . . . . . . . . . . . . . . . . . . 18
SECTION 4.5. Majority Control . . . . . . . . . . . . . . . 18
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1. Establishment of Certificate Distribution
Account . . . . . . . . . . . . . . . . . . . 19
SECTION 5.2. Application of Trust Funds . . . . . . . . . . 19
SECTION 5.3. Method of Payment . . . . . . . . . . . . . . 20
SECTION 5.4. No Segregation of Monies; No Interest . . . . 21
SECTION 5.5. Accounting and Reports to the Noteholders, Certif-
icateholders, the Internal Revenue Service and
Others . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.6. Signature on Returns; Tax Matters
Partner . . . . . . . . . . . . . . . . . . . 21
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1. General Authority . . . . . . . . . . . . . . 22
SECTION 6.2. General Duties . . . . . . . . . . . . . . . . 22
SECTION 6.3. Action upon Instruction . . . . . . . . . . . 22
SECTION 6.4. No Duties Except as Specified in this
Agreement or in Instructions . . . . . . . . . 24
SECTION 6.5. No Action Except Under Specified Documents
or Instructions . . . . . . . . . . . . . . . 24
SECTION 6.6. Restrictions . . . . . . . . . . . . . . . . . 24
ARTICLE VII
REGARDING THE OWNER TRUSTEE
SECTION 7.1. Acceptance of Trusts and Duties . . . . . . . 25
SECTION 7.2. Furnishing of Documents . . . . . . . . . . . 25
SECTION 7.3. Representations and Warranties . . . . . . . . 26
SECTION 7.4. Reliance; Advice of Counsel . . . . . . . . . 27
SECTION 7.5. Not Acting in Individual Capacity . . . . . . 28
SECTION 7.6. Owner Trustee Not Liable for Certificates or Re-
ceivables . . . . . . . . . . . . . . . . . . 28
SECTION 7.7. Owner Trustee May Own Certificates and Notes . 28
ARTICLE VIII
COMPENSATION AND INDEMNITY OF OWNER TRUSTEE
SECTION 8.1. Owner Trustee's Fees and Expenses . . . . . . 29
SECTION 8.2. Indemnification . . . . . . . . . . . . . . . 29
SECTION 8.3. Payments to the Owner Trustee . . . . . . . . 29
ARTICLE IX
TERMINATION
SECTION 9.1. Termination of Trust Agreement . . . . . . . . 30
SECTION 9.2. Dissolution upon Insolvency or Dissolution
of a Depositor or General Partner . . . . . . 31
SECTION 9.3. Redemption of Certificates. . . . . . . . . . 32
ARTICLE X
SUCCESSOR OWNER TRUSTEES
AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1. Eligibility Requirements for Owner Trustee . . 34
SECTION 10.2. Resignation or Removal of Owner Trustee . . . 34
SECTION 10.3. Successor Owner Trustee . . . . . . . . . . . 35
SECTION 10.4. Merger or Consolidation of Owner Trustee . . . 36
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee 36
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Supplements and Amendments . . . . . . . . . . 38
SECTION 11.2. No Legal Title to Owner Trust Estate in Certifi-
cateholders . . . . . . . . . . . . . . . . . 39
SECTION 11.3. Limitation on Rights of Others . . . . . . . . 40
SECTION 11.4. Notices . . . . . . . . . . . . . . . . . . . 40
SECTION 11.5. Severability . . . . . . . . . . . . . . . . . 40
SECTION 11.6. Separate Counterparts . . . . . . . . . . . . 40
SECTION 11.7. Successors and Assigns . . . . . . . . . . . . 40
SECTION 11.8. No Petition . . . . . . . . . . . . . . . . . 41
SECTION 11.9. No Recourse . . . . . . . . . . . . . . . . . 41
SECTION 11.10. Headings . . . . . . . . . . . . . . . . . . . 41
SECTION 11.11. Governing Law . . . . . . . . . . . . . . . . 41
EXHIBIT A Form of Certificate
EXHIBIT B Form of Certificate of Trust
EXHIBIT C Form of Certificate Depository Agreement
APPENDIX A Definitions and Usage
Exhibit 4.3
NATIONSBANK, N.A.
NATIONSBANK N.A. (SOUTH)
NATIONSBANK OF TEXAS, N.A.,
as Sellers
NATIONSBANK, N.A.,
as Servicer
and
as Trustee
on behalf of the Certificateholders
[and as Collateral Agent]
POOLING AND SERVICING AGREEMENT
Dated as of ____________, ____
NATIONSBANK AUTO GRANTOR TRUST ____-__
_____% Asset Backed Certificates, [Class A]
[_____% Asset Backed Certificates, Class B]
This Pooling and Servicing Agreement, dated as
of ______ __,____, (as amended, supplemented or otherwise
modified and in effect, this "Agreement"), by and among
NATIONSBANK, N.A., NATIONSBANK, N.A. (SOUTH) AND
NATIONSBANK OF TEXAS, N.A., each a national banking
association, as sellers (the "Sellers"), NATIONSBANK,
N.A., as servicer (the "Servicer"), and __________, a
__________ corporation, as trustee hereunder (in such
capacity, the "Trustee") [and as collateral agent with
respect to the Reserve Account] (in such capacity, (the
"Collateral Agent").
In consideration of the premises and of the
mutual agreements herein contained, and other good and
valuable consideration, the receipt of which is acknowl-
edged, the parties hereto, intending to be legally bound,
agree as follows:
ARTICLE I
CREATION OF TRUST; CERTAIN
DEFINITIONS AND GENERAL PROVISIONS
SECTION 1.1. Creation of Trust. Upon the
execution of this Agreement by the parties hereto, there
is hereby created the NationsBank Auto Grantor Trust
____-_.
SECTION 1.2. Definitions. Whenever used in
this Agreement, unless the context otherwise requires,
capitalized terms shall have the meanings provided in
Annex A attached hereto.
SECTION 1.3. Usage of Terms. With respect to
all terms used in this Agreement, the singular includes
the plural and the plural the singular; words importing
any gender include the other gender and the neuter;
references to "writing" include printing, typing, lithog-
raphy, and other means of reproducing words in a visible
form; references to agreements and other contractual
instruments include all subsequent amendments thereto or
changes therein entered into in accordance with their
respective terms and not prohibited by this Agreement;
references to Persons include their permitted successors
and assigns; and the terms "include" or "including" mean
"include without limitation" or "including without limi-
tation."
SECTION 1.4. Calculations. All calculations
of the amount of interest accrued on the Certificates
during any Collection Period and all calculations of the
amount of the Servicing Fee payable with respect to a
Collection Period shall be made on the basis of a 360-day
year consisting of twelve 30-day months.
SECTION 1.5. References. All references to
the first day of a Collection Period shall refer to the
opening of business on such day. All references to the
last day of a Collection Period shall refer to the close
of business of the Servicer on such day.
SECTION 1.6. Section References. All section
references shall be to Sections in this Agreement unless
otherwise specified.
SECTION 1.7. Action by or Consent of Certifi-
cateholders. Whenever any provision of this Agreement
refers to action to be taken, or consented to, by Certif-
icateholders, such provision shall be deemed to refer to
Certificateholders of record as of the Record Date imme-
diately preceding the date on which such action is to be
taken, or consented to, by Certificateholders.
ARTICLE II
THE TRUST PROPERTY
SECTION 2.1. Conveyance of Trust Property.
(a) In consideration of the delivery to, or upon the
written order of, the Sellers of authenticated Certifi-
cates, in authorized denominations, in an aggregate
amount equal to the Initial Pool Balance and the rights
to receive certain amounts as specified herein, each
Seller hereby sells, transfers, assigns and conveys to
the Trustee for the benefit of the Certificateholders,
upon the terms and conditions hereof, the Trust Property
to the Trust, without recourse. The sale, transfer,
assignment and conveyance made hereunder shall not con-
stitute and is not intended to result in an assumption by
the Trustee, any Certificateholder or any Certificate
Owner of any obligation of the Sellers to the Obligors,
the Dealers or any other Person in connection with the
Receivables and the other Trust Property or any agree-
ment, document or instrument related thereto.
(b) The parties hereto intend that the trans-
fer and conveyance of the Trust Property to the Trust
hereunder constitute a complete sale and assignment to
the Trust of all of the Sellers' right, title and inter-
est in, to and under the Trust Property and that the
beneficial interest of the Sellers in, and title to, the
Trust Property will not be a part of any Seller's estate
in the event of any liquidation, reorganization or simi-
lar insolvency proceeding with respect to a Seller. In
the event that the transfer hereunder is not respected as
a complete sale and assignment of the Trust Property to
the Trust, then, in such event, the Sellers hereby grant
to the Trustee on behalf of the Certificateholders a
security interest in the Trust Property to secure a loan
in an amount equal to the [Initial] Pool Balance. This
Agreement shall constitute a security agreement under
applicable law.
SECTION 2.2. Warranties of Each Seller as to
Each Receivable. Each Seller hereby makes the following
warranties to the Trustee and the Certificateholders as
to each Receivable conveyed by it to the Trust hereunder.
Unless otherwise indicated, such warranties shall speak
as of the Closing Date, but shall survive the sale,
transfer, and assignment of the Receivables and the other
Trust Property to the Trust.
(i) Characteristics of Receivables. The
Receivable has been fully and properly executed by
the parties thereto and (a) has been originated by a
Dealer for the retail sale of a Motor Vehicle in the
ordinary course of such Dealer's business, and has
been purchased by the Seller from such Dealer in the
ordinary course of the Seller's business and in
accordance with the Seller's underwriting standards
to finance the retail sale by a Dealer of the Fi-
nanced Vehicle and has been validly assigned by such
Dealer to the Seller, (b) is secured by a valid,
subsisting, and enforceable first priority security
interest in favor of the Seller in the Financed
Vehicle (subject to administrative delays and cleri-
cal errors on the part of the applicable government
agency and to any statutory or other lien arising by
operation of law after the Closing Date which is
prior to such security interest), which security
interest is assignable together with such Receiv-
able, and has been so assigned, by the Seller to the
Trustee, (c) contains or is accompanied by a securi-
ty agreement which contains customary and enforce-
able provisions such that the rights and remedies of
the secured party are adequate for realization of
the benefits of the security interest in the subject
collateral, (d) provides at origination for level
monthly payments (provided, that the last payment
may be different from the level payment), which
fully amortize the Amount Financed over the original
term and (e) provides for interest at the related
Contract Rate.
(ii) Schedule of Receivables. The infor-
mation set forth in the Schedule of Receivables with
respect to such Receivable has been produced from
the Electronic Ledger and was true and correct as of
the close of business of the Servicer on the Cut-Off
Date [(and) any applicable Subsequent Transfer
Date)]; and the Cut-Off Date Principal Balance of
the Receivable has been accurately and correctly
calculated.
(iii) Compliance with Laws. To the
knowledge of the Seller, the Receivable, and the
sale of the related Financed Vehicle, complied at
the time it was originated or made, and will comply
as of the Closing Date, in all material respects
with all requirements of applicable federal, state,
and local laws, and regulations thereunder, includ-
ing, to the extent applicable, usury laws, the
Federal Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Fair Credit Billing Act, the
Fair Credit Reporting Act, the Fair Debt Collection
Practices Act, Federal Reserve Board Regulations B
and Z, and any other consumer credit, equal opportu-
nity, and disclosure laws; provided, however, that
if, notwithstanding the knowledge of the Seller, any
Receivable, or the sale of the related Financed
Vehicle, fails to comply with applicable law in the
manner and to the extent set forth herein, the
Seller shall repurchase such Receivable in accor-
dance with the terms and conditions set forth in
Section 2.4, but such failure to comply with such
laws shall not constitute a breach of this warranty
except for purposes of Section 2.4.
(iv) Binding Obligation. The Receivable
constitutes the genuine, legal, valid, and binding
payment obligation in writing of the Obligor, en-
forceable in all material respects by the holder
thereof in accordance with its terms, except as such
enforceability may be limited by applicable bank-
ruptcy, insolvency, reorganization, moratorium,
conservatorship, receivership, liquidation and other
similar laws affecting creditors' rights in general.
(v) No Government Obligor. The Obligor
on the Receivable is not the United States of Ameri-
ca or any state thereof or any local government, or
any agency, department, political subdivision or
instrumentality of the United States of America or
any state thereof or any local government.
(vi) Receivables in Force. The Receiv-
able has not been satisfied, subordinated, or re-
scinded and the Financed Vehicle has not been re-
leased from the lien granted by the Receivable in
whole or in part.
(vii) No Amendment or Waiver. No materi-
al provision of the Receivable has been amended,
waived, altered or modified in any respect, except
pursuant to a document, instrument or writing in-
cluded in the Receivable File or reflected in the
Electronic Ledger, and no such amendment, waiver,
alteration or modification causes such Receivable
not to conform to the other warranties contained in
this Section.
(viii) No Defenses. The Receivable is
not subject to any right of rescission, setoff,
counterclaim or defense, including the defense of
usury, and the operation of any of the terms of the
Receivable, or the exercise of any right thereunder,
will not render the Receivable unenforceable in
whole or in part or subject to any right of rescis-
sion, setoff, counterclaim or defense, including the
defense of usury, and the Seller has not received
written notice of the assertion of any such right of
rescission, setoff, counterclaim or defense asserted
with respect thereto.
(ix) No Liens. The Seller has not re-
ceived notice of any liens or claims, including
liens for work, labor, materials or unpaid state or
federal taxes relating to the Financed Vehicle, that
are or may be liens prior to, or equal to or coordi-
nate with, the lien granted by the Receivable.
(x) No Default. Except for payment
delinquencies continuing for a period of not more
than thirty (30) days as of the Cut-Off Date [(or
any applicable subsequent Transfer Date)], to the
knowledge of the Seller (a) no default, breach,
violation, or event permitting acceleration under
the terms of any Receivable exists; and (b) no
continuing condition that with notice or lapse of
time, or both, would constitute a default, breach,
violation, or event permitting acceleration under
the terms of any Receivable has arisen; and the
Seller has not waived any of the foregoing; provid-
ed, however, that if, notwithstanding the knowledge
of the Seller, any of the events specified in (a) or
(b) above exists or has arisen with respect to a
Receivable, the Seller shall repurchase such Receiv-
able in accordance with the terms and conditions of
Section 2.4, with the existence of such events not
constituting a breach of this warranty, except for
purposes of Section 2.4.
(xi) Insurance. The Financed Vehicle
securing such Receivable is required by the Receiv-
able to be insured under an Insurance Policy.
(xii) Good Title. Immediately prior to
the assignment herein contemplated, the Receivable
had not been sold, assigned, pledged or otherwise
conveyed by the Seller to any Person other than the
Trust, and the Seller had good and marketable title
to the Receivable free and clear of any encumbrance,
equity, lien, pledge, charge, claim, security inter-
est or other right or interest of any other Person,
was the sole owner thereof and had full right and
power to transfer and assign the Receivable to the
Trust. Immediately upon the transfer and assignment
of the Receivable to the Trust, the Trust shall have
good and marketable title to the Receivable, free
and clear of any encumbrance, equity, lien, pledge,
charge, claim, security interest or other right or
interest of any other Person; and all filings and
actions required by the Relevant UCC with respect to
the transfer to the Trust of Receivables associated
with the sale of the same have been accomplished for
the purpose of complying with the Relevant UCC
provisions governing the relative priority of inter-
ests of parties in the Receivables.
(xiii) Lawful Assignment. The Receivable
has not been originated in, and is not subject to
the laws of, any jurisdiction under which the sale,
transfer, and assignment of such Receivable hereun-
der or pursuant to transfers of the Certificates are
unlawful, void, or voidable.
(xiv) All Filings Made. All filings have
been made, including filings under the Relevant UCC,
which are necessary in any jurisdiction to cause the
ownership and title interests of the Trust in the
Receivables to be afforded priority over competing
claims of the holders of security interests or other
claims against whom such filings can assure priori-
ty.
(xv) Valid Security Interest. On the
Closing Date, there will exist a valid, subsisting
and enforceable first priority perfected security
interest in the Financed Vehicle securing the Re-
ceivable (subject to administrative delays and
clerical errors on the part of the applicable gov-
ernment agency and to any statutory or other lien
arising by operation of law after the Closing Date
which is prior to such security interest). With
respect to the foregoing, each Seller hereby cove-
nants to take all action necessary such that, at
such time as enforcement of such security interest
is sought, there shall exist a valid, subsisting and
enforceable first priority perfected security inter-
est in the Financed Vehicle for the benefit of the
Trust (subject to administrative delays and clerical
errors on the part of the applicable government
agency and any statutory or other lien arising by
operation of law after the Closing Date which is
prior to such interest).
(xvi) Capacity of Parties. To the knowl-
edge of the Seller, all parties to the Receivable
had capacity to execute the Receivable; provided,
however, that if, notwithstanding the knowledge of
the Seller, all parties to any Receivable did not
have the capacity to execute such Receivable, the
Seller shall repurchase such Receivable in accor-
dance with the terms and conditions of Section 2.4,
with the existence of such lack of capacity not
constituting a breach of this warranty, except for
purposes of Section 2.4.
(xvii) One Original. Only one original
of each Receivable was executed.
(xviii) Obligations; No Impairment. The
Seller has duly fulfilled all obligations on its
part to be fulfilled under, or in connection with,
the Receivable and has done nothing to impair the
rights of the Trust, the [Class A] Certificatehold-
ers [or the Class B Certificateholders] in the
Receivable or the proceeds thereof.
(xix) No Fraud or Misrepresentation. To
the knowledge of the Seller, the Receivable was
originated by a Dealer and sold by such Dealer to
the Seller without any conduct constituting fraud or
misrepresentation against the Obligor on the part of
such Dealer; provided, however, that if, notwith-
standing the knowledge of the Seller, any Receivable
was originated and sold under conduct constituting
fraud or misrepresentation against the Obligor on
the part of such Dealer, the Seller shall repurchase
such Receivable in accordance with the terms and
conditions of Section 2.4, with the existence of
such conduct not constituting a breach of this
warranty, except for purposes of Section 2.4.
(xx) Possession. Immediately prior to
the Closing Date, the Seller (or an Affiliate) will
have possession of the Receivable File, and there
are and there will be no custodial agreements in
effect materially adversely affecting the right or
ability of the Seller to make, or cause to be made,
any delivery required hereunder.
(xxi) Bulk Transfer Laws. The transfer,
assignment and conveyance of the Receivable and
Receivable Files by the Seller pursuant to this
Agreement is not subject to the bulk transfer or any
similar statutory provisions in effect in any appli-
cable jurisdiction.
SECTION 2.3. Warranties as to the Receivables
in the Aggregate and Actions of the Sellers. The Sellers
hereby make the following warranties jointly and several-
ly as to the Receivables conveyed by them to the Trust
hereunder to the Trustee and the Certificateholders.
Unless otherwise indicated, such warranties shall speak
as of the Closing Date, but shall survive the sale,
transfer, and assignment of the Receivables and the other
Trust Property to the Trust.
(i) Amounts. The aggregate Cut-Off Date
Principal Balances of the Receivables are equal to
the Initial Pool Balance.
(ii) Individual Characteristics. The
Receivables have the following individual character-
istics as of the close of business of the Servicer
on the Cut-Off Date: (a) the obligations of the
Obligors on the Receivables are secured by security
interests in new or used automobiles, vans or light-
duty trucks; (b) each Receivable has a Contract Rate
of at least ___% and not more than ___%; (c) each
Receivable had a remaining maturity of not less than
[12] months and not more than __ months; (d) each
Receivable had a Cut-Off Date Principal Balance of
not less than $_____ and not more than $_____; (e)
no Receivable was more than thirty (30) days delin-
quent as of the Cut-Off Date; (f) no Financed Vehi-
cle had been repossessed as of the Cut-Off Date; (g)
No Receivable is a Defaulted Receivable; (h) each
Receivable is a retail motor vehicle installment
sales contract; (i) each Receivable provides for
allocation of payments between principal and inter-
est by the Simple Interest Method; and (j) each
Receivable is not related to a Motor Vehicle that is
the subject of forced-placed insurance. The Receiv-
ables were selected utilizing selection procedures
that were not adverse to the Certificateholders.
(iii) Aggregate Characteristics. The
Receivables had the following characteristics in the
aggregate as of the Cut-Off Date: (a) approximately
__% of the Initial Pool Balance was attributable to
loans for purchases of new Financed Vehicles, and
approximately __% of the Initial Pool Balance was
attributable to loans for purchases of used Financed
Vehicles; (b) the weighted average Contract Rate of
the Receivables was approximately ____%; (c) there
were _____ Receivables; (d) the average Cut-Off Date
Principal Balance was approximately $_____; and (e)
the weighted average original term and weighted
average remaining term of the Receivables were
approximately _____ months and _____ months, respec-
tively.
(iv) Computer Tape. The Computer Tapes
were complete and accurate as of the Cut-Off Date
and include a description of the same Receivables
that are described in the Schedule of Receivables.
(v) Marking Records. By the Closing
Date, the Sellers will have caused the portions of
the Electronic Ledger relating to the Receivables to
be clearly and unambiguously marked to show that
such Receivables constitute part of the Trust Prop-
erty and are owned by the Trust in accordance with
the terms of the trust created hereunder.
(vi) No Assignment. As of the Closing
Date, none of the Sellers shall have taken any
action to convey any right to any Person that would
result in such Person having a right to payments
received under the Insurance Policies, the Dealer
Agreements the Dealer Assignments or payments due
under the Receivables that is senior to, or equal
with, that of the Trust.
SECTION 2.4. Repurchase upon Breach. Each of
the Sellers, the Servicer and the Trustee, as the case
may be, shall inform the other parties promptly, in
writing, upon the discovery of any breach or failure to
be true of the warranties (including in the case of
Sections 2.2(iii), (x), (xvi) and (xix) any breach or
failure which would have occurred if such warranty had
not been made to the knowledge of the Sellers) made by
the Sellers pursuant to Section 2.2 or Section 2.3.
Unless the breach or failure shall have been cured by the
last day of the Collection Period which includes the 60th
day after the date on which a Seller becomes aware of, or
receives written notice from the Trustee or the Servicer
of, such breach or failure, the affected Seller shall
repurchase from the Trustee any Receivable the interests
of the Trust and the Certificateholders in which is
materially and adversely affected by the breach or fail-
ure, on the Deposit Date immediately following such
Collection Period; provided, however, that if such breach
or failure occurs solely as a result of NationsBank,
N.A.'s practice of retaining original Motor Vehicle loan
documents only in microfilm form, NationsBank, N.A. shall
not be required to repurchase any such Receivables unless
the Dealer with respect to such Receivable becomes the
subject of any bankruptcy, insolvency or similar proceed-
ings and the trustee in bankruptcy, conservator, receiver
or other similar official or a creditor of such Dealer
asserts that NationsBank, N.A. did not have, or the Trust
does not have, a first priority perfected ownership
interest in such Receivable as a result of such practice.
Any breach of a representation relating to the status of
a Receivable as a Simple Interest Receivable or the
Contract Rate of a Receivable shall be deemed to materi-
ally and adversely affect the Certificateholders. In
consideration of the purchase of a Receivable hereunder,
the related Seller shall remit the Purchase Amount of
such Receivable, no later than the close of business (New
York time) on the applicable Deposit Date, in the manner
specified in Section 4.3. Except as provided in Section
7.2, the sole remedy of the Trust, the Trustee, or the
Certificateholders with respect to a breach or failure to
be true of the warranties made by a Seller pursuant to
Section 2.2 or Section 2.3 shall be to require such
Seller to repurchase any Receivables subject to such
breach pursuant to this Section 2.4.
SECTION 2.5. Custody of Receivable Files. To
assure uniform quality in servicing the Receivables and
to reduce administrative costs, the Trustee, upon the
execution and delivery of this Agreement, revocably
appoints the Servicer and the Servicer accepts such
appointment, it being understood that the Servicer shall
appoint its Affiliate NSI, on behalf of the Servicer, as
agent, to act as custodian on behalf of the Trustee of
the following documents or instruments, which are hereby
constructively delivered to the Trustee with respect to
each Receivable (collectively, a "Receivable File"):
(i) the original of the Receivable in all cases
in which an original exists;
(ii) any documents evidencing the existence of
any Insurance Policies;
(iii) copies of the original credit applica-
tion;
(iv) either (x) the original certificate of
title, or such other documents as the Seller shall
keep on file, in accordance with its customary
procedures, evidencing the security interest of the
Seller in the Financed Vehicle or the efforts (in-
cluding the proof of application for notice of lien
or other evidence of such security interest) made by
the Seller to perfect such security interest; or (y)
with respect to jurisdictions in which the certifi-
cate of title or other evidence of ownership is not
issued to the holder of a lien, evidence of the
Seller's security interest in the Financed Vehicle
(or the efforts made by the Seller to perfect such
security interest (including the proof of applica-
tion for notice of lien or other evidence of such
security interest)), in each case issued by the
appropriate governmental agency of the state in
which such Financed Vehicle is registered;
(v) electronic entries or originals or true
copies of all documents, instruments or writings
relating to extensions, amendments or waivers of the
Receivable; and
(vi) any and all other documents or electronic
records that the Seller or Servicer, as the case may
be, shall keep on file, in accordance with its
customary procedures, relating to the Receivable,
the Obligor or the Financed Vehicle.
SECTION 2.6. Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer, in its capacity as
custodian, shall hold, or cause its Affiliate NSI to
hold, the Receivable Files on behalf of the Trustee for
the benefit of all present and future Certificateholders,
and maintain such accurate and complete accounts, re-
cords, and computer systems pertaining to each Receivable
as shall enable the Servicer and the Trustee to comply
with the terms and provisions of this Agreement applica-
ble to it. In performing its duties as custodian hereun-
der, the Servicer and its Affiliate NSI shall act with
reasonable care, exercising the degree of skill and care
that the Servicer and NSI exercises with respect to
similar motor vehicle receivables owned and/or serviced
by it and that is consistent with industry standards.
The Servicer shall implement and maintain written poli-
cies and procedures with respect to the handling and
custody of the Receivable Files, so that the integrity
and physical possession of the Receivable Files shall be
maintained, and, in general, shall attend to all details
in connection with maintaining custody of the Receivable
Files as agent of the Trustee, for the benefit of the
Trust and the Certificateholders. The Servicer shall
also maintain a current inventory of the Receivables and
conduct, or cause to be conducted, periodic audits (to
the extent required by Section 3.11) of the Receivable
Files held by it (or its Affiliates) under this Agreement
and the related accounts, records, and computer systems,
and shall otherwise maintain (or cause to be maintained)
the Receivable Files in such a manner as shall enable the
Trustee to verify, if the Trustee so elects, the accuracy
of the record keeping of the Servicer (or its Affili-
ates); provided, however, nothing in this Agreement shall
be construed to require the Trustee to verify the accura-
cy of the record keeping of the Servicer. The Servicer
shall promptly report to the Trustee any failure to hold
the Receivable Files and maintain the accounts, records,
and computer systems as herein provided, and the Servicer
shall promptly take appropriate action to remedy any such
failure.
(b) Maintenance of and Access to Records. The
Servicer shall maintain (or cause to be maintained) each
Receivable File at the location specified in Schedule B
to this Agreement, or at such other office of the
Servicer or an Affiliate within the states of North
Carolina or Texas (or, in the case of any successor
Servicer, within the state in which its principal place
of business is located) as shall be specified to the
Trustee by thirty (30) days' prior written notice. The
Servicer shall make available to the Trustee or its
Authorized Officers (or, when requested in writing by the
Trustee, to its attorneys or auditors) and to Certifi-
cateholders (for legitimate business purposes relating to
the Trust) the Receivable Files and the related accounts,
records, and computer systems maintained by the Servicer
at such times during the normal business hours of the
Servicer as the Trustee shall reasonably instruct.
(c) Release of Documents. Upon written in-
structions from the Trustee, the Servicer shall release
(or cause to be released) any document in the Receivable
Files to the Trustee, the Trustee's agent, or the
Trustee's designee, as the case may be, at such place or
places as the Trustee may designate, as soon thereafter
as is practicable. Any document so released shall be
handled by the Trustee with due care and returned to the
Servicer for safekeeping as soon as the Trustee or its
agent or designee, as the case may be, shall have no
further need therefor.
(d) Title to Receivables. The Servicer agrees
that, in respect of any Receivable held by it as custodi-
an hereunder, the Servicer will not at any time have or
in any way attempt to assert any interest in such Receiv-
able (other than its interest in the Supplemental Servic-
ing Fee) or the related Receivable File, other than
solely for the purpose of collecting or enforcing the
Receivable for the benefit of the Trust and that the
entire equitable interest in such Receivable and the
related Receivable File shall at all times be vested in
the Trust.
SECTION 2.7. Instructions; Authority to Act.
The Servicer shall be deemed to have received proper
instructions with respect to the Receivable Files upon
its receipt of written instructions signed by an Autho-
rized Officer of the Trustee. A certified copy of ex-
cerpts of By-Laws or certain resolutions of the Board of
Directors of the Trustee shall constitute conclusive
evidence of the authority of any such Authorized Officer
to act and shall be considered in full force and effect
until receipt by such Servicer of written notice to the
contrary given by the Trustee.
SECTION 2.8. Custodian's Indemnification. The
Servicer, in its capacity as custodian, shall indemnify
and hold harmless the Trustee, its officers, directors,
employees and agents and the Certificateholders from and
against any and all liabilities, obligations, losses,
compensatory damages, payments, costs or expenses (in-
cluding legal fees if any) of any kind whatsoever that
may be imposed on, incurred, or asserted against the
Trustee or the Certificateholders as the result of any
act or omission relating to the maintenance and custody
of the Receivable Files; provided, however, that the
Servicer shall not be liable hereunder to the extent, but
only to the extent, that such liabilities, obligations,
losses, compensatory damages, payments, costs or expenses
result from the willful misfeasance, bad faith, or negli-
gence of the Trustee.
SECTION 2.9. Effective Period and Termination.
The Servicer's appointment as custodian shall become
effective as of the Cut-Off Date and shall continue in
full force and effect until terminated pursuant to this
Section 2.9. If the Servicer resigns as a Servicer under
Section 8.5, or if all of the rights and obligations of a
Servicer shall have been terminated under Section 9.1,
the appointment of the Servicer as custodian hereunder
may and shall at the direction of the Holders of Certifi-
cates evidencing not less than a majority of the aggre-
gate outstanding principal balance of the [Class A]
Certificates [and the Class B Certificates] taken togeth-
er as a single class (the "Majority Holders"), be termi-
nated by the Trustee in the same manner as the Trustee or
such Holders may terminate the rights and obligations of
the Servicer under Section 9.1. The Trustee, at the
direction of the Majority Holders, may terminate the
Servicer's appointment as a custodian hereunder at any
time with cause, or with thirty (30) days' prior notice
without cause, upon written notification to the Servicer.
As soon as practicable after any termination of such
appointment the Servicer, at the Servicer's expense,
shall deliver or cause to be delivered, the Receivable
Files to the Trustee, the Trustee's agent or the
Trustee's designee at such place or places as the Trustee
may reasonably designate. Notwithstanding any termina-
tion of the Servicer as custodian hereunder (other than
in connection with a termination resulting from the
termination of the Servicer, as such, pursuant to Section
9.1), the Trustee agrees that, from and after the date of
such termination, and for so long as the Servicer is
acting as Servicer pursuant to this Agreement, the Trust-
ee shall provide, or cause the successor custodian to
provide, reasonable and customary access to the Receiv-
able Files to the Servicer, at such times as the Servicer
shall request, for the purpose of carrying out its duties
and responsibilities with respect to the servicing of the
Receivables hereunder and upon the Servicer providing to
the Trustee a request for release in such form as may be
agreed to between the Servicer and the Trustee.
ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST PROPERTY
SECTION 3.1. Duties of Servicer. (a) The
Servicer, acting alone and/or through subservicers as
provided in this Section 3.1, shall administer the Re-
ceivables serviced by it with reasonable care. The
Servicer's duties shall include, but not be limited to,
the collection and posting of all payments, responding to
inquiries by Obligors on the Receivables, or by federal,
state, or local governmental authorities, investigating
delinquencies, furnishing monthly and annual statements
to the Trustee with respect to distributions and provid-
ing collection and repossession services in the event of
Obligor default. The Servicer shall also administer and
enforce all rights and responsibilities of the holder of
the Receivables provided for in the Dealer Agreements and
the Insurance Policies, to the extent that such Dealer
Agreements and Insurance Policies relate to the Receiv-
ables, the Financed Vehicles or the Obligors. In per-
forming its duties as Servicer hereunder, the Servicer
will exercise that degree of skill and care that the
Servicer exercises with respect to similar motor vehicle
receivables owned and/or serviced by the Servicer and
that is consistent with prudent industry standards.
Without limiting the generality of the foregoing, the
Servicer is hereby authorized and empowered by the Trust-
ee to execute and deliver, on behalf of itself, the
Trust, the Trustee, and the Certificateholders, any and
all instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other
comparable instruments, with respect to the Receivables
or to the Financed Vehicles, all in accordance with this
Agreement; provided, however, that notwithstanding the
foregoing, the Servicer shall not, except pursuant to an
order from a court of competent jurisdiction or as other-
wise required by law, release an Obligor from payment of
any unpaid amount under any Receivable or waive the right
to collect the unpaid balance (including accrued inter-
est) of any Receivable from the Obligor, except in con-
nection with a de minimis deficiency which the Servicer
would not attempt to collect in accordance with its
customary procedures. If the Servicer shall commence a
legal proceeding to enforce a Receivable, the Trustee
shall thereupon be deemed to have automatically assigned
such Receivable to the Servicer, which assignment shall
be solely for purposes of collection. The Trustee shall
execute and deliver to the Servicer any powers of attor-
ney and other documents or instruments prepared by and at
the expense of the Servicer which are necessary or appro-
priate to enable the Servicer to carry out its servicing
and administrative duties hereunder.
From time to time during the term of this
Agreement, the Servicer may enter into agreements with
one or more Affiliates for the servicing and administra-
tion of certain of the Receivables; provided, however,
that any such subservicer shall be and shall remain, for
so long as it is acting as subservicer, an Eligible
Servicer, and any fees paid to such subservicer shall be
paid by the Servicer and not out of the proceeds of the
Trust, and any such subservicer shall agree to service
the Receivables in a manner consistent with the terms of
this Agreement.
(b) References in this Agreement to actions
taken, to be taken, permitted to be taken, or restric-
tions on actions permitted to be taken by the Servicer in
servicing the Receivables and other actions taken, to be
taken, permitted to be taken, or restrictions on actions
to be taken with respect to the Trust Property shall
include actions taken, to be taken, permitted to be
taken, or restrictions on actions permitted to be taken
by a subservicer on behalf of a Servicer and references
herein to payments or Recoveries received by a Servicer
shall include payments or Recoveries received by a
subservicer, irrespective of whether such payments or
Recoveries are actually deposited in the Certificate
Account by such subservicer.
(c) The Servicer shall be entitled to termi-
nate any subservicing agreement in accordance with the
terms and conditions of such subservicing agreement and
without any limitation by virtue of this Agreement;
provided, however, that, in the event of termination of
any subservicing agreement by the Servicer, the Servicer
shall either act directly as servicer of the related
Receivable or enter into a subservicing agreement with a
successor subservicer which will be bound by the terms of
the related subservicing agreement.
(d) As a condition to the appointment of any
subservicer other than an Affiliate of a Seller, the
Servicer shall notify the Trustee and the Rating Agencies
in writing before such assignment becomes effective and
such subservicer shall be required to execute and deliver
an instrument in which it agrees that, for so long as it
acts as subservicer of the Receivables and the other
Trust Property being serviced by it, the covenants,
conditions, indemnities, duties, obligations and other
terms and provisions of this Agreement applicable to the
Servicer hereunder shall be applicable to it as
subservicer, that it shall be required to perform its
obligations as subservicer for the benefit of the Trust
as if it were Servicer hereunder (subject, however, to
the right of the Servicer to direct the performance of
such obligations in accordance with this Agreement) and
that, notwithstanding any provision of a subservicing
agreement to the contrary, such subservicer shall be
directly liable to the Trustee and the Trust (notwith-
standing any failure by the Servicer to perform its
duties and obligations hereunder) for the failure by such
subservicer to perform its obligations hereunder or under
any subservicing agreement, and that (notwithstanding any
failure by a Servicer to perform its respective duties
and obligations hereunder) the Trustee may enforce the
provisions of this Agreement and any subservicing agree-
ment against the subservicer for the benefit of the Trust
and the Certificateholders, without diminution of such
obligations or liabilities by virtue of any subservicing
agreement, by virtue of any indemnification provided
thereunder or by virtue of the fact that the Servicer is
primarily responsible hereunder for the performance of
such duties and obligations, as if a subservicer alone
were servicing and administering, under this Agreement,
the Receivables and the other Trust Property being ser-
viced by it under the subservicing agreement. Any such
subservicer shall agree that it has no rights (including
but not limited to, rights to compensation and indemnity)
against the Trust.
(e) Notwithstanding any subservicing agree-
ment, any of the provisions of this Agreement relating to
agreements or arrangements between a Servicer or a
subservicer or reference to actions taken through such
Persons or otherwise, the Servicer shall remain obligated
and liable to the Trust, the Trustee and the Certificate-
holders for the servicing and administering of the Re-
ceivables and the other Trust Property serviced by it in
accordance with the provisions of this Agreement (includ-
ing for the deposit of payments and Recoveries received
by a subservicer, irrespective of whether such payments
or Recoveries are actually remitted to the Servicer or
deposited in the Certificate Account by such subservicer;
provided, however, that if such amounts are so deposited,
the Servicer shall have no further obligation to do so)
without diminution of such obligation or liability by
virtue of such subservicing agreements or arrangements or
by virtue of indemnification from a subservicer, to the
same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the
Receivables and the other Trust Property. The Servicer
shall be entitled to enter into any agreement with a
subservicer for indemnification, and nothing contained in
this Agreement shall be deemed to limit or modify such
indemnification.
(f) In the event the Servicer shall for any
reason no longer be acting as such (including by reason
of the occurrence of any of the Events of Servicing
Termination), the successor Servicer may, in its discre-
tion, thereupon assume all of the rights and obligations
of the outgoing Servicer under a subservicing agreement.
In such event, the successor Servicer shall be deemed to
have assumed all of the Servicer's interest therein and
to have replaced the outgoing Servicer as a party to such
subservicing agreement to the same extent as if such
subservicing agreement had been assigned to the successor
Servicer, except that the outgoing Servicer shall not
thereby be relieved of any liability or obligation on the
part of the outgoing Servicer to the subservicer under
such subservicing agreement. The outgoing Servicer
shall, upon request of the Trustee, but at the expense of
the outgoing Servicer, deliver to the successor Servicer
all documents and records relating to each such
subservicing agreement and the Receivables and the other
Trust Property then being serviced thereunder and an
accounting of amounts collected and held by it and other-
wise use its commercially reasonable efforts to effect
the orderly and efficient transfer of the subservicing
agreement to the successor Servicer. In the event that
the successor Servicer elects not to assume a
subservicing agreement, the outgoing Servicer, at its
expense (and not at the expense of the Trust), shall
terminate such subservicing agreement and shall cause the
subservicer to deliver to the successor Servicer all
documents and records relating to the Receivables and the
other Trust Property being serviced thereunder and all
amounts held (or thereafter received) by such subservicer
(together with an accounting of such amounts) and shall
otherwise use its commercially reasonable efforts to
effect the orderly and efficient transfer of servicing of
the Receivables and the other Trust Property being ser-
viced by such subservicer to the successor Servicer. The
relationship of the Servicer (and of any successor to the
Servicer as servicers under this Agreement) to the Trust-
ee under this Agreement is intended by the parties to be
that of independent contractors and not that of joint
venturers, partners or agents of the Trustee.
SECTION 3.2. Collection of Receivable Pay-
ments; Credit Deferrals. (a) The Servicer shall make
reasonable efforts to collect all payments called for
under the terms and provisions of the Receivables as and
when the same shall become due, and otherwise act with
respect to the Receivables, the Dealer Agreements, the
Insurance Policies and the other Trust Property in such
manner as will, in the reasonable judgment of the
Servicer, maximize the amount to be received by the Trust
with respect thereto, in accordance with the standard of
care required by Section 3.1. Other than as explicitly
permitted in Section 3.2(b) below, the Servicer will not
increase or decrease the number or amount of any Sched-
uled Payment, or the Amount Financed under a Receivable
or the Contract Rate of a Receivable, or extend, rewrite
or otherwise modify the payment terms of a Receivable,
release collateral securing a Receivable, or otherwise
modify, waive, or consent to any change in any material
term of a Receivable.
(b) Notwithstanding the foregoing, the
Servicer may grant to an Obligor one or more payment
deferrals of all or a portion of a Scheduled Payment
(each, a "Credit Deferral") if (i) the Servicer deter-
mines that, absent such deferral, a payment default by
the Obligor is reasonably foreseeable; (ii) the Servicer
would grant such Credit Deferral if the Receivable were
serviced by it for its own account and in accordance with
its customary standards; (iii) the cumulative extensions
with respect to any Receivable (A) shall not cause the
term of such Receivable to extend beyond the last day of
the Collection Period immediately preceding the Final
Scheduled Distribution Date and (B) shall not exceed 50%
of the original term of any Receivable; and (iv) interest
continues to accrue on the outstanding principal balance
of the Receivable during the term of such Credit Defer-
ral. In the event that the Servicer fails to comply with
the provisions of the preceding sentence, the Servicer
shall be required to purchase the Receivable or Receiv-
ables affected thereby, for the Purchase Amount, in the
manner specified in Section 3.7 as of the close of the
Collection Period in which such failure occurs.
SECTION 3.3. Realization upon Receivables. On
behalf of the Trust, the Servicer shall charge off a
Receivable as a Defaulted Receivable no later than 120
days from a first date of delinquency (unless such delin-
quency shall have subsequently been cured in accordance
with the Servicer's customary servicing practices);
provided, however, that in the event of (a) a bankruptcy
filing under federal law; (b) a bankruptcy or similar
filing under state law; and/or (c) the repossession and
sale of a Financed Vehicle, the Servicer shall charge off
a Receivable as a Defaulted Receivable no later than 210
days from the first date of delinquency; and provided,
further, that the Servicer shall use its best efforts to
repossess and liquidate the Financed Vehicle securing any
Receivable as soon as it determines that a Receivable is
uncollectible in accordance with the Servicer's customary
servicing practices, subject to and in accordance with
the standard of care required by Section 3.1. In taking
any such actions, the Servicer shall follow such custom-
ary and usual practices and procedures as it shall deem
necessary or advisable in its servicing of motor vehicle
receivables, and as are otherwise consistent with the
standard of care required under Section 3.1, which shall
include the exercise of any rights of recourse to Dealers
under the Dealer Agreements (or rights to compel repur-
chase against third Persons) and selling the Financed
Vehicle at public or private sale. The Servicer shall be
entitled to recover all reasonable expenses incurred by
it in the course of repossessing and liquidating a Fi-
nanced Vehicle into cash proceeds, but only out of the
cash proceeds of such Financed Vehicle, any deficiency
obtained from the Obligor or any amounts received from
the related Dealer. The foregoing shall be subject to
the provision that, in any case in which a Financed
Vehicle shall have suffered damage, the Servicer shall
not expend funds in connection with the repair or the
repossession of such Financed Vehicle unless it shall
determine in its discretion that such repair and/or
repossession will increase the Liquidation Proceeds of
the related Receivable by an amount equal to or greater
than the amount of such expenses (which, in any event,
shall not be unreasonable).
If, in any enforcement suit or legal proceed-
ing, it is held that a Seller or the Servicer, as the
case may be, may not enforce any Receivable on the ground
that it shall not be a real party in interest or a Person
entitled to enforce the Receivable, the Trustee shall, at
the expense of such Seller or the Servicer, as the case
may be, take such steps as such Seller or the Servicer,
as the case may be, deems necessary to enforce the Re-
ceivable, including bringing suit in the Trustee's name
or the names of the Certificateholders.
If the Servicer elects to commence a legal
proceeding to enforce a Dealer Agreement, the act of
commencement shall be deemed to be an automatic assign-
ment from the Trustee to the Servicer of the rights of
the Trust under such Dealer Agreement. If, however, in
any enforcement suit or legal proceeding, it is held that
the Servicer may not enforce the Trust's rights under a
Dealer Agreement on the grounds that it is not a real
party in interest or a Person entitled to enforce the
Dealer Agreement, the Trustee, at the Servicer's expense,
or the applicable Seller, at such Seller's expense, shall
take such steps as the Servicer deems necessary to en-
force the Dealer Agreement, including bringing suit in
its name or the names of the Certificateholders.
SECTION 3.4. Physical Damage Insurance. The
Servicer may sue to enforce or collect upon the Insurance
Policies, in its own name, if possible, or as agent for
the Trust. If the Servicer elects to commence a legal
proceeding to enforce an Insurance Policy, the act of
commencement shall be deemed to be an automatic assign-
ment of the rights of the Trust under such Insurance
Policy to the Servicer for purposes of collection only.
If, however, in any enforcement suit or legal proceeding
it is held that the Servicer may not enforce an Insurance
Policy on the grounds that it is not a real party in
interest or a holder entitled to enforce the Insurance
Policy, the Trustee, on behalf of the Trust, at the
Servicer's expense, or the related Seller, at the
Servicer's expense, shall take such steps as the Servicer
deems necessary to enforce such Insurance Policy, includ-
ing bringing suit in its name and/or the names of the
Certificateholders.
SECTION 3.5. Maintenance of Security Interests
in Financed Vehicles. The Servicer, in accordance with
the standard of care required under Section 3.1, shall
take such steps as are necessary to maintain perfection
of the security interest created by each Receivable in
the related Financed Vehicle for the benefit of the
Trust. The Trustee, on behalf of the Trust, hereby
authorizes the Servicer, and the Servicer hereby agrees,
to take such steps as are necessary to re-perfect such
security interest on behalf of the Trust. If there has
been an Event of Servicing Termination (or the occurrence
of an event specified in clause (iii) or (iv) of Section
9.1(a) with respect to a Seller), the Servicer, at its
expense, shall promptly and duly execute and deliver such
documents and instruments, and take such other actions as
may be necessary, as evidenced by an Opinion of Counsel
delivered to the Trustee, to perfect the Trust's interest
in the Trust Property against all other Persons, includ-
ing the delivery of the Receivables and the Receivable
Files to the Trustee, its agent, or its designee, the
endorsement and delivery of the Insurance Policies or the
notification of the insurers thereunder, the execution of
transfer instruments, and the endorsement to the Trustee
and the delivery of the certificates of title to the
Financed Vehicles to the appropriate department or de-
partments of motor vehicles (or other appropriate govern-
mental agency).
SECTION 3.6. Covenants of the Servicer. The
Servicer makes the following covenants to the Trustee and
the Certificateholders:
(i) Security Interest to Remain in Force. The
Financed Vehicle securing each Receivable will not
be released from the security interest granted by
the Receivable in whole or in part, except as con-
templated herein.
(ii) No Impairment. The Servicer will not
(nor will it permit any subservicer to) impair in
any material respect the rights of the Certificate-
holders in the Receivables, the Dealer Agreements or
the Insurance Policies or, subject to clause (iii)
below, otherwise amend or alter the terms thereof
if, as a result of such amendment or alteration, the
interests of the Trust and the Certificateholders
hereunder would be materially adversely affected.
(iii) Amendments. The Servicer will not
increase or decrease the number or amount of Sched-
uled Payments or the Amount Financed under a Receiv-
able, or extend, rewrite or otherwise waive, amend,
or modify any material term of a Receivable, except
in accordance with the restrictions set forth in
Section 3.2.
SECTION 3.7. Purchases by Servicer upon
Breach. Each Seller, the Servicer and the Trustee, as
the case may be, shall inform the other parties promptly,
in writing, upon the discovery of any breach by the
Servicer of its covenants under Section 3.6. Unless the
breach shall have been cured by the last day of the
Collection Period which includes the 60th day after the
date on which the Servicer becomes aware of, or receives
written notice of, such breach, the Servicer shall pur-
chase the Receivable or Receivables materially adversely
affected thereby on the immediately succeeding Deposit
Date; provided, however, that in the case of a breach of
the covenant contained in Section 3.6(iii), the Servicer
shall be obligated to purchase the affected Receivable or
Receivables on the Deposit Date immediately succeeding
the Collection Period during which the Servicer becomes
aware of, or receives written notice of, such breach
(which in all cases shall be deemed to have a material
adverse effect on the Certificateholders). In consider-
ation of the purchase of a Receivable hereunder, the
Servicer shall remit the Purchase Amount of such Receiv-
able in the manner specified in Section 4.3. Except as
provided in Section 8.2, the sole remedy of the Trust,
the Trustee, or the Certificateholders against the
Servicer with respect to a breach pursuant to Section 3.6
shall be to require the Servicer to repurchase Receiv-
ables pursuant to this Section 3.7.
SECTION 3.8. Servicing Compensation. On each
Distribution Date, the Servicer shall be paid its Servic-
ing Fee for such Distribution Date and any unpaid Servic-
ing Fees from prior Distribution Dates to the extent of
funds available therefor in accordance with the provi-
sions of Section 4.5. The Servicing Fee in respect of a
Collection Period (together with any portion of a Servic-
ing Fee that remains unpaid from prior Distribution
Dates) may, at the option of the Servicer, be paid at or
as soon as possible after the beginning of such Collec-
tion Period out of the first collections received on the
Receivables during such Collection Period. In addition,
notwithstanding any other provision of this Agreement,
the Servicer shall (i) retain any late fees or other fees
and charges collected on Receivables during a Collection
Period and (ii) be paid any interest earned during a
Collection Period on deposits in the Accounts of Collec-
tions on the Receivables (collectively, the "Supplemental
Servicing Fee"). The Servicer shall be required to pay
all expenses incurred by it in connection with its activ-
ities hereunder (including fees and expenses of the
Trustee and its counsel (and any custodian appointed by
the Trustee) and independent accountants, any
subservicer, taxes imposed on the Servicer or any
subservicer, and expenses incurred in connection with
distributions and reports to Certificateholders) except
expenses incurred in connection with realizing upon
Receivables under Section 3.3. No transfer, sale, pledge
or other disposition of the Servicer's right to receive
all or any portion of the Servicing Fee or Supplemental
Servicing Fee shall be made, and any such attempted
transfer, sale, pledge or other disposition shall be
void, unless such transfer is made to one or more succes-
sor Servicers in connection with the assumption by any
such successor Servicer of the duties hereunder pursuant
to Section 9.2 and all (and not a portion) of the Servic-
ing Fee and Supplemental Servicing Fee is transferred to
any such successor Servicer.
SECTION 3.9. Servicer's Report. On or before
the Determination Date immediately preceding each Distri-
bution Date, the Servicer shall deliver to the Trustee a
certificate of a Servicing Officer substantially in the
form of Exhibit C hereto (each, a "Servicer's Certifi-
cate") containing all information necessary to make the
distributions pursuant to Section 4.5, and all informa-
tion necessary for the Trustee to send statements to
Certificateholders pursuant to Section 4.7.
SECTION 3.10. Annual Statement as to Compli-
ance. (a) The Servicer shall deliver to the Trustee, on
or before [January 31] of each year, commencing [January
31, 1997], an Officer's Certificate, stating that (i) a
review of the activities of the Servicer during the
preceding calendar year (or shorter period, in the case
of the first such Officer's Certificate) and of its
performance of its obligations under this Agreement has
been made under such officer's supervision and (ii) to
the best of such officer's knowledge, based on such
review, the Servicer has, or has caused to be, fully
performed its obligations under this Agreement throughout
such year (or shorter period, in the case of the first
such certificate), or, if there has been a material
default in the performance of any such obligation, speci-
fying each such default known to such officer and the
nature and status thereof.
(b) The Servicer shall deliver to the Trustee,
promptly upon having knowledge thereof, but in no event
later than five (5) Business Days thereafter, written
notice in an Officer's Certificate of any event which
constitutes or, with the giving of notice or lapse of
time, or both, would become, an Event of Servicing Termi-
nation under Section 9.1.
SECTION 3.11. Independent Certified Public
Accountants' Reports. The Servicer shall cause a firm of
independent certified public accountants (who may also
render other services to the Servicer and the Sellers) to
deliver to the Trustee on or before [August 31] of each
year commencing [August 31, 1996], a report to the effect
that such firm has conducted an examination, substantial-
ly in compliance with attestation standards established
by the American Institute of Certified Public Accoun-
tants, of certain documents and records relating to the
servicing procedures under this Agreement and that, on
the basis of such examination, such firm is of the opin-
ion that such servicing was conducted in compliance with
the sections of this Agreement with which independent
public accountants generally possess adequate profession-
al knowledge and which are reasonably subject to positive
assurance by them, except for such exception as they
believe to be immaterial and such other exceptions as
shall be set forth in such report.
SECTION 3.12. Access to Certain Documentation
and Information Regarding Receivables. The Servicer
shall provide the Trustee and the Certificateholders with
access to the Receivable Files (in the case of the Cer-
tificateholders, only where the Certificateholder shall
be required by applicable statutes or regulations to have
access to such documentation). Such access shall be
afforded without charge, but only upon reasonable request
and during normal business hours at an office of the
Servicer reasonably designated by the Servicer. Nothing
in this Section 3.12 shall affect the obligation of the
Servicer to observe any applicable law prohibiting dis-
closure of information regarding the Obligors, and the
failure of a Servicer to provide access to information as
a result of such obligation shall not constitute a breach
of this Section. Any Certificateholder, by its accep-
tance of a Certificate, shall be deemed to have agreed to
keep any information obtained by it pursuant to this
Section confidential, except as may be required by appli-
cable law.
SECTION 3.13. Reports to the Commission. The
Servicer shall, on behalf of the Trust, cause to be filed
with the Commission any periodic reports required to be
filed under the provisions of the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the
Commission thereunder.
SECTION 3.14. Reports to the Rating Agencies.
The Servicer shall deliver to each Rating Agency, at such
address as each Rating Agency may request, a copy of all
reports or notices furnished or delivered pursuant to
this Article and a copy of any amendments, supplements or
modifications to this Agreement and, if any subservicer
is not an Affiliate of the Seller, any subservicing
agreement and any other information reasonably requested
by such Rating Agency to monitor this transaction.
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS
SECTION 4.1. Establishment of Accounts.
(a) (i) The Trustee, on behalf of the Trust and for the
benefit of the Certificateholders, shall establish and
maintain in the name of the Trustee one or more Eligible
Deposit Accounts (the "Certificate Account"), entitled
Certificate Account, as trustee for the benefit
of the Certificateholders of the NationsBank Auto Grantor
Trust 199 - . The Trustee, on behalf of the Trust and
for the benefit of the [Class A] Certificateholders,
shall establish and maintain in the name of the Trustee
an Eligible Deposit Account (the "[Class A] Distribution
Account"), entitled [Class A] Distribution Account,
as trustee, for the benefit of the [Class A] Certifi-
cateholders of the NationsBank Auto Grantor Trust 199 - .
[The Trustee, on behalf of the Trust and for the benefit
of the Class B Certificateholders, shall establish and
maintain in the name of the Trustee an Eligible Deposit
Account (the "Class B Distribution Account"), entitled
Class B Distribution Account, as trustee for the
benefit of the Class B Certificateholders of the
NationsBank Auto Grantor Trust 199 - .]
(ii) Funds on deposit in the Accounts shall be
invested by the Trustee in Permitted Investments selected
by the Servicer; provided, however, it is understood and
agreed that neither the Trustee nor the Trust shall be
liable for any loss or charge arising from such invest-
ment in Permitted Investments but any such loss or charge
shall be paid by the Servicer. All such Permitted In-
vestments shall be held by the Trustee for the benefit of
the beneficiaries of the applicable Account; provided,
however, that on each Distribution Date, all interest and
other investment income (net of losses and investment
expenses) on funds on deposit therein shall be withdrawn
from the Accounts at the direction of the Servicer and
paid to the Servicer. Funds on deposit in the Accounts
with respect to any Collection Period shall be invested
in Permitted Investments that will mature so that all
funds (including both principal and interest) will be
available at the close of business on the Deposit Date
following such Collection Period. Funds deposited in an
Account on a Deposit Date which immediately precedes a
Distribution Date upon the maturity of any Permitted
Investments are not required to be (but may be) invested
overnight.
(iii) The Trustee shall possess all right,
title and interest in all funds on deposit from time to
time in the Accounts, and all such funds shall be part of
the Trust Property. The Accounts shall be under the sole
dominion and control of the Trustee. If, at any time,
any of the Accounts ceases to be an Eligible Deposit
Account, the Trustee (or the Servicer on its behalf)
shall within ten (10) Business Days (or such longer
period, not to exceed thirty (30) calendar days, as to
which each Rating Agency shall consent) establish a new
Account as an Eligible Deposit Account and shall transfer
any cash and/or any investments that are in the existing
Account which is no longer an Eligible Deposit Account to
such new Account.
(iv) With respect to the Account Property in
respect of any Account, the Trustee agrees that:
(A) any Account Property that is held in
deposit accounts shall be held solely in an Eligible
Deposit Account; and each such Eligible Deposit
Account shall be subject to the exclusive custody
and control of the Trustee, and the Trustee shall
have sole signature authority with respect thereto;
(B) any Account Property that constitutes
Physical Property shall be held, pending maturity or
disposition, solely by the Trustee or a financial
intermediary (as such term is defined in Section 8-
313(4) of the Relevant UCC) acting solely for the
Trustee;
(C) any Account Property that is a book-
entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations
shall be maintained by the Trustee, pending maturity
or disposition, through continued book-entry regis-
tration of such Account Property as described in
paragraph (b) of the definition of "Delivery"; and
(D) any Account Property that is an
"uncertificated security" under Article 8 of the
Relevant UCC and that is not governed by clause (C)
above shall be maintained by the Trustee, pending
maturity or disposition, through continued registra-
tion of the Trustee's (or its nominee's) ownership
of such security.
(v) The Servicer shall have the power, revoca-
ble by the Trustee, to instruct the Trustee to make
withdrawals and payments from the Accounts for the pur-
pose of permitting the Servicer to carry out its duties
hereunder or permitting the Trustee to carry out its
duties.
[(b) (i) The Servicer, for the benefit of the
Certificateholders, shall establish and maintain in the
name of , as Collateral Agent, an Eligible Deposit
Account (the "Reserve Account"), which account shall be
entitled Reserve Account, as trustee for the
benefit of Certificateholders of the NationsBank Auto
Grantor Trust 199 - and shall clearly indicate that such
account has been pledged to the Collateral Agent for the
benefit of the Certificateholders. The Reserve Account
shall not be property of the Trust.
[(ii) Funds on deposit in the Reserve Account
shall be invested by the Collateral Agent in Permitted
Investments selected by the Servicer; provided, however,
it is understood and agreed that the Collateral Agent
shall not be liable for any loss or charge arising from
such investment in Permitted Investments. All such
Permitted Investments shall be held by the Collateral
Agent for the benefit of the Certificateholders; provid-
ed, however, that on each Distribution Date all interest
and other investment income (net of losses and investment
expenses) on funds on deposit therein shall be withdrawn
from the Reserve Account at the direction of the Servicer
and paid to the Servicer on behalf of the Sellers. Funds
on deposit in the Reserve Account shall be invested in
Permitted Investments that will mature so that all funds
(including both principal and interest) will be available
at the opening of business on the next following Deposit
Date; provided, however, that subject to satisfaction of
the Rating Agency Condition and notice thereof to the
Trustee and the Collateral Agent, all or a portion of
such funds on deposit in the Reserve Account may be
invested in Permitted Investments that mature later than
such next following Deposit Date.
[(iii) The Reserve Account shall be under the
sole dominion and control of the Collateral Agent. If,
at any time, the Reserve Account ceases to be an Eligible
Deposit Account, the Servicer shall within ten (10)
Business Days (or such longer period, not to exceed
thirty (30) calendar days, as to which each Rating Agency
may consent, notice of which consent shall be furnished
to the Trustee and Collateral Agent) establish a new
Reserve Account as an Eligible Deposit Account and shall
transfer any cash and/or any investments that are in the
existing Account which is no longer an Eligible Deposit
Account to such new Reserve Account.
[(iv) With respect to the Account Property in
respect of the Reserve Account, the Collateral Agent
agrees that:
(A) any Account Property that is held in
deposit accounts shall be held solely in an Eligible
Deposit Account; and each such Eligible Deposit
Account shall be subject to the exclusive custody
and control of the Collateral Agent, and the Collat-
eral Agent shall have sole signature authority with
respect thereto;
(B) any Account Property that constitutes
Physical Property shall be held, pending maturity or
disposition, solely by the Collateral Agent or a
financial intermediary (as such term is defined in
Section 8-313(4) of the Relevant UCC) acting solely
for the benefit of the Certificateholders;
(C) any Account Property that is a book-
entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations
shall be maintained by the Collateral Agent, pending
maturity or disposition, through continued book-
entry registration of such Account Property as
described in such paragraph (b) of the definition of
Delivery; and
(D) any Account Property that is an
"uncertificated security" under Article 8 of the
Relevant UCC and that is not governed by clause (C)
above shall be maintained by the Collateral Agent,
pending maturity or disposition, through continued
registration of the Collateral Agent's (or its
nominee's) ownership of such security.
[(v) The Servicer shall have the power, revo-
cable by the Collateral Agent, to instruct the Collateral
Agent to make withdrawals and payments from the Reserve
Account for the purpose of permitting the Servicer to
carry out its duties hereunder.
[(vi) Each of the Sellers (and any successor
to a Seller in accordance with Section 7.3) and the
Servicer agree to take or cause to be taken such further
actions, to execute, deliver and file or cause to be
executed, delivered and filed such further documents and
instruments (including, without limitation, any financing
statements under the Relevant UCC or this Agreement) as
may be determined to be necessary, in order to perfect
the interests created by this Section 4.1(b) and other-
wise effectuate the purposes, terms and conditions of
this Section 4.1(b).]
SECTION 4.2. Collections. (a) Subject to
subsections (b) and (c) below and Section 3.8, the
Servicer shall remit to the Certificate Account all
payments by or on behalf of the Obligors on the Receiv-
ables, including all Liquidation Proceeds and Recoveries
received by the Servicer during any Collection Period, as
soon as practicable, but in no event after the close of
business on the second Business Day after receipt there-
of.
(b) Notwithstanding the provisions of Section
4.2(a), if (i) the Servicer shall have the Required
Rating or (ii) (A) the Servicer shall have obtained a
letter of credit or surety bond (or other form of perfor-
mance guaranty) in favor of the Trustee, on behalf of the
Trust and the Certificateholders, providing that the
Trustee may demand payment (up to the amount then avail-
able thereunder) in the event that the Servicer fails to
make any payment or deposit required hereunder and (B)
the Rating Agency Condition shall be satisfied, the
Servicer may deposit the amounts referred to in subsec-
tion (a) above into the Certificate Account not later
than the Deposit Date immediately succeeding the last day
of the related Collection Period, for so long as the
Servicer shall have the Required Rating or such letter of
credit, surety bond or other form of performance guaranty
is in full force and effect, as the case may be; provid-
ed, however, that (i) if an Event of Servicing Termina-
tion has occurred and is continuing, (ii) the Servicer
has been terminated as such pursuant to Section 9.1 or
(iii) the Servicer ceases to have the Required Rating
(and the Servicer has not obtained a letter of credit,
surety bond or other form of performance guaranty satis-
fying the conditions specified above), the Servicer shall
deposit such amounts (including any amounts then being
held by the Servicer) into the Certificate Account as
provided in Section 4.2(a). Notwithstanding the forego-
ing, the provisions of the proviso to the preceding
sentence shall not be applicable to a successor Servicer
solely by reason of the occurrence of an event specified
in clauses (i), (ii) and (iii) of such proviso with
respect to the outgoing Servicer. Following the occur-
rence of an event specified in clauses (i), (ii) or (iii)
of the proviso to the second preceding sentence, on a
monthly basis, all Collections, Liquidation Proceeds and
Recoveries shall be segregated by book-entry or other
form of identification on the Servicer's books and re-
cords and identified as the property of the Trust. The
Servicer shall promptly notify the Trustee in writing if
it shall obtain or lose the Required Rating or the bene-
fit of such letter of credit, surety bond or other form
of performance guaranty.
(c) Notwithstanding the provisions of subsec-
tions (a) and (b) hereof, the Servicer may retain, or
will be entitled to be reimbursed, from amounts otherwise
payable into, or on deposit in, the Certificate Account
with respect to a Collection Period any amounts previous-
ly deposited in the Certificate Account but later deter-
mined to have resulted from mistaken deposits or postings
or checks returned for insufficient funds, in each case,
with respect to which the Servicer has not been previous-
ly reimbursed hereunder. The amount to be retained or
reimbursed hereunder shall not be included in Collections
with respect to the related Distribution Date.
(d) In those cases where a subservicer is
servicing a Receivable, the Servicer shall cause the
subservicer to remit to the Certificate Account as soon
as practicable, but in no event later than the close of
business on the second Business Day after receipt thereof
by the subservicer (but subject to the [provisions of
Section 4.2(b) applied with respect to such subservicer
and the] limitations contained in Section 4.2(c) of this
Agreement) the amounts referred to in Section 4.2(a) in
respect of a Receivable being serviced by the
subservicer.
SECTION 4.3. Advances; Other Deposits. (a)
On each Deposit Date, the Servicer shall make a payment
with respect to each Receivable (other than a Defaulted
Receivable) equal to the excess, if any, of (i) the
amount of interest due on such Receivable at its applica-
ble Contract Rate as of its Due Date, assuming the pay-
ment thereon was made on such Due Date (or as of the date
that would have been its Due Date had the Obligor not
paid such Receivable ahead by more than one month) over
(ii) Interest Collections actually received by the
Servicer as of the last day of such Collection Period
with respect to such Receivable (each such payment, an
"Advance"). If the amount specified in clause (ii) above
with respect to a Receivable exceeds the amount specified
in clause (i) above with respect to such Receivable, such
excess amount shall be remitted to the Servicer to reim-
burse the Servicer for previously unreimbursed Advances
with respect to such Receivable; provided, however, that
the Servicer shall not be entitled to reimbursement for
an Advance resulting from a payment being made by or on
behalf of the Obligor prior to the Due Date under the
Receivable (a "Simple Interest Advance"). In addition,
in the Event that a Receivable becomes a Defaulted Re-
ceivable, Outstanding Advances of accrued unpaid interest
thereon shall be reimbursed to the extent of Interest
Collections with respect to such Receivable and, if such
amounts are insufficient, from amounts on deposit in the
Reserve Account. The Servicer shall not be required to
make an Advance (other than a Simple Interest Advance) to
the extent that the Servicer, in its sole discretion,
determines that such Advance would not subsequently be
recovered (whether from Interest Collections on such
Receivables (including Liquidation Proceeds) or the
Reserve Account). The Servicer shall not make any ad-
vance with respect to principal of Receivables.
(b) The Servicer shall deposit in the Certifi-
cate Account the aggregate Advances on the Receivables
pursuant to Section 4.3(a). To the extent that the
Servicer fails to make an Advance pursuant to Section
4.3(a) on the date required, the Servicer shall so notify
the Trustee in writing specifying the amount of the
Advance and the Receivable to which such Advance relates,
and the Trustee shall withdraw such amount (or, if deter-
minable, such portion of such amount as does not repre-
sent advances for delinquent interest) from the Reserve
Account and deposit such amount in the Certificate Ac-
count.
(c) The Servicer and the Sellers shall deposit
or cause to be deposited in the Certificate Account the
aggregate Purchase Amount with respect to Purchased
Receivables. All such deposits shall be made, in immedi-
ately available funds, no later than the applicable
Deposit Date.
SECTION 4.4. Net Deposits. The Servicer may
make the remittances to be made by it pursuant to Section
4.2 net of amounts to be distributed to it pursuant to
Section 4.5 (but subject to the priorities set forth
therein), for so long as (i) no Event of Servicing Termi-
nation has occurred and is continuing and (ii) the
Servicer has not been terminated as such pursuant to
Section 9.1 hereof; provided, however, that the Servicer
shall account for all of such amounts in the related
Servicer's Certificate as if such amounts were deposited
and distributed separately; and provided further that, if
an error is made by the Servicer in calculating the
amount to be deposited or retained by it and a shortfall
in the amount deposited in the Certificate Account re-
sults, the Servicer shall make a payment of the deficien-
cy to the Certificate Account, immediately upon becoming
aware, or receiving notice from the Trustee, of such
error.
SECTION 4.5. Distributions. (a) On or before
each Determination Date, the Servicer shall calculate all
amounts to be deposited in the [Class A] Distribution
Account [and the Class B Distribution Account], which
calculations shall be set forth in the Servicer's Certif-
icate delivered to the Trustee on or before such Determi-
nation Date.
(b) On each Distribution Date, after making
the reimbursements to the Servicer of Outstanding Advanc-
es pursuant to Section 4.3(a), the Trustee shall make the
following deposits and distributions from the Certificate
Account [and the Reserve Account], if necessary, based
solely on the information contained in the Servicer's
Certificate, to the extent of amounts available from the
indicated sources, in the following priority:
(i) to the Servicer, [first] from Avail-
able Interest, [and then, if necessary, from the
Available Reserve Amount,] any unpaid Servicing Fee
owing to such Servicer for the related Collection
Period and all unpaid Basic Servicing Fees from
prior Collection Periods;
(ii) to the [Class A] Distribution Ac-
count, [first] from Available Interest, [then, if
necessary, from the Available Reserve Amount, and
finally, if necessary, from the Class B Percentage
of Available Principal,] the [Class A] Interest
Distribution for such Distribution Date; and
(iii) to the [Class B] Distribution
Account, [first] from Available Interest, [and then,
if necessary, from the Available Reserve Amount,]
the [Class B] Interest Distribution for such Distri-
bution Date based solely on the information con-
tained in the Servicer's Certificate.
On each Distribution Date, the Trustee shall make the
following deposits and distributions (based on the infor-
mation contained in the Servicer's Certificate), to the
extent of the portion of Available Principal, Available
Interest [and the Available Reserve Amount] (to be ap-
plied in that order of priority) remaining after the
application of clauses (i), (ii) and (iii) above, in the
following priority:
(iv) to the [Class A] Distribution Ac-
count, the [Class A] Principal Distribution for such
Distribution Date;
[(v) to the Class B Distribution Account,
the Class B Principal Distribution for such Distri-
bution Date];
[(vi) to the Collateral Agent for deposit
in the Reserve Account, any amounts remaining, until
the amount on deposit in the Reserve Account equals
the Specified Reserve Account Balance]; and
(vii) to the Servicer for distribution to
the Sellers.
(c) On each Distribution Date, all amounts on
deposit in the [Class A] Distribution Account will be
distributed to the [Class A] Certificateholders by the
Trustee [and all amounts on deposit in the Class B Dis-
tribution Account will be distributed to the Class B
Certificateholders by the Trustee]. Except as provided
in Section 11.1, payments under this paragraph shall be
made to the Certificateholders by check mailed by the
Trustee to each Holder's respective address of record
(or, in the case of Certificates registered in the name
of a Clearing Agency, or its nominee, by wire transfer of
immediately available funds). To the extent that the
Trustee is required to wire funds to the Certificatehold-
ers from the [Class A] Distribution Account [or the Class
B Distribution Account, as applicable], it shall request
the bank maintaining the [Class A] Distribution Account
[or the Class B Distribution Account, as applicable,] to
make a wire transfer of the amount to be distributed and
the bank maintaining the [Class A] Distribution Account
[or the Class B Distribution Account, as applicable,]
shall promptly deliver to the Trustee a confirmation of
such wire transfer. To the extent that the Trustee is
required to make payments to Certificateholders by check
hereunder, it shall request the bank maintaining the
[Class A] Distribution Account [or the Class B Distribu-
tion Account, as applicable,] to provide it with a supply
of checks to make such payments. The bank shall, if a
request is made by the Trustee for a wire transfer by
9:00 A.M. (New York time) on any Distribution Date, wire
such funds in accordance with such instructions by 10:00
A.M. (New York time) on such Distribution Date, and it
will otherwise act in compliance with the provisions of
this paragraph and the other provisions of this Agreement
applicable to it as the bank maintaining the [Class A]
Distribution Account [or the Class B Distribution Ac-
count, as applicable]. The Servicer shall take all
necessary action (including requiring an agreement to
such effect) to ensure that any bank maintaining the
[Class A] Distribution Account [or the Class B Distribu-
tion Account, as applicable,] agrees to comply, and
complies, with the provisions of this paragraph and the
other provisions of this Agreement applicable to it as
the bank maintaining the [Class A] Distribution Account
[or the Class B Distribution Account, as applicable].
[SECTION 4.6. Reserve Account. On the Closing
Date, the Sellers shall deposit the Reserve Account
Initial Deposit into the Reserve Account. The Sellers
hereby grant to the Collateral Agent for the benefit of
the Certificateholders a security interest in and to the
Reserve Account and any and all property credited thereto
from time to time, including, but not limited to, Permit-
ted Investments, to secure payment of the Certificates
according to their terms. Amounts held from time to time
in the Reserve Account will continue to be held by the
Collateral Agent for the benefit of [Class A] Certifi-
cateholders [and the Class B Certificateholders], but the
Reserve Account shall not be an asset of the Trust. By
acceptance of their Certificates or interest therein,
Certificateholders and Certificate Owners shall be deemed
to have appointed as Collateral Agent.
hereby accepts such appointment as Collateral Agent.
SECTION 4.7. Statements to Certificateholders.
(a) On each Determination Date, the Servicer shall
provide to the Trustee (with a copy to the Rating Agen-
cies) for the Trustee to forward to each Certificatehold-
er of record a statement substantially in the form of
Exhibit C setting forth at least the following informa-
tion as to the Certificates to the extent applicable:
(i) the amount of the distribution allo-
cable to principal on the [Class A] Certificates
[and the Class B Certificates];
(ii) the amount of the distribution
allocable to interest on the [Class A] Certificates
[and the Class B Certificates];
(iii) the amount of the distribution
allocable to draws from the Reserve Account (if
any), or payments in respect of any other credit or
cash flow enhancement arrangement;
(iv) the amount of the Basic Servicing
Fee paid to the Servicer with respect to the related
Collection Period;
(v) the Class A Certificate Balance, the
Class A Pool Factor, the Class B Certificate Balance
and the Class B Pool Factor as of such Distribution
Date, after giving effect to payments allocated to
principal reported pursuant to clause (i) above;
(vi) the Pool Balance as of the close of
business of the Servicer on the last day of the
preceding Collection Period;
(vii) the amount of the aggregate Real-
ized Losses, if any, for such Collection Period;
(viii) the Certificateholders' interest
carryover shortfall and the Certificateholder's Principal
carryover shortfall, if any, [in each case separately
stated with respect to both the Class A Certificatehold-
ers and the Class B Certificateholders,] after giving
effect to the changes in such amounts since the proceed-
ing Determination Date;]
(ix) the aggregate Purchase Amount of
Receivables repurchased by the Sellers or purchased
by the Servicer;
(x) the balance of the Reserve Account on
such Distribution Date, after giving effect to
changes therein on such Distribution Date; and
(xi) the Specified Reserve Account Bal-
ance as of the close of business on such Distribu-
tion Date.
Each amount set forth pursuant to clauses (i), (ii) and
(iv) above shall be expressed in the aggregate and as a
dollar amount per $1,000 of original denomination of a
Certificate.
Within a reasonable period of time after the
end of each calendar year, but not later than the latest
date permitted by law, the Servicer shall furnish a
report to the Trust and the Trustee shall furnish, or
cause to be furnished, to each Person who at any time
during such calendar year shall have been a Certificate-
holder, a statement based upon such report as to the sum
of the amounts determined in clauses (i) and (ii) above
for such calendar year, or, in the event such Person
shall have been a Certificateholder during a portion of
such calendar year, for the applicable portion of such
year, and such other information as is available to the
Servicer as the Servicer deems necessary or desirable to
enable the Certificateholders to prepare their federal
income tax returns.
The Trustee shall provide copies of the state-
ments and reports specified above in the this Section
4.7, as well as copies of the Servicer's Certificates,
annual statements and accountant's reports delivered
pursuant to Sections 3.9, 3.10 and 3.11, to any Certifi-
cate Owner requesting such information in writing; pro-
vided, however, that the Trustee may require any such
Certificate Owner to pay for the costs of copying and
mailing (or otherwise delivering) such information.
ARTICLE V
[Reserved]
ARTICLE VI
THE CERTIFICATES
SECTION 6.1. The Certificates. The Trustee
shall, upon written order or request signed in the name
of the Sellers by one of each Seller's officers autho-
rized to do so and delivered to an Authorized Officer of
the Trustee, execute on behalf of the Trust, authenticate
and deliver the Certificates to or upon the order of the
Sellers in the aggregate principal amount and denomina-
tions as set forth in such written order or request. The
Certificates shall be issuable in denominations of $1,000
and integral multiples thereof; provided, however, that
one [Class A] Certificate [and one Class B Certificate]
may be issued in a denomination that represents the
residual amount of the Initial [Class A] Certificate
Balance [and the Initial Class B Certificate Balance,
respectively]. Upon initial issuance, the [Class A]
Certificates [and the Class B Certificates] shall be in
the form of Exhibit A [and Exhibit B, respectively],
which [are][is] incorporated by reference herein, and
shall be issued as provided in Section 6.8, in an aggre-
gate amount equal to the Initial [Class A] Certificate
Balance [and the Initial Class B Certificate Balance,
respectively]. The Certificates shall be executed by the
Trustee on behalf of the Trust by manual or facsimile
signature of an Authorized Officer of the Trustee under
the Trustee's seal imprinted thereon and attested by the
manual or facsimile signature of an Authorized Officer of
the Trustee. Certificates bearing the manual or facsimi-
le signatures of individuals who were, at the time when
such signatures were affixed, authorized to sign on
behalf of the Trust, shall be valid and binding obliga-
tions of the Trust, notwithstanding that such individuals
shall have ceased to be so authorized prior to the au-
thentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates.
SECTION 6.2. Authentication of Certificates.
No Certificate shall entitle the Holder thereof to any
benefit under this Agreement, or shall be valid for any
purpose, unless there shall appear on such Certificate a
certificate of authentication, substantially in the form
set forth in the form of Certificate[s] attached hereto
as Exhibit A [and Exhibit B], executed by the Trustee by
manual signature. Such authentication shall constitute
conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of
their authentication.
SECTION 6.3. Registration of Transfer and
Exchange of Certificates. The Trustee shall maintain, or
cause to be maintained, at the office or agency to be
maintained by it in accordance with Section 6.7, a Cer-
tificate Register in which, subject to such reasonable
regulations as it may prescribe, the Trustee shall pro-
vide for the registration of Certificates and of trans-
fers and exchanges of Certificates as herein provided.
Upon surrender for registration of transfer of any [Class
A] Certificate [or Class B Certificate] at such office or
agency, the Trustee shall execute, authenticate and
deliver, in the name of the designated transferee or
transferees, one or more new [Class A] Certificates [or
Class B Certificates, as the case may be,] in authorized
denominations of a like aggregate amount. At the option
of a Certificateholder, [Class A] Certificates [or Class
B Certificates] may be exchanged for other [Class A]
Certificates [or Class B Certificates, as the case may
be,] of authorized denominations of a like aggregate
amount at the office or agency maintained by the Trustee
in accordance with Section 6.7. Every Certificate pre-
sented or surrendered for registration of transfer or
exchange shall be accompanied by a written instrument of
transfer duly executed by the Holder and in form and
substance satisfactory to the Trustee. No service charge
shall be made for any registration of transfer or ex-
change of Certificates, but the Trustee may require
payment of a sum sufficient to cover any tax or govern-
mental charge that may be imposed in connection with any
transfer or exchange of Certificates. All Certificates
surrendered for registration of transfer or exchange
shall be cancelled and disposed of in a commercially
reasonable manner approved by the Trustee.
[The Class B Certificates are subject to re-
strictions on transfer to (a) an employee benefit plan
(as defined in Section 3(3) of ERISA) that is subject to
the provisions of Title 1 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 (each, a "Benefit Plan").
Such restrictions on transfer are set forth in the form
of Class B Certificate attached hereto as Exhibit B.]
SECTION 6.4. Mutilated, Destroyed, Lost or
Stolen Certificates. If (a) any mutilated [Class A]
Certificate [or Class B Certificate] shall be surrendered
to the Trustee, or if the Trustee shall receive evidence
to its satisfaction of the destruction, loss, or theft of
any [Class A] Certificate [or Class B Certificate] and
(b) there shall be delivered to the Trustee such security
or indemnity as may be required to save it harmless, then
in the absence of notice that such [Class A] Certificate
[or Class B Certificate] shall have been acquired by a
bona fide purchaser, the Trustee shall execute, authenti-
cate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost, or stolen [Class A] Certifi-
cate [or Class B Certificate], a new [Class A] Certifi-
cate [or Class B Certificate] of like tenor and denomina-
tion. In connection with the issuance of any new Certif-
icate under this Section 6.4, the Trustee may require the
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection
herewith. Any replacement Certificate issued pursuant to
this Section 6.4 shall constitute conclusive evidence of
ownership in the Trust, as if originally issued, whether
or not the lost, stolen, or destroyed Certificate shall
be found at any time.
SECTION 6.5. Persons Deemed Owners. Prior to
due presentation of a Certificate for registration of
transfer, the Trustee may treat the Person in whose name
any Certificate shall be registered as the owner of such
Certificate for the purpose of receiving distributions
pursuant to Section 4.5 and for all other purposes, and
the Trustee shall not be bound by any notice to the
contrary.
SECTION 6.6. Access to List of
Certificateholders' Names and Addresses. The Trustee
shall furnish or cause to be furnished to the Servicer,
within fifteen (15) days after receipt by the Trustee of
a request therefor from the Servicer in writing, in such
form as the Servicer may reasonably require, a list of
the names and addresses of the Certificateholders as of
the most recent Record Date. If Definitive Certificates
have been issued, the Trustee, upon written request of
the holders of [Class A] Certificates [or Class B Certif-
icates] evidencing not less than 25% of the aggregate
outstanding principal balance of either the [Class A]
Certificates [or the Class B Certificates, as the case
may be,] will, within five (5) Business Days after the
receipt of such request, afford such [Class A] Certifi-
cateholders [or Class B Certificateholders] access during
normal business hours to the most current list of Certif-
icateholders for purposes of communicating with other
Certificateholders with respect to their rights under the
Agreement. Each Certificateholder, by receiving and
holding a Certificate, shall be deemed to have agreed to
hold neither the Sellers, the Servicer nor the Trustee
accountable by reason of the disclosure of its name and
address, regardless of the source from which such infor-
mation was derived.
SECTION 6.7. Maintenance of Office or Agency.
The Trustee shall maintain, or cause to be maintained, at
its expense, in New York, New York, an office or agency
where Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or
upon the Trustee in respect of the Certificates and this
Agreement may be served. The Trustee initially desig-
nates the as its office for such pur-
poses. The Trustee shall give prompt written notice to
the Servicer and to Certificateholders of any change in
the location of any such office or agency.
SECTION 6.8. Book-Entry Certificates. Upon
original issuance, the [Class A] Certificates [and the
Class B Certificates], other than the [Class A] Certifi-
cate [and the Class B Certificate] representing the
residual amount of the Initial [Class A] Certificate
Balance [and the Initial Class B Certificate Balance,
respectively,] which shall be issued upon the written
order of the Sellers, shall be issued in the form of one
or more typewritten Certificates representing the Book-
Entry Certificates, to be delivered to the initial Clear-
ing Agency, by, or on behalf of, the Sellers. Such
Certificates shall initially be registered on the Certif-
icate Register in the name of CEDE & Co., the nominee of
the initial Clearing Agency, and no Certificate Owner
will receive a definitive certificate representing such
Certificate Owner's interest in the [Class A] Certifi-
cates [or the Class B Certificates, as the case may be,]
except as provided in Section 6.10. Unless and until
definitive, fully registered Certificates (collectively,
"Definitive Certificates") have been issued to [Class A]
Certificateholders [or Class B Certificateholders, as the
case may be], pursuant to Section 6.10:
(i) the provisions of this Section 6.8
shall be in full force and effect;
(ii) the Sellers, the Servicer and the
Trustee may deal with the Clearing Agency for all
purposes (including the making of distributions on
the Certificates and the taking of actions by the
Certificateholders) as the authorized representative
of the Certificate Owners;
(iii) to the extent that the provisions
of this Section 6.8 conflict with any other provi-
sions of this Agreement, the provisions of this
Section 6.8 shall control;
(iv) the rights of Certificate Owners
shall be exercised only through the Clearing Agency
and shall be limited to those established by law,
the rules, regulations and procedures of the Clear-
ing Agency and agreements between such Certificate
Owners and the Clearing Agency and all references in
this Agreement to actions by Certificateholders
shall refer to actions taken by the Clearing Agency
upon instructions from the Clearing Agency Partici-
pants, and all references in this Agreement to
distributions, notices, reports and statements to
Certificateholders shall refer to distributions,
notices, reports and statements to the Clearing
Agency or its nominee, as registered holder of the
Certificates, as the case may be, for distribution
to Certificate Owners in accordance with the rules,
regulations and procedures of the Clearing Agency;
and
(v) pursuant to the Depository Agreement,
the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and
receive and transmit distributions of principal and
interest on the Certificates to the Clearing Agency
Participants, for distribution by such Clearing
Agency Participants to the Certificate Owners or
their nominees.
For purposes of any provision of this Agreement
requiring or permitting actions with the consent of, or
at the direction of, Holders of Certificates evidencing
specified percentages of the aggregate outstanding prin-
cipal balance of such Certificates, such direction or
consent may be given by Certificate Owners having inter-
ests in the requisite percentage, acting through the
Clearing Agency.
SECTION 6.9. Notices to Clearing Agency.
Whenever notice or other communication to the Certifi-
cateholders is required under this Agreement unless and
until Definitive Certificates shall have been issued to
Certificate Owners pursuant to Section 6.10, the Trustee
shall give all such notices and communications specified
herein to be given to Certificateholders to the Clearing
Agency.
SECTION 6.10. Definitive Certificates. If (i)
(A) the Sellers advise the Trustee in writing that the
Clearing Agency is no longer willing or able to discharge
properly its responsibilities under the Depository Agree-
ment and (B) the Trustee or the Sellers are unable to
locate a qualified successor, (ii) the Sellers, at their
option, advise the Trustee in writing that they elect to
terminate the book-entry system through the Clearing
Agency or (iii) after the occurrence of an Event of
Servicing Termination, with respect to the [Class A]
Certificates, [Class A] Certificate Owners representing
in the aggregate not less than a majority of the aggre-
gate outstanding principal balance of the [Class A]
Certificates [or, with respect to the Class B Certifi-
cates, Class B Certificate Owners representing in the
aggregate not less than a majority of the aggregate
outstanding principal balance of the Class B Certifi-
cates,] advise the Trustee and the Clearing Agency
through the Clearing Agency Participants in writing, and
the Clearing Agency shall so notify the Trustee, that the
continuation of a book-entry system through the Clearing
Agency, is no longer in the [Class A] Certificate Owners'
[or the Class B Certificate Owners', as the case may be,]
best interests, the Trustee shall notify the Clearing
Agency, which shall be responsible to notify the [Class
A] Certificate Owners [or the Class B Certificate Owners
or both, as the case may be,] of the occurrence of any
such event and of the availability of Definitive Certifi-
cates to [Class A] Certificate Owners [or Class B Certif-
icate Owners or both, as the case may be,] requesting the
same. Upon surrender to the Trustee by the Clearing
Agency of the [Class A] Certificates [or the Class B
Certificates or both, as the case may be,] registered in
the name of the nominee of the Clearing Agency, accompa-
nied by re-registration instructions from the Clearing
Agency for registration, the Trustee shall execute, on
behalf of the Trust, authenticate and deliver Definitive
Certificates in accordance with such instructions. The
Sellers shall arrange for, and will bear all costs of,
the printing and issuance of such Definitive Certifi-
cates. Neither the Sellers, the Servicer nor the Trustee
shall be liable for any delay in delivery of such in-
structions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the
issuance of Definitive Certificates, the Trustee shall
recognize the Holders of the Definitive Certificates as
Certificateholders hereunder.
ARTICLE VII
THE SELLERS
SECTION 7.1. Representations and Warranties of
the Sellers. Each Seller makes the following representa-
tions and warranties to the Trustee and the Certificate-
holders. Such representations and warranties are made as
of the execution and delivery of this Agreement, but
shall survive the sale, transfer and assignment of the
Receivables and the other Trust Property to the Trust.
(i) Organization and Good Standing. The
Seller has been duly organized and is validly exist-
ing as a national banking association, with the
power and authority to own its properties and to
conduct its business as such properties are present-
ly owned and such business is presently conducted
and had at all relevant times, and has, full power,
authority and legal right to acquire, own and sell
its Receivables.
(ii) Due Qualification. The Seller has
obtained all necessary licenses and approvals, in
all jurisdictions where the failure to do so would
materially and adversely affect the ownership or
servicing of its Receivables or render any of its
Receivables unenforceable.
(iii) Power and Authority. The Seller
has the power, authority and legal right to execute
and deliver this Agreement and to carry out its
terms and to sell and assign the property to be sold
and assigned to and deposited with the Trustee as
Trust Property; and the execution, delivery, and
performance of this Agreement and all of the docu-
ments required pursuant hereto have been duly autho-
rized by the Seller by all necessary corporate
action.
(iv) No Consent Required. The Seller is
not required to obtain the consent of any other
Person, or any consent, license, approval or autho-
rization or registration or declaration with, any
governmental authority, bureau or agency in connec-
tion with the execution, delivery or performance of
this Agreement, other than as may be required under
the blue sky or securities laws of any state or the
Securities Act of 1933, as amended, or under state
laws governing the perfection of the interests
created under this Agreement.
(v) Valid Sale; Binding Obligation. This
Agreement effects a valid sale, transfer, and as-
signment of the Receivables and the other Trust
Property conveyed by the Seller to the Trust hereun-
der, enforceable against creditors of and purchasers
from the Seller; and this Agreement constitutes a
legal, valid, and binding obligation of the Seller,
enforceable against the Seller in accordance with
its terms, subject, as to enforceability, to appli-
cable bankruptcy, insolvency, reorganization, mora-
torium, conservatorship, receivership, liquidation
and other similar laws affecting the enforcement of
creditors' rights in general and except as such
enforceability may be limited by general principles
of equity (whether considered in a suit at law or in
equity).
(vi) No Violation. The execution, deliv-
ery and performance by the Seller of this Agreement
and the consummation of the transactions contemplat-
ed hereby and the fulfillment of the terms hereof
will not conflict with, result in any breach of any
of the terms and provisions of, or constitute (with
or without notice or lapse of time) a default under,
the articles of association or bylaws of the Seller,
or conflict with, or breach any of the terms or
provisions of, or constitute (with or without notice
or lapse of time) a default under, any material
indenture, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or
by which the Seller is bound or any of its proper-
ties are subject, or result in the creation or
imposition of any lien upon any of its properties
pursuant to the terms of any such indenture, agree-
ment, mortgage, deed of trust or other instrument
(other than this Agreement), or violate any law,
order, rule, or regulation, applicable to the Seller
or its properties, of any federal or state regulato-
ry body, any court, administrative agency, or other
governmental instrumentality having jurisdiction
over the Seller or any of its properties.
(vii) No Proceedings. There are no
proceedings or investigations pending, or, to the
knowledge of the Seller, threatened, before any
court, regulatory body, administrative agency, or
other tribunal or governmental instrumentality
having jurisdiction over the Seller or its proper-
ties: (a) asserting the invalidity of this Agree-
ment or the Certificates, (b) seeking to prevent the
issuance of the Certificates or the consummation of
any of the transactions contemplated by this Agree-
ment, (c) seeking any determination or ruling that
might materially and adversely affect the perfor-
mance by the Seller of its obligations under, or the
validity or enforceability of, this Agreement or the
Certificates, or (d) that may adversely affect the
federal or state income, excise, franchise or simi-
lar tax attributes of the Certificates.
SECTION 7.2. Liability of Sellers; Indemni-
ties. (a) The Sellers shall be jointly and severally
liable in accordance herewith only to the extent of the
obligations specifically undertaken hereunder and shall
have no other obligations or liabilities hereunder.
(b) The Sellers shall jointly and severally
indemnify, defend and hold harmless the Trustee, the
Trust and the Certificateholders from and against any
taxes that may at any time be asserted against the Trust-
ee, its directors, officers, employees and agents, the
Trust or a Certificateholder with respect to, and as of
the date of, the sale, transfer and assignment of the
Trust Property to the Trust or the issuance and original
sale of the Certificates, including any sales, gross
receipts, general corporation, tangible or intangible
personal property, privilege, or license taxes (but not
including any taxes asserted with respect to ownership of
the Trust Property or federal or other income taxes,
including franchise taxes measured by net income, arising
out of the transactions contemplated by this Agreement or
transfer taxes arising in connection with the transfer of
the Certificates), and reasonable costs and expenses in
defending against the same.
(c) The Sellers shall jointly and severally
indemnify, defend and hold harmless the Trustee, the
Trust and the Certificateholders from and against any
loss, liability or expense incurred by reason of (i) a
Seller's willful misfeasance, bad faith, or negligence in
the performance of its duties hereunder, or by reason of
reckless disregard of the obligations and duties hereun-
der; or (ii) any action taken, or failed to be taken, by
a Seller in respect of any portion of the Trust Property.
(d) The Sellers shall jointly and severally
indemnify, defend and hold harmless the Trustee, the
Trust and the Certificateholders from and against any
loss, liability or expense incurred by reason of the
violation by a Seller of federal or state securities laws
in connection with the registration or the sale of the
Certificates.
(e) The Sellers shall jointly and severally
indemnify, defend and hold harmless the Trustee, the
Trust and the Certificateholders from and against any
loss, liability or expense imposed upon, or incurred by,
the Trustee, the Trust or the Certificateholders as the
result of the failure of any Receivable conveyed by it to
the Trust hereunder, or the sale of the related Financed
Vehicle, to comply with all requirements of applicable
law.
(f) Indemnification under this Section 7.2
shall include reasonable fees and expenses of counsel and
expenses of litigation and shall survive termination of
the Trust. If the Sellers shall have made any indemnity
payments pursuant to this Section 7.2 and the indemnified
party thereafter shall collect any of such amounts from
Persons other than the Sellers, such indemnified party
shall immediately upon receipt thereof repay such amounts
to the Sellers, without interest.
SECTION 7.3. Merger or Consolidation of the
Sellers. Any corporation or other entity (i) into which
a Seller may be merged or consolidated, (ii) that may
result from any merger, conversion, or consolidation to
which a Seller is a party, or (iii) that may succeed by
purchase and assumption to all or substantially all of
the business of a Seller, where such Seller is not the
surviving entity, which corporation or other entity shall
have executed an agreement assuming the performance of
the obligations of such Seller under this Agreement,
shall be the successor to such Seller hereunder without
the execution or filing of any other document or any
further act by any of the parties to this Agreement. Any
affected Seller shall promptly inform the Trustee and the
Rating Agency of any such merger, conversion, consolida-
tion or purchase and assumption, where such Seller is not
the surviving entity.
SECTION 7.4. Limitation on Liability of Sell-
ers and Others. Each Seller, and any of its directors,
officers, employees or agents, may rely in good faith on
any document of any kind, believed by it to be genuine
and properly executed and submitted by any Person re-
specting any matters arising hereunder. Each Seller
shall be under no obligation under this Agreement to
appear in, prosecute or defend any legal action that
shall be unrelated to its obligations under this Agree-
ment and that in its opinion may involve it in any ex-
pense or liability.
SECTION 7.5. Sellers May Own Certificates.
Any Seller, and any Affiliate of the Sellers, may in its
individual or any other capacity become the owner or
pledgee of Certificates with the same rights as it would
have if it were not a Seller or an Affiliate thereof,
except as otherwise provided in the definition of "Cer-
tificateholder"[, "Class A Certificateholder" and "Class
B Certificateholder"] in Section 1.1. Certificates so
owned by or pledged to a Seller or such controlling,
controlled or commonly controlled Person shall have an
equal and proportionate benefit under the provisions of
this Agreement, without preference, priority, or distinc-
tion as among all of the Certificates.
ARTICLE VIII
THE SERVICER
SECTION 8.1. Representations and Warranties of
Servicer. The Servicer makes the following representa-
tions and warranties to the Trustee and the Certificate-
holders. These representations and warranties are made
as of the Closing Date, but shall survive the sale of the
Receivables and the other Trust Property to the Trust.
(i) Organization and Good Standing. The
Servicer has been duly organized and is validly
existing as a national banking association, with the
power and authority to own its properties and to
conduct its business as such properties are present-
ly owned and such business is presently conducted,
and had at all relevant times, and has, the power,
authority and legal right to service the Receiv-
ables.
(ii) Due Qualification. The Servicer has
obtained all necessary licenses and approvals, in
all jurisdictions where the failure to do so would
materially and adversely affect the ability of the
Servicer to service, or the enforceability of, the
Receivables.
(iii) Power and Authority. The Servicer
has the power, authority and legal right to execute
and deliver this Agreement and to carry out its
terms; and the execution, delivery and performance
of this Agreement has been duly authorized by the
Servicer by all necessary corporate action.
(iv) No Consent Required. The Servicer
is not required to obtain the consent of any other
Person, or any consent, license, approval or autho-
rization or registration or declaration with, any
governmental authority, bureau or agency in connec-
tion with the execution, delivery or performance of
this Agreement.
(v) Binding Obligation; Enforceability.
This Agreement constitutes a legal, valid, and
binding obligation of the Servicer, enforceable
against the Servicer in accordance with it terms,
subject, as to enforceability, to applicable bank-
ruptcy, insolvency, reorganization, moratorium,
conservatorship, receivership, liquidation and other
similar laws now or hereafter in effect affecting
the enforcement of creditors' rights in general and
except as such enforceability may be limited by
general principles of equity (whether considered in
a suit at law or in equity).
(vi) No Violation. The execution, deliv-
ery and performance of this Agreement, the consumma-
tion of the transactions contemplated hereby and the
fulfillment of the terms hereof will not conflict
with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice
or lapse of time) a default under, the articles of
association or bylaws of the Servicer, or conflict
with or breach any of the terms or provisions of, or
constitute (with or without notice or lapse of time)
a default under, any material indenture, agreement,
mortgage, deed of trust or other instrument to which
the Servicer is a party or by which the Servicer is
bound or to which any of its properties are subject,
or result in the creation or imposition of any lien
upon any of its properties pursuant to the terms of
any such indenture, agreement, mortgage, deed of
trust or other instrument (other than this Agree-
ment), or violate any law, order, rule, or regula-
tion applicable to the Servicer or its properties of
any federal or state regulatory body, any court,
administrative agency, or other governmental instru-
mentality having jurisdiction over the Servicer or
any of its properties.
(vii) No Proceedings. There are no
proceedings or investigations pending, or, to the
Servicer's knowledge, threatened, before any court,
regulatory body, administrative agency, or tribunal
or other governmental instrumentality having juris-
diction over the Servicer or its properties: (a)
asserting the invalidity of this Agreement or the
Certificates, (b) seeking to prevent the issuance of
the Certificates or the consummation of any of the
transactions contemplated by this Agreement, (c)
seeking any determination or ruling that might
materially and adversely affect the performance by
the Servicer of its obligations under, or the valid-
ity or enforceability of, this Agreement or the
Certificates, or (d) that may adversely affect the
federal or state income, excise, franchise or simi-
lar tax attributes of the Certificates.
SECTION 8.2. Liability of Servicer; Indemni-
ties. (a) The Servicer shall be liable in accordance
herewith only to the extent of the obligations specifi-
cally undertaken by the Servicer under this Agreement and
shall have no other obligations or liabilities hereunder.
(b) The Servicer shall indemnify, defend and
hold harmless the Trustee, the Trust and the Certificate-
holders from and against any and all costs, expenses,
losses, damages, claims and liabilities, including rea-
sonable fees and expenses of counsel and expenses of
litigation, arising out of or resulting from the use,
ownership, or operation by the Servicer or any Affiliate
thereof of any Financed Vehicle or in respect of any
action taken, or failed to be taken, by the Servicer with
respect to any Receivable or other portion of the Trust
Property.
(c) The Servicer shall indemnify, defend and
hold harmless the Trustee, the Trust and the Certificate-
holders from and against any taxes that may at any time
be asserted against the Trustee, the Trust or the Certif-
icateholders with respect to the transactions contemplat-
ed hereby, including any sales, gross receipts, general
corporation, tangible or intangible personal property,
privilege or license taxes (but not including any taxes
asserted with respect to, and as of the date of, the
sale, transfer and assignment of the Trust Property to
the Trust or the issuance and original sale of the Cer-
tificates, or asserted with respect to ownership of the
Receivables or other Trust Property, federal or other
income taxes, including franchise taxes measured by net
income, arising out of distributions on the Certificates
or any other transactions contemplated by this Agreement
or transfer taxes arising in connection with transfers of
the Certificates) and reasonable costs and expenses in
defending against the same.
(d) The Servicer shall indemnify, defend and
hold harmless the Trustee, the Trust and the Certificate-
holders from and against any and all costs, expenses,
losses, claims, damages, and liabilities, to the extent
that such cost, expense, loss, claim, damage, or liabili-
ty arose out of, or was imposed upon, or incurred by, the
Trustee, the Trust or the Certificateholders as a result
of the willful misfeasance, negligence, or bad faith of
the Servicer in the performance of its duties under this
Agreement.
(e) The Servicer, or, in the event that the
Trustee is also the Servicer, the predecessor Servicer,
shall jointly and severally indemnify, defend and hold
harmless the Trustee, from and against all costs, expens-
es, losses, claims, damages, and liabilities arising out
of or incurred in connection with the acceptance or
performance of the Trust and the duties herein contained,
except to the extent that such costs, expenses losses,
claims, damages or liabilities: (i) shall be due to the
willful misfeasance, negligence or bad faith of the
Trustee; (ii) relates to any tax other than the taxes
with respect to which either a Seller or the Servicer
shall be required to indemnify the Trustee; (iii) shall
arise from the Trustee's breach of any of its representa-
tions or warranties set forth in Section 10.15; (iv)
shall be one as to which a Seller is required to indemni-
fy the Trustee; or (v) shall arise out of, or be incurred
in connection with, the acceptance or performance by the
Trustee of its duties as a successor Servicer hereunder.
(f) Indemnification under this Section 8.2
shall include reasonable fees and expenses of counsel and
expenses of litigation. The indemnity obligations of the
Servicer hereunder shall survive any termination of the
Servicer pursuant to Section 9.1, but only with respect
to obligations arising prior thereto, and any payment of
the amount owing under, or the Purchase Amount with
respect to, any Receivable. If the Servicer shall have
made any indemnity payments pursuant to this Section 8.2
and the indemnified party thereafter collects any of such
amounts from others, such indemnified party shall immedi-
ately upon receipt thereof repay such amounts to the
Servicer, without interest.
SECTION 8.3. Merger or Consolidation of the
Servicer. Any corporation or other entity (i) into which
the Servicer may be merged or consolidated, (ii) that may
result from any merger, conversion, or consolidation to
which a Servicer is a party, or (iii) that may succeed by
purchase and assumption to all or substantially all of
the business of the Servicer, where the Servicer is not
the surviving entity, which corporation or other entity
shall be an Eligible Servicer and shall have executed an
agreement assuming the performance of the obligations of
the Servicer under this Agreement, shall be the successor
to the Servicer under this Agreement (without relieving
the Servicer of its responsibilities hereunder, if it
survives such merger, conversion or consolidation) with-
out any further act on the part of any of the parties to
this Agreement. The Servicer shall promptly inform the
Trustee and the Rating Agencies of any such merger,
conversion, consolidation or purchase and assumption,
where the Servicer is not the surviving entity.
SECTION 8.4. Limitation on Liability of
Servicer and Others. (a) Except as provided in this
Agreement, the Servicer shall be under no obligation to
appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the
Receivables in accordance with this Agreement and that in
its opinion may cause it to incur any expense or liabili-
ty; provided, however, that the Servicer may undertake,
at its expense, any reasonable action that it may deem
necessary or desirable in respect of this Agreement and
the rights and duties of the parties to this Agreement
and the interests of the Certificateholders under this
Agreement.
(b) The Servicer, and any director or officer
or employee or agent of the Servicer, may rely in good
faith on any document of any kind, believed by it to be
genuine and properly executed and submitted by any Person
respecting any matters arising hereunder.
SECTION 8.5. Servicer Not to Resign. The
Servicer shall not resign from its obligations and duties
under this Agreement except upon a determination that the
performance of its duties is no longer permissible under
applicable law. Any such determination permitting the
resignation of the Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered to the Trust-
ee. No such resignation shall become effective until the
Trustee or a successor Servicer shall have assumed the
responsibilities and obligations of the related Servicer
in accordance with Section 9.2.
SECTION 8.6. Servicer May Own Certificates.
The Servicer, and any Affiliate of the Servicer, may, in
its individual or any other capacity, become the owner or
pledgee of Certificates with the same rights as it would
have if it were not the Servicer or an Affiliate thereof,
except as otherwise provided in the definition of "Cer-
tificateholder" [, "Class A Certificateholder" and "Class
B Certificateholder"] in Section 1.1. Certificates so
owned by or pledged to the Servicer or such Affiliate
shall have an equal and proportionate benefit under the
provisions of this Agreement, without preference, priori-
ty or distinction as among all of the Certificates.
ARTICLE IX
SERVICING TERMINATION
SECTION 9.1. Events of Servicing Termination.
(a) If any one of the following events ("Events of Ser-
vicing Termination") shall occur and be continuing:
(i) Any failure by the Servicer to deliv-
er to the Trustee the Servicer's Certificate for any
Collection Period, which shall continue beyond the
related Deposit Date, or any failure by the Servicer
to deliver to any of the Accounts or the Reserve
Account any proceeds or payment required to be so
delivered under the terms of the Certificates and
this Agreement, which shall continue unremedied for
a period of five (5) Business Days following the due
date therefor (or, in the case of a payment or
deposit to be made no later than a Deposit Date
immediately preceding a Distribution Date, the
failure to make such payment or deposit by such
Distribution Date);
(ii) Any failure on the part of the
Servicer duly to observe or to perform in any mate-
rial respect any other covenants or agreements set
forth in the Certificates or in this Agreement,
which failure shall (a) materially and adversely
affect the rights of Certificateholders and (b)
continue unremedied for a period of ninety (90) days
after the date on which written notice of such
failure, requiring the same to be remedied, shall
have been given (1) to the Servicer by the Trustee,
or (2) to the Trustee and the Servicer by the Hold-
ers of Certificates evidencing not less than a
majority of the aggregate outstanding principal
balance of the [Class A] Certificates [and the Class
B Certificates], taken together as a single class;
(iii) The entry of a decree or order by a
court or agency or supervisory authority of compe-
tent jurisdiction for the appointment of a conserva-
tor, receiver, liquidator or trustee for the
Servicer in any bankruptcy, insolvency, readjustment
of debt, marshalling of assets and liabilities, or
similar proceedings, or for the winding up or liqui-
dation of its affairs, and any such decree or order
continues unstayed and in effect for a period of
sixty (60) consecutive days;
(iv) The consent by the Servicer to the
appointment of a conservator, receiver, liquidator
or trustee in any bankruptcy, insolvency, readjust-
ment of debt, marshalling of assets and liabilities,
or similar proceedings of or relating to the
Servicer or relating to substantially all of its
property, the admission in writing by the Servicer
of its inability to pay its debts generally as they
become due, the filing by the Servicer of a petition
to take advantage of any applicable bankruptcy,
insolvency or reorganization statute, the making by
the Servicer of an assignment for the benefit of its
creditors or the voluntary suspension by the
Servicer of payment of its obligations; or
(v) The failure by the Servicer to be an
Eligible Servicer;
then, and in each and every case and so long as an Event
of Servicing Termination shall not have been cured or
waived, either the Trustee, or the Holders of Certifi-
cates evidencing not less than a majority of the aggre-
gate outstanding principal balance of the Certificates,
taken together as a single class, by notice then given in
writing to the Servicer, may, and the Trustee, at the
direction of the Holders of Certificates evidencing not
less than a majority of the aggregate outstanding princi-
pal balance of the [Class A] Certificates [and the Class
B Certificates], taken together as a single class, shall,
terminate all of the rights and obligations of the
Servicer under this Agreement. On or after the receipt
by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with
respect to the Certificates or the Trust Property or
otherwise, shall pass to and be vested in the Trustee or
successor Servicer appointed by the Trustee pursuant to
this Section 9.1; and thereupon the Trustee shall be
authorized and empowered to execute and deliver, on
behalf of the Servicer, as attorney-in-fact or otherwise,
any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appro-
priate to effect the purposes of such notice of termina-
tion, whether to complete the transfer and endorsement of
the Receivable Files or the Insurance Policies, the
certificates of title to the Financed Vehicles, or other-
wise. The Servicer shall cooperate with the Trustee or
each such successor Servicer in effecting the termination
of its responsibilities and rights as Servicer under this
Agreement, including the transfer to the Trustee or such
successor Servicer for administration of all cash amounts
that are at the time held by the Servicer for deposit or
thereafter shall be received with respect to a Receiv-
able, all Receivable Files and all information or docu-
ments that the Trustee or such successor Servicer may
require. In addition, the Servicer shall transfer its
electronic records relating to the Receivables to the
successor Servicer in such electronic form as the succes-
sor Servicer may reasonably request. All reasonable
costs and expenses incurred by the successor Servicer,
including allowable compensation of employees and over-
head costs, in connection with the transfer of servicing
shall be paid by the outgoing Servicer upon presentation
of reasonable documentation of such costs and expenses.
(b) If any of the foregoing Events of Servic-
ing Termination occur, the Trustee shall have no obliga-
tion to notify Certificateholders or any other Person of
such occurrence prior to the continuance of such event
through the end of any cure period specified in Section
9.1(a).
SECTION 9.2. Trustee to Act; Appointment of
Successor Servicer. Upon the Servicer's resignation
pursuant to Section 8.5, or upon a Servicer's receipt of
notice of termination as Servicer pursuant to Section
9.1, the Trustee shall be the successor in all respects
to the Servicer in its capacity as Servicer under this
Agreement, and shall be subject to all the responsibili-
ties, duties and liabilities relating thereto placed on
the Servicer by the terms and provisions of this Agree-
ment, except that the Trustee, when acting as a successor
Servicer, shall not be obligated to purchase Receivables
pursuant to Section 3.7 unless the obligation to repur-
chase arose after the date of the notice of termination
given to the Servicer pursuant to Section 9.1, and the
Trustee shall not be liable for any acts or omissions of
such terminated Servicer or for any breach by the
Servicer of any of its representations or warranties
contained herein or in any related documents or agree-
ments. As compensation therefor, the Trustee shall be
entitled to only such compensation (whether payable out
of the Certificate Account or otherwise) as the Servicer
would have been entitled to under this Agreement if no
such notice of termination or resignation had been given.
Notwithstanding the above, the Trustee may, if it shall
be unwilling or legally unable so to act, appoint, or
petition a court of competent jurisdiction to appoint, an
Eligible Servicer as the successor to the terminated
Servicer under this Agreement. The Trustee and such
successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such
succession. The Servicer shall not resign or be relieved
of its duties under this Agreement until a newly appoint-
ed Servicer shall have assumed the responsibilities and
obligations of the terminated Servicer under this Agree-
ment.
SECTION 9.3. Effect of Servicing Transfer.
(a) After the transfer of servicing hereunder, the
Trustee or successor Servicer shall, if necessary, notify
Obligors to make directly to the successor Servicer
payments that are due under the Receivables after the
effective date of such transfer.
(b) Except as provided in Sections 8.2 and
10.8 after the transfer of servicing hereunder, the
outgoing Servicer shall have no further obligations with
respect to the management, administration, servicing,
custody or collection of the Receivables and the succes-
sor Servicer shall have all of such obligations, except
that the outgoing Servicer shall transmit or cause to be
transmitted directly to the successor Servicer for its
own account, promptly on receipt and in the same form in
which received, any amounts held by the outgoing Servicer
(properly endorsed where required for the successor
Servicer to collect any such items) received as payments
upon or otherwise in connection with the Receivables and
the outgoing Servicer shall continue to cooperate with
the successor Servicer by providing information and in
the enforcement of the Dealer Agreements and the Insur-
ance Policies.
(c) A transfer of servicing hereunder shall
not affect the rights and duties of the parties hereunder
(including the obligations and indemnities of the Sellers
pursuant to Sections 2.4, 3.3, 7.1 and 7.2 or, with
respect to obligations and indemnities arising prior to,
or concurrently with, a transfer of servicing hereunder,
the outgoing Servicer pursuant to Section 3.8, 8.1 or
8.2) other than those relating to the management, admin-
istration, servicing, custody or collection of the Re-
ceivables and the other Trust Property. The successor
Servicer shall, upon its appointment pursuant to Section
9.2 and as part of its duties and responsibilities under
this Agreement, promptly take all action it deems neces-
sary or appropriate so that the outgoing Servicer (in
whatever capacity) is paid or reimbursed all amounts it
is entitled to receive under this Agreement on each
Distribution Date subsequent to the date on which it is
terminated as Servicer hereunder.
(d) Any successor Servicer shall provide the
Sellers with access to the Receivable Files and to the
successor Servicer's records (whether written or automat-
ed) with respect to the Receivable Files. Such access
shall be afforded without charge, but only upon reason-
able request and during normal business hours at the
offices of the successor Servicer. Nothing in this
Section 9.3 shall affect the obligation of the successor
Servicer to observe any applicable law prohibiting dis-
closure of information regarding the Obligors, and the
failure of the Servicer to provide access to information
as a result of such obligation shall not constitute a
breach of this Section 9.3.
SECTION 9.4. Notification to Certificatehold-
ers. Upon any notice of an Event of Servicing Termina-
tion or upon any termination of, or appointment of a
successor to, a Servicer pursuant to this Article IX, the
Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses of
record, and to the Rating Agencies at the following
addresses: [Moody's Investors Service, Inc., 99 Church
Street, New York, New York 10007, Attention: ABS Monitor-
ing Department, 4th Floor; Standard & Poor's Ratings
Services, 26 Broadway, New York, New York 10004-1064,
Attention: Asset Backed Surveillance Group].
SECTION 9.5. Waiver of Past Events of Servic-
ing Termination. The Holders of Certificates evidencing
not less than a majority of the aggregate outstanding
principal balance of the [Class A] Certificates [and the
Class B Certificates], taken together as a single class,
may, on behalf of all Holders of Certificates waive any
Event of Servicing Termination hereunder and its conse-
quences, except an event resulting from the failure to
make any required deposits to, or payments from, any of
the Accounts or the Reserve Account in accordance with
this Agreement. Upon any such waiver of a past Event of
Servicing Termination, such event shall cease to exist,
and shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend
to any subsequent or other event or impair any right
arising therefrom, except to the extent expressly so
waived.
SECTION 9.6. Transfer of Accounts. Notwith-
standing the provisions of Section 9.1, if any of the
Accounts or the Reserve Account is maintained with the
Servicer or any Affiliate of the Servicer and an Event of
Servicing Termination shall occur and be continuing, the
Servicer shall promptly, and in any event within five (5)
Business Days, give notice to an Authorized Officer of
the Trustee of such Event of Servicing Termination, and
the Trustee, within five (5) days after the receipt of
such notice, shall establish new Eligible Deposit Ac-
counts conforming with the requirements of this Agreement
and promptly shall transfer all funds in any such Ac-
counts or the Reserve Account to such new Eligible Depos-
it Accounts.
ARTICLE X
THE TRUSTEE
SECTION 10.1. Acceptance by Trustee. The
Trustee, by its execution of this Agreement, accepts all
consideration conveyed by the Sellers pursuant to Section
2.1 and the Trust created hereunder and declares that it
shall hold such consideration in trust upon the terms
hereof set forth for the benefit of the Certificatehold-
ers.
SECTION 10.2. Duties of Trustee. (a) The
Trustee, both prior to and after the cure or waiver of an
Event of Servicing Termination of which an Authorized
Officer of the Trustee shall have actual knowledge,
undertakes to perform only such duties as are specifical-
ly set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against
the Trustee. If an Event of Servicing Termination of
which an Authorized Officer of the Trustee shall have
actual knowledge shall have occurred and shall not have
been cured (the appointment of a successor Servicer
(including the Trustee) to constitute a cure for the
purposes of this Article X) or otherwise waived, the
Trustee shall exercise such of the rights and powers
vested in it by this Agreement, and shall use the same
degree of care and skill in their exercise, as a prudent
person would exercise or use under the circumstances in
the conduct of his or her own affairs; provided, however,
that if the Trustee assumes the duties of the Servicer
pursuant to Section 9.2, the Trustee in performing such
duties shall use the degree of skill and attention re-
quired by Section 3.1.
(b) The Trustee, upon receipt of all resolu-
tions, certificates, statements, opinions, reports,
documents, orders, or other instruments furnished to the
Trustee that are required specifically to be furnished
pursuant to any provision of this Agreement, shall exam-
ine them to determine whether they conform to the re-
quirements of this Agreement provided, however, that the
Trustee shall not be responsible for the accuracy or
content of any resolution, certificate, statement, opin-
ion, report, document, order or other instrument fur-
nished by the Servicer or the Seller hereunder. If any
such instrument is found not to conform in any material
respect to the requirements of this Agreement, the Trust-
ee shall notify the Certificateholders of such instrument
in the event that the Trustee, after so requesting, does
not receive a satisfactorily corrected instrument.
(c) No provision of this Agreement shall be
construed to relieve the Trustee from liability for its
own negligent action, its own negligent failure to act,
or its own bad faith; provided, however, that:
(i) Prior to the occurrence of an Event
of Servicing Termination of which an Authorized
Officer of the Trustee has actual knowledge, and
after the curing or waiver of all such Events of
Servicing Termination that may have occurred, the
duties and obligations of the Trustee shall be
determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except
for the performance of such duties and obligations
as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into
this Agreement against the Trustee, the permissible
right of the Trustee (solely in its capacity as
such) to do things enumerated in this Agreement
shall not be construed as a duty and, in the absence
of bad faith on the part of the Trustee, or manifest
error, the Trustee (solely in its capacity as such)
may conclusively rely on the truth of the statements
and the correctness of the computations and opinions
expressed upon any certificates or opinions fur-
nished to the Trustee and conforming to the require-
ments of this Agreement;
(ii) The Trustee shall not be personally
liable for an error of judgment made in good faith
by an Authorized Officer of the Trustee, unless it
shall be proved that the Trustee shall have been
negligent in performing its duties in accordance
with the terms of this Agreement; and
(iii) The Trustee shall not be personally
liable with respect to any action taken, suffered,
or omitted to be taken in good faith in accordance
with the direction of the Holders of Certificates
evidencing not less than a majority of the aggregate
outstanding principal balance of the [Class A]
Certificates [and the Class B Certificates], taken
together as a single class, as set forth in Section
9.1, relating to the time, method and place of
conducting any proceeding or any remedy available to
the Trustee, or exercising any trust or power con-
ferred upon the Trustee, under this Agreement.
(d) The Trustee shall not be required to
expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights
or powers, if it shall have reasonable grounds for be-
lieving that the repayment of such funds or adequate
indemnity against such risk or liability shall not be
reasonably assured to it, and none of the provisions
contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner
of performance of, any of the obligations of the Servicer
under this Agreement except during such time, if any, as
the Trustee shall be the successor to, and be vested with
the rights, duties, powers and privileges of, the
Servicer in accordance with the terms of this Agreement.
(e) Except for actions expressly authorized by
this Agreement, the Trustee shall take no action reason-
ably likely to impair the security interests created or
existing under any Receivable or Financed Vehicle or to
impair the value of any Receivable or Financed Vehicle.
(f) Except for actions expressly authorized by
this Agreement, the Trustee shall have no power to vary
the corpus of the Trust including (i) accepting any
substitute obligation for a Receivable initially assigned
to the Trustee under this Agreement, (ii) adding any
other investment, obligation or security, or (iii) with-
drawing any Receivable.
(g) The Trustee shall not be required to take
notice or be deemed to have notice or knowledge of any
default (except an event resulting from the failure to
make any required deposits to, or payments from, any of
the Accounts or the Reserve Account) or Event of Servic-
ing Termination unless an Authorized Officer of the
Trustee shall have received written notice thereof. In
the absence of receipt of such notice, the Trustee may
conclusively assume that there is no default or Event of
Servicing Termination; and
(h) Subject to the other provisions of this
Agreement and without limiting the generality of this
Section 10.2, the Trustee shall have no duty (A) to see
to any recording, filing, or depositing of this Agreement
or any agreement referred to herein or any financing
statement or continuation statement evidencing a security
interest, or to see to the maintenance of any such re-
cording or filing or depositing or to any rerecording,
refiling or redepositing of any thereof, (B) to see to
any insurance, (C) to see to the payment or discharge of
any tax, assessment, or other governmental charge or any
lien or encumbrance of any kind owing with respect to,
assessed or levied against, any part of the Trust Proper-
ty from funds available in the Certificate Account,
(D) to confirm or verify the contents of any reports or
certificates of the Servicer delivered to the Trustee
pursuant to this Agreement believed by the Trustee to be
genuine and to have been signed or presented by the
proper party or parties.
SECTION 10.3. Trustee's Certificate. As soon
as practicable after each Deposit Date on which Receiv-
ables shall be assigned to a Seller pursuant to Section
2.4 or to the Servicer pursuant to Section 3.7 or 11.2,
as applicable, the Trustee shall execute a certificate,
prepared by the Servicer, including its date and the date
of the Agreement, and accompanied by a copy of the
Servicer's Certificate for the related Collection Period.
The Trustee's certificate shall operate, as of such
Deposit Date, as an assignment pursuant to Section 10.4.
SECTION 10.4. Trustee's Assignment of Pur-
chased Receivables. With respect to all Receivables
repurchased by a Seller pursuant to Section 2.4, or
purchased by the Servicer pursuant to Section 3.7 or
11.2, the Trustee shall assign, without recourse, repre-
sentation, or warranty, to such Seller or the Servicer,
as the case may be, all the Trustee's right, title, and
interest in, to and under such Receivables, and all
security and documents and all other Trust Property
conveyed pursuant to Section 2.1 with respect to such
Receivables. Such assignment shall be a sale and assign-
ment outright, and not for security.
SECTION 10.5. Certain Matters Affecting the
Trustee. Except as otherwise provided in Section 10.2:
(i) The Trustee may rely and shall be
protected in acting or refraining from acting upon
any resolution, certificate of auditors or accoun-
tants or any other certificate, statement, instru-
ment, opinion, report, notice, request, direction,
consent, order, appraisal, bond, note or other paper
or document believed by it to be genuine and to have
been signed or presented by the proper party or
parties.
(ii) The Trustee may consult with counsel
and any Opinion of Counsel or any advice of such
counsel shall be full and complete authorization and
protection in respect of any action taken or suf-
fered or omitted by it under this Agreement in good
faith and in accordance with such Opinion of Counsel
or any advice of such counsel.
(iii) The Trustee shall be under no
obligation to exercise any of the rights or powers
vested in it by this Agreement, or to institute,
conduct or defend any litigation under this Agree-
ment or in relation to this Agreement, at the re-
quest, order or direction of any of the Certificate-
holders pursuant to the provisions of this Agree-
ment, unless such Certificateholders shall have
offered to the Trustee reasonable security or indem-
nity against the costs, expenses, and liabilities
that may be incurred therein or thereby. Nothing
contained in this Agreement, however, shall relieve
the Trustee of the obligations, upon the occurrence
of an Event of Servicing Termination of which an
Authorized Officer of the Trustee shall have actual
knowledge that is not timely cured or waived pursu-
ant to Section 9.5, to exercise such of the rights
and powers vested in it by this Agreement, and to
use the same degree of care and skill in their
exercise as a prudent person would exercise or use
under the circumstances in the conduct of his or her
own affairs.
(iv) The Trustee shall not be personally
liable for any action taken, suffered or omitted by
it in good faith and believed by it to be authorized
or within the discretion, rights or powers conferred
upon it by this Agreement.
(v) Prior to the occurrence of an Event
of Servicing Termination of which an Authorized
Officer of the Trustee shall have actual knowledge
and after the curing or waiver of all Events of
Servicing Termination that may have occurred, the
Trustee shall not be bound to make any investigation
into the facts of any matters stated in any resolu-
tion, certificate, statement, instrument, opinion,
report, notice, request, consent, direction, order,
approval, bond, note or other paper or document,
unless requested in writing so to do by Holders of
Certificates evidencing not less than a majority of
the aggregate outstanding principal balance of the
[Class A] Certificates [and the Class B Certifi-
cates], taken together as a single class; provided,
however, that if the payment within a reasonable
time to the Trustee of the costs, expenses, or
liabilities likely to be incurred by it in the
making of an investigation requested by the Certifi-
cateholders is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security
afforded to it by the terms of this Agreement, the
Trustee may require reasonable indemnity against
such cost, expense, or liability as a condition to
so proceeding. The reasonable expense of every such
examination shall be paid by the Servicer, or, if
paid by the Trustee, shall be reimbursed by the
Servicer upon demand. Nothing in this clause (v)
shall affect the obligation of the Servicer to
observe any applicable law prohibiting disclosure of
information regarding the Obligors; provided, fur-
ther, that the Trustee shall be entitled to make
such further inquiry or investigation into such
facts or matters as it may reasonably deem fit, and
if the Trustee shall determine to make such further
inquiry or investigation it shall be entitled to
examine the books and records of the Servicer or
Sellers, personally or by agent or attorney, at the
sole cost and expense of the Servicer or Sellers, as
the case may be.
(vi) The Trustee may execute any of the
trusts or powers hereunder or perform any duties
under this Agreement either directly or by or
through agents, attorneys, nominees or a custodian,
and shall not be liable for the acts of such agents,
attorneys, nominees or custodians, provided that
they have been appointed with due care.
(vii) The Trustee shall not be required
to make any initial or periodic examination of any
documents or records related to the Receivables or
Financed Vehicles for the purpose of establishing
the presence or absence of defects, the compliance
by the Sellers with their representations and war-
ranties or for any other purpose.
(viii) The right of the Trustee to per-
form any discretionary act enumerated in this Agree-
ment shall not be construed as a duty, and the
Trustee shall not be answerable for other than its
gross negligence or willful misconduct in the per-
formance of, or failure to perform, such act.
(ix) The Trustee shall not be required to
give any bond or surety in respect of the execution
of the Trust created hereby or the powers granted
hereunder.
SECTION 10.6. Trustee Not Liable for Certifi-
cates or Receivables. The Trustee assumes no responsi-
bility for the correctness of the recitals contained
herein and in the Certificates (other than the certifi-
cate of authentication on the Certificates). Except as
expressly provided herein, the Trustee makes no represen-
tations as to the validity or sufficiency of this Agree-
ment or of the Certificates (other than the Trustee's
execution of, and the certificate of authentication on,
the Certificates), or of any Receivable or related docu-
ment, or for the validity of the execution by the Sellers
and the Servicer of this Agreement or of any supplements
hereto or instruments of further assurance, or for the
sufficiency of the Trust Property hereunder, and the
Trustee shall not be bound to ascertain or inquire as to
the performance or observance of any covenants, condi-
tions or agreements on the part of the Sellers or the
Servicer under this Agreement except as herein set forth;
but the Trustee may require the Sellers or the Servicer
to provide full information and advice as to the perfor-
mance of the aforesaid covenants, conditions and agree-
ments. The Trustee (solely in its capacity as such)
shall have no obligation under any circumstance to per-
form any of the duties of the Sellers or of the Servicer
except as explicitly set forth in this Agreement. The
Trustee shall have no liability in connection with com-
pliance of the Servicer or the Sellers with statutory or
regulatory requirements related to the Receivables. The
Trustee shall not make or be deemed to have made any
representations or warranties with respect to the Receiv-
ables or the validity or sufficiency of any assignment of
the Receivables to the Trust or the Trustee. The Trustee
(solely in its capacity as such) shall at no time have
any responsibility or liability for, or with respect to,
the legality, validity or enforceability of any security
interest in any Financed Vehicle or (prior to the time,
if any, that the Servicer is terminated as custodian
hereunder) any Receivable, or the perfection and priority
of such a security interest or the maintenance of any
such perfection and priority, the efficacy of the Trust
or its ability to generate funds sufficient to provide
for the payments to be distributed to Certificateholders
under this Agreement, the existence, condition, location,
and ownership of any Financed Vehicle, the existence and
enforceability of any Insurance Policy, the existence and
contents of any Receivable or any computer or other
record thereof, the validity of the assignment of any
Receivable to the Trust or of any intervening assignment,
the completeness of any Receivable, the performance or
enforcement of any Receivable, the compliance by the
Sellers with any warranty or representation made by them
(whether individually or together) under this Agreement
or in any related document and the accuracy of any such
warranty or representation, prior to the Trustee's re-
ceipt of notice or other discovery of any noncompliance
therewith or any breach thereof, any investment of monies
by the Servicer or any loss resulting therefrom (it being
understood that the Trustee shall remain responsible for
any Trust Property that it may hold), the acts or omis-
sions of the Sellers, the Servicer or any Obligor, any
action of the Servicer taken in the name of the Trustee,
or any action by the Trustee taken at the instruction of
the Servicer (provided that such instruction is not in
express violation of the terms and provisions of this
Agreement); provided, however, that the foregoing shall
not relieve the Trustee of its obligation to perform its
duties under this Agreement. Except with respect to a
claim based on the failure of the Trustee to perform its
duties under this Agreement (whether in its capacity as
Trustee or as successor Servicer) or based on the
Trustee's willful misconduct, negligence, or bad faith,
or based on the Trustee's breach of a representation and
warranty contained in Section 10.15, no recourse shall be
had to the Trustee (whether in its individual capacity or
as a Trustee) for any claim based on any provision of
this Agreement, the Certificates, or any Receivable or
assignment thereof against the Trustee in its individual
capacity; the Trustee shall not have any personal obliga-
tion, liability, or duty whatsoever to any Certificate-
holder or any other Person with respect to any such
claim. The Trustee shall not be accountable for the use
or application by the Sellers of the proceeds of such
Certificates, or for the use or application of any funds
paid to the Servicer in respect of the Receivables prior
to the time such amounts are deposited in the Certificate
Account (whether or not the Certificate Account is main-
tained with the Trustee). The Trustee shall have no
responsibility for filing any financing or continuation
statement in any public office at any time or to other-
wise perfect or maintain the perfection of any security
interest or lien granted to it hereunder or to record
this Agreement.
SECTION 10.7. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may
become the owner or pledgee of Certificates and may
transact banking business with the Sellers, the Servicer
and their respective Affiliates with the same rights as
it would have if it were not Trustee.
SECTION 10.8. Trustee's Fees and Expenses.
The Servicer agrees to pay to the Trustee, and the Trust-
ee shall be entitled to, reasonable compensation (which
shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) for
all services rendered by it in the execution of the
trusts created by this Agreement and in the exercise and
performance of any of the powers and duties under this
Agreement as the Trustee, and the Servicer shall pay or
reimburse the Trustee upon its request for all reasonable
expenses (including, without limitation, expenses in-
curred in connection with notices or other communications
to Certificateholders), disbursements, and advances
(including the reasonable compensation and the reasonable
expenses and disbursements of its counsel and of all
persons not regularly in its employ) incurred or made by
the Trustee in accordance with any of the provisions of
this Agreement (including the reasonable fees and expens-
es of its agents, any co-trustee and counsel) or in
defense of any action brought against it in connection
with this Agreement except any such expense, disburse-
ment, or advance as may arise from its willful miscon-
duct, negligence or bad faith. The Servicer's covenant
to pay the expenses, disbursements and advances provided
for in the preceding sentence shall survive the termina-
tion of this Agreement.
SECTION 10.9. Trustee May Enforce Claims
Without Possession of Certificates. All rights of action
and claims under this Agreement or the Certificates may
be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production
thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in
its own name, as trustee. Any recovery of judgment
shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable
benefit of the Certificateholders in respect of which
such judgment has been obtained.
SECTION 10.10. Eligibility Requirements for
Trustee. The Trustee under this Agreement shall at all
times have an office in the same state as the
is located on the date of this Agreement or which
is otherwise consented to by the Sellers. The Trustee
shall be organized and doing business under the banking
laws of such state or of the United States, shall be
authorized under such laws to exercise corporate trust
powers, shall have a consolidated net worth of at least
$50,000,000, shall have a credit rating of at least Baa3
from Moody's and shall be subject to supervision or
examination by federal or state banking authorities. If
such corporation shall publish reports of condition at
least annually, pursuant to law or to the requirements of
the aforesaid supervising or examining authority, then
for the purpose of this Section 10.10, the consolidated
net worth of such corporation shall be deemed to be its
consolidated capital and surplus as set forth in its most
recent consolidated report of condition so published. In
case at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section 10.10,
the Trustee shall resign immediately in the manner and
with the effect specified in Section 10.11.
SECTION 10.11. Resignation or Removal of
Trustee. (a) The Trustee may at any time resign and be
discharged from the trusts hereby created by giving
thirty (30) days' prior written notice thereof to the
Servicer. Upon receiving such notice of resignation, the
Servicer shall promptly appoint a successor Trustee, by
written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Trustee
and one copy to the successor Trustee. If no successor
Trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for the appointment
of a successor Trustee.
(b) If at any time the Trustee shall cease to
be eligible in accordance with the provisions of Section
10.10 and shall fail to resign after written request
therefor by the Servicer, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged
bankrupt or insolvent, or a receiver, conservator or
liquidator of the Trustee or of its property shall be
appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquida-
tion, then the Servicer may remove the Trustee. If the
Trustee is removed under the authority of the immediately
preceding sentence, the Servicer shall promptly appoint a
successor Trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the
Trustee so removed, the successor Trustee, the Certifi-
cateholders at their respective addresses of record and
the Rating Agencies.
(c) Any resignation or removal of the Trustee
and appointment of a successor Trustee pursuant to any of
the provisions of this Section 10.11 shall not become
effective until acceptance of appointment by the succes-
sor Trustee pursuant to Section 10.12.
(d) The respective obligations of the Sellers
and the Servicer described in this Agreement shall sur-
vive the removal or resignation of the Trustee as provid-
ed in this Agreement.
SECTION 10.12. Successor Trustee. (a) Any
successor Trustee appointed pursuant to Section 10.11
shall execute, acknowledge, and deliver to the Servicer
and to its predecessor Trustee an instrument accepting
such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Trustee shall
become effective and such successor Trustee, without any
further act, deed or conveyance, shall become fully
vested with all rights, powers, duties, and obligations
of its predecessor under this Agreement, with like effect
as if originally named as Trustee. The predecessor
Trustee shall deliver to the successor Trustee all docu-
ments and statements held by it under this Agreement, and
the Servicer and the predecessor Trustee shall execute
and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vest-
ing and confirming in the successor Trustee all such
rights, powers, duties, and obligations.
(b) No successor Trustee shall accept appoint-
ment as provided in this Section 10.12 unless at the time
of such acceptance such successor Trustee shall be eligi-
ble pursuant to Section 10.10.
(c) Upon acceptance of appointment by a suc-
cessor Trustee pursuant to this Section 10.12, the
Servicer shall mail notice of such acceptance by the
successor Trustee under this Agreement to all Certifi-
cateholders at their respective addresses of record and
to the Rating Agencies. If the Servicer shall fail to
mail such notice within ten (10) days after acceptance of
appointment by the successor Trustee, the successor
Trustee shall cause such notice to be mailed at the
expense of the Servicer.
SECTION 10.13. Merger or Consolidation of
Trustee. Any corporation or banking association which is
eligible to be a successor Trustee under Section 10.10
(i) into which the Trustee may be merged or consolidated,
(ii) that may result from any merger, conversion, or
consolidation to which the Trustee shall be a party, or
(iii) that may succeed by purchase and assumption to the
business of the Trustee, where the Trustee is not the
surviving entity, which corporation or banking associa-
tion executes an agreement of assumption to perform every
obligation of the Trustee under this Agreement, shall be
the successor of the Trustee hereunder, without the
execution or filing of any instrument or any further act
on the part of any of the parties hereto, anything herein
to the contrary notwithstanding. The Trustee shall
promptly notify the Sellers, the Servicer and the Rating
Agencies of any such merger, conversion, consolidation or
purchase and assumption, where the Trustee is not the
surviving entity.
SECTION 10.14. Appointment of Co-Trustee or
Separate Trustee. (a) Notwithstanding any other provi-
sions of this Agreement, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in
which any part of the Trust Property or any Financed
Vehicle may at the time be located, the Servicer and the
Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or
more Persons approved by the Trustee to act as co-trust-
ee, jointly with the Trustee, or separate trustee or
separate trustees, of all or any part of the Trust, and
to vest in such Person, in such capacity and for the
benefit of the Certificateholders, such title to the
Trust, or any part thereof, and, subject to the other
provisions of this Section 10.14, such powers, duties,
obligations, rights, and trusts as the Servicer and the
Trustee may consider necessary or desirable. If the
Servicer shall not have joined in such appointment within
fifteen (15) days after the receipt by the Servicer of a
request so to do, or in case an Event of Servicing Termi-
nation shall have occurred and be continuing, the Trustee
alone shall have the power to make such appointment. No
co-trustee or separate trustee under this Agreement shall
be required to meet the terms of eligibility as a succes-
sor Trustee pursuant to Section 10.10 and no notice to
Certificateholders of the appointment of any co-trustee
or separate Trustee shall be required pursuant to Section
10.12. Notwithstanding the appointment of a co-trustee
or separate trustee hereunder, the Trustee shall not be
relieved of any of its obligations under this Agreement.
(b) Each separate trustee and co-trustee
shall, to the extent permitted by law, be appointed and
act subject to the following provisions and conditions:
(i) All rights, powers, duties, and
obligations conferred or imposed upon the Trustee
shall be conferred upon and exercised or performed
by the Trustee and such separate trustee or co-
trustee jointly (it being understood that such
separate trustee or co-trustee, is not authorized to
act separately without the Trustee joining in such
act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are
to be performed (whether as Trustee under this
Agreement or as successor to the Servicer under this
Agreement), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which
event such rights, powers, duties, and obligations
(including the holding of title to the Trust Proper-
ty or any portion thereof in any such jurisdiction)
shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the
direction of the Trustee.
(ii) No trustee under this Agreement
shall be personally liable by reason of any act or
omission of any other trustee under this Agreement.
(iii) The Servicer and the Trustee acting
jointly may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given
to the Trustee shall be deemed to have been given to each
of the then separate trustees and co-trustees, as effec-
tively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer
to this Agreement and in particular to the provisions of
this Article X. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be
vested with the estates or property specified in its
instrument of appointment, either jointly with the Trust-
ee or separately, as may be provided therein, subject to
all the provisions of this Agreement, specifically in-
cluding every provision of this Agreement relating to the
conduct of, affecting the liability of, or affording
protection to, the Trustee. Each such instrument shall
be filed with the Trustee and a copy thereof given to the
Servicer.
(d) Any separate trustee or co-trustee may, at
any time, appoint the Trustee its agent or attorney-in-
fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name.
If any separate trustee or co-trustee shall die, become
incapable of acting, resign or be removed, all of its
estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent
permitted by law, without the appointment of a new or
successor trustee. The Trustee shall promptly notify the
Servicer and the Rating Agencies of any appointment made
pursuant to this Section 10.14.
SECTION 10.15. Representations and Warranties
of Trustee. The Trustee makes the following representa-
tions and warranties on which the Sellers, the Servicer,
and Certificateholders may rely:
(i) Organization and Good Standing. The
Trustee is a _________________ [corporation] duly
organized, validly existing, and in good standing
under the laws of the State of _______; and
(ii) Power and Authority. The Trustee
has full power, authority and legal right to exe-
cute, deliver, and perform this Agreement and has
taken all necessary action to authorize the execu-
tion, delivery, and performance by it of this Agree-
ment.
SECTION 10.16. Reports by Trustee. The Trust-
ee shall provide to any Certificateholder or Certificate
Owner who so requests in writing (addressed to the
[__________]) a copy of any Servicer's Certificate, the
annual statement described in Section 3.10, and the
annual accountant's reports described in Section 3.11.
The Trustee may require any Certificateholder or Certifi-
cate Owner requesting such report to pay a reasonable sum
to cover the cost of the Trustee's complying with such
request.
SECTION 10.17. Tax Accounting. The Servicer
shall prepare or shall cause to be prepared any tax
returns required to be filed by the Trust and shall remit
such returns to the Trustee for signature at least five
(5) days before such returns are due to be filed. The
Trustee, upon request, will furnish the Servicer with all
such information known to the Trustee as may be reason-
ably required in connection with the preparation of all
tax returns of the Trust, and shall, upon request, exe-
cute such returns. The Servicer shall prepare the tax
returns of the Trust in accordance with the Code and any
regulations (including, to the extent applicable by their
terms, proposed regulations) thereunder.
[(a)] The [Class A] Certificateholders shall
be treated as owning the [Class A] Percentage of Interest
Collections (but limited to the [Class A] Certificate
Rate plus the Servicing Fee Rate) and Available Principal
[and the Class B Certificateholders shall be treated as
owning the Class B Percentage of Interest Collections
(but limited to the Class B Certificate Rate plus the
Servicing Fee Rate) and Available Principal]. The Sell-
ers shall be treated as having retained stripped coupons
on the [Class A] Percentage [and the Class B Percentage]
of each Receivable equal to the difference between the
Contract Rate of such Receivable and the portion owned by
the [Class A] Certificateholders [and the Class B Certif-
icateholders, respectively,] pursuant to this paragraph.
[(b) To the extent that as a result of the
subordination provisions of this Agreement, actual cash
distributions to the Class B Certificateholders are less
than the amount set forth in subsection (a), the Class B
Certificateholders shall be deemed to have (i) received
the amount set forth in subsection (a), (ii) paid such
difference to the Class A Certificateholders pursuant to
a guaranty of the Class A Certificates and (iii) become
subrogated to the rights of the Class A Certificatehold-
ers to recovery of the amounts so paid.]
ARTICLE XI
TERMINATION
SECTION 11.1. Termination of the Trust. (a)
The Trust, and the respective obligations and responsi-
bilities of the Sellers, the Servicer, and the Trustee
hereunder shall terminate (except as otherwise expressly
provided herein) upon the earliest of: (i) the Distribu-
tion Date next succeeding the purchase by the Servicer at
its option, pursuant to Section 11.2, of the Receivables
remaining in the Trust, (ii) the payment to Certificate-
holders of all amounts required to be paid to them pursu-
ant to this Agreement or (iii) the Distribution Date next
succeeding the month which is six (6) months after the
maturity or the liquidation of the last Receivable held
in the Trust and the disposition of any amounts received
upon liquidation of any property remaining in the Trust;
provided, however, that in no event shall the Trust
created by this Agreement continue beyond the expiration
of [21 years from the date hereof]. The Servicer shall
promptly notify the Trustee of any prospective termina-
tion pursuant to this Section 11.1.
(b) Notice of any termination, specifying the
Distribution Date upon which the Certificateholders may
surrender the Certificates to the Trustee for payment of
the final distribution and cancellation, shall be given
promptly by the Trustee by letter to Certificateholders
and the Rating Agencies mailed not earlier than the 15th
day and not later than the 25th day of the month next
preceding the specified Distribution Date stating the
amount of any such final payment and that the Record Date
otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation
and surrender of the Certificates at the office of the
Trustee therein specified. Upon presentation and surren-
der of the Certificates, the Trustee shall cause to be
distributed to Certificateholders amounts distributable
on such Distribution Date pursuant to Section 4.5.
Amounts remaining after distribution, or providing for
distribution, to the Certificateholders shall be distrib-
uted to the Servicer.
(c) In the event that all of the Certificate-
holders shall not surrender their Certificates for can-
cellation within six (6) months after the date specified
in the above-mentioned written notice, the Trustee shall
give a second written notice to the remaining Certifi-
cateholders to surrender their Certificates for cancella-
tion and receive the final distribution with respect
thereto. The Trustee shall after giving such notice
deliver or cause to be delivered to the Servicer the
Certificate Register. If, within one (1) year after the
second notice, all the Certificates shall not have been
surrendered for cancellation, the Servicer may take
appropriate steps, or may appoint an agent to take appro-
priate steps, to contact the remaining Certificateholders
concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets
that shall remain subject to this Agreement. Any funds
remaining in the Trust after exhaustion of such remedies
shall be distributed by the Trustee to the Sellers.
SECTION 11.2. Optional Purchase of All Receiv-
ables. In the event that (i) the Pool Balance shall be
5% or less of the Initial Pool Balance as of the last day
of any Collection Period, the Servicer, on behalf of the
Sellers, shall have the option to purchase the corpus of
the Trust on any Distribution Date occurring in a subse-
quent Collection Period. To exercise such option, the
Servicer shall notify the Trustee no later than the tenth
(10th) day of the month in which such repurchase is to be
effected and deposit the aggregate Purchase Amount for
the Receivables into the Certificate Account on the
Deposit Date occurring in the month in which such repur-
chase is to be effected. The payment shall be made in
the manner specified in Section 4.3, and shall be dis-
tributed pursuant to Section 4.5. Upon such payment the
Servicer shall succeed to and own all interests in and to
the Trust and the Trust Property.
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1. Amendment. (a) This Agreement
may be amended by the Sellers, the Servicer and the
Trustee, without the consent of any of the Certificate-
holders, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provi-
sions of this Agreement or modifying in any matter the
rights of the Certificateholders; provided, however, that
such action shall not, as evidenced by an Opinion of
Counsel to the Sellers delivered to the Trustee, materi-
ally adversely affect the interests of any Certificate-
holder or cause the Trust to be classified for federal
tax purposes as an association taxable as a corporation.
(b) This Agreement may also be amended from
time to time by the Sellers, the Servicer and the Trust-
ee, with the consent of the Holders of Certificates
evidencing not less than a majority of the aggregate
outstanding principal balance of the [Class A] Certifi-
cates [and the Class B Certificates], taken together as a
single class, for the purpose of adding any provisions to
or changing in any manner or eliminating any of the
provisions of this Agreement, or of modifying in any
manner the rights of the Certificateholders; provided,
however, that no such amendment shall (i) increase or
reduce in any manner the amount of, or accelerate or
delay the timing of, or change the allocation or priority
of, collections of payments on Receivables or distribu-
tions that are required to be made on any Certificate,
without the consent of all adversely affected Certifi-
cateholders, (ii) reduce the percentage of the aggregate
outstanding principal balance of the Certificates the
holders of which are required to consent to any such
amendment, without the consent of all Certificateholders,
(iii) materially adversely affect the interests of [ei-
ther] the [Class A] Certificateholders [or the Class B
Certificateholders] without the consent of the holders of
[Class A] Certificates [or Class B Certificates, as the
case may be,] evidencing not less than a majority of the
aggregate outstanding principal balance of the [Class A]
Certificates [or the Class B Certificates, as the case
may be], (iv) adversely affect the rating of the [Class
A] Certificates [or the Class B Certificates] by the
Rating Agencies without the consent of holders of [Class
A] Certificates [or Class B Certificates, as the case may
be,] evidencing not less than 66 2/3% of the aggregate
outstanding principal balance of the [Class A] Certifi-
cates [or the Class B Certificates, as the case may be,]
or (v) cause the Trust to be classified as an association
taxable as a corporation. Promptly after the execution
of any such amendment or consent, the Trustee shall
furnish written notification of the substance of such
amendment or consent to each Certificateholder.
(c) It shall not be necessary for the consent
of Certificateholders pursuant to this Section 12.1 to
approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining
such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject
to such reasonable requirements as the Trustee may pre-
scribe.
(d) Notice of any amendment of this Agreement
shall be sent by the Servicer to the Rating Agencies, at
such address as the Rating Agencies may from time to time
specify in writing.
(e) The Trustee may, but shall not be obligat-
ed to, enter into any such amendment which affects the
Trustee's own rights, duties or immunities under this
Agreement or otherwise.
(f) In connection with any amendment pursuant
to this Section 12.1, the Trustee shall be entitled to
receive an Opinion of Counsel to the effect that such
amendment is authorized or permitted by the Agreement.
SECTION 12.2. Protection of Title to Trust.
(a) The Servicer shall execute and file such financing
statements and cause to be executed and filed such con-
tinuation statements, all in such manner and in such
places as may be required by law fully to preserve,
maintain and protect the interest of the Certificatehold-
ers and the Trustee under this Agreement in the Trust
Property and in the proceeds thereof. The Servicer shall
deliver (or cause to be delivered) to the Trustee file-
stamped copies of, or filing receipts for, any document
filed as provided above, as soon as available following
such filing. In the event the Servicer fails to perform
its obligations under this subsection, the Trustee may
(but shall not be obligated to) do so, at the expense of
the Servicer.
(b) Neither the Sellers nor the Servicer shall
change its name, identity, or corporate structure in any
manner that would, could, or might make any financing
statement or continuation statement filed by the Servicer
in accordance with paragraph (a) above seriously mislead-
ing within the meaning of SECTION 9-402(7) of the Relevant UCC,
unless it shall have given the Trustee at least sixty
Business Days prior written notice thereof.
(c) The Sellers and the Servicer shall give
the Trustee at least ten Business Days prior written
notice of any relocation of their respective principal
executive offices if, as a result of such relocation, the
applicable provisions of the Relevant UCC would require
the filing of any amendment of any previously filed
financing or continuation statement or of any new financ-
ing statement. The Sellers and the Servicer shall at all
times maintain each office from which they shall service
Receivables, and their respective principal executive
offices, within the United States of America.
(d) The Servicer shall maintain accounts and
records as to each Receivable accurately and in suffi-
cient detail to permit (i) the reader thereof to know, as
of the most recent monthly calculation, the status of
such Receivable, including payments and Recoveries made
and payments owing (and the nature of each), and (ii)
reconciliation between payments or Recoveries on (or with
respect to) each Receivable and the amounts from time to
time deposited in the Certificate Account in respect of
such Receivable.
(e) The Servicer shall maintain its computer
systems so that, from and after the time of sale under
this Agreement of the Receivables to the Trustee, the
Servicer's master computer records (including archives)
that shall refer to a Receivable indicate clearly that
such Receivable is owned by the Trust. Indication of the
Trust's ownership of a Receivable shall be deleted from
or modified on the Servicer's computer systems when, and
only when, the Receivable shall be paid or shall become a
Purchased Receivable.
(f) If at any time a Seller or the Servicer
shall propose to sell, grant a security interest in, or
otherwise transfer any interest in motor vehicle receiv-
ables to any prospective purchaser, lender or other
transferee, such Seller or the Servicer, as the case may
be, shall give to such prospective purchaser, lender, or
other transferee computer tapes, records, or print-outs
(including any restored from archives) that, if they
shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been sold
and is owned by the Trust.
(g) Upon request, the Servicer, at its ex-
pense, shall furnish to the Trustee, within ten (10)
Business Days, a list of all Receivables then held as
part of the Trust, together with a reconciliation of such
list to each Schedule of Receivables and to each of the
Servicer's Certificates furnished pursuant to Section 3.9
indicating removal of Receivables from the Trust.
SECTION 12.3. Limitation on Rights of Certifi-
cateholders. (a) The death or incapacity of any Certif-
icateholder shall not operate to terminate this Agreement
or the Trust, or entitle the Certificateholder's legal
representatives or heirs to claim an accounting or to
take any action or commence any proceeding in any court
for a partition or winding up of the Trust, or otherwise
affect the rights, obligations, and liabilities of the
parties to this Agreement or any of them.
(b) No Certificateholder shall have any right
to vote (except as expressly provided herein) or in any
manner otherwise control the operation and management of
the Trust, or the obligations of the parties to this
Agreement, nor shall anything set forth in this Agree-
ment, or contained in the terms of the Certificates, be
construed so as to constitute the Holders as partners or
members of an association; nor shall any Certificatehold-
er be under any liability to any third party by reason of
any action taken pursuant to any provision of this Agree-
ment.
(c) No Certificateholder shall have any right
by virtue or by availing itself of any provisions of this
Agreement to institute any suit, action, or proceeding in
equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have given
to the Trustee a written notice of default and of the
continuance thereof, as hereinbefore provided, and unless
the Holders of the Certificates evidencing not less than
a majority of the aggregate outstanding principal balance
of the [Class A] Certificates [and the Class B Certifi-
cates], taken together as a single class, shall have made
written request upon the Trustee to institute such ac-
tion, suit, or proceeding in its own name as Trustee
under the Agreement and shall have offered to the Trustee
such reasonable indemnity as it may require against the
costs, expenses, and liabilities to be incurred therein
or thereby, and the Trustee, for thirty (30) days after
its receipt of such notice, request, and offer of indem-
nity, shall have neglected or refused to institute any
such action, suit or proceeding; no one or more Holders
of Certificates shall have any right in any manner what-
ever by virtue or by availing itself or themselves of any
provisions of this Agreement to affect, disturb or preju-
dice the rights of the Holders of any other of the Cer-
tificates, or to obtain or seek to obtain priority over
or preference to any other such Holder or to enforce any
right, under this Agreement, except in the manner provid-
ed in this Agreement and for the equal, ratable, and
common benefit of all [Class A] Certificateholders [or
Class B Certificateholders, as the case may be]. For the
protection and enforcement of the provisions of this
Section 12.3, each Certificateholder and the Trustee
shall be entitled to such relief as can be given either
at law or in equity.
SECTION 12.4. GOVERNING LAW. THIS AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS, AND REME-
DIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETER-
MINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 12.5. Notices. All demands, notices,
and communications under this Agreement shall be in
writing, personally delivered, or sent by telecopier,
overnight courier or mailed by certified mail, return
receipt requested, and shall be deemed to have been duly
given upon receipt (a) in the case of a Seller or
Servicer, to the applicable Seller or the Servicer, c/o
NationsBank, N.A., NationsBank Corporate Center, 100
North Tryon Street, Charlotte, North Carolina 28255, or
at such other address as shall be designated by such
Seller or Servicer in a written notice to the Trustee and
(b) in the case of the Trustee, at the
__________________. Any notice required or permitted to
be mailed to a Certificateholder shall be given by first
class mail, postage prepaid, at the address of record of
such Holder. Any notice so mailed within the time pre-
scribed in this Agreement shall be conclusively presumed
to have been duly given, whether or not the Certificate-
holder shall receive such notice.
SECTION 12.6. Severability of Provisions. If
any one or more of the covenants, provisions or terms of
this Agreement shall be for any reason whatsoever held
invalid, then such covenants, provisions or terms shall
be deemed severable from the remaining covenants, provi-
sions or terms of this Agreement, and shall in no way
affect the validity or enforceability of the other provi-
sions of this Agreement or of the Certificates or the
rights of the Holders thereof.
SECTION 12.7. Assignment. Notwithstanding
anything to the contrary contained herein, except as
provided in Section 8.3, this Agreement may not be as-
signed by the Servicer. This Agreement may not be as-
signed or subcontracted by the Trustee except as provided
by Sections 10.11 through 10.14 hereof.
SECTION 12.8. Certificates Nonassessable and
Fully Paid. The interests represented by the Certifi-
cates shall be nonassessable for any losses or expenses
of the Trust or for any reason whatsoever, and, upon
authentication thereof by the Trustee pursuant to Section
6.2, each Certificate shall be deemed fully paid.
SECTION 12.9. Intention of Parties. (a) The
execution and delivery of this Agreement shall constitute
an acknowledgment by the Sellers and the Trustee, on
behalf of the Certificateholders, that it is intended
that the assignment and transfer herein contemplated
constitute a sale and assignment outright of, and not a
security interest in, the Receivables and the other Trust
Property, conveying good title thereto free and clear of
any liens, from the Sellers to the Trust, and that the
Receivables and the other Trust Property shall not be a
part of any Seller's estate in the event of the insolven-
cy, receivership, conservatorship or the occurrence of
another similar event, of, or with respect to, such
Seller. In the event that such conveyance is determined
to be made as security for a loan made by the Trust or
the Certificateholders to a Seller, the parties intend
that such Seller shall have granted to the Trustee a
security interest in all of such Seller's right, title
and interest in, to and under the Trust Property conveyed
to the Trust pursuant to Section 2.1 in order to secure
the obligations under the Certificates, and that this
Agreement shall constitute a security agreement under
applicable law.
(b) The execution and delivery of this Agree-
ment shall constitute an acknowledgment by the Sellers
and the Trustee on behalf of the Certificateholders that
they intend that the Trust be classified (for federal tax
purposes) as a grantor trust under Subpart E, Part I of
Subchapter J of the Internal Revenue Code of which the
Certificateholders are owners, and not as an association
taxable as a corporation. The powers granted and obliga-
tions undertaken in this Agreement shall be construed so
as to further such intent.
SECTION 12.10. Counterparts. For the purpose
of facilitating the execution of this Agreement and for
other purposes, this Agreement may be executed simulta-
neously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all
of which counterparts shall constitute but one and the
same instrument.
SECTION 12.11. Limitation of Liability of the
Trustee and the Collateral Agent. Notwithstanding any-
thing contained herein to the contrary (i) this Agreement
has been accepted by _____________, not in its individual
capacity but solely as Trustee and as Collateral Agent
with respect to the Reserve Account and in no event shall
_____________ have any liability for the representations,
warranties, covenants, agreements or other obligations of
the Sellers hereunder or in any of the certificates,
notices or agreements delivered pursuant hereto, as to
all of which recourse shall be had solely to the assets
of the Sellers and (ii) under no circumstances shall
_____________ be personally liable for the payment of any
indebtedness or expenses of the Trust; provided, however,
nothing contained herein shall relieve _____________ of
its obligations contained herein in its capacity as
successor Servicer. Notwithstanding anything to the
contrary contained herein, the Collateral Agent shall
have the same rights and protections afforded to the
Trustee under this Agreement.
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed by their re-
spective officers thereunto duly authorized as of the day
and year first above written.
NATIONSBANK, N.A.,
as Seller and as Servicer
By:
Name:
Title:
NATIONSBANK, N.A. (SOUTH)
as Seller
By:
Name:
Title:
NATIONSBANK OF TEXAS, N.A.,
as Seller
By:
Name:
Title:
__________________
not in its individual capacity but
solely as Trustee
By:
Name:
Title:
___________________
not in its individual capacity but
solely as Collateral Agent
By:
Name:
Title:
SCHEDULE A
SCHEDULE OF RECEIVABLES
Available from the Trustee
SCHEDULE B
LOCATIONS OF RECEIVABLE FILES
NationsBanc Services, Inc.
4161 Piedmont Parkway
Greensboro, North Carolina 27410
NationsBanc Services, Inc.
411 North Akard Street
7th Floor
Dallas, Texas 75201
EXHIBIT A
[FORM OF [CLASS A] CERTIFICATE]
NATIONSBANK AUTO GRANTOR TRUST 199_-_
5.85% ASSET BACKED CERTIFICATE, [CLASS A]
Evidencing a fractional undivided interest in the Trust, as
defined below, the property of which includes a pool of retail
motor vehicle installment sales contracts secured by the new and
used automobiles, vans and light-duty trucks financed thereby and
sold to the Trust by NationsBank, N.A., NationsBank, N.A. (South)
and NationsBank of Texas, N.A.
THIS CERTIFICATE REPRESENTS A FRACTIONAL UNDIVIDED INTEREST IN
THE TRUST AND DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF
NATIONSBANK, N.A., NATIONSBANK, N.A. (SOUTH) OR NATIONSBANK OF
TEXAS, N.A. OR ANY AFFILIATE THEREOF. THIS CERTIFICATE AND THE
RECEIVABLES ARE NOT DEPOSITS AND ARE NOT INSURED OR GUARANTEED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMEN-
TAL AGENCY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTA-
TIVE OF [THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC")], TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANS-
FER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGIS-
TERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF [DTC] (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF [DTC]), ANY TRANS-
FER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.
CUSIP No:____________
$_________________
Initial Principal
Amount
THIS CERTIFIES THAT ____________________ is the regis-
tered owner of a __________ dollars, nonassessable, fully paid,
fractional undivided interest in the NationsBank Auto Grantor
Trust 199_-_ (the "Trust") formed by NationsBank, N.A.,
NationsBank, N.A. (SOUTH) and NationsBank of Texas, N.A., each a
national banking association (together, the "Sellers"). The
Trust was created pursuant to a Pooling and Servicing Agreement
dated as of _________, 1996 (as amended, supplemented or other-
wise modified and in effect from time to time, the "Agreement")
by and among the Sellers, NationsBank N.A., as servicer (the
"Servicer"), and _____________, as trustee (the "Trustee") and as
collateral agent, a summary of certain of the provisions of which
is set forth on the reverse hereof.
To the extent not otherwise defined herein, the capi-
talized terms used herein have the meanings assigned to them in
the Agreement. This Certificate is one of the duly authorized
Certificates designated as "____% Asset Backed Certificates,
[Class A]" (herein called the "Certificates"). This Certificate
is issued under and is subject to the terms, provisions, and
conditions of the Agreement, to which the Holder of this Certifi-
cate by virtue of the acceptance hereof assents and by which such
Holder is bound. The Trust Property includes (as more fully
described in the Agreement) a pool of retail motor vehicle
installment sales contracts (the "Receivables") for the purchase
of new and used automobiles, vans and light-duty trucks financed
thereby (the "Financed Vehicles"), certain monies received
thereunder after the close of business of the Servicer on
___________, ____ (the "Cut-Off Date"), the Sellers' security
interests in the Financed Vehicles and all proceeds of the
foregoing.
Subject to the terms and conditions of the Agreement
(including the availability of funds for distributions) and until
the obligations created by the Agreement shall have terminated in
accordance therewith, there will be distributed, but only from
funds on deposit in the [Class A] Distribution Account, on the
15th day of each month or, if such 15th day is not a Business
Day, the next succeeding Business Day (each such date, a "Distri-
bution Date"), commencing December 15, 1995, to the Person in
whose name this Certificate is registered at the close of busi-
ness of the Trustee on the day immediately preceding such Distri-
bution Date (or, if Definitive Certificates are issued, the last
day of the Collection Period immediately preceding such Distribu-
tion Date) (the "Record Date"), such Certificateholder's frac-
tional undivided interest in the amounts to be distributed to
[Class A] Certificateholders pursuant to the Agreement on such
Distribution Date.
Distributions on this Certificate will be made by the
Trustee by check mailed to the Certificateholder of record at its
address as it appears in the Certificate Register without the
presentation or surrender of this Certificate or the making of
any notation hereon, except that with respect to a Certificate
registered in the name of a Clearing Agency or its nominee,
distributions will be made by wire transfer of immediately
available funds. Except as otherwise provided in the Agreement
and notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and
surrender of this Certificate at the office or agency maintained
for that purpose by the Trustee in the Borough of Manhattan, the
City of New York.
This Certificate does not purport to summarize the
Agreement and reference is hereby made to the Agreement for
information with respect to the rights, benefits, obligations and
duties evidenced thereby. A copy of the Agreement may be exam-
ined during normal business hours at the ___________ office of
the Trustee, located at ______________________________, Atten-
tion: __________________, and at such other places, if any,
designated by the Trustee, by any Certificateholder upon request.
Reference is hereby made to the further provisions of
this Certificate set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon shall
have been executed by an authorized officer of the Trustee, by
manual signature, this Certificate shall not entitle the holder
hereof to any benefit under the Agreement or be valid for any
purpose.
IN WITNESS WHEREOF, the Trustee, on behalf of the
Trust, and not in its individual capacity, has caused this
Certificate to be duly executed.
NATIONSBANK AUTO GRANTOR TRUST
199_-_
By: _____________, as Trustee
By:
Authorized officer
DATED: ____________, __
Trustee's Certificate of
Authentication:
This is one of the [Class A] Certificates referred
to in the within-mentioned Agreement.
_____________, as Trustee
By:
Authorized Officer
[FORM OF REVERSE OF CERTIFICATE]
NATIONSBANK AUTO GRANTOR TRUST 199_-_
____% ASSET BACKED CERTIFICATE, [Class A]
The Agreement permits, with certain exceptions
therein provided, the amendment thereof and the modification
of the rights of the Certificateholders under the Agreement at
any time by the Sellers, the Servicer and the Trustee with the
consent of the Holders of Certificates evidencing not less
than a majority of the aggregate outstanding principal balance
of the [Class A] Certificates [and the Class B Certificates]
taken together as a single class. Any such consent by the
Holder of this Certificate shall be conclusive and binding on
such Holder and on all future Holders of this Certificate and
of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of
such consent is made upon this Certificate. The Agreement
also permits the amendment thereof, in certain circumstances,
without the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certifi-
cate is registerable in the Certificate Register upon surren-
der of this Certificate for registration of transfer at the
office or agency maintained by the Trustee in the Borough of
Manhattan, the City of New York, accompanied by a written
instrument of transfer in form satisfactory to the Trustee
duly executed by the Holder hereof or such Holder's attorney
duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same
aggregate interest in the Trust will be issued to the desig-
nated transferee.
As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable
for new Certificates of authorized denominations evidencing
the same aggregate interest in the Trust, as requested by the
Holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the
Trustee may require payment of a sum sufficient to cover any
tax or governmental charges payable in connection therewith.
The Sellers, the Servicer, the Trustee, and any
agent of the Sellers, the Servicer or the Trustee may treat
the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Sellers, the
Servicer, the Trustee, or any such agent shall be affected by
any notice to the contrary.
The obligations and responsibilities created by the
Agreement and the Trust created thereby will terminate upon
the earliest of (i) the Distribution Date immediately succeed-
ing the purchase by the Servicer, at its option, of the Re-
ceivables remaining in the Trust, as described below, (ii) the
payment to Certificateholders of all amounts required to be
paid to them pursuant to the Agreement, or (iii) the Distribu-
tion Date which is six months after the maturity or the liqui-
dation of the last Receivable held in the Trust and the dispo-
sition of any amounts received upon liquidation of any proper-
ty remaining in the Trust. The Agreement provides that the
Servicer may, at its option, purchase the Receivables remain-
ing in the Trust at a price equal to the aggregate Purchase
Amounts thereof, and such purchase of the Receivables will
effect early retirement of the Certificates; however, such
right of purchase is exercisable only after the first day of a
Collection Period as of which the Pool Balance is 5% or less
of the Initial Pool Balance.
Notwithstanding anything contained in the Agreement
to the contrary (i) the Agreement has been accepted by
_____________ not in its individual capacity but solely as
Trustee and as Collateral Agent with respect to the Reserve
Account and in no event shall _____________ have any liability
for the representations, warranties, covenants, agreements or
other obligations of the Sellers thereunder or in any of the
certificates, notices or agreements delivered pursuant there-
to, as to all of which recourse shall be had solely to the
assets of the Sellers and (ii) except in its capacity as
successor Servicer, under no circumstances shall _____________
be personally liable for the payment of any indebtedness or
expenses of the Trust.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells,
assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or typewrite name and address, including postal
zip code, of assignee)
the within Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
Attorney to transfer said Certificate on the books of the
Certificate Registrar, with full power of substitution in the
premises.
Dated:
*
Signature Guaranteed:
*
* NOTICE: The signature to this assignment must correspond
with the name as it appears upon the face of the within
Certificate in every particular, without alteration,
enlargement or any change whatever. Such signature must
be guaranteed by a member of the New York Stock Exchange
or a commercial bank or trust company.
EXHIBIT B
[FORM OF CLASS B CERTIFICATE]
NATIONSBANK AUTO GRANTOR TRUST 199_-_
____% ASSET BACKED CERTIFICATE, CLASS B
[Evidencing a fractional undivided interest in the Trust, as
defined below, the property of which includes a pool of retail
motor vehicle installment sales contracts and secured by the
new and used automobiles, vans and light-duty trucks financed
thereby and sold to the Trust by NationsBank, N.A.,
NationsBank, N.A. (South) and NationsBank of Texas, N.A.
[THIS CERTIFICATE REPRESENTS A FRACTIONAL UNDIVIDED INTEREST
IN THE TRUST AND DOES NOT REPRESENT AN INTEREST IN OR OBLIGA-
TION OF NATIONSBANK, N.A., NATIONSBANK OF GEORGIA, N.A.,
NATIONSBANK OF FLORIDA, N.A. OR NATIONSBANK OF TEXAS, N.A. OR
ANY AFFILIATE THEREOF. THIS CERTIFICATE AND THE RECEIVABLES
ARE NOT DEPOSITS AND ARE NOT INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMEN-
TAL AGENCY.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRE-
SENTATIVE OF [THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPO-
RATION ("DTC")], TO THE ISSUER OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF [DTC]), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
[THIS CERTIFICATE AND ANY BENEFICIAL INTEREST IN
THIS CERTIFICATE MAY NOT BE ACQUIRED BY (a) AN EMPLOYEE BENE-
FIT PLAN (AS DEFINED IN SECTION 3(3) OF THE EMPLOYEE RETIRE-
MENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA")), THAT
IS SUBJECT TO THE PROVISIONS OF TITLE 1 OF ERISA, (b) A PLAN
DESCRIBED IN SECTION 4975(e)(1) OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE"), OR (c) ANY ENTITY WHOSE
UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN'S
INVESTMENT IN THE ENTITY (EACH A "BENEFIT PLAN") UNLESS AN
EXEMPTION FROM THE PROHIBITED TRANSACTION RULES APPLIES. BY
ACCEPTING AND HOLDING THIS CERTIFICATE OR AN INTEREST HEREIN,
THE HOLDER HEREOF OR OWNER HEREOF SHALL BE DEEMED TO HAVE
REPRESENTED AND WARRANTED THAT EITHER (x) IT IS NOT A BENEFIT
PLAN OR (y) AN EXEMPTION FROM THE PROHIBITED TRANSACTION RULES
APPLIES SUCH THAT THE ACQUISITION AND SUBSEQUENT HOLDING OF
THE CLASS B CERTIFICATES OR AN INTEREST THEREIN WILL NOT
CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION IN VIOLATION OF
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE.]
CUSIP No.: ______________
$
Initial Principal
Amount
[THIS CERTIFIES THAT _________________ is the
registered owner of a _______________ dollars, nonassessable,
fully paid, fractional undivided interest in the NationsBank
Auto Grantor Trust 199_-_ (the "Trust") formed by NationsBank,
N.A., NationsBank, N.A. (South) and NationsBank of Texas,
N.A., each a national banking association (together, the
"Sellers"). The Trust was created pursuant to a Pooling and
Servicing Agreement dated as of ________, ____ (as amended,
supplemented or otherwise modified and in effect from time to
time, the "Agreement") by and among the Sellers, NationsBank,
N.A., as servicer (in such capacity, the "Servicer"), and
_____________, as trustee (the "Trustee") and as collateral
agent, a summary of certain of the provisions of which is set
forth on the reverse hereof.
[To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to
them in the Agreement. This Certificate is one of the duly
authorized Certificates designated as "____% Asset Backed
Certificates, Class B" (herein called the "Certificates").
This Certificate is issued under and is subject to the terms,
provisions, and conditions of the Agreement, to which the
Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound. The Trust Property
includes (as more fully described in the Agreement) a pool of
retail motor vehicle installment sales contracts (the "Receiv-
ables") for the purchase of new and used automobiles, vans and
light-duty trucks financed thereby (the "Financed Vehicles"),
certain monies received thereunder after the close of business
of the Servicer on _________, ____ (the "Cut-Off Date"), the
Sellers' security interests in the Financed Vehicles and all
proceeds of the foregoing.
[Subject to the terms and conditions of the Agree-
ment (including the availability of funds for distributions)
and until the obligations created by the Agreement shall have
terminated in accordance therewith, there will be distributed,
but only from funds on deposit in the Class B Distribution
Account, on the 15th day of each month or, if such 15th day is
not a Business Day, the next succeeding Business Day (each
such date, a "Distribution Date"), commencing _____________,
__, to the Person in whose name this Certificate is registered
at the close of business of the Trustee on the day immediately
preceding such Distribution Date (or, if Definitive Certifi-
cates are issued, the last day of the Collection Period imme-
diately preceding such Distribution Date) (the "Record Date"),
such Certificateholder's fractional undivided interest in the
amounts to be distributed to Class B Certificateholders pursu-
ant to the Agreement on such Distribution Date.
[Pursuant to the Agreement, distributions of inter-
est and principal on the Class B Certificates will be subordi-
nated in priority of payment to interest and principal due on
the Class A Certificates in the event of defaults and delin-
quencies on the Receivables. The Class B Certificateholders
will not receive any distributions of interest with respect to
a Collection Period until the full amount of interest on the
Class A Certificates relating to such Collection Period has
been deposited in the Class A Distribution Account, and the
Class B Certificateholders will not receive any distributions
of principal with respect to such Collection Period until the
full amount of interest on and principal of the Class A Cer-
tificates relating to such Collection Period has been deposit-
ed in the Class A Distribution Account as set forth in the
Agreement.
[Distributions on this Certificate will be made by
the Trustee by check mailed to the Certificateholder of record
at its address as it appears in the Certificate Register
without the presentation or surrender of this Certificate or
the making of any notation hereon, except that with respect to
a Certificate registered in the name of a Clearing Agency or
its nominee, distributions will be made by wire transfer of
immediately available funds. Except as otherwise provided in
the Agreement and notwithstanding the above, the final distri-
bution on this Certificate will be made after due notice by
the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office
or agency maintained for that purpose by the Trustee in the
Borough of Manhattan, the City of New York.
[This Certificate does not purport to summarize the
Agreement and reference is hereby made to the Agreement for
information with respect to the rights, benefits, obligations
and duties evidenced thereby. A copy of the Agreement may be
examined during normal business hours at the _____________ of
the Trustee, located at ____________________________________,
Attention: ___________________ and at such other places, if
any, designated by the Trustee, by any Certificateholder upon
request.
[Reference is hereby made to the further provisions
of this Certificate set forth on the reverse hereof, which
further provisions shall for all purposes have the same effect
as if set forth at this place.
[Unless the certificate of authentication hereon
shall have been executed by an authorized officer of the
Trustee, by manual signature, this Certificate shall not
entitle the holder hereof to any benefit under the Agreement
or be valid for any purpose.]
IN WITNESS WHEREOF, the Trustee, on behalf of the
Trust, and not in its individual capacity, has caused this
Certificate to be duly executed.
NATIONSBANK AUTO GRANTOR
TRUST 199_-_
By: _____________, as Trustee
By:
Authorized Officer
DATED: __________, 19__
Trustee's Certificate of
Authentication:
This is one of the Class B Certificates referred
to in the within-mentioned Agreement.
_____________, as Trustee
By:
Authorized Officer
[FORM OF REVERSE OF CERTIFICATE]
NATIONSBANK AUTO GRANTOR TRUST 199_-_
___% ASSET BACKED CERTIFICATE, CLASS B
[The Agreement permits, with certain exceptions
therein provided, the amendment thereof and the modification
of the rights of the Certificateholders under the Agreement at
any time by the Sellers, the Servicer and the Trustee with the
consent of the Holders of Certificates evidencing not less
than a majority of the aggregate outstanding principal balance
of the Class A Certificates and the Class B Certificates taken
together as a single class. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such
Holder and on all future Holders of this Certificate and of
any Certificate issued upon the transfer hereof or in exchange
herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain circumstances,
without the consent of the Holders of any of the Certificates.
[As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certifi-
cate is registerable in the Certificate Register upon surren-
der of this Certificate for registration of transfer at the
office or agency maintained by the Trustee in the Borough of
Manhattan, the City of New York, accompanied by a written
instrument of transfer in form satisfactory to the Trustee
duly executed by the Holder hereof or such Holder's attorney
duly authorized in writing, and thereupon one or more new
Certificates of authorized denominations evidencing the same
aggregate interest in the Trust will be issued to the desig-
nated transferee.
[As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable
for new Certificates of authorized denominations evidencing
the same aggregate interest in the Trust, as requested by the
Holder surrendering the same. No service charge will be made
for any such registration of transfer or exchange, but the
Trustee may require payment of a sum sufficient to cover any
tax or governmental charges payable in connection therewith.
[The Sellers, the Servicer, the Trustee, and any
agent of the Sellers, the Servicer or the Trustee may treat
the Person in whose name this Certificate is registered as the
owner hereof for all purposes, and none of the Sellers, the
Servicer, the Trustee, or any such agent shall be affected by
any notice to the contrary.
[The obligations and responsibilities created by the
Agreement and the Trust created thereby will terminate upon
the earliest of (i) the Distribution Date immediately succeed-
ing the purchase by the Servicer, at its option, of the Re-
ceivables remaining in the Trust, as described below, (ii) the
payment to Certificateholders of all amounts required to be
paid to them pursuant to the Agreement, or (iii) the Distribu-
tion Date which is six months after the maturity or the liqui-
dation of the last Receivable held in the Trust and the dispo-
sition of any amounts received upon liquidation of any proper-
ty remaining in the Trust. The Agreement provides that the
Servicer may, at its option, purchase the Receivables remain-
ing in the Trust at a price equal to the aggregate Purchase
Amounts thereof, and such purchase of the Receivables will
effect early retirement of the Certificates; however, such
right of purchase is exercisable only after the first day of a
Collection Period as of which the Pool Balance is 5% or less
of the Initial Pool Balance.
[Notwithstanding anything contained in the Agreement
to the contrary (i) the Agreement has been accepted by
_____________ not in its individual capacity but solely as
Trustee and as Collateral Agent with respect to the Reserve
Account and in no event shall _____________ have any liability
for the representations, warranties, covenants, agreements or
other obligations of the Sellers thereunder or in any of the
certificates, notices or agreements delivered pursuant there-
to, as to all of which recourse shall be had solely to the
assets of the Sellers and (ii) except in its capacity as
successor Servicer, under no circumstances shall _____________
be personally liable for the payment of any indebtedness or
expenses of the Trust.]
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells,
assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or typewrite name and address, including postal
zip code, of assignee)
the within Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
Attorney
to transfer said Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:
*
Signature Guaranteed:
*
* NOTICE: The signature to this assignment must correspond
with the name as it appears upon the face of the within
Certificate in every particular, without alteration,
enlargement or any change whatever. Such signature must
be guaranteed by a member of the New York Stock Exchange
or a commercial bank or trust company.
EXHIBIT C
[FORM OF SERVICER'S CERTIFICATE]
The undersigned certifies that he is a Servicing
Officer of NationsBank, N.A., a national banking association
organized under the laws of the United States (the
"Servicer"), and that as such s/he is duly authorized to
execute and deliver this certificate on behalf of the Servicer
pursuant to Section 3.9 of the Pooling and Servicing Agreement
dated as of __________, 1996 by and among NationsBank, N.A.,
NationsBank, N.A. (South) and NationsBank of Texas, N.A., as
sellers (the "Sellers"), the Servicer, and _____________, as
trustee (the "Trustee") of the NationsBank Auto Grantor Trust
199_-_ (the "Pooling and Servicing Agreement") (all capital-
ized terms used herein without definition have the respective
meanings specified in the Pooling and Servicing Agreement),
and further certifies that:
1. The Servicer report for the period from
____________ to __________ attached to this certificate is
complete and accurate and contains all information required by
Section 3.9 of the Pooling and Servicing Agreement; and
2. As of the date hereof, no Event of Servicing
Termination or event that with notice or lapse of time or both
would become an Event of Servicing Termination has occurred.
IN WITNESS WHEREOF, the undersigned has affixed
hereunto [her][his] signature this ____ day of ____________
19__.
NATIONSBANK, N.A.
By:
Name:
Title:
[FORM OF MONTHLY SERVICER REPORT]
EXHIBIT D
[FORM OF DEPOSITORY AGREEMENT]
TABLE OF CONTENTS
ARTICLE I
CREATION OF TRUST; CERTAIN
DEFINITIONS AND GENERAL PROVISIONS
SECTION 1.1. Creation of Trust . . . . . . . . . . . . . 1
SECTION 1.2 Definitions . . . . . . . . . . . . . . . . 1
SECTION 1.3 Usage of Terms . . . . . . . . . . . . . . . 1
SECTION 1.4. Calculations . . . . . . . . . . . . . . . . 1
SECTION 1.5. References . . . . . . . . . . . . . . . . . 2
SECTION 1.6. Section References . . . . . . . . . . . . . 2
SECTION 1.7. Action by or Consent of Certificateholders . 2
ARTICLE II
THE TRUST PROPERTY
SECTION 2.1. Conveyance of Trust Property . . . . . . . . 2
SECTION 2.2. Warranties of Each Seller as to Each
Receivable . . . . . . . . . . . . . . . . 3
SECTION 2.3. Warranties as to the Receivables in the Aggre-
gate and Actions of the Sellers . . . . . . 7
SECTION 2.4. Repurchase upon Breach . . . . . . . . . . . 8
SECTION 2.5. Custody of Receivable Files . . . . . . . . 9
SECTION 2.6. Duties of Servicer as Custodian . . . . . 10
SECTION 2.7. Instructions; Authority to Act . . . . . . 11
SECTION 2.8. Custodian's Indemnification . . . . . . . 11
SECTION 2.9. Effective Period and Termination . . . . . 12
ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST PROPERTY
SECTION 3.1. Duties of Servicer . . . . . . . . . . . . 13
SECTION 3.2. Collection of Receivable Payments; Credit De-
ferrals . . . . . . . . . . . . . . . . . 16
SECTION 3.3. Realization upon Receivables . . . . . . . 17
SECTION 3.4. Physical Damage Insurance . . . . . . . . 18
SECTION 3.5. Maintenance of Security Interests in Financed
Vehicles . . . . . . . . . . . . . . . . . 18
SECTION 3.6. Covenants of the Servicer . . . . . . . . 18
SECTION 3.7. Purchases by Servicer upon Breach . . . . 19
SECTION 3.8. Servicing Compensation . . . . . . . . . . 19
SECTION 3.9. Servicer's Report . . . . . . . . . . . . 20
SECTION 3.10. Annual Statement as to Compliance . . . . 20
SECTION 3.11. Independent Certified Public Accountants' Re-
ports . . . . . . . . . . . . . . . . . . 21
SECTION 3.12. Access to Certain Documentation and Information
Regarding Receivables . . . . . . . . . . 21
SECTION 3.13. Reports to the Commission . . . . . . . . 21
SECTION 3.14. Reports to the Rating Agencies . . . . . . 21
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNTS;
STATEMENTS TO CERTIFICATEHOLDERS
SECTION 4.1. Establishment of Accounts . . . . . . . . 22
SECTION 4.2 Collections . . . . . . . . . . . . . . . . 25
SECTION 4.3 Advances; Other Deposits . . . . . . . . . . 26
SECTION 4.4 Net Deposits . . . . . . . . . . . . . . . . 27
SECTION 4.5 Distributions . . . . . . . . . . . . . . . 28
SECTION 4.6 Reserve Accounts . . . . . . . . . . . . . . 29
SECTION 4.7 Statements to Certificateholders . . . . . . 30
ARTICLE V
[Reserved]
ARTICLE VI
THE CERTIFICATES
SECTION 6.1. The Certificates . . . . . . . . . . . . . 32
SECTION 6.2. Authentication of Certificates . . . . . . 32
SECTION 6.3. Registration of Transfer and Exchange of Cer-
tificates . . . . . . . . . . . . . . . . 32
SECTION 6.4. Mutilated, Destroyed, Lost or Stolen Certifi-
cates . . . . . . . . . . . . . . . . . . 33
SECTION 6.5. Persons Deemed Owners . . . . . . . . . . 33
SECTION 6.6. Access to List of Certificateholders' Names and
Addresses . . . . . . . . . . . . . . . . 34
SECTION 6.7. Maintenance of Office or Agency . . . . . 34
SECTION 6.8. Book-Entry Certificates . . . . . . . . . 34
SECTION 6.9. Notices to Clearing Agency . . . . . . . . 35
SECTION 6.10. Definitive Certificates . . . . . . . . . 36
ARTICLE VII
THE SELLERS
SECTION 7.1. Representations and Warranties of the Sellers
37
SECTION 7.2. Liability of Sellers; Indemnities . . . . 38
SECTION 7.3. Merger or Consolidation of the Sellers . . 39
SECTION 7.4. Limitation on Liability of Sellers and Others
40
SECTION 7.5. Sellers May Own Certificates . . . . . . . 40
ARTICLE VIII
THE SERVICER
SECTION 8.1. Representations and Warranties of Servicer 41
SECTION 8.2. Liability of Servicer; Indemnities . . . . 42
SECTION 8.3. Merger or Consolidation of the Servicer . 44
SECTION 8.4. Limitation on Liability of Servicer and Others
44
SECTION 8.5. Servicer Not to Resign . . . . . . . . . . 44
SECTION 8.6. Servicer May Own Certificates . . . . . . 44
ARTICLE IX
SERVICING TERMINATION
SECTION 9.1. Events of Servicing Termination . . . . . 46
SECTION 9.2. Trustee to Act; Appointment of Successor
Servicer . . . . . . . . . . . . . . . . . 48
SECTION 9.3. Effect of Servicing Transfer . . . . . . . 48
SECTION 9.4. Notification to Certificateholders . . . . 49
SECTION 9.5. Waiver of Past Events of Servicing Termination
49
SECTION 9.6. Transfer of Accounts . . . . . . . . . . . 50
ARTICLE X
THE TRUSTEE
SECTION 10.1. Acceptance by Trustee . . . . . . . . . . 51
SECTION 10.2. Duties of Trustee . . . . . . . . . . . . 51
SECTION 10.3. Trustee's Certificate . . . . . . . . . . 53
SECTION 10.4. Trustee's Assignment of Purchased Receivables
53
SECTION 10.5. Certain Matters Affecting the Trustee . . 54
SECTION 10.6. Trustee Not Liable for Certificates or Receiv-
ables . . . . . . . . . . . . . . . . . . 56
SECTION 10.7. Trustee May Own Certificates . . . . . . . 57
SECTION 10.8. Trustee's Fees and Expenses . . . . . . . 57
SECTION 10.9. Trustee May Enforce Claims Without Possession
of Certificates . . . . . . . . . . . . . 58
SECTION 10.10. Eligibility Requirements for Trustee . . . 58
SECTION 10.11. Resignation or Removal of Trustee . . . . 58
SECTION 10.12. Successor Trustee . . . . . . . . . . . . 59
SECTION 10.13. Merger or Consolidation of Trustee . . . . 60
SECTION 10.14. Appointment of Co-Trustee or Separate Trustee
60
SECTION 10.15. Representations and Warranties of Trustee 62
SECTION 10.16. Reports by Trustee . . . . . . . . . . . . 62
SECTION 10.17. Tax Accounting . . . . . . . . . . . . . . 62
ARTICLE XI
TERMINATION
SECTION 11.1. Termination of the Trust . . . . . . . . . 64
SECTION 11.2. Optional Purchase of All Receivables . . . 65
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1. Amendment . . . . . . . . . . . . . . . . 66
SECTION 12.2. Protection of Title to Trust . . . . . . . 67
SECTION 12.3. Limitation on Rights of Certificateholders 68
SECTION 12.4. Governing Law . . . . . . . . . . . . . . 69
SECTION 12.5. Notices . . . . . . . . . . . . . . . . . 69
SECTION 12.6. Severability of Provisions . . . . . . . . 70
SECTION 12.7. Assignment . . . . . . . . . . . . . . . . 70
SECTION 12.8. Certificates Nonassessable and Fully Paid 70
SECTION 12.9. Intention of Parties . . . . . . . . . . . 70
SECTION 12.10. Counterparts . . . . . . . . . . . . . . . 71
SECTION 12.11. Limitation of Liability of the Trustee . . 71
EXHIBIT 5.1
June 27, 1996
NationsBank, N.A.
NationsBank Corporate Center
100 North Tryon Street
Charlotte, North Carolina 28255
NationsBank, N.A. (South)
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75202
Re: NationsBank, N.A., NationsBank, N.A. (South),
and NationsBank of Texas, N.A.
Registration Statement on Form S-3 No. 333-3557
Ladies and Gentlemen:
We have acted as special counsel to
NationsBank, N.A., NationsBank, N.A. (South), and
NationsBank of Texas, N.A. (together, the "Sellers"), in
connection with Registration Statement on Form S-3 No.
333-3557, as amended (the "Registration Statement"),
filed with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, respecting the
issuance by various trusts (each, a "Trust") to be formed
pursuant to either an Amended and Restated Trust Agree-
ment (the "Trust Agreement") to be entered into by the
Sellers and the Owner Trustee (the "Owner Trustee")
designated therein or a Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement") to be entered
into by the Sellers, NationsBank, N.A. (the "Servicer")
and the Trustee designated therein (the "Trustee") of
Asset Backed Securities consisting of either Notes and/or
Certificates. Any Asset Backed Securities consisting of
Notes are to be issued pursuant to an Indenture (the
"Indenture") to be entered into by the Trust and the
Indenture Trustee designated therein (the "Indenture
Trustee") and any Asset Backed Securities consisting of
Certificates are to be issued pursuant to either the
Trust Agreement or the Pooling and Servicing Agreement.
Capitalized terms used herein and not otherwise defined
herein have the meanings assigned to them in the Regis-
tration Statement.
In this connection, we have examined and relied
upon the Registration Statement filed with the Securities
and Exchange Commission (the "SEC") on May 13, 1996 and
Amendment No. 1 thereto, filed with the SEC on June 27,
1996, including (i) the form of prospectus included
therein (the "Prospectus"); (ii) the forms of prospectus
supplements included therein (the "Prospectus Supple-
ments"); (iii) the form of Indenture; (iv) the form of
Trust Agreement; (v) the form of Sale and Servicing
Agreement; (vi) the form of Administration Agreement;
(vii) the form of Pooling and Servicing Agreement; and
(viii) such other documents as we have deemed necessary
or appropriate as a basis for the opinion set forth
below, and we have assumed (i) that such documents will
not be amended and (ii) that the parties to such docu-
ments will comply with the terms thereof.
In our examination, we have assumed the genu-
ineness of all signatures, the authenticity of all docu-
ments submitted to us as originals, the conformity to
original documents of all documents submitted to us as
certified or photostatic copies and the authenticity of
the originals of such latter documents. As to any facts
material to the opinions expressed herein which were not
independently established or verified, we have relied
upon statements, representations, and certifications of
officers and other representatives of the Sellers, the
Servicer, the Underwriters.
We express no opinion as to the laws of any
jurisdiction other than the laws of the State of New York
and the laws of the United States of America to the
extent specifically referred to herein.
Based upon and subject to the foregoing, we are
of the opinion that:
1. When the Notes have been duly and validly au-
thorized and executed on behalf of the related
Trust and authenticated by the Indenture Trust-
ee in accordance with the provisions of the
Indenture and paid for by the Underwriters in
accordance with the Underwriting Agreement, the
Notes will be legally issued, fully-paid and
non-assessable and will be valid and binding
obligations of the related Trust except to the
extent that enforcement thereof may be limited
by (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereaf-
ter in effect relating to creditors' rights
generally and the rights of creditors of na-
tional banking associations, (b) general prin-
ciples of equity (regardless of whether such
enforceability is considered in a proceeding at
law or in equity) and (c) the qualification
that certain of the remedial provisions con-
tained in the Indenture may be unenforceable in
whole or in part, but the inclusion of such
provisions will not affect the validity of the
Indenture taken as a whole, and the Indenture,
taken as a whole, together with applicable law,
contains adequate remedial provisions for the
practical realization of the benefits of the
security created thereby.
2. When the Certificates to be issued pursuant to
any Trust Agreement have been duly and validly
authorized by the related Trust and have been
executed on behalf of the related Trust and
authenticated by the Owner Trustee in accor-
dance with the provisions of the Trust Agree-
ment and paid for by the Underwriters in accor-
dance with the Underwriting Agreement, such
Certificates will be legally issued, fully-paid
and non-assessable.
3. When the Certificates to be issued pursuant to
any Pooling and Servicing Agreement have been
duly and validly authorized by the Sellers and
have been executed on behalf of the related
Trust and authenticated by the Trustee in ac-
cordance with the provisions of the Pooling and
Servicing Agreement and paid for by the Under-
writers in accordance with the Underwriting
Agreement, such Certificates will be legally
issued, fully-paid and non-assessable.
We consent to the filing of this opinion as an
exhibit to the Registration Statement and to the refer-
ence to Skadden, Arps, Slate, Meagher & Flom under the
caption "Legal Matters" in the Prospectus and the forms
of prospectus supplements included in the Registration
Statement.
Very truly yours,
/s/ Skadden, Arps, Slate,
Meagher & Flom
EXHIBIT 8.1
June 27, 1996
NationsBank, N.A.
NationsBank Corporate Center
100 North Tryon Street
Charlotte, North Carolina 28255
NationsBank, N.A. (South)
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75202
Re: NationsBank, N.A., NationsBank, N.A. (South),
and NationsBank of Texas, N.A.
Registration Statement on Form S-3 No. 333-3557
Ladies and Gentlemen:
We have acted as special counsel to
NationsBank, N.A., NationsBank, N.A. (South), and
NationsBank of Texas, N.A. (together, the "Sellers"), in
connection with Registration Statement on Form S-3 No.
333-3557, as amended (the "Registration Statement"),
filed with the Securities and Exchange Commission under
the Securities Act of 1933, as amended, respecting the
issuance by various trusts (each, a "Trust") to be formed
pursuant to either an Amended and Restated Trust Agree-
ment (the "Trust Agreement") to be entered into by the
Sellers and the Owner Trustee (the "Owner Trustee")
designated therein or a Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement") to be entered
into by the Sellers, NationsBank, N.A. (the "Servicer")
and the Trustee designated therein (the "Trustee") of
Asset Backed Securities consisting of either Notes and/or
Certificates. Any Asset Backed Securities consisting of
Notes are to be issued pursuant to an Indenture (the
"Indenture") to be entered into by the Trust and the
Indenture Trustee designated therein (the "Indenture
Trustee") and any Asset Backed Securities consisting of
Certificates are to be issued pursuant to either the
Trust Agreement or the Pooling and Servicing Agreement.
Capitalized terms used herein and not otherwise defined
herein have the meanings assigned to them in the Regis-
tration Statement.
In this connection, we have examined and relied
upon the Registration Statement filed with the Securities
and Exchange Commission (the "SEC") on May 13, 1996 and
Amendment No. 1 thereto, filed with the SEC on June 27,
1996, including (i) the form of prospectus included
therein (the "Prospectus"); (ii) the forms of prospectus
supplements included therein (the "Prospectus Supple-
ments"); (iii) the form of Indenture; (iv) the form of
Trust Agreement; (v) the form of Sale and Servicing
Agreement; (vi) the form of Administration Agreement;
(vii) the form of Pooling and Servicing Agreement; and
(viii) such other documents as we have deemed necessary
or appropriate as a basis for the opinion set forth
below, and we have assumed (i) that such documents will
not be amended and (ii) that the parties to such docu-
ments will comply with the terms thereof.
In our examination, we have assumed the genu-
ineness of all signatures, the authenticity of all docu-
ments submitted to us as originals, the conformity to
original documents of all documents submitted to us as
certified or photostatic copies and the authenticity of
the originals of such latter documents. As to any facts
material to the opinions expressed herein which were not
independently established or verified, we have relied
upon statements, representations, and certifications of
officers and other representatives of the Sellers, the
Servicer, the Underwriters.
In rendering our opinion, we have also consid-
ered and relied upon the Internal Revenue Code of 1986,
as amended, and administrative rulings, judicial deci-
sions, regulations, and such other authorities as we have
deemed appropriate, all as in effect as of the date
hereof. The statutory provisions, regulations, interpre-
tations, and other authorities upon which our opinion is
based are subject to change, and such changes could apply
retroactively. In addition, there can be no assurance
that positions contrary to those stated in our opinion
will not be taken by the Internal Revenue Service.
We express no opinions as to the laws of any
jurisdiction other than the federal laws of the United
States of America to the extent specifically referred to
herein.
Based upon and subject to the foregoing, we are
of the opinion that the statements in the Prospectus and
the Prospectus Supplement under the heading "Summary--Tax
Status" to the extent they relate to federal income tax
matters and under the heading "Federal Income Tax Conse-
quences," subject to the qualifications set forth there-
in, accurately describe the material federal income tax
consequences to holders of Notes and/or Certificates,
under existing law and the assumptions stated therein.
We also note that the Prospectus and the Basic
Documents do not relate to a specific transaction.
Accordingly, the above-referenced description of federal
income tax consequences may require modification in the
context of an actual transaction.
We consent to the filing of this opinion as an
exhibit to the Registration Statement.
Very truly yours,
/s/ Skadden, Arps, Slate,
Meagher & Flom
Exhibit 25.1
Securities Act of 1933 File No. _________
(If application to determine eligibility of trustee
for delayed offering pursuant to Section 305 (b) (2))
- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE
PURSUANT TO SECTION 305(b)(2)_________________
------------------
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
(Exact name of trustee as specified in its charter)
13-2633612
(I.R.S. Employer Identification Number)
1 CHASE MANHATTAN PLAZA, NEW YORK, NEW YORK
(Address of principal executive offices)
10081
(Zip Code)
---------------
NATIONSBANK, N.A.
NATIONSBANK, N.A. (SOUTH)
NATIONSBANK OF TEXAS, N.A.
(Exact name of obligor as specified in its charter)
UNITED STATES OF AMERICA
(State or other jurisdiction of incorporation or organization)
57-0236115, 58-0193243
75-2238693
(I.R.S. Employer Identification No.)
NATIONSBANK, N.A. NATIONSBANK, N.A. (SOUTH) NATIONSBANK OF TEXAS, N.A.
NATIONSBANK 600 PEACHTREE STREET, N.E. 901 MAIN STREET
CORPORATE CENTER ATLANTA, GEORGIA 30308 DALLAS, TEXAS 75202
100 NORTH TRYON STREET
CHARLOTTE,
NORTH CAROLINA 28255
(ADDRESSES OF PRINCIPAL EXECUTIVE OFFICES)
---------------------------------
ASSET BACKED NOTES
(Title of the indenture securities)
-------------------------------------------------------------------------
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Comptroller of the Currency, Washington, D.C.
Board of Governors of The Federal Reserve System,
Washington, D. C.
(b) Whether it is authorized to exercise corporate trust
powers.
Yes.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee,
describe each such affiliation.
The Trustee is not the obligor, nor is the Trustee
directly or indirectly controlling, controlled by, or
under common control with the obligor.
(See Note on Page 2.)
ITEM 16. LIST OF EXHIBITS.
List below all exhibits filed as a part of this statement of
eligibility.
*1. -- A copy of the articles of association of the trustee as
now in effect . (See Exhibit T-1 (Item 12), Registration No.
33-55626.)
*2. -- Copies of the respective authorizations of The Chase
Manhattan Bank (National Association) and The Chase Bank of New York
(National Association) to commence business and a copy of approval
of merger of said corporations, all of which documents are still in
effect. (See Exhibit T-1 (Item 12), Registration No. 2-67437.)
*3. -- Copies of authorizations of The Chase Manhattan Bank
(National Association) to exercise corporate trust powers, both of
which documents are still in effect. (See Exhibit T-1
(Item 12), Registration No. 2-67437.)
*4. -- A copy of the existing by-laws of the trustee. (See
Exhibit T-1 (Item 12(a)), Registration No. 22-26320.)
*5. -- A copy of each indenture referred to in Item 4, if the
obligor is in default. (Not applicable.)
*6. -- The consents of United States institutional trustees
required by Section 321(b) of the Act.
(See Exhibit T-1, (Item 12), Registration No. 22-19019.)
7. -- A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its supervising or
examining authority.
- -------------------
*The Exhibits thus designated are incorporated herein by
reference. Following the description of such Exhibits is a reference
to the copy of the Exhibit heretofore filed with the Securities and
Exchange Commission, to which there have been no amendments or
changes.
-------------------
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment
by the trustee of all facts on which to base a responsive answer to Item
2 the answer to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended
by an amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of
1939, the trustee, The Chase Manhattan Bank (National Association), a
corporation organized and existing under the laws of the United States
of America, has duly caused this statement of eligibility to be signed
on its behalf by the undersigned, thereunto duly authorized, all in the
City of New York, and the
State of New York, on the 10th day of June, 1996.
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
-------------------------
By: Thomas Mackay, Vice President
EXHIBIT 7
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the THE CHASE
MANHATTAN BANK, N.A. of New York in the State of New York, at the
close of business on March 31, 1996, published in response to call
made by Comptroller of the Currency, under title 12, United States
Code, Section 161.
<TABLE>
<CAPTION>
CHARTER NUMBER 2370 COMPTROLLER OF THE CURRENCY NORTHEASTERN DISTRICT
STATEMENT OF RESOURCES AND LIABILITIES
ASSETS THOUSANDS
OF DOLLARS
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin.................................. $ 5,026,000
Interest-bearing balances........................................................... 4,135,000
Held to maturity securities............................................................. 0
Available-for-sale securities........................................................... 5,632,000
Federal funds sold and securities purchased under agreements to resell in domestic
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs:
Federal funds sold.................................................................. 1,254,000
Securities purchased under agreements to resell..................................... 880,000
Loans and lease financing receivable:
Loans and leases, net of unearned income........................... $ 60,869,000
LESS: Allowance for loan and lease losses.......................... 1,113,000
LESS: Allocated transfer risk reserve............................. 0
Loans and leases, net of unearned income, allowance, and reserve.................... 59,756,000
Assets held in trading accounts......................................................... 13,203,000
Premises and fixed assets (including capitalized leases)................................ 1,690,000
Other real estate owned................................................................. 268,000
Investments in unconsolidated subsidiaries and associated companies..................... 29,000
Customers' liability to this bank on acceptances outstanding............................ 1,170,000
Intangible assets....................................................................... 1,330,000
Other assets............................................................................ 9,398,000
---------
TOTAL ASSETS............................................................................ $103,771,000
============
LIABILITIES
Deposits:
In domestic offices................................................................. $ 30,681,000
Noninterest-bearing.............................................. $ 11,913,000
Interest-bearing................................................. 18,768,000
----------
In foreign offices, Edge and Agreement subsidiaries, and IBFs....................... 38,923,000
Noninterest-bearing.............................................. $ 3,696,000
Interest-bearing................................................. 35,227,000
---- ----------
Federal funds purchased and securities sold under agreements to repurchase in domestic
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs:
Federal funds purchased............................................................. 3,143,000
Securities sold under agreements to repurchase...................................... 100,000
Demand notes issued to the U.S. Treasury................................................ 25,000
Trading liabilities..................................................................... 8,453,000
Other borrowed money:
With original maturity of one year or less.......................................... 3,064,000
With original maturity of more than one year........................................ 365,000
Mortgage indebtedness and obligations under capitalized leases.......................... 39,000
Bank's liability on acceptances executed and outstanding................................ 1,173,000
Subordinated notes and debentures....................................................... 1,960,000
Other liabilities....................................................................... 8,482,000
---------
TOTAL LIABILITIES....................................................................... 96,408,000
Limited-life preferred stock and related surplus........................................ 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus........................................... 0
Common stock............................................................................ 921,000
Surplus................................................................................. 5,354,000
Undivided profits and capital reserves.................................................. 1,092,000
Net unrealized holding gains (losses) on available-for-sale securities.................. 15,000
Cumulative foreign currency translation adjustments..................................... 11,000
------
TOTAL EQUITY CAPITAL.................................................................... 7,363,000
---------
TOTAL LIABILITIES, LIMITED-LIFE PREFERRED STOCK,
AND EQUITY CAPITAL................................................................ $ 103,771,000
</TABLE>
I, Lester J. Stephens, Jr., Senior Vice President and
Controller of the above named bank do hereby declare that this
Report of Condition is true and correct to the best of my knowledge
and belief.
(Signed) Lester J. Stephens, Jr.
We the undersigned directors, attest to the correctness of this
statement of resources and liabilities. We declare that it has been
examined by us, and to the best of our knowledge and belief has been
prepared in conformance with the instructions and is true and
correct.
(Signed) Thomas G. Labrecque
(Signed) Donald Trautlein Directors
(Signed) Richard J. Boyle
Exhibit 99.1
SALE AND SERVICING AGREEMENT, dated as of
_______ __, ____ (as from time to time amended, supple-
mented or otherwise modified and in effect, this "Agree-
ment"), by and among NATIONSBANK AUTO OWNER TRUST ____-_
(the "Issuer"), a Delaware business trust, NATIONSBANK,
N.A., NATIONSBANK, N.A. (SOUTH) and NATIONSBANK OF TEXAS,
N.A. each a national banking association, (each a "Sell-
er" and together, the "Sellers"), and NATIONSBANK, N.A.,
as servicer (the "Servicer").
WHEREAS, the Issuer desires to purchase a
portfolio of receivables arising in connection with
retail motor vehicle installment sales contracts indi-
rectly originated by the Sellers in the ordinary course
of their business;
WHEREAS, the Sellers are willing to sell,
transfer, assign, set over and convey such receivables to
the Issuer; and
WHEREAS, NationsBank, N.A., is willing to
service such receivables on behalf of the Issuer;
NOW, THEREFORE, in consideration of the premis-
es and the mutual covenants herein contained, and other
good and valuable consideration, the receipt and suffi-
ciency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
Except as otherwise specified herein or as the
context may otherwise require, capitalized terms used but
not otherwise defined herein are defined in Appendix A
hereto, which also contains rules as to usage that shall
be applicable herein.
End of Article I
ARTICLE II
OWNER TRUST PROPERTY
SECTION 2.1. Conveyance of Owner Trust Proper-
ty. In consideration of the Issuer's delivery to, or
upon the order of, the Sellers of Notes and Certificates,
in aggregate principal amounts equal to the initial
principal amount of the Notes and the Initial Certificate
Balance, respectively, the Sellers hereby irrevocably
sell, transfer, assign, set over and otherwise convey to
the Issuer without recourse (subject to the obligations
herein) all right, title and interest of the Sellers,
whether now owned or hereafter acquired, in and to the
Owner Trust Property. The sale, transfer, assignment,
setting over and conveyance made hereunder shall not
constitute and is not intended to result in an assumption
by the Issuer of any obligation of the Sellers to the
Obligors, the Dealers or any other Person in connection
with the Receivables and the other Owner Trust Property
or any agreement, document or instrument related thereto.
It is the intention of the Sellers and the
Issuer that the transfer of the Owner Trust Property
contemplated herein constitute a sale of the Owner Trust
Property, conveying good title to the Owner Trust Proper-
ty from the Sellers to the Issuer. However, in the event
that such transfer is deemed to be a pledge to secure the
payment of the Notes and the Certificates, each Seller
hereby grants to the Issuer a first priority security
interest in all of such Seller's right, title and inter-
est in, to and under the Owner Trust Property conveyed by
such Seller, and all proceeds thereof, to secure the
payment of the Notes and the Certificates, and in such
event, this Agreement shall constitute a security agree-
ment under applicable law.
SECTION 2.2. Representations and Warranties of
the Sellers as to the Receivables. Each Seller makes the
following representations and warranties as to the Re-
ceivables conveyed by such Seller on which the Issuer
shall be deemed to have relied in accepting such Receiv-
ables. Such representations and warranties speak as of
the execution and delivery of this Agreement, but shall
survive the sale, transfer, assignment, setting over and
conveyance of the Receivables to the Issuer and the
pledge thereof to the Indenture Trustee pursuant to the
Indenture.
(i) Characteristics of Receivables. The
Receivable has been fully and properly executed by
the parties thereto and (a) has been originated by a
Dealer for the retail sale of a Motor Vehicle in the
ordinary course of such Dealer's business, and has
been purchased by the Seller from such Dealer in the
ordinary course of the Seller's business and in
accordance with the Seller's underwriting standards
to finance the retail sale by a Dealer of the Fi-
nanced Vehicle and has been validly assigned by such
Dealer to the Seller, (b) is secured by a valid,
subsisting, and enforceable first priority security
interest in favor of the Seller in the Financed
Vehicle (subject to administrative delays and cleri-
cal errors on the part of the applicable government
agency and to any statutory or other lien arising by
operation of law after the Closing Date which is
prior to such security interest), which security
interest is assignable together with such Receiv-
able, and has been so assigned, by the Seller to the
Trust, (c) contains or is accompanied by a security
agreement which contains customary and enforceable
provisions such that the rights and remedies of the
secured party are adequate for realization of the
benefits of the security interest in the subject
collateral, (d) provides at origination for level
monthly payments (provided, that the last payment
may be different from the level payment), which
fully amortize the Amount Financed over the original
term and (e) provides for interest at the related
Contract Rate.
(ii) Schedule of Receivables. The infor-
mation set forth in the Schedule of Receivables with
respect to such Receivable has been produced from
the Electronic Ledger and was true and correct as of
the close of business of the Servicer on the Cut-Off
Date [(and) any applicable Subsequent Transfer
Date)]; and the Cut-Off Date Principal Balance of
the Receivable has been accurately and correctly
calculated.
(iii) Compliance with Laws. To the
knowledge of the Seller, the Receivable, and the
sale of the related Financed Vehicle, complied at
the time it was originated or made, and will comply
as of the Closing Date, in all material respects
with all requirements of applicable federal, state,
and local laws, and regulations thereunder, includ-
ing, to the extent applicable, usury laws, the
Federal Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Fair Credit Billing Act, the
Fair Credit Reporting Act, the Fair Debt Collection
Practices Act, Federal Reserve Board Regulations B
and Z, and any other consumer credit, equal opportu-
nity, and disclosure laws; provided, however, that
if, notwithstanding the knowledge of the Seller, any
Receivable, or the sale of the related Financed
Vehicle, fails to comply with applicable law in the
manner and to the extent set forth herein, the
Seller shall repurchase such Receivable in accor-
dance with the terms and conditions set forth in
Section 2.4, but such failure to comply with such
laws shall not constitute a breach of this warranty
except for purposes of Section 2.4.
(iv) Binding Obligation. The Receivable
constitutes the genuine, legal, valid, and binding
payment obligation in writing of the Obligor, en-
forceable in all material respects by the holder
thereof in accordance with its terms, except as such
enforceability may be limited by applicable bank-
ruptcy, insolvency, reorganization, moratorium,
conservatorship, receivership, liquidation and other
similar laws affecting creditors' rights in general.
(v) No Government Obligor. The Obligor
on the Receivable is not the United States of Ameri-
ca or any state thereof or any local government, or
any agency, department, political subdivision or
instrumentality of the United States of America or
any state thereof or any local government.
(vi) Receivables in Force. The Receiv-
able has not been satisfied, subordinated, or re-
scinded and the Financed Vehicle has not been re-
leased from the lien granted by the Receivable in
whole or in part.
(vii) No Amendment or Waiver. No materi-
al provision of the Receivable has been amended,
waived, altered or modified in any respect, except
pursuant to a document, instrument or writing in-
cluded in the Receivable File or reflected in the
Electronic Ledger, and no such amendment, waiver,
alteration or modification causes such Receivable
not to conform to the other warranties contained in
this Section.
(viii) No Defenses. The Receivable is
not subject to any right of rescission, setoff,
counterclaim or defense, including the defense of
usury, and the operation of any of the terms of the
Receivable, or the exercise of any right thereunder,
will not render the Receivable unenforceable in
whole or in part or subject to any right of rescis-
sion, setoff, counterclaim or defense, including the
defense of usury, and the Seller has not received
written notice of the assertion of any such right of
rescission, setoff, counterclaim or defense asserted
with respect thereto.
(ix) No Liens. The Seller has not re-
ceived notice of any liens or claims, including
liens for work, labor, materials or unpaid state or
federal taxes relating to the Financed Vehicle, that
are or may be liens prior to, or equal in priority
to or coordinate with, the lien granted by the
Receivable.
(x) No Default. Except for payment
delinquencies continuing for a period of not more
than thirty (30) days as of the Cut-Off Date [(or
any applicable Subsequent Transfer Date)], to the
knowledge of the Seller (a) no default, breach,
violation, or event permitting acceleration under
the terms of any Receivable exists; and (b) no
continuing condition that with notice or lapse of
time, or both, would constitute a default, breach,
violation, or event permitting acceleration under
the terms of any Receivable has arisen; and the
Seller has not waived any of the foregoing; provid-
ed, however, that if, notwithstanding the knowledge
of the Seller, any of the events specified in (a) or
(b) above exists or has arisen with respect to a
Receivable, the Seller shall repurchase such Receiv-
able in accordance with the terms and conditions of
Section 2.4, with the existence of such events not
constituting a breach of this warranty, except for
purposes of Section 2.4.
(xi) Insurance. The Financed Vehicle
securing such Receivable is required by the Receiv-
able to be insured under an Insurance Policy.
(xii) Good Title. Immediately prior to
the assignment herein contemplated, the Receivable
had not been sold, assigned, pledged or otherwise
conveyed by the Seller to any Person, and the Seller
had good and marketable title to the Receivable free
and clear of any encumbrance, equity, lien, pledge,
charge, claim, security interest or other right or
interest of any other Person, was the sole owner
thereof and had full right and power to transfer and
assign the Receivable to the Trust. Immediately
upon the transfer and assignment of the Receivable
to the Trust, the Trust shall have good and market-
able title to the Receivable, free and clear of any
encumbrance, equity, lien, pledge, charge, claim,
security interest or other right or interest of any
other Person; and all filings and actions required
by the UCC with respect to the transfer to the Trust
of Receivables associated with the sale of the same
have been accomplished for the purpose of complying
with the UCC provisions governing the relative
priority of interests of parties in the Receivables.
(xiii) Lawful Assignment. The Receivable
has not been originated in, and is not subject to
the laws of, any jurisdiction under which the sale,
transfer or assignment of such Receivable hereunder
or pursuant to transfers of the Notes or Certifi-
cates are unlawful, void, or voidable.
(xiv) All Filings Made. All filings have
been made, including filings under the UCC, which
are necessary in any jurisdiction to cause the
ownership and title interests of the Issuer in the
Receivables to be afforded priority over competing
claims of the holders of security interests or other
claims against whom such filings can assure priori-
ty.
(xv) Valid Security Interest. On the
Closing Date, there will exist a valid, subsisting
and enforceable first priority perfected security
interest in the Financed Vehicle securing the Re-
ceivable (subject to administrative delays and
clerical errors on the part of the applicable gov-
ernment agency and to any statutory or other lien
arising by operation of law after the Closing Date
which is prior to such security interest). With
respect to the foregoing, each Seller hereby cove-
nants to take all action necessary such that, at
such time as enforcement of such security interest
is sought, there shall exist a valid, subsisting and
enforceable first priority perfected security inter-
est in the Financed Vehicle for the benefit of the
Issuer (subject to administrative delays and cleri-
cal errors on the part of the applicable government
agency and any statutory or other lien arising by
operation of law after the Closing Date which is
prior to such interest).
(xvi) Capacity of Parties. To the knowl-
edge of the Seller, all parties to the Receivable
had capacity to execute the Receivable; provided,
however, that if, notwithstanding the knowledge of
the Seller, all parties to any Receivable did not
have the capacity to execute such Receivable, the
Seller shall repurchase such Receivable in accor-
dance with the terms and conditions of Section 2.4,
with the existence of such lack of capacity not
constituting a breach of this warranty, except for
purposes of Section 2.4.
(xvii) One Original. Only one original
of each Receivable was executed.
(xviii) Obligations; No Impairment. The
Seller has duly fulfilled all obligations on its
part to be fulfilled under, or in connection with,
the Receivable and has done nothing to impair the
rights of the Issuer, the Noteholders or the Certif-
icateholders in the Receivable or the proceeds
thereof.
(xix) No Fraud or Misrepresentation. To
the knowledge of the Seller, the Receivable was
originated by a Dealer and sold by such Dealer to
the Seller without any conduct constituting fraud or
misrepresentation against the Obligor on the part of
such Dealer; provided, however, that if, notwith-
standing the knowledge of the Seller, any Receivable
was originated and sold under conduct constituting
fraud or misrepresentation against the Obligor on
the part of such Dealer, the Seller shall repurchase
such Receivable in accordance with the terms and
conditions of Section 2.4, with the existence of
such conduct not constituting a breach of this
warranty, except for purposes of Section 2.4.
(xx) Possession. Immediately prior to
the Closing Date, the Seller (or an Affiliate) will
have possession of the Receivable File, and there
are and there will be no custodial agreements in
effect materially adversely affecting the right or
ability of the Seller to make, or cause to be made,
any delivery required hereunder.
(xxi) Bulk Transfer Laws. The transfer,
assignment and conveyance of the Receivable and
Receivable Files by the Seller pursuant to this
Agreement is not subject to the bulk transfer or any
similar statutory provisions in effect in any appli-
cable jurisdiction.
SECTION 2.3. Warranties as to the Receivables
in the Aggregate and Actions of the Sellers. The Sellers
hereby make the following warranties jointly and several-
ly as to the Receivables on which the Issuer shall be
deemed to have relied in accepting the Receivables.
Unless otherwise indicated, such warranties shall speak
as of the execution and delivery of this Agreement, but
shall survive the sale, transfer, and assignment of the
Receivables to the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.
(a) Amounts. The aggregate Cut-Off Date Prin-
cipal Balances of the Receivables are equal to the Ini-
tial Pool Balance.
(b) Individual Characteristics. The Receiv-
ables have the following individual characteristics as of
the close of business of the Servicer on the Cut-Off
Date: (a) the obligations of the Obligors on the Receiv-
ables are secured by security interests in new or used
automobiles, vans or light-duty trucks; (b) each Receiv-
able has a Contract Rate of at least ___% and not more
than ___%; (c) each Receivable had a remaining maturity
of not less than [12] months and not more than __ months;
(d) each Receivable had a Cut-Off Date Principal Balance
of not less than $_____ and not more than $_____; (e) no
Receivable was more than thirty (30) days delinquent as
of the Cut-Off Date; (f) no Financed Vehicle had been
repossessed as of the Cut-Off Date; (g) no Receivable is
a Defaulted Receivable; (h) each Receivable is a retail
motor vehicle installment sales contract; (i) each [Sim-
ple Interest] Receivable [(except for those Receivables
that are Balloon Receivables)], at origination, provides
for allocation of payments between principal and interest
by the Simple Interest Method and for level monthly
payments that fully amortize the Amount Financed over the
original term; (j) each Receivable is not related to a
Motor Vehicle that is the subject of forced-placed insur-
ance; [and (k) each Balloon Receivable, at origination,
provides for allocation of payments between principal and
interest by the Simple Interest Method and for equal
monthly payments (except for the final scheduled monthly
payment) which fully amortize the Amount Financed over
the original term]. The Receivables were selected utiliz-
ing selection procedures that were not adverse to the
Certificateholders.
(c) Aggregate Characteristics. The Receivables
had the following characteristics in the aggregate as of
the Cut-Off Date: (a) approximately __% of the Initial
Pool Balance was attributable to loans for purchases of
new Financed Vehicles, and approximately __% of the
Initial Pool Balance was attributable to loans for pur-
chases of used Financed Vehicles; (b) the weighted aver-
age Contract Rate of the Receivables was approximately
____%; (c) there were _____ Receivables; (d) the average
Cut-Off Date Principal Balance was approximately $_____;
(e) the weighted average original term and weighted
average remaining term of the Receivables were approxi-
mately _____ months and _____ months, respectively; [(f)
no Receivable was originated on a date prior to ____ __,
____; (g) no Receivable has a first Scheduled Payment due
after ____ __, ____; and (h) % of the Initial Pool
Balance ( Receivables) are Simple Interest Receivables
and % of the Initial Pool Balance ( Receivables)
are Balloon Receivables.]
(d) Computer Tape. The Computer Tapes were
complete and accurate as of the Cut-Off Date and include
a description of the same Receivables that are described
in the Schedule of Receivables.
(e) Marking Records. On or before the Closing
Date, the Sellers will have caused the portions of the
Electronic Ledger relating to the Receivables to be
clearly and unambiguously marked to show that such Re-
ceivables constitute part of the Owner Trust Property and
are owned by the Trust in accordance with the terms of
the trust created hereunder.
(f) No Assignment. As of the Closing Date,
none of the Sellers shall have taken any action to convey
any right to any Person that would result in such Person
having a right to payments received under the Insurance
Policies, the Dealer Agreements, the Dealer Assignments
or payments due under the Receivables that is senior to,
or equal with, that of the Trust.
(g) Location of Receivable Files. The Receiv-
able Files shall be kept at one or more of the locations
listed in Schedule B hereto.
(h) Rating Agencies. The rating agencies
rating the Notes and the Certificates are Moody's and
Standard & Poor's.
(i) Agreement. The representations and warran-
ties of the Sellers in Section 6.1 are true and correct.
SECTION 2.4. Repurchase upon Breach. The
Sellers, the Servicer, the Issuer or the Owner Trustee,
as the case may be, shall inform the other parties to
this Agreement and the Indenture Trustee promptly, in
writing, upon the discovery of any breach of the Sellers'
representations and warranties made by the Sellers pursu-
ant to Section 2.2. (including, in the case of Sections
2.2(iii), (x), (xvi) and (xix), any breach or failure
which would have occurred if such warranty had not been
made to the knowledge of the Sellers) or Section 2.3.
Unless the breach shall have been cured by the last day
of the Collection Period which includes the 60th day
after the date on which the Seller becomes aware of, or
receives notice in writing of, such breach or failure,
the Indenture Trustee shall enforce the obligation of the
Sellers under this Section 2.4, to repurchase, as of the
last day of such Collection Period, any Receivable mate-
rially and adversely affected by the breach on the Depos-
it Date immediately following such Collection Period;
provided, however, that if such breach or failure occurs
solely as a result of NationsBank, N.A.'s practice of
retaining original Motor Vehicle loan documents only in
microfilm form, NationsBank, N.A. shall not be required
to repurchase any such Receivables unless the Dealer with
respect to such Receivable becomes the subject of any
bankruptcy, insolvency or similar proceedings and the
trustee in bankruptcy, conservator, receiver or other
similar official or a creditor of such Dealer asserts
that NationsBank, N.A. did not have, or the Issuer does
not have, a first priority perfected ownership interest
in such Receivable as a result of such practice. Any
breach of a representation relating to the status of a
Receivable as a Simple Interest Receivable or the Con-
tract Rate of a Receivable shall be deemed material. In
consideration of the purchase of a Receivable hereunder,
the related Seller shall remit the Purchase Amount of
such Receivable, no later than the close of business (New
York time) on the applicable Deposit Date, in the manner
specified in Section 4.5. Except as provided in Section
6.2, the sole remedy of the Issuer, the Owner Trustee,
the Indenture Trustee, the Noteholders or the Certifi-
cateholders with respect to a breach or failure to be
true of the warranties made by a Seller pursuant to
Section 2.2 or Section 2.3 shall be to require such
Seller to repurchase any Receivables subject to such
breach pursuant to this Section 2.4. Neither the Owner
Trustee nor the Indenture Trustee shall have any duty to
conduct an affirmative investigation as to the occurrence
of any condition requiring the repurchase of any Receiv-
able pursuant to this Section 2.4 or the eligibility of
any Receivable for purposes of this Agreement.
SECTION 2.5. Custody of Receivable Files. To
assure uniform quality in servicing the Receivables and
to reduce administrative costs, the Issuer, upon the
execution and delivery of this Agreement, hereby
revocably appoints the Servicer, and the Servicer hereby
accepts such appointment, to act as the agent of the
Issuer and the Indenture Trustee as custodian of the
following documents or instruments, which are hereby
constructively delivered to the Indenture Trustee, as
pledgee of the Issuer pursuant to the Indenture, with
respect to each Receivable (collectively, a "Receivable
File"):
(a) the original of the Receivable in all cases
in which an original exists;
(b) any documents evidencing the existence of
any Insurance Policies;
(c) copies of the original credit application;
(d) either (x) the original certificate of
title, or such other documents as the Seller shall keep
on file, in accordance with its customary procedures,
evidencing the security interest of the Seller in the
Financed Vehicle or the efforts (including the proof of
application for notice of lien or other evidence of such
security interest) made by the Seller to perfect such
security interest; or (y) with respect to jurisdictions
in which the certificate of title or other evidence of
ownership is not issued to the holder of a lien, evidence
of the Seller's security interest in the Financed Vehicle
(or the efforts made by the Seller to perfect such secu-
rity interest (including the proof of application for
notice of lien or other evidence of such security inter-
est)), in each case issued by the appropriate governmen-
tal agency of the state in which such Financed Vehicle is
registered;
(e) electronic entries or originals or true
copies of all documents, instruments or writings relating
to extensions, amendments or waivers of the Receivable;
and
(f) any and all other documents or electronic
records that the Seller or Servicer, as the case may be,
shall keep on file, in accordance with its customary
procedures, relating to the Receivable, the Obligor or
the Financed Vehicle.
SECTION 2.6. Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer, in its capacity
as custodian, shall hold the Receivable Files on behalf
of the Issuer and the Indenture Trustee for the benefit
of all present and future Noteholders and Certificate-
holders, and maintain such accurate and complete ac-
counts, records, and computer systems pertaining to each
Receivable as shall enable the Servicer and the Indenture
Trustee to comply with the terms and provisions of this
Agreement applicable to it. In performing its duties as
custodian hereunder, the Servicer and any Person delegat-
ed by the Servicer shall exercise the degree of skill and
care that the Servicer exercises with respect to similar
motor vehicle receivables owned and/or serviced by it and
that is consistent with industry standards. The Servicer
shall implement and maintain written policies and proce-
dures with respect to the handling and custody of the
Receivable Files, so that the integrity and physical
possession of the Receivable Files shall be maintained,
and, in general, shall attend to all details in connec-
tion with maintaining custody of the Receivable Files as
agent of the Owner Trustee, for the benefit of the Trust
and the Noteholders and the Certificateholders. The
Servicer shall also maintain a current inventory of the
Receivables and conduct, or cause to be conducted, peri-
odic audits (to the extent required by Section 3.11) of
the Receivable Files held by it under this Agreement and
the related accounts, records, and computer systems, and
shall otherwise maintain (or cause to be maintained) the
Receivable Files in such a manner as shall enable the
Issuer or Indenture Trustee to verify, if the Issuer or
Indenture Trustee so elects, the accuracy of the record
keeping of the Servicer; provided, however, nothing in
this Agreement shall be construed to require the Issuer,
the Owner Trustee or the Indenture Trustee to verify the
accuracy of the record keeping of the Servicer. The
Servicer shall promptly report to the Issuer, the Owner
Trustee and the Indenture Trustee any failure to hold the
Receivable Files and maintain the accounts, records, and
computer systems as herein provided, and the Servicer
shall promptly take appropriate action to remedy any such
failure.
(b) Maintenance of and Access to Records. The
Servicer shall maintain (or cause to be maintained) each
Receivable File at the location specified in Schedule B
to this Agreement, or at such other office of the
Servicer or of its delegatee within the states of North
Carolina or Texas (or, in the case of any successor
Servicer, within the state in which its principal place
of business is located) as shall be specified to the
Issuer and the Indenture Trustee by thirty (30) days'
prior written notice. The Servicer shall make available
to the Issuer and the Indenture Trustee or their Autho-
rized Officers (or, when requested in writing by the
Issuer or Indenture Trustee, to its attorneys or audi-
tors) and to Noteholders and Certificateholders (in
either case only for legitimate business purposes relat-
ing to the Trust) the Receivable Files and the related
accounts, records, and computer systems maintained by the
Servicer at such times during the normal business hours
of the Servicer as the Issuer or the Indenture Trustee
shall reasonably instruct.
(c) Release of Documents. Upon written in-
structions from the Indenture Trustee, the Servicer shall
release (or cause to be released) any document in the
Receivable Files to the Indenture Trustee, the Indenture
Trustee's agent, or the Indenture Trustee's designee, as
the case may be, at such place or places as the Indenture
Trustee may designate, as soon thereafter as is practica-
ble. Any document so released shall be handled by the
Indenture Trustee with due care and returned to the
Servicer for safekeeping as soon as the Indenture Trustee
or its agent or designee, as the case may be, shall have
no further need therefor.
(d) Title to Receivables. The Servicer agrees
that, in respect of any Receivable held by it as custodi-
an hereunder, the Servicer will not at any time have or
in any way attempt to assert any interest in such Receiv-
able (other than its interest in the Supplemental Servic-
ing Fee) or the related Receivable File, other than
solely for the purpose of collecting or enforcing the
Receivable for the benefit of the Trust and that the
entire equitable interest in such Receivable and the
related Receivable File shall at all times be vested in
the Trust.
(e) Authority to Delegate Duties. The
Servicer may delegate the performance of its obligations
under this Section 2.6 to any Person, including any
Affiliate of the Servicer; provided, that nothing in this
Section 2.6 shall relieve the Servicer of any liability
for the performance, by it or by a delegatee, of the
custodial obligations described herein.
SECTION 2.7. Instructions; Authority to Act.
The Servicer shall be deemed to have received proper
instructions with respect to the Receivable Files upon
its receipt of written instructions signed by an Autho-
rized Officer of the Indenture Trustee. A certified copy
of excerpts of By-Laws or certain resolutions of the
Board of Directors of the Indenture Trustee shall consti-
tute conclusive evidence of the authority of any such
Authorized Officer to act and shall be considered in full
force and effect until receipt by such Servicer of writ-
ten notice to the contrary given by the Indenture Trust-
ee.
SECTION 2.8. Custodian's Indemnification. The
Servicer, in its capacity as custodian, shall indemnify
and hold harmless the Issuer, the Owner Trustee and the
Indenture Trustee (and each of their officers, directors,
employees and agents) and the Noteholders and the Certif-
icateholders from and against any and all liabilities,
obligations, losses, compensatory damages, payments,
costs or expenses (including legal fees if any) of any
kind whatsoever that may be imposed on, incurred, or
asserted against the Issuer, the Owner Trustee, the
Indenture Trustee, the Noteholders or the Certificate-
holders as the result of any act or omission relating to
the maintenance and custody of the Receivable Files;
provided, however, that the Servicer shall not be liable
hereunder to the extent, but only to the extent, that
such liabilities, obligations, losses, compensatory
damages, payments, costs or expenses result from the
willful misfeasance, bad faith, or negligence of the
Owner Trustee or the Indenture Trustee.
SECTION 2.9. Effective Period and Termination.
The Servicer's appointment as custodian shall become
effective as of the Cut-Off Date and shall continue in
full force and effect until terminated pursuant to this
Section 2.9. If a Servicer resigns as the Servicer in
accordance with the terms of this Agreement or if all of
the rights and obligations of a Servicer shall have been
terminated under Section 8.1, the appointment of the
Servicer as custodian hereunder may be terminated by (i)
the Indenture Trustee, or (ii) by the Indenture Trustee
at the direction of Noteholders of Notes evidencing not
less than a majority of the aggregate principal amount of
Notes Outstanding (the "Majority Noteholders"), or (iii)
by the Owner Trustee with the consent of the Majority
Noteholders, or (iv) if the Notes have been paid in full,
(x) by the Owner Trustee, at the direction of the Certif-
icateholders of Certificates evidencing not less than a
majority of the aggregate outstanding principal balance
of Certificates (the "Majority Certificateholders") or
(y) by the Owner Trustee with the consent of the Majority
Certificateholders. The Indenture Trustee, at the direc-
tion of the Majority Noteholders, or, if no Notes are
Outstanding, the Owner Trustee at the direction of the
Majority Certificateholders, may terminate the Servicer's
appointment as a custodian hereunder at any time with
cause, or with thirty (30) days' prior notice without
cause, upon written notification to the Servicer. As
soon as practicable after any termination of such ap-
pointment the Servicer, at the Servicer's expense, shall
deliver or cause to be delivered, the Receivable Files to
the Indenture Trustee, the Indenture Trustee's agent or
the Indenture Trustee's designee at such place or places
as the Indenture Trustee may reasonably designate.
Notwithstanding any termination of the Servicer as custo-
dian hereunder (other than in connection with a termina-
tion resulting from the termination of the Servicer, as
such, pursuant to Section 8.1), the Indenture Trustee
agrees that, from and after the date of such termination,
and for so long as the Servicer is acting as Servicer
pursuant to this Agreement, the Indenture Trustee shall
provide, or cause the successor custodian to provide,
reasonable and customary access to the Receivable Files
to the Servicer, at such times as the Servicer shall
request, for the purpose of carrying out its duties and
responsibilities with respect to the servicing of the
Receivables hereunder and upon the Servicer providing to
the Indenture Trustee a request for release in such form
as may be agreed to between the Servicer and the Inden-
ture Trustee.
End of Article II
ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES AND OWNER TRUST PROPERTY
SECTION 3.1. Duties of Servicer. The Servicer
, acting alone and/or through subservicers as provided in
this Section 3.1, shall administer the Receivables ser-
viced in accordance herewith. The Servicer's duties
shall include, but not be limited to, the collection and
posting of all payments, responding to inquiries by
Obligors on the Receivables, or by federal, state, or
local governmental authorities, investigating delinquen-
cies, furnishing monthly and annual statements to the
Owner Trustee and the Indenture Trustee with respect to
distributions and providing collection and repossession
services in the event of Obligor default. The Servicer
shall also administer and enforce all rights and respon-
sibilities of the holder of the Receivables provided for
in the Dealer Agreements, Dealer Assignments and the
Insurance Policies, to the extent that such Dealer Agree-
ments, Dealer Assignments and Insurance Policies relate
to the Receivables, the Financed Vehicles or the
Obligors. In performing its duties as Servicer hereun-
der, the Servicer will exercise that degree of skill and
care that the Servicer exercises with respect to similar
motor vehicle receivables owned and/or serviced by the
Servicer and that is consistent with prudent industry
standards. Without limiting the generality of the fore-
going, the Servicer is hereby authorized and empowered by
the Owner Trustee to execute and deliver, on behalf of
itself, the Issuer, the Owner Trustee, the Indenture
Trustee, the Noteholders and the Certificateholders, or
any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge,
and all other comparable instruments, with respect to the
Receivables or to the Financed Vehicles, all in accor-
dance with this Agreement; provided, however, that not-
withstanding the foregoing, the Servicer shall not,
except pursuant to an order from a court of competent
jurisdiction or as otherwise required by law, release an
Obligor from payment of any unpaid amount under any
Receivable or waive the right to collect the unpaid
balance (including accrued interest) of any Receivable
from the Obligor, except in connection with a de minimis
deficiency which the Servicer would not attempt to col-
lect in accordance with its customary procedures. If the
Servicer shall commence a legal proceeding to enforce a
Receivable, the Owner Trustee shall thereupon be deemed
to have automatically assigned such Receivable (other
than a Receivable purchased by the Servicer in respect of
a breach pursuant to Section 3.7 hereof) to the Servicer,
which assignment shall be solely for purposes of collec-
tion. The Owner Trustee shall execute and deliver to the
Servicer any powers of attorney and other documents or
instruments prepared by and at the expense of the
Servicer which are necessary or appropriate to enable the
Servicer to carry out its servicing and administrative
duties hereunder. The Servicer, at its expense, shall
obtain on behalf of the Issuer or the Owner Trustee, all
licenses, if any, required by the laws of any jurisdic-
tion to be held by the Issuer or the Owner Trustee in
connection with the ownership of the Receivables, and
shall make all filings and pay all fees as may be re-
quired in connection therewith during the term hereof.
From time to time during the term of this
Agreement, the Servicer may enter into agreements with
one or more Affiliates for the servicing and administra-
tion of certain of the Receivables; provided, however,
that any such subservicer shall be and shall remain, for
so long as it is acting as subservicer, an Eligible
Servicer, and any fees paid to such subservicer shall be
paid by the Servicer and not out of the assets of the
Trust, and any such subservicer shall agree to service
the Receivables in a manner consistent with the terms of
this Agreement.
(a) References in this Agreement to actions
taken, to be taken, permitted to be taken, or restric-
tions on actions permitted to be taken by the Servicer in
servicing the Receivables and other actions taken, to be
taken, permitted to be taken, or restrictions on actions
to be taken with respect to the Owner Trust Property
shall include actions taken, to be taken, permitted to be
taken, or restrictions on actions permitted to be taken
by a subservicer on behalf of a Servicer and references
herein to payments or Recoveries received by a Servicer
shall include payments or Recoveries received by a
subservicer, irrespective of whether such payments or
Recoveries are actually deposited in the Collection
Account by such subservicer.
(b) The Servicer shall be entitled to termi-
nate any subservicing agreement in accordance with the
terms and conditions of such subservicing agreement and
without any limitation by virtue of this Agreement;
provided, however, that, in the event of termination of
any subservicing agreement by the Servicer, the Servicer
shall either act directly as servicer of the related
Receivable or enter into a subservicing agreement with a
successor subservicer which will be bound by the terms of
the related subservicing agreement.
(c) As a condition to the appointment of any
subservicer other than an Affiliate of a Seller, the
Servicer shall notify the Issuer, the Owner Trustee, the
Indenture Trustee and the Rating Agencies in writing
before such assignment becomes effective and such
subservicer shall be required to execute and deliver an
instrument in which it agrees that, for so long as it
acts as subservicer of the Receivables and the other
Owner Trust Property being serviced by it, the covenants,
conditions, indemnities, duties, obligations and other
terms and provisions of this Agreement applicable to the
Servicer hereunder shall be applicable to it as
subservicer, that it shall be required to perform its
obligations as subservicer for the benefit of the Trust
as if it were Servicer hereunder (subject, however, to
the right of the Servicer to direct the performance of
such obligations in accordance with this Agreement) and
that, notwithstanding any provision of a subservicing
agreement to the contrary, such subservicer shall be
directly liable to the Issuer, Owner Trustee and the
Indenture Trustee (notwithstanding any failure by the
Servicer to perform its duties and obligations hereunder)
for the failure by such subservicer to perform its obli-
gations hereunder or under any subservicing agreement,
and that (notwithstanding any failure by a Servicer to
perform its respective duties and obligations hereunder)
the Issuer, the Owner Trustee, and the Indenture Trustee
may enforce the provisions of this Agreement and any
subservicing agreement against the subservicer for the
benefit of the Trust and the Noteholders and Certificate-
holders, without diminution of such obligations or lia-
bilities by virtue of any subservicing agreement, by
virtue of any indemnification provided thereunder or by
virtue of the fact that the Servicer is primarily respon-
sible hereunder for the performance of such duties and
obligations, as if a subservicer alone were servicing and
administering, under this Agreement, the Receivables and
the other Owner Trust Property being serviced by it under
the subservicing agreement. Any such subservicer shall
agree that it has no rights (including but not limited
to, rights to compensation and indemnity) against the
Trust.
(d) Notwithstanding any subservicing agree-
ment, any of the provisions of this Agreement relating to
agreements or arrangements between a Servicer or a
subservicer or reference to actions taken through such
Persons or otherwise, the Servicer shall remain obligated
and liable to the Issuer, the Owner Trustee, the Inden-
ture Trustee, the Noteholders and Certificateholders for
the servicing and administering of the Receivables and
the other Owner Trust Property serviced by it in accor-
dance with the provisions of this Agreement (including
for the deposit of payments and Recoveries received by a
subservicer, irrespective of whether such payments or
Recoveries are actually remitted to the Servicer or
deposited in the Collection Account by such subservicer;
provided, however, that if such amounts are so deposited,
the Servicer shall have no further obligation to do so)
without diminution of such obligation or liability by
virtue of such subservicing agreements or arrangements or
by virtue of indemnification from a subservicer, to the
same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the
Receivables and the other Owner Trust Property. The
Servicer shall be entitled to enter into any agreement
with a subservicer for indemnification, and nothing
contained in this Agreement shall be deemed to limit or
modify such indemnification.
(e) Any subservicing agreement shall provide
that in the event the Servicer shall for any reason no
longer be acting as such (including by reason of the
occurrence of any of the Events of Servicing Termina-
tion), the successor Servicer may, in its discretion,
thereupon assume all of the rights and obligations of the
outgoing Servicer under a subservicing agreement. In
such event, the successor Servicer shall be deemed to
have assumed all of the Servicer's interest therein and
to have replaced the outgoing Servicer as a party to such
subservicing agreement to the same extent as if such
subservicing agreement had been assigned to the successor
Servicer, except that the outgoing Servicer shall not
thereby be relieved of any liability or obligation on the
part of the outgoing Servicer to the subservicer under
such subservicing agreement. The outgoing Servicer
shall, upon request of the Issuer or the Indenture Trust-
ee, but at the expense of the outgoing Servicer, deliver
to the successor Servicer all documents and records
relating to each such subservicing agreement and the
Receivables and the other Owner Trust Property then being
serviced thereunder and an accounting of amounts collect-
ed and held by it and otherwise use its commercially
reasonable efforts to effect the orderly and efficient
transfer of the subservicing agreement to the successor
Servicer. In the event that the successor Servicer
elects not to assume a subservicing agreement, the outgo-
ing Servicer, at its expense, shall terminate such
subservicing agreement and shall cause the subservicer to
deliver to the successor Servicer all documents and
records relating to the Receivables and the other Owner
Trust Property being serviced thereunder and all amounts
held (or thereafter received) by such subservicer (to-
gether with an accounting of such amounts) and shall
otherwise use its commercially reasonable efforts to
effect the orderly and efficient transfer of servicing of
the Receivables and the other Owner Trust Property being
serviced by such subservicer to the successor Servicer.
The relationship of the Servicer (and of any successor to
the Servicer as servicers under this Agreement) to the
Issuer, the Owner Trustee or the Indenture Trustee under
this Agreement is intended by the parties to be that of
independent contractors and not that of joint venturers,
partners or agents of the Issuer, the Owner Trustee or
the Indenture Trustee.
SECTION 3.2. Collection of Receivable Payments.
The Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the
Receivables as and when the same shall become due, and
otherwise act with respect to the Receivables, the Dealer
Agreements, the Insurance Policies and the other Trust
Property in such manner as will, in the reasonable judg-
ment of the Servicer, maximize the amount to be received
by the Trust with respect thereto, in accordance with the
standard of care required by Section 3.1. The Servicer
will not increase or decrease the number or amount of any
Scheduled Payment or the Amount Financed under a Receiv-
able or the Contract Rate of a Receivable, or extend,
rewrite or otherwise modify the payment terms of a Re-
ceivable, release collateral securing a Receivable, or
otherwise modify, waive, or consent to any change in any
material term of a Receivable unless (i) the Servicer
determines that default by the Obligor on the Receivable
is reasonably foreseeable and such action, in the
Servicer's reasonable judgment, will maximize the amount
ultimately collected by the Trust with respect to such
Receivables; (ii) the Servicer would take such action if
the Receivable were serviced by it for its own account
and in accordance with its customary standards; and (iii)
any such action with respect to any Receivable shall not
cause the term of such Receivable to extend beyond the
last day of the Collection Period immediately preceding
the Final Scheduled Distribution Date.
In the event that the Servicer fails to comply with the
provisions of the preceding sentence, the Servicer shall
be required to purchase the Receivable or Receivables
affected thereby, for the Purchase Amount, in the manner
specified in Section 3.7 as of the close of the Collec-
tion Period in which such failure occurs.
SECTION 3.3. Realization upon Receivables. On
behalf of the Issuer, the Servicer shall charge off a
Receivable as a Defaulted Receivable no later than [120]
days from a first date of delinquency (unless such delin-
quency shall have subsequently been cured in accordance
with the Servicer's customary servicing practices);
provided, however, that in the event of (a) a bankruptcy
filing under federal law; (b) a bankruptcy or similar
filing under state law; and/or (c) the repossession and
sale of a Financed Vehicle, the Servicer shall charge off
a Receivable as a Defaulted Receivable no later than
[210] days from the first date of delinquency; and pro-
vided, further, that the Servicer shall use commercially
reasonable efforts to repossess and liquidate the Fi-
nanced Vehicle securing any Receivable as soon as it
determines that a Receivable is uncollectible in accor-
dance with the Servicer's customary servicing procedures,
subject to and in accordance with the standard of care
required by Section 3.1. In taking any such actions, the
Servicer shall follow such customary servicing procedures
as it shall deem necessary or advisable in its servicing
of motor vehicle receivables, and as are otherwise con-
sistent with the standard of care required under Section
3.1, which shall include the exercise of any rights of
recourse to Dealers under the Dealer Agreements, Dealer
Assignments (or rights to compel repurchase against third
Persons) and selling the Financed Vehicle at public or
private sale. The Servicer shall be entitled to recover
all reasonable expenses incurred by it in the course of
repossessing and liquidating a Financed Vehicle into cash
proceeds, but only out of the cash proceeds of such
Financed Vehicle, any deficiency obtained from the Obli-
gor or any amounts received from the related Dealer. The
foregoing shall be subject to the provision that, in any
case in which a Financed Vehicle shall have suffered
damage, the Servicer shall not expend funds in connection
with the repair or the repossession of such Financed
Vehicle unless it shall determine in its discretion that
such repair and/or repossession will increase the Liqui-
dation Proceeds of the related Receivable by an amount
equal to or greater than the amount of such expenses
(which, in any event, shall not be unreasonable).
If, in any enforcement suit or legal proceed-
ing, it is held that a Seller or the Servicer, as the
case may be, may not enforce any Receivable on the ground
that it shall not be a real party in interest or a Person
entitled to enforce the Receivable, or otherwise, the
Owner Trustee shall, at the expense of such Seller or the
Servicer, as the case may be, take such steps as such
Seller or the Servicer, as the case may be, deems neces-
sary to enforce the Receivable, including bringing suit
in the Owner Trustee's name or the names of the Indenture
Trustee, the Noteholders, the Certificateholders, or any
of them.
If the Servicer elects to commence a legal
proceeding to enforce a Dealer Agreement, the act of
commencement shall be deemed to be an automatic assign-
ment from the Owner Trustee to the Servicer of the rights
of the Trust under such Dealer Agreement. If, however,
in any enforcement suit or legal proceeding, it is held
that the Servicer may not enforce the Trust's rights
under a Dealer Agreement on the grounds that it is not a
real party in interest or a Person entitled to enforce
the Dealer Agreement, or otherwise, the Owner Trustee, at
the Servicer's expense, or the applicable Seller, at such
Seller's expense, shall take such steps as the Servicer
deems necessary to enforce the Dealer Agreement, includ-
ing bringing suit in its name or the names of the Inden-
ture Trustee, the Noteholders, the Certificateholders, or
any of them.
SECTION 3.4. Physical Damage Insurance. The
Servicer may sue to enforce or collect upon the Insurance
Policies, in its own name, if possible, or as agent for
the Trust. If the Servicer elects to commence a legal
proceeding to enforce an Insurance Policy, the act of
commencement shall be deemed to be an automatic assign-
ment of the rights of the Trust under such Insurance
Policy to the Servicer for purposes of collection only.
If, however, in any enforcement suit or legal proceeding
it is held that the Servicer may not enforce an Insurance
Policy on the grounds that it is not a real party in
interest or a holder entitled to enforce the Insurance
Policy, or otherwise, the Owner Trustee, on behalf of the
Trust, at the Servicer's expense, or the related Seller,
at the Servicer's expense, shall take such steps as the
Servicer deems necessary to enforce such Insurance Poli-
cy, including bringing suit in its name and/or the names
of the Indenture Trustee, the Noteholders, the Certifi-
cateholders, or any of them.
SECTION 3.5. Maintenance of Security Interests
in Financed Vehicles. The Servicer, in accordance with
the standard of care required under Section 3.1, shall
take such steps as are necessary to maintain perfection
of the security interest created by each Receivable in
the related Financed Vehicle for the benefit of the
Trust. The Issuer and the Owner Trustee, on behalf of
the Trust, hereby authorize the Servicer, and the
Servicer hereby agrees, to take such steps as are neces-
sary to re-perfect such security interest on behalf of
the Trust. If there has been an Event of Servicing
Termination (or the occurrence of an event specified in
clause (iii) or (iv) of Section 8.1(a) with respect to a
Seller), the Servicer, at its expense, shall promptly and
duly execute and deliver such documents and instruments,
and take such other actions as may be necessary, as
evidenced by an Opinion of Counsel delivered to the
Issuer, the Owner Trustee and the Indenture Trustee, to
perfect the Trust's interest in the Owner Trust Property
against all other Persons, including the delivery of the
Receivables and the Receivable Files to the Indenture
Trustee, its agent, or its designee, the endorsement and
delivery of the Insurance Policies or the notification of
the insurers thereunder, the execution of transfer in-
struments, and the endorsement to the Owner Trustee and
the delivery of the certificates of title to the Financed
Vehicles to the appropriate department or departments of
motor vehicles (or other appropriate governmental agen-
cy).
SECTION 3.6. Covenants of the Servicer. The
Servicer makes the following covenants to the Issuer, the
Owner Trustee, the Indenture Trustee, the Noteholders and
the Certificateholders:
(i) Security Interest to Remain in Force.
The Financed Vehicle securing each Receivable will
not be released from the security interest granted
by the Receivable in whole or in part, except as
contemplated herein.
(ii) No Impairment. The Servicer will
not (nor will it permit any subservicer to) impair
in any material respect the rights of the Certifi-
cateholders in the Receivables, the Dealer Agree-
ments, Dealer Assignments or the Insurance Policies
or, subject to clause (iii) below, otherwise amend
or alter the terms thereof if, as a result of such
amendment or alteration, the interests of the Trust,
the Noteholders or the Certificateholders hereunder
would be materially adversely affected.
(iii) Amendments. The Servicer will not
increase or decrease the number or amount of Sched-
uled Payments or the Amount Financed under a Receiv-
able, or extend, rewrite or otherwise waive, amend,
or modify any material term of a Receivable, except
in accordance with the restrictions set forth in
Section 3.2.
SECTION 3.7. Purchases by Servicer upon
Breach. Each Seller, the Servicer and the Owner Trustee,
as the case may be, shall inform the other parties
promptly, in writing, upon the discovery of any breach by
the Servicer of its covenants under Section 3.6. Unless
the breach shall have been cured by the last day of the
Collection Period which includes the 60th day after the
date on which the Servicer becomes aware of, or receives
written notice of, such breach, the Servicer shall pur-
chase, as of the last day of such Collection Period, the
Receivable or Receivables materially adversely affected
thereby on the immediately succeeding Deposit Date;
provided, however, that in the case of a breach of the
covenant contained in Section 3.6(iii), the Servicer
shall be obligated to purchase the affected Receivable or
Receivables on the Deposit Date immediately succeeding
the Collection Period during which the Servicer becomes
aware of, or receives written notice of, such breach
(which in all cases shall be deemed to have a material
adverse effect on the Certificateholders), such purchase
to be as of the last day of such Collection Period. In
consideration of the purchase of a Receivable hereunder,
the Servicer shall remit the Purchase Amount of such
Receivable in the manner specified in Section 4.5.
Except as provided in Section 7.2, the sole remedy of the
Issuer, the Indenture Trustee, or the Certificateholders
against the Servicer with respect to a breach pursuant to
Section 3.6 shall be to require the Servicer to repur-
chase Receivables pursuant to this Section 3.7.
SECTION 3.8. Servicing Compensation. On each
Distribution Date, the Servicer shall be paid its Servic-
ing Fee for such Distribution Date and any unpaid Servic-
ing Fees from prior Distribution Dates to the extent of
funds available therefor in accordance with the provi-
sions of Section 4.6. The Servicing Fee in respect of a
Collection Period (together with any portion of a Servic-
ing Fee that remains unpaid from prior Distribution
Dates) may, at the option of the Servicer, be paid at or
as soon as possible after the beginning of such Collec-
tion Period out of the first collections received on the
Receivables during such Collection Period. In addition,
notwithstanding any other provision of this Agreement,
the Servicer shall (i) retain any late fees or other fees
and charges collected on Receivables during a Collection
Period [and (ii) be paid any interest earned during a
Collection Period on deposits in the Accounts of Collec-
tions on the Receivables] ([collectively], the "Supple-
mental Servicing Fee"). The General Partner shall be
required to pay all expenses incurred by the Servicer in
connection with the Servicer's activities hereunder
(including fees and expenses of the Issuer, [the Inden-
ture Trustee and its counsel (and any custodian appointed
by the Indenture Trustee)] and independent accountants,
any subservicer, taxes imposed on the Servicer or any
subservicer, and expenses incurred in connection with
distributions and reports to the Issuer, the Owner Trust-
ee, the Indenture Trustee, the Noteholders and the Cer-
tificateholders) except expenses incurred in connection
with realizing upon Receivables under Section 3.3. No
transfer, sale, pledge or other disposition of the
Servicer's right to receive all or any portion of the
Servicing Fee or Supplemental Servicing Fee shall be
made, and any such attempted transfer, sale, pledge or
other disposition shall be void, unless such transfer is
made to one or more successor Servicers in connection
with the assumption by any such successor Servicer of the
duties hereunder pursuant to Section 8.2 and all (and not
a portion) of the Servicing Fee and Supplemental Servic-
ing Fee is transferred to any such successor Servicer.
SECTION 3.9. Servicer's Report. (a) On or
before the Determination Date immediately preceding each
Distribution Date, the Servicer shall deliver to the
Owner Trustee, the Indenture Trustee, each Note Paying
Agent and Certificate Paying Agent, and the Sellers, with
a copy to the Rating Agencies, a certificate of an Autho-
rized Officer of the Servicer substantially in the form
of Exhibit C hereto (each, a "Servicer's Certificate")
containing all information necessary to make the distri-
butions pursuant to Sections [4.4, 4.5,] 4.6 and 4.7, for
the Collection Period preceding the date of such
Servicer's Certificate, together with all information
necessary for the Owner Trustee to send statements to
Certificateholders pursuant to Section 4.9, and for the
Indenture Trustee to send statements to the Noteholders
pursuant to Section 4.9 hereof and Section 6.6 of the
Indenture. Receivables purchased or to be purchased by
the Servicer or a Seller shall be identified by the
Servicer by the Seller's account number with respect to
such Receivable (as specified in the Schedule of Receiv-
ables).
(b) On the Determination Date in each calendar
month, the Servicer shall deliver to the respective
underwriters of the Notes and the Certificates the Note
Pool Factor for each class of Notes and the Certificate
Pool Factor as of the close of business on the Distribu-
tion Date occurring in that month.
SECTION 3.10. Annual Statement as to Compli-
ance. (a) The Servicer shall deliver to the Owner
Trustee, the Indenture Trustee and each Rating Agency on
or before [________ 31] of each year, commencing
[___________ 31, 1997], an Officer's Certificate, stating
that (i) a review of the activities of the Servicer
during the preceding calendar year (or shorter period, in
the case of the first such Officer's Certificate) and of
its performance of its obligations under this Agreement
has been made under such officer's supervision and (ii)
to the best of such officer's knowledge, based on such
review, the Servicer has, or has caused to be, fully
performed its obligations under this Agreement throughout
such year (or shorter period, in the case of the first
such certificate), or, if there has been a material
default in the performance of any such obligation, speci-
fying each such default known to such officer and the
nature and status thereof. [A copy of such Officer's
Certificate and the report referred to in Section 3.11
may be obtained by any Certificateholder or Person certi-
fying that it is a Certificate Owner by a request in
writing to the Owner Trustee, or by any Noteholder or
Person certifying that it is a Note Owner by a request in
writing to the Indenture Trustee, in either case ad-
dressed to the applicable Corporate Trust Office. Upon
the telephone request of the Owner Trustee, the Indenture
Trustee shall promptly furnish the Owner Trustee a list
of Noteholders as of the date specified by the Owner
Trustee.]
(b) The Servicer shall deliver to the Owner
Trustee, the Indenture Trustee and each Rating Agency,
promptly upon having knowledge thereof, but in no event
later than five (5) Business Days thereafter, written
notice in an Officer's Certificate of any event which
constitutes or, with the giving of notice or lapse of
time, or both, would become, an Event of Servicing Termi-
nation under clause (ii) of Section 8.1(a).
SECTION 3.11. Independent Certified Public
Accountants' Reports. The Servicer shall cause a firm of
independent certified public accountants (who may also
render other services to the Servicer and the Sellers and
their Affiliates) to deliver to the [Owner Trustee and
the Indenture Trustee] on or before [______ 31] of each
year commencing [_____ 31, ___], a report to the effect
that such firm has conducted an examination, substantial-
ly in compliance with attestation standards established
by the American Institute of Certified Public Accoun-
tants, of certain documents and records relating to the
servicing procedures under this Agreement and that, on
the basis of such examination, such firm is of the opin-
ion that such servicing was conducted in compliance with
the sections of this Agreement with which independent
public accountants generally possess adequate profession-
al knowledge and which are reasonably subject to positive
assurance by them, except for such exception as they
believe to be immaterial and such other exceptions as
shall be set forth in such report.
SECTION 3.12. Access to Certain Documentation
and Information Regarding Receivables. The Servicer
shall provide the Indenture Trustee and the Certificate-
holders with access to the Receivable Files in such cases
where the Indenture Trustee or the Certificateholders
shall be required by applicable statutes or regulations
to have access to such documentation. Such access shall
be afforded without charge, but only upon reasonable
request and during normal business hours at an office of
the Servicer reasonably designated by the Servicer.
Nothing in this Section 3.12 shall affect the obligation
of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors, and the
failure of a Servicer to provide access to information as
a result of such obligation shall not constitute a breach
of this Section. Any Certificateholder, by its accep-
tance of a Certificate, shall be deemed to have agreed to
keep any information obtained by it pursuant to this
Section confidential, except as may be required by appli-
cable law.
SECTION 3.13. Reports to the Commission. The
Servicer shall, on behalf of the Trust, cause to be filed
with the Commission any periodic reports required to be
filed under the provisions of the Exchange Act and the
rules and regulations of the Commission thereunder.
SECTION 3.14. Reports to the Rating Agencies.
The Servicer shall deliver to each Rating Agency, at such
address as each Rating Agency may request, a copy of all
reports or notices furnished or delivered pursuant to
this Article and a copy of any amendments, supplements or
modifications to this Agreement and, if any subservicer
is not an Affiliate of the Seller, any subservicing
agreement and any other information reasonably requested
by such Rating Agency to monitor this transaction.
End of Article III
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO NOTEHOLDERS AND CERTIFICATEHOLDERS
SECTION 4.1. Accounts. (a) The Servicer
shall, prior to the Closing Date, establish and maintain
a segregated trust account in the name of the Indenture
Trustee, at an Eligible Institution (which shall initial-
ly be ), which shall be designated as the
"Collection Account". The Collection Account shall be
held in trust for the benefit of the Noteholders and the
Certificateholders. The Collection Account shall be
under the sole dominion and control of the Indenture
Trustee; provided, that the Servicer may make deposits
to, and direct the Indenture Trustee in writing to make
withdrawals from, the Collection Account in accordance
with the terms of the Basic Documents. All monies depos-
ited from time to time in the Collection Account shall be
held by the Indenture Trustee as part of the Owner Trust
Property and all deposits to and withdrawals therefrom
shall be made only upon the terms and conditions of the
Basic Documents.
If the Servicer is required to remit collec-
tions pursuant to the first sentence of Section 4.2, all
amounts held in the Collection Account shall, to the
extent permitted by applicable law, rules and regula-
tions, be invested, as directed in writing by the
Servicer, by the bank or trust company then maintaining
the Collection Account in Permitted Investments that
mature not later than the Business Day immediately prior
to the Distribution Date for the Collection Period to
which such amounts relate and such Permitted Investments
shall be held to maturity. [All interest and other
income (net of losses and investment expenses) on funds
on deposit in the Collection Account shall be withdrawn
from the Collection Account at the written direction of
the Servicer and shall be paid to the _________.] In the
event that the Collection Account is no longer to be
maintained at ___________, the Servicer shall, with the
Indenture Trustee's or Owner Trustee's assistance as
necessary, cause the Collection Account to be moved to an
Eligible Institution within ten (10) Business Days (or
such longer period not to exceed thirty (30) calendar
days as to which each Rating Agency may consent).
(b) The Servicer shall, prior to the Closing
Date, establish and maintain a segregated trust account
in the name of the Indenture Trustee at an Eligible
Institution (which shall initially be _______), which
shall be designated as the "Note Payment Account." The
Note Payment Account shall be held in trust for the
benefit of the Noteholders. The Note Payment Account
shall be under the sole dominion and control of the
Indenture Trustee. All monies deposited from time to
time in the Note Payment Account pursuant to this Agree-
ment and the Indenture shall be held by the Indenture
Trustee as part of the Owner Trust Property and shall be
applied as provided in the Basic Documents. In the event
that the Note Payment Account is no longer to be main-
tained at ___________, the Servicer shall, with the
Indenture Trustee's assistance as necessary, cause the
Note Payment Account to be moved to an Eligible Institu-
tion within ten (10) Business Days (or such longer period
not to exceed thirty (30) calendar days as to which each
Rating Agency may consent).
(c) The Servicer shall, prior to the Closing
Date, establish and maintain a segregated trust account
in the name of the Owner Trustee at an Eligible Institu-
tion (which shall initially be ),
which shall be designated as the "Certificate Distribu-
tion Account". Except as provided in the Trust Agree-
ment, the Certificate Distribution Account shall be held
in trust for the benefit of the Certificateholders. The
Certificate Distribution Account shall be under the sole
dominion and control of the Owner Trustee. All monies
deposited from time to time in the Certificate Distribu-
tion Account pursuant to this Agreement and the Indenture
shall be held by the Owner Trustee as part of the Owner
Trust Property and shall be applied as provided in the
Basic Documents. In the event that the Certificate
Distribution Account is no longer to be maintained at
_________, the Servicer shall, with the Owner Trustee's
assistance as necessary, cause the Certificate Distribu-
tion Account to be moved to an Eligible Institution
within ten (10) Business Days (or such longer period not
to exceed thirty (30) calendar days as to which each
Rating Agency may consent).
[(d) The Collection Account, the Note Payment
Account, [the Yield Supplement Account, the Pre-Funding
Account] and the Reserve Account are, collectively, the
"Indenture Trust Accounts." Each Indenture Trust Account
and the Certificate Distribution Account shall be main-
tained as an Eligible Deposit Account, and funds on
deposit in the Indenture Trust Accounts and the Certifi-
cate Distribution Account may, except to the extent
specified herein, be invested by the Indenture Trustee
(or, in the case of the Certificate Distribution Account,
by the Owner Trustee) in Permitted Investments selected
by the Servicer. It is understood and agreed that nei-
ther the Indenture nor the Trust shall be liable for any
loss or charge arising from such investment in Permitted
Investments. Funds on deposit in the Indenture Trust
Accounts with respect to any Collection Period shall be
invested in Permitted Investments that will mature so
that all funds (including both principal and interest)
will be available at the close of business on the Deposit
Date following such Collection Period. Funds deposited
in an Indenture Trust Account on a Deposit Date which
immediately precedes a Distribution Date upon the maturi-
ty of any Permitted Investments are not required to be
(but may be) invested overnight.
SECTION 4.2. Collections. (a) The Servicer
shall remit to the Collection Account (i) all payments by
or on behalf of the Obligors (excluding Purchased Receiv-
ables) and (ii) all Liquidation Proceeds and Recoveries,
in each case as soon as practicable, but in any event not
later than the second Business Day after the receipt
thereof; provided, that if and so long as the specific
terms and conditions set forth below in this Section 4.2
are fulfilled, the Servicer may make remittances of
collections less frequently than daily.
(b) Notwithstanding the provisions of Section
4.2(a), if (i) the Servicer shall have the Required
Rating or (ii) (A) the Servicer shall have obtained a
letter of credit or surety bond (or other form of guaran-
ty) in favor of the Indenture Trustee, on behalf of the
Issuer, the Owner Trustee, the Noteholders and the Cer-
tificateholders, providing that the Indenture Trustee may
demand payment (up to the amount then available thereun-
der) in the event that the Servicer fails to make any
payment or deposit required hereunder and (B) the Rating
Agency Condition shall be satisfied, the Servicer may
deposit the amounts referred to in subsection (a) above
into the Collection Account not later than the Deposit
Date immediately succeeding the last day of the related
Collection Period, for so long as the Servicer shall have
the Required Rating or such letter of credit, surety bond
or other form of guaranty is in full force and effect, as
the case may be; provided, however, that (i) if an Event
of Servicing Termination has occurred and is continuing,
(ii) the Servicer has been terminated as such pursuant to
Section 8.1 or (iii) the Servicer ceases to have the
Required Rating (and the Servicer has not obtained a
letter of credit, surety bond or other form of guaranty
satisfying the conditions specified above), the Servicer
shall deposit such amounts (including any amounts then
being held by the Servicer) into the Collection Account
as provided in Section 4.2(a). Notwithstanding the
foregoing, the provisions of the proviso to the preceding
sentence shall not be applicable to a successor Servicer
solely by reason of the occurrence of an event specified
in clauses (i), (ii) and (iii) of such proviso with
respect to the outgoing Servicer. Following the occur-
rence of an event specified in clauses (i), (ii) or (iii)
of the proviso to the second preceding sentence, on a
monthly basis, all Collections, Liquidation Proceeds and
Recoveries shall be segregated by book-entry or other
form of identification on the Servicer's books and re-
cords and identified as the property of the Trust. The
Servicer shall promptly notify the Indenture Trustee in
writing if it shall obtain or lose the Required Rating or
the benefit of such letter of credit, surety bond or
other form of guaranty.
(c) Notwithstanding the provisions of subsec-
tions (a) and (b) hereof, the Servicer may retain, or
will be entitled to be reimbursed, from amounts otherwise
payable into, or on deposit in, the Collection Account
with respect to a Collection Period any amounts previous-
ly deposited in the Collection Account but later deter-
mined to have resulted from mistaken deposits or postings
or checks returned for insufficient funds, in each case,
with respect to which the Servicer has not been previous-
ly reimbursed hereunder. The amount to be retained or
reimbursed hereunder shall not be included in Collections
with respect to the related Distribution Date.
(d) In those cases where a subservicer is
servicing a Receivable, the Servicer shall cause the
subservicer to remit to the Collection Account as soon as
practicable, but in no event later than the close of
business on the second Business Day after receipt thereof
by the subservicer (but subject to the provisions of
Section 4.2(b) applied with respect to such subservicer
and the limitations contained in Section 4.2(c) of this
Agreement) the amounts referred to in Section 4.2(a) in
respect of a Receivable being serviced by the
subservicer.
The Owner Trustee or the Indenture Trustee shall not be
deemed to have knowledge of any event or circumstance
that would require daily remittance by the Servicer to
the Collection Account unless the Owner Trustee or the
Indenture Trustee has received notice of such event or
circumstance from the Sellers or the Servicer in an
Officer's Certificate or from the Noteholders of Notes
evidencing not less than 25% of the principal amount of
the Notes Outstanding or from the Certificateholders of
Certificates evidencing not less than 25% of the Certifi-
cate Balance or an Officer in the Corporate Trust Office
with knowledge hereof or familiarity herewith has actual
knowledge of such event or circumstance. For purposes of
this Article IV the phrase "payments by or on behalf of
Obligors" shall mean payments made by Persons other than
the Servicer or by other means.
SECTION 4.3. [Reserved]
SECTION 4.4. [Reserved] [Advances. On each
Deposit Date, the Servicer shall make an advance with
respect to each Receivable (other than a Defaulted Re-
ceivable) equal to the excess, if any, of (i) the amount
of interest due on such Receivable at its applicable
Contract Rate as of its Due Date, assuming the payment
thereon was made on such Due Date [(or as of the date
that would have been its Due Date had the Obligor not
paid such Receivable ahead by more than one month)] over
(ii) Interest Collections actually received by the
Servicer as of the last day of such Collection Period
with respect to such Receivable (each such payment, an
"Advance"). If the amount specified in clause (ii) above
with respect to a Receivable exceeds the amount specified
in clause (i) above with respect to such Receivable, such
excess amount shall be remitted to the Servicer to reim-
burse the Servicer for previously unreimbursed Advances
with respect to such Receivable; provided, however, that
the Servicer shall not be entitled to reimbursement for
an Advance resulting from a payment being made by or on
behalf of the Obligor prior to the Due Date under the
Receivable (a "Simple Interest Advance"). In addition,
in the event that a Receivable becomes a Defaulted Re-
ceivable, Outstanding Advances of accrued unpaid interest
thereon shall be reimbursed to the extent of Interest
Collections with respect to such Receivable and, if such
amounts are insufficient, from amounts on deposit in the
Reserve Account. The Servicer shall not be required to
make an Advance (other than a Simple Interest Advance) to
the extent that the Servicer, in its sole discretion,
determines that such Advance would not subsequently be
recovered (whether from Interest Collections on such
Receivables (including Liquidation Proceeds) or the
Reserve Account). The Servicer shall not make any ad-
vance with respect to principal of Receivables. With
respect to each Receivable, the Advance shall increase
Outstanding Advances. Outstanding Advances shall be
reduced by subsequent payments by or on behalf of the
Obligor, collections of Liquidation Proceeds and payments
of the Purchase Amount. If the Servicer shall determine
that an Outstanding Advance with respect to any Receiv-
able shall not be recoverable, the Servicer shall be
reimbursed from any collections made on other Receivables
in the Trust, and Outstanding Advances with respect to
such Receivable shall be reduced accordingly.]
SECTION 4.5. [Reserved] [Additional Deposits.
(a) The Servicer shall deposit in the Collection Account
the aggregate Advances on the Receivables pursuant to
Section 4.4. To the extent that the Servicer fails to
make an advance pursuant to Section 4.4 on the date
required, the Servicer shall so notify the Indenture
Trustee in writing specifying the amount of the Advance
and the Receivable to which such Advance relates, and the
Indenture Trustee shall withdraw such amount (or, if
determinable, such portion of such amount as does not
represent advances for delinquent interest) from the
Reserve Account and deposit such amount in the Collection
Account.
(b) The Servicer and the Sellers shall deposit
or cause to be deposited in the Collection Account the
aggregate Purchase Amount with respect to Purchased
Receivables. All such deposits shall be made, in immedi-
ately available funds, no later than the applicable
Deposit Date. The Servicer shall deposit in the Collec-
tion Account the aggregate of all amounts to be paid
under Sections 9.1 and 3.7. [The Indenture Trustee shall
deposit in the Collection Account the aggregate of
amounts received pursuant to the Yield Supplement Agree-
ment, if any, and amounts received from the Yield Supple-
ment Account, if any, pursuant to Article V.]
(c) The Indenture Trustee shall on the Distri-
bution Date relating to each Collection Period make a
withdrawal from the Reserve Account in an amount equal to
the amount (if positive) calculated by the Servicer
pursuant to the second sentence of Section 4.6(b) and
shall deposit such funds into the Collection Account.]
SECTION 4.6. Distributions. (a) On each
Distribution Date after making the reimbursement of
Outstanding Advances pursuant to Sectron 4.4, the Inden-
ture Trustee shall cause to be made the following trans-
fers and distributions in the amounts set forth in the
Servicer's Certificate for such Distribution Date:
(i) to the Servicer, from the Available
Interest (as so allocated), the Servicing Fee
and all unpaid Servicing Fees from prior Col-
lection Periods;
(ii) to the Note Payment Account, from the
Available Funds remaining after the application of
clause (i), the Accrued Note Interest [and the Net
Trust Swap Payment, if any];
(iii) to the Note Payment Account, from the
Available Funds remaining after the application of
clauses (i) and (ii), the Noteholders' Principal
Payment Amount;
(iv) to the Certificate Distribution Account,
from the Available Funds remaining after the appli-
cation of clauses (i) through (iii), the Accrued
Certificate Interest;
(v) to the Certificate Distribution Account,
from the Available Funds remaining after the appli-
cation of clauses (i) through (iv), the
Certificateholders' Principal Distribution Amount;
and
(vi) to the Reserve Account, the Available
Funds remaining after the application of clauses (i)
through (v).
Notwithstanding the foregoing, following the occurrence
and during the continuation of an Event of Default which
has resulted in an acceleration of the Notes or following
an Insolvency Event with respect to [NB-SPC], the Avail-
able Funds remaining after the application of clauses (i)
and (ii) above will be deposited in the Note Payment
Account to the extent necessary to reduce the principal
amount of all the Notes to zero, and the Certificatehold-
ers will not receive any distributions until the princi-
pal amount and accrued interest on the Notes have been
paid in full.
(b) Prior to each Distribution Date, the
Servicer shall on each Determination Date calculate the
Available Funds, the Available Interest, the Available
Principal, the Servicing Fee, the Accrued Note Interest,
[the Net Swap Interest,] the Noteholders' Principal
Payment Amount, the Noteholders' Regular Principal, the
Noteholders' Accelerated Principal, [the Principal Dis-
tribution Amount,] the Accrued Certificate Interest, the
Certificateholders' Principal Distribution Amount, [the
Certificateholders' Regular Principal and the Yield
Supplement Amount, if any]. In addition, the Servicer
shall calculate on each Determination Date the difference
between the Total Required Payment and the Available
Funds.
(c) On each Distribution Date, all amounts on
deposit in the Note Payment Account [(other than [any]
Investment Earnings [in excess of the weighted average of
the Note Interest Rates] [and the Certificate Rate])]
will be paid in the following order of priority:
(i) to the [applicable] Noteholders, accrued
and unpaid interest on the outstanding principal
amount of the [applicable class of] Notes at the
[applicable] Note Interest Rate [and to the Swap
Counterparty, the Net Trust Swap Payment, if any,
for such Distribution Date, on a pro rata basis with
the amount[s] payable to the Noteholders pursuant to
this clause (i)]; [and]
(ii) to the [Class A-1] Noteholders in reduc-
tion of principal until the principal amount of the
[Class A-1] Notes has been reduced to zero[;
(iii) to the Class A-2 Noteholders in reduc-
tion of principal until the principal amount 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 amount of the Class
A-3 Notes has been reduced to zero].
(d) On each Distribution Date, all amounts on
deposit in the Certificate Distribution Account will be
distributed to the Certificateholders.
SECTION 4.7. Reserve Account. (a) (i) There
shall be established, prior to the Closing Date, an
account in the name of the Indenture Trustee at an Eligi-
ble Institution (which shall initially be ),
which shall be designated as the "Reserve Account". The
Reserve Account shall be under the sole dominion and
control of the Indenture Trustee; provided, that the
Servicer may make deposits to the Reserve Account in
accordance with the Basic Documents. On the Closing
Date, the Sellers shall deposit the Reserve Account
Initial Deposit into the Reserve Account from the net
proceeds of the sale of the Notes and the Certificates.
All amounts on deposit in and credited to the Reserve
Account, including the Reserve Account Initial Deposit
and any Permitted Investments (whether in the form of
deposit accounts, Physical Property, book-entry securi-
ties, uncertificated securities or otherwise), and all
proceeds thereof (such amounts, the "Reserve Account
Property") shall be pledged by the Sellers to __________,
acting in its capacity as agent for the benefit of the
Noteholders and the Certificateholders. Pursuant to the
Indenture, the Issuer will pledge all of its right, title
and interest in, to and under the Reserve Account and the
Reserve Account Property to the Indenture Trustee on
behalf of the Noteholders to secure the Issuer's obliga-
tions under the Notes and the Indenture.
The Reserve Account Property shall, to the
extent permitted by applicable law, rules and regula-
tions, be invested, as directed in writing by the
Servicer, by the bank or trust company then maintaining
the Reserve Account in Permitted Investments that mature
not later than the next Distribution Date, and such
Permitted Investments shall be held to maturity. All
interest and other income (net of losses and investment
expenses) on funds on deposit in the Reserve Account
shall, upon the written direction of the Servicer, be
paid to on any Distribution Date to the
extent funds on deposit therein, as certified by the
Servicer, exceed the Specified Reserve Account Balance.
In the event the Reserve Account is no longer to be
maintained at , the
Servicer shall, with the Indenture Trustee's or Owner
Trustee's assistance as necessary, cause the Reserve
Account to be moved to an Eligible Institution within ten
(10) Business Days (or such longer period not to exceed
thirty (30) calendar days as to which each Rating Agency
may consent).
(ii) With respect to Reserve Account Property:
(A) any Reserve Account Property
that is held in deposit accounts shall be
held solely in the name of the Indenture
Trustee at one or more depository institu-
tions having the Required Rating. Each
such deposit account shall be subject to
the exclusive custody and control of the
Indenture Trustee, and the Indenture
Trustee shall have sole signature authori-
ty with respect thereto.
(B) any Reserve Account Property
that constitutes Physical Property shall
be delivered to the Indenture Trustee in
accordance with paragraph (a) of the defi-
nition of "Delivery" and shall be held,
pending maturity or disposition, solely by
the Indenture Trustee or a financial in-
termediary (as such term is defined in
Section 8-313(4) of the UCC) acting solely
for the Indenture Trustee.
(C) any Reserve Account Property
that is a book-entry security held through
the Federal Reserve System pursuant to
federal book-entry regulations shall be
delivered in accordance with paragraph (b)
of the definition of "Delivery" and shall
be maintained by the Indenture Trustee,
pending maturity or disposition, through
continued book-entry registration of such
Reserve Account Property as described in
such paragraph.
(D) any Reserve Account Property
that is an "uncertificated security" under
Article 8 of the UCC shall be delivered to
the Indenture Trustee in accordance with
paragraph (c) of the definition of "Deliv-
ery" and shall be maintained by the Inden-
ture Trustee, pending maturity or disposi-
tion, through continued registration of
the Indenture Trustee's (or its nominee's)
ownership of such security;
(E) Property of a type which is not
capable of being delivered to the Inden-
ture Trustee in accordance with the defi-
nition of "Delivery" shall not constitute
Reserve Account Property.
Effective upon Delivery of any Reserve Account
Property in the form of Physical Property, uncertified
securities or book-entry securities, the Indenture Trust-
ee shall be deemed to have represented that it has pur-
chased such Reserve Account Property for value, in good
faith, and without notice of any adverse claim thereto.
(b) [If the Servicer pursuant to Section 4.4
determines on any Determination Date that it is required
to make an Advance and does not do so from its own funds,
the Servicer shall promptly instruct the Indenture Trust-
ee in writing to withdraw funds, in an amount specified
by the Servicer, from the Reserve Account and deposit
them in the Collection Account to cover any shortfall.
Such payment shall be deemed to have been made by the
Servicer pursuant to Section 4.4 for purposes of making
distributions pursuant to this Agreement, but shall not
otherwise satisfy the Servicer's obligation to deliver
the amount of the Advances to the Indenture Trustee, and
the Servicer shall within two Business Days replace any
funds in the Reserve Account so used.]
(c) If the amount on deposit in the Reserve
Account on any Distribution Date (after giving effect to
all deposits thereto or withdrawals therefrom on such
Distribution Date) is greater than the Specified Reserve
Account Balance for such Distribution Date, the Servicer
shall instruct the Indenture Trustee to [apply such
excess as Noteholders' Accelerated Principal] [distribute
the amount of such excess to the holder of the right to
receive any remaining Reserve Account Property following
the payment of the aggregate principal balance of the
Notes and the Certificate Balance and of all other
amounts owing hereunder or under the Indenture or the
Trust Agreement (the "Contingent Payment Right"); provid-
ed that the Indenture Trustee and the Owner Trustee
hereby release, on each Distribution Date, their security
interest in, to and under Reserve Account Property dis-
tributed to the holder of the Contingent Pay-
ment Right and provided further, that any portion of such
excess attributable to investment income (net of losses
and investment expenses) shall be paid to the holder of
the Contingent Payment Right. [Subsequent to any reduc-
tion or withdrawal by any Rating Agency of its rating of
[the] [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 Payment Account for payment to Noteholders as an
accelerated payment of principal on [such Distribution
Date.]
(d) Amounts held from time to time in the
Reserve Account will be held for the benefit of
Noteholders and Certificateholders. On each Distribution
Date, funds will be withdrawn from the Reserve Account up
to the Available Reserve Amount [to the extent that the
Available Funds (after the payment of the Servicing Fee)
with respect to any Collection Period is less than the
Noteholders' Payment Amount and will be deposited in the
Note Payment Account. In addition, funds will be with-
drawn from the Reserve Account up to the Available Re-
serve Amount (as reduced by any withdrawal pursuant to
the [preceding sentence][two preceding sentences]) to the
extent that the Available Funds remaining after the
payment of the Servicing Fee and the deposit of the
Noteholders' Payment Amount in the Note Payment Account
is less than the Certificateholders' Distribution Amount
and will be deposited in the Certificate Distribution
Account. If funds applied in accordance with the preced-
ing sentence are insufficient to distribute interest due
on the Certificates, subject to certain limitations,
funds 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.]
[in an amount equal to the shortfall between the Total
Required Amount, with respect to such Distribution Date,
and the Available Funds, with respect to such Distribu-
tion Date.] On each Distribution Date, the Reserve
Account will be reinstated up to the Specified Reserve
Account Balance to the extent, if any, of the Available
Funds remaining after payment of the Servicing Fee, the
deposit of the Noteholders' Payment Amount into the Note
Payment Account and the deposit of the
Certificateholders' Distribution Amount into the Certifi-
cate Distribution Account.
(e) Following the payment in full of the
aggregate principal amount of the Notes and the Certifi-
cate Balance and of all other amounts owing or to be
distributed hereunder or under the Indenture or the Trust
Agreement to Noteholders and Certificateholders and the
termination of the Trust, any remaining Reserve Account
Property shall be distributed to the holder of the Con-
tingent Payment Right.
SECTION 4.8. Net Deposits. For so long as (i)
NationsBank, N.A. shall be the Servicer and (ii) the
Servicer shall be entitled pursuant to Section 4.2 to
remit collections on a monthly rather than daily basis,
NationsBank, N.A. may make the remittances pursuant to
Sections 4.2 and 4.5 above, net of amounts to be distrib-
uted to NationsBank, N.A. pursuant to Section 4.6(a)(i).
Nonetheless, the Servicer shall account for all of the
above described remittances and distributions except for
the Supplemental Servicing Fee in the Servicer's Certifi-
cate as if the amounts were deposited and/or transferred
separately. The Sellers may make the remittances pursu-
ant to Sections 4.2 and 4.5 above, net of amounts to be
distributed to the Sellers pursuant to Section 4.6(a)(i).
Nonetheless, the Sellers shall account for all of the
above described remittances and distributions as if the
amounts were deposited and/or transferred separately.
SECTION 4.9. Statements to Noteholders and
Certificateholders. On each Distribution Date, the
Servicer shall provide to the Indenture Trustee (with
copies to the Rating Agencies and each Note Paying Agent)
for the Indenture Trustee to forward to each Noteholder
of record as of the most recent Record Date and to the
Owner Trustee (with copies to the Rating Agencies and to
each Certificate Paying Agent) for the Owner Trustee to
forward to each Certificateholder of record as of the
most recent Record Date a statement based on information
in the Servicer's Certificate furnished pursuant to
Section 3.9, setting forth for the Collection Period
relating to such Distribution Date the following informa-
tion as to the Notes and the Certificates to the extent
applicable:
(i) the amount of such distribution
allocable to principal allocable to the Notes and to
the Certificates;
(ii) the amount of such distribution
allocable to interest allocable to the Notes and the
Certificates;
(iii) the amount of such distribution
allocable to withdrawals made from the Reserve
Account [and under the Yield Supplement Agreement
and from amounts on deposit in the Yield Supplement
Account];
(iv) the Pool Balance as of the close of
business on the Deposit Date;
(v) the amount of the Servicing Fee paid
to the Servicer with respect to the related Collec-
tion Period and the amount of any unpaid Servicing
Fees and the change in such amount from that of the
prior Distribution Date;
(vi) the amounts of the Noteholders'
Interest Carryover Shortfall, the Noteholders'
Principal Carryover Shortfall, the
Certificateholders' Interest Carryover Shortfall and
the Certificateholders' Principal Carryover Short-
fall, if any, on such Distribution Date and the
change in such amounts from the preceding Distribu-
tion Date;
(vii) the aggregate outstanding principal
amount of each Class of Notes, the Note Pool Factor
for each Class of Notes, the Certificate Balance and
the Certificate Pool Factor as of such Distribution
Date;
(viii) the balance of the Reserve Account
on such Distribution Date, after giving effect to
distributions made on such Distribution Date and the
change in such balance from the preceding Distribu-
tion Date;
(ix) the amount of the aggregate Realized
Losses, if any, with respect to the related Collec-
tion Period;
(x) the aggregate Purchase Amount of
Receivables repurchased by the Sellers or purchased
by the Servicer, if any, with respect to the related
Collection Period;
[(xi) the balance of the Yield Supplement
Account on such Distribution Date, after giving
effect to distributions made on such Distribution
Date and the change in such balance from the preced-
ing Distribution Date;]
[(xii) the balance of the Pre-Funding
Account on such Distribution Date, after giving
effect to distributions made on such Distribution
Date and the change in such balance from the preced-
ing Distribution Date;]
[(xiii) with respect to the succeeding
Accrual Period, the applicable Note Interest Rate
for [each Class of ] the Notes Outstanding; and]
[(xiv) the amount, if any, of [Advanc-
es,][Advance Reserve Withdrawals] made on such
Distribution Date.
Each amount set forth on the Distribution Date
statement pursuant to clauses (i), (ii), (v) or (vi)
above shall be expressed as a dollar amount per $1,000 of
original principal amount or original Certificate Balance
of a Note or a Certificate, as applicable.
End of Article IV
ARTICLE V
[ RESERVED]
ARTICLE VI
THE SELLERS
SECTION 6.1. Representations and Warranties of
Sellers. Each Seller makes the following representations
and warranties on which the Issuer is deemed to have
relied in acquiring the Owner Trust Property. These
representations and warranties are made as of the Closing
Date, but shall survive the sale, transfer and assignment
of the Receivables and the other Owner Trust Property to
the Trust.
(i) Organization and Good Standing. The
Seller has been duly organized and is validly exist-
ing as a national banking association, with the
power and authority to own its properties and to
conduct its business as such properties are present-
ly owned and such business is presently conducted
and had at all relevant times, and has, full power,
authority and legal right to acquire, own and sell
its Receivables.
(ii) Due Qualification. The Seller has
obtained all necessary licenses and approvals, in
all jurisdictions where the failure to do so would
materially and adversely affect the ownership or
servicing of its Receivables or render any of its
Receivables unenforceable.
(iii) Power and Authority. The Seller
has the power, authority and legal right to execute
and deliver this Agreement and to carry out its
terms and to sell and assign the property to be sold
and assigned to and deposited with the Owner Trustee
as Owner Trust Property; and the execution, deliv-
ery, and performance of this Agreement and all of
the documents required pursuant hereto have been
duly authorized by the Seller by all necessary
corporate action.
(iv) No Consent Required. The Seller is
not required to obtain the consent of any other
Person, or any consent, license, approval or autho-
rization or registration or declaration with, any
governmental authority, bureau or agency in connec-
tion with the execution, delivery or performance of
this Agreement, other than as may be required under
the blue sky or securities laws of any state or the
Act, or under state laws governing the perfection of
the interests created under this Agreement.
(v) Valid Sale; Binding Obligation. This
Agreement effects a valid sale, transfer, and as-
signment of the Receivables and the other Owner
Trust Property conveyed by the Seller to the Trust
hereunder, enforceable against creditors of and
purchasers from the Seller; and this Agreement
constitutes a legal, valid, and binding obligation
of the Seller, enforceable against the Seller in
accordance with its terms, subject, as to enforce-
ability, to applicable bankruptcy, insolvency,
reorganization, moratorium, conservatorship, receiv-
ership, liquidation and other similar laws affecting
the enforcement of creditors' rights in general and
except as such enforceability may be limited by
general principles of equity (whether considered in
a suit at law or in equity).
(vi) No Violation. The execution, deliv-
ery and performance by the Seller of this Agreement
and the consummation of the transactions contemplat-
ed hereby and the fulfillment of the terms hereof
will not conflict with, result in any breach of any
of the terms and provisions of, or constitute (with
or without notice or lapse of time) a default under,
the articles of association or bylaws of the Seller,
or conflict with, or breach any of the terms or
provisions of, or constitute (with or without notice
or lapse of time) a default under, any material
indenture, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or
by which the Seller is bound or any of its proper-
ties are subject, or result in the creation or
imposition of any lien upon any of its properties
pursuant to the terms of any such indenture, agree-
ment, mortgage, deed of trust or other instrument
(other than this Agreement), or violate any law,
order, rule, or regulation, applicable to the Seller
or its properties, of any federal or state regulato-
ry body, any court, administrative agency, or other
governmental instrumentality having jurisdiction
over the Seller or any of its properties.
(vii) No Proceedings. There are no
proceedings or investigations pending, or, to the
knowledge of the Seller, threatened, before any
court, regulatory body, administrative agency, or
other tribunal or governmental instrumentality
having jurisdiction over the Seller or its proper-
ties: (a) asserting the invalidity of this Agree-
ment or the Certificates, (b) seeking to prevent the
issuance of the Certificates or the consummation of
any of the transactions contemplated by this Agree-
ment, (c) seeking any determination or ruling that
might materially and adversely affect the perfor-
mance by the Seller of its obligations under, or the
validity or enforceability of, this Agreement or the
Certificates, or (d) that may adversely affect the
federal or state income, excise, franchise or simi-
lar tax attributes of the Certificates.
SECTION 6.2. Liability of the Sellers; Indem-
nities. (a) The Sellers shall be jointly and severally
liable in accordance herewith only to the extent of the
obligations specifically undertaken hereunder and shall
have no other obligations or liabilities hereunder.
(b) The Sellers shall jointly and severally
indemnify, defend and hold harmless the Issuer, the Owner
Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders from and against any taxes that may at
any time be asserted against any such Person, its direc-
tors, officers, employees and agents, the Trust, a
Noteholder or a Certificateholder with respect to, and as
of the date of, the sale, transfer and assignment of the
Owner Trust Property to the Trust or the issuance and
original sale of the Notes or the Certificates, including
any sales, gross receipts, general corporation, tangible
or intangible personal property, privilege, or license
taxes (but not including any taxes asserted with respect
to ownership of the Owner Trust Property or federal or
other Applicable Tax State income taxes, including fran-
chise taxes measured by net income, arising out of the
transactions contemplated by this Agreement and the other
Basic Documents, or any transfer taxes arising in connec-
tion with the transfer of the Notes or the Certificates),
and reasonable costs and expenses in defending against
the same.
(c) The Sellers shall jointly and severally
indemnify, defend and hold harmless the Issuer, the Owner
Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders from and against any loss, liability
or expense incurred by reason of (i) a Seller's willful
misfeasance, bad faith, or negligence in the performance
of its duties hereunder, or by reason of reckless disre-
gard of the obligations and duties hereunder; or (ii) any
action taken, or failed to be taken, by a Seller in
respect of any portion of the Owner Trust Property.
(d) The Sellers shall jointly and severally
indemnify, defend and hold harmless the Issuer, the Owner
Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders from and against any loss, liability
or expense incurred by reason of the violation by a
Seller of federal or state securities laws in connection
with the registration or the sale of the Notes or the
Certificates.
(e) The Sellers shall jointly and severally
indemnify, defend and hold harmless the Issuer, the Owner
Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders from and against any loss, liability
or expense imposed upon, or incurred by, the Issuer, the
Owner Trustee, the Indenture Trustee, the Noteholders or
the Certificateholders as the result of the failure of
any Receivable conveyed by it to the Trust hereunder, or
the sale of the related Financed Vehicle, to comply with
all requirements of applicable law.
(f) Indemnification under this Section 6.2
shall include reasonable fees and expenses of counsel and
expenses of litigation and shall survive termination of
the Trust. If the Sellers shall have made any indemnity
payments pursuant to this Section 6.2 and the indemnified
party thereafter shall collect any of such amounts from
Persons other than the Sellers, such indemnified party
shall immediately upon receipt thereof repay such amounts
to the Sellers, without interest.
(g) The Sellers shall jointly and severally
indemnify, defend and hold harmless the Owner Trustee and
the Indenture Trustee and their respective officers,
directors, employees and agents from and against all
costs, expenses, losses, claims, damages and liabilities
arising out of or incurred in connection with the accep-
tance or performance of the trusts and duties contained
herein and in the Trust Agreement, in the case of the
Owner Trustee, and in the Indenture, in the case of the
Indenture Trustee, except to the extent that such cost,
expense, loss, claim, damage or liability: (i) in the
case of the Owner Trustee, shall be due to the willful
misfeasance, bad faith or negligence (except for errors
in judgment) of the Owner Trustee or, in the case of the
Indenture Trustee, shall be due to the willful misfea-
sance, bad faith or negligence (except for errors in
judgment) of the Indenture Trustee; or (ii) in the case
of the Owner Trustee shall arise from the breach by the
Owner Trustee of any of its representations or warranties
set forth in Section 7.3 of the Trust Agreement or (iii)
in the case of the Indenture Trustee shall arise from the
breach by the Indenture Trustee of any of its representa-
tions and warranties set forth in the Indenture.
(h) The General Partner shall pay any and all
taxes levied or assessed upon all or any part of the
Owner Trust Property.
SECTION 6.3. Merger or Consolidation of, or
Assumption of the Obligations of, any of the Sellers.
Any Person (i) into which a Seller may be merged or
consolidated, (ii) that may result from any merger,
conversion, or consolidation to which a Seller is a
party, or (iii) that may succeed by purchase and assump-
tion to all or substantially all of the business of a
Seller, where such Seller is not the surviving entity,
which Person in any of the foregoing cases executes an
agreement of assumption to perform every obligation of
such affected Seller(s) under this Agreement, will be the
successor to such Seller(s) under this Agreement without
the execution or filing of any document or any further
act on the part of any of the parties to this Agreement;
provided, however, that (x) such affected Seller(s) shall
have delivered to the Owner Trustee and the Indenture
Trustee an Officer's Certificate and an Opinion of Coun-
sel each stating that such merger, conversion, consolida-
tion or succession and such agreement of assumption
comply with this Section 6.3 and that all conditions
precedent, if any, provided for in this Agreement relat-
ing to such transaction have been complied with and (y)
the Sellers shall have delivered to the Owner Trustee and
the Indenture Trustee an Opinion of Counsel either (A)
stating that, in the opinion of such counsel, all financ-
ing statements and continuation statements and amendments
thereto have been executed and filed that are necessary
fully to preserve and protect the interests of the Issuer
and the Indenture Trustee, respectively, in the Receiv-
ables and the other Owner Trust Property, and reciting
the details of such filings, or (B) stating that, in the
opinion of such counsel, no such action shall be neces-
sary to preserve and protect such interest. The Sellers
shall provide notice of any merger, conversion, consoli-
dation, or succession pursuant to this Section 6.3 to the
Rating Agencies. Notwithstanding anything herein to the
contrary, the execution of the foregoing agreement of
assumption and compliance with clauses (x) or (y) above
shall be conditions to the consummation of the transac-
tions referred to in clauses (i), (ii) or (iii) above.
SECTION 6.4. Limitation on Liability of the
Sellers and Others. Each Seller and any officer or
employee or agent of any of the Sellers may rely in good
faith on the advice of counsel or on any document of any
kind, prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. No
Seller shall be under any obligation to appear in, prose-
cute, or defend any legal action that shall not be inci-
dental to its obligations under this Agreement, and that
in its opinion may involve it in any expense or liabili-
ty.
SECTION 6.5. Sellers May Own Notes or Certifi-
cates. Each of the Sellers, and any Affiliate of the
Sellers, may in its individual or any other capacity
become the owner or pledgee of Notes or Certificates with
the same rights as it would have if it were not the
Sellers or an Affiliate thereof, except as otherwise
expressly provided herein or in the other Basic Docu-
ments. Except as set forth herein or in the other Basic
Documents, Notes and Certificates so owned by or pledged
to the Sellers or any such Affiliate shall have an equal
and proportionate benefit under the provisions of this
Agreement and the other Basic Documents, without prefer-
ence, priority, or distinction as among all of the Notes
and Certificates.
End of Article VI
ARTICLE VII
THE SERVICER
SECTION 7.1. Representations of Servicer. The
Servicer makes the following representations and warran-
ties on which the Issuer is deemed to have relied in
acquiring the Owner Trust Property. These representa-
tions and warranties are made as of the Closing Date, but
shall survive the sale, transfer and assignment of the
Receivables and the other Owner Trust Property to the
Trust.
(i) Organization and Good Standing. The
Servicer has been duly organized and is validly
existing as a national banking association, with the
power and authority to own its properties and to
conduct its business as such properties are present-
ly owned and such business is presently conducted,
and had at all relevant times, and has, the power,
authority and legal right to service the Receiv-
ables, and to hold the Receivable Files as custodian
on behalf of the Owner Trustee and the Indenture
Trustee.
(ii) Due Qualification. The Servicer has
obtained all necessary licenses and approvals, in
all jurisdictions where the failure to do so would
materially and adversely affect the ability of the
Servicer to service, or the enforceability of, the
Receivables.
(iii) Power and Authority. The Servicer
has the power, authority and legal right to execute
and deliver this Agreement and to carry out its
terms; and the execution, delivery and performance
of this Agreement has been duly authorized by the
Servicer by all necessary corporate action.
(iv) No Consent Required. The Servicer
is not required to obtain the consent of any other
Person, or any consent, license, approval or autho-
rization or registration or declaration with, any
governmental authority, bureau or agency in connec-
tion with the execution, delivery or performance of
this Agreement.
(v) Binding Obligation; Enforceability.
This Agreement constitutes a legal, valid, and
binding obligation of the Servicer, enforceable
against the Servicer in accordance with it terms,
subject, as to enforceability, to applicable bank-
ruptcy, insolvency, reorganization, moratorium,
conservatorship, receivership, liquidation and other
similar laws now or hereafter in effect affecting
the enforcement of creditors' rights in general and
except as such enforceability may be limited by
general principles of equity (whether considered in
a suit at law or in equity).
(vi) No Violation. The execution, deliv-
ery and performance of this Agreement, the consumma-
tion of the transactions contemplated hereby and the
fulfillment of the terms hereof will not conflict
with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice
or lapse of time) a default under, the articles of
association or bylaws of the Servicer, or conflict
with or breach any of the terms or provisions of, or
constitute (with or without notice or lapse of time)
a default under, any material indenture, agreement,
mortgage, deed of trust or other instrument to which
the Servicer is a party or by which the Servicer is
bound or to which any of its properties are subject,
or result in the creation or imposition of any lien
upon any of its properties pursuant to the terms of
any such indenture, agreement, mortgage, deed of
trust or other instrument (other than this Agree-
ment), or violate any law, order, rule, or regula-
tion applicable to the Servicer or its properties of
any federal or state regulatory body, any court,
administrative agency, or other governmental instru-
mentality having jurisdiction over the Servicer or
any of its properties.
(vii) No Proceedings. There are no
proceedings or investigations pending, or, to the
Servicer's knowledge, threatened, before any court,
regulatory body, administrative agency, or tribunal
or other governmental instrumentality having juris-
diction over the Servicer or its properties: (a)
asserting the invalidity of this Agreement, the
Indenture, any of the other Basic Documents, the
Notes or the Certificates, (b) seeking to prevent
the issuance of the Notes or the Certificates or the
consummation of any of the transactions contemplated
by this Agreement or any of the other Basic Docu-
ments, (c) seeking any determination or ruling that
might materially and adversely affect the perfor-
mance by the Servicer of its obligations under, or
the validity or enforceability of, this Agreement,
the Indenture, any of the other Basic Documents, the
Notes or the Certificates, or (d) that may adversely
affect the federal or Applicable Tax State income,
excise, franchise or similar tax attributes of the
Notes or the Certificates.
SECTION 7.2. Indemnities of Servicer. The
Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically undertaken by
the Servicer under this Agreement, and hereby agrees to
the following:
(a) The Servicer shall defend, indemnify and
hold harmless the Issuer, the Owner Trustee, the Inden-
ture Trustee, the Noteholders, the Certificateholders and
the Sellers from and against any and all costs, expenses,
losses, damages, claims and liabilities, arising out of
or resulting from the use, ownership or operation by the
Servicer or any Affiliate thereof of a Financed Vehicle
or in respect of any action taken, or failed to be taken,
by the Servicer with respect to any Receivable or other
portion of the Owner Trust Property.
(b) The Servicer shall indemnify, defend and
hold harmless the Issuer, the Owner Trustee and the
Indenture Trustee from and against any taxes that may at
any time be asserted against any of the foregoing with
respect to the transactions contemplated herein or in the
other Basic Documents, if any, including, without limita-
tion, any sales, gross receipts, general corporation,
tangible personal property, privilege, or license taxes
(but not including any taxes asserted with respect to,
and as of the date of, the sale, transfer and assignment
of the Owner Trust Property to the Trust or the issuance
and original sale of the Notes and the Certificates, or
asserted with respect to ownership of the Receivables or
the other Owner Trust Property, or federal or other
Applicable Tax State income taxes arising out of the
transactions contemplated by this Agreement and the other
Basic Documents) and costs and expenses in defending
against the same.
(c) The Servicer shall indemnify, defend and
hold harmless the Issuer, the Owner Trustee, the Inden-
ture Trustee, the Noteholders, the Certificateholders and
the Sellers from and against any and all costs, expenses,
losses, claims, damages, and liabilities to the extent
that such cost, expense, loss, claim, damage, or liabili-
ty arose out of, or was imposed upon any of the foregoing
through, the negligence, willful misfeasance, or bad
faith of the Servicer in the performance of its duties
under this Agreement or any other Basic Document to which
it is a party.
(d) The Servicer shall indemnify, defend and
hold harmless the Trustee, the Trust and the Certificate-
holders from and against any and all costs, expenses,
losses, claims, damages, and liabilities, to the extent
that such cost, expense, loss, claim, damage, or liabili-
ty arose out of, or was imposed upon, or incurred by, the
Trustee, the Trust or the Certificateholders as a result
of the willful misfeasance, negligence, or bad faith of
the Servicer in the performance of its duties under this
Agreement.
Indemnification under this Section 7.2 shall
include reasonable fees and expenses of counsel and
expenses of litigation. The indemnity obligations of the
Servicer hereunder shall survive any termination of the
Servicer pursuant to Section 8.1, but only with respect
to obligations arising prior thereto, and any payment of
the amount owing under, or the Purchase Amount with
respect to, any Receivable. If the Servicer shall have
made any indemnity payments pursuant to this Section 7.2
and the indemnified party thereafter collects any of such
amounts from others, such indemnified party shall immedi-
ately upon receipt thereof repay such amounts to the
Servicer, without interest.
SECTION 7.3. Merger or Consolidation of, or
Assumption of the Obligations of, Servicer. Any corpora-
tion or other entity (i) into which the Servicer may be
merged or consolidated, (ii) that may result from any
merger, conversion, or consolidation to which a Servicer
is a party, or (iii) that may succeed by purchase and
assumption to all or substantially all of the business of
the Servicer, where the Servicer is not the surviving
entity, which corporation or other entity shall be an
Eligible Servicer and shall have executed an agreement
assuming the performance of the obligations of the
Servicer under this Agreement, shall be the successor to
the Servicer under this Agreement (without relieving the
Servicer of its responsibilities hereunder, if it sur-
vives such merger, conversion or consolidation) without
any further act on the part of any of the parties to this
Agreement; the Servicer shall promptly inform the Owner
Trustee, the Indenture Trustee and the Rating Agencies of
any such merger, conversion, consolidation or purchase
and assumption, where the Servicer is not the surviving
entity.
SECTION 7.4. Limitation on Liability of
Servicer and Others. (a) Neither the Servicer nor any of
the directors or officers or employees or agents of the
Servicer shall be under any liability to the Issuer, the
Noteholders or the Certificateholders, except as provided
under this Agreement, for any action taken or for re-
fraining from the taking of any action pursuant to this
Agreement or for errors in judgment; provided, however,
that this provision shall not protect the Servicer or any
such Person against any liability that would otherwise be
imposed by reason of willful misfeasance or bad faith in
the performance of duties or by reason of reckless disre-
gard of obligations and duties under this Agreement, or
by reason of negligence in the performance of its duties
under this Agreement (except for errors in judgment).
The Servicer and any director, officer or employee or
agent of the Servicer may rely in good faith on any
Opinion of Counsel or on any Officer's Certificate or
certificate of auditors believed to be genuine and to
have been signed by the proper party in respect of any
matters arising under this Agreement.
(b) Except as provided in this Agreement, the
Servicer shall not be under any obligation to appear in,
prosecute, or defend any legal action that shall not be
incidental to its duties to service the Receivables in
accordance with this Agreement, and that in its opinion
may involve it in any expense or liability; provided,
however, that the Servicer may undertake any reasonable
action that it may deem necessary or desirable in respect
of this Agreement and the rights and duties of the par-
ties to this Agreement and the interests of the
Noteholders and Certificateholders under this Agreement.
In such event, the legal expenses and costs of such
action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Servicer.
SECTION 7.5. NationsBank, N.A. Not to Resign
as Servicer. Subject to the provisions of Section 7.3,
NationsBank, N.A. shall not resign from the obligations
and duties hereby imposed on it as Servicer under this
Agreement except upon determination that the performance
of its duties under this Agreement shall no longer be
permissible under applicable law. Notice of any such
determination permitting the resignation of NationsBank,
N.A. shall be communicated to the Owner Trustee and the
Indenture Trustee at the earliest practicable time (and,
if such communication is not in writing, shall be con-
firmed in writing at the earliest practicable time) and
any such determination shall be evidenced by an Opinion
of Counsel to such effect delivered to the Owner Trustee
and the Indenture Trustee concurrently with or promptly
after such notice. No such resignation shall become
effective until the Indenture Trustee or a successor
Servicer shall have (i) taken the actions required by the
last paragraph of Section 8.1, (ii) assumed the responsi-
bilities and obligations of NationsBank, N.A. in accor-
dance with Section 8.2 and (iii) become the Administrator
under the Administration Agreement pursuant to Section 9
thereof.
SECTION 7.6. Servicer May Own Notes or Certif-
icates. The Servicer, and any Affiliate of the Servicer,
may, in its individual or any other capacity, become the
owner or pledgee of Notes or Certificates with the same
rights as it would have if it were not the Servicer or an
Affiliate thereof, except as otherwise expressly provided
herein or in the other Basic Documents. Except as set
forth herein or in the other Basic Documents, Notes and
Certificates so owned by or pledged to the Servicer or
such Affiliate shall have an equal and proportionate
benefit under the provisions of this Agreement, without
preference, priority or distinction as among all of the
Notes and Certificates.
End of Article VII
ARTICLE VIII
SERVICING TERMINATION
SECTION 8.1. Events of Servicing Termination.
(a) If any one of the following events ("Events of
Servicing Termination") shall occur and be continuing:
(i) Any failure by the Servicer to (A) deliver
the Servicer's Certificate in accordance with Sec-
tion 3.9 hereof, or (B) deliver to the Owner Trustee
or the Indenture any proceeds or payment required to
be so delivered under the terms of the Notes and the
Certificates and this Agreement that shall continue
unremedied for a period of five (5) Business Days
after the due date therefor (or, in the case of a
payment or deposit to be made no later than a Depos-
it Date immediately preceding a Distribution Date,
the failure to make such payment or deposit by such
Distribution Date); or
(ii) Failure on the part of the Servicer duly
to observe or to perform in any material respect any
other covenants or agreements of the Servicer set
forth in the Notes, the Certificates or in this
Agreement, which failure shall (a) materially and
adversely affect the rights of Noteholders or Cer-
tificateholders and (b) continue unremedied for a
period of ninety (90) days after the date on which
written notice of such failure, requiring the same
to be remedied, shall have been given (1) to the
Servicer by the Owner Trustee or the Indenture
Trustee, or (2) to the Owner Trustee, the Indenture
Trustee, the Sellers and the Servicer by the Majori-
ty Noteholders or by the Majority Certificatehold-
ers; or
(iii) The entry of a decree or order by a
court or agency or supervisory authority of compe-
tent jurisdiction for the appointment of a conserva-
tor, receiver, liquidator or trustee for the
Servicer in any bankruptcy, insolvency, receivership
, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings, or for the
winding up or liquidation of its affairs, and any
such decree or order continues unstayed and in
effect for a period of sixty (60) consecutive days;
(iv) The consent by the Servicer to the
appointment of a conservator, receiver, liquidator
or trustee in any bankruptcy, insolvency, readjust-
ment of debt, marshalling of assets and liabilities,
or similar proceedings of or relating to the
Servicer or relating to substantially all of its
property, the admission in writing by the Servicer
of its inability to pay its debts generally as they
become due, the filing by the Servicer of a petition
to take advantage of any applicable bankruptcy,
insolvency or reorganization statute, the making by
the Servicer of an assignment for the benefit of its
creditors or the voluntary suspension by the
Servicer of payment of its obligations; or
(v) The failure by the Servicer to be an
Eligible Servicer;
then, and in each and every case, so long as an Event of
Servicing Termination shall not have been remedied,
either (i) the Indenture Trustee, or (ii) by the Inden-
ture Trustee at the direction of the Majority
Noteholders, or (iii) by the Owner Trustee with the
consent of the Majority Noteholders, or (iv) if the Notes
have been paid in full, (x) by the Owner Trustee, at the
direction of the Majority Certificateholders or (y) by
the Owner Trustee with the consent of the Majority Cer-
tificateholders. On or after the receipt by the Servicer
of such written notice, all authority and power of the
Servicer under this Agreement, whether with respect to
the Notes, the Certificates or the Owner Trust Property
or otherwise, shall pass to and be vested in the Inden-
ture Trustee or such successor Servicer as may be ap-
pointed under Section 8.2; and, without limitation, the
Indenture Trustee and the Owner Trustee are hereby autho-
rized and empowered to execute and deliver, on behalf of
the predecessor Servicer, as attorney-in-fact or other-
wise, any and all documents and other instruments, and to
do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and en-
dorsement of the Receivables Files and related documents,
or otherwise.
The predecessor Servicer shall cooperate with
the Indenture Trustee, the Owner Trustee and such succes-
sor Servicer in effecting the termination of the respon-
sibilities and rights of the predecessor Servicer under
this Agreement, including the transfer to the Indenture
Trustee or such successor Servicer for administration of
all cash amounts that shall at the time be held by the
predecessor Servicer for deposit, or shall thereafter be
received with respect to a Receivable and the delivery of
the Receivable Files and the related accounts and records
maintained by the Servicer. All reasonable costs and
expenses (including attorneys' fees) incurred in connec-
tion with transferring the Receivable Files to the suc-
cessor Servicer and amending this Agreement to reflect
such succession as Servicer pursuant to this Section 8.1
shall be paid by the predecessor Servicer upon presenta-
tion of reasonable documentation of such costs and ex-
penses.
SECTION 8.2. Appointment of Successor
Servicer. (a) Upon the Servicer's receipt of notice of
termination pursuant to Section 8.1 or the Servicer's
resignation in accordance with the terms of this Agree-
ment, the predecessor Servicer shall continue to perform
its functions as Servicer under this Agreement, in the
case of termination, only until the date specified in
such termination notice or, if no such date is specified
in a notice of termination, until receipt of such notice
and, in the case of resignation, until the later of (x)
the date 45 days from the delivery to the Indenture
Trustee of written notice of such resignation (or written
confirmation of such notice) in accordance with the terms
of this Agreement and (y) the date upon which the prede-
cessor Servicer shall become unable to act as Servicer,
as specified in the notice of resignation and accompany-
ing Opinion of Counsel. In the event of the Servicer's
resignation or termination hereunder, the Indenture
Trustee shall appoint a successor Servicer, and the
successor Servicer shall accept its appointment by a
written assumption in form acceptable to the Owner Trust-
ee and the Indenture Trustee, provided, however, that if
the Servicer has been terminated as a result of the
appointment of a trustee, receiver or other official
pursuant to Section 8.1(a)(iii) and no other Event of
Servicing Termination has occurred, such trustee or
official may have the power to prevent such Indenture
Trustee or the Noteholders from effecting a transfer of
servicing. In the event that a successor Servicer has
not been appointed at the time when the predecessor
Servicer has ceased to act as Servicer in accordance with
this Section 8.2, the Indenture Trustee without further
action shall automatically be appointed the successor
Servicer. Notwithstanding the above, the Indenture
Trustee shall, if it shall be legally unable so to act,
appoint, or petition a court of competent jurisdiction to
appoint, any Eligible Servicer as the successor to the
Servicer under this Agreement. The Servicer shall not
resign or be relieved of its duties under this Agreement
until a newly appointed Servicer shall have assumed the
responsibilities and obligations of the terminated
Servicer under this Agreement.
(b) Upon appointment, the successor
Servicer shall be the successor in all respects to the
predecessor Servicer and shall be subject to all the
responsibilities, duties, and liabilities arising there-
after relating thereto placed on the predecessor
Servicer, by the terms and provisions of this Agreement.
(c) In connection with such appointment,
the Indenture Trustee may make such arrangements for the
compensation of such successor Servicer out of payments
on Receivables as it and such successor Servicer shall
agree; provided, however, that no such compensation shall
be in excess of that permitted the predecessor Servicer
under this Agreement. The Indenture Trustee and such
successor Servicer shall take such action, consistent
with this Agreement, as shall be necessary to effectuate
any such succession.
SECTION 8.3. Effect of Servicing Transfer.
(a) After the transfer of servicing hereunder, the
Indenture Trustee or successor Servicer shall, if neces-
sary, notify Obligors to make directly to the successor
Servicer payments that are due under the Receivables
after the effective date of such transfer.
(b) Except as provided in Sections 7.2 and 9.8
after the transfer of servicing hereunder, the outgoing
Servicer shall have no further obligations with respect
to the management, administration, servicing, custody or
collection of the Receivables and the successor Servicer
shall have all of such obligations, except that the
outgoing Servicer shall transmit or cause to be transmit-
ted directly to the successor Servicer for its own ac-
count, promptly on receipt and in the same form in which
received, any amounts held by the outgoing Servicer
(properly endorsed where required for the successor
Servicer to collect any such items) received as payments
upon or otherwise in connection with the Receivables and
the outgoing Servicer shall continue to cooperate with
the successor Servicer by providing information and in
the enforcement of the Dealer Agreements, the Dealer
Assignments and the Insurance Policies.
(c) A transfer of servicing hereunder shall
not affect the rights and duties of the parties hereunder
(including the obligations and indemnities of the Sellers
pursuant to Sections 2.4, 3.3, 6.1 and 6.2 or, with
respect to obligations and indemnities arising prior to,
or concurrently with, a transfer of servicing hereunder,
the outgoing Servicer pursuant to Section 2.8, 7.1 or
7.2) other than those relating to the management, admin-
istration, servicing, custody or collection of the Re-
ceivables and the other Owner Trust Property. The suc-
cessor Servicer shall, upon its appointment pursuant to
Section 8.2 and as part of its duties and responsibili-
ties under this Agreement, promptly take all action it
deems necessary or appropriate so that the outgoing
Servicer (in whatever capacity) is paid or reimbursed all
amounts it is entitled to receive under this Agreement on
each Distribution Date subsequent to the date on which it
is terminated as Servicer hereunder.
(d) Any successor Servicer shall provide the
Sellers with access to the Receivable Files and to the
successor Servicer's records (whether written or automat-
ed) with respect to the Receivable Files. Such access
shall be afforded without charge, but only upon reason-
able request and during normal business hours at the
offices of the successor Servicer. Nothing in this
Section 8.3 shall affect the obligation of the successor
Servicer to observe any applicable law prohibiting dis-
closure of information regarding the Obligors, and the
failure of the Servicer to provide access to information
as a result of such obligation shall not constitute a
breach of this Section 8.3.
SECTION 8.4. Repayment of Advances. If the
identity of the Servicer shall change, the predecessor
Servicer shall be entitled to receive to the extent of
available funds reimbursement for Outstanding Advances
pursuant to Section 4.3 and 4.4, in the manner specified
in Section 4.6, with respect to all Advances made by the
predecessor Servicer.
SECTION 8.5. Notification to Noteholders and
Certificateholders. Upon any termination of, or appoint-
ment of a successor to, the Servicer pursuant to this
Article VIII, the Indenture Trustee shall give prompt
written notice thereof to the Noteholders, and the Owner
Trustee shall give prompt written notice thereof to the
Certificateholders at their respective addresses of
record and to each Rating Agency.
SECTION 8.6. Waiver of Past Events of Servic-
ing Termination. The Noteholders of Notes evidencing not
less than a majority of the principal amount of the Notes
Outstanding or the Certificateholders of Certificates
evidencing not less than a majority of the Certificate
Balance (in the case of an Event of Servicing Termination
which does not adversely affect the Indenture Trustee or
the Noteholders) may, on behalf of all Noteholders and
Certificateholders, waive any Event of Servicing Termina-
tion hereunder and its consequences, except an event
resulting from the failure to make any required deposits
to or payments from any of the Indenture Trust Accounts,
the Certificate Distribution Account[, the Yield Supple-
ment Account or the Reserve Account] in accordance with
this Agreement. Upon any such waiver of a past Event of
Servicing Termination, such Event of Servicing Termina-
tion shall cease to exist, and shall be deemed to have
been remedied for every purpose of this Agreement. No
such waiver shall extend to any subsequent or other event
or impair any right consequent thereon.
SECTION 8.7. Transfer of Accounts. Notwith-
standing the provisions of Section 8.1, if any of the
Indenture Trust Accounts, [Certificate Distribution
Account] or the Reserve Account is maintained with the
Servicer or any Affiliate of the Servicer and an Event of
Servicing Termination shall occur and be continuing, the
Servicer shall promptly, and in any event within five (5)
Business Days, give notice to an Authorized Officer of
the Indenture Trustee (or, in the case of the Certificate
Distribution Account, the Owner Trustee) of such Event of
Servicing Termination, and the Indenture Trustee (or the
Owner Trustee, as applicable), within five (5) Business
Days after the receipt of such notice, shall establish
new Eligible Deposit Accounts conforming with the re-
quirements of this Agreement and promptly shall transfer
all funds in any such Indenture Trust Accounts, Certifi-
cate Distribution Account or the Reserve Account to such
new Eligible Deposit Accounts.
End of Article VIII
ARTICLE IX
TERMINATION
SECTION 9.1. Optional Purchase of All Receiv-
ables. On the last day of any Collection Period as of
which the [Pool Factor shall be less than the Optional
Purchase Percentage] [Pool Balance shall be not more than
5% of the Initial Pool Balance], the Servicer shall have
the option to purchase the corpus of the Trust. To
exercise such option, the Servicer shall deposit pursuant
to Section 4.5 in the Collection Account an amount equal
to the aggregate Purchase Amount for the Receivables,
plus the appraised value of any other property held by
the Trust, such value to be determined by an appraiser
mutually agreed upon by the Servicer, the Owner Trustee
and the Indenture Trustee, and shall succeed to all
interests in and to the Trust. Notwithstanding the
foregoing, the Servicer shall not be permitted to exer-
cise such option unless the amount to be deposited in the
Collection Account pursuant to the preceding sentence is
greater than or equal to the sum of the outstanding
principal amount of the Notes and the Certificate Balance
and all accrued but unpaid interest (including any over-
due interest) thereon. The amount deposited in the
Collection Account pursuant to this Section 9.1 shall be
used on the next Distribution Date to make payments in
full to Noteholders and Certificateholders in the manner
set forth in Article IV.
SECTION 9.2. Succession Upon Satisfaction and
Discharge of Indenture. Following the satisfaction and
discharge of the Indenture and the payment in full of the
principal of and interest on the Notes, the Certificate-
holders will succeed to the rights of the Noteholders
hereunder, and the Indenture Trustee will continue to
carry out its obligations hereunder with respect to the
Certificateholders, including without limitation making
distributions from the Collection Account in accordance
with Section 4.6 and making withdrawals from the Reserve
Account in accordance with Section 4.5(c) and Section
4.7.
[SECTION 9.3. Sale Upon Termination. (a)
The Servicer will, within [ten] days following a Distri-
bution Date as of which the Pool Balance is equal to or
less than the Optional Purchase Percentage of the Initial
Pool Balance, solicit bids for the purchase of the Re-
ceivables remaining in the Trust, in a commercially
reasonable manner and on commercially reasonable terms.
The minimum price of any such bid which may be accepted
shall be an amount not less than the sum of (i) the
amount of all accrued and unpaid interest on the Notes
Outstanding to the next succeeding Distribution Date,
(ii) the unpaid principal amount of the Notes Outstand-
ing, (iii) the amount of all accrued and unpaid interest
on the Certificates Outstanding to the next succeeding
Distribution Date, and (iv) the principal balance of the
Certificates Outstanding. The Owner's Trustee's interest
in such Receivables and related Owner Trust Property will
not be released or terminated except upon receipt of
payment of the purchase price therefor. If two or more
bids are received, each of which are at least equal to
the amount described above, then the Receivables and
related Owner Trust Property remaining in such Trust will
be sold to the highest bidder.
(b) The amount of the accepted bid described in the
paragraph (a) of this Section 9.3 shall be deposited in
the Collection Account and shall be used on the next
Distribution Date to make payments in full to Noteholders
and Certificateholders in the manner set forth in Article
IV.
End of Article IX
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Amendment. (a) This Agreement
may be amended by the Sellers, the Servicer and the
Issuer, with the consent of the Indenture Trustee and the
Owner Trustee to the extent that their respective rights
or obligations may be affected thereby (which consent may
not be unreasonably withheld), but without the consent of
any of the Noteholders or the Certificateholders, to cure
any ambiguity, to correct, delete or supplement any
provisions in this Agreement, or to add any other provi-
sions with respect to matters or questions arising under
this Agreement that shall not be inconsistent with the
provisions of this Agreement; provided, however, that
such action shall not, as evidenced by an Opinion of
Counsel delivered to the Owner Trustee and the Indenture
Trustee, adversely affect in any material respect the
interests of any Noteholder or Certificateholder.
(b) This Agreement may also be amended from
time to time by the Sellers, the Servicer and the Issuer,
with the consent of the Indenture Trustee and the Owner
Trustee to the extent that their respective rights or
obligations may be affected thereby (which consent may
not be unreasonably withheld) and with the consent of (i)
the Majority Noteholders and (ii) the Majority Certifi-
cateholders (which consent, when given pursuant to this
Section 10.1 or pursuant to any other provision of this
Agreement, shall be conclusive and binding on the holder
of such Note or Certificate, as the case may be, and on
all future Noteholders of such Note or Certificateholders
of such Certificate, as the case may be, and of any Note
or Certificate, as applicable, issued upon the transfer
thereof or in exchange thereof or in lieu thereof whether
or not notation of such consent is made upon such Note or
the Certificate), for the purpose of adding any provi-
sions to or changing in any manner or eliminating any of
the provisions of this Agreement, or of modifying in any
manner the rights of the Noteholders or the Certificate-
holders; provided, however, that no such amendment shall
(a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, or change the alloca-
tion or priority of, collections of payments on Receiv-
ables or distributions that shall be required to be made
on any Note or Certificate or change any Note Interest
Rate or the Certificate Rate or the Specified Reserve
Account Balance, without the consent of all adversely
affected Noteholders or Certificateholders or (b) reduce
the aforesaid percentage required to consent to any such
amendment, without the consent of the Noteholders of all
Notes and Certificateholders of all Certificates affected
thereby.
(c) Prior to the execution of any such amend-
ment or consent the Servicer will provide and the Owner
Trustee shall distribute written notification of the
substance of such amendment or consent to each Rating
Agency.
(d) Promptly after the execution of any such
amendment or consent, the Owner Trustee shall furnish
written notification of the substance of such amendment
or consent to each Certificateholder, the Indenture
Trustee and each Rating Agency. It shall not be neces-
sary for the consent of Noteholders or the Certificate-
holders pursuant to this Section 10.1 to approve the
particular form of any proposed amendment or consent, but
it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents
(and any other consents of Noteholders and Certificate-
holders provided for in this Agreement) and of evidencing
the authorization of the execution thereof by Noteholders
and Certificateholders shall be subject to such reason-
able requirements as the Owner Trustee and the Indenture
Trustee may prescribe, including the establishment of
record dates pursuant to paragraph number 2 of the Note
Depository Agreements.
(e) Prior to the execution of any amendment to
this Agreement, the Owner Trustee and the Indenture
Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement
and the Opinion of Counsel referred to in Section
10.2(i)(1). The Owner Trustee or the Indenture Trustee
may, but shall not be obligated to, enter into any such
amendment which affects such Owner Trustee's or Indenture
Trustee's own rights, duties or immunities under this
Agreement or otherwise.
SECTION 10.2. Protection of Title to Trust.
(a) The Sellers shall execute and file such financing
statements and cause to be executed and filed such con-
tinuation statements, all in such manner and in such
places as may be required by law fully to preserve,
maintain, and protect the interest of the Issuer and the
Indenture Trustee for the benefit of the Noteholders in
the Receivables and in the proceeds thereof. The Sellers
shall deliver (or cause to be delivered) to the Owner
Trustee and the Indenture Trustee file-stamped copies of,
or filing receipts for, any document filed as provided
above, as soon as available following such filing.
(b) None of the Sellers nor the Servicer shall
change its name, identity, or corporate structure in any
manner that would, could, or might make any financing
statement or continuation statement filed by the Sellers
in accordance with paragraph (a) above seriously mislead-
ing within the meaning of SECTION 9-402(7) of the UCC, unless
it shall have given the Owner Trustee and the Indenture
Trustee at least five (5) Business Days prior written
notice thereof and shall have promptly filed appropriate
amendments to all previously filed financing statements
or continuation statements.
(c) The Sellers and the Servicer shall give
the Owner Trustee and the Indenture Trustee at least
sixty (60) days' prior written notice of any relocation
of its principal executive office if, as a result of such
relocation, the applicable provisions of the UCC would
require the filing of any amendment of any previously
filed financing or continuation statement or of any new
financing statement and shall promptly file any such
amendment or new financing statement. The Servicer shall
at all times maintain each office from which it shall
service Receivables, and its principal executive office,
within the United States of America.
(d) The Servicer shall maintain accounts and
records as to each Receivable accurately and in suffi-
cient detail to permit (i) the reader thereof to know at
any time the status of such Receivable, including pay-
ments and recoveries made and payments owing (and the
nature of each) and (ii) reconciliation between payments
or recoveries on (or with respect to) each Receivable and
the amounts from time to time deposited in the Collection
Account,[ the Yield Supplement Account] and the Reserve
Account in respect of such Receivable.
(e) The Servicer shall maintain its computer
systems so that, from and after the time of sale under
this Agreement of the Receivables to the Issuer, the
Servicer's master computer records (including any back-up
archives) that refer to a Receivable shall indicate
clearly the interest of the Issuer and the Indenture
Trustee in such Receivable and that such Receivable is
owned by the Issuer and has been pledged to the Indenture
Trustee pursuant to the Indenture. Indication of the
Issuer's and the Indenture Trustee's interest in a Re-
ceivable shall be deleted from or modified on the
Servicer's computer systems when, and only when, the
Receivable shall have been paid in full or repurchased.
(f) If at any time the Sellers or the Servicer
shall propose to sell, grant a security interest in, or
otherwise transfer any interest in retail automotive
installment sales contracts to any prospective purchaser,
lender, or other transferee, the Servicer shall give to
such prospective purchaser, lender, or other transferee
computer tapes, records, or print-outs (including any
restored from back-up archives) that, if they shall refer
in any manner whatsoever to any Receivable, shall indi-
cate clearly that such Receivable has been sold and is
owned by the Issuer and has been pledged to the Indenture
Trustee.
(g) The Servicer shall permit the Owner Trust-
ee, the Indenture Trustee and their respective agents at
any time during normal business hours to inspect, audit,
and make copies of and abstracts from the Servicer's
records regarding any Receivable.
(h) Upon request, the Servicer shall furnish
to the Owner Trustee and the Indenture Trustee, within
twenty (20) Business Days, a list of all Receivables (by
contract number and name of Obligor) then held as part of
the Trust, together with a reconciliation of such list to
the Schedule of Receivables and to each of the Servicer's
Certificates furnished before such request indicating
removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner
Trustee and the Indenture Trustee:
(1) promptly after the execution and
delivery of this Agreement and of each amend-
ment thereto, an Opinion of Counsel either (A)
stating that, in the opinion of such Counsel,
all financing statements and continuation
statements have been executed and filed that
are necessary fully to preserve and protect the
interest of the Issuer and the Indenture Trust-
ee in the Receivables, and reciting the details
of such filings or referring to prior Opinions
of Counsel in which such details are given, or
(B) stating that, in the opinion of such Coun-
sel, no such action shall be necessary to pre-
serve and protect such interest; and
(2) within 120 days after the begin-
ning of each calendar year beginning with the
first calendar year beginning more than three
months after the Cutoff Date, an Opinion of
Counsel, dated as of a date during such 120-day
period, either (A) stating that, in the opinion
of such counsel, all financing statements and
continuation statements have been executed and
filed that are necessary fully to preserve and
protect the interest of the Issuer and the
Indenture Trustee in the Receivables, and re-
citing the details of such filings or referring
to prior Opinions of Counsel in which such
details are given, or (B) stating that, in the
opinion of such Counsel, no such action shall
be necessary to preserve and protect such in-
terest.
Each Opinion of Counsel referred to in clause
(i)(1) or (i)(2) above shall specify any action necessary
(as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
(j) The Sellers shall, to the extent required
by applicable law, cause the Notes and the Certificates
to be registered with the Securities and Exchange Commis-
sion pursuant to Section 12(b) or Section 12(g) of the
Exchange Act within the time periods specified in such
sections.
(k) For the purpose of facilitating the execu-
tion of this Agreement and for other purposes, this
Agreement may be executed in any number of counterparts,
each of which counterparts shall be deemed to be an
original, and all of which counterparts shall constitute
but one and the same instrument.
SECTION 10.3. GOVERNING LAW. THIS AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS, AND REME-
DIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETER-
MINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 10.4. Notices. All demands, notices,
and communications under this Agreement shall be in
writing, personally delivered, sent by telecopier, over-
night courier or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given
upon receipt (a) in the case of the Sellers or the
Servicer, to the agent for service as specified in Sec-
tion 10.11 hereof, or at such other address as shall be
designated by the Sellers or the Servicer in a written
notice to the Owner Trustee and the Indenture Trustee,
(b) in the case of the Owner Trustee, at the Corporate
Trust Office of the Owner Trustee, (c) in the case of the
Indenture Trustee, at the Corporate Trust Office of the
Indenture Trustee, (d) in the case of Moody's Investors
Service, Inc., at the following address: Moody's Inves-
tors Service, Inc., ABS Monitoring Department, 99 Church
Street, New York, New York 10007, and (e) in the case of
[Standard & Poor's Ratings Group], at the following
address: [Standard & Poor's Ratings Group], 25 Broadway,
20th Floor, New York, New York 10004, Attention: Asset
Backed Surveillance Department. Any notice required or
permitted to be mailed to a Noteholder or Certificate-
holder shall be given by first class mail, postage pre-
paid, at the address of such Person as shown in the Note
Register or the Certificate Register, as applicable. Any
notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been
duly given, whether or not the Noteholder or Certificate-
holder shall receive such notice.
SECTION 10.5. Severability of Provisions. If
any one or more of the covenants, agreements, provisions,
or terms of this Agreement shall be for any reason what-
soever held invalid, then such covenants, agreements,
provisions, or terms shall be deemed severable from the
remaining covenants, agreements, provisions, or terms of
this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement
or of the Notes, the Certificates or the rights of the
holders thereof.
SECTION 10.6. Assignment. Notwithstanding
anything to the contrary contained herein, except as
provided in Sections 7.3 and 8.2 and as provided in the
provisions of this Agreement concerning the resignation
of the Servicer, this Agreement may not be assigned by
the Sellers or the Servicer without the prior written
consent of the Owner Trustee, the Indenture Trustee, the
Noteholders of Notes evidencing not less than 66-2/3% of
the principal amount of the Notes Outstanding and the
Certificateholders of Certificates evidencing not less
than 66-2/3% of the Certificate Balance.
SECTION 10.7. Further Assurances. The Sellers
and the Servicer agree to do and perform, from time to
time, any and all acts and to execute any and all further
instruments required or reasonably requested by the Owner
Trustee or the Indenture Trustee more fully to effect the
purposes of this Agreement, including, without limita-
tion, the execution of any financing statements or con-
tinuation statements relating to the Receivables for
filing under the provisions of the UCC of any applicable
jurisdiction.
SECTION 10.8. No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the
part of the Owner Trustee, the Indenture Trustee, the
Noteholders or the Certificateholders, any right, remedy,
power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights,
remedies, powers and privileges therein provided are
cumulative and not exhaustive of any rights, remedies,
powers and privileges provided by law.
SECTION 10.9. Third-Party Beneficiaries. This
Agreement will inure to the benefit of and be binding
upon the parties hereto, the Noteholders, the Certifi-
cateholders, and their respective successors and permit-
ted assigns. Except as otherwise provided in this Arti-
cle X, no other Person will have any right or obligation
hereunder. The parties hereto hereby acknowledge and
consent to the pledge of this Agreement by the Issuer to
the Indenture Trustee for the benefit of the Noteholders
pursuant to the Indenture.
SECTION 10.10. Actions by Noteholders or
Certificateholders. (a) Wherever in this Agreement a
provision is made that an action may be taken or a no-
tice, demand, or instruction given by Noteholders or
Certificateholders, such action, notice, or instruction
may be taken or given by any Noteholder or Certificate-
holder, as applicable, unless such provision requires a
specific percentage of Noteholders or Certificateholders.
(b) Any request, demand, authorization, direc-
tion, notice, consent, waiver, or other act by a
Noteholder or Certificateholder shall bind such
Noteholder or Certificateholder and every subsequent
holder of such Note or Certificate issued upon the regis-
tration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done or omitted to be
done by the Owner Trustee, the Indenture Trustee or the
Servicer in reliance thereon, whether or not notation of
such action is made upon such Note or Certificate.
SECTION 10.11. Agent for Service. The agent
for service of the Sellers and the Servicer in respect of
this Agreement shall be Robert W. Long, Jr., Esq.,
NationsBank Corporation, NationsBank Corporate Center,
100 North Tryon Street, NC1-007-20-01, Charlotte, North
Carolina 28255.
SECTION 10.12. No Bankruptcy Petition. The
Owner Trustee, the Indenture Trustee, the Sellers and the
Servicer each covenants and agrees that, prior to the
date which is one year and one day after the payment in
full of all securities issued by a trust which securities
were rated by any nationally recognized statistical
rating organization it will not institute against, or
join any other Person in instituting against, the General
Partner any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceed-
ings under any federal or State bankruptcy or similar
law. This Section 10.12 shall survive the resignation or
removal of the Owner Trustee under the Trust Agreement or
the Indenture Trustee under the Indenture or the termina-
tion of this Agreement.
SECTION 10.13. Limitation of Liability of
Owner Trustee and Indenture Trustee. (a) Notwithstand-
ing anything contained herein to the contrary, this
Agreement has been countersigned by _____ not in its
individual capacity but solely in its capacity as Owner
Trustee of the Issuer and in no event shall _____ in its
individual capacity or, except as expressly provided in
the Trust Agreement, as beneficial owner of the Issuer
have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer
hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which
recourse shall be had solely to the assets of the Issuer.
For all purposes of this Agreement, in the performance of
its duties or obligations hereunder or in the performance
of any duties or obligations of the Issuer hereunder, the
Owner Trustee shall be subject to, and entitled to the
benefits of, the terms and provisions of Articles VI, VII
and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein
to the contrary, this Agreement has been accepted by
_____, not in its individual capacity but solely as
Indenture Trustee, and in no event shall _____ have any
liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder
or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse
shall be had solely to the assets of the Issuer.
End of Article X
IN WITNESS WHEREOF, the parties have caused
this Sale and Servicing Agreement to be duly executed by
their respective officers thereunto duly authorized as of
the day and year first above written.
NATIONSBANK, N.A.
as Seller
By:
Name:
Title:
NATIONSBANK, N.A. (SOUTH)
as Seller
By:
Name:
Title:
NATIONSBANK OF TEXAS, N.A.
as Seller
By:
Name:
Title:
NATIONSBANK, N.A.
as Servicer
By:
Name:
Title:
NATIONSBANK AUTO OWNER TRUST
_____-__,
as Issuer
By:_____________________,
as Owner Trustee
By:
Name:
Title:
Accepted and agreed:
_________________________,
as Indenture Trustee
By:
Name:
Title:
_________________________,
as Owner Trustee
By:
Name:
Title:
SCHEDULE A
[SCHEDULE OF RECEIVABLES]
Delivered to Indenture Trustee at Closing
EXHIBIT A
[FORM OF YIELD SUPPLEMENT AGREEMENT]
________, _____
NationsBank Auto Owner Trust ___-__
c/o NationsBank, N.A.
100 North Tryon Street
Charlotte, North Carolina 28255
Re: NationsBank Auto Owner Trust -
Ladies and Gentlemen:
We hereby confirm arrangements made as of the
date hereof with you to be effective upon (i) receipt by
us of the enclosed copy of this letter agreement (as from
time to time amended, supplemented or otherwise modified
and in effect, the "Yield Supplement Agreement"), execut-
ed by you, and (ii) execution of the Sale and Servicing
Agreement referred to below and payment of the purchase
price specified thereunder. Capitalized terms used and
not otherwise defined herein shall have the meanings
assigned to such terms in the Sale and Servicing Agree-
ment, dated as of _______, ____ (as from time to time
amended, supplemented or otherwise modified and in ef-
fect, the "Sale and Servicing Agreement"), between
NationsBank, N.A., NationsBank, N.A .(South) and
NationsBank of Texas, N.A. (each a "Seller", and collec-
tively, the "Sellers"), and NationsBank, Auto Owner Trust
, as purchaser and Issuer (the "Purchaser").
1. On or prior to the Determination Date
preceding each Distribution Date, the Servicer shall
notify the Purchaser and the Sellers of the Yield Supple-
ment Amount for such Distribution Date.
2. In consideration for the Purchaser enter-
ing into the Sale and Servicing Agreement and the pur-
chase price paid to the Sellers for the Receivables under
the Sale and Servicing Agreement, we agree to make a
payment of the Yield Supplement Amount to the Purchaser,
or to the pledgee or the assignee of the Purchaser re-
ferred to in paragraph 5 hereof, on the Business Day
prior to each Distribution Date.
3. All payments pursuant hereto shall be made
by federal wire transfer (same day) funds or in immedi-
ately available funds, to such account as the Purchaser
or the pledgee of the assignee of the Purchaser referred
to in Section 5 hereof, may designate in writing to the
Sellers, prior to the relevant Distribution Date.
4. Our agreements set forth in this Yield
Supplement Agreement are our primary obligations and such
obligations are irrevocable, absolute and unconditional,
shall not be subject to any counterclaim, setoff or
defense and shall remain in full force and effect without
regard to, and shall not be released, discharged or in
NationsBank Auto Owner Trust ___-__
______, ____
Page 2
any way affected by, any circumstances or condition whatsoever.
5. Pursuant to the Indenture, the Purchaser
will pledge its rights under this Yield Supplement Agree-
ment, along with certain other assets of the Purchaser,
to __________, as Indenture Trustee, to secure its obli-
gations under the Notes and the Indenture, and the Sell-
ers hereby acknowledge and consent to such pledge. The
Sellers hereby agree, for the benefit of the Trust, that
following such sale, transfer, assignment, conveyance and
pledge, this Yield Supplement Agreement shall not be
amended, modified or terminated without the consent of
the Purchaser, and, prior to the payment in full of the
Notes, the Indenture Trustee.
6. This Yield Supplement Agreement will be
governed by, and construed in accordance with, the laws
of the State of New York.
7. Except as otherwise provided herein, all
notices pursuant to this Yield Supplement Agreement shall
be in writing and shall be effective upon receipt there-
of. All notices shall be directed as set forth below, or
to such other address or to the attention of such other
person as the relevant party shall have designated for
such purpose in a written notice.
If to the Purchaser:
NationsBank Auto Owner Trust
c/o NationsBank, N.A.
100 North Tryon Street
NC1-007-20-01
Charlotte, North Carolina 28255
Attention: ___________
Telephone: (704) 386-____
Telecopy:
If to the Sellers:
c/o NationsBank, N.A.
100 North Tryon Street
NC1-007-20-01
Charlotte, North Carolina 28255
Attention: ___________
Telephone: (704) 386-____
Telecopy:
8. This Yield Supplement Agreement may be
executed in one or more counterparts and by the different
parties hereto on separate counterparts, all of which
shall be deemed to be one and the same document.
NationsBank Auto Owner Trust ___-__
______, ____
Page 3
If the foregoing satisfactorily sets forth the
terms and conditions of our agreement, please indicate
your acceptance thereof by signing in the space provided
below and returning to us the enclosed duplicate original
of this letter.
Very truly yours,
NATIONSBANK, N.A.,
as Seller
By: _______________________
Name:
Title:
NATIONSBANK, N.A. (SOUTH),
as Seller
By: _______________________
Name:
Title:
NATIONSBANK OF TEXAS, N.A.,
as Seller
By: _______________________
Name:
Title:
NationsBank Auto Owner Trust ___-__
______, ____
Page 4
Agreed and accepted as of
the date first above written:
NationsBank Auto Owner Trust,
as Purchaser
By: _____________
Owner Trustee
By: _______________________
Name:
Title:
SALE AND SERVICING AGREEMENT
by and among
NATIONSBANK AUTO OWNER TRUST ______-_,
as Issuer,
NATIONSBANK, N.A., NATIONSBANK, N.A. (SOUTH) AND
NATIONSBANK OF TEXAS, N.A.
as Sellers
and
NATIONSBANK, N.A.
as Servicer
Dated as of ____________, ____
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND USAGE
ARTICLE II
OWNER TRUST PROPERTY
SECTION 2.1. Conveyance of Owner Trust Property
2
SECTION 2.2. Representations and Warranties of
the Sellers as to the Receivables . . . 2
SECTION 2.3. Warranties as to the Receivables in
the Aggregate and Actions
of the Sellers . . . . . . . . . . . . . 7
SECTION 2.4. Repurchase upon Breach . . . . 9
SECTION 2.5. Custody of Receivable Files . . 10
SECTION 2.6. Duties of Servicer as Custodian 11
SECTION 2.7. Instructions; Authority to Act 13
SECTION 2.8. Custodian's Indemnification . . 13
SECTION 2.9. Effective Period and Termination
13
ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES AND OWNER TRUST PROPERTY
SECTION 3.1. Duties of Servicer . . . . . . 15
SECTION 3.2. Collection of Receivable Payments;
Credit Deferrals . . . . . . . 19
SECTION 3.3. Realization upon Receivables . 19
SECTION 3.4. Physical Damage Insurance . . . 20
SECTION 3.5. Maintenance of Security Interests in
Financed Vehicles . . . . . . . . . . . 21
SECTION 3.6. Covenants of the Servicer . . . 21
SECTION 3.7. Purchases by Servicer upon Breach
22
SECTION 3.8. Servicing Compensation . . . . 22
SECTION 3.9. Servicer's Report . . . . . . . 23
SECTION 3.10. Annual Statement as to Compliance
24
SECTION 3.11. Independent Certified Public
Accountants' Reports . . . . . 24
SECTION 3.12. Access to Certain Documentation and
Information Regarding Receivables . . . 25
SECTION 3.13. Reports to the Commission . . . 25
SECTION 3.14. Reports to the Rating Agencies 25
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO
NOTEHOLDERS AND CERTIFICATEHOLDERS
SECTION 4.1. Accounts . . . . . . . . . . . 27
SECTION 4.2. Collections . . . . . . . . . . 29
SECTION 4.3. [Reserved] 30
SECTION 4.4. [Reserved] [Advances . . . . . 30
SECTION 4.5. [Reserved] [Additional Deposits 31
SECTION 4.6. Distributions . . . . . . . . . 32
SECTION 4.7. Reserve Account . . . . . . . . 34
SECTION 4.8. Net Deposits . . . . . . . . . 37
Page
SECTION 4.9. Statements to . . . . . . . . 37
ARTICLE V
[ RESERVED] . . . . . . . . . 41
ARTICLE VI
THE SELLERS
SECTION 6.1. Representations and Warranties of
Sellers . . . . . . . . . . . . 41
SECTION 6.2. Liability of the Sellers; Indemni-
ties . . . . . . . . . . . . . 43
SECTION 6.3. Merger or Consolidation of, or As-
sumption of the Obligations of, any
of the Sellers . . . . . . . . 44
SECTION 6.4. Limitation on Liability of the Sell-
ers and Others . . . . . . . . 45
SECTION 6.5. Sellers May Own Notes or Certifi-
cates . . . . . . . . . . . . . 45
ARTICLE VII
THE SERVICER
SECTION 7.1. Representations of Servicer . . 47
SECTION 7.2. Indemnities . . . . . . . . . . 49
SECTION 7.3. Merger or Consolidation of, or As-
sumption of the Obligations of,
Servicer . . . . . . . . . . . 50
SECTION 7.4. Limitation on Liability of Servicer
and Others . . . . . . . . . . 50
SECTION 7.5. NationsBank, N.A. Not to Resign as
Servicer . . . . . . . . . . . 51
SECTION 7.6. Servicer May Own Notes or Certifi-
cates . . . . . . . . . . . . . 51
ARTICLE VIII
SERVICING TERMINATION
SECTION 8.1. Events of Servicing Termination 53
SECTION 8.2. Appointment of Successor Servicer
55
SECTION 8.3. Effect of Servicing Transfer . 56
SECTION 8.4. Repayment of Advances . . . . . 57
SECTION 8.5. Notification to Noteholders and Cer-
tificateholders . . . . . . . . 57
SECTION 8.6. Waiver of Past Events of Servicing
Termination . . . . . . . . . . . . . . 57
SECTION 8.7. Transfer of Accounts . . . . . 57
ARTICLE IX
TERMINATION
SECTION 9.1. Optional Purchase of All Receivables
59
SECTION 10.1. Amendment . . . . . . . . . . . 60
SECTION 10.2. Protection of Title to Trust . 61
Page
SECTION 10.3. Governing Law . . . . . . . . . 64
SECTION 10.4. Notices . . . . . . . . . . . . 64
SECTION 10.5. Severability of Provisions . . 65
SECTION 10.6. Assignment . . . . . . . . . . 65
SECTION 10.7. Further Assurances . . . . . . 65
SECTION 10.8. No Waiver; Cumulative Remedies 65
SECTION 10.9. Third-Party Beneficiaries . . . . .
SECTION 10.10. Actions by Noteholders or
Certificateholders . . . . . . . . . . 66
SECTION 10.11. Agent for Service . . . . . . . 66
SECTION 10.12. No Bankruptcy Petition. . . . . 66
SECTION 10.13. Limitation of Liability of Owner
Trustee
and Indenture Trustee . . . . . . . . . 67
SCHEDULE A: Schedule of Receivables
EXHIBIT A: Form of Yield Supplement Agreement
Exhibit 99.2
ADMINISTRATION AGREEMENT
This ADMINISTRATION AGREEMENT, dated as of ______
__, ____ (as from time to time amended, supplemented or
otherwise modified and in effect, this "Agreement"), is
by and among NATIONSBANK AUTO OWNER TRUST ____-_, a
Delaware business trust (the "Issuer"), NATIONSBANK,
N.A., a national banking association, as administrator
(the "Administrator"), and _______, a ______ banking
corporation, not in its individual capacity but solely
as Indenture Trustee (the "Indenture Trustee").
WHEREAS, the Issuer is issuing the Notes pursuant
to the Indenture and the Certificates pursuant to the
Trust Agreement and has entered into certain agreements
in connection therewith, including (i) the Sale and
Servicing Agreement, (ii) the Depository Agreements, and
(iii) the Indenture (the Sale and Servicing Agreement,
the Depository Agreements and the Indenture being re-
ferred to hereinafter collectively as the "Related
Agreements");
WHEREAS, the Issuer and the Owner Trustee desire to
have the Administrator perform certain duties of the
Issuer and the Owner Trustee under the Related Agree-
ments and to provide such additional services consistent
with the terms of this Agreement and the Related Agree-
ments as the Issuer and the Owner Trustee may from time
to time request; and
WHEREAS, the Administrator has the capacity to
provide the services required hereby and is willing to
perform such services for the Issuer and the Owner
Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual
covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto, intending to be
legally bound, agree as follows:
SECTION I. Definitions and Usage. Except as
otherwise specified herein or as the context may other-
wise require, capitalized terms used but not otherwise
defined herein are defined in Appendix A hereto, which
also contains rules as to usage that shall be applicable
herein.
SECTION II. Duties of the Administrator. A.
Duties with Respect to the Indenture and the Depository
Agreements. 1. The Administrator agrees to perform
all its duties as Administrator and the duties of the
Issuer under the Depository Agreements. In addition,
the Administrator shall consult with the Owner Trustee
regarding the duties of the Issuer under the Indenture
and the Depository Agreements. The Administrator shall
monitor the performance of the Issuer and shall advise
the Owner Trustee when action is necessary to comply
with the Issuer's duties under the Indenture and the
Depository Agreements. The Administrator shall prepare
for execution by the Issuer, or shall cause the prepara-
tion by other appropriate persons of, all such docu-
ments, reports, filings, instruments, certificates and
opinions that it shall be the duty of the Issuer to
prepare, file or deliver pursuant to the Indenture and
the Depository Agreements. In furtherance of the fore-
going, the Administrator shall take all appropriate
action that is the duty of the Issuer to take pursuant
to the Indenture including, without limitation, such
actions as are required with respect to the following
matters under the Indenture (references are to sections
of the Indenture):
A.) the duty to cause the Note Register to be
kept and to give the Indenture Trustee notice of
any appointment of a new Note Registrar and the
location, or change in location, of the Note Regis-
ter (Section 2.5);
B.) the notification of Noteholders of the
final principal payment on their Notes (Section
2.8(b));
C.) the preparation and delivery of or ob-
taining of the documents and instruments required
for authentication of the Notes and delivery of the
same to the Indenture Trustee (Section 2.2,
11.1(b));
D.) the preparation, obtaining or filing of
the instruments, opinions and certificates and
other documents required for the release of proper-
ty from the lien of the Indenture (Section 2.10);
E.) the preparation of Definitive Notes in
accordance with the instructions of the Clearing
Agency (Section 2.13);
F.) the maintenance of an office in the Bor-
ough of Manhattan, City of New York, for registra-
tion of transfer or exchange of Notes (Section
3.2);
G.) the duty to cause newly appointed Note
Paying Agents, if any, to deliver to the Indenture
Trustee the instrument specified in the Indenture
regarding funds held in trust (Section 3.3);
H.) the direction to the Indenture Trustee to
deposit monies with Note Paying Agents, if any,
other than the Indenture Trustee (Section 3.3);
I.) the obtaining and preservation of the
Issuer's qualification to do business in each ju-
risdiction in which such qualification is or shall
be necessary to protect the validity and enforce-
ability of the Indenture, the Notes, the Collateral
and each other instrument or agreement included in
the Indenture Trust Estate (Section 3.4);
J.) the preparation of all supplements and
amendments to the Indenture and all financing
statements, continuation statements, instruments of
further assurance and other instruments and the
taking of such other action as is necessary or
advisable to protect the Indenture Trust Estate
(Section 3.5);
K.) the delivery of the Opinion of Counsel on
the Closing Date and the annual delivery of Opin-
ions of Counsel as to the Indenture Trust Estate,
and the annual delivery of the Officer's Certifi-
cate and certain other statements as to compliance
with the Indenture (Sections 3.6 and 3.9);
L.) the identification to the Indenture
Trustee in an Officer's Certificate of any Person
with whom the Issuer has contracted to perform its
duties under the Indenture (Section 3.7(b));
M.) the notification of the Indenture Trustee
and the Rating Agencies of an Event of Servicing
Termination under the Sale and Servicing Agreement
and, if such Event of Servicing Termination arises
from the failure of the Servicer to perform any of
its duties under the Sale and Servicing Agreement
with respect to the Receivables, the taking of all
reasonable steps available to remedy such failure
(Section 3.7(d));
N.) the preparation and obtaining of docu-
ments and instruments required for the transfer by
the Issuer of its properties or assets (Section
3.10(b));
O.) the duty to cause the Servicer to comply
with Sections 3.9, 3.10, 3.11, 3.12, 3.13, 3.14 and
4.9 and Article VII of the Sale and Servicing
Agreement (Section 3.14);
P.) the delivery of written notice to the
Indenture Trustee and the Rating Agencies of each
Event of Default under the Indenture and each de-
fault by the Servicer or any Seller under the Sale
and Servicing Agreement (Section 3.19);
Q.) the monitoring of the Issuer's obliga-
tions as to the satisfaction and discharge of the
Indenture and the preparation of an Officer's Cer-
tificate and the obtaining of the Opinions of Coun-
sel and the Independent Certificate relating there-
to (Section 4.1);
R.) the monitoring of the Issuer's obliga-
tions as to the satisfaction, discharge and defea-
sance of the Notes and the preparation of an
Officer's Certificate and the obtaining of an opin-
ion of a nationally recognized firm of independent
certified public accountants, a written confirma-
tion thereof and the Opinions of Counsel relating
thereto (Section 4.2);
S.) the preparation and delivery of an
Officer's Certificate to the Indenture Trustee
after the occurrence of any event which with the
giving of notice and the lapse of time would become
an Event of Default under Section 5.1(iii) of the
Indenture, its status and what action the Issuer is
taking or proposes to take with respect thereto
(Section 5.1);
T.) the compliance with any written directive
of the Indenture Trustee with respect to the sale
of the Indenture Trust Estate at one or more public
or private sales called and conducted in any manner
permitted by law if an Event of Default shall have
occurred and be continuing (Section 5.4);
U.) the preparation and delivery of notice to
Noteholders of the removal of the Indenture Trustee
and the appointment of a successor Indenture Trust-
ee (Section 6.8);
V.) the preparation of any written instru-
ments required to confirm more fully the authority
of any co-trustee or separate trustee and any writ-
ten instruments necessary in connection with the
resignation or removal of any co-trustee or sepa-
rate trustee (Sections 6.8 and 6.10);
W.) the furnishing of the Indenture Trustee
with the names and addresses of Noteholders during
any period when the Indenture Trustee is not the
Note Registrar (Section 7.1);
X.) the preparation and, after execution by
the Issuer, the filing with the Commission, any
applicable state agencies and the Indenture Trustee
of documents required to be filed on a periodic
basis with, and summaries thereof as may be re-
quired by rules and regulations prescribed by, the
Commission and any applicable state agencies and
the transmission of such summaries, as necessary,
to the Noteholders (Section 7.3);
Y.) the opening of one or more accounts in
the Issuer's name, the preparation and delivery of
Issuer Orders, Officer's Certificates and Opinions
of Counsel and all other actions necessary with
respect to investment and reinvestment, to the
extent permitted, of funds in such accounts (Sec-
tions 8.2 and 8.3);
Z.) the preparation of an Issuer Request and
Officer's Certificate and the obtaining of an Opin-
ion of Counsel and Independent Certificates, if
necessary, for the release of the Indenture Trust
Estate (Sections 8.4 and 8.5);
AA.) the preparation of Issuer Orders and the
obtaining of Opinions of Counsel with respect to
the execution of supplemental indentures and the
mailing to the Noteholders of notices with respect
to such supplemental indentures (Sections 9.1, 9.2
and 9.3);
(BB) the execution and delivery of new Notes
conforming to any supplemental indenture (Section
9.6);
(CC) the notification of Noteholders of re-
demption of the Notes or duty to cause the Inden-
ture Trustee to provide such notification (Section
10.2);
(DD) the preparation and delivery of all
Officer's Certificates and the obtaining of Opin-
ions of Counsel and Independent Certificates with
respect to any requests by the Issuer to the Inden-
ture Trustee to take any action under the Indenture
(Section 11.1 (a));
(EE) the notification of the Rating Agencies,
upon the failure of the Indenture Trustee to give
such notification, of the information required
pursuant to Section 11.4 of the Indenture (Section
11.4);
(FF) the preparation and delivery to
Noteholders and the Indenture Trustee of any agree-
ments with respect to alternate payment and notice
provisions (Section 11.6); and
(GG) the recording of the Indenture, if appli-
cable (Section 11.15).
(ii) The Administrator will:
(A) pay the Indenture Trustee from time to
time reasonable compensation for all services ren-
dered by the Indenture Trustee under the Indenture
(which compensation shall not be limited by any
provision of law in regard to the compensation of a
trustee of an express trust);
(B) except as otherwise expressly provided in
the Indenture, reimburse the Indenture Trustee upon
its request for all reasonable expenses, disburse-
ments and advances incurred or made by the Inden-
ture Trustee in accordance with any provision of
the Indenture (including the reasonable compensa-
tion, expenses and disbursements of its agents and
counsel), except any such expense, disbursement or
advance as may be attributable to its negligence or
bad faith;
(C) indemnify the Indenture Trustee and its
agents for, and hold them harmless against, any
losses, liability or expense incurred without neg-
ligence or bad faith on their part, arising out of
or in connection with the acceptance or administra-
tion of the transactions contemplated by the Inden-
ture, including the reasonable costs and expenses
of defending themselves against any claim or lia-
bility in connection with the exercise or perfor-
mance of any of their powers or duties under the
Indenture; and
(D) indemnify the Owner Trustee and its
agents for, and hold them harmless against, any
losses, liability or expense incurred without neg-
ligence or bad faith on their part, arising out of
or in connection with the acceptance or administra-
tion of the transactions contemplated by the Trust
Agreement, including the reasonable costs and ex-
penses of defending themselves against any claim or
liability in connection with the exercise or per-
formance of any of their powers or duties under the
Trust Agreement.
(b) Additional Duties. (i) In addition to the
duties of the Administrator set forth above, the Admin-
istrator shall perform such calculations and shall
prepare or shall cause the preparation by other appro-
priate persons of, and shall execute on behalf of the
Issuer or the Owner Trustee, all such documents, re-
ports, filings, instruments, certificates and opinions
that it shall be the duty of the Issuer or the Owner
Trustee to prepare, file or deliver pursuant to the
Related Agreements, and at the request of the Owner
Trustee shall take all appropriate action that it is the
duty of the Issuer or the Owner Trustee to take pursuant
to the Related Agreements. Subject to Section 5 of this
Agreement, and in accordance with the directions of the
Owner Trustee, the Administrator shall administer,
perform or supervise the performance of such other
activities in connection with the Collateral (including
the Related Agreements) as are not covered by any of the
foregoing provisions and as are expressly requested by
the Owner Trustee and are reasonably within the capabil-
ity of the Administrator.
(ii) Notwithstanding anything in this Agree-
ment or the Related Agreements to the contrary, the
Administrator shall be responsible for promptly notify-
ing the Owner Trustee in the event that any withholding
tax is imposed on the Trust's payments (or allocations
of income) to a Certificateholder as contemplated in
Section 5.2(c) of the Trust Agreement. Any such notice
shall specify the amount of any withholding tax required
to be withheld by the Owner Trustee pursuant to such
provision.
(iii) Notwithstanding anything in this Agree-
ment or the Related Agreements to the contrary, the
Administrator shall be responsible for performance of
the duties of the Trust or the Owner Trustee set forth
in Section 5.5(a), (b), (c) and (d), the penultimate
sentence of Section 5.5 and Section 5.6(a) of the Trust
Agreement with respect to, among other things, account-
ing and reports to Certificateholders.
(iv) The Administrator will provide prior to
__________ __, ____, a certificate of an Authorized
Officer in form and substance satisfactory to the Owner
Trustee as to whether any tax withholding is then re-
quired and, if required, the procedures to be followed
with respect thereto to comply with the requirements of
the Code. The Administrator shall be required to update
the letter in each instance that any additional tax
withholding is subsequently required or any previously
required tax withholding shall no longer be required.
(v) The Administrator shall perform the
duties of the Administrator specified in Section 10.2 of
the Trust Agreement required to be performed in connec-
tion with the resignation or removal of the Owner Trust-
ee, and any other duties expressly required to be per-
formed by the Administrator pursuant to the Trust Agree-
ment.
(vi) In carrying out the foregoing duties or
any of its other obligations under this Agreement, the
Administrator may enter into transactions or otherwise
deal with any of its Affiliates; provided, however, that
the terms of any such transactions or dealings shall be
in accordance with any directions received from the
Issuer and shall be, in the Administrator's opinion, no
less favorable to the Issuer than would be available
from unaffiliated parties.
(c) Non-Ministerial Matters. (i) With respect to
matters that in the reasonable judgment of the Adminis-
trator are non-ministerial, the Administrator shall not
take any action unless within a reasonable time before
the taking of such action, the Administrator shall have
notified the Owner Trustee of the proposed action and
the Owner Trustee shall not have withheld consent or
provided an alternative direction. For the purpose of
the preceding sentence, "non-ministerial matters" shall
include, without limitation:
(A) the amendment of or any supplement to the
Indenture;
(B) the initiation of any claim or lawsuit by
the Issuer and the compromise of any action, claim
or lawsuit brought by or against the Issuer (other
than in connection with the collection of the Re-
ceivables or Permitted Investments);
(C) the amendment, change or modification of
the Related Agreements;
(D) the appointment of successor Note Regis-
trars, successor Note Paying Agents and successor
Indenture Trustees pursuant to the Indenture or the
appointment of successor Administrators or Succes-
sor Servicers, or the consent to the assignment by
the Note Registrar, Note Paying Agent or Indenture
Trustee of its obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
(ii) Notwithstanding anything to the contrary
in this Agreement, the Administrator shall not be obli-
gated to, and shall not, (x) make any payments to the
Noteholders under the Related Agreements, (y) sell the
Indenture Trust Estate pursuant to Section 5.4 of the
Indenture or (z) take any other action that the Issuer
directs the Administrator not to take on its behalf.
SECTION 3. Records. The Administrator shall
maintain appropriate books of account and records
relating to services performed hereunder, which books of
account and records shall be accessible for inspection
by the Issuer and the Sellers at any time during normal
business hours.
SECTION 4. Compensation. As compensation for the
performance of the Administrator's obligations under
this Agreement and, as reimbursement for its expenses
related thereto, the Administrator shall be entitled to
[$2,500] annually which shall be solely an obligation of
the Sellers.
SECTION 5. Additional Information To Be Furnished
to the Issuer. The Administrator shall furnish to the
Issuer from time to time such additional information
regarding the Collateral and within the Administrator's
knowledge as the Issuer shall reasonably request.
SECTION 6. Independence of the Administrator. For
all purposes of this Agreement, the Administrator shall
be an independent contractor and shall not be subject to
the supervision of the Issuer or the Owner Trustee with
respect to the manner in which it accomplishes the
performance of its obligations hereunder. Unless ex-
pressly authorized by the Issuer, the Administrator
shall have no authority to act for or represent the
Issuer or the Owner Trustee in any way and shall not
otherwise be deemed an agent of the Issuer or the Owner
Trustee.
SECTION 7. No Joint Venture. Nothing contained in
this Agreement, with respect to the Administrator, the
Issuer or the Owner Trustee (i) shall confer on any of
them status as members of any partnership, joint ven-
ture, association, syndicate, unincorporated business or
other separate entity, (ii) shall be construed to impose
any liability as such on any of them or (iii) shall be
deemed to confer on any of them any express, implied or
apparent authority to incur any obligation or liability
on behalf of the others.
SECTION 8. Other Activities of Administrator.
Nothing herein shall prevent the Administrator or its
Affiliates from engaging in other businesses or, in its
sole discretion, from acting in a similar capacity as an
administrator for any other person or entity even though
such person or entity may engage in business activities
similar to those of the Issuer, the Owner Trustee or the
Indenture Trustee.
SECTION 9. Term of Agreement; Resignation and
Removal of Administrator. (a) This Agreement shall
continue in force until the dissolution of the Issuer,
upon which event this Agreement shall automatically
terminate.
(b) Subject to subsections (e) and (f) of this
Section 9, the Administrator may resign its duties
hereunder by providing the Issuer with at least sixty
(60) days' prior written notice.
(c) Subject to subsections (e) and (f) of this
Section 9, the Issuer may remove the Administrator
without cause by providing the Administrator with at
least sixty (60) days' prior written notice.
(d) Subject to subsections (e) and (f) of this
Section 9, at the sole option of the Issuer, the Admin-
istrator may be removed immediately upon written notice
of termination from the Issuer to the Administrator if
any of the following events shall occur:
(i) the Administrator shall default in the
performance of any of its duties under this Agree-
ment and, after receiving notice of such default,
shall not cure such default within ten (10) days
(or, if such default cannot be cured in such time,
shall not give, within ten (10) days, such assur-
ance of cure as shall be reasonably satisfactory to
the Issuer);
(ii) the entry of a decree or order by a
court or agency or supervisory authority of compe-
tent jurisdiction for the appointment of a conser-
vator, receiver, liquidator or trustee for the
Administrator in any bankruptcy, insolvency, read-
justment of debt, marshalling of assets and liabil-
ities, or similar proceedings, or for the winding
up or liquidation of its affairs, and any such
decree or order continues unstayed and in effect
for a period of sixty (60) consecutive days; or
(iii) the consent by the Administrator to
the appointment of a conservator, receiver, liqui-
dator or trustee or similar official in any insol-
vency, readjustment of debt, marshalling of assets
and liabilities, or similar proceedings of or re-
lating to the Administrator or relating to substan-
tially all of its property, the admission in writ-
ing by the Administrator of its inability to pay
its debts generally as they become due, the filing
by the Administrator of a petition to take advan-
tage of any applicable insolvency or reorganization
statute, the making by the Administrator of an
assignment for the benefit of its creditors or the
voluntary suspension by the Administrator of pay-
ment of its obligations.
The Administrator agrees that if any of the events
specified in clause (ii) or (iii) of this Section 9(d)
shall occur, it shall give written notice thereof to the
Issuer and the Indenture Trustee within seven (7) days
after the happening of such event.
(e) No resignation or removal of the Administrator
pursuant to this Section 9 shall be effective until (i)
a successor Administrator shall have been appointed by
the Issuer and (ii) such successor Administrator shall
have agreed in writing to be bound by the terms of this
Agreement in the same manner as the Administrator is
bound hereunder.
(f) The appointment of any successor Administrator
shall be effective only after satisfaction of the Rating
Agency Condition with respect to the proposed appoint-
ment.
(g) Subject to subsections (e) and (f) of this
Section 9, the Administrator acknowledges that upon the
appointment of a successor Servicer pursuant to the Sale
and Servicing Agreement, the Administrator shall immedi-
ately resign and such successor Servicer shall automati-
cally become the Administrator under this Agreement.
SECTION 10. Action upon Termination, Resignation
or Removal. Promptly upon the effective date of termi-
nation of this Agreement pursuant to Section 9(a) or the
resignation or removal of the Administrator pursuant to
Section 9(b) or 9(c), respectively, the Administrator
shall be entitled to be paid all fees and reimbursable
expenses accruing to it to the date of such termination,
resignation or removal. The Administrator shall forth-
with upon such termination pursuant to Section 9(a)
deliver to the Issuer all property and documents of or
relating to the Collateral then in the custody of the
Administrator. In the event of the resignation or
removal of the Administrator pursuant to Section 9(b) or
9(c), respectively, the Administrator shall cooperate
with the Issuer and take all reasonable steps requested
to assist the Issuer in making an orderly transfer of
the duties of the Administrator.
SECTION 11. Notices. Any notice, report or other
communication given hereunder shall be in writing and
addressed of follows:
(a) if to the Issuer or the Owner Trustee, to:
NationsBank Auto Owner Trust ____-_
c/o NationsBank, N.A.
100 North Tryon Street
NC1-007-20-01
Charlotte, North Carolina 28255
Attention: ______
Telephone: (704) 386-_______
Telecopy: (704) 386-_______
(b) if to the Administrator, to:
NationsBank, N.A.
100 North Tryon Street
NC1-007-20-01
Charlotte, North Carolina 28255
Attention: ______
Telephone: (704) 386-_______
Telecopy: (704) 386-_______
(c) If to the Indenture Trustee, to:
__________________
__________________
Attention: ______
Telephone: ______
Telecopy: ______
or to such other address as any party shall have provid-
ed to the other parties in writing. Any notice required
to be in writing hereunder shall be deemed given if such
notice is mailed by certified mail, postage prepaid, or
hand-delivered to the address of such party as provided
above.
SECTION 12. Amendments. This Agreement may be
amended from time to time by a written amendment duly
executed and delivered by the Issuer, the Administrator
and the Indenture Trustee, with the written consent of
the Owner Trustee, without the consent of the
Noteholders and the Certificateholders, for the purpose
of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Noteholders
or Certificateholders; provided that either (i) such
amendment will not, as set forth in an Opinion of Coun-
sel satisfactory to the Indenture Trustee and the Owner
Trustee, materially and adversely affect the interest of
any Noteholder or Certificateholder or (ii) the written
consent of the Owner Trustee and the Noteholders of
Notes evidencing not less than a majority of the Notes
Outstanding and the Certificateholders of Certificates
evidencing not less than a majority of the Certificate
Balance shall have been obtained; provided, however,
that no such amendment may (x) increase or reduce in any
manner the amount of, or accelerate or delay the timing
of, or change the allocation or priority of, collections
of payments on Receivables or distributions that are
required to be made for the benefit of the Noteholders
or Certificateholders, or (y) change any Note Interest
Rate or the Certificate Rate or the Specified Reserve
Account Balance or (z) reduce the aforesaid percentage
of the Noteholders and Certificateholders which are
required to consent to any such amendment, without the
consent of the Noteholders of all the Notes Outstanding
and Certificateholders of Certificates evidencing all
the Certificate Balance. Notwithstanding the foregoing,
the Administrator may not amend this Agreement without
the consent of the Sellers, which permission shall not
be unreasonably withheld.
SECTION 13. Successors and Assigns. This Agree-
ment may not be assigned by the Administrator unless
such assignment is previously consented to in writing by
the Issuer and the Owner Trustee and subject to the
satisfaction of the Rating Agency Condition in respect
thereof. An assignment with such consent and satisfac-
tion, if accepted by the assignee, shall bind the as-
signee hereunder in the same manner as the Administrator
is bound hereunder. Notwithstanding the foregoing, this
Agreement may be assigned by the Administrator without
the consent of the Issuer or the Owner Trustee to a
corporation or other organization that is a successor
(by merger, consolidation or purchase of assets) to the
Administrator; provided that such successor organization
executes and delivers to the Issuer, the Owner Trustee
and the Indenture Trustee an agreement in which such
corporation or other organization agrees to be bound
hereunder by the terms of said assignment in the same
manner as the Administrator is bound hereunder. Subject
to the foregoing, this Agreement shall bind any succes-
sors or assigns of the parties hereto.
SECTION 14. Governing Law. This agreement shall
be construed in accordance with the laws of the State of
New York, and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance
with such laws.
SECTION 15. Headings. The Section headings hereof
have been inserted for convenience of reference only and
shall not be construed to affect the meaning, construc-
tion or effect of this Agreement.
SECTION 16. Counterparts. This Agreement may be
executed in counterparts, each of which when so executed
shall be an original, but all of which together shall
constitute but one and the same agreement.
SECTION 17. Severability. Any provision of this
Agreement that is prohibited or unenforceable in any
jurisdiction shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or
unenforceability in any jurisdiction shall not invali-
date or render unenforceable such provision in any other
jurisdiction.
SECTION 18. Not Applicable to NationsBank, N.A. in
Other Capacities. Nothing in this Agreement shall
affect any right or obligation NationsBank, N.A. may
have in any other capacity.
SECTION 19. Limitation of Liability of Owner
Trustee and Indenture Trustee. (a) Notwithstanding
anything contained herein to the contrary, this instru-
ment has been countersigned by ______ not in its indi-
vidual capacity but solely in its capacity as Owner
Trustee of the Issuer and in no event shall ______ in
its individual capacity or any beneficial owner of the
Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations
of the Issuer hereunder, as to all of which recourse
shall be had solely to the assets of the Issuer. For
all purposes of this Agreement, in the performance of
any duties or obligations of the Issuer hereunder, the
Owner Trustee shall be subject to, and entitled to the
benefits of, the terms and provisions of Articles VI,
VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to
the contrary, this Agreement has been countersigned by
______ not in its individual capacity but solely as
Indenture Trustee and in no event shall ______ have any
liability for the representations, warranties, cove-
nants, agreements or other obligations of the Issuer
hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which
recourse shall be had solely to the assets of the Issu-
er.
SECTION 20. Third-Party Beneficiary. The Owner
Trustee is a third-party beneficiary to this Agreement
and is entitled to the rights and benefits hereunder and
may enforce the provisions hereof as if it were a party
hereto.
SECTION 21. Nonpetition Covenants. Notwithstand-
ing any prior termination of this Agreement, the Sell-
ers, the Administrator, the Owner Trustee and the Inden-
ture Trustee shall not, prior to the date which is one
year and one day after the termination of this Agreement
with respect to the Issuer, acquiesce, petition or
otherwise invoke or cause the Issuer or the General
Partner to invoke the process of any court or government
authority for the purpose of commencing or sustaining a
case against the Issuer or the General Partner under any
federal or state bankruptcy, insolvency or similar law
or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the
Issuer or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of
the Issuer or the General Partner.
END OF AGREEMENT
IN WITNESS WHEREOF, the parties have caused
this Agreement to be duly executed and delivered as of
the day and year first above written.
NATIONSBANK AUTO OWNER TRUST ____-_
By: ______, not in its individual
capacity but solely as Owner
Trustee
By:
Name:
Title:
______, not in its individual ca-
pacity but solely as Indenture
Trustee
By:
Name:
Title:
NATIONSBANK, N.A., as Administrator
By:
Name:
Title:
APPENDIX A
Definitions and Usage