<PAGE>
RULE NO. 424(b)(2)
REGISTRATION NO. 333-17981
PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED FEBRUARY 28, 1997)
$325,000,000
AMERICREDIT AUTOMOBILE RECEIVABLES TRUST 1997-C
$83,000,000 Class A-1 5.66% Asset Backed Notes
$135,000,000 Class A-2 Floating Rate Asset Backed Notes
$107,000,000 Class A-3 6.30% Asset Backed Notes
AFS FUNDING CORP.
Seller
LOGO AMERICREDIT
-----------------------
FINANCIAL SERVICES, INC.
Servicer
-----------
AmeriCredit Automobile Receivables Trust 1997-C (the "Trust") will be formed
pursuant to a Trust Agreement to be entered into between AFS Funding Corp.,
as Seller (the "Seller"), and Bankers Trust (Delaware), as Owner Trustee
(the "Owner Trustee"), and will issue $83,000,000 aggregate principal
amount of Class A-1 5.66% Asset Backed Notes (the "Class A-1 Notes"),
$135,000,000 aggregate principal amount of Class A-2 Floating Rate Asset
Backed Notes (the "Class A-2 Notes") and $107,000,000 aggregate
principal amount of Class A-3 6.30% 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 12, 1997 (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 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 duty trucks and vans financed thereby (the
"Initial Financed Vehicles"), certain monies received thereunder
after August 12, 1997 (the "Initial Cutoff Date"), security
interests in the Initial Financed Vehicles and certain other
property, as more fully described herein.
FOR A DISCUSSION OF CERTAIN FACTORS RELATING TO THE SECURITIES, SEE
"RISK FACTORS" BEGINNING ON PAGE S-12 HEREIN AND BEGINNING ON
PAGE 13 IN THE
ACCOMPANYING PROSPECTUS.
THE NOTES REPRESENT OBLIGATIONS OF THE TRUST ONLY AND DO NOT REPRESENT
INTERESTS IN OR OBLIGATIONS OF THE SELLER, THE SERVICER OR ANY
AFFILIATE THEREOF.
FULL AND COMPLETE PAYMENT OF THE NOTEHOLDERS' DISTRIBUTABLE AMOUNT ON EACH
INSURED DISTRIBUTION DATE IS UNCONDITIONALLY AND IRREVOCABLY GUARANTEED
PURSUANT TO A FINANCIAL GUARANTY INSURANCE POLICY (THE "POLICY") TO BE ISSUED
BY:
LOGO FSA
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT SELLER(1)(2)
--------------- --------------- ---------------
<S> <C> <C> <C>
Per Class A-1 Note......................... 100% 0.24% 99.76%
Per Class A-2 Note......................... 100% 0.275% 99.725%
Per Class A-3 Note......................... 99.84375% 0.375% 99.46875%
Total...................................... $324,832,812.50 $971,700.00 $323,861,112.50
</TABLE>
(1) Plus accrued interest, if any, from August 20, 1997.
(2) Before deducting expenses, estimated to be $900,000.
The Notes are offered by the Underwriters when, as and if issued by the
Trust, delivered to and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that delivery of
the Notes in book-entry form will be made through the facilities of The
Depository Trust Company ("DTC") against payment in immediately available
funds and Cedel Bank, societe anonyme ("Cedel") and the Euroclear System
("Euroclear") on or about August 20, 1997.
CREDIT SUISSE FIRST BOSTON BEAR, STEARNS & CO. INC.
---------------
The date of this Prospectus Supplement is August 15, 1997.
<PAGE>
(Continued from preceding page).
From time to time on or before October 31, 1997, 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 duty 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 Notes.
Subsequent Receivables with an aggregate Principal Balance of up to
$25,000,000.18 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 0.10%, subject to a
maximum rate equal to 12% per annum. For so long as AmeriCredit is the
Servicer, interest on the Notes will generally be payable on the fifth
day of each month (each, a "Distribution Date"), commencing on September
5, 1997. 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. In the event that
the Back-up Servicer or other successor servicer becomes the Servicer,
the Distribution Date will become the twelfth day of each month, or if
such twelfth day is not a Business Day, the next following Business Day.
The "Insured Distribution Date" with respect to payments under the
Policy will be the twelfth of each month, or if such twelfth day is not
a Business Day, the next following Business Day, whether or not
AmeriCredit is the Servicer.
The Distribution Date with respect to any class of Notes on which
the final distribution is scheduled to be paid is the "Final Schedule
Distribution Date" for such class. The Final Scheduled Distribution
Date for the Class A-l Notes will be the September 1998 Insured
Distribution Date, for the Class A-2 Notes will be the March 2001
Insured Distribution Date and for the Class A-3 Notes will be the July
2003 Insured Distribution Date. However, payment in full of a Class of
Notes 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, 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. The
Underwriters expect to make a market in the Notes but have no obligation
to do so. There is no assurance that any such market will develop or
continue or that it will provide Noteholders with sufficient liquidity
of investment.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION
ABOUT THE OFFERING OF THE NOTES. ADDITIONAL INFORMATION IS CONTAINED IN
THE PROSPECTUS AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE NOTES
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 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 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 nominee of DTC. See "Description of the Notes -- Reports
to Noteholders" 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 Noteholders. 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 consolidated
financial statements of Financial Security Assurance Inc. (the
"Insurer") and Subsidiaries 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 this Prospectus Supplement:
(a) Annual Report on Form 10-K for the year ended December 31, 1996, and
(b) Quarterly Report on Form 10-Q for the period ended June 30, 1997.
All financial statements of the Insurer and Subsidiaries 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 Notes
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 the Insurer 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 Notes offered hereby,
and the offering of such Notes at that time shall be deemed to be the
initial bona fide offering thereof.
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<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to
the detailed information appearing elsewhere in this Prospectus
Supplement and in the Prospectus. 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.
Issuer.............. AmeriCredit Automobile Receivables Trust 1997-C
(the "Trust" or the "Issuer"), a Delaware business
trust to be formed pursuant to a Trust Agreement,
dated as of August 12, 1997 (the "Trust
Agreement"), among the Seller and the Owner
Trustee.
Seller.............. AFS Funding Corp. (the "Seller"), a special
purpose financing subsidiary of AmeriCredit.
Servicer............ AmeriCredit Financial Services, Inc. (in its
individual capacity, "AmeriCredit" and, as
servicer, the "Servicer"), a Delaware corporation.
Insurer............. Financial Security Assurance Inc. (the "Insurer"),
a New York financial guaranty insurance company.
Indenture Trustee... LaSalle National Bank (the "Indenture Trustee").
Owner Trustee....... Bankers Trust (Delaware) (the "Owner Trustee").
Statistical
Calculation Date... August 1, 1997.
Initial Cutoff Date. August 12, 1997.
Closing Date........ August 20, 1997.
The Notes........... The Trust will issue Class A-1 5.66% Asset Backed
Notes (the "Class A-1 Notes") in the aggregate
original principal amount of $83,000,000, Class A-
2 Floating Rate Asset Backed Notes (the "Class A-2
Notes") in the aggregate original principal amount
of $135,000,000, and Class A-3 6.30% Asset Backed
Notes (the "Class A-3 Notes") in the aggregate
original principal amount of $107,000,000. 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 12, 1997, 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.
The Notes will be secured by the assets of the
Trust pursuant to the Indenture.
S-4
<PAGE>
The Certificates.......... The Trust will issue Asset Backed Certificates
(the "Certificates") which represent the equity
ownership in the Trust, and are subordinate in
right of payment to the Notes. The Certificates
do not have a principal balance. The Certificates
will be issued pursuant to the Trust Agreement.
The Certificates are not being offered hereby.
Trust Property............ Each Note will represent an obligation of 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 duty 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, 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 Notes.
Additional motor vehicle retail installment sale
contracts (the "Subsequent Receivables") secured
by new or used automobiles, light duty 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 October 31, 1997, 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. The Initial Receivables and
the Subsequent Receivables are hereinafter
referred to as the "Receivables," and the Initial
Financed Vehicles and 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.
S-5
<PAGE>
The statistical information presented herein is
based on the Initial Receivables as of the
Statistical Calculation Date. The Initial
Receivables have an aggregate Principal Balance of
$274,421,724.32 as of the Statistical Calculation
Date and an aggregate Principal Balance of
$299,999,999.82 as of the Initial Cutoff Date.
The additional Receivables represent Receivables
acquired by AmeriCredit after the Statistical
Calculation Date but prior to the Initial Cutoff
Date. In addition, as of the Statistical
Calculation Date as to which statistical
information is presented herein, some amortization
has occurred prior to the Initial Cutoff Date. In
addition, certain Receivables included as of the
Statistical Calculation Date have prepaid in full
or have been determined not to meet the
eligibility requirements and have not been
included. As a result of the foregoing, the
statistical distribution of characteristics as of
the Initial Cutoff Date varies somewhat from the
statistical distribution of such characteristics
as of the Statistical Calculation Date as
presented herein, although such variance is not
material.
The Initial Receivables have, as of the
Statistical Calculation Date, a weighted average
annual percentage rate ("APR") of approximately
19.71%, a weighted average original maturity of 56
months and a weighted average remaining maturity
of 55 months. Each of the Initial Receivables
also will have a remaining term of not more than
60 months and not less than 4 months as of the
Statistical Calculation 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
$25,000,000.18. 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.
The Policy................ 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 "Policy"). Pursuant to the Policy,
the Insurer will
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unconditionally and irrevocably guarantee to the
Noteholders payment of the scheduled payments for
each Insured Distribution Date.
The "Insured Distribution Date" will be the
twelfth day of each month, or, if such twelfth day
is not a Business Day, the next following Business
Day. In the event that, on any Distribution Date,
the Noteholders did not receive the full amount of
the scheduled payment then due to them, such
shortfall (together with, in the case of an
interest shortfall, interest thereon at the
related Interest Rate) shall be due and payable
and shall be funded on the Insured Distribution
Date either from the Spread Account or from the
proceeds of a drawing under the Policy. The
Record Date applicable to an Insured Distribution
Date shall be the Record Date applicable to the
related Distribution Date.
Terms of the Notes........ The principal terms of the Notes will be as
described below:
A. Distribution Dates..... For so long as AmeriCredit is the Servicer,
payments of interest and principal on the Notes
will be made on the fifth day of each month (or,
if such fifth day is not a Business Day, on the
next following Business Day; provided, that such
day for payment shall in no event be earlier than
the second Business Day of the month)(each, a
"Distribution Date") commencing September 5, 1997.
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.
If the backup servicer or another successor
servicer becomes the Servicer, the "Distribution
Date" will thereafter become the twelfth day of
each month, or if such twelfth day is not a
Business Day, the next following Business Day
(i.e., the "Distribution Date" and the "Insured
Distribution Date" will thereafter be the same
date).
The Insurer will only make payment of any unpaid
interest and principal on the Notes on the Insured
Distribution Date, which will be the twelfth day
of each month, or if such twelfth day is not a
Business Day, the next following Business Day. An
"Event of Default" with respect to the Notes will
only occur if the full amount of the required
monthly payment has not been distributed on or
prior to the related Insured Distribution Date.
B. Final Scheduled
Distribution Dates.... For the Class A-1 Notes, the September 1998
Insured Distribution Date; for the Class A-2
Notes, the March 2001 Insured Distribution Date;
and for the Class A-3 Notes, the July 2003
Insured 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")
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<PAGE>
plus 0.10%, 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 Notes of each Class 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").
The interest which accrues during an Interest
Period shall accrue on the principal amount of the
Notes of each Class outstanding as of the end of
the prior Distribution Date (or, in the case of
the first Distribution Date, as of the Closing
Date); provided, that if such principal balance is
further reduced by a payment of principal on the
Insured Distribution Date which immediately
follows such prior Distribution Date, then such
interest shall accrue (i) from and including such
prior Distribution Date to, but excluding, such
related Insured Distribution Date, on the
principal balance outstanding as of the end of the
prior Distribution Date (or, in the case of the
first Distribution Date, as of the Closing Date)
and (ii) from and including such Insured
Distribution Date, to, but excluding, the
following Distribution Date, on the principal
balance outstanding as of the end of such Insured
Distribution Date. Interest on the Notes for any
Distribution Date due but not paid on such
Distribution Date will be due on the next Insured
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.
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 each Receivable (other than Purchased
Receivables) that became a Liquidated Receivable
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
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option of the Insurer, the outstanding Principal
Balances 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.
Any amount of principal due on the Notes on a
Distribution Date and not paid on such
Distribution Date shall be due and payable on the
following Insured 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 (and,
if not paid in full on such date, will be paid on
the Insured Distribution Date immediately
following such Final Scheduled Distribution Date).
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 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. 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) of the Pre-Funded Amount
at the end of the Funding Period (such Class's
"Note Prepayment Amount"); provided, that if the
aggregate remaining amount in the Pre-Funding
Account is $100,000 or less, such amount will be
applied exclusively to reduce the outstanding
principal balance of the Class of Notes then
entitled to receive distributions of principal.
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 12, 1997 (the "Insurance Agreement"), among
the
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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. The 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.
Pre-Funding Account....... On the Closing Date, a cash amount equal to
approximately $25,000,000.18 (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) October 31, 1997. 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 on the Mandatory
Redemption Date as described herein. The
"Mandatory Redemption Date" is the earlier of (i)
the Distribution Date in November 1997 or (ii) if
the last day of the Funding Period occurs on or
prior to the Calculation Date (as defined below)
occurring in September or October 1997, the
Distribution Date relating to such Calculation
Date.
The "Calculation Date" is the close of business on
the last day of each Collection Period.
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 1997 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 on the portion of the Notes 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.
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 and the Class A-3 Notes be rated AAA by S&P
and Aaa by Moody's. The ratings by the Rating
Agencies of the Notes will
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<PAGE>
be (i) with respect to the Class A-1 Notes,
without regard to the Policy in the case of S&P
and substantially based on the Policy in the case
of Moody's and (ii) with respect to all other
Classes of Notes, based on the Policy. To the
extent that such ratings are based on the Policy,
such ratings apply to distributions due on the
Insured Distribution Dates, and not to
distributions due on the Distribution Dates. There
is no assurance that the ratings initially
assigned to the Notes will not subsequently be
lowered or withdrawn by the Rating Agencies.
S-11
<PAGE>
RISK FACTORS
Prospective Noteholders 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.
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 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) of the Pre-
Funded Amount (exclusive of investment earnings) remaining in the Pre-
Funding Account at the end of the Funding Period; provided, that if the
aggregate remaining amount in the Pre-Funding Account is $100,000 or
less, such amount will be applied exclusively to reduce the outstanding
principal balance of the Class of Notes then entitled to receive
distributions of principal. Any reinvestment risk from the prepayment
of the Notes from the Pre-Funded Amount at the end of the Funding Period
will be borne by the Noteholders. 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
Noteholders. See "Yield and Prepayment Considerations".
CONCENTRATION OF RECEIVABLES
As of the Statistical Calculation Date (based on Principal Balance
and mailing address of the Obligors), Obligors with respect to
approximately 15.2% of the Receivables were located in California,
Obligors with respect to approximately 10.7% of the Receivables were
located in Texas, and substantially all of the rest of the Receivables
were located in those states identified in the table on page S-22. See
"The 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.
S-12
<PAGE>
LIMITED ASSETS
The Trust will not have, nor is it permitted or expected to have,
any significant assets or sources of funds other than the Receivables,
the Pre-Funding Account, the Capitalized Interest Account and the
Policy. Holders of the Notes 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 Policy. 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 Policy will
be available on each Insured Distribution Date to cover shortfalls in
distributions of the Noteholders' Distributable Amount on the related
Distribution Date, if the Insurer defaults in its obligations under the
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. See "The Insurer" and "The Policy" herein.
RATINGS ON NOTES
A rating is not a recommendation to purchase, hold or sell Notes.
The ratings of the Notes address the likelihood of the payment of
principal and interest on the Notes 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 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. Any reduction or withdrawal of a rating may
have an adverse effect on the liquidity and market price of the Notes.
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.
Following the occurrence of an Event of Default, the Indenture Trustee
and the Owner Trustee will continue to submit claims under the Policy as
necessary to enable the Trust to continue to make payments of the
Noteholders' Distributable Amount on each Insured 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.
S-13
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by the Trust from the sale of the
Notes 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 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
S-14
<PAGE>
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 Notes (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 1997-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 Certificate, (iii) making payments on the Notes and
(iv) engaging in other activities that are necessary, suitable or
convenient to accomplish the foregoing or are incidental thereto or
connected therewith.
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.
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 1011 Centre Road, Suite 200, 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 of the Certificate and the issuance and sale of 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.
S-15
<PAGE>
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 duty trucks and vans; (b) certain monies 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 that 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; and (i) 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.
Pursuant to the Indenture, the Trust will grant a security interest
in the Trust Property 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.
S-16
<PAGE>
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, light duty trucks and vans. 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, a substantial majority of AmeriCredit's
Contracts were originated in connection with Obligors' purchases of used
autos. Of the Contracts purchased by AmeriCredit during the year ended
June 30, 1997, approximately 83% were originated by manufacturer-
franchised Dealers with used auto operations and 17% by independent
Dealers specializing in used auto sales. AmeriCredit purchased
Contracts from 5,657 Dealers during the year ended June 30, 1997.
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.
S-17
<PAGE>
As of June 30, 1997, AmeriCredit operated 85 branch offices in 30
states as reflected in the following table:
STATE CITY STATE CITY
Arizona Phoenix New Mexico Albuquerque
Tucson
New York Albany
California Concord Buffalo
Encino Rochester
Fresno White Plains
Irvine
Los Angeles North Carolina Charlotte
Pasadena Raleigh-Durham
Riverside Winston-Salem
Sacramento
San Diego Ohio Akron
San Francisco Cincinnati
San Jose Cleveland
Stockton Columbus
Dayton
Colorado Colorado Springs
Denver Oklahoma Oklahoma City
Florida Ft. Lauderdale Oregon Portland
Jacksonville
Orlando Pennsylvania Allentown
Tampa Harrisburg
Philadelphia
Georgia Atlanta (3) Pittsburgh
Illinois Chicago (4) Rhode Island Providence
Springfield
South Carolina Charleston
Indiana Indianapolis Columbia
Kentucky Louisville Tennessee Nashville
Memphis
Maryland Baltimore (2)
Texas Austin
Massachusetts Boston Dallas-Fort Worth (2)
Houston (2)
Michigan Detroit (2) San Antonio
Grand Rapids
Utah Salt Lake City
Missouri Kansas City
St. Louis (2) Virginia Fredricksburg
Newport News
Minnesota Minneapolis Norfolk
Richmond
Nevada Las Vegas Vienna
New Jersey Marlton Washington Seattle
Paramus Spokane
Somerset Tacoma
Tinton Falls
Wisconsin Milwaukee
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<PAGE>
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 40 states.
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 60 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 32.00%; (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 $25,000,000.18. 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
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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 Noteholders; (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) S&P
shall confirm that the ratings on the Notes 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 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 19%; (ii) the weighted average remaining term
of the Receivables on such Subsequent Cutoff Date is not greater than 56
months; and (iii) not more than 35% 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 herein is based on the
Initial Receivables as of the Statistical Calculation Date. The Initial
Receivables have an aggregate Principal Balance of $274,421,724.32 as of
the Statistical Calculation Date and an aggregate Principal Balance of
$299,999,999.82 as of the Initial Cutoff Date. The additional
Receivables represent Receivables acquired by AmeriCredit after the
Statistical Calculation Date but prior to the Initial Cutoff Date. In
addition, as of the Statistical Calculation Date as to which statistical
information is presented herein, some amortization has occurred prior to
the Initial Cutoff Date. In addition, certain Receivables included as
of the Statistical Calculation Date have prepaid in full or have been
determined not to meet the eligibility requirements and have not been
included. As a result of the foregoing, the statistical distribution of
characteristics as of the Initial Cutoff Date varies somewhat from the
statistical distribution of such characteristics as of the Statistical
Calculation Date as presented herein, although such variance is not
material.
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<PAGE>
The composition and distribution by APR and geographic
concentration of the Initial Receivables Pool as of the Statistical
Calculation Date are set forth in the following tables:
COMPOSITION OF THE INITIAL RECEIVABLES AS OF THE STATISTICAL CALCULATION DATE
<TABLE>
<CAPTION>
New Used Total
----------------------- ----------------------- ------------------------
<S> <C> <C> <C>
Aggregate Principal Balance(1) $44,563,212.05 $229,858,512.27 $274,421,724.32
Number of Receivables 2,933 19,669 22,602
Percent of Aggregate Principal Balance
16.24% 83.76%
Average Principal Balance $ 15,193.73 $11,686.33 $ 12,141.48
Range of Principal Balances ($974.58 to $ 29,998.43) ($584.41 to
$29,745.49)
Weighted Average APR(1) 18.45% 19.96% 19.71%
Range of APRs (14.25% to 25.00%) (14.25% to 30.00%)
Weighted Average Remaining Term 59 months 54 months 55 months
Range of Remaining Terms (34 to 60 months) (4 to 60 months)
Weighted Average Original Term 60 months 55 months 56 months
Range of Original Terms (36 to 60 months) (12 to 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 STATISTICAL
CALCULATION DATE
<TABLE>
<CAPTION>
Aggregate % of Aggregate Number of % of Total Number
APR Range Principal Balance(1) Principal Balance(2) Receivables of Receivables(2)
- --------------------------- --------------------- -------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
14.000% to 14.999% $ 6,501,930.31 2.37% 411 1.82%
15.000 to 15.999 12,536,342.30 4.57 820 3.63
16.000 to 16.999 11,738,214.87 4.28 799 3.54
17.000 to 17.999 30,667,058.78 11.18 2,198 9.73
18.000 to 18.999 52,574,725.32 19.16 4,083 18.07
19.000 to 19.999 28,254,874.04 10.30 2,212 9.79
20.000 to 20.999 40,577,632.08 14.78 3,314 14.66
21.000 to 21.999 45,789,693.12 16.69 4,164 18.43
22.000 to 22.999 16,914,593.11 6.16 1,591 7.04
23.000 to 23.999 14,400,388.57 5.25 1,382 6.12
24.000 to 24.999 8,977,519.30 3.27 931 4.12
25.000 to 25.999 3,564,891.08 1.30 439 1.94
26.000 to 26.999 1,487,584.00 0.54 195 0.86
27.000 to 27.999 230,246.60 0.08 31 0.14
28.000 to 28.999 95,966.63 0.04 15 0.07
29.000 to 29.999 100,469.57 0.04 16 0.07
30.000 to 30.999 9,594.64 0.00 1 0.00
TOTAL $274,421,724.32 100.00% 22,602 100.00%
</TABLE>
(1) Aggregate Principal Balances include some portion of accrued interest.
(2) Percentages may not add to 100% because of rounding.
S-21
<PAGE>
DISTRIBUTION OF THE INITIAL RECEIVABLES BY GEOGRAPHIC LOCATION OF OBLIGOR
AS OF THE STATISTICAL CALCULATION DATE
<TABLE>
<CAPTION>
Aggregate % of Aggregate Number of % of Total Number
State Principal Balance(1) Principal Balance(2) Receivables of Receivables(2)
- --------------------- --------------------- -------------------- --------------- -----------------
<S> <C> <C> <C> <C>
California $ 41,670,480.29 15.19% 3,256 14.41%
Texas 29,349,839.85 10.70 2,383 10.54
Illinois 16,797,604.14 6.12 1,409 6.23
Ohio 16,610,941.44 6.05 1,431 6.33
Virginia 15,904,644.51 5.80 1,247 5.52
North Carolina 14,436,893.88 5.26 1,084 4.80
Florida 13,498,385.07 4.92 1,101 4.87
Arizona 11,555,296.90 4.21 948 4.19
Pennsylvania 10,255,829.05 3.74 883 3.91
Washington 9,954,516.85 3.63 840 3.72
Michigan 8,956,729.26 3.26 709 3.14
Georgia 8,357,935.82 3.05 640 2.83
New Jersey 8,252,499.68 3.01 715 3.16
New York 7,062,303.67 2.57 576 2.55
Maryland 5,690,064.15 2.07 449 1.99
Missouri 5,528,269.40 2.02 512 2.27
Tennessee 5,185,682.59 1.89 407 1.80
Nevada 5,063,157.25 1.85 442 1.96
Colorado 4,017,534.63 1.46 372 1.65
Massachusetts 3,890,786.44 1.42 357 1.58
South Carolina 3,640,459.23 1.33 298 1.32
Kentucky 3,445,762.47 1.26 310 1.37
Utah 3,365,994.00 1.23 299 1.32
Oklahoma 2,416,304.91 0.88 230 1.02
Oregon 2,197,399.23 0.80 191 0.85
Connecticut 2,166,704.10 0.79 175 0.77
Wisconsin 1,931,560.00 0.70 172 0.76
Kansas 1,872,419.91 0.68 167 0.74
Indiana 1,760,676.28 0.64 151 0.67
New Mexico 1,702,296.46 0.62 133 0.59
Other(3) 7,882,752.86 2.90 715 3.14
TOTAL $274,421,724.32 100.00% 22,602 100.00%
</TABLE>
- -----------------------------------------------------------------------------
(1) Aggregate Principal Balances include some portion of accrued interest.
(2) Percentages may not add to 100% because of rounding.
(3) States with Aggregate Principal Balances less than $1,500,000.
S-22
<PAGE>
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
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 from 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 Noteholders.
The rate of payment of principal of each Class of Notes 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. Reinvestment risk associated with early payment of the
Notes will be borne exclusively by the Noteholders.
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.
The table captioned "Percent of Initial Note Principal Balance at Various
ABS Percentages" (the "ABS Table") has been prepared on the basis of the
following assumptions: (i) the Trust includes two 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 are as set forth on the cover page hereof; (v) interest
accrues during each Interest Period at the following assumed coupon
S-23
<PAGE>
rates: Class A-1 Notes, 5.67%; Class A-2 Notes, 5.75%; and Class A-3 Notes,
6.37%; (vi) payments on the Notes are made on the 5th day of each month
whether or not a Business Day; (vii) the Notes are purchased on the Closing
Date; (viii) the scheduled monthly payment for each Receivable 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; (ix) the first due date for each Receivable is the last
day of the month of the assumed cutoff date for such Receivable as set
forth in the following table; (x) the entire Pre-Funded Amount is used to
purchase Subsequent Receivables; (xi) the Servicer does exercise its option
to purchase the Receivables; (xii) Accelerated Principal Amounts are paid
on each Distribution Date until the later of the first Distribution Date on
which the Pro Forma Note Balance reaches the Required Pro Forma Note
Balance and the Class A-1 Notes are paid in full; (xiii) the difference
between the gross APR and the net APR is equal to the Base Servicing Fee,
and the net APR is further reduced by the fees due to the Indenture
Trustee, the Trust Collateral Agent, the Owner Trustee and the Insurer and
(xiv) LIBOR remains constant at 5.65% per annum.
<TABLE>
<CAPTION>
Remaining
Aggregate Original Term Term
Principal Gross Assumed Cutoff to Maturity to Maturity
Pool Balance APR Date (in Months) (in Months)
---- ------- ----- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
1 $300,000,000.00 19.71% 8/1/97 56 55
0
2 $ 25,000,000.00 19.71% 9/1/97 56 55
Total $325,000,000.00
===============
0
=
</TABLE>
The ABS Table indicates, based on the assumptions set forth above, the
percentages of the initial principal amount of each Class of Notes that
would be outstanding after each of the Distribution Dates shown at various
percentages of ABS and the corresponding weighted average lives of such
Notes. 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 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, including
actual prepayment experience or losses, will affect the percentages of
initial balances outstanding over time and the weighted average lives of
each Class of Notes.
S-24
<PAGE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES(1)
<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>
Initial 100 100 100 100 100 100 100 100
9/5/97 94 90 88 85 100 100 100 100
10/5/97 85 77 71 65 100 100 100 100
11/5/97 76 64 56 46 100 100 100 100
12/5/97 68 52 41 28 100 100 100 100
1/5/98 59 40 27 11 100 100 100 100
2/5/98 51 29 13 0 100 100 100 97
3/5/98 42 17 0 0 100 100 99 86
4/5/98 34 6 0 0 100 100 91 77
5/5/98 26 0 0 0 100 97 84 70
6/5/98 17 0 0 0 100 92 79 63
7/5/98 8 0 0 0 100 88 73 56
8/5/98 0 0 0 0 100 83 67 49
9/5/98 0 0 0 0 100 79 62 42
10/5/98 0 0 0 0 99 74 56 36
11/5/98 0 0 0 0 96 70 51 29
12/5/98 0 0 0 0 93 66 46 23
1/5/99 0 0 0 0 90 61 41 17
2/5/99 0 0 0 0 87 57 35 11
3/5/99 0 0 0 0 84 52 30 5
4/5/99 0 0 0 0 80 48 25 0
5/5/99 0 0 0 0 77 44 20 0
6/5/99 0 0 0 0 73 40 16 0
7/5/99 0 0 0 0 70 35 11 0
8/5/99 0 0 0 0 66 31 6 0
9/5/99 0 0 0 0 63 27 2 0
10/5/99 0 0 0 0 59 23 0 0
11/5/99 0 0 0 0 55 19 0 0
12/5/99 0 0 0 0 51 15 0 0
1/5/00 0 0 0 0 48 11 0 0
2/5/00 0 0 0 0 44 7 0 0
3/5/00 0 0 0 0 40 3 0 0
4/5/00 0 0 0 0 36 0 0 0
5/5/00 0 0 0 0 32 0 0 0
6/5/00 0 0 0 0 27 0 0 0
7/5/00 0 0 0 0 23 0 0 0
8/5/00 0 0 0 0 19 0 0 0
9/5/00 0 0 0 0 14 0 0 0
10/5/00 0 0 0 0 10 0 0 0
11/5/00 0 0 0 0 5 0 0 0
12/5/00 0 0 0 0 1 0 0 0
1/5/01 0 0 0 0 0 0 0 0
2/5/01 0 0 0 0 0 0 0 0
3/5/01 0 0 0 0 0 0 0 0
4/5/01 0 0 0 0 0 0 0 0
5/5/01 0 0 0 0 0 0 0 0
6/5/01 0 0 0 0 0 0 0 0
7/5/01 0 0 0 0 0 0 0 0
8/5/01 0 0 0 0 0 0 0 0
9/5/01 0 0 0 0 0 0 0 0
10/5/01 0 0 0 0 0 0 0 0
11/5/01 0 0 0 0 0 0 0 0
Weighted Average 0.51 0.36 0.29 0.24 2.33 1.64 1.29 1.01
Life in Years(2) ---- ---- ---- ---- ---- ---- ---- ----
- --------------------
</TABLE>
(1) The percentages in this table have been rounded to nearest whole
number.
(2) The weighted average life of a Note is determined by (i) multiplying
the amount of each principal payment on a Note by the number of years
from the date of the issuance of the Note to the related Distribution
Date, (ii) adding the results and (iii) dividing the sum by the
related initial principal amount of the Note.
S-25
<PAGE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES(1)
<TABLE>
<CAPTION>
Class A-3 Notes
--------------------------
Distribution Date 0.0% 1.0% 1.7% 2.5%
- ------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Initial 100 100 100 100
9/5/97 100 100 100 100
10/5/97 100 100 100 100
11/5/97 100 100 100 100
12/5/97 100 100 100 100
1/5/98 100 100 100 100
2/5/98 100 100 100 100
3/5/98 100 100 100 100
4/5/98 100 100 100 100
5/5/98 100 100 100 100
6/5/98 100 100 100 100
7/5/98 100 100 100 100
8/5/98 100 100 100 100
9/5/98 100 100 100 100
10/5/98 100 100 100 100
11/5/98 100 100 100 100
12/5/98 100 100 100 100
1/5/99 100 100 100 100
2/5/98 100 100 100 100
3/5/98 100 100 100 100
4/5/99 100 100 100 99
5/5/99 100 100 100 91
6/5/99 100 100 100 85
7/5/99 100 100 100 78
8/5/99 100 100 100 71
9/5/99 100 100 100 65
10/5/99 100 100 96 59
11/5/99 100 100 91 53
12/5/99 100 100 85 47
1/5/00 100 100 80 42
2/5/00 100 100 75 36
3/5/00 100 100 70 31
4/5/00 100 98 65 0
5/5/00 100 93 60 0
6/5/00 100 88 56 0
7/5/00 100 84 51 0
8/5/00 100 79 47 0
9/5/00 100 74 43 0
10/5/00 100 69 39 0
11/5/00 100 65 35 0
12/5/00 100 60 31 0
1/5/01 95 56 28 0
2/5/01 89 51 0 0
3/5/01 83 47 0 0
4/5/01 77 43 0 0
5/5/01 70 38 0 0
6/5/01 64 34 0 0
7/5/01 57 30 0 0
8/5/01 51 0 0 0
9/5/01 44 0 0 0
10/5/01 37 0 0 0
11/5/01 30 0 0 0
Weighted Average 3.96 3.47 2.92 2.26
Life in Years(2) ---- ---- ---- ----
</TABLE>
(1) The percentages in this table have been rounded to nearest whole
number.
(2) The weighted average life of a Note is determined by (i) multiplying
the amount of each principal payment on a Note by the number of years
from the date of the issuance of the Note to the related Distribution
Date, (ii) adding the results and (iii) dividing the sum by the
related initial principal amount of the Note.
S-26
<PAGE>
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 June 30,
----------------------------------------------------------------------------------------
1997 1996 1995
---- ---- ----
Number of Number of Number of
Contracts Amount Contracts Amount Contracts Amount
--------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C>
Portfolio at end of 112,847 $1,138,255 59,913 $523,981 30,941 $240,491
period(1)
Period of Delinquency(2)
31-60 days(3) 7,761 $ 73,956 3,886 $ 31,723 1,276 $ 9,692
61-90 days 2,164 $ 20,213 1,215 $ 9,959 452 $ 3,391
91 days or more 3,467 $ 31,012 1,696 $ 13,631 528 $ 3,271
------- ---------- ------ -------------- ---------- ---------
Total Delinquencies(4) 13,392 $ 125,181 6,797 $ 55,313 2,256 $ 16,354
Total Delinquencies as a 11.9% 11.0% 11.3% 10.6% 7.3% 6.8%
Percent of the Portfolio
</TABLE>
(1) All amounts and percentages are based on the Principal Balances of the
Receivables. Principal Balances include some portion of accrued interest.
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-27
<PAGE>
<TABLE>
<CAPTION>
CREDIT LOSS EXPERIENCE Fiscal Year Ended June 30,
-----------------------------------------------
1997 1996 1995
------------------ -------------- ----------
<S> <C> <C> <C>
Period-End Principal Outstanding(1) 1,138,255 $523,981 $240,491
Average Month-End Amount Outstanding
During the Period(1)............ 792,155 357,966 141,526
Net Charge-Offs(2)............... 43,231 19,974 6,409
Net Charge-Offs as a Percentage of Period-End
Principal Outstanding........... 3.8% 3.8% 2.7%
Net Charge-Offs as a Percent of Average
Month-End Amount Outstanding.... 5.5% 5.6% 4.5%
</TABLE>
(1) All amounts and percentages are based on the Principal Balances of the
Receivables. Principal Balances include some portion of accrued interest.
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.
S-28
<PAGE>
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 or reinsured form third parties by Financial
Security or any of its domestic operating insurance company 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, Fitch Investors Service, L.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 Notes"
herein.
S-29
<PAGE>
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 June 30, 1997 (in thousands):
<TABLE>
<CAPTION>
June 30, 1997
(Unaudited)
--------------
<S> <C>
Deferred Premium Revenue $ 401,251
(net of prepaid reinsurance premiums).................................
Shareholder's Equity:
Common Stock.......................................................... 15,000
Additional Paid-In Capital............................................ 650,370
Unrealized Gain (Loss) on Investments (net of deferred income taxes).. 11,876
Accumulated Earnings.................................................. 183,963
----------
Total Shareholder's Equity 861,209
----------
Total Deferred Premium Revenue $1,262,460
and Shareholder's Equity.............................................. ==========
</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. 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 Policy is not covered by the Property/Casualty Insurance Security
Fund specified in Article 76 of the New York Insurance Law.
S-30
<PAGE>
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
Notes -- Book-Entry Registration" in the Prospectus and Annex I hereto.
PAYMENTS OF INTEREST
Interest on the Notes of each Class 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"). The interest which accrues
during an Interest Period shall accrue on the principal amount of the Notes
of each Class outstanding as of the end of the prior Distribution Date (or,
in the case of the first Distribution Date, as of the Closing Date);
provided, that if such principal balance is further reduced by a payment of
principal on the Insured Distribution Date which immediately follows such
prior Distribution Date, then such interest shall accrue (i) from and
including such prior Distribution Date to, but excluding, such related
Insured Distribution Date, on the principal balance outstanding as of the
end of the prior Distribution Date (or, in the case of the first
Distribution Date, as of the Closing Date) and (ii) from and including such
Insured Distribution Date, to, but excluding, the following Distribution
Date, on the principal balance outstanding as of the end of such Insured
Distribution Date. Interest on the Notes for any Distribution Date due but
not paid on such Distribution Date will be due on the next Insured
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.
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 0.10%, subject to
a maximum rate equal to 12% per annum. In the event that the interest rate
of 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 paid as
additional interest to the Class A-2 Noteholders on any subsequent
Distribution Date.
DETERMINATION OF LIBOR
Pursuant to the Sale and Servicing Agreement, the Trust Collateral
Agent 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 as not required or authorized by law to be closed.
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"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
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 Trust Collateral Agent 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 Trust Collateral Agent, are quoting as of approximately 11:00 a.m.,
York City time, on such LIBOR Determination Date to leading European banks
for United Sates 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 designative on the Dow
Jones Telerate Services (or such other page as may replace that page on
that service for the purpose of displaying comparable name or rates).
"Reference Banks" means four major banks in the London interbank
market selected by the Trust Collateral Agent.
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. 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 (and, if not paid in full on such date, will be paid on the Insured
Distribution Date immediately following such Final Scheduled Distribution
Date). 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.
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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) of the
remaining Pre-Funded Amount on such date (such Class's "Note Prepayment
Amount"); provided, that if the aggregate remaining amount in the Pre-
Funding Account is $100,000 or less, such amount will be applied
exclusively to reduce the outstanding principal balance of the Class of
Notes then entitled to receive distributions of principal.
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 the Policy; (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 Insured Distribution Date, the sum of the Available Funds for the
related Monthly Period plus the Deficiency Claim Amount for the related
Distribution Date is less than the sum of the amounts described in clauses
1-5 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 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
Policy for any shortfalls in the Scheduled Payments on the Notes. 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 Policy" herein.
DESCRIPTION OF THE PURCHASE AGREEMENTS AND THE TRUST DOCUMENTS
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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 Noteholders, 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 Noteholders 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 made (the "Note
Distribution Account").
On the Closing Date, a cash amount equal to approximately
$25,000,000.18 (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
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Agreement, or (iii) October 31, 1997. 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 as described herein. The "Mandatory Redemption Date" is the
earlier of (i) the Distribution Date in November 1997 or (ii) if the last
day of the Funding Period occurs on or prior to the Calculation Date
occurring in September or October 1997, the Distribution Date relating to
such Calculation 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 1997 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 on the
portion of the Notes 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 opening of
business on the first day of the related 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.
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.
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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
DISTRIBUTION DATE CALCULATIONS AND PAYMENTS. On or prior to 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 Available Funds, 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.
2. From the Available Funds, 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).
3. From the Available Funds, to the Note Distribution Account, the
Noteholders' Interest Distributable Amount.
4. From the Available Funds, 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 Available Funds, to the Insurer, any amounts owing to
the Insurer under the Insurance Agreement and not paid.
6. From the Available Funds (less certain investment earnings), to
the Spread Account, an amount, if necessary, required to increase
the amount therein to its then required level.
7. From the Available Funds (less certain investment earnings), and
together with amounts, if any, available in accordance with the
terms of the Spread Account Agreement, to the Note Distribution
Account, the Noteholders' Accelerated Principal Amount.
8. From the Available Funds, to the Spread Account, or as otherwise
specified in the Trust Documents, any remaining funds.
Amounts on deposit in the Spread Account on any Insured Distribution
Date (after giving effect to all distributions made on such Insured
Distribution Date and the related Distribution Date) in excess of the
Specified Spread Account Requirement for such Distribution Date may be
released to the Certificateholder without the consent of the Noteholders.
If the Notes are accelerated following an Event of Default under the
Indenture, amounts collected will be distributed in the order described
above.
INSURED DISTRIBUTION DATE CALCULATIONS AND PAYMENTS. In the event
that any Servicer's Certificate delivered by the Servicer indicates that
the Available Funds with respect to a Distribution Date are insufficient to
fund in full the related Guaranteed Distributions plus the amounts
described in clauses 1 and 5 above, the Indenture Trustee shall request the
Deficiency Claim Amount for the Spread Account, at the time required by and
pursuant to, the Spread Account Agreement. Further, in the event that any
Servicer's Certificate delivered by the Servicer indicates that the sum of
(i) the Available Funds with respect to a Distribution Date, plus (ii) any
related Deficiency Claim Amount is insufficient to fund in full the related
Guaranteed Distributions plus the amount described in clause 1 above, the
Indenture Trustee
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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
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 Insured
Distribution Date.
For the purposes hereof, the following terms shall have the following
meanings:
"Accelerated Payment Termination Date" means, the later to occur of
(i) first Distribution Date on which the Pro Forma Note Balance equals the
Required Pro Forma Note Balance and (ii) the Distribution Date on which the
principal balance of the Class A-1 Notes is reduced to zero.
"Accelerated Principal Amount" for a Distribution Date will equal the
lesser of
(x) the sum of (i) excess, if any, of the amount of Available Funds
on such Distribution Date over the amounts payable on such
Distribution Date pursuant to clauses 1 through 6 under
"Distributions" plus (ii) amounts, if any, available in accordance
with the terms of the Spread Account Agreement; and
(y) the greater of (a) the excess, if any, on such Distribution Date
of (i) the Pro Forma Note Balance for such Distribution Date over (ii)
the Required Pro Forma Note 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 Accelerated Payment Termination
Date.
The Insurer does not guarantee the payment of Accelerated Principal
Amounts.
"Additional Funds Available" means, with respect to any Insured
Distribution Date the sum of (i) the Deficiency Claim Amount, if any,
received by the Indenture Trustee with respect to such Insured Distribution
Date plus (ii) the Insurer Optional Deposit, if any, received by the
Indenture Trustee with respect to such Insured Distribution Date.
"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.
"Available Funds" means, with respect to any Monthly Period, the sum
of (i) the Collected Funds for such Monthly Period, plus (ii) all Purchase
Amounts deposited in the Collection Account during such Monthly Period,
plus income on investments held in the Collection Account, plus (iii) the
Monthly Capitalized Interest Amount with respect to the Distribution Date
which immediately follows such Monthly Period plus (iv) the proceeds of any
liquidation of the assets of the Trust plus (v) any remaining Pre-Funded
Amount applied to the mandatory redemption of the Notes.
"Collected Funds" means, with respect to any Monthly Period, the
amount of funds in the Collection Account representing collections on the
Receivables during such Monthly Period, including all Net Liquidation
Proceeds collected during such 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
excess of the Principal Balance of such Receivable immediately prior to
such order over 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)
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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 paid on the related
Distribution Date pursuant to clauses 1 through 5 under "Distributions"
over the amount of Available Funds with respect to the related Monthly
Period, to the extent that such excess amount is available on the related
Insured Distribution Date in accordance with the terms of the Spread
Account Agreement.
"Deficiency Notice" means, with respect to any Insured Distribution
Date, 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 Insured Distribution Date.
"Determination Date" means, with respect to any Monthly Period, the
earlier of (i) the fourth Business Day preceding the related Insured
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.
"Insurer Optional Deposit" means, with respect to any Insured
Distribution Date, an amount delivered by the Insurer, at its sole option,
other than amounts in respect of a Policy Claim Amount 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 Insured Distribution Date; or (ii) to
include such amount as part of the Additional Funds Available for such
Insured 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 Monthly Period, a
Receivable as to which, as of the last day of such 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.
"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 Amount" means, with respect to any
Class of Notes and any date of determination, the excess of the
Noteholders' Interest Distributable Amount for such Class for the
immediately preceding Distribution Date, and any outstanding Noteholders'
Interest Carryover Amount which remains unpaid as of such date of
determination, plus interest on such unpaid amount, to the extent permitted
by law, at the Interest Rate borne by such Class of Notes from such
preceding Distribution Date to but excluding such date of determination.
"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 Amount, if any, for each Class of
Notes,calculated as of 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 shall accrue on the principal amount
of the Notes of each Class outstanding as of the end of the prior
Distribution Date (or, in the case of the first Distribution Date, as of
the Closing Date); provided, that if such principal balance is further
reduced by a payment of principal on the Insured
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Distribution Date which immediately follows such prior Distribution Date,
then such interest shall accrue (i) from and including such prior
Distribution Date to, but excluding, such related Insured Distribution
Date, on the principal balance outstanding as of the end of the prior
Distribution Date (or, in the case of the first Distribution Date, as of
the Closing Date) and (ii) from and including such Insured Distribution
Date, to, but excluding, the following Distribution Date, on the principal
balance outstanding as of the end of such Insured 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 Amount" means, as of any date of
determination, all or any portion of the Noteholders' Principal
Distributable Amount and any outstanding Noteholders' Principal Carryover
Amount from the preceding Distribution Date which remains unpaid as of such
date of determination.
"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 Amount, if any, as of such 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 Amount as of such
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).
"Policy Claim Amount" means, for any Insured Distribution Date, the
sum of (x) the excess, if any, of (i) the sum of the Noteholders' Interest
Distributable Amount and the Noteholders' Principal Distributable Amount
for the related Distribution Date, together with, if such related
Distribution Date was the Mandatory Redemption Date, the Note Prepayment
Amount over (ii) the sum of (a) the amount actually deposited into the Note
Distribution Account on such related Distribution Date and (b) the
Additional Funds Available, if any, for such Insured Distribution Date plus
(y) the Noteholders' Interest Carryover Amount, if any, which has accrued
since the related Distribution Date.
"Principal Balance" means, with respect to any Receivable, as of any
date, the sum of (x) 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 plus (y) the accrued and unpaid interest on such
Receivable as of such date.
"Principal Distributable Amount" means, with respect to any
Distribution Date, the amount equal to the excess, if any, of (x) the sum
of the following amounts with respect to the related Monthly Period,
computed in accordance with the simple interest method: (i) collections
received 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 the
related Monthly Period over (y) the Step-Down Amount, if any, for such
Distribution Date.
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"Pro Forma Note Balance" means, with respect to any Distribution Date,
the aggregate remaining principal balance of the Notes outstanding on such
Distribution Date, after giving effect to distributions pursuant to clauses
1 through 4 under "Distributions."
"Purchase Amount" means, with respect to a Receivable, the Principal
Balance as of the date of purchase.
"Required Pro Forma Note Balance" means, with respect to any
Distribution Date, a dollar amount equal to product of (x) 90% and (y) the
sum of the Pool Balance and the Pre-Funded Amount as of the end of the
prior Monthly Period.
"Step-Down Amount" means, with respect to any Distribution Date, the
excess, if any, of (x) the Required Pro Forma Note Balance over (y) the Pro
Forma Note Balance on such Distribution Date, calculated for this purpose
only without deduction for any Step-Down Amount (i.e., assuming that the
entire amount described in clause (x) of the definition of "Principal
Distributable Amount" is distributed as principal on the Notes).
STATEMENTS TO NOTEHOLDERS
On or prior to each Insured Distribution Date, the Indenture Trustee
will be required to forward a statement to the Noteholders setting forth
certain information required under the Trust Documents. Such statements
will be based on the information in the related Servicer's Certificate.
Each such statement to be delivered to the Noteholders will include the
following information as to the Notes with respect to the related
Distribution Date and the related Insured Distribution Date, as applicable:
(i) the amount of the distribution(s) allocable to interest on or with
respect to the Notes:
(ii) the amount of the distribution(s) allocable to principal with
respect to the Notes;
(iii) the amount of the distribution, if any, payable pursuant to a
claim on the Policy;
(iv) the aggregate outstanding principal amount for each Class of
Notes, after giving effect to all payments reported under (ii) above
on such date;
(v) the Noteholders' Interest Carryover Shortfall and the Noteholders'
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; and
(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.
Each amount set forth pursuant to subclauses (i) through (vi) with
respect to Notes will be expressed as a dollar amount per $1,000 of the
initial principal amount of the Notes.
Unless and until Definitive Notes are issued, such reports will be
sent on behalf of the Trust to Cede & Co., as registered holder of the
Notes 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, a statement as to the aggregate
amounts of interest and principal paid to such Noteholder, information
regarding the amount of servicing compensation received by the Servicer and
such other information as the Seller deems necessary to enable such
Noteholder to prepare its tax returns.
CREDIT SUPPORT
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The Accelerated Principal Amount and the Spread Account result in
credit support. This credit support is required to be increased to, and
thereafter maintained at, a level established by the Insurer. This level
changes over time, and may take two forms: the "Spread Account", which is
a funded cash reserve account and "overcollateralization". The Insurer may
permit the required level of credit support to reduce, or "step down", over
time.
OVERCOLLATERALIZATION. Overcollateralization is created as a result
of the application of excess interest to the payment of principal on the
Notes. Such "excess interest" is interest which is collected on the
Receivables in excess of the amount of interest that is paid on the Notes,
used to pay certain fees, or, under certain circumstances, deposited to the
Spread Account. This application of excess interest results in the
outstanding principal balance of the Notes amortizing more quickly than the
Pool Balance.
If the Insurer permits the required level of overcollateralization to
step down, principal collections which would otherwise be paid through to
the Noteholders as part of the Principal Distributable Amount may be
instead released to the Seller.
SPREAD ACCOUNT. The Spread Account may be funded with an initial cash
deposit on the Closing Date; on each Distribution Date thereafter, 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 on
an Insured Distribution Date will be available to the extent provided in
the Spread Account Agreement to fund any Deficiency Claim Amount with
respect to such Insured Distribution Date. Amounts on deposit in the
Spread Account on any Insured Distribution Date (after giving effect to all
distributions made on such Insured Distribution Date) in excess of the
Specified Spread Account Requirement for such Insured Distribution Date
will be released to the Seller without the consent of the Noteholders.
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 Noteholders) without the consent of, or notice to, the
Trustee, the Owner Trustee or the Noteholders. 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 Insured Distribution Date to fund the full amount
of each Guaranteed Distribution required to be paid by such Insured
Distribution Date, and which would not be paid in the absence of a payment
under the Policy. If the Insurer breaches its obligations, any losses on
the Receivables will be borne by the Noteholders.
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
distribution to the Noteholders 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 Insured 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; (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 interests of 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
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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 the 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 Note 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.
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 Notes, 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
Noteholders' 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 Noteholders, 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 Noteholder; 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
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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 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; 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 (ii) reduce the aforesaid percentage of the Noteholders
required to consent to any such amendment, without, in either case, the
consent of the holders of all Notes 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 POLICY
Simultaneously with the issuance of the Notes, the Insurer will
deliver the Policy to the Trust Collateral Agent as agent for the Indenture
Trustee for the benefit of each Noteholder. Under the Policy, the Insurer
will unconditionally and irrevocably guarantee receipt by the Trust
Collateral Agent, on each Insured Distribution Date, for the benefit of
each Noteholder the full and complete payment of (i) Guaranteed
Distributions (as defined below) on the Notes 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 the Trust
Collateral Agent fails to make a claim under the Policy, Noteholders do not
have the right to make a claim directly under the Policy, but may sue to
compel the Trust Collateral Agent to do so.
The "Insured Distribution Date" will be the twelfth day of each month,
or, if such twelfth day is not a Business Day, the next following Business
Day. In the event that, on any Distribution Date, the Noteholders did not
receive the full amount of the scheduled payment then due to them, such
shortfall (together with, in the case of an interest shortfall, interest
thereon at the related Interest Rate) shall be due and payable and shall be
funded on the Insured Distribution Date either from the Spread Account or
from the proceeds of a drawing under the Policy. The Record Date
applicable to an Insured Distribution Date shall be the Record Date
applicable to the related Distribution Date.
"Guaranteed Distributions" means payments which are scheduled to be
made on the Notes during the term of the 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, with respect to any Insured
Distribution Date, are (i) the Noteholders' Interest Distributable Amount,
with respect to the related Distribution Date, (ii) the Noteholders'
Principal Distributable Amount with respect to the related Distribution
Date, and (iii) the Noteholders' Interest Carryover Amount, if any, which
has accrued since the related Distribution Date; Guaranteed Distributions
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, together with any accrued interest to the date of
acceleration. In the event the Insurer does not so elect, the Policy will
continue to guarantee Guaranteed Distributions due on the Notes in
accordance with their original terms. Guaranteed Distributions shall not
include (x) any portion of a Noteholders' Interest Distributable Amount or
of a Noteholders' Interest Carryover 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 or (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 Policy.
Payment of claims on the 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 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.
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If payment of any amount avoided as a preference under applicable
bankruptcy, insolvency, receivership or similar law is required to be made
under the 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
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.
OTHER PROVISIONS OF THE POLICY
The terms "Receipt" and "Received" with respect to the 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 the 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 Policy, "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 Policy in respect of Guaranteed
Distributions shall be discharged to the extent funds are transferred to
the Trust Collateral Agent as provided in the 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 to
receive payments of principal and interest to the extent of any payment by
the Insurer under the Policy.
Claims under the Policy 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 Policy cannot
be modified or altered by any other agreement or instrument, or by the
merger, consolidation or dissolution of the Trust. The Policy may not be
canceled or revoked prior to distribution in full of all Guaranteed
Distributions. THE POLICY IS NOT COVERED BY THE PROPERTY/CASUALTY
INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE
LAW. The Policy is 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 and the Class A-3
Notes be rated AAA by S&P and Aaa by Moody's. The ratings by the Rating
Agencies of the Notes will be (i) with respect to the Class A-1 Notes,
without regard to the Policy in the case of S&P and substantially based on
the Policy in the case of Moody's and (ii) with respect to all other
Classes of Notes, based on the issuance of
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the Policy. To the extent that such ratings are based on the Policy, such
ratings apply to distributions due on the Insured Distribution Dates, and
not to distributions due on the Distribution Dates. A rating is not a
recommendation to purchase, hold or sell Notes. In the event that the
rating initially assigned to any of the Notes 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 Notes. Any
reduction or withdrawal of a rating may have an adverse effect on the
liquidity and market price of the Notes. 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
Assuming that the terms of the Trust Agreement and related documents
will be complied with, 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.
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.
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, state and local income tax purposes. There are no
regulations, published rulings or judicial decisions involving the
characterization for federal income tax purposes of securities 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.
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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.
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 minimis 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 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 after 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
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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.
STATE TAX CONSIDERATIONS
Potential Noteholders should consider the state and local income tax
consequences of the purchase, ownership and disposition of the Notes.
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 should consult their own tax advisors with respect to
the various state and local tax consequences of an investment in the Notes.
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" 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 Notes 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
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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.
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 and the Class A-3
Notes be rated AAA by S&P and Aaa by Moody's. The ratings by the Rating
Agencies of the Notes will be (i) with respect to the Class A-1 Notes,
without regard to the Policy in the case of S&P and substantially based on
the Policy in the case of Moody's and (ii) with respect to all other
Classes of Notes, based primarily on the Policy. To the extent that such
ratings are based on the Policy, such ratings apply to distributions due on
the Insured Distribution Dates, and not to distributions due on the
Distribution Dates. There is no assurance that the ratings initially
assigned to the Notes will not subsequently be lowered or withdrawn by the
Rating Agencies.
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UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting
Agreement (the "Underwriting Agreement"), the Seller has agreed to cause
the Trust to sell to each of the Underwriters named below (collectively,
the "Underwriters"), and each of the Underwriters has severally agreed to
purchase, the principal amount of the Notes set forth opposite its name
below:
CLASS A-1 NOTES
Principal Amount
----------------
Credit Suisse First Boston Corporation.... $41,500,000
Bear, Stearns & Co. Inc................... 41,500,000
-----------
Total........................... $83,000,000
CLASS A-2 NOTES
Principal Amount
----------------
Credit Suisse First Boston Corporation.... $ 68,500,000
Bear, Stearns & Co. Inc................... 68,500,000
------------
Total........................... $137,000,000
CLASS A-3 NOTES
Principal Amount
----------------
Credit Suisse First Boston Corporation.... $ 53,500,000
Bear, Stearns & Co. Inc................... 53,500,000
------------
Total........................... $107,000,000
The Seller has been advised by the Underwriters that they propose
initially to offer the Notes to the public at the prices set forth herein,
and to certain dealers at such prices less the initial concession not in
excess of 0.125% per Class A-1 Note, 0.165% per Class A-2 Note and 0.225%
per Class A-3 Note. The Underwriters may allow and such dealers may
reallow a concession not in excess of 0.100% per Class A-1 Note, 0.125% per
Class A-2 Note and 0.125% per Class A-3 Note to certain other dealers.
After the initial public offering of the Notes, the public offering prices
and such concessions may be changed.
Each Underwriter has represented and agreed that (a) it has not
offered or sold, and will not offer or sell, any Notes to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances
that do not constitute an offer to the public in the United Kingdom for the
purposes of the Public Offers of Securities Regulations 1995, (b) it has
complied and will comply with all applicable provisions of the Financial
Services Act 1986 of Great Britain with respect to anything done by it in
relation to the Notes in, from or otherwise involving the United Kingdom
and (c) it has only issued or passed on and will only issue or pass on in
the United Kingdom any document in connection with the issue of the Notes
to a person who is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or is
a person to whom the document may otherwise lawfully be issued or passed
on.
Upon receipt of a request by an investor who has received an
electronic Prospectus Supplement and Prospectus from an Underwriter or a
request by such investor's representative within the period during which
there is an obligation
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to deliver a Prospectus Supplement and Prospectus, the Seller of the
Underwriter will promptly deliver, or cause to be delivered, without
charge, a paper copy of the Prospectus Supplement and Prospectus.
EXPERTS
The consolidated balance sheets of the Insurer and Subsidiaries as of
December 31, 1996 and 1995 and the related consolidated statements of
income, changes in shareholder's equity and cash flows for each of the
three years in the period ended December 31, 1996, incorporated by
reference in this Prospectus Supplement, have been incorporated herein in
reliance on the report of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that firm as experts in accounting
and auditing.
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 Notes will be passed upon for the Underwriters by Dewey Ballantine.
Certain legal matters will be passed upon for the Insurer by Brian H.
Mellstrom, Assistant General Counsel, the Insurer. The Insurer is
represented by Rogers & Wells.
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INDEX OF DEFINED TERMS
----------------------
Page
----
ABS.................................................. 23
ABS Table............................................ 23
Accelerated Payment Termination Date................. 37
Accelerated Principal Amount......................... 37
Additional Funds Available........................... 37
Aggregate risks...................................... 30
AmeriCredit.......................................... 4
Amount Financed...................................... 37
APR.................................................. 6
Available Funds...................................... 38
Basic Servicing Fee.................................. 35
Benefit Plan......................................... 48
Business Day......................................... 7
Calculation Date..................................... 10
Capitalized Interest Account......................... 10, 35
Cedel................................................ 1, 4
Certificates......................................... 5
Class A-1 Notes...................................... 1, 4
Class A-2 Notes...................................... 1, 4
Class A-3 Notes...................................... 1, 4
Closing Date......................................... 4
Code................................................. 46
Collected Funds...................................... 38
Collection Account................................... 34
Commission........................................... 3
Contracts............................................ 17
Cram Down Loss....................................... 38
Dealer Agreements.................................... 16
Deficiency Claim Amount.............................. 38
Deficiency Notice.................................... 38
Determination Date................................... 38
Distribution Date.................................... 7
DTC.................................................. 1
Euroclear............................................ 1, 4
Events of Default.................................... 33
Exchange Act......................................... 3
Final Schedule Distribution Date..................... 2
Financed Vehicles.................................... 2, 5
Financial Security................................... 29
Funding Period....................................... 10, 35
Guaranteed Distributions............................. 44
Holdings............................................. 3, 29
Indenture............................................ 1
Indenture Trustee.................................... 1, 4
Initial Cutoff Date.................................. 1, 4
Initial Financed Vehicles............................ 1, 5
Initial Pre-Funded Amount............................ 10, 35
Initial Receivables.................................. 1, 5
Insurance Agreement.................................. 10
Insurance Agreement Indenture Cross Defaults......... 33
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Page
----
Insured Distribution Date............................ 7, 44
Insurer.............................................. 3, 4
Insurer Default...................................... 42
Insurer Optional Deposit............................. 38
Interest Period...................................... 8, 31
Interest Rate........................................ 8
IRS.................................................. 46
Issuer............................................... 4
LIBOR................................................ 32
LIBOR Determination Date............................. 31
Liquidated Receivable................................ 38
Lockbox.............................................. 34
Lockbox Account...................................... 34
Mandatory Redemption Date............................ 10, 35
Monthly Capitalized Interest Amount.................. 11, 35
Monthly Period....................................... 8, 32
Moody's.............................................. 11
Net Liquidation Proceeds............................. 38
Note Distribution Account............................ 35
Note Prepayment Amount............................... 10, 33
Noteholder Monthly Interest Distributable Amount..... 39
Noteholders.......................................... 7
Noteholders' Accelerated Principal Amount............ 39
Noteholders' Distributable Amount.................... 39
Noteholders' Interest Carryover Shortfall............ 39
Noteholders' Interest Distributable Amount........... 39
Noteholders' Monthly Principal Distributable Amount.. 39
Noteholders' Percentage.............................. 39
Noteholders' Principal Carryover Shortfall........... 39
Noteholders' Principal Distributable Amount.......... 39
Notes................................................ 1, 4
OID.................................................. 46
Order................................................ 44
Original Pool Balance................................ 9
Owner Trustee........................................ 1, 4
Payment Date......................................... 7
Plan Assets Regulation............................... 48
Policy............................................... 1, 7
Policy Claim Amount.................................. 40
Pool Balance......................................... 16
Pre-Funded Amount.................................... 10, 35
Pre-Funding Account.................................. 2, 9, 10, 35
Precomputed Receivables.............................. 23
Principal Balance.................................... 40
Principal Distributable Amount....................... 9, 32, 40
Pro Forma Note Balance............................... 40
Prospectus........................................... 3
PTCE................................................. 48
Purchase Agreement................................... 5
Purchase Agreements.................................. 34
Purchase Amount...................................... 40
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Page
----
Rating Agencies...................................... 11
Receivables.......................................... 2
Record Date.......................................... 7
Redemption Price..................................... 33
Reference Banks...................................... 32
Required Pro Forma Note Balance...................... 40
S&P.................................................. 11
Schedule of Receivables.............................. 34
Seller............................................... 1, 4
Servicer............................................. 4
Servicer Termination Event........................... 42
Simple Interest Receivables.......................... 23
Single risks......................................... 30
Statistical Calculation Date......................... 4
Step-Down Amount..................................... 40
Subsequent Cutoff Date............................... 6
Subsequent Financed Vehicles......................... 2, 5
Subsequent Purchase Agreement........................ 5
Subsequent Receivables............................... 2, 5
Subsequent Transfer Date............................. 6
Telerate Page 3750................................... 32
Trust................................................ 1, 4
Trust Agreement...................................... 4
Trust Collateral Agent............................... 1, 4
Trust Documents...................................... 34
Trust Property....................................... 5
Underwriters......................................... 50
Underwriting Agreement............................... 50
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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 1997-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.
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.
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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 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.
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<PAGE>
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 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"
AI-3
<PAGE>
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.
AI-4
<PAGE>
PROSPECTUS
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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 28, 1997.
<PAGE>
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.
2
<PAGE>
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.
3
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and by reference to
the information with respect to the Securities of any series contained in the
related Prospectus Supplement to be prepared and delivered in connection with
the offering of such Securities. Certain capitalized terms used in 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.
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
4
<PAGE>
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 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).
5
<PAGE>
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.
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.
6
<PAGE>
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
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
7
<PAGE>
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
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
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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 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.
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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."
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
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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.
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
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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
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
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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. 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
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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 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."
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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 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
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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, 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.
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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.
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
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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.
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.
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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.
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
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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
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
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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.
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.
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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.
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.
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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 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.
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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 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.
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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 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
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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.
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
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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
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.
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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 "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
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(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.
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
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summary does not purport to be complete. It is qualified in its entirety by
reference to the provisions of the Trust Agreements.
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 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
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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, 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
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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 any of the Trust
Accounts in accordance with such Trust Agreement. No such waiver shall impair
the Securityholders' rights with respect to subsequent defaults.
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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
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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 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.
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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 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
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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 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
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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).
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
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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.
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
40
<PAGE>
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 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 provi sions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a
41
<PAGE>
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.
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.
42
<PAGE>
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.
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.
43
<PAGE>
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
Indexed Securities........................................ 26
Indirect Participants..................................... 16, 27
Insolvency Event.......................................... 36
44
<PAGE>
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
Trust Agreement........................................... 5, 31
Trust Property............................................ 1, 4
Trustee................................................... 5
Vehicles.................................................. 1, 4
Vendors................................................... 4
45
<PAGE>
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
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
46
<PAGE>
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
Trust Agreement........................................... 5, 31
Trust Property............................................ 1, 4
Trustee................................................... 5
Vehicles.................................................. 1, 4
Vendors................................................... 4
47
<PAGE>
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFOR-
MATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS SUPPLE-
MENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTA-
TION 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 CIR-
CUMSTANCES, 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 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-12
Use of Proceeds......................................................... S-14
The Servicer............................................................ S-14
The Seller.............................................................. S-14
The Trust............................................................... S-15
The Trust Property...................................................... S-16
AmeriCredit's Automobile Financing Program.............................. S-17
The Receivables......................................................... S-19
Yield and Prepayment Considerations..................................... S-23
The Insurer............................................................. S-29
Description of the Notes................................................ S-31
Description of the Purchase Agreements and the Trust Documents.......... S-34
The Policy.............................................................. S-43
Certain Federal Income Tax Consequences................................. S-45
State Tax Considerations................................................ S-48
ERISA Considerations.................................................... S-48
Legal Investment........................................................ S-49
Ratings................................................................. S-49
Underwriting............................................................ S-50
Experts................................................................. S-51
Legal Opinions.......................................................... S-51
Index of Defined Terms.................................................. S-52
Global Clearance Settlement and Tax Documentation Procedures............ Annex I
PROSPECTUS
Prospectus Supplement................................................... 2
Available Information................................................... 2
Incorporation of Certain Documents by Reference......................... 2
Reports of 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
</TABLE>
------------
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE SECURITIES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATION OF DEALERS TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTION.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$325,000,000
AMERICREDIT AUTOMOBILE
RECEIVABLES TRUST 1997-C
$83,000,000 Class A-1 5.66%
Asset Backed Notes
$135,000,000 Class A-2 Floating Rate
Asset Backed Notes
$107,000,000 Class A-3 6.30%
Asset Backed Notes
AFS FUNDING CORP.
Seller
LOGO AMERICREDIT
-----------------------
FINANCIAL SERVICES, INC
Servicer
PROSPECTUS SUPPLEMENT
CREDIT SUISSE FIRST BOSTON
BEAR, STEARNS & CO. INC.
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