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Filed Pursuant to Rule 424(b)(3)
Registration No. 33-98620
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with and
declared effective by the Securities and Exchange Commission. These
securities may not be sold nor may offers to buy be accepted without the
delivery of a final prospectus supplement and accompanying prospectus. 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 JULY 31, 1996
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED FEBRUARY 23, 1996
$175,000,000
AmeriCredit Automobile Receivables Trust 1996-C
$48,000,000 Class A-1 % Money Market Asset Backed Notes
$80,000,000 Class A-2 Floating Rate Asset Backed Notes
$40,875,000 Class A-3 % Asset Backed Notes
$6,125,000% Asset Backed Certificates
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AmeriCredit Automobile Receivables Trust 1996-C (the "Trust") will be formed
pursuant to a Trust Agreement to be entered into by and among AFS Funding
Corp., as Seller (the "Seller"), and Bankers Trust (Delaware), as Owner
Trustee, and will issue $48,000,000 aggregate principal amount of Class A
-1 % Money Market Asset Backed Notes (the "Class A-1 Notes"),
$80,000,000 aggregate principal amount of Class A-2 Floating Rate Asset
Backed Notes (the "Class A-2 Notes") and $40,875,000 aggregate
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"). The Notes will be issued pursuant to an
Indenture to be dated as of August 1, 1996 (the "Indenture"),
between the Trust and LaSalle National Bank as Indenture
Trustee and as Trust Collateral Agent (the "Indenture
Trustee" and the "Trust Collateral Agent"). The Trust also
will issue $6,125,000 aggregate principal amount of
% Asset Backed Certificates (the "Certificates"
and together with the Notes, the "Securities").
The assets of the Trust will include a pool of motor vehicle retail installment
sale contracts (the "Initial Receivables") secured by new and used
automobiles, light trucks and vans financed thereby (the "Initial
Financed Vehicles"), certain amounts received under each Initial
Receivable after July 15, 1996 (the "Initial Cutoff Date"),
security interests in the Initial Financed Vehicles and
certain other property, as more fully described
herein.
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FOR A DISCUSSION OF CERTAIN FACTORS RELATING TO THE TRANSACTION, SEE "RISK
FACTORS" AT PAGE S-13 HEREIN AND PAGE 13 IN THE ACCOMPANYING PROSPECTUS.
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FULL AND COMPLETE PAYMENT OF THE NOTEHOLDERS' DISTRIBUTABLE AMOUNT AND THE
CERTIFICATEHOLDERS' DISTRIBUTABLE AMOUNT ON EACH DISTRIBUTION DATE IS
UNCONDITIONALLY AND IRREVOCABLY GUARANTEED PURSUANT TO FINANCIAL GUARANTY
INSURANCE POLICIES (THE "POLICIES") TO BE ISSUED BY:
[LOGO]
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THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT INTERESTS IN,
THE TRUST ONLY AND DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS
OF THE SELLER, THE SERVICER OR ANY AFFILIATE
THEREOF.
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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.
The Underwriters have agreed to purchase the Securities as approximately
% of the principal amount thereof, subject to the terms and conditions
set forth in the Underwriting Agreement referred to herein under "Underwriting."
The aggregate proceeds to the Trust, before deducting expenses payable by or on
behalf of the Trust, estimated at $400,000, will be $ .
The Underwriters propose to offer the Securities from time to time in
negotiated transactions or otherwise, at prices determined at the time of sale.
For further information with respect to the plan of distribution and any
discounts, commissions or profits that may be deemed underwriting discounts or
commissions, see "Underwriting" herein.
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The Securities are offered hereby by the Underwriters when, as and if issued by
the Trust, delivered to and accepted by the Underwriters and subject to
their right to reject orders in whole or in part. It is expected that
delivery of the Securities in book-entry form will be made through
the facilities of The Depository Trust Company ("DTC") on the
Same Day Funds Settlement System and, in the case of the
Notes, Cedel Bank, societe anonyme ("Cedel") and the
Euroclear System ("Euroclear") on or about August
, 1996.
CS First Boston Prudential Securities Incorporated
The date of this Prospectus Supplement is August , 1996.
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(Continued from preceding page).
From time to time on or before November 12, 1996, additional motor
vehicle retail installment sale contracts (the "Subsequent Receivables," and
together with the Initial Receivables, the "Receivables") secured by new and
used automobiles, light trucks and vans financed thereby (the "Subsequent
Financed Vehicles," and together with the Initial Financed Vehicles, the
"Financed Vehicles"), certain amounts received under the Subsequent Receivables
on and after the related Subsequent Cutoff Dates (as defined herein), security
interests in the Subsequent Financed Vehicles and certain other property, as
more fully described herein, are intended to be purchased by the Trust from
amounts deposited in a pre-funding account established with the Trust Collateral
Agent (the "Pre-Funding Account") on the date of issuance of the Securities.
Subsequent Receivables with an aggregate principal balance of up to
$41,186,267.11 may be acquired by the Trust.
The Notes will be secured by the assets of the Trust pursuant to the
Indenture. Interest on the Class A-1 and Class A-3 Notes will accrue at the per
annum interest rates specified above. The per annum rate of interest on the
Class A-2 Notes for each monthly interest period will equal one-month LIBOR (as
defined herein) plus ____%, subject to a maximum rate equal to 12% per annum.
Interest on the Notes will generally be payable on the twelfth day of each month
(each, a "Distribution Date"), commencing on September 12, 1996. Principal on
the Notes will be payable on each Distribution Date to the extent described
herein, except that no principal will be paid on a Class of Notes until each
Class of Notes having a lower numerical Class designation has been paid in full.
The Certificates represent fractional undivided interests in the Trust.
Interest, to the extent of the Certificate Rate of ____% per annum, will be
distributed to the Certificateholders on each Distribution Date. Distributions
of interest on the Certificates will be subordinated in priority of payment to
interest on and principal of the Notes. No principal will be paid on the
Certificates until all of the Notes have been paid in full.
The Final Scheduled Distribution Date for the Class A-l Notes will be
September __, 1997, for the Class A-2 Notes will be the May 2000 Distribution
Date, and for the Class A-3 Notes will be the January 2001 Distribution Date.
The Final Scheduled Distribution Date for the Certificates will be the May 2002
Distribution Date. However, payment in full of a Class of Notes or the
Certificates may occur earlier 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 has declined to 10% or less of the Original
Pool Balance (as hereinafter defined).
There currently is no secondary market for the Notes or the
Certificates. The Underwriters expect to make a market in the Securities but
have no obligation to do so. There is no assurance that any such market will
develop or continue or that it will provide Securityholders with sufficient
liquidity of investment.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT
THE OFFERING OF THE SECURITIES. 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 SECURITIES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED A FINAL PROSPECTUS SUPPLEMENT AND
THE FINAL PROSPECTUS. TO THE EXTENT ANY STATEMENTS IN THIS PROSPECTUS SUPPLEMENT
CONFLICT WITH STATEMENTS IN THE PROSPECTUS, THE STATEMENTS IN THIS PROSPECTUS
SUPPLEMENT SHALL CONTROL.
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE NOTES
AND THE CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
Unless and until Definitive Notes or Definitive Certificates are
issued, unaudited monthly and annual reports containing information concerning
the Receivables will be sent on behalf of the Trust to Cede & Co., as registered
holder of the Notes and the Certificates and the nominee of DTC. See
"Description of the Securities -- Reports to Securityholders" and "-- Book-Entry
Registration" in the accompanying Prospectus (the "Prospectus"). Such reports
will not constitute financial statements prepared in accordance with generally
accepted accounting principles. None of the Seller, the Servicer, or the Insurer
intends to send any of its financial reports to Securityholders. The Servicer,
on behalf of the Trust, will file with the Securities and Exchange Commission
(the "Commission") periodic reports concerning the Trust to the extent required
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations of the Commission thereunder.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
In addition to the documents described in the Prospectus under
"Incorporation of Certain Documents by Reference," the financial statements of
Financial Security Assurance Inc. (the "Insurer") included in, or as exhibits
to, the following documents which have been filed with the Commission by
Financial Security Assurance Holdings Ltd. ("Holdings"), are hereby incorporated
by reference in the Registration Statement of which this Prospectus Supplement
and the Prospectus form a part:
(a) Annual Report on Form 10-K for the year ended December 31, 1995, and
(b) Quarterly Report on Form 10-Q for the period ended March 31, 1996.
All financial statements of the Insurer included in documents filed by
Holdings pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus Supplement and prior to the
termination of the offering of the Securities shall be deemed to be incorporated
by reference into this Prospectus Supplement and to be a part hereof from the
respective dates of filing of such documents.
The Seller on behalf of the Trust hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the Trust's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act and each filing of the financial statements of Financial Security
included in or as an exhibit to the annual report of Holdings filed pursuant to
section 13(a) or section 15(d) of the Exchange Act that is incorporated by
reference in the Registration Statement (as defined in the accompanying
Prospectus) shall be deemed to be a new registration statement relating to the
Securities offered hereby, and the offering of such Securities at that time
shall be deemed to be the initial bona fide offering thereof.
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SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the Prospectus. Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings ascribed to such terms elsewhere in this
Prospectus Supplement or the Prospectus.
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Issuer.............................. AmeriCredit Automobile Receivables Trust 1996-C (the "Trust" or the
"Issuer"), a Delaware business trust to be formed pursuant to a Trust
Agreement, dated as of August 1, 1996 (the "Trust Agreement"),
among the Seller and the Owner Trustee.
Seller.............................. AFS Funding Corp. (the "Seller"), a special purpose financing
subsidiary of AmeriCredit. See "The Seller" herein.
Servicer............................ AmeriCredit Financial Services, Inc. (in its individual capacity,
"AmeriCredit" and, as servicer, the "Servicer"), a Delaware corporation.
See "The Company and the Servicer" in the Prospectus.
Insurer............................. Financial Security Assurance Inc. (the "Insurer"), a New York financial
guaranty insurance company. See "The Insurer" herein.
Indenture Trustee................... LaSalle National Bank (the "Indenture Trustee").
Owner Trustee....................... Bankers Trust (Delaware) (the "Owner Trustee").
Initial Cutoff Date................. July 15, 1996.
Closing Date........................ August __, 1996.
The Notes........................... The Trust will issue Class A-1 ______% Money Market Asset Backed
Notes (the "Class A-1 Notes") in the aggregate original principal
amount of $48,000,000, Class A-2 Floating Rate Asset-Backed Notes
(the "Class A-2 Notes") in the aggregate original principal amount of
$80,000,000, and Class A-3 ____% Asset-Backed Notes (the "Class
A-3 Notes") in the aggregate original principal amount of $40,875,000.
The Class A-1 Notes, the Class A-2 Notes and the Class A-3 Notes
(collectively, the "Notes") will be issued pursuant to an Indenture, dated
as of August 1, 1996, among the Issuer and LaSalle National Bank, as
Indenture Trustee and as Trust Collateral Agent (the "Trust Collateral
Agent"). The Notes will be offered for purchase in denominations of
$1,000 and integral multiples thereof in book-entry form only. Persons
acquiring beneficial interests in the Notes will hold their interests
through DTC in the United States or Cedel Bank, societe anonyme
("Cedel") or the Euroclear System ("Euroclear") in Europe. See
"Description of the Securities -- Book-Entry Registration" in the
Prospectus and Annex I hereto.
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The Notes will be secured by the assets of the Trust (other than certain
property relating exclusively to the Certificates) pursuant to the
Indenture.
The Certificates.................... The Trust will issue ____% Asset Backed Certificates (the
"Certificates") with an aggregate initial Certificate Balance (as defined
herein) of $6,125,000. The Certificates will represent fractional
undivided interests in the Trust. The Certificates will be issued
pursuant to the Trust Agreement. The Certificates will be offered for
purchase in denominations of $l,000 and integral multiples thereof in
book-entry form only (other than the Certificates sold to the Seller, as
described in "The Trust -- General" herein). See "Description of the
Securities -- Book-Entry Registration" in the Prospectus.
Trust Property..................... Each Note will represent an obligation of, and each Certificate will
represent a fractional undivided interest in, the Trust. The Trust's
assets (the "Trust Property") will include, among other things, certain
motor vehicle retail installment sale contracts (the "Initial
Receivables"), secured by new and used automobiles, light trucks and
vans (the "Initial Financed Vehicles"), certain monies received
thereunder after the Initial Cutoff Date, an assignment of the security
interests in the Initial Financed Vehicles securing the Initial
Receivables, the related Receivables Files, all rights to proceeds from
claims on certain physical damage, credit life and disability insurance
policies covering the Initial Financed Vehicles or the Obligers, as the
case may be, all rights to liquidation proceeds with respect to the Initial
Receivables, an assignment of the right of the Seller against Dealers
under agreements between AmeriCredit and such Dealers, certain bank
accounts, all proceeds of the foregoing, the Certificate Policy, and
certain rights under the Trust Documents. The Trust Property also will
include an assignment of the Seller's rights against AmeriCredit under
the Purchase Agreement upon the occurrence of certain breaches of
representations and warranties. The Initial Receivables will be
purchased by the Seller from AmeriCredit pursuant to a purchase
agreement (the "Purchase Agreement") between the Seller and
AmeriCredit on or prior to the date of issuance of the Securities.
Additional motor vehicle retail installment sale contracts (the
"Subsequent Receivables") secured by new or used automobiles, light
trucks and vans (the "Subsequent Financed Vehicles") and related
property are intended to be purchased by the Trust from the Seller from
time to time on or before November 12, 1996, from funds on deposit
in the Pre-Funding Account. The Subsequent Receivables will be
purchased by the Seller from AmeriCredit pursuant to one or more
subsequent purchase agreements (each, a "Subsequent Purchase
Agreement") between the Seller and AmeriCredit. The purchase by the
Trust of the Subsequent Receivables is subject to the satisfaction of
certain conditions, as described under "The Receivables" herein. The
Initial Receivables and the Subsequent Receivables are hereinafter
referred to as the "Receivables," and the Initial Financed Vehicles and
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the Subsequent Financed Vehicles are hereinafter referred to as the
"Financed Vehicles."
Receivables......................... The Receivables consist of motor vehicle retail installment sale
contracts originated by Dealers and then acquired by AmeriCredit
pursuant to its Contract Acquisition Program. The motor vehicle retail
installment sale contracts consist primarily of contracts with individuals
with less than perfect credit due to various factors, including, among
other things, the manner in which such individuals have handled
previous credit, the limited extent of their prior credit history and/or
their limited financial resources. See "AmeriCredit's Automobile
Financing Program" herein and in the Prospectus.
The statistical information presented in this Prospectus Supplement is
based on the Initial Receivables as of the Initial Cutoff Date. The
Initial Receivables transferred to the Trust on the Closing Date may
include certain other motor vehicle retail installment sale contracts.
The Initial Receivables have, as of the Initial Cutoff Date, a weighted
average annual percentage rate ("APR") of approximately 20.45%, a
weighted average original maturity of 52.23 months and a weighted
average remaining maturity of 50.31 months. The Initial Receivables
have an aggregate principal balance of $133,813,732.89 as of the Initial
Cutoff Date. See "The Receivables." Each of the Initial Receivables
also will have a remaining term of not more than 59 months and not
less than 8 months as of the Initial Cutoff Date.
Following the Closing Date, the Trust will be obligated to purchase
from time to time on or before the end of the Funding Period (as
defined below), subject to the availability thereof, Subsequent
Receivables consisting of retail automobile installment sale contracts
acquired by the Seller from AmeriCredit. The aggregate principal
balance of the Subsequent Receivables is anticipated by AmeriCredit
to equal approximately $41,186,267.11. In connection with each
purchase of Subsequent Receivables, the Trust will be required to pay
to the Seller a cash purchase price equal to the principal amount thereof
from the Pre-Funding Account. AmeriCredit will designate as a cutoff
date (each, a "Subsequent Cutoff Date") (i) the last day of the month
preceding the month in which Subsequent Receivables are conveyed to
the Seller by AmeriCredit and reconveyed by the Seller to the Trust or
(ii) if any such Subsequent Receivable is originated in the month of
conveyance, the date of origination. Subsequent Receivables will be
conveyed to the Seller and then reconveyed by the Seller to the Trust
on designated dates (each, a "Subsequent Transfer Date") occurring
during the Funding Period. The Trust may purchase the Subsequent
Receivables only from the Seller and not from any other person, and
the Seller may purchase the Subsequent Receivables only from
AmeriCredit. The Subsequent Receivables must satisfy certain
eligibility criteria. See "The Receivables -- Eligibility Criteria" herein.
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Terms of the Notes.................. The principal terms of the Notes will be as described below:
A. Distribution Dates............. Payments of interest and principal on the Notes will be made on the
twelfth day of each month or, if the twelfth day is not a Business Day,
on the next following Business Day (each, a "Distribution Date")
commencing September 12, 1996. Each reference to a "Payment Date"
in the accompanying Prospectus shall refer to a Distribution Date.
Payments will be made to holders of record of the Notes (the
"Noteholders") as of the close of business on the Business Day
immediately preceding such Distribution Date (a "Record Date"). A
"Business Day" is a day other than a Saturday, Sunday or other day on
which commercial banks located in the states of Texas, Delaware,
Illinois or New York are authorized or obligated to be closed.
B. Final Scheduled
Distribution Dates........... For the Class A-1 Notes, September __, 1997 (which shall not be later
than 397 days from August __, 1996 (the date of pricing)) (the "Special
A-1 Distribution Date"). For the Class A-2 Notes, the May 2000
Distribution Date. For the Class A-3 Notes, the January 2001
Distribution Date.
For purposes of this Prospectus supplement, the term "Distribution
Date," insofar as it relates to the Class A-1 Notes, shall be deemed to
include the Special A-1 Distribution Date.
C. Interest Rates................. The Class A-1 Notes and the Class A-3 Notes will bear interest at the
respective fixed per annum rates set forth on the cover page hereof.
The Class A-2 Notes will bear interest at a floating rate equal to the
London interbank offered rates for one-month U.S. dollar deposits
("LIBOR") plus ____%, subject to a maximum rate equal to 12% per
annum. Each such interest rate for a Class of Notes is referred to as
the "Interest Rate."
D. Interest....................... Interest on the principal amount of the Notes of each Class outstanding
immediately prior to a Distribution Date will accrue at the applicable
Interest Rate from and including the most recent Distribution Date on
which interest has been paid (or, in the case of the first Distribution
Date, from and including the Closing Date) to, but excluding, the
following Distribution Date (each, an "Interest Period"). Interest on the
Notes for any Distribution Date due but not paid on such Distribution
Date will be due on the next Distribution Date together with, to the
extent permitted by law, interest on such amount at the applicable
Interest Rate. The amount of interest distributable on the Notes on
each Distribution Date will equal interest accrued during the related
Interest Period, plus any shortfall amount carried-forward. Interest on
the Class A-1 Notes and the Class A-2 Notes will be calculated on the
basis of a 360-day year and the actual number of days elapsed in the
applicable Interest Period. Interest on the Class A-3 Notes will be
calculated on the basis of a 360-day year consisting of twelve 30-day
months. In the event that the interest rate for the Class A-2 Notes for
any Interest Period calculated without giving effect to the maximum
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rate would exceed the interest rate for
such Interest Period after giving effect
to the maximum rate, the amount of such
excess will not be due as additional
interest to the Class A-2 Noteholders on
the related Distribution Date, nor will it
be carried forward and payable as
additional interest to the Class A-2
Noteholders on any subsequent Distribution
Date. In addition to the foregoing, any
accrued and unpaid interest on the Class
A-1 Notes will be due and payable on the
Special A-1 Distribution Date. See
"Description of the Notes -- Payments of
Interest" herein.
E. Principal...................... Principal of the Notes will be payable on each Distribution Date in an
amount equal to the Noteholders' Principal Distributable Amount and
the Noteholders' Accelerated Principal Amount, if any, for the calendar
month (the "Monthly Period") preceding such Distribution Date. The
Noteholders' Principal Distributable Amount will equal the sum of
(x) the Noteholders' Percentage of the Principal Distributable Amount
and (y) any unpaid portion of the amount described in clause (x) with
respect to a prior Distribution Date. The "Principal Distributable
Amount" with respect to any Distribution Date will be an amount equal
to the sum of the following amounts with respect to the related
Monthly Period, computed in accordance with the simple interest
method: (i) collections on Receivables (other than Liquidated and
Purchased Receivables) allocable to principal, including full and partial
principal prepayments, (ii) the principal balance of all Receivables
(other than Purchased Receivables) that became Liquidated Receivables
during the related Monthly Period, (iii) (A) the portion of the Purchase
Amount allocable to principal of all Receivables that became Purchased
Receivables as of the immediately preceding Record Date and (B) at
the option of the Insurer, the outstanding principal balance of those
Receivables that were required to be repurchased by the Seller and/or
AmeriCredit during such Monthly Period but were not so repurchased,
and (iv) the aggregate amount of Cram Down Losses during such
Monthly Period. See "Description of the Purchase Agreements and the
Trust Documents -- Distributions" herein.
In addition to the foregoing, any remaining outstanding principal on the
Class A-1 Notes will be due and payable on the Special A-1
Distribution Date.
The Noteholders' Percentage will be 100% until the Class A-3 Notes
have been paid in full and thereafter will be zero. No principal will be
paid on a Class of Notes until the principal of all Classes of Notes
having a lower numerical Class designation has been paid in full. In
addition, the outstanding principal amount of the Notes of any Class,
to the extent not previously paid, will be payable on the respective
Final Scheduled Distribution Date for such Class.
F. Optional Redemption............ The Class A-3 Notes, to the extent still outstanding, may be redeemed
in whole, but not in part, on any Distribution Date on which the
Servicer exercises its option to purchase the Receivables, which, subject
to certain requirements can occur after the Pool Balance declines to
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10% or less of the Original Pool Balance,
at a redemption price equal to the unpaid
principal amount of the Notes of such
Class plus accrued and unpaid interest
thereon. See "Description of the Notes --
Optional Redemption" herein. The Original
Pool Balance will equal the sum of (i) the
aggregate principal balance of the Initial
Receivables as of the Initial Cutoff Date
plus (ii) the aggregate principal balances
of all Subsequent Receivables added to the
Trust as of their respective Subsequent
Cutoff Dates (the "Original Pool
Balance").
G. Mandatory Redemption........... Each Class of Notes will be redeemed in part on the Mandatory
Redemption Date (as defined under "Pre-Funding Account" below) in
the event that any portion of the Pre-Funded Amount remains on
deposit in the Pre-Funding Account at the end of the Funding Period.
The aggregate principal amount of each Class of Notes to be redeemed
will be an amount equal to such Class's pro rata share (based on the
respective current principal amount of each Class of Notes and the
Certificate Balance) of the Pre-Funded Amount at the end of the
Funding Period (such Class's "Note Prepayment Amount").
The Notes may be accelerated and subject to immediate payment at par
upon the occurrence of an Event of Default under the Indenture. So
long as no Insurer Default shall have occurred and be continuing, an
Event of Default under the Indenture will occur only upon delivery by
the Insurer to the Indenture Trustee of notice of the occurrence of
certain events of default under the Insurance and Indemnity Agreement,
dated as of August 1, 1996 (the "Insurance Agreement"), among the
Insurer, the Trust, AmeriCredit, AmeriCredit Corp. and the Seller. In
the case of such an Event of Default, the Notes will automatically be
accelerated and subject to immediate payment at par. See "Description
of the Notes -- Events of Default" herein. The Note Policy does not
guarantee payment of any amounts that become due on an accelerated
basis, unless the Insurer elects, in its sole discretion, to pay such
amounts in whole or in part. See "The Policies -- Note Policy" herein.
Terms of the
Certificates....................... The principal terms of the Certificates will be as described below:
A. Distribution Dates............. Distributions with respect to the Certificates will be made on each
Distribution Date, commencing September
12, 1996. Distributions will be made to
holders of record of the Certificates (the
"Certificateholders" and, together with
the Noteholders, the "Securityholders") as
of the related Record Date.
B. Final Scheduled Certificate
Distribution Date............. The May 2002 Distribution Date.
C. Certificate Rate............... ____% per annum payable monthly at one-twelfth of the annual rate,
calculated on the basis of a 360-day year consisting of twelve 30-day
months.
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D. Subordination of
Certificates.................. The Certificates will not receive any distribution with respect to a
Distribution Date until the full amount of the Noteholders'
Distributable Amount with respect to such Distribution Date has been
deposited in the Note Distribution Account.
E. Interest....................... The amount of interest distributable on the Certificates on each
Distribution Date will equal interest accrued during the related Interest
Period at the Certificate Rate on the Certificate Balance immediately
prior to such Distribution Date. Interest on the Certificates for any
Distribution Date due but not paid on such Distribution Date will be
due on the next Distribution Date together with, to the extent permitted
by law, interest on such amount at one-twelfth of the Certificate Rate.
Distributions of interest on the Certificates are subordinate to payments
of interest and principal on the Notes, as described above under
"Subordination of Certificates." See "Description of the Certificates --
Distributions of Interest" herein.
F. Principal...................... On each Distribution Date on or after the date on which the Class A-3
Notes have been paid in full, principal of the Certificates will be
payable in an amount equal to the Certificateholders' Principal
Distributable Amount and the Certificateholders' Accelerated Principal
Amount, if any, for the Monthly Period preceding such Distribution
Date. The Certificateholders' Principal Distributable Amount will
equal the sum of (x) the Principal Distributable Amount and (y) any
unpaid portion of the amount described in clause (x) with respect to a
prior Distribution Date; provided, however, that the Certificateholders'
Principal Distributable Amount on the Distribution Date on which the
Class A-3 Notes are paid in full will be reduced by the amount
necessary to pay the Class A-3 Notes in full. See "Description of the
Purchase Agreements and Trust Documents -- Distributions" herein.
The remaining Certificate Balance, if any, will be payable in full on the
Final Scheduled Distribution Date for the Certificates.
G. Optional Prepayment............ If the Servicer exercises its option to purchase the Receivables as
described above, the Certificateholders shall receive an amount equal
to the remaining Certificate Balance together with accrued interest at
the Certificate Rate, and the Certificates will be retired.
H. Mandatory Prepayment........... The Certificates will be prepaid in part on the Mandatory Redemption
Date in the event that any portion of the Pre-Funded Amount remains
on deposit in the Pre-Funding Account at the end of the Funding Period
after giving effect to the purchase of all Subsequent Receivables,
including any such purchase on such date. The aggregate principal
amount of Certificates to be prepaid will be an amount equal to the
Certificateholders' pro rata share (based on the respective current
principal amount of each Class of Notes and the Certificate Balance)
of the Pre-Funded Amount (the "Certificate Prepayment Amount") at
the end of the Funding Period. The "Mandatory Redemption Date" is
the earlier of (i) the Distribution Date in November 1996 or (ii) if the
</TABLE>
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<TABLE>
<S> <C>
last day of the Funding Period occurs on
or prior to the Determination Date (as
defined herein) occurring in September or
October 1996, the Distribution Date
relating to such Determination Date.
Pre-Funding Account................. On the Closing Date, a cash amount equal to approximately
$41,186,267.11 (the "Initial Pre-Funded Amount") will be deposited in
an account (the "Pre-Funding Account") which will be established with
the Trust Collateral Agent. The "Funding Period" is the period from
the Closing Date until the earliest of the date on which (i) the amount
on deposit in the Pre-Funding Account is less than $100,000, (ii) a
Servicer Termination Event occurs under the Sale and Servicing
Agreement, or (iii) the Distribution Date in November 1996. The
Initial Pre-Funded Amount as reduced from time to time during the
Funding Period by the amount thereof used to purchase Subsequent
Receivables in accordance with the Sale and Servicing Agreement is
referred to herein as the "Pre-Funded Amount." The Seller expects that
the Pre-Funded Amount will be reduced to less than $100,000 on or
before the end of the Funding Period. Any Pre-Funded Amount
remaining at the end of the Funding Period will be payable to the
Noteholders and Certificateholders as described herein.
Capitalized Interest
Account......................... On the Closing Date, a cash amount shall be deposited in an account
(the "Capitalized Interest Account") which will be established with the
Trust Collateral Agent. The amount, if any, deposited in the
Capitalized Interest Account will be applied on the Distribution Dates
occurring in September, October and November of 1996 to fund an
amount (the "Monthly Capitalized Interest Amount") equal to the
amount of interest accrued for each such Distribution Date at the
weighted average Interest Rates and Certificate Rate on the portion of
the Securities having a principal balance in excess of the principal
balances of the Initial Receivables (which portion will equal the
Pre-Funded Amount). Any amounts remaining in the Capitalized
Interest Account on the Mandatory Redemption Date and not used for
such purposes are required to be paid directly to the Seller on such
date. See "Description of the Purchase Agreements and the Trust
Documents -- Accounts."
The Policies........................ On the Closing Date, the Insurer will issue to the Trust Collateral
Agent (i) as agent for the Indenture Trustee, a financial guaranty
insurance policy (the "Note Policy") and (ii) as agent for the Owner
Trustee, a separate financial guaranty insurance policy (the "Certificate
Policy"). Pursuant to the Note Policy, the Insurer will unconditionally
and irrevocably guarantee to the Noteholders payment of the Scheduled
Payments (as defined herein) for each Distribution Date and, with
respect to the Class A-1 Notes, the Class A-1 Special Distribution Date.
Pursuant to the Certificate Policy, the Insurer will unconditionally and
irrevocably guarantee to the Certificateholders payment of the
Guaranteed Distributions (as defined herein). See "The Policies" and
"Description of the Purchase Agreements and the Trust Documents --
Distributions" herein.
</TABLE>
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<TABLE>
<S> <C>
Tax Status.......................... In the opinion of Dewey Ballantine, special federal tax counsel to the
Trust, for federal income tax purposes, the Notes will be characterized
as debt, and the Trust will not be characterized as an association (or a
publicly traded partnership) taxable as a corporation. Each Noteholder,
by the acceptance of a Note, will agree to treat the Notes as debt. 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. See "Certain Federal Income Tax
Consequences" herein.
ERISA Considerations................ Subject to the conditions and considerations discussed under "ERISA
Considerations," the Notes are eligible for purchase by pension,
profit-sharing or other employee benefit plans as well as individual
retirement accounts and certain types of Keogh Plans (each, a "Benefit
Plan").
The Certificates may not be acquired (directly or indirectly) by or on
behalf of any Benefit Plan or any entity (including, without limitation,
an insurance company general account) whose underlying assets include
plan assets of a Benefit Plan by reason of a plan's investment in the
entity. See "ERISA Considerations" herein.
Legal Investment.................... The Class A-1 Notes will be eligible securities for purchase by money
market funds under Rule 2a-7 under the Investment Company Act of
1940, as amended.
Ratings............................. It is a condition to issuance that the Class A-l Notes be rated A-1+ by
Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. ("S&P"), and P-1 by Moody's Investors Service, Inc.
("Moody's" and together with S&P, the "Rating Agencies"), and that
the Class A-2 Notes, the Class A-3 Notes and the Certificates be rated
AAA by S&P and Aaa by Moody's. The ratings by the Rating
Agencies of the Securities will be (i) with respect to the Class A-1
Notes, without regard to the Note Policy in the case of S&P and
substantially based on the Note Policy in the case of Moody's and (ii)
with respect to all other Classes of Notes and Certificates, based on the
Policies. There is no assurance that the ratings initially assigned to the
Notes and the Certificates will not subsequently be lowered or
withdrawn by the Rating Agencies. See "Risk Factors -- Ratings on
Securities" herein.
</TABLE>
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RISK FACTORS
Prospective Noteholders and Certificateholders should consider, in
addition to the factors described under "Risk Factors" in the Prospectus, the
following risk factors in connection with the purchase of the Notes or the
Certificates.
PREPAYMENT FROM THE PRE-FUNDING ACCOUNT; ABILITY TO ORIGINATE SUBSEQUENT
RECEIVABLES
To the extent that the Pre-Funded Amount has not been fully applied to
the purchase of Subsequent Receivables by the Trust by the end of the Funding
Period, the Noteholders and the Certificateholders will receive a prepayment of
principal on the Mandatory Redemption Date in an amount equal to their pro rata
share (based on the current principal balance of each Class and the Certificate
Balance) of the Pre-Funded Amount (exclusive of investment earnings) remaining
in the Pre-Funding Account at the end of the Funding Period. Any reinvestment
risk from the prepayment of the Securities from the Pre-Funded Amount at the end
of the Funding Period will be borne by the Noteholders and the
Certificateholders. See "Yield and Prepayment Considerations" herein.
The conveyance of Subsequent Receivables to the Trust during the
Funding Period is subject to the conditions described herein under "The
Receivables -- Eligibility Criteria." The ability of the Trust to invest in
Subsequent Receivables is dependent upon the ability of AmeriCredit to originate
through Dealers a sufficient amount of motor vehicle retail installment sales
contracts that meet such eligibility criteria. The ability of AmeriCredit to
originate sufficient Subsequent Receivables may be affected by a variety of
social and economic factors. Economic factors include interest rates,
unemployment levels, the rate of inflation and consumer perception of economic
conditions generally. Neither AmeriCredit nor the Seller has any basis to
predict whether or the extent to which economic or social factors will affect
the availability of Subsequent Receivables. See "The Receivables" herein.
MATURITY AND PREPAYMENT ASSUMPTIONS
All of the Receivables are prepayable at any time. 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 related Financed Vehicle securing a Receivable without the
consent of AmeriCredit. (For this purpose the term "prepayments" includes
prepayments in full, certain partial prepayments related to refunds of extended
service contract costs and unearned insurance premiums, liquidations due to
default, Cram Down Losses, as well as receipts of proceeds from physical damage,
repossession loss, credit life and credit accident and health insurance policies
and certain other Receivables repurchased for administrative reasons.) The rate
of prepayment on the Receivables may also be influenced by the structure of the
loan, the nature of the Obligors and the Financed Vehicles and servicing
decisions as discussed above. In addition, under certain circumstances, the
Seller and the Servicer are obligated to purchase Receivables pursuant to the
Sale and Servicing Agreement as a result of breaches of certain covenants. The
Servicer also has the right, subject to certain conditions, to purchase the
Receivables when the Pool Balance is 10% or less of the Original Pool Balance.
Any reinvestment risks resulting from a faster or slower incidence of prepayment
of Receivables will be borne entirely by the Securityholders. See "Yield and
Prepayment Considerations".
CONCENTRATION OF RECEIVABLES
As of the Initial Cutoff Date (based on principal balance and mailing
address of the Obligors), Obligors with respect to approximately 16.23% of the
Receivables were located in Texas, Obligors with respect to approximately 10.77%
of the Receivables were located in California, and substantially all of the rest
of the Receivables were located in those states identified in the table on page
S-19. See "The
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<PAGE> 14
Receivables". Accordingly, adverse economic conditions or other factors
particularly affecting any of these states could adversely affect the
delinquency or loan loss experience of the Issuer with respect to the
Receivables.
SUBORDINATION OF CERTIFICATES; LIMITED ASSETS
Distributions of interest and principal on the Certificates will be
subordinated in priority of payment to interest and principal due on the Notes.
Consequently, the Certificateholders will not receive any distributions with
respect to a Monthly Period until the full amount of interest and principal
payable on the Notes on such Distribution Date has been deposited in the Note
Distribution Account. The Certificateholders will not receive any distributions
of principal before the Distribution Date on which the Class A-3 Notes have been
paid in full.
If the Notes are accelerated following an Event of Default under the
Indenture, the Notes must be paid in full prior to the distribution of any
amounts on the Certificates.
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 Capitalized Interest Account and the Policies. 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 Capitalized Interest Account and payments of claims
made under the Policies. The Pre-Funded Amount on deposit in the Pre-Funding
Account will be used solely to purchase Subsequent Receivables and is not
available to cover losses on the Receivables. The Capitalized Interest Account
is designed to cover obligations of the Trust relating to that portion of its
assets not invested in Receivables and is not designed to provide protection
against losses on the Receivables. Similarly, although the Policies will be
available on each Distribution Date to cover shortfalls in distributions of the
Noteholders' Distributable Amount and the Certificateholders' Distributable
Amount on such Distribution Date, if the Insurer defaults in its obligations
under the applicable Policy, the Trust will depend on current distributions on
the Receivables and, amounts, if any, available therefor in certain collateral
accounts maintained for the benefit of the Insurer to make payments on the Notes
and the Certificates. See "The Insurer" and "The Policies" herein.
RATINGS ON SECURITIES
A rating is not a recommendation to purchase, hold or sell Notes or
Certificates. The ratings of the Notes and Certificates address the likelihood
of the payment of principal and interest on the Securities pursuant to their
terms. There is no assurance that a rating will remain in effect 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. In the
event that any ratings initially assigned to the Notes and the Certificates are
subsequently lowered or withdrawn for any reason, including by reason of a
downgrading of the claims-paying ability of the Insurer, no person or entity
will be obligated to provide any additional credit enhancement with respect to
the Notes or the Certificates. Any reduction or withdrawal of a rating may have
an adverse effect on the liquidity and market price of the Notes and the
Certificates.
EVENTS OF DEFAULT UNDER THE INDENTURE
So long as no Insurer Default shall have occurred and be continuing,
neither the Indenture Trustee nor the Noteholders may declare an Event of
Default under the Indenture. So long as an Insurer Default shall not have
occurred and be continuing, an Event of Default will occur only upon delivery by
the Insurer to the Indenture Trustee of notice of the occurrence of certain
events of default under the Insurance Agreement. Upon the occurrence of an Event
of Default under the Indenture (so long as an Insurer Default shall not have
occurred and be continuing), the Insurer will have the right, but not the
obligation, to cause the liquidation, in whole or in part, of the Trust
Property, which will result in redemption, in whole or in part, of the Notes,
and prepayment, in whole or in part, of the Certificates. Following the
occurrence of
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<PAGE> 15
an Event of Default, the Indenture Trustee and the Owner Trustee will continue
to submit claims under the Policies as necessary to enable the Trust to continue
to make payments of the Noteholders' Distributable Amount and the
Certificateholders' Distributable Amount on each Distribution Date. However,
following the occurrence of an Event of Default, the Insurer may elect to pay
all or any portion of the outstanding amount of the Notes, plus accrued interest
thereon, and may elect to cause the prepayment, in whole or in part, of the
Certificates.
INSOLVENCY CONSIDERATIONS
The Trust Agreement provides that, in the event that the Seller becomes
insolvent, or is terminated or dissolved (a "Dissolution Event") and the Owner
Trustee is unable to obtain an opinion of counsel satisfactory to the Insurer to
the effect that the Trust will not thereafter be an association (or publicly
traded partnership) taxable as a corporation for federal income tax purposes,
the Trust will terminate in 90 days and effect redemption of the Notes and
prepayment of the Certificates following the winding-up of the affairs of the
Trust, unless within such 90 days the Certificate Owners of a majority of the
remaining principal balance of the Certificates agree in writing to continue the
business of the Trust and the Owner Trustee is able to obtain the opinion of
counsel described above. See "Description of the Trust Agreements --
Termination" in the Prospectus.
USE OF PROCEEDS
The net proceeds to be received by the Trust from the sale of the
Securities will be used to pay the Seller, and in turn, AmeriCredit or a
warehouse facility, the purchase price for the Receivables, to make the deposits
of the Pre-Funded Amount into the Pre-Funding Account and to make the initial
deposit into the Capitalized Interest Account.
THE SERVICER
The Servicer is a wholly-owned subsidiary of AmeriCredit Corp. The
Servicer was incorporated in Delaware on July 22, 1992. AmeriCredit purchases
and services automobile loans which are originated and assigned to AmeriCredit
by automobile dealers. AmeriCredit is the primary operating subsidiary of
AmeriCredit Corp., a Texas corporation the common shares of which are listed on
the New York Stock Exchange. The Servicer's executive offices are located at 200
Bailey Avenue, Fort Worth, Texas 76107- 1220; telephone (817) 332-7000.
The Servicer will initially service the Receivables pursuant to the
Sale and Servicing Agreement and will be compensated for acting as the Servicer.
The Servicer will be appointed custodian for the Receivables and the Receivables
will be delivered to and held by the Servicer. Prior to delivery of the
Receivables to the Servicer, as custodian, AmeriCredit will stamp the
Receivables to reflect the sale and assignment of the Receivables to the Issuer.
AmeriCredit will not seek to have amended or re-issued the certificates of title
of the Financed Vehicles. In the absence of amendments to the certificates of
title, the Issuer may not have perfected security interests in the Financed
Vehicles securing the receivables originated in some states, including Texas and
California. See "Certain Legal Aspects of Receivables."
THE SELLER
The Seller was incorporated in the State of Nevada in April, 1996. The
Seller is organized for the limited purpose of purchasing receivables from
AmeriCredit and transferring such receivables to third parties and any
activities incidental to and necessary or convenient for the accomplishment of
such purposes. The
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Seller is a wholly-owned subsidiary of AmeriCredit. The principal executive
offices of the Seller are located at 1325 Airmotive Way, Reno, Nevada 89502;
telephone (702) 322-2221.
The Seller has taken steps in structuring the transaction contemplated
hereby that are intended to ensure that the voluntary or involuntary application
for relief by AmeriCredit under Insolvency Laws will not result in consolidation
of the assets and liabilities of the Seller with those of AmeriCredit. These
steps include the creation of the Seller as a separate, limited-purpose
subsidiary pursuant to a certificate of incorporation containing certain
limitations (including restrictions on the nature of the Seller's business, the
requirement of an independent director being on the Board of Directors of the
Seller and a restriction on the Seller's ability to commence a voluntary case or
proceeding under any Insolvency Law without the prior unanimous affirmative vote
of all of its directors). The Seller has received the advice of counsel to the
effect that, subject to certain facts, assumptions and qualifications, it would
not be a proper exercise by a court of its equitable discretion to disregard the
separate corporate existence of the Seller and to require the consolidation of
the assets and liabilities of the Seller with the assets and liabilities of
AmeriCredit in the event of the application of the federal bankruptcy laws to
AmeriCredit. Among other things, it is assumed by counsel that the Seller will
follow certain procedures in the conduct of its affairs, including maintaining
records and books of account separate from those of AmeriCredit, refraining from
commingling its assets with those of AmeriCredit and refraining from holding
itself out as having agreed to pay, or being liable for, the debts of
AmeriCredit. The Seller intends to follow and has represented to such counsel
that it will follow these and other procedures related to maintaining its
separate corporate identity. However, in the event that the Seller did not
follow these procedures, there can be no assurance that a court would not
conclude that the assets and liabilities of the Seller should be consolidated
with those of AmeriCredit. If a court were to reach such a conclusion, or a
filing were made under any Insolvency Law by or against the Seller, or if an
attempt were made to litigate any of the foregoing issues, delays in
distributions on the Certificates (and possible reductions in the amount of such
distributions) could occur. See "Risk Factors - Certain Legal Aspects."
THE TRUST
The following information supplements and, to the extent inconsistent
therewith, supersedes the information contained in the accompanying Prospectus.
GENERAL
The Issuer, AmeriCredit Automobile Receivables Trust 1996-C, is a
business trust formed under the laws of the State of Delaware pursuant to the
Trust Agreement for the transactions described in this Prospectus Supplement.
After its formation, the Trust will not engage in any activity other than (i)
acquiring, holding and managing the Receivables and the other assets of the
Trust and proceeds therefrom, (ii) issuing the Notes and the Certificates, (iii)
making payments on the Notes and the Certificates and (iv) engaging in other
activities that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith.
The Trust will initially be capitalized with equity equal to
$6,125,000. Certificates with an aggregate original Certificate Balance of
$65,000 will be sold to the Seller, and Certificates representing the remainder
of the Certificate Balance will be sold to third party investors that are
expected to be unaffiliated with the Seller, the Servicer or their affiliates.
The equity of the Trust, together with the proceeds of the initial sale of the
Notes, will be used by the Trust to purchase the Initial Receivables from the
Seller pursuant to the Sale and Servicing Agreement and to fund the deposits in
the Pre-Funding Account, certain collateral accounts maintained for the benefit
of the Insurer and, the Capitalized Interest Account.
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The Trust's principal offices are in Wilmington, Delaware, in care of
Bankers Trust (Delaware), as Owner Trustee, at the address listed below under
"-- The Owner Trustee."
THE OWNER TRUSTEE
Bankers Trust (Delaware) is the Owner Trustee under the Trust
Agreement, is a Delaware banking corporation and its principal offices are
located at 1001 Jefferson Street, Suite 550, Wilmington, Delaware 19801. The
Owner Trustee will perform limited administrative functions under the Trust
Agreement. The Owner Trustee's liability in connection with the issuance and
sale of the Certificates and the Notes is limited solely to the express
obligations of the Owner Trustee set forth in the Trust Agreement and the Sale
and Servicing Agreement.
THE INDENTURE TRUSTEE
LaSalle National Bank is the Indenture Trustee under the Indenture.
LaSalle National Bank is a national banking association, the principal offices
of which are located at 135 South LaSalle Street, Chicago, Illinois 60674.
THE TRUST PROPERTY
The Trust Property will include, among other things, the following: (a)
motor vehicle retail installment sale contracts secured by new and used
vehicles, light trucks and vans; (b) all payments received thereunder after the
Initial Cutoff Date or the Subsequent Cutoff Date, as the case may be; (c) such
amounts as from time to time may be held in the Lockbox Accounts, the Collection
Account, the Pre-Funding Account, and the Capitalized Interest Account; (d) an
assignment of the security interests of AmeriCredit in the Financed Vehicles;
(e) an assignment of the rights of the Seller against Dealers under agreements
between AmeriCredit and such Dealers (the "Dealer Agreements"); (f) an
assignment of the right to receive proceeds from claims on certain physical
damage, credit life and disability insurance policies covering the Financed
Vehicles or the Obligors; (g) an assignment of the rights of the Seller under
the Purchase Agreement and any Subsequent Purchase Agreements; (h) the
Receivables Files; (i) the Certificate Policy; and (j) certain other rights
under the Trust Documents.
The Initial Receivables were, and the Subsequent Receivables were or
will be, originated by Dealers in accordance with AmeriCredit's requirements
under agreements with Dealers for assignment to AmeriCredit, have been or will
be so assigned, and evidence or will evidence the indirect financing made
available to the Obligors. Dealer Agreements may provide for repurchase or
recourse against the Dealer in the event of a breach of a representation or
warranty by the Dealer under a Dealer Agreement.
The "Pool Balance" at any time represents the aggregate principal
balance of the Receivables at the end of the preceding Monthly Period (plus the
amount, if any, then on deposit in the Pre-Funding Account on such date), after
giving effect to all payments received from Obligors and any Purchase Amounts to
be remitted by AmeriCredit or the Seller, for such Monthly Period and all
losses, including Cram Down Losses, realized on Receivables liquidated during
such Monthly Period.
Each Certificate will represent a fractional undivided interest in the
Trust Property. Pursuant to the Indenture, the Trust will grant a security
interest in the Trust Property (other than the Certificate Distribution Account
and Certificate Policy) in favor of the Trust Collateral Agent for the benefit
of the Indenture Trustee on behalf of the Noteholders and for the benefit of the
Insurer in support of the obligations owing to it under the Insurance Agreement.
Any proceeds of such security interest in the Trust Property would be
distributed according to the Indenture, as described below under "Description of
the Purchase Agreements and the Trust Documents -- Distributions." The Insurer
would be entitled to such distributions only after payment of amounts owing to,
among others, holders of the Notes and Certificates.
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AMERICREDIT'S AUTOMOBILE FINANCING PROGRAM
Through its branch offices and marketing representatives, AmeriCredit
serves as a funding source for franchised and independent automobile dealers to
finance their customers' purchase of new and used automobiles and light duty
trucks. Dealers originate retail installment sale contracts ("Contracts") which
conform to AmeriCredit's credit policies which are then purchased by AmeriCredit
generally without recourse to the Dealers. AmeriCredit also services the
Contracts that it purchases.
AmeriCredit's indirect lending programs are designed to serve consumers
who have limited access to traditional auto financing. The typical borrower may
have had previous financial difficulties, but is now attempting to re-establish
credit, or may not yet have an established credit history. Because AmeriCredit
serves consumers who are unable to meet the credit standards imposed by most
traditional auto financing sources, AmeriCredit generally charges interest at
rates which are higher than those charged by traditional auto financing sources.
AmeriCredit also expects to sustain a higher level of delinquencies and credit
losses than that experienced by traditional auto financing sources since
AmeriCredit provides financing in a relatively high risk market.
AmeriCredit has established relationships with a variety of Dealers
located in the markets in which AmeriCredit has branch offices or marketing
representatives. While AmeriCredit occasionally finances purchases of new autos,
substantially all of AmeriCredit's Contracts were originated in connection with
Obligor's purchases of used autos. Of the Contracts purchased by AmeriCredit
during the year ended June 30, 1996, approximately 77% were originated by
manufacturer-franchised Dealers with used auto operations and 23% by independent
Dealers specializing in used auto sales. AmeriCredit purchased Contracts from
3,262 Dealers during the year ended June 30, 1996.
Contracts are generally purchased by AmeriCredit without recourse to
the Dealer, and accordingly, the Dealer usually has no liability to AmeriCredit
if the consumer defaults on the Contract. To mitigate AmeriCredit's risk from
potential credit losses, AmeriCredit typically charges the Dealers an
acquisition fee when purchasing Contracts. Such acquisition fees are negotiated
with Dealers on a contract-by-contract basis and are usually non-refundable.
Although Contracts are purchased without recourse to Dealers, Dealers typically
make certain representations as to the validity of the contract and compliance
with certain laws, and indemnify AmeriCredit against any claims, defenses and
set-offs that may be asserted against AmeriCredit because of assignment of the
Contract.
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As of June 30, 1996, AmeriCredit operated 51 branch offices in 26
states as reflected in the following table:
<TABLE>
<CAPTION>
STATE CITY STATE CITY
<S> <C> <C> <C>
Arizona Phoenix New Jersey Marlton
California San Jose New Mexico Albuquerque
San Francisco
Concord
Fresno
Los Angeles
San Diego
Stockton
Colorado Colorado Springs North Carolina Charlotte
Denver Raleigh-Durham
Florida Tampa Ohio Akron
Ft. Lauderdale Columbus
Jacksonville Cleveland
Orlando Cincinnati
Georgia Atlanta (2) Oklahoma Oklahoma City
Illinois Chicago (3) Oregon Portland
Indiana Indianapolis Pennsylvania Pittsburgh
Kentucky Louisville South Carolina Greenville
Charleston
Maryland Baltimore Tennessee Nashville
Memphis
Massachusetts Boston Texas Dallas-Fort Worth
Houston
San Antonio
Michigan Detroit Utah Salt Lake City
Missouri Kansas City Virginia Vienna
St. Louis Newport News
Norfolk
Richmond
Nevada Las Vegas Washington Seattle
</TABLE>
These branch offices solicit Dealers for Contracts and maintain AmeriCredit's
relationship with the Dealers in the geographic vicinity of the branch office.
AmeriCredit also has marketing representatives covering certain
existing branch territories and markets where the company does not have a branch
presence. AmeriCredit does business in a total of 39 states.
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<PAGE> 20
See "AmeriCredit's Automobile Financing Program" in the Prospectus for
a description of AmeriCredit's contract acquisition, servicing and collection
practices.
THE RECEIVABLES
The following information supplements the information contained under
"The Receivables" in the accompanying Prospectus.
GENERAL
The Receivables were, or will be, purchased by AmeriCredit in the
ordinary course of business pursuant to AmeriCredit's Contract Acquisition
Program from Dealers. The Receivables will consist of motor vehicle retail
installment sale contracts. The motor vehicle retail installment sale contracts
consist primarily of contracts with individuals with less than perfect credit
due to various factors, including, among other things, the manner in which such
individuals have handled previous credit, the limited extent of their prior
credit history and/or their limited financial resources.
ELIGIBILITY CRITERIA
The Receivables were or will be selected according to several criteria,
including those specified under "AmeriCredit's Automobile Financing Program --
Contract Acquisition" in the accompanying Prospectus. In addition, the Initial
Receivables were selected from AmeriCredit's portfolio of motor vehicle retail
installment contracts based on several criteria, including the following: (i)
each Initial Receivable had a remaining maturity, as of the Cutoff Date, of not
more than 59 months; (ii) each Initial Receivable had an original maturity of
not more than 60 months; (iii) each Initial Receivable had a remaining Principal
Balance as of the Cutoff Date of at least $250 and not more than $30,000; (iv)
each Initial Receivable has an Annual Percentage Rate of at least 14.25% and not
more than 33.00%; (v) no Initial Receivable was more than 30 days past due as of
the Cutoff Date and (vi) no funds have been advanced by AmeriCredit, any Dealer,
or anyone acting on behalf of any of them in order to cause any Initial
Receivable to qualify under clause (v) above.
During the Funding Period, the Seller is obligated to purchase from
AmeriCredit and to sell to the Trust the Subsequent Receivables. The aggregate
principal balance of the Subsequent Receivables is anticipated by AmeriCredit to
equal approximately $41,186,267.11. The Seller will convey the Subsequent
Receivables to the Trust on the related Subsequent Transfer Date. In connection
with each purchase of Subsequent Receivables the Trust will be required to pay
to the Seller a cash purchase price equal to the outstanding principal balance
of the Subsequent Receivables as of their respective Subsequent Cutoff Dates,
which price the Seller will pay to AmeriCredit. The purchase price will be
withdrawn from the Pre-Funding Account and paid to the Seller for payment to
AmeriCredit.
Any conveyance of Subsequent Receivables is subject to the following
conditions, among others: (i) each such Subsequent Receivable and/or Subsequent
Financed Vehicle must satisfy the eligibility criteria specified under "The
Receivables" in the Prospectus and the criteria set forth in clauses (i) through
(v) of the second preceding paragraph, in each case, as of the respective
Subsequent Cutoff Date of such Subsequent Receivable; (ii) the Insurer (so long
as no Insurer Default shall have occurred and be continuing) shall have approved
the transfer of such Subsequent Receivables to the Trust; (iii) neither
AmeriCredit nor the Seller will have selected such Subsequent Receivables in a
manner that either believes is adverse to the interests of the Insurer or the
Securityholders; (iv) AmeriCredit and the Seller will deliver certain opinions
of counsel with respect to the validity of the conveyance of such Subsequent
Receivables; and (v) the Rating Agencies shall confirm that the ratings on the
Securities have not been withdrawn or reduced as a result of the transfer of
such Subsequent Receivables to the Trust. Because the Subsequent Receivables may
be
S-20
<PAGE> 21
originated after the Initial Receivables, following their conveyance to the
Trust the characteristics of the Receivables, including the Subsequent
Receivables, may vary from those of the Initial Receivables.
In addition, the obligation of the Trust to purchase the Subsequent
Receivables on a Subsequent Transfer Date is subject to the condition that the
Receivables in the Trust, including the Subsequent Receivables to be conveyed to
the Trust on such Subsequent Transfer Date, meet the following criteria: (i) the
weighted average APR of the Receivables in the Trust is not less than 20.0%;
(ii) the weighted average remaining term of the Receivables on such Subsequent
Cutoff Date is not greater than 53 months; and (iii) not more than 30.0% of the
Receivables have Obligors whose mailing addresses are in Texas and California.
As to clauses (i) and (ii) in the immediately preceding sentence, such criteria
will be based on the characteristics of the Initial Receivables on the Initial
Cutoff Date and the Receivables, including the Subsequent Receivables, on the
related Subsequent Cutoff Date, and as to clause (iii) in the immediately
preceding sentence, such criteria will be based on the mailing addresses of the
Obligors of the Initial Receivables on the Initial Cutoff Date and the
Subsequent Receivables on the related Subsequent Cutoff Dates.
Except for the criteria described in the preceding paragraphs, there
are no required characteristics of the Subsequent Receivables. Therefore,
following the transfer of Subsequent Receivables to the Trust, the aggregate
characteristics of the entire pool of Receivables included in the Trust,
including the composition of the Receivables, the geographic distribution, the
distribution by remaining principal balance, the distribution by APR, the
distribution by remaining term and the distribution of the Receivables secured
by new and used vehicles, may vary from those of the Initial Receivables.
COMPOSITION
The statistical information presented in this Prospectus Supplement,
including the summary statistical information set forth below, is based on the
Initial Receivables as of July 15, 1996 (the "Initial Cutoff Date").
S-21
<PAGE> 22
The composition and distribution by APR and geographic concentration of
the Initial Receivables Pool as of the Initial Cutoff Date are set forth in the
following table:
COMPOSITION OF THE INITIAL RECEIVABLES AS OF THE INITIAL CUTOFF DATE
<TABLE>
<CAPTION>
Weighted
Aggregate Number of Average Average Weighted Weighted
Principal Receivables Principal APR of the Average Average
Balance(1) in Pool Balance Receivables(1) Remaining Term Original Term
- ---------- ----------- --------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Total: $133,813,732.89 Total: 12,420 $10,774.05 20.45% 50.31 52.23
</TABLE>
<TABLE>
<CAPTION>
Range of Range of
Principal Remaining Range of
New: $16,841,994.32 New: 1,176 Balances: Range of APR's: Terms: Original Terms:
--------- --------------- ------ ---------------
<S> <C> <C> <C> <C> <C>
$ 1,003.13 to 14.25% to 8 months to 12 months to
Used: $116,971,738.57 Used: 11,244 $29,898.72 33.00% 59 months 60 months
</TABLE>
- -------------
(1) Aggregate Principal balance includes some portion of accrued interest. As
a result, the Weighted Average APR of the Receivables may not be
equivalent to the Contracts' aggregate yield on the Aggregate Principal
Balance.
DISTRIBUTION OF THE INITIAL RECEIVABLES BY APR AS OF THE INITIAL CUTOFF DATE
<TABLE>
<CAPTION>
Aggregate Percent of
Principal Balance Aggregate Number of Percent of Number
APR Range(1) as of Cutoff Date Principal Balance(2) Receivables of Receivables(2)
- ----------------------- ----------------------- ----------------------- ----------------------- --------------------
<S> <C> <C> <C> <C>
14.250 to 14.999% $ 1,898,794.40 1.42% 122 0.98%
15.000 to 15.999% 3,078,527.39 2.30 204 1.64
16.000 to 16.999% 3,517,986.17 2.63 254 2.05
17.000 to 17.999% 9,644,302.20 7.21 738 5.94
18.000 to 18.999% 24,838,936.99 18.56 2,009 16.18
19.000 to 19.999% 12,552,073.77 9.38 1,054 8.49
20.000 to 20.999% 18,111,990.03 13.54 1,579 12.71
21.000 to 21.999% 25,158,314.88 18.80 2,505 20.17
22.000 to 22.999% 11,252,053.28 8.41 1,179 9.49
23.000 to 23.999% 9,530,242.00 7.12 1,001 8.06
24.000 to 24.999% 6,443,898.73 4.82 723 5.82
25.000 to 25.999% 4,984,672.30 3.73 630 5.07
26.000 to 26.999% 2,282,164.67 1.71 340 2.74
27.000 to 27.999% 207,769.07 0.16 28 0.23
28.000 to 28.999% 132,248.54 0.10 20 0.16
29.000 to 29.999% 119,769.79 0.09 21 0.17
30.000 to 30.999% 46,152.43 0.03 9 0.07
31.000 to 31.999% 0.00 0.00 0 0.00
32.000 to 33.000% 13,836.25 0.01 4 0.03
--------------- ------ ------ ------
TOTAL $133,813,732.89 100.00% 12,420 100.00%
</TABLE>
- -------------
(1) Aggregate Principal Balances include some portion of accrued interest.
Indicated APR's represent APR's on Principal balance net of such accrued
interest.
(2) Percentages may not add to 100% because of rounding.
S-22
<PAGE> 23
DISTRIBUTION OF THE INITIAL RECEIVABLES BY GEOGRAPHIC LOCATION OF OBLIGOR
<TABLE>
<CAPTION>
Aggregate Percent of
Principal Balance Aggregate Number of Percent of Number
State as of Cutoff Date Principal Balance(1) Receivables of Receivables(1)
- ----------------------- ----------------- -------------------- ----------- -----------------
<S> <C> <C> <C> <C>
Texas $ 21,714,904.48 16.23% 1,897 15.27%
California 14,413,831.60 10.77 1,294 10.42
Illinois 9,118,100.96 6.81 914 7.36
Virginia 8,606,101.48 6.43 824 6.63
Ohio 8,533,465.26 6.38 806 6.49
North Carolina 7,367,831.28 5.51 659 5.31
Georgia 6,985,695.54 5.22 600 4.83
Arizona 6,788,836.47 5.07 576 4.64
Florida 5,194,701.35 3.88 457 3.68
Michigan 3,725,693.34 2.78 338 2.72
Nevada 3,632,608.48 2.72 348 2.80
Washington 3,622,403.60 2.71 347 2.79
Missouri 3,441,796.79 2.57 349 2.81
Maryland 3,369,570.38 2.52 334 2.69
Tennessee 3,352,864.05 2.51 297 2.39
Colorado 3,298,633.12 2.47 362 2.92
Massachusetts 2,708,877.14 2.02 276 2.22
South Carolina 2,385,308.25 1.78 210 1.69
New Mexico 2,193,355.78 1.64 183 1.47
New Jersey 1,529,718.86 1.14 172 1.39
Indiana 1,520,400.31 1.14 136 1.10
Oklahoma 1,355,162.54 1.01 129 1.04
Utah 1,285,016.67 0.96 125 1.01
Kentucky 1,154,076.74 0.86 125 1.01
Kansas 1,105,449.21 0.83 112 0.90
Other (2) 5,409,329.21 4.04 550 4.43
--------------- ------ ------ ------
TOTAL $133,813,732.89 100.00% 12,420 100.00%
</TABLE>
- -----------
(1) Percentages may not add to 100% because of rounding.
(2) States with principal balances less than $1,000,000.
S-23
<PAGE> 24
All Receivables provide for the payment by the Obligor of a specific
total amount of payments, payable in substantially equal monthly installments on
each due date, which total represents the amount financed plus interest charges
on the amount financed for the term of the Receivable. The amount of interest
charges on the Receivables are determined either by the simple-interest method
("Simple Interest Receivables") or by adding-on to the amount financed, as of
the date of the Receivable, a precomputed interest charge ("Precomputed
Receivables").
In a Simple Interest Receivable, the amount of an Obligor's fixed level
installment payment that is allocated to interest is equal to the product of the
fixed rate of interest on the loan (typically the APR) multiplied by the period
of time (expressed as a fraction of a year) elapsed since the preceding payment
under the loan. The remaining amount of the Obligor's payment is allocated to
reduce the principal amount financed.
The Issuer will account for all Receivables, including Simple Interest
Receivables and Precomputed Receivables, as if such Receivables provided for
amortization of the loans pursuant to the simple interest method. Amounts
received upon prepayment in full of a Precomputed Receivable in excess of the
sum of the then outstanding principal balance of such Receivable and accrued
interest thereon (calculated pursuant to the simple interest method) will not be
deposited to the Collection Account but will be paid (net of any amounts
required to be rebated to the Obligor) to the Servicer as Supplemental Servicing
Fees.
YIELD AND PREPAYMENT CONSIDERATIONS
Interest paid on the Securities on each Distribution Date will be paid
at a rate equal to one-twelfth of the applicable annual rate. In the event of
prepayments on Receivables, Securityholders will nonetheless be entitled to
receive interest for the full month in which such prepayment occurs.
All the Receivables are prepayable at any time. If prepayments
are received on the Receivables, the actual weighted average life of the
Receivables may be shorter than the scheduled weighed average life (i.e., the
weighted average life assuming that payments will be made as scheduled, and that
no prepayments will be made). (For this purpose, the term "prepayments" also
includes liquidations due to default, as well as receipt of proceeds form credit
life, credit disability, and casualty insurance policies.) Weighted average life
means the average amount of time during which each dollar of principal on a
Receivable is outstanding.
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 may not sell or transfer a Financed Vehicle without the consent of the
Servicer. The Servicer believes that the actual rate of prepayments will result
in a substantially shorter weighted average life than the scheduled weighted
average life of the Receivables. Any reinvestment risks resulting form a faster
or slower incidence of prepayment of Receivables will be borne by the
Securityholders.
The rate of payment of principal of each Class of Notes and in
respect of the Certificate Balance will depend on the rate of payment (including
prepayments) of the principal balance of the Receivables. As a result, final
payment of any Class of Notes could occur significantly earlier than the Final
Scheduled Distribution Date for such Class of Notes. The final distribution in
respect of principal of the Certificates also could occur prior to the Final
Scheduled Distribution Date for the Certificates. Reinvestment risk associated
with early payment of the Notes and the Certificates will be borne exclusively
by the Noteholders and the Certificateholders, respectively.
Prepayments on automobile receivables can be measured relative
to a prepayment standard or model. The model used in this Prospectus Supplement,
the Absolute Prepayment Model ("ABS"), represents an assumed rate of prepayment
each month relative to the original number of receivables in a pool of
receivables. ABS further assumes that all the receivables are the same size and
amortize at the same rate and that each receivable in each month of its life
will either be paid as scheduled or be prepaid in full. For example, in a pool
of receivables originally containing 10,000 receivables, a 1% ABS rate means
that 100 receivables prepay each month. ABS does not purport to be an historical
description of prepayment experience or a prediction of the anticipated rate of
prepayment of any pool of receivables, including the Receivables.
S-24
<PAGE> 25
The table captioned "Percent of Initial Note Principal Balance or
Initial Certificate Balance at Various ABS Percentages" (the "ABS Table") has
been prepared on the basis of the following assumptions: (i) the Trust includes
three pools of Receivables with the characteristics set forth in the following
table; (ii) the Receivables prepay in full at the specified constant percentage
of ABS monthly, with no defaults, losses or repurchases; (iii) each scheduled
monthly payment on the Receivables is made on the last day of each month and
each month has 30 days; (iv) the initial principal amount of each Class of Notes
and the initial Certificate Balance are as set forth on the cover page hereof;
(v) interest accrues during each Interest Period at the applicable Interest Rate
and Certificate Rate; (vi) LIBOR remains constant at ____% per annum; (vii)
payments on the Notes and distributions on the Certificates are made on the 12th
day of each month whether or not a Business Day; (viii) the Securities are
purchased on the Closing Date; (ix) the scheduled monthly payment for each
Receivables has been calculated on the basis of the assumed characteristics in
the following table such that each Receivable will amortize in amounts
sufficient to repay the principal balance of such Receivable by its indicated
remaining term to maturity; (x) the first due date for each Receivable is in the
month after the assumed cutoff date for such Receivable as set forth in the
following table; (xi) the entire Pre-Funded Amount is used to purchase
Subsequent Receivables; (xii) the Servicer does exercise its option to purchase
the Receivables and (xiii) Accelerated Principal Amounts are paid on each
Distribution Date until the later of the first Distribution Date on which the
Pro Forma Security Balance reaches the Required Pro Forma Security Balance and
the Class A-1 Notes are paid in full.
<TABLE>
<CAPTION>
Original Term Remaining Term
Aggregate Assumed Cutoff to Maturity to Maturity
Pool Principal Balance APR Date (in Months) (in Months)
---- ----------------- --- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
1 $ 66,906,866.45 20.45% June 30, 1996 52 50
2 $ 66,906,866.44 20.45% July 31, 1996 52 50
3 $ 20,593,133.56 20.45% August 31, 1996 52 52
4 $ 20,593,133.55 20.45% September 30, 1996 52 52
Total $175,000,000.00
===============
</TABLE>
The ABS Table indicates, based on the assumptions set forth above, the
percentages of the initial principal amount of each Class of Notes and of the
Certificate Balance of the Certificates that would be outstanding after each of
the Distributions Dates shown at various percentages of ABS and the
corresponding weighted average lives of such Securities. 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, that all of the Receivables will prepay at the same
level of ABS or that LIBOR will remain constant at the level assumed or at any
other level. Moreover, the diverse terms of Receivables 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.
S-25
<PAGE> 26
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE OR
INITIAL CERTIFICATE BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
Class A-1 Notes Class A-2 Notes
------------------------------------------------ ---------------------------------------------
Distribution Date 0.0% 1.0% 1.7% 2.5% 0.0% 1.0% 1.7% 2.5%
- ----------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date......... 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
9/12/96.............. 89.94 85.41 82.12 78.25 100.00 100.00 100.00 100.00
10/12/96............. 82.41 74.52 68.82 62.10 100.00 100.00 100.00 100.00
11/12/96............. 73.67 62.08 53.72 43.89 100.00 100.00 100.00 100.00
12/12/96............. 64.83 49.69 38.77 25.96 100.00 100.00 100.00 100.00
1/12/97.............. 55.96 37.41 24.05 8.37 100.00 100.00 100.00 100.00
2/12/97.............. 47.03 25.22 9.51 0.00 100.00 100.00 100.00 97.17
3/12/97.............. 37.94 13.03 0.00 0.00 100.00 100.00 99.51 89.44
4/12/97.............. 28.89 1.01 0.00 0.00 100.00 100.00 93.37 81.82
5/12/97.............. 19.74 0.00 0.00 0.00 100.00 95.74 87.29 74.33
6/12/97.............. 10.55 0.00 0.00 0.00 100.00 90.90 81.28 66.96
7/12/97.............. 1.28 0.00 0.00 0.00 100.00 86.07 75.34 59.72
8/12/97.............. 0.00 0.00 0.00 0.00 97.43 81.26 69.47 52.61
9/12/97.............. 0.00 0.00 0.00 0.00 94.03 76.46 63.68 45.64
10/12/97............. 0.00 0.00 0.00 0.00 90.58 71.69 57.95 38.81
11/12/97............. 0.00 0.00 0.00 0.00 87.07 66.93 52.31 32.12
12/12/97............. 0.00 0.00 0.00 0.00 83.49 62.20 46.74 25.58
1/12/98.............. 0.00 0.00 0.00 0.00 79.86 57.49 41.26 19.20
2/12/98.............. 0.00 0.00 0.00 0.00 76.16 52.81 35.86 12.96
3/12/98.............. 0.00 0.00 0.00 0.00 72.41 48.14 30.55 6.90
4/12/98.............. 0.00 0.00 0.00 0.00 68.58 43.51 25.33 0.99
5/12/98.............. 0.00 0.00 0.00 0.00 64.69 38.90 20.20 0.00
6/12/98.............. 0.00 0.00 0.00 0.00 60.74 34.31 15.17 0.00
7/12/98.............. 0.00 0.00 0.00 0.00 56.72 29.76 10.23 0.00
8/12/98.............. 0.00 0.00 0.00 0.00 52.63 25.23 5.40 0.00
9/12/98.............. 0.00 0.00 0.00 0.00 48.47 20.74 0.66 0.00
10/12/98............. 0.00 0.00 0.00 0.00 44.24 16.28 0.00 0.00
11/12/98............. 0.00 0.00 0.00 0.00 39.94 11.85 0.00 0.00
12/12/98............. 0.00 0.00 0.00 0.00 35.56 7.46 0.00 0.00
1/12/99.............. 0.00 0.00 0.00 0.00 31.11 3.11 0.00 0.00
2/12/99.............. 0.00 0.00 0.00 0.00 26.58 0.00 0.00 0.00
3/12/99.............. 0.00 0.00 0.00 0.00 21.98 0.00 0.00 0.00
4/12/99.............. 0.00 0.00 0.00 0.00 17.30 0.00 0.00 0.00
5/12/99.............. 0.00 0.00 0.00 0.00 12.54 0.00 0.00 0.00
6/12/99.............. 0.00 0.00 0.00 0.00 7.69 0.00 0.00 0.00
7/12/99.............. 0.00 0.00 0.00 0.00 2.77 0.00 0.00 0.00
8/12/99.............. 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Weighted Average
Life (years)(1)...... 0.52 0.38 0.32 0.27 2.07 1.61 1.35 1.10
</TABLE>
- ---------------
(1) The weighted average life of a Security is determined by (i)
multiplying the amount of each principal payment on a Security by the
number of years from the date of the issuance of the Security to the
related Distribution Date, (ii) adding the results and (iii) dividing
the sum by the related initial principal amount of the Security.
S-26
<PAGE> 27
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE OR
INITIAL CERTIFICATE BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
Class A-3 Notes Certificates
------------------------------------------------ --------------------------------------------
Distribution Date 0.0% 1.0% 1.7% 2.5% 0.0% 1.0% 1.7% 2.5%
- ----------------- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date......... 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
9/12/96 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
10/12/96 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
11/12/96 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
12/12/96 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
1/12/97 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
2/12/97 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
3/12/97 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
4/12/97 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
5/12/97 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
6/12/97 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
7/12/97 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
8/12/97 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
9/12/97 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
10/12/97 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
11/12/97 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
12/12/97 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
1/12/98 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
2/12/98 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
3/12/98 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
4/12/98 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
5/12/98 100.00 100.00 100.00 90.71 100.00 100.00 100.00 100.00
6/12/98 100.00 100.00 100.00 79.83 100.00 100.00 100.00 100.00
7/12/98 100.00 100.00 100.00 69.30 100.00 100.00 100.00 100.00
8/12/98 100.00 100.00 100.00 59.12 100.00 100.00 100.00 100.00
9/12/98 100.00 100.00 100.00 49.32 100.00 100.00 100.00 100.00
10/12/98 100.00 100.00 92.25 39.89 100.00 100.00 100.00 100.00
11/12/98 100.00 100.00 83.41 30.86 100.00 100.00 100.00 100.00
12/12/98 100.00 100.00 74.79 22.22 100.00 100.00 100.00 100.00
1/12/99 100.00 100.00 66.41 14.00 100.00 100.00 100.00 100.00
2/12/99 100.00 97.63 58.25 6.19 100.00 100.00 100.00 100.00
3/12/99 100.00 89.25 50.34 0.00 100.00 100.00 100.00 0.00
4/12/99 100.00 80.96 42.67 0.00 100.00 100.00 100.00 0.00
5/12/99 100.00 72.75 35.26 0.00 100.00 100.00 100.00 0.00
6/12/99 100.00 64.62 28.11 0.00 100.00 100.00 100.00 0.00
7/12/99 100.00 56.58 21.22 0.00 100.00 100.00 100.00 0.00
8/12/99 95.62 48.63 14.62 0.00 100.00 100.00 100.00 0.00
9/12/99 85.64 40.78 8.29 0.00 100.00 100.00 100.00 0.00
10/12/99 75.50 33.03 2.26 0.00 100.00 100.00 100.00 0.00
11/12/99 65.19 25.38 0.00 0.00 100.00 100.00 0.00 0.00
12/12/99 54.70 17.83 0.00 0.00 100.00 100.00 0.00 0.00
1/12/00 44.03 10.40 0.00 0.00 100.00 100.00 0.00 0.00
2/12/00 33.18 3.07 0.00 0.00 100.00 100.00 0.00 0.00
3/12/00 22.15 0.00 0.00 0.00 100.00 72.41 0.00 0.00
4/12/00 10.92 0.00 0.00 0.00 100.00 0.00 0.00 0.00
5/12/00 0.00 0.00 0.00 0.00 96.71 0.00 0.00 0.00
6/12/00 0.00 0.00 0.00 0.00 19.24 0.00 0.00 0.00
7/12/00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Weighted Average
Life (years)(1)..... 3.41 3.04 2.66 2.14 3.86 3.65 3.26 2.59
</TABLE>
- ----------------
(1) The weighted average life of a Security is determined by (i)
multiplying the amount of each principal payment on a Security by the
number of years from the date of the issuance of the Security to the
related Distribution Date, (ii) adding the results and (iii) dividing
the sum by the related initial principal amount of the Security.
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<PAGE> 28
DELINQUENCY AND LOAN LOSS INFORMATION
The following tables set forth information relating to AmeriCredit's
delinquency and loan loss experience for each period indicated with respect to
all Receivables it has purchased and serviced. This information includes the
experience with respect to all Receivables in AmeriCredit's portfolio of
Receivables serviced during each such period, including Receivables which do not
meet the criteria for selection as a Receivable.
DELINQUENCY EXPERIENCE
Financed Vehicles which have been repossessed
but not yet liquidated and bankrupt accounts
which have not yet been charged off are both
included as delinquent accounts in the table below.
<TABLE>
<CAPTION>
At March 31, At June 30,
------------ -----------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
Number Number Number Number Number
of of of of of
Contracts Amount Contracts Amount Contracts Amount Contracts Amount Contracts Amount
--------- ------ --------- ------ --------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio at end of
period(1) 50,641 $422,577 23,908 $184,935 30,941 $240,491 9,375 $67,636 2,321 $15,964
Period of Delinquency(2)
31-60 days(3) 2,552 20,434 840 6,322 1,276 9,692 235 1,600 50 328
61-90 days 937 7,231 229 1,680 452 3,391 87 560 12 84
91 days or more 1,585 12,255 365 2,454 528 3,271 110 709 6 53
------ -------- ------ -------- ------ -------- ----- ------- ----- -------
Total Delinquencies(4) 5,074 $ 39,920 1,434 $ 10,456 2,256 $ 16,354 432 $ 2,869 68 $ 465
Total Delinquencies as a
Percent of the Portfolio 10.0% 9.5% 6.0% 5.7% 7.3% 6.8% 4.6% 4.2% 2.9% 2.9%
</TABLE>
- -------------
(1) All amounts and percentages are based on the principal amount scheduled to
be paid on each Contract. All dollar amounts are in thousands of dollars.
(2) AmeriCredit considers a loan delinquent when an Obligor fails to make a
contractual payment by the due date. The period of delinquency is based on
the number of days payments are contractually past due.
(3) Amounts shown do not include loans which are less than 31 days delinquent.
(4) Financed Vehicles which have been repossessed but not yet liquidated are
considered delinquent accounts in the table above.
S-28
<PAGE> 29
CREDIT LOSS EXPERIENCE
<TABLE>
<CAPTION>
Nine Months Ended
March 31, Fiscal Year Ended June 30,
---------------------- ----------------------------------
1996 1995 1995 1994 1993
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Period-End Principal Outstanding(1)......... $422,577 $184,935 $240,491 $67,636 $15,964
Average Month-End Amount Outstanding
During the Period(1)...................... $318,724 $117,638 $141,526 $37,507 $ 7,645
Net Charge-Offs(2).......................... $ 13,458 $ 4,009 $ 6,409 $ 1,432 $ 49
Net Charge-Offs as a Percentage of Period-End
Principal Outstanding(3).................. 4.3% 2.9% 2.7% 2.1% 0.3%
Net Charge-Offs as a Percent of Average
Month-End Amount Outstanding(3)........... 5.6% 4.5% 4.5% 3.8% 0.7%
</TABLE>
- -------------
(1) All amounts are based on the principal amount scheduled to be paid on each
Contract. All dollar amounts are in thousands of dollars.
(2) Net Charge-Offs equal Gross Charge-Offs minus Recoveries. Gross Charge-Offs
do not include unearned finance charges and other fees. Recoveries include
repossession proceeds received from the sale of repossessed Financed
Vehicles net of repossession expenses, refunds of unearned premiums from
credit life and credit accident and health insurance and extended service
contract costs obtained and financed in connection with the vehicle
financing and recoveries from Obligors on deficiency balances.
(3) Percentages were annualized for the nine months ended March 31, 1996 and
1995, and are not necessarily indicative of results for the year.
S-29
<PAGE> 30
THE INSURER
The following information has been obtained from Financial Security Assurance
Inc. (hereinafter in this section, "Financial Security") and has not been
verified by the Seller or the Underwriters. No representations or warranty is
made by the Seller or the Underwriters with respect thereto.
GENERAL
Financial Security is a monoline insurance company incorporated in 1984 under
the laws of the State of New York. Financial Security is licensed to engage in
the financial guaranty insurance business in all 50 states, the District of
Columbia and Puerto Rico.
Financial Security and its subsidiaries are engaged in the business of writing
financial guaranty insurance, principally in respect of securities offered in
domestic and foreign markets. In general, financial guaranty insurance consists
of the issuance of a guaranty of scheduled payments of an issuer's securities,
thereby enhancing the credit rating of those securities, in consideration for
the payment of a premium to the insurer. Financial Security and its subsidiaries
principally insure asset-backed, collateralized and municipal securities.
Asset-backed securities are generally supported by residential mortgage loans,
consumer or trade receivables, securities or other assets having an
ascertainable cash flow or market value. Collateralized securities include
public utility first mortgage bonds and sale/leaseback obligation bonds.
Municipal securities consist largely of general obligation bonds, special
revenue bonds and other special obligations of state and local governments.
Financial Security insures both newly issued securities sold in the primary
market and outstanding securities sold in the secondary market that satisfy
Financial Security's underwriting criteria.
Financial Security is a wholly-owned subsidiary of Financial Security Assurance
Holdings Ltd. ("Holdings"), a New York Stock Exchange listed company. Major
shareholders of Holdings include Fund American Enterprises Holdings, Inc., U S
WEST Capital Corporation and The Tokio Marine and Fire Insurance Co., Ltd. No
shareholder of Holdings is obligated to pay any debt of Financial Security or
any claim under any insurance policy issued by Financial Security or to make any
additional contribution to the capital of Financial Security.
The principal executive offices of Financial Security are located at 350 Park
Avenue, New York, New York 10022, and its telephone number at that location is
(212) 826-0100.
REINSURANCE
Pursuant to an intercompany agreement, liabilities on financial guaranty
insurance written by Financial Security or any of its subsidiaries are reinsured
among such companies on an agreed-upon percentage substantially proportional to
their respective capital, surplus and reserves, subject to applicable statutory
risk limitations. In addition, Financial Security reinsures a portion of its
liabilities under certain of its financial guaranty insurance policies with
other reinsurers under various quota share treaties and on a
transaction-by-transaction basis. Such reinsurance is utilized by Financial
Security as a risk management device and to comply with certain statutory and
rating agency requirements; it does not alter or limit Financial Security's
obligations under any financial guaranty insurance policy.
RATING OF CLAIMS-PAYING ABILITY
Financial Security's claims-paying ability is rated Aaa by Moody's and AAA by
S&P, Nippon Investors Service Inc. and Standard & Poor's (Australia) Pty. Ltd.
Such ratings reflect only the views of the respective rating agencies, are not
recommendations to buy, sell or hold securities and are subject to revision or
withdrawal at any time by such rating agencies. See "Risk Factors -- Ratings on
Securities" herein.
S-30
<PAGE> 31
CAPITALIZATION
The following table sets forth the capitalization of Financial Security and its
wholly-owned subsidiaries on the basis of generally accepted accounting
principles as of March 31, 1996 (in thousands):
<TABLE>
<CAPTION>
March 31, 1996
(unaudited)
--------------
<S> <C>
Unearned Premium Reserve
(net of prepaid reinsurance premiums) ....................... $ 340,226
Shareholder's Equity:
Common Stock ................................................ 15,000
Additional Paid-In Capital .................................. 681,470
Unrealized Loss on Investments (net of deferred income taxes) (737)
Accumulated Earnings ........................................ 83,444
-----------
Total Shareholder's Equity .................................... 779,177
Total Unearned Premium Reserve -----------
and Shareholder's Equity ...................................... $ 1,119,403
===========
</TABLE>
For further information concerning Financial Security, see the Consolidated
Financial Statements of Financial Security and Subsidiaries, and the notes
thereto, incorporated by reference herein. The New York State Insurance
Department recognizes only statutory accounting practices for determining and
reporting the financial condition and results of operations of an insurance
company, for determining its solvency under the New York Insurance Law, and for
determining whether its financial condition warrants the payment of a dividend
to its stockholders. No consideration is given by the New York State Insurance
Department to financial statements prepared in accordance with generally
accepted accounting principles in making such determinations. Copies of the
statutory quarterly and annual statements filed with the State of New York
Insurance Department by Financial Security are available upon request to the
State of New York Insurance Department.
INSURANCE REGULATION
Financial Security is licensed and subject to regulation as a financial
guaranty insurance corporation under the laws of the State of New York, its
state of domicile. In addition, Financial Security and its insurance
subsidiaries are subject to regulation by insurance laws of the various other
jurisdictions in which they are licensed to do business. As a financial guaranty
insurance corporation licensed to do business in the State of New York,
Financial Security is subject to Article 69 of the New York Insurance Law which,
among other things, limits the business of each such insurer to financial
guaranty insurance and related lines, requires that each such insurer maintain a
minimum surplus to policyholders, establishes contingency, loss and unearned
premium reserve requirements for each such insurer, and limits the size of
individual transactions ("single risks") and the volume of transactions
("aggregate risks") that may be underwritten by each such insurer. Other
provisions of the New York Insurance Law, applicable to non-life insurance
companies such as Financial Security, regulate, among other things, permitted
investments, payment of dividends, transactions with affiliates, mergers,
consolidations, acquisitions or sales of assets and incurrence of liabilities
for borrowings.
The Policies are not covered by the Property/Casualty Insurance Security Fund
specified in Article 76 of the New York Insurance Law.
S-31
<PAGE> 32
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. 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. The
following summary supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of the Notes of
any given series and the related Indenture set forth in the accompanying
Prospectus, to which description reference is hereby made.
The Notes will be offered for purchase in denominations of $1,000 and integral
multiples thereof in book-entry form only. Persons acquiring beneficial
interests in the Notes will hold their interests through DTC in the United
States or Cedel or Euroclear in Europe. See "Description of the Securities --
Book-Entry Registration" in the Prospectus and Annex I hereto.
PAYMENTS OF INTEREST
Interest on the principal amount of each Class of Notes will accrue at the
applicable Interest Rate and will be payable to the Noteholders of such Class
monthly on each Distribution Date, commencing September 12, 1996. Interest will
accrue from and including the most recent Distribution Date on which interest
has been paid (or, in the case of the first Distribution Date, from and
including the Closing Date) to but excluding the following Distribution Date
(each, an "Interest Period"). Interest on the Class A-1 Notes and the Class A-2
Notes will be calculated on the basis of a 360-day year and the actual number of
days elapsed in the related Interest Period. Interest on the Class A-3 Notes
will be calculated on the basis of a 360-day year consisting of twelve 30-day
months. Interest accrued as of any Distribution Date but not paid on such
Distribution Date will be due on the next Distribution Date, together with, to
the extent permitted by law, interest on such amount at the applicable Interest
Rate. Interest payments on the Notes will be made from the Note Distribution
Amount (as defined herein) after payment of accrued and unpaid trustees' fees
and other administrative fees of the Trust and payment of the Servicing Fee. See
"Description of the Purchase Agreements and the Trust Documents --
Distributions" herein.
Interest on the Class A-2 Notes will accrue during each Interest Period at a
rate per annum equal to the sum of LIBOR plus ____%, subject to a maximum rate
equal to 12% per annum. In the event that the interest rate for the Class A-2
Notes for any Interest Period calculated without giving effect to the maximum
rate would exceed the interest rate for such Interest Period after giving effect
to the maximum rate, the amount of such excess will not be due as additional
interest to the Class A-2 Noteholders on the related Distribution Date, nor will
it be carried forward and payable as additional interest to the Class A-2
Noteholders on any subsequent Distribution Date. In addition to the foregoing,
any accrued and unpaid interest on the Class A-1 Notes will be due and payable
on the Special A-1 Distribution Date.
DETERMINATION OF LIBOR
Pursuant to the Indenture, the Indenture Trustee will determine LIBOR for
purposes of calculating the Interest Rate for the Class A-2 Notes for each given
Interest Period on the second business day prior to the commencement of each
Interest Period (each, a "LIBOR Determination Date"). For purposes of
calculating LIBOR, a business day means a Business Day and a day on which
banking institutions in the City of London, England are not required or
authorized by law to be closed.
"LIBOR" means, with respect to any Interest Period, the London interbank
offered rate for deposits in U.S. dollars having a maturity of one month
commencing on the related LIBOR Determination Date (the "Index Maturity") which
appears on Telerate Page 3750 as of 11:00 a.m., London time, on such LIBOR
Determination Date. If such rate does not appear on the Telerate Page 3750, the
rate for that day will be determined on the basis of the rates at which deposits
in U.S. dollars, having the Index Maturity and in a principal amount of not less
than U.S. $1,000,000, are
S-32
<PAGE> 33
offered at approximately 11:00 a.m., London time, on such LIBOR Determination
Date to prime banks in the London interbank market by the Reference Banks. The
Indenture Trustee will request the principal London office of each of such
Reference Banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate for that day will be the arithmetic mean,
rounded upward, if necessary, to the nearest 1/100,000 of 1% (0.0000001), with
five one-millionths of a percentage point rounded upward, of all such
quotations. If fewer than two such quotations are provided, the rate for that
day will be the arithmetic mean, rounded upward, if necessary, to the nearest
1/100,000 of 1% (0.0000001), with five one-millionths of a percentage point
rounded upward, of the offered per annum rates that one or more leading banks in
New York City, selected by the Indenture Trustee, are quoting as of
approximately 11:00 a.m., New York City time, on such LIBOR Determination Date
to leading European banks for United States dollar deposits for the Index
Maturity; provided that if the banks selected as aforesaid are not quoting as
mentioned in this sentence, LIBOR in effect for the applicable Interest Period
will be LIBOR in effect for the previous Interest Period.
"Telerate Page 3750" means the display page so designated on the Dow Jones
Telerate Service (or such other page as may replace that page on that service
for the purpose of displaying comparable rates or prices).
"Reference Banks" means four major banks in the London interbank market
selected by the Indenture Trustee.
PAYMENTS OF PRINCIPAL
Principal payments will be made to the Noteholders on each Distribution Date in
an amount equal to the Noteholders' Principal Distributable Amount and the
Noteholders' Accelerated Principal Amount, if any, for the calendar month (the
"Monthly Period") preceding such Distribution Date. The Noteholders' Principal
Distributable Amount will equal the sum of (x) the Noteholders' Percentage of
the Principal Distributable Amount and (y) any unpaid portion of the amount
described in clause (x) with respect to a prior Distribution Date. The
"Principal Distributable Amount" with respect to any Distribution Date will be
an amount equal to the sum of the following amounts with respect to the related
Monthly Period, computed in accordance with the simple interest method: (i)
collections on Receivables (other than Liquidated and Purchased Receivables)
allocable to principal, including full and partial principal prepayments, (ii)
the principal balance of all Receivables (other than Purchased Receivables) that
became Liquidated Receivables during the related Monthly Period, (iii) (A) the
portion of the Purchase Amount allocable to principal of all Receivables that
became Purchased Receivables as of the immediately preceding Record Date and (B)
at the option of the Insurer, the outstanding principal balance of those
Receivables that were required to be repurchased by the Seller and/or
AmeriCredit during such Monthly Period but were not so repurchased and (iv) the
aggregate amount of Cram Down Losses during such Monthly Period. In addition to
the foregoing, any remaining outstanding principal on the Class A-1 Notes will
be due and payable on the Special A-1 Distribution Date. Principal payments on
the Notes will be made from the Distribution Amount after payment of accrued and
unpaid trustees' fees and other administrative fees of the Trust, payment of the
Servicing Fee and after distribution of the Noteholders' Interest Distributable
Amount. See "Description of the Purchase Agreements and the Trust Documents --
Distributions" herein.
The Noteholders' Percentage will be 100% until the Class A-3 Notes have been
paid in full and thereafter will be zero. Principal payments on the Notes will
be applied on each Distribution Date sequentially, to the Class A-1 Notes, the
Class A-2 Notes and the Class A-3 Notes, in that order, until the respective
principal amount of each such Class of Notes has been paid in full so that no
principal will be paid on a Class of Notes until the principal of all Classes of
Notes having a lower numerical Class designation has been paid in full. In
addition, the outstanding principal amount of the Notes of any Class, to the
extent not previously paid, will be payable on the respective Final Scheduled
Distribution Date for such Class. The actual date on which the aggregate
outstanding principal amount of any Class of Notes is paid may be earlier than
the Final Scheduled Distribution Date for such Class, depending on a variety of
factors.
S-33
<PAGE> 34
MANDATORY REDEMPTION
Each Class of Notes will be redeemed in part on the Mandatory Redemption Date
in the event that any portion of the Pre-Funded Amount remains on deposit in the
Pre-Funding Account at the end of the Funding Period. The aggregate principal
amount of each Class of Notes to be redeemed will be an amount equal to such
Class's pro rata share (based on the respective current principal amount of each
Class of Notes and the Certificate Balance) of the remaining Pre-Funded Amount
on such date (such Class's "Note Prepayment Amount").
OPTIONAL REDEMPTION
The Class A-3 Notes, to the extent still outstanding, may be redeemed 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 Pool Balance has declined to 10% or less of the Original Pool Balance,
as described in the accompanying Prospectus under "Description of the Trust
Agreements -- Termination." Such redemption will effect early retirement of the
Notes of such Class. The redemption price will be equal to the unpaid principal
amount of the Notes of such Class, plus accrued and unpaid interest thereon (the
"Redemption Price").
EVENTS OF DEFAULT
Unless an Insurer Default shall have occurred and be continuing, "Events of
Default" under the Indenture will consist of those events defined in the
Insurance Agreement as Insurance Agreement Indenture Cross Defaults, and will
constitute an Event of Default under the Indenture only if the Insurer shall
have delivered to the Indenture Trustee, and not rescinded, a written notice
specifying that any such Insurance Agreement Indenture Cross Default constitutes
an Event of Default under the Indenture. "Insurance Agreement Indenture Cross
Defaults" consist of: (i) a demand for payment being made under either of the
Policies; (ii) certain events of bankruptcy, insolvency, receivership or
liquidation of the Trust; (iii) the Trust becoming taxable as an association (or
publicly traded partnership) taxable as a corporation for federal or state
income tax purposes; (iv) on any Distribution Date, the sum of the Available
Funds with respect to such Distribution Date plus the amount (if any) available
from certain collateral accounts maintained for the benefit of the Insurer being
less than the sum of the amounts described in clauses 1-7 under "Description of
the Purchase Agreements and the Trust Documents -- Distributions" herein; and
(v) any failure to observe or perform in any material respect any other
covenants or agreements in the Indenture, or any representation or warranty of
the Trust made in the Indenture or in any certificate or other writing delivered
pursuant thereto or in connection therewith proving to have been incorrect in
any material respect when made, and such failure continuing or not being cured,
or the circumstance or condition in respect of which such misrepresentation or
warranty was incorrect not having been eliminated or otherwise cured, for 30
days after the giving of written notice of such failure or incorrect
representation or warranty to the Trust and the Indenture Trustee by the
Insurer.
Upon the occurrence of an Event of Default, so long as an Insurer Default shall
not have occurred and be continuing, the Insurer will have the right, but not
the obligation, to cause the Trust Collateral Agent to liquidate the Trust
Property in whole or in part, on any date or dates following the acceleration of
the Notes due to such Event of Default as the Insurer, in its sole discretion,
shall elect, and to deliver the proceeds of such liquidation to the Indenture
Trustee for distribution in accordance with the terms of the Indenture. The
Insurer may not, however, cause the Trust Collateral Agent to liquidate the
Trust Property in whole or in part if the proceeds of such liquidation would not
be sufficient to pay all outstanding principal of and accrued interest on the
Notes, unless such Event of Default arose from a claim being made on the Note
Policy or from certain events of bankruptcy, insolvency, receivership or
liquidation of the Trust. Following the occurrence of any Event of Default, the
Indenture Trustee and the Owner Trustee will continue to submit claims under the
Policies for any shortfalls in the Scheduled Payments on the Notes and the
Guaranteed Distributions on the Certificates. Following any Event of Default
under the Indenture, the Insurer may elect to pay all or any portion of the
outstanding amount of the Notes, plus accrued interest thereon. See "The
Policies" herein.
S-34
<PAGE> 35
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. The
following summary describes certain terms of the Certificates and the Trust
Agreement. The summary does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all the provisions of the
Certificates and the Trust Agreement. The following summary supplements, and to
the extent inconsistent therewith replaces, the description of the general terms
and provisions of the Certificates of any given series and the related Trust
Agreement set forth in the Prospectus, to which description reference is hereby
made.
The Certificates will be offered for purchase in denominations of $1,000 and
integral multiples thereof in book-entry form only. Persons acquiring beneficial
interests in the Certificates will hold their interest through DTC. See
"Description of the Securities -- Book-Entry Registration" in the Prospectus.
DISTRIBUTIONS OF INTEREST
Interest on the Certificate Balance immediately prior to a Distribution Date
will accrue at the Certificate Rate for the related Interest Period, and will be
distributable to Certificateholders of record on each Distribution Date,
commencing September 12, 1996. Interest for each Interest Period will be
calculated on the basis of a 360-day year consisting 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 together with, to
the extent permitted by law, interest on such amount at the Certificate Rate.
Interest distributions with respect to the Certificates will be made from the
Distribution Amount after the payment of accrued and unpaid trustees' fees and
other administrative fees of the Trust, the payment of the Servicing Fee and the
distribution of the Noteholders' Distributable Amount. See "Description of the
Purchase Agreements and the Trust Documents -- Distributions" herein.
DISTRIBUTIONS OF PRINCIPAL
Certificateholders will be entitled to distributions of principal on each
Distribution Date on or after the date on which the Class A-3 Notes have been
paid in full in an amount equal to the Certificateholders' Percentage of the
Principal Distributable Amount, as defined under "Description of the Notes --
Payments of Principal" and the Certificateholders' Accelerated Principal Amount,
if any; provided, however, that the amount distributable as principal on the
Distribution Date on which the Class A-3 Notes are paid in full will be reduced
by the amount necessary to pay the Class A-3 Notes in full. Distributions with
respect to principal payments will be made from Available Funds after payment of
accrued and unpaid trustees' fees and other administrative fees of the Trust,
payment of the Servicing Fee and the distribution of the Noteholders'
Distributable Amount and the Certificateholders' Interest Distributable Amount.
See "Description of the Purchase Agreements and the Trust Documents --
Distributions" herein.
MANDATORY PREPAYMENT
The Certificates will be prepaid in part on the Mandatory Redemption Date in
the event that any portion of the Pre-Funded Amount remains on deposit in the
Pre-Funding Account as of the end of the Funding Period. The aggregate principal
amount of the Certificates to be prepaid will be an amount equal to the
Certificateholders' pro rata share (based on the respective current principal
amount of each Class of Notes and the Certificate Balance) of the remaining
Pre-Funded Amount (the "Certificate Prepayment Amount").
Upon the occurrence of an Event of Default under the Indenture (so long as an
Insurer Default shall not have occurred and be continuing), the Insurer will
have the right, but not the obligation, to cause the liquidation of the Trust
Property, in whole or in part, on any date or dates as the Insurer, in its sole
discretion, shall elect, as described
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<PAGE> 36
under "Description of the Notes -- Events of Default." Any such liquidation, in
whole or in part, may cause a full or partial prepayment of the Certificates.
OPTIONAL PREPAYMENT
If the Servicer exercises its option to purchase the Receivables when the Pool
Balance declines to 10% or less of the Original Pool Balance, Certificateholders
will receive an amount in respect of the Certificates equal to the outstanding
Certificate Balance together with accrued interest at the Certificate Rate,
which distribution will effect early retirement of the Certificates. See
"Description of the Securities -- Termination" in the Prospectus.
TRANSFERS OF CERTIFICATES
Certificateholders, other than individuals or entities holding Certificates
through a broker who reports sales of securities on Form 1099-B, are required
under the Trust Agreement to notify the Owner Trustee of any transfer of their
Certificates in a taxable sale or exchange within 30 days of such transfer.
S-36
<PAGE> 37
DESCRIPTION OF THE PURCHASE AGREEMENTS AND THE TRUST DOCUMENTS
The following summary describes certain terms of the Purchase Agreement and any
Subsequent Purchase Agreement (together, the "Purchase Agreements"), and the
Sale and Servicing Agreement, any Subsequent Transfer Agreement and the Trust
Agreement (together, the "Trust Documents"). Forms of the Purchase Agreements
and the Trust Documents have been filed as exhibits to the Registration
Statement. 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 Purchase
Agreements and the Trust Documents. The following summary supplements, and to
the extent inconsistent therewith replaces, the description of the general terms
and provisions of the Trust Agreement (as such term is used in the Prospectus)
set forth in the Prospectus, to which description reference is hereby made.
SALE AND ASSIGNMENT OF RECEIVABLES
On or prior to the Closing Date, or, with respect to Subsequent Receivables,
the related Subsequent Transfer Date, AmeriCredit will enter into a Purchase
Agreement with the Seller pursuant to which AmeriCredit will, on or prior to
such Closing Date, or, with respect to Subsequent Receivables, the related
Subsequent Transfer Date, sell and assign to the Seller, without recourse, its
entire interest in and to the related Receivables, including its security
interest in the Financed Vehicles securing such Receivables and its rights to
receive all payments on, or proceeds with respect to, such Receivables to the
extent paid or payable after the applicable Cutoff Date. Pursuant to the
Purchase Agreement, AmeriCredit will agree that, upon the occurrence of a breach
of a representation or warranty under the Trust Documents with respect to any of
the Receivables which causes the Seller to be obligated to repurchase a
Receivable, the Owner Trustee will be entitled to require AmeriCredit to
repurchase such Receivables from the Trust. Such rights of the Trust under the
Purchase Agreement will constitute part of the property of the Trust and may be
enforced directly by the Owner Trustee and the Insurer. In addition, the Owner
Trustee will pledge such rights to the Indenture Trustee as collateral for the
Notes, if any, and such rights may be enforced directly by the Indenture
Trustee.
On the Closing Date, or, with respect to Subsequent Receivables, the related
Subsequent Transfer Date, the Seller will sell and assign to the Owner Trustee,
without recourse, the Seller's entire interest in the related Receivables and
the proceeds thereof, including its security interest in the related Financed
Vehicles. Each Receivable transferred by the Seller to the Trust will be
identified in a schedule appearing as an exhibit to the Trust Documents (the
"Schedule of Receivables").
ACCOUNTS
Each Obligor will be instructed to make payments with respect to the
Receivables after the Cutoff Date directly to one or more post office boxes or
other mailing locations (each, a "Lockbox") maintained by the Lockbox Bank, and
a segregated account will be established and maintained with a bank or banks
acceptable to the Insurer, in the name of the Indenture Trustee for the benefit
of the Securityholders, into which all payments made from Obligors to a Lockbox
on or with respect to the Receivables must be deposited within one business day
of receipt (the "Lockbox Account"). The Issuer will also establish and maintain
with the Indenture Trustee one or more accounts (the "Collection Account"), in
the name of the Indenture Trustee on behalf of the Securityholders and the
Insurer, into which all amounts previously deposited in the Lockbox Account in
respect of the Receivables will be transferred within three business days of
deposit in the Lockbox Account. The Collection Account will be maintained with
the Indenture Trustee so long as the Indenture Trustee's deposits have a rating
acceptable to the Insurer and the Rating Agencies. If the deposits of the
Indenture Trustee or its corporate parent no longer have such acceptable rating,
the Servicer shall, with the Indenture Trustee's assistance as necessary, cause
such Accounts to be moved within 30 days to a bank whose deposits have such
rating.
The Servicer will also establish and maintain an account, in the name of the
Trust Collateral Agent, for the benefit of the Indenture Trustee, on behalf of
the Noteholders, and the Insurer in which amounts released from the Collection
Account for distribution to Noteholders will be deposited and from which all
distributions to Noteholders will be
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made (the "Note Distribution Account"). The Servicer will establish and maintain
an account, in the name of the Trust Collateral Agent, for the benefit of the
Owner Trustee, on behalf of the Certificateholders and the Insurer, in which
amounts released from the Collection Account for distribution to
Certificateholders will be deposited and from which all distributions to
Certificateholders will be made (the "Certificate Distribution Account").
On the Closing Date, a cash amount equal to approximately $41,186,267.11 (the
"Initial Pre-Funded Amount") will be deposited in an account (the "Pre-Funding
Account") which will be established with the Trust Collateral Agent. The
"Funding Period" is the period from the Closing Date until the earliest of the
date on which (i) the amount on deposit in the Pre-Funding Account is less than
$100,000, (ii) a Servicer Termination Event occurs under the Sale and Servicing
Agreement, or (iii) the Distribution Date in November 1996. The Initial
Pre-Funded Amount, as reduced from time to time during the Funding Period by the
amount thereof used to purchase Subsequent Receivables in accordance with the
Sale and Servicing Agreement, is referred to herein as the "Pre-Funded Amount."
The Seller expects that the Pre-Funded Amount will be reduced to less than
$100,000 on or before the end of the Funding Period. Any Pre-Funded Amount
remaining at the end of the Funding Period will be payable to the Noteholders
and Certificateholders as described herein. The "Mandatory Redemption Date" is
the earlier of (i) the Distribution Date in November 1996 or (ii) if the last
day of the Funding Period occurs on or prior to the Determination Date (as
defined herein) occurring in September or October 1996, the Distribution Date
relating to such Determination Date.
On the Closing Date, a cash amount shall be deposited in an account (the
"Capitalized Interest Account") which will be established with the Trust
Collateral Agent. The amount, if any deposited in the Capitalized Interest
Account will be applied on the Distribution Dates occurring in September,
October and November of 1996 to fund an amount (the "Monthly Capitalized
Interest Amount") equal to the amount of interest accrued for each such
Distribution Date at the weighted average Interest Rates and Certificate Rate on
the portion of the Securities having a principal balance in excess of the
principal balances of the Receivables (which portion will equal the Pre-Funded
Amount). Any amounts remaining in the Capitalized Interest Account on the
Mandatory Redemption Date and not used for such purposes are required to be paid
directly to the Seller on such date. See "Description of the Purchase Agreements
and the Trust Documents -- Accounts."
All such Accounts shall be Eligible Deposit Accounts (as defined in the
Prospectus) acceptable to the Insurer (so long as no Insurer Default has
occurred and is continuing).
SERVICING COMPENSATION AND TRUSTEES' FEES
The Servicer will be entitled to receive the Basic Servicing Fee on each
Distribution Date, equal to the product of one-twelfth times 2.25% of the
aggregate principal balance of the Receivables as of the close of business on
the last day of the preceding Monthly Period (the "Basic Servicing Fee"). So
long as AmeriCredit is the Servicer, a portion of the Servicing Fee will be
payable to the Backup Servicer for agreeing to stand by as successor Servicer
and for performing certain other functions. The Servicer will also collect and
retain any late fees, prepayment charges and other administrative fees or
similar charges allowed by applicable law with respect to the Receivables, and
will be entitled to reimbursement from the Issuer for certain expenses. Payments
by or on behalf of Obligors will be allocated to scheduled payments, late fees
and other charges and principal and interest in accordance with the Servicer's
normal practices and procedures.
The Basic Servicing Fee will compensate the Servicer for performing the
functions of a third party servicer of automotive receivables as an agent for
their beneficial owner, including collecting and posting all payments,
responding to inquiries of Obligors on the Receivables, investigating
delinquencies, reporting tax information to Obligors, paying costs related to
disposition of defaulted accounts, and policing the collateral. The Basic
Servicing Fee also will compensate the Servicer for administering the
Receivables, including accounting for collections and furnishing monthly and
annual statements to the Issuer and the Insurer with respect to distributions
and generating federal income tax information. The Basic Servicing Fee also will
reimburse the Servicer for certain taxes, accounting fees, outside auditor fees,
data processing costs and other costs incurred in connection with administering
the Receivables and for payment of the fees of the Backup Servicer.
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On each Distribution Date, the Indenture Trustee is entitled to receive a fee
for its services as Indenture Trustee and Trust Collateral Agent during the
prior Monthly Period in an amount agreed upon by the Indenture Trustee and the
Servicer. On each Distribution Date, the Owner Trustee is entitled to receive a
fee for its services as Owner Trustee during the prior Monthly Period in an
amount agreed upon by the Owner Trustee and the Servicer.
All such fees will be paid from the Collection Account.
CERTAIN ALLOCATIONS
On each Determination Date, the Servicer will be required to deliver the
Servicer's Certificate to the Indenture Trustee, the Owner Trustee and the
Insurer specifying, among other things, the amount of aggregate collections on
the Receivables and the aggregate Purchase Amount of Receivables to be purchased
by the Seller, the Servicer, all with respect to the preceding Monthly Period.
On each Determination Date the Indenture Trustee will (based solely on the
information contained in the Servicer's Certificate delivered on the related
Determination Date) deliver to the Trust Collateral Agent, the Insurer and the
Servicer a Deficiency Notice specifying the Deficiency Claim Amount, if any, for
such Distribution Date. Such Deficiency Notice will direct the Trust Collateral
Agent to remit such Deficiency Claim Amount from amounts on deposit in certain
collateral accounts maintained for the benefit of the Insurer for deposit in the
Collection Account.
DISTRIBUTIONS
On each Distribution Date, the Servicer is required to instruct the Indenture
Trustee to make the following distributions in the following order of priority:
1. From the Distribution Amount, to the Indenture Trustee and the Owner
Trustee, any accrued and unpaid trustees' fees and any accrued and unpaid
fees of the Trust Collateral Agent (in each case, to the extent such fees
have not been previously paid by the Servicer).
2. From the Distribution Amount, to the Servicer, the Servicing Fee for the
related Monthly Period, any Supplemental Servicing Fees for such month and
certain other amounts relating to mistaken deposits, postings or checks
returned for insufficient funds to the extent the Servicer has not
reimbursed itself in respect of such amount or to the extent not retained by
the Servicer.
3. From the Distribution Amount plus the related portion of any Note Policy
Claim Amount, if any, to the Note Distribution Account, the Noteholders'
Interest Distributable Amount.
4. From the Distribution Amount plus the related portion of any Note Policy
Claim Amount, if any, to the Note Distribution Account, the Noteholders'
Principal Distributable Amount, to be distributed as described under
"Description of the Notes -- Payments of Principal."
5. From the Distribution Amount plus the related portion of any Certificate
Policy Claim Amount, if any, to the Certificate Distribution Account, the
Certificateholders' Interest Distributable Amount.
6. From the Distribution Amount plus the related portion of any Certificate
Policy Claim Amount, if any, to the Certificate Distribution Account the
Certificateholders' Principal Distributable Amount.
7. From the Distribution Amount, to the Insurer, any amounts owing to the
Insurer under the Insurance Agreement and not paid.
8. From Available Funds and amounts, if any, otherwise available in accordance
with the terms of the Spread Account Agreement, to the Note Distribution
Account, the Noteholders' Accelerated Principal Amount.
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9. From Available Funds and amounts, if any, otherwise permitted to be released
from the lien of the Spread Account Agreement, to the Certificate
Distribution Account, the Certificateholders' Accelerated Principal Amount.
10. From Available Funds, to the Seller, or as otherwise specified in the Trust
Documents, any remaining funds.
In addition to the foregoing, any accrued and unpaid interest and any remaining
outstanding principal on the Class A-1 Notes will be due and payable on the
Special A-1 Distribution Date, which, for purposes of the definitions set forth
below (insofar as they relate to the Class A-1 Notes) shall be considered a
"Distribution Date."
If the Notes are accelerated following an Event of Default under the Indenture,
amounts collected will be distributed in the order described above.
In the event that the Servicer's Certificate indicates that the Distribution
Amount will be insufficient on any Distribution Date to cover the distributions
required pursuant to clauses 1 through 4 above on such Distribution Date, the
Indenture Trustee shall furnish to the Insurer no later than 12:00 noon New York
City time on the related Draw Date a completed notice of claim in the amount of
the Note Policy Claim Amount. Amounts paid by the Insurer pursuant to any such
notice of claim shall be deposited by the Insurer into the Note Distribution
Account for payment to Noteholders on the related Distribution Date.
In the event that the Servicer's Certificate indicates that the Distribution
Amount will be insufficient on any Distribution Date to cover the distributions
required by clauses 1 through 6 above on such Distribution Date, the Indenture
Trustee shall furnish to the Insurer no later than 12:00 noon New York City time
on the related Draw Date a completed notice of claim in the amount of the
Certificate Policy Claim Amount. Amounts paid by the Insurer pursuant to any
such notice of claim shall be deposited by the Insurer into the Certificate
Distribution Account for payment to Certificateholders on the related
Distribution Date.
For the purposes hereof, the following terms shall have the following meanings:
"Amount Financed" means, with respect to a Receivable, the aggregate amount
advanced under such Receivable toward the purchase price of the Financed Vehicle
and related costs, including amounts advanced in respect of accessories,
insurance premiums, service, car club and warranty contracts, other items
customarily financed as part of retail automobile installment sale contracts or
promissory notes, and related costs.
"Accelerated Principal Amount" for a Distribution Date will equal the lesser of
(x) the excess, if any, of the sum of (i) the amount of Available Funds on
such Distribution Date over the amounts payable on such Distribution Date
pursuant to clauses 1 through 7 under "Distributions", together with amounts,
if any, otherwise available in accordance with the terms of the Spread
Account Agreement and (ii) any amounts otherwise permitted to be released
from the lien of the Spread Account Agreement; and
(y) the greater of (a) the excess, if any, on such Distribution Date of
(i) the Pro Forma Security Balance for such Distribution Date over (ii) the
Required Pro Forma Security Balance for such Distribution Date and (b) the
amount necessary (after taking into account all other distributions to be
made on such date) to reduce the principal balance of the Class A-1 Notes to
zero.
Notwithstanding the foregoing, the requirement to pay Accelerated Principal
Amounts will terminate on the later to occur of (i) first Distribution Date on
which the Pro Forma Security Balance equals the Required Pro Forma Security
Balance and (ii) the Distribution Date on which the principal balance of the
Class A-1 Notes is reduced to zero (the "Accelerated Payment Termination Date").
The Insurer does not guarantee the payment of Accelerated Principal Amounts.
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"Available Funds" means, with respect to any Determination Date, the sum of
(i) the Collected Funds for such Determination Date, plus (ii) all Purchase
Amounts deposited in the Collection Account during the related Monthly Period,
plus income on investments held in the Collection Account, plus (iii) the
Monthly Capitalized Interest Amount with respect to the related Distribution
Date.
"Certificate Balance" equals, initially, $6,125,000.00 and, thereafter, equals
the initial Certificate Balance reduced by all amounts allocable to principal
previously distributed to Certificateholders.
"Certificateholders' Accelerated Principal Amount" means, with respect to any
Distribution Date, the Certificateholders' Percentage of the Accelerated
Principal Amount on such Distribution Date, if any.
"Certificateholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Certificateholders' Principal Distributable
Amount and the Certificateholders' Interest Distributable Amount.
"Certificateholders' Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of the Certificateholders' Interest Distributable
Amount for the preceding Distribution Date, over the amount in respect of
interest on the Certificates that was actually deposited in the Certificate
Distribution Account on such preceding Distribution Date, plus interest on such
excess, to the extent permitted by law, at the Certificate Rate from such
preceding Distribution Date to but excluding the current Distribution Date.
"Certificateholders' Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date.
"Certificateholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, interest accrued during the related Interest
Period (including the initial Interest Period which will consist of ____ days)
at the Certificate Rate on the Certificate Balance immediately preceding such
Distribution Date, calculated on the basis of a 360-day year consisting of
twelve 30-day months.
"Certificateholders' Monthly Principal Distributable Amount" means, with
respect to any Distribution Date, the Certificateholders' Percentage of the
Principal Distributable Amount.
"Certificateholders' Percentage" means (i) for each Distribution Date prior to
the Distribution Date on which the Class A-3 Notes are paid in full, zero, (ii)
on the Distribution Date on which the Class A-3 Notes are paid in full, the
percentage equivalent of a fraction, the numerator of which is the excess, if
any, of (x) the Principal Distributable Amount for such Distribution Date over
(y) the outstanding principal amount of the Class A-3 Notes immediately prior to
such Distribution Date, and the denominator of which is the Principal
Distributable Amount for such Distribution Date, and (iii) for each Distribution
Date thereafter to and including the Distribution Date on which the Certificate
Balance is reduced to zero, 100%.
"Certificateholders' Principal Carryover Shortfall" means, as of the close of
any Distribution Date, the excess of the Certificateholders' Principal
Distributable Amount for the preceding Distribution Date, over the amount in
respect of principal that was actually deposited in the Certificate Distribution
Account on such Distribution Date.
"Certificateholders' Principal Distributable Amount" means, with respect to
any Distribution Date (other than the Final Scheduled Distribution Date for the
Certificates), the sum of the Certificateholders' Monthly Principal
Distributable Amount for such Distribution Date and the Certificateholders'
Principal Carryover Shortfall as of the close of the preceding Distribution
Date; provided, however, that the Certificateholders' Principal Distributable
Amount shall not exceed the Certificate Balance. In addition, on the Final
Scheduled Distribution Date for the Certificates, the Certificateholders'
Principal Distributable Amount will equal the Certificate Balance on such
Distribution Date.
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"Certificate Policy Claim Amount" for any Distribution Date, shall equal the
lesser of (i) the sum of the Certificateholders' Interest Distributable Amount
and the Certificateholders' Principal Distributable Amount for such Distribution
Date and (ii) the excess, if any, of the amount required to be distributed
pursuant to clauses 1 through 6 under "Distributions" over the Distribution
Amount with respect to such Distribution Date.
"Collected Funds" means, with respect to any Determination Date, the amount of
funds in the Collection Account representing collections on the Receivables
during the related Monthly Period, including all Net Liquidation Proceeds
collected during the related Monthly Period (but excluding any Purchase
Amounts).
"Cram Down Loss" means, with respect to a Receivable if a court of appropriate
jurisdiction in an insolvency proceeding shall have issued an order reducing the
amount owed on such Receivable or otherwise modifying or restructuring the
scheduled payments to be made on such Receivable, an amount equal to (i) the
excess of the principal balance of such Receivable immediately prior to such
order over the principal balance of such Receivable as so reduced and/or (ii) if
such court shall have issued an order reducing the effective rate of interest on
such Receivable, the net present value (using as the discount rate the higher of
the APR on such Receivable or the rate of interest, if any, specified by the
court in such order) of the scheduled payments as so modified or restructured. A
"Cram Down Loss" shall be deemed to have occurred on the date of issuance of
such order.
"Deficiency Claim Amount" means, with respect to any Determination Date, the
excess, if any, of the sum of the amounts payable on the related Distribution
Date pursuant to clauses 1 through 7 under "Distributions" over the amount of
Available Funds with respect to such Determination Date to the extent that such
amounts are available in accordance with the terms of the Spread Account
Agreement.
"Deficiency Notice" means a written notice delivered by the Indenture Trustee
to the Insurer, the Servicer and any other person required under the Insurance
Agreement, specifying the Deficiency Claim Amount for such Distribution Date.
"Determination Date" means, with respect to any Monthly Period, the earlier of
(i) the fourth Business Day preceding the Distribution Date in the next calendar
month, and (ii) the 5th day of the next calendar month, or if such 5th day is
not a Business Day, the next succeeding Business Day.
"Distribution Amount" means, with respect to any Distribution Date the sum of
(i) the Available Funds for the immediately preceding Determination Date plus
(ii) the Deficiency Claim Amount, if any, received by the Indenture Trustee with
respect to such Distribution Date.
"Insurer Optional Deposit" means, with respect to any Distribution Date, an
amount delivered by the Insurer, at its sole option, other than the Policies for
deposit into the Collection Account for any of the following purposes: (i) to
provide funds in respect of the payment of fees or expenses of any provider of
services to the Trust with respect to such Distribution Date; or (ii) to include
such amount as part of the Distribution Amount for such Distribution Date to the
extent that without such amount a draw would be required to be made on a Policy.
"Liquidated Receivable" means, with respect to any Determination Date, a
Receivable as to which, as of the last day of the related Monthly Period, (i) 90
days have elapsed since the Servicer repossessed the Financed Vehicle, (ii) the
Servicer has determined in good faith that all amounts it expects to recover
have been received, (iii) 5% or more of a scheduled payment shall have become
120 or more days delinquent, except in the case of repossessed Financed
Vehicles.
"Net Liquidation Proceeds" means, with respect to Liquidated Receivables, (i)
proceeds from the disposition of the underlying Financed Vehicle securing the
Liquidated Receivables, less the Servicer's reasonable out-of-pocket costs,
including repossession and resale expenses not already deducted from such
proceeds, and any amounts required by law to be remitted to the Obligor, (ii)
any insurance proceeds, or (iii) other monies received from the Obligor or
otherwise.
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"Noteholders' Accelerated Principal Amount" means, with respect to any
Distribution Date, the Noteholders' Percentage of the Accelerated Principal
Amount on such Distribution Date, if any.
"Noteholders' Distributable Amount" means, with respect to any Distribution
Date, the sum of the Noteholders' Principal Distributable Amount and the
Noteholders' Interest Distributable Amount.
"Noteholders' Interest Carryover Shortfall" means, with respect to any
Distribution Date and a Class of Notes, the excess of the Noteholders' Interest
Distributable Amount for such Class for the preceding Distribution Date, over
the amount in respect of interest that was actually deposited in the Note
Distribution Account with respect to such Class on such preceding Distribution
Date, plus interest on the amount of interest due but not paid to Noteholders of
such Class on the preceding Distribution Date, to the extent permitted by law,
at the Interest Rate borne by such Class of Notes from such preceding
Distribution Date to but excluding the current Distribution Date.
"Noteholders' Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Monthly Interest Distributable
Amount for each Class of Notes for such Distribution Date and the Noteholders'
Interest Carryover Shortfall for each Class of Notes for such Distribution Date.
"Noteholders' Monthly Interest Distributable Amount" means, with respect to
any Distribution Date and any Class of Notes, interest accrued during the
applicable Interest Period at the Interest Rate borne by such Class of Notes on
the outstanding principal amount of such Class immediately prior to such
Distribution Date, calculated on the basis of a 360-day year and (a) the actual
number of days elapsed, in the case of the Class A-l Notes and the Class A-2
Notes and (b) twelve 30-day months, in the case of the Class A-3 Notes.
"Noteholders' Monthly Principal Distributable Amount" means, with respect to
any Distribution Date, the Noteholders' Percentage of the Principal
Distributable Amount.
"Noteholders' Percentage" means (i) for each Distribution Date to the
Distribution Date on which the Class A-3 Notes are paid in full, 100%, (ii) on
the Distribution Date on which the Class A-3 Notes are paid in full, the
percentage equivalent of a fraction, the numerator of which is the outstanding
principal amount of the Class A-3 Notes immediately prior to such Distribution
Date, and the denominator of which is the Principal Distributable Amount for
such Distribution Date, and (iii) for any Distribution Date thereafter, zero.
"Noteholders' Principal Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Noteholders' Principal Distributable Amount
for the preceding Distribution Date over the amount in respect of principal that
was actually deposited in the Note Distribution Account on such Distribution
Date.
"Noteholders' Principal Distributable Amount" means, with respect to any
Distribution Date (other than the Final Scheduled Distribution Date for any
Class of Notes), the sum of the Noteholders' Monthly Principal Distributable
Amount for such Distribution Date and the Noteholders' Principal Carryover
Shortfall as of the close of the preceding Distribution Date. The Noteholders'
Principal Distributable Amount on the Final Scheduled Distribution Date for any
Class of Notes will equal the sum of (i) the Noteholders' Monthly Principal
Distributable Amount for such Distribution Date, (ii) the Noteholders' Principal
Carryover Shortfall as of the close of the preceding Distribution Date, and
(iii) the excess of the outstanding principal amount of such Class of Notes, if
any, over the amounts described in clauses (i) and (ii).
"Note Policy Claim Amount" for any Distribution Date, shall equal the lesser
of (i) the sum of the Noteholders' Interest Distributable Amount and
Noteholders' Principal Distributable Amount for such Distribution Date and (ii)
the excess, if any, of the amount required to be distributed pursuant to clauses
1 through 4 under "Distributions" over the Distribution Amount with respect to
such Distribution Date.
"Principal Balance" means, with respect to any Receivable, as of any date, the
Amount Financed minus (i) that portion of all amounts received on or prior to
such date and allocable to principal in accordance with the terms of the
Receivable, and (ii) any Cram Down Loss in respect of such Receivable.
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"Principal Distributable Amount" means, with respect to any Distribution Date,
the amount equal to the sum of the following amounts with respect to the related
Monthly Period, computed in accordance with the simple interest method: (i)
collections on Receivables (other than Liquidated and Purchased Receivables)
allocable to principal, including full and partial principal prepayments, (ii)
the principal balance of all Receivables (other than Purchased Receivables) that
became Liquidated Receivables during the related Monthly Period, (iii) (A) the
portion of the Purchase Amount allocable to principal of all Receivables that
became Purchased Receivables as of the immediately preceding Record Date and (B)
at the option of the Insurer, the outstanding principal balance of those
Receivables that were required to be repurchased by the Seller and/or
AmeriCredit during such Monthly Period but were not so repurchased and (iv) the
aggregate amount of Cram Down Losses during such Monthly Period.
"Pro Forma Security Balance" means, with respect to any Distribution Date, the
aggregate remaining principal balance of the Notes and the Certificates
outstanding on such Distribution Date, after giving effect to distributions
pursuant to clauses 1 through 6 under "Distributions."
"Purchase Amount" means, with respect to a Receivable, the Principal Balance
and all accrued and unpaid interest on the Receivable as of the date of
purchase.
"Required Pro Forma Security Balance" means, with respect to any Distribution
Date, the product of (x) 95% and (y) the sum of the Pool Balance and the
Pre-Funded Amount as of the end of the prior Monthly Period.
STATEMENTS TO SECURITYHOLDERS
On or prior to each Distribution Date, the Indenture Trustee will be required
to forward a statement to the Noteholders and the Certificateholders on such
Distribution Date. Such statements will be based on the information in the
related Servicer's Certificate setting forth certain information required under
the Trust Documents. Each such statement to be delivered to Noteholders will
include the following information as to the Notes, and each such statement to be
delivered to Certificateholders will include the following information as to the
Certificates, with respect to such Distribution Date or the period since the
previous Distribution Date, as applicable:
(i) the amount of the distribution allocable to interest on or with respect to
the Notes and the Certificates:
(ii) the amount of the distribution allocable to principal with respect to the
Notes and the Certificates;
(iii) the amount of the distribution payable pursuant to a claim on the Note
Policy or the Certificate Policy, as the case may be;
(iv) the aggregate outstanding principal amount for each Class of Notes and
the Certificate Balance for the Certificates, in each case, after giving effect
to all payments reported under (ii) above on such date;
(v) the Noteholders' Interest Carryover Shortfall, the Noteholders' Principal
Carryover Shortfall, the Certificateholders' Interest Carryover Shortfall and
the Certificateholders' Principal Carryover Shortfall, if any, and the change
in such amounts from the preceding statement;
(vi) the amount of the Servicing Fee paid to the Servicer with respect to the
related Monthly Period;
(vii) for each such date during the Funding Period, the remaining Pre-Funded
Amount, the amount in the Pre-Funding Account and the amount remaining in the
Capitalized Interest Account; and
(viii) for the final Subsequent Transfer Date, 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 of the Notes
and Certificates.
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Each amount set forth pursuant to subclauses (i) through (vi) with respect to
Certificates or Notes will be expressed as a dollar amount per $1,000 of the
initial principal amount of the Notes or initial Certificate Balance, as
applicable.
Unless and until Definitive Notes or Definitive Certificates are issued, such
reports will be sent on behalf of the Trust to Cede & Co., as registered holder
of the Notes and the Certificates and the nominee of DTC. See "Reports to
Securityholders" and "Description of the Securities" in the Prospectus.
Within the required period of time after the end of each calendar year, the
Indenture Trustee will furnish to each person who at any time during such
calendar year was a Noteholder or Certificateholder, a statement as to the
aggregate amounts of interest and principal paid to such Noteholder or
Certificateholder, information regarding the amount of servicing compensation
received by the Servicer and such other information as the Seller deems
necessary to enable such Noteholder or Certificateholder to prepare its tax
returns.
SPREAD ACCOUNT
On the Closing Date, the Seller will make an initial deposit of an amount to
be agreed upon by the Seller and the Insurer (the "Spread Account Initial
Deposit") to the Spread Account which will be established with LaSalle National
Bank, as Trust Collateral Agent for the benefit of the Trustee on behalf of the
Noteholders, the Owner Trustee, on behalf of the Certificateholders, and the
Insurer pursuant to a certain Spread Account Agreement Supplement dated as of
the Closing Date (the "Spread Account Agreement"). The Spread Account will not
be an asset of the Trust. On each Distribution Date, the Trust Collateral Agent
will be required to deposit additional amounts into the Spread Account from
payments on the Receivables as described under "-- Distributions" above.
Amounts, if any, on deposit in the Spread Account will be available to the
extent provided in the Spread Account Agreement to fund any Deficiency Claim
Amount otherwise required to be made on a Distribution Date. The aggregate
amount required to be on deposit at any time in the Spread Account (the
"Specified Spread Account Requirement") will be determined in accordance with
the Insurance Agreement and the Spread Account Agreement. The Specified Spread
Account Requirement may increase or decrease over time as a result of floors,
caps and triggers set forth in the Insurance Agreement or the Spread Account
Agreement, even if no withdrawals are made from the Spread Account. Amounts on
deposit in the Spread Account on any Distribution Date (after giving effect to
all distributions made on such Distribution Date) in excess of the Specified
Spread Account Requirement for such Distribution Date will be released to the
Seller. Amounts on deposit or to be deposited in the Spread Account may be
distributed to persons other than the Insurer or the Securityholders without the
consent of the Securityholders.
Amounts held from time to time in the Spread Account will continue to be held
for the benefit of holders of the Securities and the Insurer. Funds in the
Spread Account will be invested in Eligible Investments.
In addition, the Seller, the Insurer and the Trust Collateral Agent may amend
the Spread Account Agreement (and any provisions in the Insurance Agreement
relating to the Spread Account) in any respect (including, without limitation,
reducing or eliminating the Specified Spread Account Requirement and/or reducing
or eliminating the funding requirements of the Spread Account or permitting such
funds to be used for the benefit of persons other than Securityholders) without
the consent of, or notice to, the Trustee, the Owner Trustee or the
Securityholders. The Trust Collateral Agent shall not withhold or delay its
consent with respect to any amendment that does not adversely affect the Trust
Collateral Agent in its individual capacity. Notwithstanding any reduction in or
elimination of the funding requirements of the Spread Account or the depletion
thereof, the Insurer will be obligated on each Distribution Date to fund the
full amount of each Scheduled Payment and each Guaranteed Distribution otherwise
required to be made on such Distribution Date. If the Insurer breaches its
obligations, any losses on the Receivables will be borne by the Securityholders.
SERVICER TERMINATION EVENT
"Servicer Termination Event" under the Sale and Servicing Agreement will
consist of the occurrence and continuance of any of the following: (i) any
failure by the Servicer to deliver to the Trust Collateral Agent for
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distribution to the Securityholders any required payment, which failure
continues unremedied for two Business Days, or any failure to deliver the
Servicer's Certificate (as defined in the Sale and Servicing Agreement) by the
fourth Business Day prior to the Distribution Date, and which shall comply with
the requirements therefor; (ii) any failure by the Servicer duly to observe or
perform in any material respect any other covenant or agreement under the Sale
and Servicing Agreement or the Purchase Agreement (if AmeriCredit is the
Servicer) which failure continues unremedied for 60 days after the giving of
written notice of such failure (1) to the Servicer by the Insurer, the Trust
Collateral Agent or the Issuer, or (2) if a Insurer Default has occurred and is
continuing, to the Servicer by any holder of a Note or a Certificate; (iii)
certain events of insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings with respect to the Servicer or, so long as
AmeriCredit is Servicer, of any of its affiliates, and certain actions by the
Servicer, or, so long as AmeriCredit is Servicer, of its affiliates, indicating
its insolvency, reorganization pursuant to bankruptcy proceedings, or inability
to pay its obligations; (iv) any representation, warranty or statement of the
Servicer shall prove to be incorrect in any material respect and which has a
material adverse effect on the Insurer, and the circumstances or conditions in
respect of which such representation, warranty or statement was incorrect shall
not have been eliminated or cured as provided thereunder; (v) so long as a
Insurer Default shall not have occurred and be continuing, the Insurer shall not
have delivered an extension notice; (vi) so long as a Insurer Default shall not
have occurred and be continuing, an Insurance Agreement Event of Default or an
event of default under any other Insurance and Indemnity Agreement relating to
any series of securities shall have occurred; or (vii) a claim is made under the
Policy.
"Insurer Default" shall mean the occurrence and continuance of any of the
following events:
(a) the Insurer shall have failed to make a payment required under either
Policy in accordance with its terms;
(b) the Insurer shall have (i) filed a petition or commenced any case or
proceeding under any provision or chapter of the United States Bankruptcy Code
or any other similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization, (ii) made a general assignment
for the benefit of its creditors, or (iii) had an order for relief entered
against it under the United States Bankruptcy Code or any other similar federal
or state law relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department of Insurance or
other competent regulatory authority shall have entered a final and
nonappealable order, judgment or decree (i) appointing a custodian, trustee,
agent or receiver for the Insurer or for all or any material portion of its
property or (ii) authorizing the taking of possession by a custodian, trustee,
agent or receiver of the Insurer (or the taking of possession of all or any
material portion of the property of the Insurer).
RIGHTS UPON SERVICER TERMINATION EVENT
As long as a Servicer Termination Event under the Sale and Servicing Agreement
remains unremedied, (x) provided no Insurer Default shall have occurred and be
continuing, the Insurer in its sole and absolute discretion or (y) if a Insurer
Default shall have occurred and be continuing, then the Trust Collateral Agent
or a Security Majority, may terminate all the rights and obligations of the
Servicer under such Agreement, whereupon (i) if AmeriCredit is terminated under
the Agreement, the Backup Servicer, or such other successor servicer as shall
have been appointed by the Insurer (so long as no Insurer Default shall have
occurred and be continuing) will succeed to all the responsibilities, duties,
and liabilities of the Servicer under such Agreement or (ii) if a Servicer other
than AmeriCredit is terminated under the Agreement, a successor servicer will be
appointed by the Insurer (or, if a Insurer Default shall have occurred and be
continuing, by the Trust Collateral Agent). Any such successor Servicer will
succeed to all the responsibilities, duties, and liabilities of the Servicer
under the Sale and Servicing Agreement and will be entitled to similar
compensation arrangements. There is no assurance that the succession of a
successor servicer will not result in a material disruption in the performance
of the duties of the servicer.
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WAIVER OF PAST DEFAULTS
Notwithstanding anything to the contrary set forth under "Description of the
Trust Agreements -- Waiver of Past Defaults" in the Prospectus, the Insurer may,
on behalf of all holders of Securities, waive any default by the Servicer in the
performance of its obligations under the Sale and Servicing Agreement and its
consequences. No such waiver will impair the Securityholders' rights with
respect to subsequent defaults.
AMENDMENT
Notwithstanding anything to the contrary set forth under "Description of the
Trust Agreements -- Amendment" in the Prospectus, the Sale and Servicing
Agreement may be amended by the Seller, the Servicer and the Owner Trustee with
the consent of the Indenture Trustee, (which consent may not be unreasonably
withheld) and with the consent of the Insurer (so long as no Insurer Default has
occurred and is continuing), but without the consent of the Securityholders, to
cure any ambiguity, or to correct or supplement any provision therein which may
be inconsistent with any other provision therein; provided that such action
shall not adversely affect in any material respect the interests of any
Securityholder; provided, further, that if an Insurer Default has occurred and
is continuing, such action shall not materially adversely affect the interests
of the Insurer. The Seller, the Servicer and the Owner Trustee may also amend
the Sale and Servicing Agreement with the consent of the Insurer, the consent of
the Indenture Trustee, the consent of Noteholders holding a majority of the
principal amount of the Notes and the consent of Certificateholders holding a
majority of the principal amount of Certificates outstanding to add, change or
eliminate any other provisions with respect to matters or questions arising
under such Agreement or affecting the rights of the Noteholders or the
Certificateholders; provided that such action will not (i) increase or reduce in
any manner the amount of, or accelerate or delay the timing of, collections of
payments on Receivables or distributions that are required to be made for the
benefit of the Noteholders or Certificateholders or (ii) reduce the aforesaid
percentage of the Noteholders or Certificateholders required to consent to any
such amendment, without, in either case, the consent of the holders of all Notes
and Certificates outstanding; provided, further, that if an Insurer Default has
occurred and is continuing, such action shall not materially adversely affect
the interest of the Insurer. The Seller and Servicer must deliver to the Owner
Trustee, the Indenture Trustee and the Insurer upon the execution and delivery
of the Sale and Servicing Agreement and any amendment thereto an opinion of
counsel, satisfactory to the Indenture Trustee, that all financing statements
and continuation statements have been filed that are necessary to fully protect
and preserve the Trustee's interest in the Receivables.
THE POLICIES
NOTE POLICY
Simultaneously with the issuance of the Notes, the Insurer will deliver the
Note Policy to the Trust Collateral Agent as agent for the Indenture Trustee for
the benefit of each Noteholder. Under the Note Policy, the Insurer will
unconditionally and irrevocably guarantee to the Trust Collateral Agent for the
benefit of each Noteholder the full and complete payment of (i) Scheduled
Payments (as defined below) on the Notes and (ii) the amount of any Scheduled
Payment which subsequently is avoided in whole or in part as a preference
payment under applicable law. In the event the Trust Collateral Agent fails to
make a claim under the Note Policy, Noteholders do not have the right to make a
claim directly under the Note Policy, but may sue to compel the Trust Collateral
Agent to do so.
"Scheduled Payments" means payments which are scheduled to be made on the Notes
during the term of the Note Policy in accordance with the original terms of the
Notes when issued and without regard to any subsequent amendment or modification
of the Notes that has not been consented to by the Insurer, which payments are
(i) the Noteholders' Interest Distributable Amount and (ii) the Noteholders'
Principal Distributable Amount with respect to a Distribution Date or the
Special A-1 Distribution Date; Scheduled Payments do not include payments which
become due on an accelerated basis as a result of (a) a default by the Trust,
(b) an election by the Trust to pay principal on an accelerated basis, (c) the
occurrence of an Event of Default under the Indenture or (d) any other cause,
unless the Insurer elects, in its sole discretion, to pay in whole or in part
such principal due upon acceleration,
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together with any accrued interest to the date of acceleration. In the event the
Insurer does not so elect, the Note Policy will continue to guarantee Scheduled
Payments due on the Notes in accordance with their original terms. Scheduled
Payments shall not include (x) any portion of a Noteholders' Interest
Distributable Amount due to Noteholders because the appropriate notice and
certificate for payment in proper form was not timely Received (as defined
below) by the Insurer, (y) any portion of a Noteholders' Interest Distributable
Amount due to Noteholders representing interest on any Noteholders' Interest
Carryover Shortfall accrued from and including the date of payment of the amount
of such Noteholders' Interest Carryover Shortfall pursuant to the Note Policy,
or (z) any Note Prepayment Amounts unless, in each case, the Insurer elects, in
its sole discretion, to pay such amount in whole or in part.
Payment of claims on the Note Policy made in respect of Scheduled Payments will
be made by the Insurer following Receipt by the Insurer of the appropriate
notice for payment on the later to occur of (i) 12:00 noon, New York City time,
on the third Business Day following Receipt of such notice for payment, and (ii)
12:00 noon, New York City time, on the date on which such payment was due on the
Notes.
If payment of any amount avoided as a preference under applicable bankruptcy,
insolvency, receivership or similar law is required to be made under the Note
Policy, the Insurer shall cause such payment to be made no earlier than the
first to occur of (a) the fourth Business Day following Receipt by the Insurer
from the Trust Collateral Agent of (i) a certified copy of the order (the
"Order") of the court or other governmental body which exercised jurisdiction to
the effect that the Noteholder is required to return principal or interest paid
on the Notes during the term of the Note Policy because such payments were
avoidable as preference payments under applicable bankruptcy law, (ii) a
certificate of the Noteholder that the Order has been entered and is not subject
to any stay and (iii) an assignment duly executed and delivered by the
Noteholder, in such form as is reasonably required by the Insurer and provided
to the Noteholder by the Insurer, irrevocably assigning to the Insurer all
rights and claims of the Noteholder relating to or arising under the Notes
against the Trust or otherwise with respect to such preference payment, or (b)
the date of Receipt (as defined below) by the Insurer from the Trust Collateral
Agent of the items referred to in clauses (i), (ii) and (iii) above if, at least
four Business Days prior to such date of Receipt, the Insurer shall have
received written notice from the Trust Collateral Agent that such items were to
be delivered on such date and such date was specified in such notice. Such
payment shall be disbursed to the receiver, conservator, debtor-in-possession or
trustee in bankruptcy named in the Order and not to the Trust Collateral Agent
or any Noteholder directly (unless a Noteholder has previously paid such amount
to the receiver, conservator, debtor-in-possession or trustee in bankruptcy
named in.the Order, in which case such payment shall be disbursed to the Trust
Collateral Agent for distribution to such Noteholder upon proof of such payment
reasonably satisfactory to the Insurer). In connection with the foregoing, the
Insurer shall have the rights provided in the Indenture.
CERTIFICATE POLICY
Simultaneously with the issuance of the Certificates, the Insurer will deliver
the Certificate Policy to the Trust Collateral Agent as agent for the Owner
Trustee for the benefit of each Certificateholder. Under the Certificate Policy,
the Insurer will unconditionally and irrevocably guarantee to the Trust
Collateral Agent for the benefit of each Certificateholder the full and complete
payment of (i) Guaranteed Distributions (as defined below) with respect to the
Certificates and (ii) the amount of any Guaranteed Distribution which
subsequently is avoided in whole or in part as a preference payment under
applicable law. In the event that the Trust Collateral Agent fails to make a
claim under the Certificate Policy, Certificateholders do not have the right to
make a claim directly under the Certificate Policy but may sue to compel the
Trust Collateral Agent to do so.
"Guaranteed Distributions" means the distributions to be made on the
Certificates with respect to a Distribution Date during the term of the
Certificate Policy in accordance with the original terms of the Certificates
when issued and without regard to any amendment or modification of the
Certificates or the Trust Agreement which has not been consented to by the
Insurer, which distributions are equal to (i) the Certificateholders' Interest
Distributable Amount and (ii) the Certificateholders' Principal Distributable
Amount provided, however, that Guaranteed Distributions shall not include (x)
any portion of a Certificateholder's Interest Distributable Amount due to
Certificateholders because the appropriate notice and certificate for payment in
proper form was not timely Received (as defined below) by the
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Insurer, (y) any portion of a Certificateholder's Interest Distributable Amount
due to Certificateholders representing interest on any Certificateholders'
Interest Carryover Shortfall accrued from and including the date of payment of
the amount of such Certificateholders' Interest Carryover Shortfall pursuant to
the Certificate Policy, or (z) any Certificate Prepayment Amount, unless, in
each case, the Insurer elects, in its sole discretion, to pay such amount in
whole or in part.
Payment of claims on the Certificate Policy made in respect of Guaranteed
Distributions will be made by the Insurer following Receipt by the Insurer of
the appropriate notice for payment on the later to occur of (i) 12:00 noon New
York City time, on the third Business Day following Receipt (as defined below)
of such notice for payment, or (ii) 12:00 noon, New York City time, on the date
on which such payment was due on the Certificates.
If payment of any amount avoided as a preference under applicable bankruptcy,
insolvency, receivership or similar law is required to be made under the
Certificate Policy, the Insurer shall cause such payment to be made no earlier
than the first to occur of (a) the fourth Business Day following Receipt by the
Insurer from the Trust Collateral Agent of (i) a certified copy of the order
(the "Order") of the court or other governmental body which exercised
jurisdiction to the effect that the Certificateholder is required to return the
amount of any Guaranteed Distributions distributed with respect to the
Certificates during the term of the Certificate Policy because such
distributions were avoidable as preference payments under applicable bankruptcy
law, (ii) a certificate of the Certificateholder that the Order has been entered
and is not subject to any stay and (iii) an assignment duly executed and
delivered by the Certificateholder, in such form as is reasonably required by
the Insurer and provided to the Certificateholder by the Insurer, irrevocably
assigning to the Insurer all rights and claims of the Certificateholder relating
to or arising under the Certificates against the debtor which made such
preference payment or otherwise with respect to such preference payment, or (b)
the date of Receipt by the Insurer from the Trust Collateral Agent of the items
referred to in clauses (i), (ii) and (iii) above if, at least four Business Days
prior to such date of Receipt, the Insurer shall have Received written notice
from the Trust Collateral Agent that such items were to be delivered on such
date and such date was specified in such notice. Such payment shall be disbursed
to the receiver, conservator, debtor-in-possession or trustee in bankruptcy
named in the Order and not to the Trust Collateral Agent or any
Certificateholder directly (unless a Certificateholder has previously paid such
amount to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy named in the Order in which case such payment shall be disbursed to
the Trust Collateral Agent for distribution to such Certificateholder upon proof
of such payment reasonably satisfactory to the Insurer). In connection with the
foregoing, the Insurer shall have the rights provided in the Sale and Servicing
Agreement.
OTHER PROVISIONS OF THE POLICIES
The terms "Receipt" and "Received" with respect to a Policy shall mean actual
delivery to the Insurer and to its fiscal agent, if any, prior to 12:00 noon,
New York City time, on a Business Day; delivery either on a day that is not a
Business Day or after 12:00 noon, New York City time, shall be deemed to be
Received on the next succeeding Business Day. If any notice or certificate given
under a Policy by the Trust Collateral Agent is not in proper form or is not
properly completed, executed or delivered, it shall be deemed not to have been
Received, and the Insurer or its fiscal agent shall promptly so advise the Trust
Collateral Agent, and the Trust Collateral Agent may submit an amended notice.
Under the Policies, "Business Day" means any day other than a Saturday, Sunday,
legal holiday or other day on which commercial banking institutions in
Wilmington, Delaware, the City of New York or Chicago, Illinois or any other
location of any successor Servicer, successor Owner Trustee or successor Trust
Collateral Agent are authorized or obligated by law, executive order or
governmental decree to be closed.
The Insurer's obligations under the respective Policies in respect of Scheduled
Payments and Guaranteed Distributions shall be discharged to the extent funds
are transferred to the Trust Collateral Agent as provided in the related Policy
whether or not such funds are properly applied by the Trust Collateral Agent.
The Insurer shall be subrogated to the rights of each Noteholder or
Certificateholder to receive payments of principal and interest to the extent of
any payment by the Insurer under the related Policy.
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Claims under the Policies constitute direct, unsecured and unsubordinated
obligations of the Insurer ranking not less than pari passu with other unsecured
and unsubordinated indebtedness of the Insurer for borrowed money. Claims
against the Insurer under each other financial guaranty insurance policy issued
thereby constitute pari passu claims against the general assets of the Insurer.
The terms of the Policies cannot be modified or altered by any other agreement
or instrument, or by the merger, consolidation or dissolution of the Trust. The
Note Policy may not be canceled or revoked prior to distribution in full of all
Scheduled Payments, and the Certificate Policy may not be canceled or revoked
prior to distribution in full of all Guaranteed Distributions. THE POLICIES ARE
NOT COVERED BY THE PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN
ARTICLE 76 OF THE NEW YORK INSURANCE LAW. The Policies are governed by the laws
of the State of New York.
It is a condition to issuance that the Class A-l Notes be rated A-l+ by S&P and
P-l by Moody's, and that the Class A-2 Notes, the Class A-3 Notes and the
Certificates be rated AAA by S&P and Aaa by Moody's. The ratings by the Rating
Agencies of the Securities will be (i) with respect to the Class A-1 Notes,
without regard to the Note Policy in the case of S&P and substantially based on
the Note Policy in the case of Moody's and (ii) with respect to all other
Classes of Notes and Certificates, based on the issuances of the Policies. A
rating is not a recommendation to purchase, hold or sell Securities. In the
event that the rating initially assigned to any of the Securities is
subsequently lowered or withdrawn for any reason, including by reason of a
downgrading of the claims-paying ability of the Insurer, no person or entity
will be obligated to provide any additional credit enhancement with respect to
the Securities. Any reduction or withdrawal of a rating may have an adverse
effect on the liquidity and market price of the Securities. See "Ratings"
herein.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the material anticipated federal
income tax considerations to investors of the purchase, ownership and
disposition of the securities offered hereby. The discussion is based upon laws,
regulations, rulings and decisions now in effect, all of which are subject to
change. The discussion below does not purport to deal with all federal tax
considerations applicable to all categories of investors, some of which may be
subject to special rules. Investors should consult their own tax advisors in
determining the federal, state, local and any other tax consequences to them of
the purchase, ownership and disposition of the securities.
TAX CHARACTERIZATION OF THE TRUST
Dewey Ballantine is of the opinion that, although no transaction closely
comparable to that contemplated herein has been the subject of any Treasury
regulation, revenue ruling or judicial decision, and therefore the matter is
subject to interpretation, the Trust will not be an association (or publicly
traded partnership) taxable as a corporation for federal income tax purposes.
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) the
nature of the income of the Trust exempts it from the rule that certain publicly
traded partnerships are taxable as corporations.
If the Trust were taxable as a corporation for federal income tax purposes, the
Trust would be subject to corporate income tax on its taxable income. The
Trust's taxable income would include all its income on the Receivables, possibly
reduced by its interest expense on the Notes. Any such corporate income tax
could materially reduce cash available to make payments on the Notes and
distributions on the Certificates, and Certificateholders could be liable for
any such tax that is unpaid by the Trust.
TAX CONSEQUENCES TO HOLDERS OF THE NOTES
Treatment of the Notes as Indebtedness. The Seller agrees, and the Noteholders
will agree by their purchase of Notes, to treat the Notes as debt for all
federal estate and local income tax purposes. There are no regulations,
published rulings or judicial decisions involving the characterization for
federal income tax purposes of securities
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with terms substantially the same as the Notes. In general, whether instruments
such as the Notes constitute indebtedness for federal income tax purposes is a
question of fact, the resolution of which is based primarily upon the economic
substance of the instruments and the transaction pursuant to which they are
issued rather than merely upon the form of the transaction or the manner in
which the instruments are labeled. The IRS and the courts have set forth various
factors to be taken into account in determining, for federal income tax
purposes, whether or not an instrument constitutes indebtedness and whether a
transfer of property is a sale because the transferor has relinquished
substantial incidents of ownership in the property or whether such transfer is a
borrowing secured by the property. On the basis of its analysis of such factors
as applied to the facts and its analysis of the economic substance of the
contemplated transaction, counsel is expected to conclude that, for federal
income tax purposes, the Notes will be treated as indebtedness of the Trust, and
not as an ownership interest in the Receivables, or an equity interest in the
Trust or in a separate association taxable as a corporation or other taxable
entity.
Except as described below, interest paid or accrued on a Note will be treated
as ordinary income to the Noteholders and principal payments on a Note will be
treated as a return of capital to the extent of the Noteholder's basis in the
Note allocable thereto. An accrual method taxpayer will be required to include
in income interest on the Notes when earned, even if not paid, unless it is
determined to be uncollectible. The Trust will report to Noteholders of record
and the Internal Revenue Service (the "IRS") in respect of the interest paid and
original issue discount, if any, accrued on the Notes to the extent required by
law.
Although, as described above, it is the opinion of counsel that, for federal
income tax purposes, the Notes will be characterized as debt, such opinion is
not binding on the IRS and thus no assurance can be given that such a
characterization will prevail. If the IRS successfully asserted that one or more
of the Notes did not represent debt for federal income tax purposes, the Notes
would likely be treated as equity interests in the Trust. If so treated, the
Trust might be taxable as a corporation and the taxable corporation would not be
able to reduce its taxable income by deductions for interest expense on Notes
recharacterized as equity.
Original Issue Discount. It is anticipated that the Notes will not have any
original issue discount ("OID") other than possibly OID within a de minimis
exception and that accordingly the provisions of sections 1271 through 1273 and
1275 of the Internal Revenue Code of 1986, as amended (the "Code"), generally
will not apply to the Notes. OID will be considered de minimis if it is less
than 0.25% of the principal amount of a Note multiplied by its expected weighted
average life.
Market Discount. A subsequent purchaser who buys a Note for less than its
principal amount may be subject to the "market discount" rules of Section 1276
through 1278 of the Code. If a subsequent purchaser of a Note disposes of such
Note (including certain nontaxable dispositions such as a gift), or receives a
principal payment, any gain upon such sale or other disposition will be
recognized, or the amount of such principal payment will be treated, as ordinary
income to the extent of any "market discount" accrued for the period that such
purchaser holds the Note. Such holder may instead elect to include market
discount in income as it accrues with respect to all debt instruments acquired
in the year of acquisition of the Notes and thereafter. Market discount
generally will equal the excess, if any, of the then current unpaid principal
balance of the Note over the purchaser's basis in the Note immediately after
such purchaser acquired the Note. In general, market discount on a Note will be
treated as accruing over the term of such Note in the ratio of interest for the
current period over the sum of such current interest and the expected amount of
all remaining interest payments, or at the election of the holder, under a
constant yield method. At the request of a holder of a Note, information will be
made available that will allow the holder to compute the accrual of market
discount under the first method described in the preceding sentence.
The market discount rules also provide that a holder who incurs or continues
indebtedness to acquire a Note at a market discount may be required to defer the
deduction of all or a portion of the interest on such indebtedness until the
corresponding amount of market discount is included in income.
Notwithstanding the above rules, market discount on a Note will be considered
to be zero if it is less than a de minimus amount, which is 0.25% of the
remaining principal balance of the Note multiplied by its expected weighted
average remaining life. If OID or market discount is de minimis, the actual
amount of discount must be allocated
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to the remaining principal distributions on the Notes and, when each such
distribution is received, capital gain equal to the discount allocated to such
distribution will be recognized.
Market Premium. A subsequent purchaser who buys a Note for more than its
principal amount generally will be considered to have purchased the Note at a
premium. Such holder may amortize such premium, using a constant yield method,
over the remaining term of the Note and, except as future regulations may
otherwise provide, may apply such amortized amounts to reduce the amount of
interest reportable with respect to such Note over the period from the purchase
date to the date of maturity of the Note. Legislative history to the Tax Reform
Act of 1986 indicates that the amortization of such premium on an obligation
that provides for a partial principal payments prior to maturity should be
governed by the methods for accrual of market discount on such an obligation
(described above). Proposed regulations implementing the provisions of the Tax
Reform Act of 1986 provide for the use of the constant yield method to determine
the amortization of premiums. Such proposed regulations will apply to bonds
acquired on or after 60 days the final regulations are published. A holder that
elects to amortize premium must reduce his tax basis in the related obligation
by the amount of the aggregate deductions (or interest offsets) allowable for
amortizable premium. If a debt instrument purchased at a premium is redeemed in
full prior to its maturity, a purchaser who has elected to amortize premium
should be entitled to a deduction for any remaining unamortized premium in the
taxable year of redemption.
Sale or Redemption of Notes. If a Note is sold or retired, the seller will
recognize gain or loss equal to the difference between the amount realized on
the sale and his adjusted basis in the Note. Such adjusted basis generally will
equal the cost of the Note to the seller, increased by any original issue
discount included in the seller's gross income in respect of the Note (and by
any market discount which the taxpayer elected to include in income or was
required to include in income), and reduced by payments other than payments of
qualified stated interest in respect of the Note received by the seller and by
any amortized premium. Similarly, a holder who receives a payment other than a
payment of qualified stated interest in respect of a Note, either on the date on
which such payment is scheduled to be made or as a prepayment, will recognize
gain equal to the excess, if any, of the amount of the payment over his adjusted
basis in the Note allocable thereto. A Noteholder who receives a final payment
which is less than his adjusted basis in the Note will generally recognize a
loss in the amount of the shortfall on the last day of his taxable year.
Generally, any such gain or loss realized by an investor who holds a Note as a
"capital asset" within the meaning of Code Section 1221 should be capital gain
or loss, except as described above in respect of market discount and except that
a loss attributable to accrued but unpaid interest may be an ordinary loss.
Taxation of Certain Foreign Investors. Interest payments (including OID) on the
Notes made to a Noteholder who is a nonresident alien individual, foreign
corporation or other non-United States person (a "foreign person") generally
will be "portfolio interest" which is not subject to United States tax if such
payments are not effectively connected with the conduct of a trade or business
in the United States by such foreign person and if the Trust (or other person
who would otherwise be required to withhold tax from such payments) is provided
with an appropriate statement that the beneficial owner of the Note identified
on the statement is a foreign person.
Backup Withholding. Distributions of interest and principal as well as
distributions of proceeds from the sale of the Notes, may be subject to the
"backup withholding tax" under Section 3406 of the Code at rate of 31% if
recipients of such distributions fail to furnish to the payor certain
information, including their taxpayer identification numbers, or otherwise fail
to establish an exemption from such tax. Any amounts deducted and withheld from
a distribution to a recipient would be allowed as a credit against such
recipient's federal income tax. Furthermore, certain penalties may be imposed by
the IRS on a recipient of distributions that is required to supply information
but that does not do so in the proper manner.
TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES
Treatment of the Trust as a Partnership. The Seller and AmeriCredit will agree,
and the Certificateholders 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, and the Notes being debt
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of the partnership. However, the proper characterization of the arrangement
involving the Trust, the Certificates, the Notes, the Seller and AmeriCredit is
not clear because there is no authority on transactions closely comparable to
that contemplated herein.
For example, because the Certificates have certain features characteristic of
debt, the Certificates might be considered debt of the Seller or the Trust.
Generally, provided such Certificates are issued at or close to face value, any
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.
Partnership Taxation. As a partnership, the Trust will not be subject to
federal income tax unless treated as a publicly traded partnership taxable as a
corporation. Any such corporate income tax could materially reduce cash
available to make payments on the Notes and distributions on the Certificates,
and Certificateholders could be liable for any such tax that is unpaid by the
Trust. Assuming that the Trust is taxable as a partnership, each
Certificateholder will be required to separately take into account such holder's
allocated share of income, gains, losses, deductions and credits of the Trust.
In certain instances, however, the Trust could have an obligation to make
payments of withholding tax on behalf of a Certificateholder. See "Backup
Withholding" and "Tax Consequences to Foreign Certificateholders" below. The
Trust's income will consist primarily of interest and finance charges earned on
the Receivables (including appropriate adjustments for market discount, OID and
bond premium) and any gain upon collection or disposition of Receivables. The
Trust's deductions will consist primarily of interest accruing with respect to
the Notes, servicing and other fees, and losses or deductions upon collection or
disposition of Receivables.
The tax items of a partnership are allocable to the partners in accordance with
the Code, Treasury regulations and the partnership agreement (here, the Trust
Agreement and related documents). The Trust Agreement will provide, in general,
that the Certificateholders will be allocated taxable income of the Trust for
each month equal to the sum of (i) the interest that accrues on the Certificates
in accordance with their terms for such month, including interest accruing at
the Certificate Rate for such month and interest on amounts previously due on
the Certificates but not yet distributed; (ii) any Trust income attributable to
discount on the Receivables that corresponds to any excess of the principal
amount of the Certificates over their initial issue price; (iii) prepayment
premium payable to the Certificateholders for such month; and (iv) any other
amounts of income payable to the Certificateholders for such month. Such
allocation will be reduced by any amortization by the Trust of premium on
Receivables that corresponds to any excess of the issue price of Certificates
over their principal amount. Based on the economic arrangement of the parties
this approach for allocating Trust income should be permissible under applicable
Treasury regulations, although Counsel is unable to opine that the IRS would not
require a greater amount of income to be allocated to Certificateholders.
Moreover, even under the foregoing method of allocation, Certificateholders may
be allocated income equal to the entire Certificate Rate plus the other items
described above even though the Trust might not have sufficient cash to make
current cash distributions of such amount. Thus, cash basis holders 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 allocations and tax reporting will be done on a uniform basis for all
Certificateholders but Certificateholders may be purchasing Certificates at
different times and at different prices, Certificateholders may be required to
report on their tax returns taxable income that is greater or less than the
amount reported to them by the Trust.
Substantially all of the taxable income allocated to a Certificateholder that
is a pension, profit sharing or employee benefit plan or other tax-exempt entity
(including an individual retirement account) will constitute "unrelated business
taxable income" generally taxable to such a holder under the Code.
An individual taxpayer's share of expenses of the Trust (including fees to the
Servicer but not interest expense) would be miscellaneous itemized deductions.
Such deductions might be disallowed to the individual in whole or in part and
might result in such holder being taxed on an amount of income that exceeds the
amount of cash actually distributed to such holder over the life of the Trust.
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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 will not be issued
with OID, and, therefore, the Trust should not have OID income. However, the
purchase price paid by the Trust for the Receivables may be greater or less than
the remaining principal balance of the Receivables at the time of purchase. If
so, the Receivables will have been acquired at a premium or discount, as the
case may be. (As indicated above, the Trust will make this calculation on an
aggregate basis, but might be required to recompute it on a
Receivable-by-Receivable basis.)
If the Trust acquires the Receivables at a market discount or premium, the
Trust will elect to include any such discount in income currently as it accrues
over the life of the Receivables or to offset any such premium against interest
income on the Receivables. As indicated above, a portion of such market discount
income or premium deduction will 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. Under proposed
regulations issued on May 9, 1996, if such a termination occurs the Trust will
be considered to have transferred all of its assets and liabilities to a new
partnership in exchange for interests in the new partnership, and then,
immediately thereafter, to have distributed these partnership interest to its
partners in liquidation of the terminating partnership. The Trust will not
comply with certain technical requirements that might apply when such a
constructive termination occurs under either the existing or proposed
regulations. As a result, the Trust may be subject to certain tax penalties and
may incur additional expenses if it is required to comply with those
requirements. Furthermore, the Trust might not be able to comply due to lack of
data.
Disposition of Certificates. 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
Certificate, and, upon sale or other disposition of some of the Certificates,
allocate a portion of such aggregate tax basis to the Certificates sold (rather
than maintaining a separate tax basis in each Certificate for purposes of
computing gain or loss on a sale of that Certificate).
Any gain on the sale of a Certificate attributable to the holder's share of
unrecognized accrued market discount on the Receivables would generally be
treated as ordinary income to the holder and would give rise to special tax
reporting requirements. The Trust does not expect to have any other assets that
would give rise to such special reporting requirements. Thus, to avoid those
special reporting requirements, the Trust will elect to include market discount
in income as it accrues.
If a Certificateholder is required to recognize an aggregate amount of income
(not including income attributable to disallowed itemized deductions described
above) over the life of the Certificates that exceeds the aggregate cash
distributions with respect thereto, such excess will generally give rise to a
capital loss upon the retirement of the Certificates.
Allocations Between Transferors and Transferees. In general, the Trust's
taxable income and losses will be determined monthly and the tax items for a
particular calendar month will be apportioned among the Certificateholders in
proportion to the principal amount of Certificates owned by them as of the close
of the last day
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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
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 Owner
Trustee is authorized to revise the Trust's method of allocation between
transferors and transferees to conform to a method permitted by future
regulations.
Section 754 Election. In the event that a Certificateholder sells its
Certificates at a profit (or loss), the purchasing Certificateholder will have a
higher (or 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 tax purposes on an accrual basis and the fiscal year of
the Trust will be the calendar year. The Trustee will file a partnership
information return (IRS Form 1065) with the IRS for each taxable year of the
Trust and will report each Certificateholder's allocable share of items of Trust
income and expense to holders and the IRS on Schedule K-1. The Trust will
provide the Schedule K-1 information to nominees that fail to provide the Trust
with the information statement described below and such nominees will be
required to forward such information to the beneficial owners of the
Certificates. Generally, holders must file tax returns that are consistent with
the information return filed by the Trust or be subject to penalties unless the
holder notifies the IRS of all such inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as a nominee
at any time during a calendar year is required to furnish the Trust with a
statement containing certain information on the nominee, the beneficial owners
and the Certificates so held. Such information includes (i) the name, address
and taxpayer identification number of the nominee and (ii) as to each beneficial
owner (x) the name, address and identification number of such person, (y)
whether such person is a United States person, a tax-exempt entity or a foreign
government, an international organization, or any wholly owned agency or
instrumentality of either of the foregoing, and (z) certain information on
Certificates that were held, bought or sold on behalf of such person throughout
the year. In addition, brokers and financial institutions that hold Certificates
through a nominee are required to furnish directly to the Trust information as
to themselves and their ownership of Certificates. A clearing agency registered
under Section 17A of the Exchange Act is not required to furnish any such
information statement to the Trust. The information referred to above for any
calendar year must be furnished to the Trust on or before the following January
31. Nominees, brokers and financial institutions that fail to provide the Trust
with the information described above may be subject to penalties.
The Seller will be designated as the tax matters partner in the related Trust
Agreement and, as such, will be responsible for representing the
Certificateholders in any dispute with the IRS. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on which the
partnership information return is filed. Any adverse determination following an
audit of the return of the Trust by the appropriate taxing authorities could
result in an adjustment of the returns of the Certificateholders, and, under
certain circumstances, a Certificateholder may be precluded from separately
litigating a proposed adjustment to the items of the Trust. An adjustment could
also result in an audit of a Certificateholder's returns and adjustments of
items not related to the income and losses of the Trust.
Tax Consequences to Foreign Certificateholders. As discussed below, an
investment in a Certificate is not suitable for any non-U.S. person which is not
eligible for a complete exemption from U.S. withholding tax on interest under a
tax treaty with the United States. Accordingly, no interest in a Certificate
should be acquired by or on behalf of any such non-U.S. person.
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No regulations, published rulings or judicial decisions exist that would
discuss the characterization for federal withholding tax purposes with respect
to non-U.S. persons of a partnership with activities substantially the same as
the Trust. Depending upon the particular terms of the related Trust Agreement
and Sale and Servicing Agreement, a trust may be considered to be engaged in a
trade or business in the United States for purposes or federal withholding taxes
with respect to non-U.S. persons. If the Trust is considered to be engaged in a
trade or business in the United States for such purposes, the income of the
Trust distributable to a non-U.S. person would be subject to federal withholding
tax at a rate of 35% for persons taxable as a corporation and 39.6% for all
other non-US. persons. Also, in such cases, a non-U.S. Certificateholder that is
a corporation may be subject to the branch profits tax. If the Trust is notified
that a Certificateholder is a foreign person, the Trust may withhold as if it
were engaged in a trade or business in the United States in order to protect the
Trust from possible adverse consequences of a failure to withhold. Subsequent
adoption of Treasury regulations or the issuance of other administrative
pronouncements may require the Trust to change its withholding procedures.
If a Trust is engaged in a trade or business, each foreign Certificateholder
will be required to file a U.S. individual or corporate income tax return
(including in the case of a corporation, the branch profits tax) on its share of
the Trust's income. Each foreign holder must obtain a taxpayer identification
number from the IRS and submit that number to the withholding agent on Form W-8
in order to assure appropriate crediting of any taxes withheld. A foreign holder
generally would be entitled to file with the IRS a claim for refund with respect
to withheld taxes, taking the position that no taxes were due because the Trust
was not engaged in a U.S. trade or business. However, interest payments made to
(or accrued by) a Certificateholder who is a foreign person may be considered
guaranteed payments to the extent such payments are determined without regard to
the income of the Trust and for that reason or because of the nature of the
Receivables, the interest will likely not be considered "portfolio interest." As
a result, even if the Trust is not considered to be engaged in a U.S. trade or
business, Certificateholders would be subject to United States Federal income
tax which must be withheld at a rate of 30% on their share of the Trusts income
(without reduction for interest expense), unless reduced or eliminated pursuant
to an applicable income tax treaty. If the Trust is notified that a
Certificateholder is a foreign person, the Trust may be required to withhold and
pay over such tax, which can exceed the amounts otherwise available for
distribution to such a Certificateholder. A foreign holder would generally be
entitled to file with the IRS a refund claim for such withheld taxes, taking the
position that the interest was portfolio interest and therefore not subject to
U.S. tax. However, the IRS may disagree and no assurance can be given as to the
appropriate amount of tax liability. As a result, each potential foreign
Certificateholder should consult its tax advisor as to whether the tax
consequences of holding an interest in a Certificate make it an unsuitable
investment.
Backup Withholding. Distributions made on the Certificates and proceeds from
the sale of the Certificates will be subject to a "backup" withholding tax of
31% if, in general, the Certificateholder fails to comply with certain
identification procedures, unless the holder is an exempt recipient under
applicable provisions of the Code.
STATE TAX CONSIDERATIONS
Potential Noteholders and Certificateholders should consider the state and
local income tax consequences of the purchase, ownership and disposition of the
Notes and Certificates. State and local income tax laws may differ substantially
from the corresponding federal law, and this discussion does not purport to
describe any aspect of the income tax laws of any state or locality. Therefore,
potential Noteholders and Certificateholders should consult their own tax
advisors with respect to the various state and local tax consequences of an
investment in the Notes and Certificates.
ERISA CONSIDERATIONS
Section 406 of ERISA, and/or Section 4975 of the Code, prohibits a pension,
profit-sharing or other employee benefit plan, as well as individual retirement
accounts and certain types of Keogh Plans (each a "Benefit Plan") from engaging
in certain transactions with persons that are "parties in interest" under ERISA
or "disqualified persons"
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under the Code with respect to such Benefit Plan. A violation of these
"prohibited transaction" rules may result in an excise tax or other penalties
and liabilities under ERISA and the Code for such persons. Title I of ERISA also
requires that fiduciaries of a Benefit Plan subject to ERISA make investments
that are prudent, diversified (except if prudent not to do so) and in accordance
with governing plan documents.
Certain transactions involving the purchase, holding or transfer of the
Securities might be deemed to constitute prohibited transactions under ERISA and
the Code if assets of the Trust were deemed to be assets of a Benefit Plan.
Under a regulation issued by the United States Department of Labor (the "Plan
Assets Regulation"), the assets of the Trust would be treated as plan assets of
a Benefit Plan for the purposes of ERISA and the Code only if the Benefit Plan
acquires an "Equity Interest" 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 Seller believes that the Notes should be treated as
indebtedness without substantial equity features for purposes of the Plan Assets
Regulation. However, without regard to whether the Notes are treated as an
Equity Interest for such purposes, the acquisition or holding of Notes by or on
behalf of a Benefit Plan could be considered to give rise to a prohibited
transaction if the Trust, the Owner Trustee or the Indenture Trustee, the owner
of collateral, or any of their respective affiliates is or becomes a party in
interest or a disqualified person with respect to such Benefit 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: Prohibited
Transaction Class Exemption ("PTCE") 90-1, regarding investments by insurance
company pooled separate accounts; PTCE 95-60, regarding investments by insurance
company general accounts; PTCE 91-38, regarding investments by bank collective
investment funds; PTCE 96-23, regarding transactions affected by in-house asset
managers; and PTCE 84-14, regarding transactions effected by "qualified
professional asset managers." Each investor using the assets of a Benefit Plan
which acquires the Notes, or to whom the Notes are transferred, will be deemed
to have represented that the acquisition and continued holding of the Notes will
be covered by one of the exemptions listed above or by another Department of
Labor Class Exemption.
The Certificates may not be acquired by (a) an employee benefit plan (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA, (b) a plan described in Section 4975(e)(1) of the Code or (c) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity. By its acceptance of a Certificate, each
Certificateholder will be deemed to have represented and warranted that it is
not subject to the foregoing limitation.
Employee benefit plans that are governmental plans (as defined in Section 3(32)
of ERISA) and certain church plans (as defined in Section 3(33) of ERISA) are
not subject to ERISA requirements.
A plan fiduciary considering the purchase of Notes should consult its tax
and/or legal advisors regarding whether the assets of the Trust would be
considered plan assets, the possibility of exemptive relief from the prohibited
transaction rules and other issues and their potential consequences.
LEGAL INVESTMENT
The Class A-1 Notes will be eligible securities for purchase by money market
funds under the Investment Company Act of 1940, as amended.
RATINGS
It is a condition to issuance that the Class A-1 Notes be rated A-1+ by S&P,
and P-1 by Moody's, and that the Class A-2 Notes, the Class A-3 Notes and the
Certificates be rated AAA by S&P and Aaa by Moody's. The ratings by the Rating
Agencies of the Securities will be (i) with respect to the Class A-1 Notes,
without regard to the Note Policy in the case of S&P and substantially based on
the Note Policy in the case of Moody's and (ii) with respect
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to all other Classes of Notes and Certificates, based primarily on the Policies.
There is no assurance that the ratings initially assigned to the Notes and the
Certificates will not subsequently be lowered or withdrawn by the Rating
Agencies.
UNDERWRITING
Under the terms and subject to the conditions contained in the Underwriting
Agreement, the Seller has agreed to cause the Trust to sell to the Underwriters
named below (the "Underwriters"), for whom CS First Boston Corporation is acting
as representative, and the Underwriters have severally but not jointly agreed to
purchase the following respective number of Notes and Certificates.
Underwriter Principal Amount Principal Amount
----------- of Notes of Certificates
---------------- ----------------
CS First Boston
Corporation...........
Prudential Securities
Incorporated..........
The Underwriters have informed the Seller that they do not expect discretionary
sales by the Underwriters to exceed 5% of the principal amount of the Securities
being offered hereby.
The Seller has been advised by the Underwriters that the Underwriters propose
to offer the Securities from time to time for sale in negotiated transactions or
otherwise, at prices determined at the time of sale. The Underwriters may effect
such transactions by selling Securities to or through dealers and such dealers
may receive compensation in the form of underwriting discounts, concessions or
commissions from the Underwriters and any purchasers of Securities for whom they
may act as agents. The Underwriters and any dealers that participate with the
Underwriters in the distribution of the Securities may be deemed to be
underwriters, and any discounts or commissions received by them and any profit
on the resale of Securities by them may be deemed to be underwriting discounts
or commissions, under the Securities Act of 1933, as amended.
AmeriCredit and the Seller have jointly agreed to indemnify the several
Underwriters against certain liabilities, including civil liabilities under the
Securities Act, or contribute to payments which the Underwriters may be required
to make in respect thereof.
The Indenture Trustee and the Trust Collateral Agent may from time to time
invest the funds in the Collection Account, the Pre-Funding Account, the
Capitalized Interest Account, in Eligible Investments acquired from the
Underwriters.
EXPERTS
The consolidated balance sheets of Financial Security and Subsidiaries as of
December 31, 1995 and 1994 and the related consolidated statements of income,
changes in shareholders' equity and cash flows for each of the three years in
the period ended December 31, 1995, incorporated by reference herein, have been
audited by Coopers & Lybrand L.L.P., independent accountants, given on the
authority of that firm as experts in accounting and auditing.
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LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus, certain federal
income tax and other matters will be passed upon for the Seller and the Trust by
Dewey Ballantine. Certain legal matters relating to the Securities will be
passed upon for the Underwriters by Dewey Ballantine. Certain legal matters will
be passed upon for the Insurer by Bruce E. Stern, General Counsel, the Insurer.
The Insurer is represented by Rogers & Wells.
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INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ABS................................................................... 24
ABS Table............................................................. 25
Accelerated Principal Amount.......................................... 40
Aggregate risks....................................................... 31
AmeriCredit........................................................... 4
Amount Financed....................................................... 40
APR................................................................... 6
Available Funds....................................................... 41
Basic Servicing Fee................................................... 38
Benefit Plan.......................................................... 12, 56
Business Day.......................................................... 7, 49
Capitalized Interest Account.......................................... 11, 38
Cedel................................................................. 1, 4
Certificate Balance................................................... 41
Certificate Distribution Account...................................... 38
Certificate Policy.................................................... 11
Certificate Policy Claim Amount....................................... 42
Certificate Prepayment Amount......................................... 10, 35
Certificateholders.................................................... 9
Certificateholders ' Interest Carryover Shortfall..................... 41
Certificateholders' Accelerated Principal Amount...................... 41
Certificateholders' Distributable Amount.............................. 41
Certificateholders' Interest Distributable Amount..................... 41
Certificateholders' Monthly Interest Distributable Amount............. 41
Certificateholders' Monthly Principal Distributable Amount............ 41
Certificateholders' Percentage........................................ 41
Certificateholders' Principal Carryover Shortfall..................... 41
Certificateholders' Principal Distributable Amount.................... 41
Certificates.......................................................... 1, 5
Class A-1 Notes....................................................... 1, 4
Class A-2 Notes....................................................... 1, 4
Class A-3 Notes....................................................... 1, 4
Code.................................................................. 51
Collected Funds....................................................... 42
Collection Account.................................................... 37
Commission............................................................ 3
Contracts............................................................. 18
Cram Down Loss........................................................ 42
Dealer Agreements..................................................... 17
Deficiency Claim Amount............................................... 42
Deficiency Notice..................................................... 42
Determination Date.................................................... 42
Disqualified persons.................................................. 56
Dissolution Event..................................................... 15
Distribution Amount................................................... 42
Distribution Date..................................................... 2, 7, 40
Distributions......................................................... 40
DTC................................................................... 1
Equity Interest....................................................... 57
</TABLE>
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<TABLE>
<CAPTION>
Page
----
<S> <C>
Euroclear........................................................... 1, 4
Events of Default................................................... 34
Exchange Act........................................................ 3
Financed Vehicles................................................... 2, 6
Financial Security.................................................. 30
Funding Period...................................................... 11, 38
Guaranteed Distributions............................................ 48
Holdings............................................................ 3, 30
Indenture........................................................... 1
Indenture Trustee................................................... 1, 4
Index Maturity...................................................... 32
Initial Cutoff Date................................................. 1, 21
Initial Financed Vehicles........................................... 1, 5
Initial Pre-Funded Amount........................................... 11, 38
Initial Receivables................................................. 1, 5
Insurance Agreement................................................. 9
Insurance Agreement Indenture Cross Defaults........................ 34
Insurer............................................................. 3, 4
Insurer Default..................................................... 46
Insurer Optional Deposit............................................ 42
Interest Period..................................................... 7, 32
Interest Rate....................................................... 7
IRS................................................................. 51
Issuer.............................................................. 4
LIBOR............................................................... 7, 32
LIBOR Determination Date............................................ 32
Liquidated Receivable............................................... 42
Lockbox............................................................. 37
Lockbox Account..................................................... 37
Mandatory Redemption Date........................................... 10, 38
Monthly Capitalized Interest Amount................................. 11, 38
Monthly Period...................................................... 8, 33
Moody's............................................................. 12
Net Liquidation Proceeds............................................ 42
Note Distribution Account........................................... 38
Note Policy......................................................... 11
Note Policy Claim Amount............................................ 43
Note Prepayment Amount.............................................. 9, 34
Noteholder Monthly Interest Distributable Amount.................... 43
Noteholders......................................................... 7
Noteholders' Accelerated Principal Amount........................... 43
Noteholders' Distributable Amount................................... 43
Noteholders' Interest Carryover Shortfall........................... 43
Noteholders' Interest Distributable Amount.......................... 43
Noteholders' Monthly Principal Distributable Amount................. 43
Noteholders' Percentage............................................. 43
Noteholders' Principal Carryover Shortfall.......................... 43
Noteholders' Principal Distributable Amount......................... 43
Notes............................................................... 1, 4
OID................................................................. 51
</TABLE>
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<TABLE>
<CAPTION>
Page
----
<S> <C>
Order........................................................... 48, 49
Original Pool Balance........................................... 9
Owner Trustee................................................... 4
Parties in interest............................................. 56
Payment Date.................................................... 7
Plan Assets Regulation.......................................... 57
Policies........................................................ 1
Pool Balance.................................................... 17
Portfolio interest.............................................. 56
Pre-Funded Amount............................................... 11, 38
Pre-Funding Account............................................. 2, 9, 11, 38
Precomputed Receivables......................................... 24
Prepayments..................................................... 13, 24
Principal Balance............................................... 43
Principal Distributable Amount.................................. 8, 33, 44
Pro Forma Security Balance...................................... 44
Prohibited transaction.......................................... 57
Prospectus...................................................... 3
PTCE............................................................ 57
Purchase Agreement.............................................. 5
Purchase Agreements............................................. 37
Purchase Amount................................................. 44
Qualified professional asset managers........................... 57
Rating Agencies................................................. 12
Receivables..................................................... 2
Record Date..................................................... 7
Redemption Price................................................ 34
Reference Banks................................................. 33
Required Pro Forma Security Balance............................. 44
S&P............................................................. 12
Schedule of Receivables......................................... 37
Scheduled Payments.............................................. 47
Securities...................................................... 1
Securityholders................................................. 9
Seller.......................................................... 1, 4
Servicer........................................................ 4
Servicer Termination Event...................................... 45
Simple Interest Receivables..................................... 24
Single risks.................................................... 31
Special A-1 Distribution Date................................... 7
Specified Spread Account Requirement............................ 45
Spread Account Agreement........................................ 45
Spread Account Initial Deposit.................................. 45
Subsequent Cutoff Date.......................................... 6
Subsequent Financed Vehicles.................................... 2, 5
Subsequent Purchase Agreement................................... 5
Subsequent Receivables.......................................... 5
Subsequent Transfer Date........................................ 6
Telerate Page 3750.............................................. 33
The Owner Trustee............................................... 17
</TABLE>
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<TABLE>
<CAPTION>
Page
----
<S> <C>
The Policies............................................................ 14
The Receivables......................................................... 20
Trust................................................................... 1, 4
Trust Agreement......................................................... 4
Trust Collateral Agent.................................................. 1, 4
Trust Documents......................................................... 37
Trust Property.......................................................... 5
Underwriters............................................................ 58
Unrelated business taxable income....................................... 53
</TABLE>
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ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered AmeriCredit
Automobile Receivables Trust 1996-C Securities (the "Global Securities") will be
available only in book-entry form. Investors in the Global Securities may hold
such Global Securities through any of DTC, CEDEL or Euroclear. The Global
Securities will be tradeable as home market instruments in both the European and
U.S. domestic markets. Initial settlement and all secondary trades will settle
in same-day funds.
Secondary market trading between investors through CEDEL and Euroclear will be
conducted in the ordinary way in accordance with the normal rules and operating
procedures of CEDEL and Euroclear and in accordance with conventional eurobond
practice (i.e., seven calendar day settlement).
Secondary market trading between investors through DTC will be conducted
according to DTC's rules and procedures applicable to U.S. corporate debt
obligations.
Secondary cross-market trading between CEDEL or Euroclear and DTC Participants
holding Certificates 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 Relevant Depository
which in turn will hold such positions in their accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC will follow DTC
settlement practices. 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 prior home
equity loan asset-backed certificates issues in same-day funds.
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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 Participants. 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 Relevant Depository, 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, on the basis of the actual number of days in such accrual
period and a year assumed to consist of 360 days. For transactions settling on
the 31st of the month, payment will include interest accrued to and excluding
the first day of the following month. Payment will then be made by the Relevant
Depository 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 debt 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 debt
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 preposition 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 account 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 preposition 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 the 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 crediting Global Securities
to the respective European Depository 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 Participants 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
Depository, 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 Depository, as appropriate, to credit the Global
Securities to the DTC Participant's account against payment. Payment will
include interest accrued on the Global Securities from and including the last
coupon payment to and excluding the settlement date on the basis of the actual
number of days in such accrual period and a year assumed to consist to 360 days.
For transactions settling on the 31st of the month, payment
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will include interest accrued to and excluding the first day of the following
month. The payment will then be reflected in the account of 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). In the event that the CEDEL Participant or Euroclear Participant have
a line of credit with its respective clearing system and elect to be in debt in
anticipation of receipt of the sale proceeds in its account, the back-valuation
will extinguish any overdraft 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 is 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 trade is reflected in their CEDEL or Euroclear accounts) in accordance
with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant no later
than one day prior to settlement, which would give the Global Securities
sufficient time to be reflected in their CEDEL or Euroclear account in order to
settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade so that
the value date for the purchase from the DTC Participant is at least one day
prior to the value date for the sale to the CEDEL Participant or Euroclear
Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through CEDEL or
Euroclear (or through DTC if the holder has an address outside the U.S.) will be
subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original issue discount) on registered debt issued by U.S.
Persons (as defined below), 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 that are Non-U.S. Persons (as defined below) 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 (as defined below), 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 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
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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 Certificate Owners or their 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 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, partnership or other entity organized in or under the laws
of the United States or any political subdivision thereof or (iii) an estate or
trust that is subject to U.S. federal income tax regardless of the source of its
income. The term "Non-U.S. Person" means any person who is not a U.S. Person.
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 advisors for specific tax advice
concerning their holding and disposing of the Global Securities.
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PROSPECTUS
Auto Receivables Backed Securities Issuable in Series
AMERICREDIT FINANCIAL SERVICES, INC.
This Prospectus describes certain Auto Receivables Backed Notes (the
"Notes") and Auto Receivables Backed Certificates (the "Certificates" and,
together with the Notes, the "Securities") that may be sold from time to time in
one or more series, in amounts, at prices and on terms to be determined at the
time of sale and to be set forth in a supplement to this Prospectus (each, a
"Prospectus Supplement"). Each series of Securities may include one or more
classes of Notes and one or more classes of Certificates, which will be issued
either by the Company, a Transferor (as hereinafter defined), or by a trust to
be formed by the Company for the purpose of issuing one or more series of such
Securities (each, a "Trust"). The Company, a Transferor or a Trust, as
appropriate, issuing Securities as described in this Prospectus and the related
Prospectus Supplement shall be referred to herein as the "Issuer."
Each class of Securities of any series will evidence beneficial
ownership in a segregated pool of assets (the "Trust Property") (such
Securities, "Certificates") or will represent indebtedness of the Issuer secured
by the Trust Property (such Securities, "Notes"), as described herein and in the
related Prospectus Supplement. The Trust Property may consist of any combination
of retail installment sales contracts between manufacturers, dealers or certain
other originators and retail purchasers secured by new and used automobiles and
light duty trucks financed thereby, or participation interests therein, together
with all monies received relating thereto (the "Contracts"). The Trust Property
may also include a security interest in the underlying new and used automobiles
and light duty trucks and property relating thereto, together with the proceeds
thereof (the "Vehicles" together with the Contracts, the "Receivables"). If and
to the extent specified in the related Prospectus Supplement, credit enhancement
with respect to the Trust Property or any class of Securities may include any
one or more of the following: a financial guaranty insurance policy (a "Policy")
issued by an insurer specified in the related Prospectus Supplement, a reserve
account, letters of credit, credit or liquidity facilities, third party payments
or other support, cash deposits or other arrangements. In addition to or in lieu
of the foregoing, credit enhancement may be provided by means of subordination,
cross-support among the Receivables or over-collateralization. See "Description
of the Trust Agreements -- Credit and Cash Flow Enhancement." The Receivables in
the Trust Property for a series will have been originated by the Company on or
prior to the date of issuance of the related Securities, as described herein and
in the related Prospectus Supplement. The Receivables included in a Trust Fund
will be serviced by a servicer (the "Servicer") described in the related
Prospectus Supplement.
Each series of Securities may include one or more classes (each, a
"Class"). A series may include one or more Classes of Securities entitled to
principal distributions, with disproportionate, nominal or no interest
distributions, or to interest distributions, with disproportionate, nominal or
no principal distributions. The rights of one or more Classes of Securities of
any series may be senior or subordinate to the rights of one or more of the
other Classes of Securities. A series may include two or more Classes of
Securities which differ as to the timing, order or priority of payment, interest
rate or amount of distributions of principal or interest or both. Information
regarding each Class of Securities of a series, together with certain
characteristics of the related Receivables, will be set forth in the related
Prospectus Supplement. The rate of payment in respect of principal of the
Securities of any Class will depend on the priority of payment of such a Class
and the rate and timing of payments (including prepayments, defaults,
liquidations or repurchases of Receivables) on the related Receivables. A rate
of payment lower or higher than that anticipated may affect the weighted average
life of each Class of Securities in the manner described herein and in the
related Prospectus Supplement. See "Description of the Securities."
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" PAGE 13 HEREIN AND IN THE RELATED PROSPECTUS SUPPLEMENT.
THE NOTES OF A GIVEN SERIES REPRESENT OBLIGATIONS OF THE ISSUER ONLY AND DO NOT
REPRESENT OBLIGATIONS OF THE COMPANY, ANY SERVICER OR ANY OF THEIR RESPECTIVE
AFFILIATES. THE CERTIFICATES OF A GIVEN SERIES REPRESENT BENEFICIAL INTERESTS IN
THE RELATED TRUST ONLY AND DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF THE
COMPANY, ANY TRANSFEROR, ANY SERVICER OR ANY OF THEIR RESPECTIVE AFFILIATES.
NEITHER THE SECURITIES NOR THE UNDERLYING RECEIVABLES WILL BE GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY THE COMPANY, ANY
SERVICER, ANY TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES, EXCEPT AS SET FORTH
IN THE RELATED PROSPECTUS SUPPLEMENT. SEE ALSO "RISK FACTORS" PAGE 13.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Offers of the Securities may be made through one or more different
methods, including offerings through underwriters as more fully described under
"Method of Distribution" herein and in the related Prospectus Supplement. Prior
to issuance, there will have been no market for the Securities of any series,
and there can be no assurance that a secondary market for the Securities will
develop, or if it does develop, it will continue.
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of Securities unless accompanied by a Prospectus
Supplement.
The date of this Prospectus is February 23, 1996.
<PAGE> 69
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to a series of Securities to be
offered hereunder, among other things, will set forth with respect to such
series of Securities: (i) a description of the Class or Classes of such
Securities, (ii) the rate of interest, the "Pass-Through Rate" or "Interest
Rate" or other applicable rate (or the manner of determining such rate) and
authorized denominations of such Class of such Securities; (iii) certain
information concerning the Receivables and insurance polices, cash accounts,
letters of credit, financial guaranty insurance policies, third party guarantees
or other forms of credit enhancement, if any, relating to one or more pools of
Receivables or all or part of the related Securities; (iv) the specified
interest, if any, of each Class of Securities in, and manner and priority of,
the distributions from the Trust Property; (v) information as to the nature and
extent of subordination with respect to such series of Securities, if any; (vi)
the payment date to Securityholders; (vii) information regarding the Servicer(s)
for the related Receivables; (viii) the circumstances, if any, under which the
Trust Property may be subject to early termination; (ix) information regarding
tax considerations; and (x) additional information with respect to the method of
distribution of such Securities.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (together with all amendments and
exhibits thereto, referred to herein as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Securities offered pursuant to this Prospectus. For further information,
reference is made to the Registration Statement which may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549; and at the Commission's regional
offices at 500 West Madison, 14th Floor, Chicago, Illinois 60661 and Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies of the Registration
Statement may be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
No person has been authorized to give any information or to make any
representation other than those contained in this Prospectus and any Prospectus
Supplement with respect hereto and, if given or made, such information or
representations must not be relied upon. This Prospectus and any Prospectus
Supplement with respect hereto do not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the Securities offered
hereby and thereby, nor an offer of the Securities to any person in any state or
other jurisdiction in which such offer would be unlawful. The delivery of this
Prospectus at any time does not imply that information herein is correct as of
any time subsequent to its date.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents subsequently filed by the Company with respect to the
Registration Statement, either on its own behalf or on behalf of a Trust,
relating to any series of Securities referred to in the accompanying Prospectus
Supplement, with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), after the
date of this Prospectus and prior to the termination of any offering of the
Securities issued by the Issuer, shall be deemed to be incorporated by reference
in this Prospectus and to be a part of this Prospectus from the date of the
filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein (or in the accompanying Prospectus Supplement) or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein, modifies or replaces 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.
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REPORTS TO SECURITYHOLDERS
So long as the Securities are in book-entry form, monthly and annual
reports concerning the Securities and the Trust will be sent by the Trustee to
Cede & Co., as the nominee of DTC and as registered holder of the Securities
pursuant to the related Pooling and Servicing Agreement. DTC will supply such
reports to Securityholders in accordance with its procedures. To the extent
required by the Securities Exchange Act of 1934, as amended, the Trust will
provide financial information to the Securityholders which has been examined and
reported upon, with an opinion expressed by, an independent public accountant;
to the extent not so required, such financial information will be unaudited. The
Company has determined that the financial statements of no entity other than the
Security Insurer are material to the offering made hereby. The Trust will be
formed to own the Receivables, hold and administer the Pre-Funding Account, to
issue the Securities and to acquire the Subsequent Receivables, if available.
The Trust will have no assets or obligations prior to issuance of the Securities
and will engage in no activities other than those described herein. Accordingly,
no financial statements with respect to the Trust are included in the related
Prospectus Supplement. The audited financial statements of the Certificate
Insurer are set forth in Appendix A to the related Prospectus Supplement, and
the unaudited interim financial statements of the Certificate Insurer are set
forth in Appendix B to the related Prospectus Supplement. The Company intends to
discontinue filing periodic reports at the beginning of the company's next
fiscal year, to the extent permitted by Section 15(d) of the Exchange Act.
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<PAGE> 71
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and by reference to
the information with respect to the Securities of any series contained in the
related Prospectus Supplement to be prepared and delivered in connection with
the offering of such Securities. Certain capitalized terms used in the summary
are defined elsewhere in the Prospectus on the pages indicated in the "Index of
Terms."
Issuer.............................. With respect to each series of Securities,
either the Company, a special-purpose
finance subsidiary of the Company which
may be organized and established by the
Company with respect to the Trust Property
(each such special-purpose finance
subsidiary, a "Transferor") or a trust
(each, a "Trust") to be formed by the
Company. For purposes of this Prospectus,
the term "Company" includes the term
"Transferor". The Company, a Transferor or
a Trust issuing Securities pursuant to
this Prospectus and the related Prospectus
Supplement shall be referred to herein as
the "Issuer" with respect to the related
Securities. See "The Issuers."
Company............................. AmeriCredit Financial Services, Inc.
("AFS" or, the "Company"), a Delaware
corporation. The Receivables will be
either (i) originated by various dealers,
which may or may not be affiliated with
one or more manufacturers of vehicles
("Dealers", and together with such
manufacturers, "Vendors") or (ii) acquired
by the Company from other originators or
owners of Receivables. The Company's
principal executive offices are located at
200 Bailey Avenue, Fort Worth, Texas
76107, and its telephone number is (817)
332-7000. See "The Company and the
Servicer."
Servicer............................ AmeriCredit Financial Services, Inc.
("AFS" or, in its capacity as the
servicer, the "Servicer"). See
"AmeriCredit's Automobile Financing
Program - Servicing and Collections."
Trustee............................. The Trustee for each series of Securities
will be specified in the related
Prospectus Supplement. In addition, a
Trust may separately enter into an
Indenture and may issue Notes pursuant to
such Indenture; in any such case the Trust
and the Indenture will be administered by
separate, independent trustees as required
by the rules and regulations under the
Trust Indenture Act of 1939 and the
Investment Company Act of 1940.
The Securities ..................... Each Class of Securities of any series
will either evidence beneficial ownership
in a segregated pool of assets (the "Trust
Property") (such Securities,
"Certificates") or will represent
indebtedness of the Issuer secured by the
Trust Property (such Securities, "Notes"),
as described herein and in the related
Prospectus Supplement. The Trust Property
may consist of any combination of retail
installment sales contracts between
manufacturers, dealers or certain other
originators and retail purchasers secured
by new and used automobiles and light duty
trucks financed thereby, or participation
interests therein, together with all
monies received relating thereto (the
"Contracts"). The Trust Property also may
include a security interest in the
underlying new and used automobiles and
light duty trucks and property relating
thereto, together with the proceeds
thereof (the "Vehicles" and together with
the Contracts, the "Receivables").
The Trust Property will include
Receivables with respect to which the
related Contract or the related Vehicles
is subject to federal or state
registration or titling requirements. No
Trust Property will include Receivables
with respect to which the underlying
Contracts or Vehicles relate to office
equipment, aircraft, ships or boats,
firearms or other weapons, railroad
rolling stock or facilities such as
factories, warehouses or plants subject to
state laws governing the manner in which
title or security interest in real
property is determined or perfected.
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<PAGE> 72
If and to the extent specified in the
related Prospectus Supplement, credit
enhancement with respect to the Trust
Property or any class of Securities may
include any one or more of the following:
a financial guaranty insurance policy (a
"Policy") issued by an insurer specified
in the related Prospectus Supplement, a
reserve account, letters of credit, credit
or liquidity facilities, third party
payments or other support, cash deposits
or other arrangements. In addition to or
in lieu of the foregoing, credit
enhancement may be provided by means of
subordination, cross-support among the
Receivables or over- collateralization.
The Company will originate Receivables or
acquire Receivables from one or more
originators on or prior to the date of
issuance of the related Securities, as
described herein and in the related
Prospectus Supplement.
With respect to Securities issued by a
Trust, each Trust will be established
pursuant to an agreement (each, a "Pooling
Agreement") by and between the Company and
the Trustee named therein. Each Pooling
Agreement will describe the related pool
of Receivables held by the Trust.
With respect to Securities that represent
debt issued by the Issuer, the Issuer will
enter into an indenture (each, an
"Indenture") by and between the Issuer and
the trustee named on such Indenture (the
"Indenture Trustee"). Each Indenture will
describe the related pool of Receivables
comprising the Trust Property and securing
the debt issued by the related Issuer.
The Receivables comprising the Trust
Property will be serviced by the Servicer
pursuant to a servicing agreement (each, a
"Servicing Agreement") by and between the
Servicer and the related Issuer.
In the case of the Trust Property of any
class of Securities, the contractual
arrangements relating to the establishment
of a Trust, if any, the servicing of the
related Receivables and the issuance of
the related Securities may be contained in
a single agreement, or in several
agreements which combine certain aspects
of the Pooling Agreement, the Servicing
Agreement and the Indenture described
above (for example, a pooling and
servicing agreement, or a servicing and
collateral management agreement). For
purposes of this Prospectus, the term
"Trust Agreement" as used with respect to
Trust Property means, collectively, and
except as otherwise described in the
related Prospectus Supplement, any and all
agreements relating to the establishment
of a Trust, if any, the servicing of the
related Receivables and the issuance of
the related Securities. The term "Trustee"
means any and all persons acting as a
trustee pursuant to a Trust Agreement.
Securities Will Be Non-Recourse.
The Securities will not be obligations,
either recourse or non-recourse (except
for certain non-recourse debt described
under "Certain Tax Considerations"), of
the Company, the related Servicer or any
person other than the related Issuer. The
Notes of a given series represent
obligations of the Issuer, and the
Certificates of a given series represent
beneficial interests in the related Issuer
only and do not represent interests in or
obligations of the Company, the related
Servicer or any of their respective
affiliates other than the related Issuer.
In the case of Securities that represent
beneficial ownership interest in the
related Issuer, such Securities will
represent the beneficial ownership
interests in such Issuer and the sole
source of payment will be the assets of
such Issuer. In the case of Securities
that represent debt issued by the related
Issuer, such Securities will be secured by
assets in the related Trust Property.
Notwithstanding the foregoing, and as to
be described in the related Prospectus
Supplement, certain types of credit
enhancement, such as a letter of credit,
financial guaranty insurance policy or
reserve fund may
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<PAGE> 73
constitute a full recourse obligation of
the issuer of such credit enhancement.
General Nature of the Securities as Investments.
All of the Securities offered pursuant to
this Prospectus and the related Prospectus
Supplement will be rated in one of the
four highest rating categories by one or
more Rating Agencies (as defined herein).
Additionally, except to the extent
provided in the related Prospectus
Supplement, all of the Securities offered
pursuant to this Prospectus and the
related Prospectus Supplement will be of
the fixed-income type ("Fixed Income
Securities"). Fixed Income Securities will
generally be styled as debt instruments,
having a principal balance and a specified
interest rate ("Interest Rate"). Fixed
Income Securities may either represent
beneficial ownership interests in the
related Receivables held by the related
Trust or debt secured by certain assets of
the related Issuer.
Each series or Class of Fixed Income
Securities offered pursuant to this
Prospectus may have a different Interest
Rate, which may be a fixed or adjustable
Interest Rate. The related Prospectus
Supplement will specify the Interest Rate
for each series or Class of Fixed Income
Securities described therein, or the
initial Interest Rate and the method for
determining subsequent changes to the
Interest Rate.
A series may include one or more Classes
of Fixed Income Securities ("Strip
Securities") entitled (i) to principal
distributions, with disproportionate,
nominal or no interest distributions, or
(ii) to interest distributions, with
disproportionate, nominal or no principal
distributions. In addition, a series of
Securities may include two or more Classes
of Fixed Income Securities that differ as
to timing, sequential order, priority of
payment, Interest Rate or amount of
distribution of principal or interest or
both, or as to which distributions of
principal or interest or both on any Class
may be made upon the occurrence of
specified events, in accordance with a
schedule or formula, or on the basis of
collections from designated portions of
the related pool of Receivables. Any such
series may include one or more Classes of
Fixed Income Securities ("Accrual
Securities"), as to which certain accrued
interest will not be distributed but
rather will be added to the principal
balance (or nominal balance, in the case
of Accrual Securities which are also Strip
Securities) thereof on each Payment Date,
as hereinafter defined, or in the manner
described in the related Prospectus
Supplement.
If so provided in the related Prospectus
Supplement, a series may include one or
more other Classes of Fixed Income
Securities (collectively, the "Senior
Securities") that are senior to one or
more other Classes of Fixed Income
Securities (collectively, the "Subordinate
Securities") in respect of certain
distributions of principal and interest
and allocations of losses on Receivables.
In addition, certain Classes of Senior (or
Subordinate) Securities may be senior to
other Classes of Senior (or Subordinate)
Securities in respect of such
distributions or losses.
General Payment Terms of Securities.
As provided in the related Trust Agreement
and as described in the related Prospectus
Supplement, the holders of the Securities
("Securityholders") will be entitled to
receive payments on their Securities on
specified dates (each, a "Payment Date").
Payment Dates with respect to Fixed Income
Securities will occur monthly, quarterly
or semi-annually, as described in the
related Prospectus Supplement.
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The related Prospectus Supplement will
describe a date (the "Record Date")
preceding such Payment Date, as of which
the Trustee or its paying agent will fix
the identity of the Securityholders for
the purpose of receiving payments on the
next succeeding Payment Date. As described
in the related Prospectus Supplement, the
Payment Date will be a specified day of
each month, commonly the tenth, twelfth,
fifteenth or twenty-fifth day of each
month (or, in the case of quarterly-pay
Securities, the tenth, twelfth, fifteenth
or twenty-fifth day of every third month;
and in the case of semi-annual pay
Securities, the tenth, twelfth, fifteenth
or twenty-fifth day of every sixth month)
and the Record Date will be the close of
business as of the last day of the
calendar month that precedes the calendar
month in which such Payment Date occurs.
Each Trust Agreement will describe a
period (each, a "Remittance Period")
preceding each Payment Date (for example,
in the case of monthly-pay Securities, the
calendar month preceding the month in
which a Payment Date occurs). As more
fully described in the related Prospectus
Supplement, collections received on or
with respect to the related Receivables
constituting Trust Property during a
Remittance Period will be required to be
remitted by the Servicer to the related
Trustee prior to the related Payment Date
and will be used to fund payments to
Securityholders on such Payment Date. As
may be described in the related Prospectus
Supplement, the related Trust Agreement
may provide that all or a portion of the
payments collected on or with respect to
the related Receivables may be applied by
the related Trustee to the acquisition of
additional Receivables during a specified
period (rather than be used to fund
payments of principal to Securityholders
during such period), with the result that
the related Securities will possess an
interest-only period, also commonly
referred to as a revolving period, which
will be followed by an amortization
period. Any such interest only or
revolving period may, upon the occurrence
of certain events to be described in the
related Prospectus Supplement, terminate
prior to the end of the specified period
and result in the earlier than expected
amortization of the related Securities.
In addition, and as may be described in
the related Prospectus Supplement, the
related Trust Agreement may provide that
all or a portion of such collected
payments may be retained by the Trustee
(and held in certain temporary
investments, including Receivables) for a
specified period prior to being used to
fund payments of principal to
Securityholders.
Such retention and temporary investment by
the Trustee of such collected payments may
be required by the related Trust Agreement
for the purpose of (a) slowing the
amortization rate of the related
Securities relative to the installment
payment schedule of the related
Receivables, or (b) attempting to match
the amortization rate of the related
Securities to an amortization schedule
established at the time such Securities
are issued. Any such feature applicable to
any Securities may terminate upon the
occurrence of events to be described in
the related Prospectus Supplement,
resulting in distributions to the
specified Securityholders and an
acceleration of the amortization of such
Securities.
As more fully specified in the related
Prospectus Supplement, neither the
Securities nor the underlying Receivables
will be guaranteed or insured by any
governmental agency or instrumentality or
the Company, the related Servicer, any
Trustee, or any of their affiliates.
No Investment Companies............. Neither the Company nor any Trust will
register as an "investment company" under
the Investment Company Act of 1940, as
amended (the "Investment Company Act").
The Residual Interest............... With respect to each Trust, the "Residual
Interest" at any time represents the
rights to the related Trust Property in
excess of the
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Securityholders' interest of all series
then outstanding that were issued by such
Trust. The Residual Interest in any Trust
Property will fluctuate as the aggregate
Pool Balance (as hereinafter defined) of
such Trust Fund changes from time to time.
A portion of the Residual Interest in any
Trust may be sold separately in one or
more public or private transactions.
Master Trusts; Issuance of
Additional Series .................. As may be described in the related
Prospectus Supplement, the Company may
cause one or more of the Trusts (such a
Trust, a "Master Trust") to issue
additional series of Securities from time
to time. Under each Trust Agreement
relating to a Master Trust (each, a
"Master Trust Agreement"), the Company may
determine the terms of any such new
series. See "Description of the Securities
-- Master Trusts."
The Company may cause the related Trustee
to offer any such new series to the public
or other investors, in transactions either
registered under the Securities Act or
exempt from registration thereunder,
directly or through one or more
underwriters or placement agents, in
fixed-price offerings or in negotiated
transactions or otherwise.
A new series to be issued by a Master
Trust which has a series outstanding may,
only be issued upon satisfaction of the
conditions described herein under
"Description of the Securities -- Master
Trusts". Securities secured by Receivables
held by a Master Trust shall be entitled
to moneys received relating to such
Receivables on a pari passu basis with
other Securities issued pursuant to the
other Trust Agreements by such Master
Trust.
Cross-Collateralization ............ As described in the related Trust
Agreement and the related Prospectus
Supplement, the source of payment for
Securities of each series will be the
assets of the related Trust Property only.
However, as may be described in the
related Prospectus Supplement, a series or
class of Securities may include the right
to receive moneys from a common pool of
credit enhancement which may be available
for more than one series of Securities,
such as a master reserve account, master
insurance policy or a master collateral
pool consisting of similar Receivables.
Notwithstanding the foregoing, and as
described in the related Prospectus
Supplement, no payment received on any
Receivable held by any Trust may be
applied to the payment of Securities
issued by any other Trust (except to the
limited extent that certain collections in
excess of the amounts needed to pay the
related Securities may be deposited in a
common master reserve account or an
overcollateralization account that
provides credit enhancement for more than
one series of Securities issued pursuant
to the related Trust Agreement).
Trust Property...................... As specified in the related Prospectus
Supplement, the Trust Property will
consist of the related Contracts, and may
include a security interest in the related
Vehicles. If and to the extent specified
in the related Prospectus Supplement,
credit enhancement with respect to Trust
Property or any class of Securities may
include any one or more of the following:
a Policy issued by an insurer specified in
the related Prospectus Supplement, a
reserve account, letters of credit, credit
or liquidity facilities, repurchase
obligations, third party payments or other
support, cash deposits or other
arrangements. In addition to or in lieu of
the foregoing, credit enhancement may be
provided by means of subordination,
cross-support among the Receivables or
over- collateralization. See "Description
of the Trust Agreement -- Credit and Cash
Flow Enhancement." The Contracts are
obligations for the purchase of the
Vehicles, or evidence borrowings used to
acquire the Vehicles. As specified in the
related Prospectus Supplement, the
Contracts may consist of any combination
of Rule of 78s Contracts, Fixed Value
Contracts or Simple Interest Contracts.
Generally, "Rule of 78s Contracts" provide
for fixed level monthly payments which
will
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amortize the full amount of the Contract
over its term. The Rule of 78s Contracts
provide for allocation of payments
according to the "sum of periodic
balances" or "sum of monthly payments"
method (the "Rule of 78s"). Each Rule of
78s Contract provides for the payment by
the Obligor of a specified total amount of
payments, payable in monthly installments
on the related due date, which total
represents the principal amount financed
and finance charges in an amount
calculated on the basis of a stated annual
percentage rate ("APR") for the term of
such Contract. The rate at which such
amount of finance charges is earned and,
correspondingly, the amount of each fixed
monthly payment allocated to reduction of
the outstanding principal balance of the
related Contract are calculated in
accordance with the Rule of 78s. Under the
Rule of 78s, the portion of each payment
allocable to interest is higher during the
early months of the term of a Contract and
lower during later months than that under
a constant yield method for allocating
payments between interest and principal.
Notwithstanding the foregoing, as
specified in the related Prospectus
Supplement, all payments received by the
related Servicer on or in respect of the
Rule of 78s Contracts may be allocated on
an actuarial or simple interest basis.
Generally, the "Fixed Value Contracts"
provide for monthly payments with a final
fixed value payment which is greater than
the scheduled monthly payments. A Fixed
Value Contract provides for amortization
of the loan over a series of fixed level
payment monthly installments, but also
requires a final fixed value payment due
after payment of such monthly installments
which may be satisfied by (i) payment in
full in cash of such amount, (ii) transfer
of the vehicle to the Company provided
certain conditions are satisfied or (iii)
refinancing the fixed value payment in
accordance with certain conditions. With
respect to Fixed Value Contracts, as
specified in the related Prospectus
Supplement, only the principal and
interest payments due prior to the final
fixed value payment and not the final
fixed value payment may be included
initially in the related Trust Property.
"Simple Interest Contracts" provide for
the amortization of the amount financed
under the receivable over a series of
fixed level monthly payments. However,
unlike the monthly payment under Rule of
78s Contracts, each monthly payment
consists of an installment of interest
which is calculated on the basis of the
outstanding principal balance of the
receivable multiplied by the stated APR
and further multiplied by the period
elapsed (as a fraction of a calendar year)
since the preceding payment of interest
was made. As payments are received under a
Simple Interest Contract, the amount
received is applied first to interest
accrued to the date of payment and the
balance is applied to reduce the unpaid
principal balance. Accordingly, if an
Obligor pays a fixed monthly installment
before its scheduled due date, the portion
of the payment allocable to interest for
the period since the preceding payment was
made will be less than it would have been
had the payment been made as scheduled,
and the portion of the payment applied to
reduce the unpaid principal balance will
be correspondingly greater. Conversely, if
an Obligor pays a fixed monthly
installment after its scheduled due date,
the portion of the payment allocable to
interest for the period since the
preceding payment was made will be greater
than it would have been had the payment
been made as scheduled, and the portion of
the payment applied to reduce the unpaid
principal balance will be correspondingly
less. In either case, the Obligor pays a
fixed monthly installment until the final
scheduled payment date, at which time the
amount of the final installment is
increased or decreased as necessary to
repay the then outstanding principal
balance.
If an Obligor elects to prepay a Rule of
78s Contract in full, it is entitled to a
rebate of the portion of the outstanding
balance then due and payable attributable
to unearned finance charges. If a Simple
Interest Contract is prepaid, rather than
receive a rebate, the Obligor is required
to pay interest only to the date of
prepayment. The
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<PAGE> 77
amount of a rebate under a Rule of 78s
Contract calculated in accordance with the
Rule of 78s will always be less than had
such rebate been calculated on an
actuarial basis and generally will be less
than the remaining scheduled payments of
interest that would be due under a Simple
Interest Contract for which all payments
were made on schedule. Distributions to
Securityholders may not be affected by
Rule of 78s rebates under the Rule of 78s
Contracts because pursuant to the related
Prospectus Supplement such distributions
may be determined using the actuarial or
simple interest method.
The related Prospectus Supplement will
further describe the type and
characteristics of the Contracts included
in the Trust Property relating to the
Securities offered pursuant to this
Prospectus and the related Prospectus
Supplement.
The Receivables comprising the Trust
Property will be originated by the
Company; such Receivables will have
theretofore been either (i) originated by
Vendors and acquired by the Company or
(ii) acquired by the Company from other
originators or owners of Receivables.
The Company will either transfer
Receivables to a Trust pursuant to a
Pooling Agreement or pledge the Company's
right, title and interest in and to such
Receivables to a Trustee on behalf of
Securityholders pursuant to an Indenture.
The obligations of the Company, the
Servicer, the related Trustee and the
related Indenture Trustee, if any, under
the related Trust Agreement include those
specified below and in the related
Prospectus Supplement.
In addition, if so specified in the
related Prospectus Supplement, the Trust
Property will include monies on deposit in
a Pre-Funding Account (the "Pre-Funding
Account") to be established with the
Trustee, which will be used to acquire
Additional Receivables (as hereinafter
defined) from time to time during the
"Pre-Funding Period" specified in the
related Prospectus Supplement. The
Pre-Funding Account, if any, will be
reduced during the related Pre-Funding
Period by the amount thereof used to
purchase Additional Receivables. Any
amount remaining in the Pre-Funding
Account at the end of the related
Pre-Funding Period will be distributed to
the related Securityholders, pro rata, on
the Payment Date immediately following the
end of the Pre-Funding Period.
If and to the extent provided in the
related Prospectus Supplement, the Company
will be obligated (subject only to the
availability thereof) to either transfer
to a Trust or pledge to a Trustee on
behalf of Securityholders, additional
Receivables (the "Additional Receivables")
from time to time during any Pre-Funding
Period specified in the related Prospectus
Supplement.
Registration of Securities.......... Securities may be represented by global
securities registered in the name of Cede
& Co. ("Cede"), as nominee of The
Depository Trust Company ("DTC"), or
another nominee. In such case,
Securityholders will not be entitled to
receive definitive securities representing
such Securityholders' interests, except in
certain circumstances described in the
related Prospectus Supplement. See
"Description of the Securities -- Book
Entry Registration" herein.
Credit and Cash Flow
Enhancement ........................ If and to the extent specified in the
related Prospectus Supplement, credit
enhancement with respect to Trust Property
or any class of Securities may include any
one or more of the following: a Policy
issued by an insurer specified in the
related Prospectus Supplement (a "Security
Insurer"), a reserve account, letters of
credit, credit or liquidity facilities,
third party payments or other support,
cash deposits or other arrangements. Any
form of credit enhancement will have
certain limitations and exclusions from
coverage thereunder, which will be
described in the related Prospectus
Supplement. See "Description of the Trust
Agreement -- Credit and Cash Flow
Enhancement."
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Repurchase Obligations and
the Receivables Acquisition
Agreement........................... As more fully described in the related
Prospectus Supplement, the Company will be
obligated to acquire from the related
Trust Property any Receivable which was
transferred pursuant to a Pooling
Agreement or pledged pursuant to an
Indenture if the interest of the
Securityholders therein is materially
adversely affected by a breach of any
representation or warranty made by the
Company with respect to such Receivable,
which breach has not been cured. In
addition, if so specified in the related
Prospectus Supplement, the Company may
from time to time reacquire certain
Receivables of the Trust Property, subject
to specified conditions set forth in the
related Trust Agreement.
Servicer's Compensation............. The Servicer shall be entitled to receive
a fee for servicing the Trust Property
equal to a specified percentage of the
value of such Trust Property, as set forth
in the related Prospectus Supplement. See
"Description of the Trust Agreements --
Servicing Compensation" herein and in the
related Prospectus Supplement.
Certain Legal Aspects
of the Contracts.................... With respect to the transfer of the
Contracts to the related Trust pursuant to
a Pooling Agreement or the pledge of the
related Issuer's right, title and interest
in and to such Contracts on behalf of
Securityholders pursuant to an Indenture,
the Company will warrant, in each case,
that such transfer is either a valid
transfer and assignment of the Contracts
to the Trust or the grant of a security
interest in the Contracts. Each Prospectus
Supplement will specify what actions will
be taken by which parties as will be
required to perfect either the Issuer's or
the Securityholders' security interest in
the Contracts. The Company may also
warrant that, if the transfer or pledge by
it to the Trust or to the Securityholders
is deemed to be a grant to the Trust or to
the Securityholders of a security interest
in the Contracts, then the related Issuer
or the Securityholders will have a first
priority perfected security interest
therein, except for certain liens which
have priority over previously perfected
security interests by operation of law,
and, with certain exceptions, in the
proceeds thereof. Similar security
interest and priority representations and
warranties, as described in the related
Prospectus Supplement, may also be made by
the Company with respect to the Vehicles.
Perfection of security interests in
automobiles and light duty trucks is
generally governed by the vehicle
registration or titling laws of the state
in which each vehicle is registered or
titled. In most states, a security
interest in a vehicle is perfected by
notation of the secured party's lien on
the vehicle's certificate of title. Each
Prospectus Supplement will specify whether
the Company, the Servicer or the Trustee,
in light of the administrative burden and
expense, will amend any certificate of
title to identify the Company or the
Trustee as the new secured party on the
certificates of title relating to the
Vehicles. See "Certain Legal Aspects of
the Receivables."
Each Prospectus Supplement will specify if
the Company has filed or will be required
to file UCC (as herein defined) financing
statements identifying the Vehicles as
collateral pledged in favor of the related
Trust or Trustee on behalf of the
Securityholders. In the absence of such
filings any security interest in the
Vehicles will not be perfected in favor of
the related Trust or Trustee. See "Certain
Legal Aspects of the Receivables."
Optional Termination................ The Servicer, the Company, or, if
specified in the related Prospectus
Supplement, certain other entities may, at
their respective options, effect early
retirement of a series of Securities under
the circumstances and in the manner set
forth herein under "Description of The
Trust Agreement -- Termination" and in the
related Prospectus Supplement.
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Mandatory Termination............... The Trustee, the Servicer or certain other
entities specified in the related
Prospectus Supplement may be required to
effect early retirement of all or any
portion of a series of Securities by
soliciting competitive bids for the
purchase of the Trust Property or
otherwise, under other circumstances and
in the manner specified in "Description of
The Trust Agreement -- Termination" and in
the related Prospectus Supplement.
Tax Considerations.................. Securities of each series offered hereby
will, for federal income tax purposes,
constitute either (i) interests in a Trust
treated as a grantor trust under
applicable provisions of the Code
("Grantor Trust Securities"), (ii) debt
issued by a Trust or by the Company ("Debt
Securities") or (iii) interests in a Trust
which is treated as a partnership
("Partnership Interests").
The Prospectus Supplement for each series
of Securities will summarize, subject to
the limitations stated therein, federal
income tax considerations relevant to the
purchase, ownership and disposition of
such Securities.
Investors are advised to consult their tax
advisors and to review "Certain Federal
and State Income Tax Consequences" in the
related Prospectus Supplement.
ERISA Considerations................ The Prospectus Supplement for each series
of Securities will summarize, subject to
the limitations discussed therein,
considerations under the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA"), relevant to the
purchase of such Securities by employee
benefit plans and individual retirement
accounts. See "ERISA Considerations" in
the related Prospectus Supplement.
Ratings............................. Each Class of Securities offered pursuant
to this Prospectus and the related
Prospectus Supplement will be rated in one
of the four highest rating categories by
one or more "national statistical rating
organizations", as defined in the
Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and commonly
referred to as "Rating Agencies". Such
ratings will address, in the opinion of
such Rating Agencies, the likelihood that
the Issuer will be able to make timely
payment of all amounts due on the related
Securities in accordance with the terms
thereof. Such ratings will neither address
any prepayment or yield considerations
applicable to any Securities nor
constitute a recommendation to buy, sell
or hold any Securities.
The ratings expected to be received with
respect to any Securities will be set
forth in the related Prospectus
Supplement.
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RISK FACTORS
Prospective Securityholders should consider, among other things, the
following factors in connection with the purchase of the Securities:
Limited Liquidity. There can be no assurance that a secondary market
for the Securities of any series or Class will develop or, if it does develop,
that it will provide Securityholders with liquidity of investment or that it
will continue for the life of such Securities. The Prospectus Supplement for any
series of Securities may indicate that an underwriter specified therein intends
to establish and maintain a secondary market in such Securities; however, no
underwriter will be obligated to do so. The Securities will not be listed on any
securities exchange.
Ownership of Contracts. In connection with the issuance of any series
of Securities, the Company will originate Contracts. The Company will warrant in
a Trust Agreement (i) if the Company retains title to the Contracts, that the
Trustee for the benefit of Securityholders has a valid security interest in such
Contracts, or (ii) if the Company transfers such Contracts to a Trust, that the
transfer of the Contracts to such Trust is either a valid assignment, transfer
and conveyance of the Contracts to the Trust or the Trustee on behalf of the
Securityholders has a valid security interest in such Contracts. As to be
described in the related Prospectus Supplement, the related Trust Agreement will
provide either that the Trustee will be required to maintain possession of the
original copies of all Contracts that constitute chattel paper or that the
Company or the Servicer will retain possession of such Contracts; provided that
in case the Company retains possession of the related Contracts, the Servicer
may take possession of such original copies as necessary for the enforcement of
any Contract. If any Contracts remain in the possession of the Company, the
related Prospectus Supplement may describe specific trigger events that will
require delivery to the Trustee. If the Company, the Servicer, the Trustee or
other third party, while in possession of the Contracts, sells or pledges and
delivers such Contracts to another party, in violation of the Receivables
Acquisition Agreement or the Trust Agreement, there is a risk that such other
party could acquire an interest in such Contracts having a priority over the
Issuer's interest. Furthermore, if the Company, the Servicer or a third party,
while in possession of the Contracts, is rendered insolvent, such event of
insolvency may result in competing claims to ownership or security interests in
the Contracts. Such an attempt, even if unsuccessful, could result in delays in
payments on the Securities. If successful, such attempt could result in losses
to the Securityholders or an acceleration of the repayment of the Securities.
The Company will be obligated to repurchase any Contract originated by the
Company and currently in the related Trust Property if there is a breach of the
Company's representations and warranties that materially and adversely affects
the interests of the Trust in such Contract and such breach has not been cured.
Security Interests. The transfer of the Receivables by the Company to
the Trustee pursuant to the related Pooling Agreement, Indenture or Trust
Agreement, the perfection of the security interests in the Receivables and the
enforcement of rights to realize on the Vehicles as collateral for the
Receivables are subject to a number of federal and state laws, including the UCC
as in effect in various states. As specified in each Prospectus Supplement, the
Servicer will take such action as is required to perfect the rights of the
Trustee in the Receivables. If, through inadvertence or otherwise, a third party
were to purchase (including the taking of a security interest in) a Receivable
for new value in the ordinary course of its business, without actual knowledge
of the Trust's interest, and take possession of a Receivable, the purchaser
would acquire an interest in such Receivable superior to the interest of the
Trust. As further specified in each Prospectus Supplement, no action will be
taken to perfect the rights of the Trustee in proceeds of a VSI Insurance Policy
(as hereinafter defined) or of any other insurance policies covering individual
Vehicles or Obligors. Therefore, the rights of a third party with an interest in
such proceeds could prevail against the rights of the Trust prior to the time
such proceeds are deposited by the Servicer into a Trust Account (as hereinafter
defined). See "Certain Legal Aspects of the Receivables".
Except to the extent specified in the related Prospectus Supplement,
each Contract will include a perfected security interest in the related Vehicle
in favor of the Trustee or the Company (and, if perfected in the name of the
Company, assigned pursuant to the related Pooling Agreement, Indenture or Trust
Agreement to the Trustee for the benefit of the Securityholders). However, to
the extent provided in the
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<PAGE> 81
related Prospectus Supplement, due to the administrative burden and expense, the
certificates of title of the Vehicles securing certain Contracts which reflect
the security interest of the Company in such Vehicles may not be endorsed to
reflect the Trustee's interest therein or delivered to the Trustee. In the
absence of such endorsement and delivery, the Trustee may not have a perfected
security interest in such Vehicles. As a result, a third party buyer of a
Vehicle for value from an Obligor may extinguish the interest of the Trust in
the Vehicle, a subsequent perfected lienholder may obtain a security interest
senior in right to that of the Trust, and a trustee in bankruptcy of the Company
may be able to assert successfully that the Trust did not have a security
interest in the Vehicle. In addition, statutory liens for repairs or unpaid
taxes and other liens arising by operation of law may have priority even over
prior perfected security interests in the name of the Trustee in the Vehicles.
Restrictions on Recoveries. Unless specific limitations are described
on the related Prospectus Supplement with respect to specific Contracts, all
Contracts will provide that the obligations of the Obligors thereunder are
absolute and unconditional, regardless of any defense, set-off or abatement
which the Obligor may have against the Company or any other person or entity
whatsoever. The Company will warrant that no claims or defenses have been
asserted or threatened with respect to the Contracts and that all requirements
of applicable law with respect to the Contracts have been satisfied.
In the event that the Company or the Trustee must rely on repossession
and disposition of Vehicles to recover scheduled payments due on Defaulted
Contracts (as defined in the related Pooling Agreement), the Issuer may not
realize the full amount due on a Contract (or may not realize the full amount on
a timely basis). Other factors that may affect the ability of the Issuer to
realize the full amount due on a Contract include whether amendments to
certificates of title relating to the Vehicles had been filed, whether financing
statements to perfect the security interest in the Vehicles had been filed,
depreciation, obsolescence, damage or loss of any Vehicle, and the application
of Federal and state bankruptcy and insolvency laws. As a result, the
Securityholders may be subject to delays in receiving payments and suffer loss
of their investment in the Securities.
Insolvency and Bankruptcy Matters. The Company will take steps in
structuring the transactions contemplated hereby that are intended to ensure
that the voluntary or involuntary application for relief by the Company under
the United States Bankruptcy Code or similar applicable state laws ("Insolvency
Laws") will not result in the Trust Property becoming property of the estate of
the Company within the meaning of such Insolvency Laws. Such steps will
generally involve the creation by the Company of one or more separate,
limited-purpose subsidiaries (each, a "Finance Subsidiary") pursuant to articles
of incorporation containing certain limitations (including restrictions on the
nature of such Finance Subsidiary's business and a restriction on such Finance
Subsidiary's ability to commence a voluntary case or proceeding under any
Insolvency Law without the prior unanimous affirmative vote of all its
directors). However, there can be no assurance that the activities of any
Finance Subsidiary would not result in a court's concluding that the assets and
liabilities of such Finance Subsidiary should be consolidated with those of the
Company in a proceeding under any Insolvency Law.
With respect to the Trust Property, the Trustee and all Securityholders
will covenant that they will not at any time institute against the Company or
the related Finance Subsidiary any bankruptcy, reorganization or other
proceeding under any federal or state bankruptcy or similar law.
While an originator is the Servicer, cash collections held by such
originator may, subject to certain conditions, be commingled and used for the
benefit of such originator prior to each Payment Date and, in the event of the
bankruptcy of such originator, the Company, a Trust or Trustee may not have a
perfected interest in such collections.
The Company believes that the transfer of the Receivables by the
Company to a Finance Subsidiary should be treated as a valid assignment,
transfer and conveyance of such Receivables. However, in the event of an
insolvency of the Company, a court, among other remedies, could attempt to
recharacterize the transfer of the Receivables by the Company to the Finance
Subsidiary as a borrowing by the Company from the Finance Subsidiary or the
related Securityholders, secured by a pledge of such Receivables. Such an
attempt, even if unsuccessful, could result in delays in payments on the
Securities.
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If such an attempt were successful, a court, among other remedies, could elect
to accelerate payment of the Securities and liquidate the Receivables, with the
Securityholders entitled to the then outstanding principal amount thereof and
interest thereon at the applicable Security Interest Rate to the date of
payment. Thus, the Securityholders could lose the right to future payments of
interest and might incur reinvestment losses. As more fully described in the
related Prospectus Supplement, in the event the related Issuer is rendered
insolvent, the related Trustee for a Trust, in accordance with the Trust
Agreement, will promptly sell, dispose of or otherwise liquidate the related
Receivables in a commercially reasonable manner on commercially reasonable
terms. The proceeds from any such sale, disposition or liquidation of such
Receivables will be treated as collections on such Receivables. If the proceeds
from the liquidation of the Receivables and any amount available from any credit
enhancement, if any, are not sufficient to pay Securities of the related series
in full, the amount of principal returned to such Securityholders will be
reduced and such Securityholders will incur a loss.
Obligors of the Vehicles may be entitled to assert against the Company,
the Issuer, or the Trust, if any, claims and defenses which they have against
the Company with respect to the Receivables. The Company will warrant that no
such claims or defenses have been asserted or threatened with respect to the
Receivables and that all requirements of applicable law with respect to the
Receivables have been satisfied.
Insurance on Vehicles. Each Receivable generally requires the Company
to maintain insurance covering physical damage to the Vehicle in an amount not
less than the unpaid principal balance of such Receivable pursuant to which the
Company is named as a loss payee. Since the Obligors select their own insurers
to provide the requisite coverage, the specific terms and conditions of their
policies vary.
In addition, although each Receivable generally gives the Company the
right to force place insurance coverage in the event the required physical
damage insurance on a Vehicle is not maintained by an Obligor, neither the
Company nor the Servicer is obligated to place such coverage. In the event
insurance coverage is not maintained by Obligors and coverage is not force
placed, then insurance recoveries may be limited in the event of losses or
casualties to Vehicles included in the Trust Property, as a result of which
Securityholders could suffer a loss on their investment.
Delinquencies. There can be no assurance that the historical levels of
delinquencies and losses experienced by the Company on its respective loan and
vehicle portfolio will be indicative of the performance of the Contracts
included in the Trust or that such levels will continue in the future.
Delinquencies and losses could increase significantly for various reasons,
including changes in the federal income tax laws, changes in the local, regional
or national economies or due to other events.
Subordination; Limited Assets. To the extent specified in the related
Prospectus Supplement, distributions of interest and principal on one Class of
Securities of a series may be subordinated in priority of payment to interest
and principal due on other Classes of Securities of a related series. Moreover,
the Trust Property will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the related Receivables and,
to the extent provided in the related Prospectus Supplement, the related reserve
account and any other credit enhancement. The Securities represent obligations
solely of the related Trust or debt secured by the related Trust Property, and
will not represent a recourse obligation to other assets of the Company. No
Securities of any series will be insured or guaranteed by the Company, the
Servicer, or the applicable Trustee. Consequently, holders of the Securities of
any series must rely for repayment primarily upon payments on the Receivables
and, if and to the extent available, the reserve account, if any, and any other
credit enhancement, all as specified in the related Prospectus Supplement.
Master Trusts. As may be described in the related Prospectus
Supplement, a Master Trust may issue from time to time more than one series.
While the terms of any additional series will be specified in a supplement to
the related Master Trust Agreement, the provisions of such supplement and,
therefore, the terms of any additional series, will not be subject to prior
review by, or consent of, holders of the Securities of any series previously
issued by such Master Trust. Such terms may include methods for determining
applicable investor percentages and allocating collections, provisions creating
different or
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additional security or credit enhancements and any other provisions which are
made applicable only to such series. The obligation of the related Trustee to
issue any new series is subject to the condition, among others, that such
issuance will not result in any Rating Agency reducing or withdrawing its rating
of the Securities of any outstanding series (any such reduction or withdrawal is
referred to herein as a "Ratings Effect"). There can be no assurance, however,
that the terms of any series might not have an impact on the timing or amount of
payments received by a Securityholder of another series issued by the same
Master Trust. See "Description of the Securities -- Master Trusts."
Book-Entry Registration. Issuance of the Securities in book-entry form
may reduce the liquidity of such Securities in the secondary trading market
since investors may be unwilling to purchase Securities for which they cannot
obtain definitive physical securities representing such Securityholders'
interests, except in certain circumstances described in the related Prospectus
Supplement.
Since transactions in Securities will, in most cases, be able to be
effected only through DTC, direct or indirect participants in DTC's book-entry
system ("Direct Participants" or "Indirect Participants") or certain banks, the
ability of a Securityholder to pledge a Security to persons or entities that do
not participate in the DTC system, or otherwise to take actions in respect to
such Securities, may be limited due to lack of a physical security representing
the Securities.
Securityholders may experience some delay in their receipt of
distributions of interest on and principal of the Securities since distributions
may be required to be forwarded by the Trustee to DTC and, in such case, DTC
will be required to credit such distributions to the accounts of its
Participants which thereafter will be required to credit them to the accounts of
the applicable class of Securityholders either directly or indirectly through
Indirect Participants. See "Description of the Securities -- Book Entry
Registration."
Security Rating. The rating of Securities credit enhanced by a letter
of credit, financial guaranty insurance policy, reserve fund, credit or
liquidity facilities, cash deposits or other forms of credit enhancement
(collectively "Credit Enhancement") will depend primarily on the
creditworthiness of the issuer of such external Credit Enhancement device (a
"Credit Enhancer"). Any reduction in the rating assigned to the claims-paying
ability of the related Credit Enhancer to honor its obligations pursuant to any
such Credit Enhancement below the rating initially given to the Securities would
likely result in a reduction in the rating of the Securities.
Maturity and Prepayment Considerations. Because the rate of payment of
principal on the Securities will depend, among other things, on the rate of
payment on the related Contracts, the rate of payment of principal on the
Securities cannot be predicted. Payments on the Contracts will include scheduled
payments as well as partial and full prepayments (to the extent not replaced
with substitute Contracts), payments upon the liquidation of Defaulted
Contracts, payments upon acquisitions by the Servicer or the Company of
Contracts from the related Trust Property on account of a breach of certain
representations and warranties in the related Trust Agreement, payments upon an
optional acquisition by the Servicer or the Company of Contracts from the
related Trust Property (any such voluntary or involuntary prepayment or other
early payment of a Contract, a "Prepayment"), and residual payments. The rate of
early terminations of Contracts due to Prepayments and defaults may be
influenced by a variety of economic and other factors, including, among others,
obsolescence, then current economic conditions and tax considerations. The risk
of reinvesting distributions of the principal of the Securities will be borne by
the Securityholders. The yield to maturity on Strip Securities or Securities
purchased at premiums or discounts to par will be extremely sensitive to the
rate of Prepayments on the related Receivables. In addition, the yield to
maturity on certain other types of classes of Securities, including Strip
Securities, Accrual Securities or certain other Classes in a series including
more than one Class of Securities, may be relatively more sensitive to the rate
of prepayment of the related Contracts than other Classes of Securities.
The rate of Prepayments of Contracts cannot be predicted and is
influenced by a wide variety of economic, social, and other factors, including
prevailing interest rates, the availability of alternate financing
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and local and regional economic conditions. Therefore, no assurance can be given
as to the level of Prepayments that a Trust will experience.
Securityholders should consider, in the case of Securities purchased at
a discount, the risk that a slower than anticipated rate of Prepayments on the
Receivables could result in an actual yield that is less than the anticipated
yield and, in the case of any Securities purchased at a premium, the risk that a
faster than anticipated rate of Prepayments on the Receivables could result in
an actual yield that is less than the anticipated yield.
Limitations on Interest Payments and Foreclosures. Generally, under the
terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended (the
"Relief Act"), or similar state legislation, an Obligor who enters military
service after the origination of the related Receivable (including an Obligor
who is a member of the National Guard or is in reserve status at the time of the
origination of the Receivable and is later called to active duty) may not be
charged interest (including fees and charges) above an annual rate of 6% during
the period of such Obligor's active duty status, unless a court orders otherwise
upon application of the lender. It is possible that such action could have an
effect, for an indeterminate period of time, on the ability of the Servicer to
collect full amounts of interest on certain of the Receivables. In addition, the
Relief Act imposes limitations that would impair the ability of the Servicer to
foreclose on an affected Receivable during the Obligor's period of active duty
status. Thus, in the event that such a Receivable goes into default, there may
be delays and losses occasioned by the inability of the Servicer to realize upon
the Financed Vehicle in a timely fashion.
Financial Condition of AFS. The Company is generally not obligated to
make any payments in respect of the Securities or the Receivables of a specific
Trust. If the Company 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.
In certain circumstances, the Company will be required to acquire
Receivables from the related Trust Property with respect to which such
representations and warranties have been breached. In the event that the Company
is incapable of complying with its reacquire obligations and no other party is
obligated to perform or satisfy such obligations, Securityholders may be subject
to delays in receiving payments and suffer loss of their investment in the
Securities.
The related Prospectus Supplement will set forth certain information
regarding the Company. In addition, the Company is subject to the information
requirements of the Exchange Act and, in accordance therewith, file reports and
other information with the Commission. For further information regarding the
Company reference is made to such reports and other information which are
available as described under "Available Information."
THE TRUST PROPERTY
The Trust Property will include, as specified in the related Prospectus
Supplement, (i) a pool of Receivables, (ii) all moneys (including accrued
interest) due thereunder on or after the applicable Cut-off Date, (iii) such
amounts as from time to time may be held in one or more accounts established and
maintained by the Servicer pursuant to the related Trust Agreement, as described
below and in the related Prospectus Supplement, (iv) the security interests, if
any, in the Vehicles relating to such pool of Receivables, (v) the right to
proceeds from claims on physical damage policies, if any, covering such Vehicles
or the related Obligors, as the case may be, (vi) the proceeds of any
repossessed Vehicles related to such pool of Receivables, (vii) the rights of
the Company under the related Receivables Acquisition Agreement and (viii)
interest earned on certain short-term investments held in such Trust Property,
unless the related Prospectus Supplement specifies that such earnings may be
paid to the Servicer or the Company. The Trust Property will also include, if so
specified in the related Prospectus Supplement, monies on deposit in a
Pre-Funding Account, which will be used by the Trustee to acquire or receive a
security interest in Additional Receivables from time to time during the
Pre-Funding Period specified in the related Prospectus Supplement. See
"Desciption of the Securities -- Forward Commitments; Pre-Funding." In addition,
to the extent specified in the related Prospectus Supplement,
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some combination of Credit Enhancements may be issued to or held by the Trustee
on behalf of the related Trust for the benefit of the holders of one ore more
classes of Securities.
The Receivables comprising the Trust Property will, as specifically
described in the related Prospectus Supplement, be either (i) originated by the
Company, (ii) originated by various manufacturers and acquired by the Company,
(iii) originated by various Dealers and acquired by the Company or (iv) acquired
by the Company from originators or owners of Receivables.
The Trust Property will include Receivables with respect to which the
related Contract or the related Vehicles is subject to federal or state
registration or titling requirements. No Trust Property will include Receivables
with respect to which the underlying Contracts or Vehicles relate to office
equipment, aircraft, ships or boats, firearms or other weapons, railroad rolling
stock or facilities such as factories, warehouses or plants subject to state
laws governing the manner in which title or security interest in real property
is determined or perfected.
The Receivables included in the Trust Property will be selected from
those Receivables held by the Company based on the criteria specified in the
applicable Trust Agreement and described herein or in the related Prospectus
Supplement.
With respect to each series of Securities, on or prior to the Closing
Date on which the Securities are delivered to Securityholders, the Company or a
Finance Subsidiary will form a Trust by either (i) transferring the related
Receivables into a Trust pursuant to a Trust Agreement between the Company or a
Finance Subsidiary and the Trustee or (ii) entering into an Indenture with an
Indenture Trustee, relating to the issuance of such Securities, secured by the
related Receivables.
The Receivables comprising the Trust Property will generally have been
originated by the Company or acquired by the Company from Dealers in accordance
with the Company's specified underwriting criteria. The underwriting criteria
applicable to the Receivables included in any Trust Property will be described
in all material respects in the related Prospectus Supplement.
THE ISSUERS
With respect to each series of Securities, the Company will either
establish a separate Trust that will issue such Securities, or the Company will
form a Finance Subsidiary that will issue such Securities, in each case pursuant
to the related Trust Agreement. For purposes of this Prospectus and the related
Prospectus Supplement, the Finance Subsidiary, if the Finance Subsidiary issues
the related Securities, or the related Trust, if a Trust issues the related
Securities, shall be referred to as the "Issuer" with respect to such
Securities.
Upon the issuance of the Securities of a given series, the proceeds
from such issuance will be used by the Company to originate Receivables. The
Servicer will service the related Receivables pursuant to the applicable
Servicing Agreement, and will be compensated for acting as the Servicer. To
facilitate servicing and to minimize administrative burden and expense, the
Servicer may be appointed custodian for the related Receivables by each Trustee
and the Company, as may be set forth in the related Prospectus Supplement.
If the protection provided to the Securityholders of a given class by
the subordination of another Class of Securities of such series and by the
availability of the funds in the reserve account, if any, or any other Credit
Enhancement for such series is insufficient, the Issuer must rely solely on the
payments from the Obligors on the related Contracts, and the proceeds from the
sale of Vehicles which secure the Defaulted Contracts. In such event, certain
factors may affect such Issuer's ability to realize on the collateral securing
such Contracts, and thus may reduce the proceeds to be distributed to the
Securityholders of such series.
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THE RECEIVABLES
RECEIVABLES POOLS
Information with respect to the Receivables in the related Trust
Property will be set forth in the related Prospectus Supplement, including, to
the extent appropriate, the composition of such Receivables and the distribution
of such Receivables by geographic concentration, payment frequency and current
principal balance as of the applicable Cut-off Date.
THE CONTRACTS
As specified in the related Prospectus Supplement, the Contracts may
consist of any combination of Rule of 78s Contracts, Fixed Value Contracts or
Simple Interest Contracts. Generally, "Rule of 78s Contracts" provide for fixed
level monthly payments which will amortize the full amount of the Contract over
its term. The Rule of 78s Contracts provide for allocation of payments according
to the "sum of periodic balances" or "sum of monthly payments" method (the "Rule
of 78s"). Each Rule of 78s Contract provides for the payment by the Obligor of a
specified total amount of payments, payable in monthly installments on the
related due date, which total represents the principal amount financed and
finance charges in an amount calculated on the basis of a stated annual
percentage rate ("APR") for the term of such Contract. The rate at which such
amount of finance charges is earned and, correspondingly, the amount of each
fixed monthly payment allocated to reduction of the outstanding principal
balance of the related Contract are calculated in accordance with the Rule of
78s. Under the Rule of 78s, the portion of each payment allocable to interest is
higher during the early months of the term of a Contract and lower during later
months than that under a constant yield method for allocating payments between
interest and principal. Notwithstanding the foregoing, as specified in the
related Prospectus Supplement, all payments received by the Servicer on or in
respect of the Rule of 78s Contracts may be allocated on an actuarial or simple
interest basis.
Generally, the "Fixed Value Contracts" provide for monthly payments
with a final fixed value payment which is greater than the scheduled monthly
payments. A Fixed Value Contract provides for amortization of the loan over a
series of fixed level payment monthly installments, but also requires a final
fixed value payment due after payment of such monthly installments which may be
satisfied by (i) payment in full in cash of such amount, (ii) transfer of the
vehicle to the Company, provided certain conditions are satisfied or (iii)
refinancing the fixed value payment in accordance with certain conditions. With
respect to Fixed Value Contracts, as specified in the related Prospectus
Supplement, only the principal and interest payments due prior to the final
fixed value payment and not the final fixed value payment may be included
initially in the related Trust Property.
"Simple Interest Contracts" provide for the amortization of the amount
financed under the receivable over a series of fixed level monthly payments.
However, unlike the monthly payment under Rule of 78s Contracts, each monthly
payment consists of an installment of interest which is calculated on the basis
of the outstanding principal balance of the receivable multiplied by the stated
APR and further multiplied by the period elapsed (as a fraction of a calendar
year) since the preceding payment of interest was made. As payments are received
under a Simple Interest Contract, the amount received is applied first to
interest accrued to the date of payment and the balance is applied to reduce the
unpaid principal balance. Accordingly, if an Obligor pays a fixed monthly
installment before its scheduled due date, the portion of the payment allocable
to interest for the period since the preceding payment was made will be less
than it would have been had the payment been made as scheduled, and the portion
of the payment applied to reduce the unpaid principal balance will be
correspondingly greater. Conversely, if an Obligor pays a fixed monthly
installment after its scheduled due date, the portion of the payment allocable
to interest for the period since the preceding payment was made will be greater
than it would have been had the payment been made as scheduled, and the portion
of the payment applied to reduce the unpaid principal balance will be
correspondingly less. In either case, the Obligor pays a fixed monthly
installment until the final scheduled payment date, at which time the amount of
the final installment is increased or decreased as necessary to repay the then
outstanding principal balance.
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If an Obligor elects to prepay a Rule of 78s Contract in full, it is
entitled to a rebate of the portion of the outstanding balance then due and
payable attributable to unearned finance charges. If a Simple Interest Contract
is prepaid, rather than receive a rebate, the Obligor is required to pay
interest only to the date of prepayment. The amount of a rebate under a Rule of
78s Contract calculated in accordance with the Rule of 78s will always be less
than had such rebate been calculated on an actuarial basis and generally will be
less than the remaining scheduled payments of interest that would be due under a
Simple Interest Contract for which all payments were made on schedule.
Distributions to Security holders may not be affected by Rule of 78s rebates
under the Rule of 78s Contract because pursuant to the related Prospectus
Supplement such distributions may be determined using the actuarial or simple
interest method.
DELINQUENCIES, REPOSSESSIONS, AND NET LOSSES
Certain information relating to the Company's delinquency, repossession
and net loss experience with respect to Contracts it has originated or acquired
will be set forth in each Prospectus Supplement. This information may include,
among other things, the experience with respect to all Contracts in the
Company's portfolio during certain specified periods. There can be no assurance
that the delinquency, repossession and net loss experience on any Trust Property
will be comparable to the Company's prior experience.
MATURITY AND PREPAYMENT CONSIDERATIONS
As more fully described in the related Prospectus Supplement, if a
Contract permits a Prepayment, such payment, together with accelerated payments
resulting from defaults, will shorten the weighted average life of the related
pool of Receivables and the weighted average life of the related Securities. The
rate of Prepayments on the Receivables may be influenced by a variety of
economic, financial and other factors. In addition, under certain circumstances,
the Company will be obligated to acquire Receivables from the related Trust
Property pursuant to the applicable Trust Agreement or Receivables Acquisition
Agreement as a result of breaches of representations and warranties. Any
reinvestment risks resulting from a faster or slower amortization of the related
Securities which results from Prepayments will be borne entirely by the related
Securityholders.
The related Prospectus Supplement will set forth certain additional
information with respect to the maturity and prepayment considerations
applicable to a particular pool of Receivables and the related series of
Securities, together with a description of any applicable prepayment penalties.
AMERICREDIT'S AUTOMOBILE FINANCING PROGRAM
GENERAL
Through its branch offices and marketing representatives, AFS serves as
a funding source for franchised and independent automobile dealers to finance
their customers' purchase of new and used automobiles and light duty trucks.
Retail installment sale contracts ("Contracts") originated by Dealers which
conform to AFS's credit policies are purchased by AFS generally without recourse
to Dealers. AFS also services the Contracts that it purchases.
AFS's indirect lending programs are designed to serve consumers who
have limited access to traditional auto financing. The typical borrower may have
had previous financial difficulties, but is now attempting to re-establish
credit, or may not yet have sufficient credit history. Because AFS serves
consumers who are unable to meet the credit standards imposed by most
traditional auto financing sources, AFS generally charges interest at rates
which are higher than those charged by traditional auto financing sources. AFS
also expects to sustain a higher level of delinquencies and credit losses than
that experienced by traditional auto financing sources since AFS provides
financing in a relatively high risk market.
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AFS has established relationships with a variety of Dealers located in
the markets in which AFS has branch offices or marketing representatives. While
AFS occasionally finances purchases of new autos, substantially all of AFS's
Contracts were originated in connection with Obligor's purchases of used autos.
Contracts are generally purchased by AFS without recourse to the
Dealer, and accordingly, the Dealer usually has no liability to AFS if the
consumer defaults on the Contract. To mitigate AFS's risk from potential credit
losses, AFS charges the Dealers an acquisition fee when purchasing Contracts.
Such acquisition fees are negotiated with Dealers on a contract-by-contract
basis and are usually non-refundable. Although Contracts are purchased without
recourse to Dealers, Dealers typically make certain representations as to the
validity of the contract and compliance with certain laws, and indemnify AFS
against any claims, defenses and set-offs that may be asserted against AFS
because of assignment of the Contract.
CONTRACT ACQUISITION
AFS purchases individual Contracts through its branch offices and
through its central purchasing office, which underwrites applications solicited
by certain marketing representatives. The central purchasing office operates in
a manner similar to the branch office network.
All credit extensions are executed at the branch level. Each branch
manager has a specific credit authority based upon their experience and
historical loan portfolio results and credit scoring parameters. Extensions of
credit outside these limits are reviewed and approved by a regional vice
president. Although the credit approval process is decentralized, all credit
decisions are guided by AFS's credit scoring strategies and overall credit and
underwriting policies and procedures.
The Company has implemented a credit scoring system across its branch
network to support the branch level credit approval process. The credit scoring
system was developed by Fair Isaac & Co., Inc. from the Company's loan
origination and portfolio databases. Credit scoring is used to prioritize
applications for processing and to tailor pricing and structure to an empirical
assessment of credit risk.
Loan application packages completed by prospective Obligors are
received via facsimile at the branch offices from Dealers. Application data is
entered into AFS's automated application processing system. A credit bureau
report is automatically generated and a credit score is computed. Depending on
the credit quality of the applicant, a customer service representative may then
investigate the residence, employment and credit history of the applicant or
forward the application directly to the branch manager. In either case, the
Company's credit policy requires that all applications be investigated prior to
loan funding. The branch manager reviews the application package and determines
whether to approve the application, approve the application subject to
conditions that must be met, or to deny the application. The branch manager
considers many factors in arriving at a credit decision, including the
applicant's credit score, capacity to pay, stability, character and intent to
pay and the contract terms and collateral value. In certain cases, a regional
vice president may review and approve the branch manager's credit decision. AFS
estimates that approximately 50% of applicants are denied credit by AFS
typically because of their credit histories or because their income levels are
not sufficient to support the proposed level of monthly auto payments. Dealers
are contacted regarding credit decisions by facsimile and/or telephone. Declined
applicants are also provided with appropriate notification of the decision.
Completed loan packages are received from Dealers at the branch office.
Loan terms are reverified with the Obligor by branch personnel and the loan
packages are forwarded to the centralized loan services department where the
package is scanned to create an electronic copy. Key original documents are
stored in a fire-proof vault and the loan packages are further processed in an
electronic environment. The loans are reviewed for proper documentation and
regulatory compliance and are entered into the loan accounting system. A daily
report is generated for final review by consumer finance operations management.
Once cleared for funding by consumer finance operations management, the
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loan services department issues a funding check to the Dealer. Upon funding of
the Contract, AFS acquires a perfected security interest in the Vehicle.
AFS requires all consumers to obtain or provide evidence that they
carry current comprehensive and collision insurance. Through a third party
administrator, AFS tracks the insurance status of each Contract and sends
notices to Obligors when collateral becomes uninsured. If no action is taken by
the Obligor to insure the collateral, continuing efforts are made to persuade
the Obligor to comply with the insurance requirements of the Contract. Although
it has the right, AFS rarely repossesses a Vehicle due to its being uninsured.
AFS also does not typically force place insurance coverage and add the premium
to the Obligor's obligations, although it has the right to do so under the terms
of the Contracts.
SERVICING AND COLLECTIONS
AFS's servicing activities consist of collecting and processing Obligor
payments, responding to Obligor inquiries, initiating contact with Obligors who
are delinquent in payment of a Receivable installment, maintaining the security
interest in the Vehicle, and repossessing and liquidating collateral when
necessary. AFS utilizes various automated systems to support its servicing and
collections activities.
Approximately 15 days before an Obligor's first payment due date and
each month thereafter, AFS mails the Obligor a billing statement directing them
to mail payments to a lockbox banking facility for deposit in a lockbox account.
Payment receipt data is electronically transferred to AFS by a lockbox banking
facility for posting to AFS records. All subsequent payment processing and
customer account maintenance is performed centrally by AFS's loan services
department.
Collection activity on Contracts is performed by collection personnel
("Collectors") at AFS's headquarters facility. The Collectors follow
standardized collection policies and procedures. Collectors monitor the
Receivables portfolio through a computer assisted collection system and usually
take action on delinquencies within a few days after delinquency occurs.
A Collector's action is typically telephone contact with the Obligor
utilizing AFS's automated predictive dialing system. This system dials multiple
telephone numbers simultaneously based upon parameters set by management. When a
telephone connection is made, the call is routed to a collector and the
delinquent Obligor's account information is displayed on a Collector's computer
terminal. The Collector then attempts to work out the delinquency with the
Obligor.
If an Obligor continues to be delinquent, AFS's policy is to work out
suitable payment arrangements with the Obligor. However, if the Obligor becomes
seriously delinquent or deals in bad faith with AFS, AFS may ultimately have to
repossess the Vehicle and generally will take prompt action to do so.
Repossessions are handled by independent repossession firms engaged by AFS. All
repossessions are approved by collection officers.
AFS follows prescribed legal procedures for repossessions, which
include peaceful repossession, one or more notifications to Obligors, a
prescribed waiting period prior to disposition of the Vehicle, and return of
personal items to the Obligor.
Upon repossession and after any prescribed waiting period, the Vehicle
is typically sold at auction. AFS will pursue collection of deficiencies when it
deems such action to be appropriate.
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POOL FACTORS
The "Pool Factor" for each Class of Securities will be a seven-digit
decimal, which the Servicer will compute prior to each distribution with respect
to such Class of Securities, indicating the remaining outstanding principal
balance of such Class of Securities as of the applicable Payment Date, as a
fraction of the initial outstanding principal balance of such Class of
Securities. Each Pool Factor will be initially 1.0000000, and thereafter will
decline to reflect reductions in the outstanding principal balance of the
applicable Class of Securities. A Securityholder's portion of the aggregate
outstanding principal balance of the related Class of Securities is the product
of (i) the original aggregate purchase price of such Securityholder's Securities
and (ii) the applicable Pool Factor.
As more specifically described in the related Prospectus Supplement
with respect to each series of Securities, the related Securityholders of record
will receive reports on or about each Payment Date concerning the payments
received on the Receivables, the Pool Balance (as such term is defined in the
related Prospectus Supplement, the "Pool Balance"), each Pool Factor 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.
USE OF PROCEEDS
Except as provided in the related Prospectus Supplement, the proceeds
from the sale of the Securities of a given series will be used by the Company
for the acquisition of the related Receivables, for general corporate purposes,
including, but not limited to, the purchase of additional Receivables from
Dealers, repayment of indebtedness and general working capital purposes. The
Company expects that it will make additional transfers of Receivables to the
Trust from time to time, but the timing and amount of any such additional
transfers will be dependent upon a number of factors, including the volume of
Contracts originated or acquired by the Company, prevailing interest rates,
availability of funds and general market conditions.
THE COMPANY AND THE SERVICER
AFS is a wholly-owned subsidiary of AmeriCredit Corp. AFS was
incorporated in Delaware on July 22, 1992. AFS purchases and services automobile
loans which are originated and assigned to AFS by automobile dealers. AFS is the
primary operating subsidiary of AmeriCredit Corp., a Texas corporation the
common shares of which are listed on the New York Stock Exchange. AFS's
executive offices are located at 200 Bailey Avenue, Fort Worth, Texas
76107-1220; telephone (817) 332-7000.
THE TRUSTEE
The Trustee for each series of Securities 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.
With respect to each series of Securities, the procedures for the
resignation or removal of the Trustee and the appointment of a successor Trustee
shall be specified in the related Prospectus Supplement.
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DESCRIPTION OF THE SECURITIES
GENERAL
The Securities will be issued in series. Each series of Securities (or,
in certain instances, two or more series of Securities) will be issued pursuant
to a Trust Agreement. The following summaries (together with additional
summaries under "The Trust Agreement" below) describe all material terms and
provisions relating to the Securities common to each Trust Agreement. The
summaries do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, all of the provisions of the Trust Agreement for
the related Securities and the related Prospectus Supplement.
All of the Securities offered pursuant to this Prospectus and the
related Prospectus Supplement will be rated in one of the four highest rating
categories by one or more Rating Agencies.
The Securities will generally be styled as debt instruments, having a
principal balance and a specified Interest Rate. The Securities may either
represent beneficial ownership interests in the related Receivables held by the
related Trust or debt secured by certain assets of the related Issuer.
Each series or Class of Securities offered pursuant to this Prospectus
may have a different Interest Rate, which may be a fixed or adjustable interest
rate. The related Prospectus Supplement will specify the Interest Rate for each
series or Class of Securities described therein, or the initial interest rate
and the method for determining subsequent changes to the Interest Rate.
A series may include one or more Classes of Strip Securities entitled
(i) to principal distributions, with disproportionate, nominal or no interest
distributions, or (ii) to interest distributions, with disproportionate, nominal
or no principal distributions. In addition, a series of Securities may include
two or more Classes of Securities that differ as to timing, sequential order,
priority of payment, Interest Rate or amount of distribution of principal or
interest or both, or as to which distributions of principal or interest or both
on any Class may be made upon the occurrence of specified events, in accordance
with a schedule or formula, or on the basis of collections from designated
portions of the related pool of Receivables. Any such series may include one or
more Classes of Accrual Securities, as to which certain accrued interest will
not be distributed but rather will be added to the principal balance (or nominal
balance, in the case of Accrual Securities which are also Strip Securities)
thereof on each Payment Date, as hereinafter defined, or in the manner described
in the related Prospectus Supplement.
If so provided in the related Prospectus Supplement, a series may
include one or more other Classes of Senior Securities that are senior to one or
more other Classes of Subordinate Securities in respect of certain distributions
of principal and interest and allocations of losses on Receivables.
In addition, certain Classes of Senior (or Subordinate) Securities may
be senior to other Classes of Senior (or Subordinate) Securities in respect of
such distributions or losses.
GENERAL PAYMENT TERMS OF SECURITIES
As provided in the related Trust Agreement and as described in the
related Prospectus Supplement, Securityholders will be entitled to receive
payments on their Securities on the specified Payment Dates. Payment Dates with
respect to the Securities will occur monthly, quarterly or semi-- annually, as
described in the related Prospectus Supplement.
The related Prospectus Supplement will describe the Record Date
preceding such Payment Date, as of which the Trustee or its paying agent will
fix the identity of the Securityholders for the purpose of receiving payments on
the next succeeding Payment Date. As more fully described in the related
Prospectus Supplement, the Payment Date may be the tenth, twelfth, fifteenth or
twenty-fifth day of each month (or, in the case of quarterly-pay Securities, the
tenth, twelfth, fifteenth or twenty-fifth day of every third month; and in the
case of semi-annual pay Securities, the tenth, twelfth, fifteenth or
twenty-fifth day
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of every sixth month) and the Record Date will be the close of business as of
the last day of the calendar month that precedes the calendar month in which
such Payment Date occurs.
Each Trust Agreement will describe a Remittance Period preceding each
Payment Date (for example, in the case of monthly-pay Securities, the calendar
month preceding the month in which a Payment Date occurs). As more fully
provided in the related Prospectus Supplement, collections received on or with
respect to the related Receivables held by a Trust during a Remittance Period
will be required to be remitted by the Servicer to the related Trustee prior to
the related Payment Date and will be used to fund payments to Securityholders on
such Payment Date. As may be described in the related Prospectus Supplement, the
related Trust Agreement may provide that all or a portion of the payments
collected on or with respect to the related Receivables may be applied by the
related Trustee to the acquisition of additional Receivables during a specified
period (rather than be used to fund payments of principal to Securityholders
during such period) with the result that the related Securities will possess an
interest-only period, also commonly referred to as a revolving period, which
will be followed by an amortization period. Any such interest only or revolving
period may, upon the occurrence of certain events to be described in the related
Prospectus Supplement, terminate prior to the end of the specified period and
result in the earlier than expected amortization of the related Securities.
In addition, and as may be described in the related Prospectus
Supplement, the related Trust Agreement may provide that all or a portion of
such collected payments may be retained by the Trustee (and held in certain
temporary investments, including Receivables) for a specified period prior to
being used to fund payments of principal to Securityholders.
Such retention and temporary investment by the Trustee of such
collected payments may be required by the related Trust Agreement for the
purposes of (a) slowing the amortization rate of the related Securities relative
to the installment payment schedule of the related Receivables, or (b)
attempting to match the amortization rate of the related Securities to an
amortization schedule established at the time such Securities are issued. Any
such feature applicable to any Securities may terminate upon the occurrence of
events to be described in the related Prospectus Supplement, resulting in
distributions to the specified Securityholders and an acceleration of the
amortization of such Securities.
Neither the Securities nor the underlying Receivables will be
guaranteed or insured by any governmental agency or instrumentality or the
Company, the Servicer, any Trustee or any of their respective affiliates unless
specifically set forth in the related Prospectus Supplement.
As may be described in the related Prospectus Supplement, Securities of
each series covered by a particular Trust Agreement will either evidence
specified beneficial ownership interests in the Trust Property or represent debt
secured by the related Trust Property. To the extent that any Trust Property
includes certificates of interest or participations in Receivables, the related
Prospectus Supplement will describe the material terms and conditions of such
certificates or participations.
MASTER TRUSTS
As may be described in the related Prospectus Supplement, each Trust
Agreement may provide that, pursuant to any one or more supplements thereto, the
Company may direct the related Trustee to issue from time to time new series
subject to the conditions described below (each such issuance a "Master Trust
New Issuance"). Each Master Trust New Issuance will have the effect of
decreasing the Residual Interest in the related Master Trust. Under each such
Master Trust Agreement, the Company may designate, with respect to any newly
issued series: (i) its name or designation; (ii) its initial principal amount
(or method for calculating such amount); (iii) its Interest Rate (or formula for
the determination thereof); (iv) the Payment Dates and the date or dates from
which interest shall accrue; (v) the method for allocating collections to
Securityholders of such series; (vi) any bank accounts to be used by such series
and the terms governing the operation of any such bank accounts; (vii) the
percentage used to calculate monthly servicing fees; (viii) the provider and
terms of any form of Credit Enhancement with respect thereto; (ix) the terms on
which the Securities of such series may be repurchased or remarketed to other
investors; (x) the number of Classes of Securities of such series, and if such
series consists of
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more than one Class, the rights and priorities of each such Class; (xi) the
extent to which the Securities of such series will be issuable in book-entry
form; (xii) the priority of such series with respect to any other series; and
(xiii) any other relevant terms. None of the Company, the Servicer, the related
Trustee or any Master Trust is required or intends to obtain the consent of any
Securityholder of any outstanding series to issue any additional series.
Each Master Trust Agreement provides that the Company may designate
terms such that each Master Trust New Issuance has an amortization period which
may have a different length and begin on a different date than such periods for
any series previously issued by the related Master Trust and then outstanding.
Moreover, each Master Trust New Issuance may have the benefits of Credit
Enhancements issued by enhancement providers different from the providers of the
Credit Enhancement, if any, with respect to any series previously issued by the
related Master Trust and then outstanding. Under each Master Trust Agreement,
the related Trustee shall hold any such Credit Enhancement only on behalf of the
Securityholders to which such Credit Enhancement relates. The Company will have
the option under each Master Trust Agreement to vary among series the terms upon
which a series may be repurchased by the Issuer or remarketed to other
investors. As more fully described in a related Prospectus Supplement, there is
no limit to the number of Master Trust New Issuances that the Company may cause
under a Master Trust Agreement. Each Master Trust will terminate only as
provided in the related Master Trust Agreement. There can be no assurance that
the terms of any Master Trust New Issuance might not have an impact on the
timing and amount of payments received by Securityholders of another series
issued by the same Master Trust.
Under each Master Trust Agreement and pursuant to a related supplement,
a Master Trust New Issuance may only occur upon the satisfaction of certain
conditions provided in each such Master Trust Agreement. The obligation of the
related Trustee to authenticate the Securities of any such Master Trust New
Issuance and to execute and deliver the supplement to the related Master Trust
Agreement is subject to the satisfaction of the following conditions: (a) on or
before the date upon which the Master Trust New Issuance is to occur, the
Company shall have given the related Trustee, the Servicer, the Rating Agency
and certain related providers of Credit Enhancement, if any, written notice of
such Master Trust New Issuance and the date upon which the Master Trust New
Issuance is to occur; (b) the Company shall have delivered to the related
Trustee a supplement to the related Master Trust Agreement, in form satisfactory
to such Trustee, executed by each party to the related Master Trust Agreement
other than such Trustee; (c) the Company shall have delivered to the related
Trustee any related Credit Enhancement agreement; (d) the related Trustee shall
have received confirmation from the Rating Agency that such Master Trust New
Issuance will not result in any Rating Agency reducing or withdrawing its rating
with respect to any other series or Class of such Trust (any such reduction or
withdrawal is referred to herein as a "Ratings Effect"); (e) the Company shall
have delivered to the related Trustee, the Rating Agency and certain providers
of Credit Enhancement, if any, an opinion of counsel acceptable to the related
Trustee that for federal income tax purposes (i) following such Master Trust New
Issuance the related Master Trust will not be deemed to be an association (or
publicly traded partnership) taxable as a corporation, (ii) such Master Trust
New Issuance will not affect the tax characterization as debt of Securities of
any outstanding series or Class issued by such Master Trust that were
characterized as debt at the time of their issuance and (iii) such Master Trust
New Issuance will not cause or constitute an event in which gain or loss would
be recognized by any Securityholders or the related Master Trust; and (f) any
other conditions specified in any supplement. Upon satisfaction of the above
conditions, the related Trustee shall execute the supplement to the related
Master Trust Agreement and issue the Securities of such new series.
INDEXED SECURITIES
To the extent so specified in any Prospectus Supplement, any class of Securities
of a given series may consist of Securities ("Indexed Securities") in which the
principal amount payable at the final scheduled Payment Date (the "Indexed
Principal Amount") is determined by reference to a measure (the "Index") which
will be related to (i) the difference in the rate of exchange between United
States dollars and a currency or composite currency (the "Indexed Currency")
specified in the applicable Prospectus Supplement (such Indexed Securities,
"Currency Indexed Securities"); (ii) the difference in the price of a specified
commodity (the "Indexed Commodity") on specified dates (such Indexed Securities,
"Commodity
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Indexed Securities"); (iii) the difference in the level of a specified stock
index (the "Stock Index"), which may be based on U.S. or foreign stocks, on
specified dates (such Indexed Securities, "Stock Indexed Securities"); or (iv)
such other objective price or economic measures as are described in the
applicable Prospectus Supplement. The manner of determining the Indexed
Principal Amount of an Indexed Security and historical and other information
concerning the Indexed Currency, the Indexed Commodity, the Stock Index or other
price or economic measures used in such determination will be set forth in the
applicable Prospectus Supplement, together with information concerning tax
consequences to the holders of such Indexed Securities.
If the determination of the Indexed Principal Amount of an Indexed
Security is based on an Index calculated or announced by a third party and such
third party either suspends the calculation or announcement of such Index or
changes the basis upon which such Index is calculated (other than changes
consistent with policies in effect at the time such Indexed Security was issued
and permitted changes described in the applicable Prospectus Supplement), then
such Index shall be calculated for purposes of such Indexed Security by an
independent calculation agent named in the applicable Prospectus Supplement on
the same basis, and subject to the same conditions and controls, as applied to
the original third party. If for any reason such index cannot be calculated on
the same basis and subject to the same conditions and controls as applied to the
original third party, then the Indexed Principal Amount of such Indexed Security
shall be calculated in the manner set forth in the applicable Prospectus
Supplement. Any determination of such independent calculation agent shall in the
absence of manifest error be binding on all parties.
Interest on an Indexed Security will be payable based on the amount
designated in the applicable Prospectus Supplement (the "Face Amount"). The
applicable Prospectus Supplement will describe whether the principal amount of
the related Indexed Security, if any, that would be payable upon redemption or
repayment prior to the applicable final scheduled Distribution Date will be the
Face Amount of such Indexed Security, the Indexed Principal Amount of such
Indexed Security at the time of redemption or repayment or another amount
described in such Prospectus Supplement.
BOOK-ENTRY REGISTRATION
As may be described in the related Prospectus Supplement,
Securityholders of a given series may hold their Securities through DTC (in the
United States) or CEDEL or Euroclear (in Europe) if they are participants of
such systems, or indirectly through organizations that are participants in such
systems.
Cede, as nominee for DTC, will hold the global Securities in respect of
a given series. CEDEL and Euroclear will hold omnibus positions on behalf of the
CEDEL Participants (as defined below) and the Euroclear Participants (as defined
below) (collectively, the "Participants"), respectively, through customers'
securities accounts in CEDEL's and Euroclear's names on the books of their
respective depositaries (collectively, the "Depositaries") 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 UCC and a "clearing agency"
registered pursuant to Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions between Participants through electronic book-entries,
thereby eliminating the need for physical movement of notes or certificates.
Participants include securities brokers and dealers, banks, trust companies and
clearing corporations. Indirect access to the DTC system also is available to
others such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants").
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.
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Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through CEDEL
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by its Depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its Depositary to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. CEDEL Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in CEDEL or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant CEDEL
Participant or Euroclear Participant on such business day. Cash received in
CEDEL or Euroclear as a result of sales of securities by or through a CEDEL
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
CEDEL or Euroclear cash account only as of the business day following settlement
in DTC.
The Securityholders of a given series that are not Participants or
Indirect Participants but desire to purchase, sell or otherwise transfer
ownership of, or other interests in, Securities of such series may do so only
through Participants and Indirect Participants. In addition, Securityholders of
a given series will receive all distributions of principal and interest through
the Participants who in turn will receive them from DTC. Under a book-entry
format, Securityholders of a given series may experience some delay in their
receipt of payments, since such payments will be forwarded by the applicable
Trustee to Cede, as nominee for DTC. DTC will forward such payments to its
Participants, which thereafter will forward them to Indirect Participants or
such Securityholders. It is anticipated that the only "Securityholder" in
respect of any series will be Cede, as nominee of DTC. Securityholders of a
given series will not be recognized as Securityholders of such series, and such
Securityholders will be permitted to exercise the rights of Securityholders of
such series 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 of a given series among Participants on whose behalf it acts with
respect to such Securities and to receive and transmit distributions of
principal of, and interest on, such Securities. Participants and Indirect
Participants with which the Securityholders of a given series have accounts with
respect to such Securities similarly are required to make book-entry transfers
and receive and transmit such payments on behalf of their respective
Securityholders of such series. Accordingly, although such Securityholders will
not possess Securities, the Rules provide a mechanism by which Participants will
receive payments and will be able to transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Securityholder of a given series to pledge Securities of such series to persons
or entities that do not participate in the DTC system, or to otherwise act with
respect to such Securities, may be limited due to the lack of a physical
certificate for such Securities.
DTC will advise the Trustee in respect of each series that it will take
any action permitted to be taken by a Securityholder of the related series only
at the direction of one or more Participants to whose accounts with DTC the
Securities of such series 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 securities
transactions between CEDEL Participants through electronic book-entry changes
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in accounts of CEDEL Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in 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 securities and securities
lending and borrowing. CEDEL interfaces with domestic markets in several
countries. As a professional depository, CEDEL is subject to regulation by the
Luxembourg Monetary Institute. CEDEL Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. 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.
Euroclear was created in 1968 to hold securities for participants of
the Euroclear System ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Transactions may now be settled in any of 28 currencies,
including United States dollars. The Euroclear System includes various other
services, including securities lending and borrowing and interfaces with
domestic markets in several countries generally similar to the arrangements for
cross-market transfers with DTC described above. Euroclear is operated by Morgan
Guaranty Trust Company of New York, Brussels, Belgium office, under contract
with Euroclear Clearance System, S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the "Euroclear Operator" (as
defined below), and all Euroclear securities clearance accounts and Euroclear
cash accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for the Euroclear System on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include the Underwriters. Indirect access to the Euroclear System is
also available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The "Euroclear Operator" is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants and has no record
of relationship with persons holding through Euroclear Participants.
Except as required by law, the Trustee in respect of a series will not
have any liability for any aspect of the records relating to or payments made or
account of beneficial ownership interests of the related Securities held by
Cede, as nominee for DTC, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
DEFINITIVE NOTES
As may be described in the related Prospectus Supplement, the
Securities will be issued in fully registered, certificated form ("Definitive
Securities") to the Securityholders of a given series or their nominees, rather
than to DTC or its nominee, only if (i) the Trustee in respect of the related
series advises in writing that DTC is no longer willing or able to discharge
properly its responsibilities as depository with respect to such Securities and
such Trustee is unable to locate a qualified successor, (ii) such Trustee, at
its option, elects to terminate the book-entry-system through DTC or (iii) after
the occurrence of an
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"Event of Default" under the related Indenture or a default by the Servicer
under the related Trust Agreements, Securityholders representing at least a
majority of the outstanding principal amount of such Securities advise the
applicable Trustee through DTC in writing that the continuation of a book-entry
system through DTC (or a successor thereto) is no longer in such
Securityholders' best interest.
Upon the occurrence of any event described in the immediately preceding
paragraph, the applicable Trustee will be required to notify all such
Securityholders through Participants of the availability of Definitive
Securities. Upon surrender by DTC of the definitive certificates representing
such 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 Securities will
thereafter be made by the applicable Trustee in accordance with the procedures
set forth in the related Indenture or Trust Agreement 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 Security,
however, will be made only upon presentation and surrender of such Security at
the office or agency specified in the notice of final distribution to the
applicable Securityholders.
Definitive Securities in respect of a given series of Securities will
be transferable and exchangeable at the offices of the applicable Trustee or of
a certificate registrar named in a notice delivered to holders of such
Definitive Securities. No service charge will be imposed for any registration of
transfer or exchange, but the applicable Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith.
REPORTS TO SECURITYHOLDERS
With respect to each series of Securities, on or prior to each Payment
Date for such series, the Servicer or the related Trustee will forward or cause
to be forwarded to each holder of record of such class of Securities a statement
or statements with respect to the related Trust Property setting forth the
information specifically described in the related Trust Agreement which
generally will include the following information:
(i) the amount of the distribution with respect to each
class of Securities;
(ii) the amount of such distribution allocable to principal;
(iii) the amount of such distribution allocable to interest;
(iv) the Pool Balance, if applicable, as of the close of
business on the last day of the related Remittance Period;
(v) the aggregate outstanding principal balance and the
Pool Factor for each Class of Securities after giving effect to all
payments reported under (ii) above on such Payment Date;
(vi) the amount paid to the Servicer, if any, with respect
to the related Remittance Period;
(vii) the amount of the aggregate purchase amounts for
Receivables that have been reacquired, if any, for such Remittance
Period; and
(viii) the amount of coverage under any letter of credit,
financial guaranty insurance policy, reserve account or other form of
credit enhancement covering default risk as of the close of business on
the applicable Payment Date and a description of any Credit Enhancement
substituted therefor.
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Each amount set forth pursuant to subclauses (i), (ii), (iii) and (v)
with respect to the Securities of any series will be expressed as a dollar
amount per $1,000 of the initial principal balance of such Securities, as
applicable. The actual information to be set forth in statements to
Securityholders of a series will be described in the related Prospectus
Supplement.
Within the prescribed period of time for tax reporting purposes after
the end of each calendar year, the applicable Trustee will provide to the
Securityholders a statement containing the amounts described in (ii) and (iii)
above for that calendar year and any other information required by applicable
tax laws, for the purpose of the Securityholders' preparation of federal income
tax returns.
FORWARD COMMITMENTS; PRE-FUNDING
A Trust may enter into an agreement (each, a "Forward
Purchase Agreement") with the Sponsor whereby the Sponsor will agree to transfer
additional Mortgage Loans to such Trust following the date on which such Trust
is established and the related Certificates are issued. The Trust may enter into
Forward Purchase Agreements to permit the acquisition of additional Mortgage
Loans that could not be delivered by the Sponsor or have not formally completed
the origination process, in each case prior to the date on which the
Certificates are delivered to the Certificateholders (the "Closing Date"). Any
Forward Purchase Agreement will require that any Mortgage Loans so transferred
to the Trust conform to the requirements specified in such Forward Purchase
Agreement.
If a Forward Purchase Agreement is to be utilized, and unless
otherwise specified in the related Prospectus Supplement, the related Trustee
will be required to deposit in a segregated account (each, a "Pre-Funding
Account") up to 100% of the net proceeds received by the Trustee in connection
with the sale of one or more classes of Certificates of the related Series; the
additional Mortgage Loans will be transferred to the related Trust in exchange
for money released to the Sponsor from the related Pre-Funding Account. Each
Forward Purchase Agreement will set a specified period (the "Funding Period")
during which any such transfers must occur; for a Trust which elects federal
income treatment as REMIC or as a grantor trust, the related Funding Period will
be limited to three months from the date such Trust is established; for a Trust
which is treated as a mere security device for federal income tax purposes, the
related Funding Period will be limited to nine months from the date such Trust
is established. The Forward Purchase Agreement or the related Pooling and
Servicing Agreement will require that, if all moneys originally deposited to
such Pre-Funding Account are not so used by the end of the related Funding
Period, then any remaining moneys will be applied as a mandatory prepayment of
the related class or classes of Certificates as specified in the related
Prospectus Supplement.
During the Funding Period the moneys deposited to the
Pre-Funding Account will either (i) be held uninvested or (ii) will be invested
in cash-equivalent investments rated in one of the four highest rating
categories by at least one nationally recognized statistical rating orgnaization
and which will either mature prior to the end of the Funding Period, or will be
drawable on demand and in any event, will not constitute the type of investment
which would require registration of the related Trust as an "investment company"
under the Investment Company Act of 1940, as amended.
DESCRIPTION OF THE TRUST AGREEMENTS
The following summary describes certain terms of each Trust Agreement
pursuant to which a Trust Property will be created and the related Securities in
respect of such Trust Property will be issued. For purposes of this Prospectus,
the term "Trust Agreement" as used with respect to a Trust means, collectively,
and except as otherwise specified, any and all agreements relating to the
establishment of the related Trust, the servicing of the related Receivables and
the issuance of the related Securities, including without limitation the
Indenture, (i.e. pursuant to which any Notes shall be issued). Forms of the
Trust Agreement have been filed as exhibits to the Registration Statement of
which the Prospectus forms a part. The summary does not purport to be complete.
It is qualified in its entirety by reference to the provisions of the Trust
Agreements.
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ORIGINATION OF THE RECEIVABLES BY THE COMPANY AND ACQUISITION OF THE RECEIVABLES
PURSUANT TO A RECEIVABLES ACQUISITION AGREEMENT
On the closing date specified with respect to any given series of
Securities (the "Closing Date"), the Company or a Finance Subsidiary will
transfer Receivables originated by the Company either to a Trust pursuant to a
Pooling Agreement, or will pledge the Company's or the Finance Subsidiary's
right, title and interests in and to such Receivables to a Trustee on behalf of
the Securityholders pursuant to an Indenture. The Company or a Finance
Subsidiary will either transfer the Receivables to a Trust pursuant to a Pooling
Agreement, or will pledge the Company's right, title and interests in and to
such Receivables to a Trustee on behalf of Securityholders pursuant to an
Indenture. The obligations of the Company or a Finance Subsidiary and the
Servicer under the related Trust Agreement include those specified below and in
the related Prospectus Supplement.
As more fully described in the related Prospectus Supplement, the
Company will be obligated to acquire from the related Trust Property its
interest in any Receivable transferred to a Trust or pledged to a Trustee on
behalf of Securityholders if the interest of the Securityholders therein is
materially adversely affected by a breach of any representation or warranty made
by the Company with respect to such Receivable, which breach has not been cured
following the discovery by or notice to the Company of the breach. In addition,
if so specified in the related Prospectus Supplement, the Company may from time
to time reacquire certain Receivables or substitute other Receivables for such
Receivable subject to specified conditions set forth in the related Trust
Agreement.
ACCOUNTS
With respect to each series of Securities issued by a Trust, the
Servicer will establish and maintain with the applicable Trustee one or more
accounts, in the name of such Trustee on behalf of the related Securityholders,
into which all payments made on or with respect to the related Receivables will
be deposited (the "Collection Account"). The Servicer will also establish and
maintain with such Trustee separate accounts, in the name of such Trustee on
behalf of such Securityholders, in which amounts released from the Collection
Account and the reserve account or other Credit Enhancement, if any, for
distribution to such Securityholders will be deposited and from which
distributions to such Securityholders will be made (the "Distribution Account").
Any other accounts to be established with respect to a Trust, including
any reserve account, will be described in the related Prospectus Supplement.
For any series of Securities, funds in the Collection Account, the
Distribution Account, any reserve account and other accounts identified as such
in the related Prospectus Supplement (collectively, the "Trust Accounts") shall
be invested as provided in the related Trust Agreement in Eligible Investments.
"Eligible Investments" are generally limited to investments acceptable to the
Rating Agencies as being consistent with the rating of such Securities. Subject
to certain conditions, Eligible Investments may include securities issued by the
Company, the Servicer or their respective affiliates or other trusts created by
the Company or its affiliates. Except as described below or in the related
Prospectus Supplement, Eligible Investments are limited to obligations or
securities that mature not later than the business day immediately preceding the
related Payment Date. However, subject to certain conditions, funds in the
reserve account may be invested in securities that will not mature prior to the
date of the next distribution 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 such reserve account. If the amount required to be withdrawn from any
reserve account to cover shortfalls in collections on the related Receivables
exceeds the amount of cash in such reserve account a temporary shortfall in the
amounts distributed to the related Securityholders could result, which could, in
turn, increase the average life of the Securities of such series. Except as
otherwise specified in the related Prospectus Supplement, investment earnings on
funds deposited in the applicable Trust Accounts, net of losses and investment
expenses (collectively, "Investment Earnings"), shall be deposited in the
applicable Collection Account on each Payment Date and shall be treated as
collections of interest on the related Receivables.
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The Trust Accounts will be maintained as Eligible Deposit Accounts.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution has a credit rating from each Rating
Agency in one of its generic rating categories which signifies investment grade.
"Eligible Institution" means, with respect to a Trust, (a) the corporate trust
department of the related Indenture Trustee or the related Trustee, as
applicable, or (b) a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), which (i) (A) has either
(w) a long-term unsecured debt rating acceptable to the Rating Agencies or (x) a
short-term unsecured debt rating or certificate of deposit rating acceptable to
the Rating Agencies or (B) the parent corporation of which has either (y) a
long-term unsecured debt rating acceptable to the Rating Agencies or (z) a
short-term unsecured debt rating or certificate of deposit rating acceptable to
the Rating Agencies and (ii) whose deposits are insured by the FDIC.
THE SERVICER
The Servicer under each Trust Agreement will be named in the related
Prospectus Supplement. The entity serving as Servicer may be the Company or an
affiliate of the Company and may have other business relationships with the
Company or the Company's affiliates. The Servicer with respect to each series
will service the Receivables contained in the Trust Fund for such series. Any
Servicer may delegate its servicing responsibilities to one or more
sub-servicers, but will not be relieved of its liabilities with respect thereto.
The Servicer will make certain representations and warranties regarding
its authority to enter into, and its ability to perform its obligations under,
the related Trust Agreement. An uncured breach of such a representation or
warranty that in any respect materially and adversely affects the interests of
the Securityholders will constitute a Servicer Default (as hereinafter defined)
by the Servicer under the related Trust Agreement.
SERVICING PROCEDURES
Each Trust Agreement will provide that the Servicer will make
reasonable efforts to collect all payments due with respect to the Receivables
which are part of the Trust Fund and, in a manner consistent with the related
Trust Agreement, will continue such collection procedures as the Servicer
follows with respect to the particular type of Receivable in the particular pool
it services for itself and others. Consistent with its normal procedures, the
Servicer may, in its discretion and on a case-by-case basis, arrange with the
Obligor on a Receivable to extend or modify the payment schedule. Some of such
arrangements (including, without limitation any extension of the payment
schedule beyond the final scheduled Payment Date for the related Securities) may
result in the Servicer acquiring such Receivable if such Contract becomes a
Defaulted Contract. The Servicer may sell the Vehicle securing the respective
Defaulted Contract, if any, at a public or private sale, or take any other
action permitted by applicable law. See "Certain Legal Aspects of the
Receivables".
The material aspects of any particular Servicer's collections and other
relevant procedures will be set forth in the related Prospectus Supplement.
PAYMENTS ON RECEIVABLES
With respect to each series of Securities, unless otherwise specified
in the related Prospectus Supplement, the Servicer will deposit into the
Collection Account all payments on the related Receivables (from whatever
source) and all proceeds of such Receivables collected within three (3) business
days of receipt thereof in the related collection facility, such as a lock-box
account or collection account. Moneys deposited in such collection facility for
Trust Property may be commingled with funds from other sources.
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SERVICING COMPENSATION
As may be described in the related Prospectus Supplement with respect
to any series of securities issued by a Trust, the Servicer will be entitled to
receive a servicing fee for each Collection Period (the "Servicing Fee") in an
amount equal to a specified percentage per annum (as set forth in the related
Prospectus Supplement, the "Servicing Fee Rate") of the value of the assets of
the Trust Property, generally as of the first day of such Collection Period.
Each Prospectus Supplement and Servicing Agreement will specify the priority of
distributions with respect to the Servicing Fee (together with any portion of
the Servicing Fee that remains unpaid from prior Payment Dates). Generally, the
Servicing Fee will be paid prior to any distribution to the related
Securityholders.
The Servicer will also collect and retain any late fees, the penalty
portion of interest paid on past due amounts and other administrative fees or
similar charges allowed by applicable law with respect to the Receivables, and
will be entitled to reimbursement from each Trust for certain liabilities.
Payments by or on behalf of Obligors will be allocated to scheduled payments and
late fees and other charges in accordance with the Servicer's normal practices
and procedures.
The Servicing Fee will compensate the Servicer for performing the
functions of a third party servicer of similar types of receivables as an agent
for their beneficial owner, including collecting and posting all payments,
responding to inquiries of Obligors on the related Receivables, investigating
delinquencies, sending billing statements to Obligors, reporting tax information
to Obligors, paying costs of collection and disposition of defaults, and
policing the collateral. The Servicing Fee also will compensate the Servicer for
administering the related Receivables, accounting for collections and furnishing
statements to the applicable Trustee and the applicable Indenture Trustee, if
any, with respect to distributions. The Servicing Fee also will reimburse the
Servicer for certain taxes, accounting fees, outside auditor fees, data
processing costs and other costs incurred in connection with administering the
Receivables.
DISTRIBUTIONS
With respect to each series of Securities, beginning on the Payment
Date specified in the related Prospectus Supplement, distributions of principal
and interest (or, where applicable, of principal or interest only) on each Class
of such Securities entitled thereto will be made by the applicable Indenture
Trustee to the holders of Notes (the "Noteholders") and by the applicable
Trustee to the holders of Certificates (the "Certificateholders") of such
series. The timing, calculation, allocation, order, source, priorities of and
requirements for each class of Noteholders and all distributions to each class
of Certificateholders of such series will be set forth in the related Prospectus
Supplement.
With respect to each series of Securities, on each Payment Date
collections on the related Receivables will be transferred from the Collection
Account to the Distribution Account for distribution to Securityholders,
respectively, to the extent provided in the related Prospectus Supplement.
Credit Enhancement, such as a reserve account, may be available to cover any
shortfalls in the amount available for distribution on such date, to the extent
specified in the related Prospectus Supplement. As more fully described in the
related Prospectus Supplement, and unless otherwise specified therein,
distributions in respect of principal of a Class of Securities of a given series
will be subordinate to distributions in respect of interest on such Class, and
distributions in respect of the Certificates of such series may be subordinate
to payments in respect of the Notes of such series.
CREDIT AND CASH FLOW ENHANCEMENTS
The amounts and types of Credit Enhancement arrangements, if any, and
the provider thereof, if applicable, with respect to each class of Securities of
a given series will be set forth in the related Prospectus Supplement. If and to
the extent provided in the related Prospectus Supplement, credit enhancement may
be in the form of a Policy, subordination of one or more Classes of Securities,
reserve accounts, overcollateralization, letters of credit, credit or liquidity
facilities, third party payments or other support, surety bonds, guaranteed cash
deposits or such other arrangements as may be described in the
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related Prospectus Supplement or any combination of two or more of the
foregoing. If specified in the applicable Prospectus Supplement, Credit
Enhancement for a Class of Securities may cover one or more other Classes of
Securities of the same series, and Credit Enhancement for a series of Securities
may cover one or more other series of Securities.
The presence of Credit Enhancement for the benefit of any Class or
series of Securities is intended to enhance the likelihood of receipt by the
Securityholders or 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. As more specifically provided in the related Prospectus
Supplement, the credit enhancement for a Class or series of Securities will not
provide protection against all risks of loss and will not guarantee repayment of
the entire principal balance and interest thereon. If losses occur which exceed
the amount covered by any Credit Enhancement or which are not covered by any
Credit Enhancement, Securityholders of any Class or series will bear their
allocable share of deficiencies, as described in the related Prospectus
Supplement. In addition, if a form of Credit Enhancement covers more than one
series of Securities, Securityholders of any such series will be subject to the
risk that such Credit Enhancement will be exhausted by the claims of
Securityholders of other series.
STATEMENTS TO INDENTURE TRUSTEES AND TRUSTEES
Prior to each Payment Date with respect to each series of Securities,
the Servicer will provide to the applicable Indenture Trustee and/or the
applicable Trustee and Credit Enhancer as of the close of business on the last
day of the preceding related 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 "Description
of the Securities--Reports to Securityholders".
EVIDENCE AS TO COMPLIANCE
Each Trust Agreement will provide that a firm of independent public
accountants will furnish to the related Trust and/or the applicable Indenture
Trustee and Credit Enhancer, annually, a statement as to compliance by the
Servicer during the preceding twelve months (or, in the case of the first such
certificate, the period from the applicable Closing Date) with certain standards
relating to the servicing of the Receivables.
Each Trust Agreement will also provide for delivery to the related
Trust and/or the applicable Indenture Trustee of a certificate signed by an
officer of the Servicer stating that the Servicer either has fulfilled its
obligations under such Trust Agreement in all material respects throughout the
preceding 12 months (or, in the case of the first such certificate, the period
from the applicable Closing Date) or, if there has been a default in the
fulfillment of any such obligation in any material respect, describing each such
default. The Servicer also will agree to give each Indenture Trustee and each
Trustee notice of certain Servicer Defaults (as hereinafter defined) under the
related Trust Agreement.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the applicable Indenture
Trustee or the applicable Trustee.
CERTAIN MATTERS REGARDING THE SERVICERS
Each Trust Agreement will provide that the Servicer may not resign from
its obligations and duties as Servicer thereunder, except upon determination
that the performance by the Servicer of such duties is no longer permissible
under applicable law. No such resignation will become effective until the
related Trustee or a successor servicer has assumed the Servicer's servicing
obligations and duties under the Trust Agreement.
Except as otherwise provided in the related Prospectus Supplement, each
Trust Agreement will further provide that neither the Servicer nor any of its
respective directors, officers, employees, or agents shall be under any
liability to the related Issuer or the related Securityholders for taking any
action or for refraining from taking any action pursuant to such Trust
Agreement, or for errors in judgment; provided,
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however, that neither the Servicer nor any such person will be protected against
any liability that would otherwise be imposed by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties or by reason of
reckless disregard of obligations and duties thereunder. In addition, such Trust
Agreement will provide that the Servicer is under no obligation to appear in,
prosecute, or defend any legal action that is not incidental to its servicing
responsibilities under such Trust Agreement and that, in its opinion, may cause
it to incur any expense or liability.
Under the circumstances specified in any such Trust Agreement, any
entity into which the Servicer may be merged or consolidated, or any entity
resulting from any merger or consolidation to which the Servicer is a party, or
any entity succeeding to the business of the Servicer or, with respect to its
obligations as Servicer, which corporation or other entity in each of the
foregoing cases assumes the obligations of the Servicer, will be the successor
to the Servicer under such Trust Agreement.
SERVICER DEFAULT
Except as otherwise provided in the related Prospectus Supplement,
"Servicer Default" under a Trust Agreement will include (i) any failure by the
Servicer to deliver to the applicable Trustee for deposit in any of the related
Trust Accounts any required payment or to direct such Trustee to make any
required distributions therefrom, which failure continues unremedied for more
than three (3) Business Days after written notice from such Trustee is received
by the Servicer or after discovery by the Servicer; (ii) any failure by the
Servicer duly to observe or perform in any material respect any other covenant
or agreement in such Trust Agreement, which failure materially and adversely
affects the rights of the related Securityholders and which continues unremedied
for more than thirty (30) days after the giving of written notice of such
failure (1) to the Servicer by the applicable Trustee or (2) to the Servicer,
and to the applicable Trustee by holders of the related Securities, as
applicable, evidencing not less than 50% of the voting rights of such
outstanding Securities; (iii) any Insolvency Event; and (iv) any claim being
made on a Policy issued as Credit Enhancement. An "Insolvency Event" shall mean
financial insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings with respect to the Servicer and certain
actions by the Servicer indicating its insolvency, reorganization pursuant to
bankruptcy proceedings, or inability to pay its obligations.
RIGHTS UPON SERVICER DEFAULT
As more fully described in the related Prospectus Supplement, as long
as a Servicer Default under a Trust Agreement remains unremedied, the applicable
Trustee, Credit Enhancer or holders of Securities of the related series
evidencing not less than 50% of the voting rights of such then outstanding
Securities may terminate all the rights and obligations of the Servicer, if any,
under such Trust Agreement, whereupon a successor servicer appointed by such
Trustee or such Trustee will succeed to all the responsibilities, duties and
liabilities of the Servicer under such Trust Agreement and will be entitled to
similar compensation arrangements. If, however, a bankruptcy trustee or similar
official has been appointed for the Servicer, and no Servicer Default other than
such appointment has occurred, such bankruptcy trustee or official may have the
power to prevent the applicable Trustee or such Securityholders from effecting a
transfer of servicing. In the event that the 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 $25,000,000 and whose
regular business includes the servicing of a similar type of receivables. Such
Trustee may make such arrangements for compensation to be paid, which in no
event may be greater than the servicing compensation payable to the Servicer
under the related Trust Agreement.
WAIVER OF PAST DEFAULTS
With respect to each Trust, unless otherwise provided in the related
Prospectus Supplement and subject to the approval of any Credit Enhancer, the
holders of Notes evidencing at least a majority of the voting rights of such
then outstanding Securities may, on behalf of all Securityholders of the related
Securities, waive any default by the Servicer in the performance of its
obligations under the related Trust Agreement and its consequences, except a
default in making any required deposits to or payments from
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any of the Trust Accounts in accordance with such Trust Agreement. No such
waiver shall impair the Securityholders' rights with respect to subsequent
defaults.
AMENDMENT
As more fully described in the related Prospectus Supplement, each of
the Trust Agreements may be amended by the parties thereto, without the consent
of the related Securityholders, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of such Trust
Agreements or of modifying in any manner the rights of such Securityholders;
provided that such action will not, in the opinion of counsel satisfactory to
the applicable Trustee, materially and adversely affect the interests of any
such Securityholder and subject to the approval of any Credit Enhancer. As may
be described in the related Prospectus Supplement, the Trust Agreements may also
be amended by the Company, the Servicer, and the applicable Trustee with the
consent of the holders of Securities evidencing at least a majority of the
voting rights of such then outstanding Securities for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
such Trust Agreements or of modifying in any manner the rights of such
Securityholders; provided, however, that no such amendment may (i) increase or
reduce in any manner the amount or priority of, or accelerate or delay the
timing of, collections of payments on the related Receivables or distributions
that are required to be made for the benefit of such Securityholders or (ii)
reduce the aforesaid percentage of the Securities of such series which are
required to consent to any such amendment, without the consent of the
Securityholders of such series.
INSOLVENCY EVENT
As described in the related Prospectus Supplement, if an Insolvency
Event occurs with respect to a Debtor relating to the applicable Trust Property,
the related Trust will terminate, and the Receivables of the related Trust
Property will be liquidated and each such Trust will be terminated 90 days after
the date of such Insolvency Event, unless, before the end of such 90-day period,
the Trustee of such Trust shall have received written instructions from each of
the related Securityholders (other than the Company) and/or Credit Enhancer to
the effect that such party disapproves of the liquidation of such Receivables.
Promptly after the occurrence of any Insolvency Event with respect to a Debtor,
notice thereof is required to be given to such Securityholders and/or Credit
Enhancer; provided, however, that any failure to give such required notice will
not prevent or delay termination of any Trust. Upon termination of any Trust,
the applicable Trustee shall direct that the assets of such Trust be promptly
sold (other than the related Trust Accounts) in a commercially reasonable manner
and on commercially reasonable terms. The proceeds from any such sale,
disposition or liquidation of such Receivables will be treated as collections on
such Receivables and deposited in the related Collection Account. If the
proceeds from the liquidation of such Receivables and any amounts on deposit in
the Reserve Account, if any, and the related Distribution Account are not
sufficient to pay the Securities of the related series in full, and no
additional Credit Enhancement is available, the amount of principal returned to
Securityholders will be reduced and some or all of such Securityholders will
incur a loss.
Each Trust Agreement will provide that the applicable Trustee does not
have the power to commence a voluntary proceeding in bankruptcy with respect to
any related Trust without the unanimous prior approval of all Certificateholders
(including the Company, if applicable) of such Trust and the delivery to such
Trustee by each such Certificateholder of a certificate certifying that such
Certificateholder reasonably believes that such Trust is insolvent.
TERMINATION
With respect to each Trust, the obligations of the Servicer, the
Company and the applicable Trustee pursuant to the related Trust Agreement will
terminate upon the earlier to occur of (i) the maturity or other liquidation of
the last related Receivable and the disposition of any amounts received upon
liquidation of any such remaining Receivables and (ii) the payment to
Securityholders of the related series of all amounts required to be paid to them
pursuant to such Trust Agreement. As more fully described in the related
Prospectus Supplement, in order to avoid excessive administrative expense, the
Servicer
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will be permitted in respect of the applicable Trust Property, unless otherwise
specified in the related Prospectus Supplement, at its option to purchase from
such Trust Property, as of the end of any Collection Period immediately
preceding a Payment Date, if the Pool Balance of the related Contracts is less
than a specified percentage (set forth in the related Prospectus Supplement) of
the initial Pool Balance in respect of such Trust Property, all such remaining
Receivables at a price equal to the aggregate of the Purchase Amounts thereof as
of the end of such Collection Period. The related Securities will be redeemed
following such purchase.
If and to the extent provided in the related Prospectus Supplement with
respect to the Trust Property, the applicable Trustee will, within ten days
following a Payment Date as of which the Pool Balance is equal to or less than
the percentage of the initial Pool Balance specified in the related Prospectus
Supplement, solicit bids for the purchase of the Receivables remaining in such
Trust, in the manner and subject to the terms and conditions set forth in such
Prospectus Supplement. If such Trustee receives satisfactory bids as described
in such Prospectus Supplement, then the Receivables remaining in such Trust
Property 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 may effect the prepayment of the
Certificates of such series.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
GENERAL
The transfer of Receivables by the Company or its Finance Subsidiary to
the Trust pursuant to the related Trust Agreement, the perfection of the
security interests in the Receivables and the enforcement of rights to realize
on the Vehicles as collateral for the Receivables are subject to a number of
federal and state laws, including the UCC as in effect in various states. As
specified in each Prospectus Supplement, the Servicer will take such action as
is required to perfect the rights of the Trustee in the Receivables. If, through
inadvertence or otherwise, a third party were to purchase (including the taking
of a security interest in) a Receivable for new value in the ordinary course of
its business, without actual knowledge of the Trust's interest, and take
possession of a Receivable, the purchaser would acquire an interest in such
Receivable superior to the interest of the Trust. As further specified in each
Prospectus Supplement, no action will be taken to perfect the rights of the
Trustee in proceeds of any insurance policies covering individual Vehicles or
Obligors. Therefore, the rights of a third party with an interest in such
proceeds could prevail against the rights of the Trust prior to the time such
proceeds are deposited by the Servicer into a Trust Account.
SECURITY INTERESTS IN THE FINANCED VEHICLES
General
Retail installment sale contracts such as the Receivables evidence the
credit sale of automobiles and light duty trucks by dealers to consumers. The
contracts also constitute personal property security agreements and include
grants of security interests in the related automobiles and light duty trucks
under the UCC. Perfection of security interests in automobiles and light duty
trucks is generally governed by the vehicle registration or titling laws of the
state in which each vehicle is registered or titled. In most states a security
interest in a vehicle is perfected by notation of the secured party's lien on
the vehicle's certificate of title.
Perfection
Pursuant to the Trust Agreement, the Company will sell and assign the
Receivables it has originated or acquired and its security interests in the
Vehicles to the Trustee. Alternatively, the Company
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may sell and assign the Receivables and its interest in the Vehicles to a
Finance Subsidiary which will, in turn, sell and assign such Receivables and
related security interests to the Trustee. Each of the related Prospectus
Supplements will specify whether, because of the administrative burden and
expense, the Company, the Servicer or the Trustee will amend any certificate of
title to identify the Trustee as the new secured party on the certificates of
title relating to the Vehicles. Each of the related Prospectus Supplements will
specify the UCC financing statements to be filed in order to perfect the
transfer to the Finance Subsidiary of Receivables and the transfer by the
Finance Subsidiary to the Trustee of the Receivables. Further, although the
Trustee will not rely on possession of the Receivables as the legal basis for
the perfection of its interest therein or in the security interests in the
Vehicles, the Servicer, as specified in the related Prospectus Supplement, will
continue to hold the Receivables and any certificates of title relating to the
Vehicles in its possession as custodian for the Trustee pursuant to the related
Trust Agreement which, as a practical matter, should preclude any other party
from claiming a competing security interest in the Receivables on the basis that
the security interest is perfected by possession.
A security interest in a motor vehicle registered in most states may be
perfected against creditors and subsequent purchasers without notice for
valuable consideration only by one or more of the following: depositing with the
related Department of Motor Vehicles or analogous state office a properly
endorsed certificate of title for the vehicle showing the secured party as legal
owner or lienholder thereon, or filing a sworn notice of lien with the related
Department of Motor Vehicles or analogous state office and noting such lien on
the certificate of title, or, if the vehicle has not been previously registered,
filing an application in usual form for an original registration together with
an application for registration of the secured party as legal owner or
lienholder, as the case may be. However, under the laws of most states, a
transferee of a security interest in a motor vehicle is not required to reapply
to the related Department of Motor Vehicles or analogous state office for a
transfer of registration when the security interest is sold or when the interest
of the transferee arises from the transfer of a security interest by the
lienholder to secure payment or performance of an obligation. Accordingly, under
the laws of such states, the assignment by the Company of its interest in the
Receivables to the Trustee under the related Trust Agreement is an effective
conveyance of the security interest of the Company in the Receivables, and
specifically, the Vehicles, without such re-registration and without amendment
of any lien noted on the related certificate of title, and (subject to the
immediately succeeding paragraphs) the Trustee will succeed to the Company's
rights as secured party.
Although re-registration of a Vehicle is not necessary to convey a
perfected security interest in the Vehicles to the Trustee, the Trustee's
security interest could be defeated through fraud, negligence, forgery or
administrative error since it may not be listed as legal owner or lienholder on
the certificates of title to the Vehicles. However, in the absence of fraud,
negligence, forgery or administrative error , the notation of the Company's lien
on the certificates of title will be sufficient to protect the Trust against the
rights of subsequent purchasers of a Vehicle or subsequent creditors who take a
security interest in a Vehicle. In the related Trust Agreement, the Company or
its Finance Subsidiary will represent and warrant that it has, or has taken all
action necessary to obtain, a perfected security interest in each Vehicle. If
there are any Vehicles as to which the Company failed to obtain a first priority
perfected security interest, the Company's security interest would be
subordinate to, among others, subsequent purchasers of such Vehicles and holders
of first priority perfected security interests therein. Such a failure, however,
would constitute a breach of the Company's or the Finance Subsidiary's
representations and warranties under the related Trust Agreement. Accordingly,
pursuant to the related Trust Agreement, the Company or Finance Subsidiary would
be required to repurchase the related Receivables from the Trustee unless the
breach were cured.
Continuity of Perfection
Under the laws of most states, a perfected security interest in a motor
vehicle continues for four months after the vehicle is moved to a new state from
the one in which it is initially registered and thereafter until the owner
re-registers such motor vehicle in the new state. A majority of states generally
require surrender of a certificate of title to re-register a vehicle. In those
states that require a secured party to hold possession of the certificate of
title to maintain perfection of the security interest, the secured party would
learn of the re-registration through the request from the Obligor under the
related installment
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<PAGE> 107
sale contract to surrender possession of the certificate of title to assist in
such re-registration. In the case of vehicles registered in states providing for
the notation of a lien on the certificate of title but not requiring possession
by the secured party (such as Texas), the secured party would receive notice of
surrender from the state of re-registration if the security interest is noted on
the certificate of title. Thus, the secured party would have the opportunity to
reperfect its security interest in the vehicle in the state of relocation.
However, these procedural safeguards will not protect the secured party if,
through fraud, forgery or administrative error, the debtor somehow procures a
new certificate of title that does not list the secured party's lien.
Additionally, in states that do not require surrender of a certificate of title
for re-registration of a vehicle, re-registration could defeat perfection. In
each of the Trust Agreements, the Servicer will be required to take steps to
effect re-perfection upon receipt of notice of re-registration or information
from the Obligor as to relocation. Similarly, when an Obligor sells a Vehicle,
the Servicer will have an opportunity to require satisfaction of the related
Receivable before release of the lien, either because the Servicer will be
required to surrender possession of the certificate of title in connection with
the sale, or because the Servicer will receive notice as a result of its lien
noted thereon. Pursuant to the related Trust Agreement, the related Servicer
will hold the certificates of title for the related Vehicles as custodian for
the Trustee. Under the related Trust Agreement, the Servicer will be obligated
to take appropriate steps, at its own expense, to maintain perfected security
interests in the Vehicles.
Priority of Certain Liens Arising by Operation of Law
Under the laws of most states, certain statutory liens such as
mechanics', repairmen's and garagemen's liens for repairs performed on a motor
vehicle, motor vehicle accident liens, towing and storage liens, liens arising
under various state and federal criminal statutes and liens for unpaid taxes
take priority over even a first priority perfected security interest in such
vehicle by operation of law. The UCC also grants priority to certain federal tax
liens over the lien of a secured party. The laws of most states and federal law
permit the confiscation of motor vehicles by governmental authorities under
certain circumstances if used in or acquired with the proceeds of unlawful
activities, which may result in the loss of a secured party's perfected security
interest in a confiscated vehicle. The Company will represent and warrant to the
Trustee in the related Trust Agreement that, as of the related Closing Date,
each security interest in a Vehicle shall be a valid, subsisting and enforceable
first priority security interest in such Vehicle. However, liens for repairs or
taxes superior to the security interest of the Trustee in any such Vehicle, or
the confiscation of such Vehicle, could arise at any time during the term of a
Receivable. No notice will be given to the Trustee or any Securityholder in the
event such a lien or confiscation arises and any such lien or confiscation
arising after the related Closing Date would not give rise to the Company's
repurchase obligation under the related Trust Agreement.
REPOSSESSION
In the event of default by an Obligor, the holder of the related retail
installment sale contract has all the remedies of a secured party under the UCC,
except where specifically limited by other state laws. The UCC remedies of 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
surrendered, self-help repossession is accomplished simply by taking possession
of the related 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 is obtained from the appropriate state court, and the vehicle must
then be recovered in accordance with that order. In some jurisdictions, the
secured party is required to notify the debtor of the default and the intent to
repossess the collateral and give the debtor a time period within which to cure
the default prior to repossession. Generally, this right of cure may only be
exercised on a limited number of occasions during the term of the related
contract. Other jurisdictions permit repossession without prior notice if it can
be accomplished without a breach of the peace (although in some states, a course
of conduct in which the creditor has accepted late payments has been held to
create a right by the Obligor to receive prior notice).
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<PAGE> 108
NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and other state laws require a 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. In
addition, some states also impose substantive timing requirements on the sale of
repossessed vehicles in certain circumstances and/or various substantive timing
and content requirements on such notices. In some states, under certain
circumstances after a financed vehicle has been repossessed, the Obligor may
redeem the collateral by paying the delinquent installments and other amounts
due. The Obligor has the right to redeem the collateral prior to actual sale or
entry by the secured party into a contract for sale of the collateral by paying
the secured party the unpaid principal balance of the obligation, accrued
interest thereon, reasonable expenses for repossessing, holding, and preparing
the collateral for disposition and arranging for its sale, plus, in some
jurisdictions, reasonable attorneys' fees and legal expenses or in some other
states, by payment of delinquent installments on the unpaid principal balance of
the related obligation.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the Vehicles generally will be applied first
to the expenses of resale and repossession and then to the satisfaction of the
indebtedness. In many instances, the remaining principal amount of such
indebtedness will exceed such proceeds. Under the UCC and laws applicable in
some states, a creditor is entitled to bring an action to obtain a deficiency
judgment from a debtor for any deficiency on repossession and resale of a motor
vehicle securing such debtor's loan; however, in some states, a creditor may not
seek a deficiency judgment from a debtor whose financed vehicle had an initial
cash sales price less than a specified amount, usually $3,000. Some states,
impose prohibitions or limitations or notice requirements on actions for
deficiency judgments. In addition to the notice requirement described above, the
UCC requires that every aspect of the sale or other disposition, including the
method, manner, time, place and terms, be "commercially reasonable". Generally,
courts have held that when a sale is not "commercially reasonable", the secured
party loses its right to a deficiency judgment. In addition, the UCC permits the
debtor or other interested party to recover for any loss caused by noncompliance
with the provisions of the UCC. Also, prior to a sale, the UCC permits the
debtor or other interested person to obtain an order mandating that the secured
party refrain from disposing of the collateral if it is established that the
secured party is not proceeding in accordance with the "default" provisions
under the UCC. However, the deficiency judgment would be a personal judgment
against the Obligor for the shortfall, and a defaulting Obligor can be expected
to have very little capital or sources of income available following
repossession. Therefore, in many cases, it may not be useful to seek a
deficiency judgment or, if one is obtained, it may be settled at a significant
discount or be uncollectible.
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
creditor to remit the surplus to any holder of a subordinate lien with respect
to the vehicle or if no such lienholder exists or if there are remaining funds,
the UCC requires the creditor to remit the surplus to the Obligor under the
contract.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related
regulations impose substantial requirements upon creditors 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 Federal Reserve Board's Regulations B and Z, state adaptations
of the Uniform Consumer Credit Code, state motor vehicle retail installment sale
acts, state "lemon" laws and other similar laws. In addition, the laws of
certain states impose finance charge ceilings and other restrictions on consumer
transactions and require contract disclosures in addition to those required
under federal law. These requirements impose specific statutory liabilities upon
creditors who fail to comply with their provisions. In some cases, this
liability could affect the ability of an assignee such as the Trustee to enforce
consumer finance contracts such as the Receivables.
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<PAGE> 109
The so-called "Holder-in-Due-Course Rule" of the Federal Trade
Commission (the "FTC Rule") has the effect of subjecting any assignee of the
seller in a consumer credit transaction (and certain related creditors and their
assignees) to all claims and defenses which the Obligor in the transaction could
assert against the seller. Liability under the FTC Rule is limited to the
amounts paid by the Obligor under the contract, and the holder of the contract
may also be unable to collect any balance remaining due thereunder from the
Obligor. The FTC Rule is generally duplicated by the Uniform Consumer Credit
Code, other state statutes or the common law in certain states. To the extent
that the Receivables will be subject to the requirements of the FTC Rule, the
Trustee, as holder of the Receivables, will be subject to any claims or defenses
that the purchaser of the related Vehicle may assert against the seller of such
Vehicle. Such claims will be limited to a maximum liability equal to the amounts
paid by the Obligor under the related Receivable.
Under most state vehicle dealer licensing laws, sellers of automobiles
and light duty trucks are required to be licensed to sell vehicles at retail
sale. In addition, with respect to used vehicles, the Federal Trade Commission's
Rule on Sale of Used Vehicles requires that all sellers of used vehicles
prepare, complete and display a "Buyer's Guide" which explains the warranty
coverage for such vehicles. Furthermore, Federal Odometer Regulations
promulgated under the Motor Vehicle Information and Cost Savings Act and the
motor vehicle title laws of most states require that all sellers of 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
either a Buyer's Guide or Odometer Disclosure Statement was not provided to the
purchaser of a Vehicle, the Obligor may be able to assert a defense against the
seller of the Vehicle. If an Obligor on a Receivable were successful in
asserting any such claim or defense, the Servicer would pursue on behalf of the
Trust any reasonable remedies against the seller or manufacturer of the vehicle,
subject to certain limitations as to the expense of any such action to be
specified in the related Trust Agreement.
Any such loss, to the extent not covered by credit support (as
specified in the Related Prospectus Supplement), could result in losses to the
Securityholders. As specified in the related Prospectus Supplement, if an
Obligor were successful in asserting any such claim or defense as described in
this paragraph or the two immediately preceding paragraphs, such claim or
defense may constitute a breach of a representation and warranty under the
related Trust Agreement and may create an obligation of the Company to
repurchase such Receivable unless the breach were cured.
Courts have applied general equitable principles to secured parties
pursuing repossession or litigation involving deficiency balances. These
equitable principles may have the effect of relieving an Obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies
of secured parties under the UCC and related laws violate the due process
protections of the 14th Amendment to the Constitution of the United States.
Courts have generally either upheld the notice provisions of the UCC and related
laws as reasonable or have found that the creditor's repossession and resale do
not involve sufficient state action to afford constitutional protection to
consumers.
As specified in the related Prospectus Supplement, the Company (or its
Finance Subsidiary, if any) will represent and warrant under the related Trust
Agreement that each Receivable complies with all requirements of law in all
material respects. Accordingly, if an Obligor has a claim against the Trustee
for violation of any law and such claim materially and adversely affects the
Trustee's interest in a Receivable, such violation would constitute a breach of
representation and warranty under the related Trust Agreement and would create
an obligation of the Company (or its Finance Subsidiary, if any) to repurchase
such Receivable unless the breach were cured.
SOLDIERS' AND SAILORS' CIVIL RELIEF ACT OF 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended (the "Relief Act"), an Obligor who enters military service after the
origination of such Obligor's Receivable (including an Obligor who was in
reserve status and is called to active duty after origination of the
Receivable), may
42
<PAGE> 110
not be charged interest (including fees and charges) above an annual rate of 6%
during the period of such Obligor's active duty status, unless a court orders
otherwise upon application of the lender. The Relief Act applies to Obligors who
are members of the Army, Navy, Air Force, Marines, National Guard, Reserves,
Coast Guard, and officers of the U.S. Public Health Service assigned to duty
with the military. Because the Relief Act applies to Obligors who enter military
service (including reservists who are called to active duty) after origination
of the related Receivable, no information can be provided as to the number of
loans that may be effected by the Relief Act. Application of the Relief Act
would adversely affect, for an indeterminate period of time, the ability of the
Servicer to collect full amounts of interest on certain of the Receivables. Any
shortfall in interest collections resulting from the application of the Relief
Act or similar legislation or regulations, which would not be recoverable from
the related Receivables, would result in a reduction of the amounts
distributable to the holders of the related Securities, and would not be covered
by advances, any form of Credit Enhancement provided in connection with the
related series of Securities. In addition, the Relief Act imposes limitations
that would impair the ability of the Servicer to foreclose on an affected
Receivable during the Mortgagor's period of active duty status, and, under
certain circumstances, during an additional three month period thereafter. Thus,
in the event that the Relief Act or similar legislation or regulations applies
to any Receivable which goes into default, there may be delays in payment and
losses on the related Securities in connection therewith. Any other interest
shortfalls, deferrals or forgiveness of payments on the Receivables resulting
from similar legislation or regulations may result in delays in payments or
losses to Securityholders of the related series.
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a creditor to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
creditor from repossessing a 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 unsecured creditor for the remainder
of the indebtedness. A bankruptcy court may also reduce the monthly payments due
under a contract or change the rate of interest and time of repayment of the
indebtedness. Any such shortfall, to the extent not covered by credit support
(as specified in each Prospectus Supplement), could result in losses to the
Securityholders.
CERTAIN TAX CONSIDERATIONS
The Prospectus Supplement for each series of Securities will summarize,
subject to the limitations stated therein, federal income tax considerations
relevant to the purchase, ownership and disposition of such Securities.
ERISA CONSIDERATIONS
The Prospectus Supplement for each series of Securities will summarize,
subject to the limitations discussed therein, considerations under ERISA
relevant to the purchase of such Securities by employee benefit plans and
individual retirement accounts.
METHODS OF DISTRIBUTION
The Securities offered hereby and by the related Prospectus Supplement
will be offered in series through one or more of the methods described below.
The Prospectus Supplement prepared for each series will describe the method of
offering being utilized for that series and will state the public offering or
purchase price of such series and the net proceeds to the Company from such
sale.
43
<PAGE> 111
The Company intends that Securities will be offered through the
following methods from time to time and that offerings may be made concurrently
through more than one of these methods or that an offering of a particular
series of Securities may be made through a combination of two or more of these
methods. Such methods are as follows:
1. By negotiated firm commitment or best efforts underwriting
and public re-offering by underwriters;
2. By placements by the Company with institutional investors
through dealers;
3. By direct placements by the Company with institutional
investors; and
4. By competitive bid.
In addition, if specified in the related Prospectus Supplement, a
series of Securities may be offered in whole or in part in exchange for the
Receivables (and other assets, if applicable) that would comprise the Trust
Property in respect of such Securities.
If underwriters are used in a sale of any Securities (other than in
connection with an underwriting on a best efforts basis), such Securities will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions, at
fixed public offering prices or at varying prices to be determined at the time
of sale or at the time of commitment therefor. The Securities will be set forth
on the cover of the Prospectus Supplement relating to such series and the
members of the underwriting syndicate, if any, will be named in such Prospectus
Supplement.
In connection with the sale of the Securities, underwriters may receive
compensation from the Company or from purchasers of the Securities in the form
of discounts, concessions or commissions. Underwriters and dealers participating
in the distribution of the Securities may be deemed to be underwriters in
connection with such Securities, and any discounts or commissions received by
them from the Company and any profit on the resale of Securities by them may be
deemed to be underwriting discounts and commissions under the Securities Act.
The Prospectus Supplement will describe any such compensation paid by the
Company.
It is anticipated that the underwriting agreement pertaining to the
sale of any series of Securities will provide that the obligations of the
underwriters will be subject to certain conditions precedent, that the
underwriters will be obligated to purchase all such Securities if any are
purchased (other than in connection with an underwriting on a best efforts
basis) and that, in limited circumstances, the Company will indemnify the
several underwriters and the underwriters will indemnify the Company against
certain civil liabilities, including liabilities under the Securities Act or
will contribute to payments required to be made in respect thereof.
The Prospectus Supplement with respect to any series offered by
placements through dealers will contain information regarding the nature of such
offering and any agreements to be entered into between the Company and
purchasers of Securities of such series.
Purchasers of Securities, including dealers, may, depending on the
facts and circumstances of such purchases, be deemed to be "underwriters" within
the meaning of the Securities Act in connection with reoffers and sales by them
of Securities. Holders of Securities should consult with their legal advisors in
this regard prior to any such reoffer or sale.
LEGAL OPINIONS
Certain legal matters relating to the issuance of the Securities of any
series, including certain federal and state income tax consequences with respect
thereto, will be passed upon by Dewey Ballantine, New York, New York, or other
counsel specified in the related Prospectus Supplement.
44
<PAGE> 112
FINANCIAL INFORMATION
Certain specified Trust Property will secure each series of Securities,
no Trust will engage in any business activities or have any assets or
obligations prior to the issuance of the related series of Securities, except
for serial issuances by a Master Trust. Accordingly, no financial statements
with respect to any Trust Property will be included in this Prospectus or in the
related Prospectus Supplement.
A Prospectus Supplement may contain the financial statements of the
related Credit Enhancer, if any.
ADDITIONAL INFORMATION
This Prospectus, together with the Prospectus Supplement for each
series of Securities, contains a summary of the material terms of the applicable
exhibits to the Registration Statement and the documents referred to herein and
therein. Copies of such exhibits are on file at the offices of the Securities
and Exchange Commission in Washington, D.C., and may be obtained at rates
prescribed by the Commission upon request to the Commission and may be
inspected, without charge, at the Commission's offices.
45
<PAGE> 113
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.
Accrual Securities............................................................6
Additional Receivables.......................................................10
AFS...........................................................................4
APR.......................................................................9, 19
Cede.........................................................................10
CEDEL Participants...........................................................28
Certificateholders...........................................................34
Certificates...............................................................1, 4
Class.........................................................................1
Closing Date.............................................................31, 32
Collection Account...........................................................32
Collectors...................................................................22
Commission....................................................................2
Commodity Indexed Securities.................................................26
Company.......................................................................4
Contracts..............................................................1, 4, 20
Cooperative..................................................................29
Credit Enhancement...........................................................16
Credit Enhancer..............................................................16
Currency Indexed Securties...................................................26
Dealers.......................................................................4
Debt Securities..............................................................12
Definitive Securities........................................................29
Depositaries.................................................................27
Direct Participants..........................................................16
Distribution Account.........................................................32
DTC..........................................................................10
Eligible Deposit Account.....................................................33
Eligible Institution.........................................................33
Eligible Investments.........................................................32
ERISA........................................................................12
Euroclear Operator...........................................................29
Euroclear Participants.......................................................29
Event of Default.............................................................30
Exchange Act..............................................................2, 12
Face Amount..................................................................27
Finance Subsidiary...........................................................14
Fixed Income Securities.......................................................6
Fixed Value Contracts.....................................................9, 19
Forward Purchase Agreement...................................................31
FTC Rule.....................................................................42
Funding Period...............................................................31
Grantor Trust Securities.....................................................12
Holder-in-Due-Course Rule....................................................42
Indenture.....................................................................5
Indenture Trustee ............................................................5
Index........................................................................26
Indexed Commodity ...........................................................26
Indexed Currency.............................................................26
Indexed Principal Amount.....................................................26
46
<PAGE> 114
Indexed Securities...........................................................26
Indirect Participants....................................................16, 27
Insolvency Event.............................................................36
Insolvency Laws..............................................................14
Interest Rate..............................................................2, 6
Investment Company Act........................................................7
Investment Earnings..........................................................32
Issuer.................................................................1, 4, 18
Master Trust..................................................................8
Master Trust Agreement........................................................8
Master Trust New Issuance....................................................25
Noteholders..................................................................34
Notes......................................................................1, 4
Participants.................................................................27
Partnership Interests........................................................12
Pass-Through Rate ............................................................2
Payment Date..................................................................6
Policy.....................................................................1, 5
Pool Balance.................................................................23
Pool Factor..................................................................23
Pooling Agreement ............................................................5
Pre-Funding Account..........................................................10
Pre-Funding Period...........................................................10
Prepayment...................................................................16
Prospectus Supplement.........................................................1
Rating Agencies..............................................................12
Ratings Effect...........................................................16, 26
Receivables.............................................................1, 4, 5
Record Date...................................................................7
Registration Statement........................................................2
Relief Act...............................................................17, 42
Remittance Period ............................................................7
Residual Interest ............................................................7
Rule of 78s...............................................................9, 19
Rule of 78s Contracts........................................................19
Rules........................................................................28
Securities....................................................................1
Securities Act................................................................2
Security Insurer.............................................................10
Securityholder...............................................................28
Securityholders...............................................................6
Senior Securities ............................................................6
Servicer...................................................................1, 4
Servicer Default.............................................................36
Servicing Agreement...........................................................5
Servicing Fee................................................................34
Servicing Fee Rate...........................................................34
Simple Interest Contracts.................................................9, 19
Stock Index..................................................................27
Stock Indexed Securities.....................................................27
Strip Securities..............................................................6
Subordinate Securities........................................................6
Terms and Conditions.........................................................29
Transferor....................................................................4
Trust......................................................................1, 4
Trust Accounts...............................................................32
47
<PAGE> 115
Trust Agreement...........................................................5, 31
Trust Property.............................................................1, 4
Trustee.......................................................................5
Vehicles...................................................................1, 4
Vendors.......................................................................4
48
<PAGE> 116
- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE SELLER
OR THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE TRUST, THE RECEIVABLES OR THE SECURITY INSURER SINCE SUCH
DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
PROSPECTUS SUPPLEMENT
Incorporation of Certain Documents by
Reference.................................. S- 3
Summary of Terms............................. S- 4
Risk Factors................................. S-13
Use of Proceeds.............................. S-15
The Servicer................................. S-15
The Seller................................... S-15
The Trust.................................... S-16
The Trust Property........................... S-17
AmeriCredit's Automobile Financing
Program.................................... S-18
The Receivables.............................. S-20
Yield and Prepayment Considerations.......... S-24
The Insurer.................................. S-30
Description of the Notes..................... S-32
Description of the Certificates.............. S-35
Description of the Purchase Agreements and
the Trust Documents........................ S-37
The Policies................................. S-47
Certain Federal Income Tax Consequences...... S-50
State Tax Considerations..................... S-56
ERISA Considerations......................... S-56
Legal Investment............................. S-57
Ratings...................................... S-57
Underwriting................................. S-58
Experts...................................... S-58
Legal Opinions............................... S-59
Index of Defined Terms....................... S-60
Global Clearance Settlement and Tax
Documentation Procedures................... Annex I
PROSPECTUS
Prospectus Supplement........................ 2
Available Information........................ 2
Incorporation of Certain Documents by
Reference.................................. 2
Reports to Securityholders................... 3
Summary of Terms............................. 4
Risk Factors................................. 13
The Trust Property........................... 17
The Issuers.................................. 18
The Receivables.............................. 19
AmeriCredit's Automobile Financing Program... 20
Pool Factors................................. 23
Use of Proceeds.............................. 23
The Company and the Servicer................. 23
The Trustee.................................. 23
Description of the Securities................ 24
Description of the Trust Agreements.......... 31
Certain Legal Aspects of the Receivables..... 38
Certain Tax Considerations................... 43
ERISA Considerations......................... 43
Methods of Distribution...................... 43
Legal Opinions............................... 44
Financial Information........................ 45
Additional Information....................... 45
Index of Terms............................... 46
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UNTIL , 1996 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT),
ALL DEALERS EFFECTING TRANSACTIONS IN THE CERTIFICATES DESCRIBED IN THIS
PROSPECTUS SUPPLEMENT, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
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$175,000,000
AmeriCredit Automobile
Receivables Trust 1996-C
$48,000,000
Class A-1 % Money Market Asset
Backed Notes
$80,000,000
Class A-2 Floating Rate Asset
Backed Notes
$40,875,000
Class A-3 % Asset Backed Notes
$6,125,000
% Asset Backed Certificates
AFS Funding Corp.
Seller
AmeriCredit Financial Services, Inc.
Servicer
PROSPECTUS SUPPLEMENT
CS First Boston
Prudential Securities
Incorporated
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