<PAGE>
SUBJECT TO COMPLETION, DATED FEBRUARY
28, 1997
INFORMATION CONTAINED HEREIN IS
SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO
THESE SECURITIES HAS BEEN FILED WITH
AND DECLARED EFFECTIVE BY THE
SECURITIES AND EXCHANGE COMMISSION.
THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED WITHOUT
THE DELIVERY OF A FINAL PROSPECTUS
SUPPLEMENT AND ACCOMPANYING
PROSPECTUS. THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF
AN OFFER TO BUY NOR SHALL THERE BE
ANY SALE OF THESE SECURITIES IN ANY
STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES
LAWS OF ANY SUCH STATE.
<PAGE>
Filed pursuant to Rule 424(b)(3)
Registration No. 333-17981
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED FEBRUARY 28, 1997)
$225,000,000
AMERICREDIT AUTOMOBILE RECEIVABLES TRUST 1997-A
$60,200,000 CLASS A-1 % ASSET BACKED NOTES
$86,625,000 CLASS A-2 FLOATING RATE ASSET BACKED NOTES
$70,300,000 CLASS A-3 % ASSET BACKED NOTES
$7,875,000 % ASSET BACKED CERTIFICATES
---------------------
AmeriCredit Automobile Receivables Trust 1997-A (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 $60,200,000 aggregate principal amount of Class
A-1 % Asset Backed Notes (the "Class A-1 Notes"), $86,625,000 aggregate
principal amount of Class A-2 Floating Rate Asset Backed Notes (the "Class A-2
Notes") and $70,300,000 aggregate principal amount of Class A-3 % Asset
Backed Notes (the "Class A-3 Notes," and together with the Class A-1 Notes and
the Class A-2 Notes, the "Notes"). The Notes will be issued pursuant to an
Indenture to be dated as of March 1, 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 Trust also will
issue $7,875,000 aggregate principal amount of % Asset Backed Certificates
(the "Certificates" and together with the Notes, the "Securities").
The assets of the Trust will include a pool of motor vehicle retail
installment sale contracts (the "Initial Receivables") secured by new and used
automobiles, light duty trucks and vans financed thereby (the "Initial Financed
Vehicles"), certain monies received thereunder after February 24, 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-13 HEREIN AND BEGINNING ON PAGE 13
IN THE ACCOMPANYING PROSPECTUS.
---------------------
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT INTERESTS
IN, THE TRUST ONLY AND DO NOT REPRESENT INTEREST IN OR OBLIGATIONS OF THE
SELLER, THE SERVICER OR ANY AFFILIATE THEREOF.
FULL AND COMPLETE PAYMENT OF THE NOTEHOLDERS' DISTRIBUTABLE AMOUNT AND THE
CERTIFICATEHOLDERS' DISTRIBUTABLE AMOUNT ON EACH DISTRIBUTION DATE IS
UNCONDITIONALLY AND IRREVOCABLY GUARANTEED PURSUANT TO FINANCIAL GUARANTY
INSURANCE POLICIES (THE "POLICIES") TO BE ISSUED BY:
[LOGO]
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 THE SELLER(1)(2)
<S> <C> <C> <C>
Per Class A-1 Note............................................. % % %
Per Class A-2 Note............................................. % % %
Per Class A-3 Note............................................. % % %
Per Certificate................................................ % % %
Total.......................................................... $ $ $
</TABLE>
(1) Plus accrued interest, if any, from March , 1997.
(2) Before deducting expenses, estimated to be $600,000.
The Securities 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
Securities in book-entry form will be made through the facilities of The
Depository Trust Company ("DTC") against payment in immediately available funds
and, in the case of the Notes, Cedel Bank, societe anonyme ("Cedel") and the
Euroclear System ("Euroclear") on or about March , 1997.
--------------------------
BEAR, STEARNS & CO. INC. CREDIT SUISSE FIRST BOSTON
---------------
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS MARCH , 1997.
<PAGE>
(Continued from preceding page).
From time to time on or before May , 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 trucks and vans financed thereby (the "Subsequent Financed
Vehicles," and together with the Initial Financed Vehicles, the "Financed
Vehicles"), certain amounts received under the Subsequent Receivables on and
after the related Subsequent Cutoff Dates (as defined herein), security
interests in the Subsequent Financed Vehicles and certain other property, as
more fully described herein, are intended to be purchased by the Trust from
amounts deposited in a pre-funding account established with the Trust Collateral
Agent (the "Pre-Funding Account") on the date of issuance of the Securities.
Subsequent Receivables with an aggregate Principal Balance of up to
$56,164,777.29 may be acquired by the Trust.
The Notes will be secured by the assets of the Trust pursuant to the
Indenture. Interest on the Class A-1 and Class A-3 Notes will accrue at the per
annum interest rates specified above. The per annum rate of interest on the
Class A-2 Notes for each monthly interest period will equal one-month LIBOR (as
defined herein) plus %, subject to a maximum rate equal to 12% per annum.
Interest on the Notes will generally be payable on the twelfth day of each month
(each, a "Distribution Date"), commencing on April 14, 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.
The Certificates represent fractional undivided interests in the Trust.
Interest, to the extent of the Certificate Rate of % per annum, will be
distributed to the Certificateholders on each Distribution Date. Distributions
of interest on the Certificates will be subordinated in priority of payment to
interest on and principal of the Notes. No principal will be paid on the
Certificates until all of the Notes have been paid in full.
The Distribution Date with respect to any class of Securities 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 April 1998 Distribution Date, for the Class A-2 Notes will be
the May 2000 Distribution Date, and for the Class A-3 Notes will be the May 2001
Distribution Date. The Final Scheduled Distribution Date for the Certificates
will be the January 2003 Distribution Date. However, payment in full of a Class
of Notes or the Certificates may occur earlier than such dates as described
herein. In addition, the Class A-3 Notes will be subject to redemption in whole,
but not in part, and the Certificates will be subject to prepayment in whole,
but not in part, on any Distribution Date on which the Servicer exercises its
option to purchase the Receivables. The Servicer may purchase the Receivables
when the aggregate Principal Balance of the Receivables has declined to 10% or
less of the Original Pool Balance (as hereinafter defined).
There currently is no secondary market for the Notes or the Certificates.
The Underwriters expect to make a market in the Securities but have no
obligation to do so. There is no assurance that any such market will develop or
continue or that it will provide Securityholders with sufficient liquidity of
investment.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE SECURITIES. ADDITIONAL INFORMATION IS CONTAINED IN THE
PROSPECTUS AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE SECURITIES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED A FINAL PROSPECTUS SUPPLEMENT AND
THE FINAL PROSPECTUS. TO THE EXTENT ANY STATEMENTS IN THIS PROSPECTUS SUPPLEMENT
CONFLICT WITH STATEMENTS IN THE PROSPECTUS, THE STATEMENTS IN THIS PROSPECTUS
SUPPLEMENT SHALL CONTROL.
S-2
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE NOTES AND THE
CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
Unless and until Definitive Notes or Definitive Certificates are issued,
unaudited monthly and annual reports containing information concerning the
Receivables will be sent on behalf of the Trust to Cede & Co., as registered
holder of the Notes and the Certificates and the nominee of DTC. See
"Description of the Securities--Reports to Securityholders" and "--Book-Entry
Registration" in the accompanying Prospectus (the "Prospectus"). Such reports
will not constitute financial statements prepared in accordance with generally
accepted accounting principles. None of the Seller, the Servicer, or the Insurer
intends to send any of its financial reports to Securityholders. The Servicer,
on behalf of the Trust, will file with the Securities and Exchange Commission
(the "Commission") periodic reports concerning the Trust to the extent required
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the rules and regulations of the Commission thereunder.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
In addition to the documents described in the Prospectus under
"Incorporation of Certain Documents by Reference," the 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, 1995,
(b) Quarterly Report on Form 10-Q for the period ended March 31, 1996,
(c) Quarterly Report on Form 10-Q for the period ended June 30, 1996,
and
(d) Quarterly Report on Form 10-Q for the period ended September 30,
1996.
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 Securities shall be deemed to be
incorporated by reference into this Prospectus Supplement and to be a part
hereof from the respective dates of filing of such documents.
The Seller on behalf of the Trust hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Trust's annual report pursuant to section 13(a) or section 15(d) of the Exchange
Act and each filing of the financial statements of Financial Security included
in or as an exhibit to the annual report of Holdings filed pursuant to section
13(a) or section 15(d) of the Exchange Act that is incorporated by reference in
the Registration Statement (as defined in the accompanying Prospectus) shall be
deemed to be a new registration statement relating to the Securities offered
hereby, and the offering of such Securities at that time shall be deemed to be
the initial bona fide offering thereof.
S-3
<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-A (the
"Trust" or the "Issuer"), a Delaware business trust to
be formed pursuant to a Trust Agreement, dated as of
March 1, 1997 (the "Trust Agreement"), among the
Seller and the Owner Trustee.
Seller.................. AFS Funding Corp. (the "Seller"), a special purpose
financing subsidiary of AmeriCredit. See "The Seller"
herein.
Servicer................ AmeriCredit Financial Services, Inc. (in its
individual capacity, "AmeriCredit" and, as servicer,
the "Servicer"), a Delaware corporation. See "The
Company and the Servicer" in the Prospectus.
Insurer................. Financial Security Assurance Inc. (the "Insurer"), a
New York financial guaranty insurance company. See
"The Insurer" herein.
Indenture Trustee....... LaSalle National Bank (the "Indenture Trustee").
Owner Trustee........... Bankers Trust (Delaware) (the "Owner Trustee").
Initial Cutoff Date..... February 24, 1997.
Closing Date............ March __, 1997.
The Notes............... The Trust will issue Class A-1 _____% Asset Backed
Notes (the "Class A-1 Notes") in the aggregate
original principal amount of $60,200,000, Class A-2
Floating Rate Asset Backed Notes (the "Class A-2
Notes") in the aggregate original principal amount of
$86,625,000, and Class A-3 ____% Asset Backed Notes
(the "Class A-3 Notes") in the aggregate original
principal amount of $70,300,000. 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 March 1, 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. See "Description of the
Securities -- Book-Entry Registration" in the
Prospectus and Annex I hereto.
S-4
<PAGE>
The Notes will be secured by the assets of the Trust
(other than certain property relating exclusively to
the Certificates) pursuant to the Indenture.
The Certificates........ The Trust will issue ____% Asset Backed Certificates
(the "Certificates") with an aggregate initial
Certificate Balance (as defined herein) of $7,875,000.
The Certificates will represent fractional undivided
interests in the Trust. The Certificates will be
issued pursuant to the Trust Agreement. The
Certificates will be offered for purchase in
denominations of $1,000 and integral multiples thereof
in book-entry form only (other than the Certificates
sold to the Seller, as described in "The Trust --
General" herein). See "Description of the Securities
-- Book-Entry Registration" in the Prospectus.
Trust Property.......... Each Note will represent an obligation of, and each
Certificate will represent a fractional undivided
interest in, the Trust. The Trust's assets (the "Trust
Property") will include, among other things, certain
motor vehicle retail installment sale contracts (the
"Initial Receivables"), secured by new and used
automobiles, light trucks and vans (the "Initial
Financed Vehicles"), certain monies received thereunder
after the Initial Cutoff Date, an assignment of the
security interests in the Initial Financed Vehicles
securing the Initial Receivables, the related
Receivables Files, all rights to proceeds from claims
on certain physical damage, credit life and disability
insurance policies covering the Initial Financed
Vehicles or the Obligers, as the case may be, all
rights to liquidation proceeds with respect to the
Initial Receivables, an assignment of the right of the
Seller against Dealers under agreements between
AmeriCredit and such Dealers, certain bank accounts,
all proceeds of the foregoing, the Certificate Policy,
and certain rights under the Trust Documents. The
Trust Property also will include an assignment of the
Seller's rights against AmeriCredit under the Purchase
Agreement upon the occurrence of certain breaches of
representations and warranties. The Initial
Receivables will be purchased by the Seller from
AmeriCredit pursuant to a purchase agreement (the
"Purchase Agreement") between the Seller and
AmeriCredit on or prior to the date of issuance of the
Securities.
Additional motor vehicle retail installment sale
contracts (the "Subsequent Receivables") secured by
new or used automobiles, light trucks and vans (the
"Subsequent Financed Vehicles") and related property
are intended to be purchased by the Trust from the
Seller from time to time on or before May __, 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, as described under "The
Receivables" herein. The Initial Receivables and the
Subsequent Receivables are hereinafter referred to as
the "Receivables," and the Initial Financed Vehicles
and the Subsequent Financed Vehicles are hereinafter
referred to as the "Financed Vehicles."
S-5
<PAGE>
Receivables............. The Receivables consist of motor vehicle retail
installment sale contracts originated by Dealers and
then acquired by AmeriCredit pursuant to its Contract
Acquisition Program. The motor vehicle retail
installment sale contracts consist primarily of
contracts with individuals with less than perfect
credit due to various factors, including, among other
things, the manner in which such individuals have
handled previous credit, the limited extent of their
prior credit history and/or their limited financial
resources. See "AmeriCredit's Automobile Financing
Program" herein and in the Prospectus.
The statistical information presented in this
Prospectus Supplement is based on the Initial
Receivables as of the Initial Cutoff Date. The
Initial Receivables have, as of the Initial Cutoff
Date, a weighted average annual percentage rate
("APR") of approximately 19.73%, a weighted average
original maturity of 55 months and a weighted average
remaining maturity of 53 months. The Initial
Receivables have an aggregate Principal Balance of
$168,835,222.71 as of the Initial Cutoff Date. See
"The Receivables." Each of the Initial Receivables
also will have a remaining term of not more than 60
months and not less than 9 months as of the Initial
Cutoff Date.
Following the Closing Date, the Trust will be
obligated to purchase from time to time on or before
the end of the Funding Period (as defined below),
subject to the availability thereof, Subsequent
Receivables consisting of retail automobile
installment sale contracts acquired by the Seller
from AmeriCredit. The aggregate Principal Balance of
the Subsequent Receivables is anticipated by
AmeriCredit to equal approximately $56,164,777.29.
In connection with each purchase of Subsequent
Receivables, the Trust will be required to pay to the
Seller a cash purchase price equal to the principal
amount thereof from the Pre-Funding Account.
AmeriCredit will designate as a cutoff date (each, a
"Subsequent Cutoff Date") (i) the last day of the
month preceding the month in which Subsequent
Receivables are conveyed to the Seller by AmeriCredit
and reconveyed by the Seller to the Trust or (ii) if
any such Subsequent Receivable is originated in the
month of conveyance, the date of origination.
Subsequent Receivables will be conveyed to the Seller
and then reconveyed by the Seller to the Trust on
designated dates (each, a "Subsequent Transfer Date")
occurring during the Funding Period. The Trust may
purchase the Subsequent Receivables only from the
Seller and not from any other person, and the Seller
may purchase the Subsequent Receivables only from
AmeriCredit. The Subsequent Receivables must satisfy
certain eligibility criteria. See "The Receivables --
Eligibility Criteria" herein.
Terms of the Notes...... The principal terms of the Notes will be as described
below:
A. Distribution Dates... Payments of interest and principal on the Notes will
be made on the twelfth day of each month or, if the
S-6
<PAGE>
twelfth day is not a Business Day, on the next
following Business Day (each, a "Distribution Date")
commencing April 14, 1997. Each reference to a
"Payment Date" in the accompanying Prospectus shall
refer to a Distribution Date. Payments will be made
to holders of record of the Notes (the "Noteholders")
as of the close of business on the Business Day
immediately preceding such Distribution Date (a
"Record Date"). A "Business Day" is a day other than
a Saturday, Sunday or other day on which commercial
banks located in the states of Texas, Delaware,
Illinois or New York are authorized or obligated to be
closed.
B. Final Scheduled
Distribution Dates.. For the Class A-1 Notes, the April 1998 Distribution
Date (the "Class A-1 Final Scheduled Distribution
Date"); for the Class A-2 Notes, the May 2000
Distribution Date; and for the Class A-3 Notes, the
May 2001 Distribution Date.
C. Interest Rates....... The Class A-1 Notes and the Class A-3 Notes will bear
interest at the respective fixed per annum rates set
forth on the cover page hereof. The Class A-2 Notes
will bear interest at a floating rate equal to the
London interbank offered rates for one-month U.S.
dollar deposits ("LIBOR") plus ____%, subject to a
maximum rate equal to 12% per annum. Each such
interest rate for a Class of Notes is referred to as
the "Interest Rate."
D. Interest............. Interest on the principal amount of the Notes of each
Class outstanding immediately prior to a Distribution
Date will accrue at the applicable Interest Rate from
and including the most recent Distribution Date on
which interest has been paid (or, in the case of the
first Distribution Date, from and including the
Closing Date) to, but excluding, the following
Distribution Date (each, an "Interest Period").
Interest on the Notes for any Distribution Date due
but not paid on such Distribution Date will be due on
the next Distribution Date together with, to the
extent permitted by law, interest on such amount at
the applicable Interest Rate. The amount of interest
distributable on the Notes on each Distribution Date
will equal interest accrued during the related
Interest Period, plus any shortfall amount
carried-forward. Interest on the Class A-1 Notes and
the Class A-2 Notes will be calculated on the basis of
a 360-day year and the actual number of days elapsed
in the applicable Interest Period. Interest on the
Class A-3 Notes will be calculated on the basis of a
360-day year consisting of twelve 30-day months. In
the event that the interest rate for the Class A-2
Notes for any Interest Period calculated without
giving effect to the maximum rate would exceed the
interest rate for such Interest Period after giving
effect to the maximum rate, the amount of such excess
will not be due as additional interest to the Class
A-2 Noteholders on the related Distribution Date, nor
will it be carried forward and payable as additional
interest to the Class A-2 Noteholders on any
subsequent Distribution Date. In addition to the
foregoing, any accrued and unpaid interest on the
Class A-1 Notes will be due and payable on the Special
A-1 Distribution Date. See "Description of the Notes
-- Payments of Interest" herein.
S-7
<PAGE>
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 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. See
"Description of the Purchase Agreements and the Trust
Documents -- Distributions" herein.
In addition to the foregoing, any remaining
outstanding principal on the Class A-1 Notes will be
due and payable on the Class A-1 Final Scheduled
Distribution Date.
The Noteholders' Percentage will be 100% until the
Class A-3 Notes have been paid in full and thereafter
will be zero. No principal will be paid on a Class of
Notes until the principal of all Classes of Notes
having a lower numerical Class designation has been
paid in full. In addition, the outstanding principal
amount of the Notes of any Class, to the extent not
previously paid, will be payable on the respective
Final Scheduled Distribution Date for such Class.
F. Optional Redemption.. The Class A-3 Notes, to the extent still outstanding,
may be redeemed in whole, but not in part, on any
Distribution Date on which the Servicer exercises its
option to purchase the Receivables, which, subject to
certain requirements can occur after the Pool Balance
declines to 10% or less of the Original Pool Balance,
at a redemption price equal to the unpaid principal
amount of the Notes of such Class plus accrued and
unpaid interest thereon. See "Description of the
Notes -- Optional Redemption" herein. The Original
Pool Balance will equal the sum of (i) the aggregate
Principal Balance of the Initial Receivables as of the
Initial Cutoff Date plus (ii) the aggregate Principal
Balances of all Subsequent Receivables added to the
Trust as of their respective Subsequent Cutoff Dates
(the "Original Pool Balance").
S-8
<PAGE>
G. Mandatory Redemption. Each Class of Notes will be redeemed in part on the
Mandatory Redemption Date (as defined under
"Pre-Funding Account" below) in the event that any
portion of the Pre-Funded Amount remains on deposit
in the Pre-Funding Account at the end of the Funding
Period. The aggregate principal amount of each Class
of Notes to be redeemed will be an amount equal to
such Class's pro rata share (based on the respective
current principal amount of each Class of Notes and
the Certificate Balance) of the Pre-Funded Amount at
the end of the Funding Period (such Class's "Note
Prepayment Amount"); 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 March 1, 1997 (the
"Insurance Agreement"), among the Insurer, the
Trust, AmeriCredit, AmeriCredit Corp. and the
Seller. In the case of such an Event of Default,
the Notes will automatically be accelerated and
subject to immediate payment at par. See
"Description of the Notes -- Events of Default"
herein. The Note Policy does not guarantee payment
of any amounts that become due on an accelerated
basis, unless the Insurer elects, in its sole
discretion, to pay such amounts in whole or in
part. See "The Policies -- Note Policy" herein.
Terms of the
Certificates........... The principal terms of the Certificates will be as
described below:
A. Distribution Dates... Distributions with respect to the Certificates will be
made on each Distribution Date, commencing April 14,
1997. Distributions will be made to holders of record
of the Certificates (the "Certificateholders" and,
together with the Noteholders, the "Securityholders")
as of the related Record Date.
B. Final Scheduled
Certificate
Distribution Date...... The January 2003 Distribution Date.
C. Certificate Rate..... ____% per annum payable monthly at one-twelfth of the
annual rate, calculated on the basis of a 360-day year
consisting of twelve 30-day months.
S-9
<PAGE>
D. Subordination
of Certificates..... The Certificates will not receive any distribution
with respect to a Distribution Date until the full
amount of the Noteholders' Distributable Amount with
respect to such Distribution Date has been deposited
in the Note Distribution Account.
E. Interest............. The amount of interest distributable on the
Certificates on each Distribution Date will equal
interest accrued during the related Interest
Period at the Certificate Rate on the Certificate
Balance immediately prior to such Distribution
Date. Interest on the Certificates for any
Distribution Date due but not paid on such
Distribution Date will be due on the next
Distribution Date together with, to the extent
permitted by law, interest on such amount at
one-twelfth of the Certificate Rate. Distributions
of interest on the Certificates are subordinate to
payments of interest and principal on the Notes, as
described above under "Subordination of Certificates."
See "Description of the Certificates -- Distributions
of Interest" herein.
F. Principal............ On each Distribution Date on or after the date on
which the Class A-3 Notes have been paid in full,
principal of the Certificates will be payable in an
amount equal to the Certificateholders' Principal
Distributable Amount and the Certificateholders'
Accelerated Principal Amount, if any, for the
Monthly Period preceding such Distribution Date.
The Certificateholders' Principal Distributable
Amount will equal the sum of (x) the Principal
Distributable Amount and (y) any unpaid portion of
the amount described in clause (x) with respect to
a prior Distribution Date; provided, however, that
the Certificateholders' Principal Distributable
Amount on the Distribution Date on which the Class
A-3 Notes are paid in full will be reduced by the
amount necessary to pay the Class A-3 Notes in
full. See "Description of the Purchase Agreements
and Trust Documents -- Distributions" herein.
The remaining Certificate Balance, if any, will be
payable in full on the Final Scheduled Distribution
Date for the Certificates.
G. Optional Prepayment.. If the Servicer exercises its option to purchase
the Receivables as described above, the
Certificateholders shall receive an amount equal to
the remaining Certificate Balance together with
accrued interest at the Certificate Rate, and the
Certificates will be retired.
H. Mandatory Prepayment. The Certificates will be prepaid in part on the
Mandatory Redemption Date in the event that any
portion of the Pre-Funded Amount remains on deposit
in the Pre-Funding Account at the end of the
Funding Period after giving effect to the purchase
of all Subsequent Receivables, including any such
purchase on such date. The aggregate principal
amount of Certificates to be prepaid will be an
amount equal to the Certificateholders' pro rata
share (based on the respective current principal
amount of each Class of Notes and the Certificate
Balance) of the Pre-Funded Amount (the "Certificate
Prepayment Amount") at the end of the Funding
Period; provided, that if the aggregate remaining
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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.
Pre-Funding Account..... On the Closing Date, a cash amount equal to
approximately $56,164,777.29 (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) May __, 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 and
Certificateholders on the Mandatory Redemption Date as
described herein. The "Mandatory Redemption Date" is
the earlier of (i) the Distribution Date in May 1997 or
(ii) if the last day of the Funding Period occurs on or
prior to the Determination Date (as defined herein)
occurring in April 1997, April 14, 1997.
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 April and May
of 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 and Certificate
Rate on the portion of the Securities having a
principal balance in excess of the Principal
Balances of the Initial Receivables (which portion
will equal the Pre-Funded Amount). Any amounts
remaining in the Capitalized Interest Account on
the Mandatory Redemption Date and not used for such
purposes are required to be paid directly to the
Seller on such date. See "Description of the
Purchase Agreements and the Trust Documents
--Accounts."
The Policies............On the Closing Date, the Insurer will issue to the
Trust Collateral Agent (i) as agent for the
Indenture Trustee, a financial guaranty insurance
policy (the "Note Policy") and (ii) as agent for
the Owner Trustee, a separate financial guaranty
insurance policy (the "Certificate Policy").
Pursuant to the Note Policy, the Insurer will
unconditionally and irrevocably guarantee to the
Noteholders payment of the Scheduled Payments (as
defined herein) for each Distribution Date and,
with respect to the Class A-1 Notes, the Class A-1
Final Scheduled Distribution Date. Pursuant to the
Certificate Policy, the Insurer will unconditionally
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<PAGE>
and irrevocably guarantee to the Certificateholders
payment of the Guaranteed Distributions (as defined
herein). See "The Policies" and "Description of the
Purchase Agreements and the Trust Documents
--Distributions" herein.
Tax Status.............. In the opinion of Dewey Ballantine, special federal
tax counsel to the Trust, for federal income tax
purposes, the Notes will be characterized as debt,
and the Trust will not be characterized as an
association (or a publicly traded partnership)
taxable as a corporation. Each Noteholder, by the
acceptance of a Note, will agree to treat the Notes
as debt. Each Certificateholder, by the acceptance
of a Certificate, will agree to treat the Trust as
a partnership in which the Certificateholders are
partners for federal income tax purposes. See
"Certain Federal Income Tax Consequences" herein.
ERISA Considerations.... Subject to the conditions and considerations
discussed under "ERISA Considerations," the Notes
are eligible for purchase by pension,
profit-sharing or other employee benefit plans as
well as individual retirement accounts and certain
types of Keogh Plans (each, a "Benefit Plan").
The Certificates may not be acquired (directly or
indirectly) by or on behalf of any Benefit Plan or
any entity (including, without limitation, an
insurance company general account) whose underlying
assets include plan assets of a Benefit Plan by
reason of a plan's investment in the entity. See
"ERISA Considerations" herein.
Legal Investment........ The Class A-1 Notes will be eligible securities for
purchase by money market funds under Rule 2a-7
under the Investment Company Act of 1940, as
amended.
Ratings................. It is a condition to issuance that the Class A-l
Notes be rated A-1+ by Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies,
Inc. ("S&P"), and P-1 by Moody's Investors Service,
Inc. ("Moody's" and together with S&P, the "Rating
Agencies"), and that the Class A-2 Notes, the Class
A-3 Notes and the Certificates be rated AAA by S&P
and Aaa by Moody's. The ratings by the Rating
Agencies of the Securities will be (i) with respect
to the Class A-1 Notes, without regard to the Note
Policy in the case of S&P and substantially based
on the Note Policy in the case of Moody's and (ii)
with respect to all other Classes of Notes and
Certificates, based on the Policies. There is no
assurance that the ratings initially assigned to
the Notes and the Certificates will not
subsequently be lowered or withdrawn by the Rating
Agencies. See "Risk Factors -- Ratings on
Securities" herein.
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<PAGE>
RISK FACTORS
Prospective Noteholders and Certificateholders should consider, in addition
to the factors described under "Risk Factors" in the Prospectus, the following
risk factors in connection with the purchase of the Notes or the Certificates.
Prepayment from the Pre-Funding Account; Ability to Originate Subsequent
Receivables
To the extent that the Pre-Funded Amount has not been fully applied to the
purchase of Subsequent Receivables by the Trust by the end of the Funding
Period, the Noteholders and the Certificateholders will receive a prepayment of
principal on the Mandatory Redemption Date in an amount equal to their pro rata
share (based on the current principal balance of each Class and the Certificate
Balance) of the Pre-Funded Amount (exclusive of investment earnings) remaining
in the Pre-Funding Account at the end of the Funding Period. Any reinvestment
risk from the prepayment of the Securities from the Pre-Funded Amount at the end
of the Funding Period will be borne by the Noteholders and the
Certificateholders. See "Yield and Prepayment Considerations" herein.
The conveyance of Subsequent Receivables to the Trust during the Funding
Period is subject to the conditions described herein under "The Receivables --
Eligibility Criteria." The ability of the Trust to invest in Subsequent
Receivables is dependent upon the ability of AmeriCredit to originate through
Dealers a sufficient amount of motor vehicle retail installment sales contracts
that meet such eligibility criteria. The ability of AmeriCredit to originate
sufficient Subsequent Receivables may be affected by a variety of social and
economic factors. Economic factors include interest rates, unemployment levels,
the rate of inflation and consumer perception of economic conditions generally.
Neither AmeriCredit nor the Seller has any basis to predict whether or the
extent to which economic or social factors will affect the availability of
Subsequent Receivables. See "The Receivables" herein.
Maturity and Prepayment Assumptions
All of the Receivables are prepayable at any time. The rate of prepayments
on the Receivables may be influenced by a variety of economic, social and other
factors, including the fact that an Obligor generally may not sell or transfer
the related Financed Vehicle securing a Receivable without the consent of
AmeriCredit. (For this purpose the term "prepayments" includes prepayments in
full, certain partial prepayments related to refunds of extended service
contract costs and unearned insurance premiums, liquidations due to default,
Cram Down Losses, as well as receipts of proceeds from physical damage,
repossession loss, credit life and credit accident and health insurance policies
and certain other Receivables repurchased for administrative reasons.) The rate
of prepayment on the Receivables may also be influenced by the structure of the
loan, the nature of the Obligors and the Financed Vehicles and servicing
decisions as discussed above. In addition, under certain circumstances, the
Seller and the Servicer are obligated to purchase Receivables pursuant to the
Sale and Servicing Agreement as a result of breaches of certain covenants. The
Servicer also has the right, subject to certain conditions, to purchase the
Receivables when the Pool Balance is 10% or less of the Original Pool Balance.
Any reinvestment risks resulting from a faster or slower incidence of prepayment
of Receivables will be borne entirely by the Securityholders. See "Yield and
Prepayment Considerations".
Concentration of Receivables
As of the Initial Cutoff Date (based on Principal Balance and mailing
address of the Obligors), Obligors with respect to approximately 14.01% of the
Receivables were located in California, Obligors with respect to approximately
12.61% 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-23. 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.
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<PAGE>
Subordination of Certificates; Limited Assets
Distributions of interest and principal on the Certificates will be
subordinated in priority of payment to interest and principal due on the Notes.
Consequently, the Certificateholders will not receive any distributions with
respect to a Monthly Period until the full amount of interest and principal
payable on the Notes on such Distribution Date has been deposited in the Note
Distribution Account. The Certificateholders will not receive any distributions
of principal before the Distribution Date on which the Class A-3 Notes have been
paid in full.
If the Notes are accelerated following an Event of Default under the
Indenture, the Notes must be paid in full prior to the distribution of any
amounts on the Certificates.
The Trust will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables, the
Pre-Funding Account, the Capitalized Interest Account and the Policies. Holders
of the Notes and the Certificates must rely for repayment upon payments on the
Receivables and, if and to the extent available, amounts on deposit in the
Pre-Funding Account, the Capitalized Interest Account and payments of claims
made under the Policies. The Pre-Funded Amount on deposit in the Pre-Funding
Account will be used solely to purchase Subsequent Receivables and is not
available to cover losses on the Receivables. The Capitalized Interest Account
is designed to cover obligations of the Trust relating to that portion of its
assets not invested in Receivables and is not designed to provide protection
against losses on the Receivables. Similarly, although the Policies will be
available on each Distribution Date to cover shortfalls in distributions of the
Noteholders' Distributable Amount and the Certificateholders' Distributable
Amount on such Distribution Date, if the Insurer defaults in its obligations
under the applicable Policy, the Trust will depend on current distributions on
the Receivables and, amounts, if any, available therefor in certain collateral
accounts maintained for the benefit of the Insurer to make payments on the Notes
and the Certificates. See "The Insurer" and "The Policies" herein.
Ratings on Securities
A rating is not a recommendation to purchase, hold or sell Notes or
Certificates. The ratings of the Notes and Certificates address the likelihood
of the payment of principal and interest on the Securities pursuant to their
terms. There is no assurance that a rating will remain in effect for any given
period of time or that a rating will not be lowered or withdrawn entirely by a
Rating Agency if in its judgment circumstances in the future so warrant. In the
event that any ratings initially assigned to the Notes and the Certificates are
subsequently lowered or withdrawn for any reason, including by reason of a
downgrading of the claims-paying ability of the Insurer, no person or entity
will be obligated to provide any additional credit enhancement with respect to
the Notes or the Certificates. Any reduction or withdrawal of a rating may have
an adverse effect on the liquidity and market price of the Notes and the
Certificates.
Events of Default Under the Indenture
So long as no Insurer Default shall have occurred and be continuing,
neither the Indenture Trustee nor the Noteholders may declare an Event of
Default under the Indenture. So long as an Insurer Default shall not have
occurred and be continuing, an Event of Default will occur only upon delivery by
the Insurer to the Indenture Trustee of notice of the occurrence of certain
events of default under the Insurance Agreement. Upon the occurrence of an
Event of Default under the Indenture (so long as an Insurer Default shall not
have occurred and be continuing), the Insurer will have the right, but not the
obligation, to cause the liquidation, in whole or in part, of the Trust
Property, which will result in redemption, in whole or in part, of the Notes,
and prepayment, in whole or in part, of the Certificates. Following the
occurrence of an Event of Default, the Indenture Trustee and the Owner Trustee
will continue to submit claims under the Policies as necessary to enable the
Trust to continue to make payments of the Noteholders' Distributable Amount and
the Certificateholders' Distributable Amount on each Distribution Date.
However, following the occurrence of an Event of Default, the Insurer may elect
to pay all or any portion of the outstanding
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<PAGE>
amount of the Notes, plus accrued interest thereon, and may elect to cause the
prepayment, in whole or in part, of the Certificates.
Insolvency Considerations
The Trust Agreement provides that, in the event that the Seller becomes
insolvent, or is terminated or dissolved (a "Dissolution Event") and the Owner
Trustee is unable to obtain an opinion of counsel satisfactory to the Insurer to
the effect that the Trust will not thereafter be an association (or publicly
traded partnership) taxable as a corporation for federal income tax purposes,
the Trust will terminate in 90 days and effect redemption of the Notes and
prepayment of the Certificates following the winding-up of the affairs of the
Trust, unless within such 90 days the Certificate Owners of a majority of the
remaining principal balance of the Certificates agree in writing to continue the
business of the Trust and the Owner Trustee is able to obtain the opinion of
counsel described above. See "Description of the Trust Agreements --
Termination" in the Prospectus.
USE OF PROCEEDS
The net proceeds to be received by the Trust from the sale of the
Securities will be used to pay the Seller, and in turn, AmeriCredit or a
warehouse facility, the purchase price for the Receivables, to make the deposits
of the Pre-Funded Amount into the Pre-Funding Account and to make the initial
deposit into the Capitalized Interest Account.
THE SERVICER
The Servicer is a wholly-owned subsidiary of AmeriCredit Corp. The
Servicer was incorporated in Delaware on July 22, 1992. AmeriCredit purchases
and services automobile loans which are originated and assigned to AmeriCredit
by automobile dealers. AmeriCredit is the primary operating subsidiary of
AmeriCredit Corp., a Texas corporation the common shares of which are listed on
the New York Stock Exchange. The Servicer's executive offices are located at
200 Bailey Avenue, Fort Worth, Texas 76107-1220; telephone (817) 332-7000.
The Servicer will initially service the Receivables pursuant to the Sale
and Servicing Agreement and will be compensated for acting as the Servicer.
The Servicer will be appointed custodian for the Receivables and the
Receivables will be delivered to and held by the Servicer. Prior to delivery
of the Receivables to the Servicer, as custodian, AmeriCredit will stamp the
Receivables to reflect the sale and assignment of the Receivables to the
Issuer. AmeriCredit will not seek to have amended or re-issued the
certificates of title of the Financed Vehicles. In the absence of amendments
to the certificates of title, the Issuer may not have perfected security
interests in the Financed Vehicles securing the receivables originated in
some states, including Texas and California. See "Certain Legal Aspects of
Receivables."
THE SELLER
The Seller was incorporated in the State of Nevada in April, 1996. The
Seller is organized for the limited purpose of purchasing receivables from
AmeriCredit and transferring such receivables to third parties and any
activities incidental to and necessary or convenient for the accomplishment of
such purposes. The 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
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<PAGE>
not result in consolidation of the assets and liabilities of the Seller with
those of AmeriCredit. These steps include the creation of the Seller as a
separate, limited-purpose subsidiary pursuant to a certificate of
incorporation containing certain limitations (including restrictions on the
nature of the Seller's business, the requirement of an independent director
being on the Board of Directors of the Seller and a restriction on the
Seller's ability to commence a voluntary case or proceeding under any
Insolvency Law without the prior unanimous affirmative vote of all of its
directors). The Seller has received the advice of counsel to the effect
that, subject to certain facts, assumptions and qualifications, it would not
be a proper exercise by a court of its equitable discretion to disregard the
separate corporate existence of the Seller and to require the consolidation
of the assets and liabilities of the Seller with the assets and liabilities
of AmeriCredit in the event of the application of the federal bankruptcy laws
to AmeriCredit. Among other things, it is assumed by counsel that the Seller
will follow certain procedures in the conduct of its affairs, including
maintaining records and books of account separate from those of AmeriCredit,
refraining from commingling its assets with those of AmeriCredit and
refraining from holding itself out as having agreed to pay, or being liable
for, the debts of AmeriCredit. The Seller intends to follow and has
represented to such counsel that it will follow these and other procedures
related to maintaining its separate corporate identity. However, in the
event that the Seller did not follow these procedures, there can be no
assurance that a court would not conclude that the assets and liabilities of
the Seller should be consolidated with those of AmeriCredit. If a court were
to reach such a conclusion, or a filing were made under any Insolvency Law by
or against the Seller, or if an attempt were made to litigate any of the
foregoing issues, delays in distributions on the Securities (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-A, is a business
trust formed under the laws of the State of Delaware pursuant to the Trust
Agreement for the transactions described in this Prospectus Supplement. After
its formation, the Trust will not engage in any activity other than
(i) acquiring, holding and managing the Receivables and the other assets of the
Trust and proceeds therefrom, (ii) issuing the Notes and the Certificates,
(iii) making payments on the Notes and the Certificates and (iv) engaging in
other activities that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith.
The Trust will initially be capitalized with equity equal to $7,875,000.
Certificates with an aggregate original Certificate Balance of $78,750 will be
sold to the Seller, and Certificates representing the remainder of the aggregate
original Certificate Balance will be sold to third party investors that are
expected to be unaffiliated with the Seller, the Servicer or their affiliates.
The equity of the Trust, together with the proceeds of the initial sale of the
Notes, will be used by the Trust to purchase the Initial Receivables from the
Seller pursuant to the Sale and Servicing Agreement and to fund the deposits in
the Pre-Funding Account, certain collateral accounts maintained for the benefit
of the Insurer and, the Capitalized Interest Account.
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."
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<PAGE>
The Owner Trustee
Bankers Trust (Delaware) is the Owner Trustee under the Trust Agreement, is
a Delaware banking corporation and its principal offices are located at 1001
Jefferson Street, Suite 550, Wilmington, Delaware 19801. The Owner Trustee will
perform limited administrative functions under the Trust Agreement. The Owner
Trustee's liability in connection with the issuance and sale of the Certificates
and the Notes is limited solely to the express obligations of the Owner Trustee
set forth in the Trust Agreement and the Sale and Servicing Agreement.
The Indenture Trustee
LaSalle National Bank is the Indenture Trustee under the Indenture.
LaSalle National Bank is a national banking association, the principal offices
of which are located at 135 South LaSalle Street, Chicago, Illinois 60674.
THE TRUST PROPERTY
The Trust Property will include, among other things, the following:
(a) motor vehicle retail installment sale contracts secured by new and used
vehicles, light trucks and vans; (b) 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; (i) the Certificate Policy; and (j) certain other rights
under the Trust Documents.
The Initial Receivables were, and the Subsequent Receivables were or will
be, originated by Dealers in accordance with AmeriCredit's requirements under
agreements with Dealers for assignment to AmeriCredit, have been or will be so
assigned, and evidence or will evidence the indirect financing made available to
the Obligors. Dealer Agreements may provide for repurchase or recourse against
the Dealer in the event of a breach of a representation or warranty by the
Dealer under a Dealer Agreement.
The "Pool Balance" at any time represents the aggregate Principal Balance
of the Receivables at the end of the preceding Monthly Period (plus the amount,
if any, then on deposit in the Pre-Funding Account on such date), after giving
effect to all payments received from Obligors and any Purchase Amounts to be
remitted by AmeriCredit or the Seller, for such Monthly Period and all losses,
including Cram Down Losses, realized on Receivables liquidated during such
Monthly Period.
Each Certificate will represent a fractional undivided interest in the
Trust Property. Pursuant to the Indenture, the Trust will grant a security
interest in the Trust Property (other than the Certificate Distribution
Account and Certificate Policy) in favor of the Trust Collateral Agent for
the benefit of the Indenture Trustee on behalf of the Noteholders and for the
benefit of the Insurer in support of the obligations owing to it under the
Insurance Agreement. Any proceeds of such security interest in the Trust
Property would be distributed according to the Indenture, as described below
under "Description of the Purchase Agreements and the Trust Documents --
Distributions." The Insurer would be entitled to such distributions only
after payment of amounts owing to, among others, holders of the Notes and
Certificates.
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<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 Obligor's purchases of used autos. Of the Contracts purchased
by AmeriCredit during the year ended June 30, 1996, approximately 77% were
originated by manufacturer-franchised Dealers with used auto operations and 23%
by independent Dealers specializing in used auto sales; of the Contracts
purchased in the six months ended December 31, 1996, the respective percentages
were 83% and 17%. AmeriCredit purchased Contracts from 3,262 Dealers during the
year ended June 30, 1996 and from 3,299 Dealers during the six months ended
December 31, 1996.
Contracts are generally purchased by AmeriCredit without recourse to the
Dealer, and accordingly, the Dealer usually has no liability to AmeriCredit if
the consumer defaults on the Contract. To mitigate AmeriCredit's risk from
potential credit losses, AmeriCredit typically charges the Dealers an
acquisition fee when purchasing Contracts. Such acquisition fees are negotiated
with Dealers on a contract-by-contract basis and are usually non-refundable.
Although Contracts are purchased without recourse to Dealers, Dealers typically
make certain representations as to the validity of the contract and compliance
with certain laws, and indemnify AmeriCredit against any claims, defenses and
set-offs that may be asserted against AmeriCredit because of assignment of the
Contract.
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As of January 31, 1997, AmeriCredit operated 69 branch offices in 28 states
as reflected in the following table:
STATE CITY STATE CITY
Arizona Phoenix New Jersey Marlton
Tucson Paramus
California San Jose New Mexico Albuquerque
San Francisco
Concord
Fresno
Los Angeles
San Diego
Stockton
Sacramento
Colorado Colorado Springs North Carolina Charlotte
Denver Raleigh-Durham
Winston-Salem
Florida Tampa Ohio Akron
Ft. Lauderdale Columbus
Jacksonville Cleveland
Orlando Cincinnati
Dayton
Georgia Atlanta (3) Oklahoma Oklahoma City
Illinois Chicago (4) Oregon Portland
Springfield
Indiana Indianapolis Pennsylvania Pittsburgh
Philadelphia
Kentucky Louisville Rhode Island Providence
Maryland Baltimore (2) South Carolina Columbia
Charleston
Massachusetts Boston Tennessee Nashville
Memphis
Michigan Detroit (2) Texas Dallas-Fort Worth
Grand Rapids Houston
San Antonio
Austin
Missouri Kansas City Utah Salt Lake City
St. Louis (2)
Minnesota Minneapolis Virginia Vienna
Newport News
Norfolk
Richmond
Fredricksburg
Nevada Las Vegas Washington Seattle
Tacoma
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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 33.00%; (v) no Initial Receivable was more than 30 days
past due as of the Cutoff Date and (vi) no funds have been advanced by
AmeriCredit, any Dealer, or anyone acting on behalf of any of them in order to
cause any Initial Receivable to qualify under clause (v) above.
During the Funding Period, the Seller is obligated to purchase from
AmeriCredit and to sell to the Trust the Subsequent Receivables. The aggregate
Principal Balance of the Subsequent Receivables is anticipated by AmeriCredit to
equal approximately $56,164,777.29. The Seller will convey the Subsequent
Receivables to the Trust on the related Subsequent Transfer Date. In connection
with each purchase of Subsequent Receivables the Trust will be required to pay
to the Seller a cash purchase price equal to the outstanding Principal Balance
of the Subsequent Receivables as of their respective Subsequent Cutoff Dates,
which price the Seller will pay to AmeriCredit. The purchase price will be
withdrawn from the Pre-Funding Account and paid to the Seller for payment to
AmeriCredit.
Any conveyance of Subsequent Receivables is subject to the following
conditions, among others: (i) each such Subsequent Receivable and/or Subsequent
Financed Vehicle must satisfy the eligibility criteria specified under "The
Receivables" in the Prospectus and the criteria set forth in clauses
(i) through (v) of the second preceding paragraph, in each case, as of the
respective Subsequent Cutoff Date of such Subsequent Receivable; (ii) the
Insurer (so longas no Insurer Default shall have occurred and be continuing)
S-20
<PAGE>
shall have approved the transfer of such Subsequent Receivables to the Trust;
(iii) neither AmeriCredit nor the Seller will have selected such Subsequent
Receivables in a manner that either believes is adverse to the interests of
the Insurer or the Securityholders; (iv) AmeriCredit and the Seller will
deliver certain opinions of counsel with respect to the validity of the
conveyance of such Subsequent Receivables; and (v) the Rating Agencies shall
confirm that the ratings on the Securities have not been withdrawn or reduced
as a result of the transfer of such Subsequent Receivables to the Trust.
Because the Subsequent Receivables may be 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 55 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 in this Prospectus Supplement,
including the summary statistical information set forth below, is based on the
Initial Receivables as of February 24, 1997 (the "Initial Cutoff Date").
S-21
<PAGE>
The composition and distribution by APR and geographic concentration of the
Initial Receivables Pool as of the Initial Cutoff Date are set forth in the
following table:
Composition of the Initial Receivables as of the Initial Cutoff Date
<TABLE>
<S> <C> <C> <C>
New Used Total
---------------------- ---------------------- ----------------
Aggregate Principal Balance(1) $27,525,832.43 $141,309,390.28 $168,835,222.71
Number of Receivables 1,863 12,511 14,374
Percent of Aggregate Principal 16.30% 83.70%
Balance
Average Principal Balance $14,775.00 $11,294.81 $11,745.88
Range of Principal Balances ($359.78 to $29,699.12) ($418.39 to $29,655.72)
Weighted Average APR(1) 18.49% 19.97% 19.73%
Range of APRs (14.25% to 28.00%) (14.25% to 30.00%)
Weighted Average Remaining Term 58 months 53 months 53 months
Range of Remaining Terms (32 to 60 months) (9 to 60 months)
Weighted Average Original Term 60 months 55 months 55 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 Initial Cutoff Date
<TABLE>
<S> <C> <C> <C> <C>
Aggregate % of Aggregate Number of % of Total Number
APR Range Principal Balance(1) Principal Balance(2) Receivables of Receivables(2)
--------- -------------------- -------------------- ----------- -----------------
14.250% to 14.999% $3,647,528.54 2.16% 237 1.65%
15.000 to 15.999 7,674,065.96 4.55 501 3.49
16.000 to 16.999 7,170,147.10 4.25 511 3.56
17.000 to 17.999 18,859,092.87 11.17 1,385 9.64
18.000 to 18.999 34,976,785.38 20.72 2,753 19.15
19.000 to 19.999 16,113,183.70 9.54 1,302 9.06
20.000 to 20.999 25,452,300.44 15.08 2,144 14.92
21.000 to 21.999 25,373,766.43 15.03 2,433 16.93
22.000 to 22.999 10,066,244.16 5.96 977 6.80
23.000 to 23.999 9,440,838.59 5.59 950 6.61
24.000 to 24.999 5,420,596.32 3.21 566 3.94
25.000 to 25.999 2,986,297.22 1.77 381 2.65
26.000 to 26.999 1,270,427.85 0.75 175 1.22
27.000 to 27.999 192,795.21 0.11 27 0.19
28.000 to 28.999 120,656.75 0.07 20 0.14
29.000 to 29.999 50,086.21 0.03 8 0.06
30.000 to 30.999 20,409.98 0.01 4 0.03
-------------------- --------- --------- --------
TOTAL $168,835,222.71 100.00% 14,374 100.00%
</TABLE>
(1)Aggregate Principal Balances include some portion of accrued interest.
(2)Percentages may not add to 100% because of rounding.
S-22
<PAGE>
Distribution of the Initial Receivables by Geographic Location of Obligor
as of the Initial Cutoff Date
<TABLE>
<S> <C> <C> <C> <C>
Aggregate % of Aggregate Number of % of Total Number
State Principal Balance(1) Principal Balance(2) Receivables of Receivables(2)
- ----------------- -------------------- -------------------- ----------- -----------------
California $23,656,583.58 14.01% 1,949 13.56%
Texas 21,295,614.05 12.61 1,763 12.27
Ohio 11,067,942.53 6.56 1,011 7.03
Florida 10,237,397.03 6.06 840 5.84
Virginia 9,277,126.63 5.49 771 5.36
Illinois 9,065,753.88 5.37 800 5.57
Arizona 8,936,824.49 5.29 751 5.22
North Carolina 8,798,938.21 5.21 712 4.95
Washington 6,952,572.09 4.12 609 4.24
Georgia 6,883,938.93 4.08 532 3.70
Maryland 5,016,018.05 2.97 408 2.84
Michigan 4,642,570.73 2.75 390 2.71
New Jersey 4,203,140.98 2.49 372 2.59
Nevada 4,086,322.96 2.42 345 2.40
Tennessee 3,966,204.96 2.35 323 2.25
Missouri 3,530,801.14 2.09 326 2.27
Massachusetts 2,926,467.85 1.73 269 1.87
Pennsylvania 2,557,187.47 1.51 229 1.59
Oklahoma 2,430,221.43 1.44 220 1.53
Colorado 2,155,698.08 1.28 217 1.51
South Carolina 2,135,285.61 1.26 178 1.24
Kentucky 1,870,242.08 1.11 176 1.22
Oregon 1,663,151.15 0.99 144 1.00
Utah 1,605,512.95 0.95 152 1.06
Other(3) 9,873,705.85 5.85 887 6.17
-------------- -------- -------- ---------
TOTAL $168,835,222.71 100.00% 14,374 100.00%
</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-23
<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 Securityholders.
The rate of payment of principal of each Class of Notes and in respect of
the Certificate Balance will depend on the rate of payment (including
prepayments) of the Principal Balance of the Receivables. As a result, final
payment of any Class of Notes could occur significantly earlier than the
Final Scheduled Distribution Date for such Class of Notes. The final
distribution in respect of principal of the Certificates also could occur
prior to the Final Scheduled Distribution Date for the Certificates.
Reinvestment risk associated with early payment of the Notes and the
Certificates will be borne exclusively by the Noteholders and the
Certificateholders, respectively.
Prepayments on automobile receivables can be measured relative to a
prepayment standard or model. The model used in this Prospectus Supplement,
the Absolute Prepayment Model ("ABS"), represents an assumed rate of
prepayment each month relative to the original number of receivables in a
pool of receivables. ABS further assumes that all the receivables are the
same size and amortize at the same rate and that each receivable in each
month of its life will either be paid as scheduled or be prepaid in full.
For example, in a pool of receivables originally containing 10,000
receivables, a 1% ABS rate means that 100 receivables prepay each month. ABS
does not purport to be an historical description of prepayment experience or
a prediction of the anticipated rate of prepayment of any pool of
receivables, including the Receivables.
The table captioned "Percent of Initial Note Principal Balance or Initial
Certificate Balance at Various ABS Percentages" (the "ABS Table") has been
prepared on the basis of the following assumptions: (i) the Trust includes
two pools of Receivables with the characteristics set forth in the following
table; (ii) the Receivables prepay in full
S-24
<PAGE>
at the specified constant percentage of ABS monthly, with no defaults, losses
or repurchases; (iii) each scheduled monthly payment on the Receivables is
made on the last day of each month and each month has 30 days; (iv) the
initial principal amount of each Class of Notes and the initial Certificate
Balance are as set forth on the cover page hereof; (v) interest accrues
during each Interest Period at the following assumed coupon rates: Class A-1
Notes, 5.542%; Class A-2 Notes, 5.5175%; Class A-3 Notes, 6.500%; and
Certificates, 6.710%; (vi) LIBOR remains constant at 5.4375% per annum; (vii)
payments on the Notes and distributions on the Certificates are made on the
12th day of each month whether or not a Business Day; (viii) the Securities
are purchased on the Closing Date; (ix) the scheduled monthly payment for
each 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; (x) the first due
date for each Receivable is in the month after the assumed cutoff date for
such Receivable as set forth in the following table; (xi) the entire
Pre-Funded Amount is used to purchase Subsequent Receivables; (xii) the
Servicer does exercise its option to purchase the Receivables; (xiii)
Accelerated Principal Amounts are paid on each Distribution Date until the
later of the first Distribution Date on which the Pro Forma Security Balance
reaches the Required Pro Forma Security Balance and the Class A-1 Notes are
paid in full; and (xiv) 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.
Remaining
Aggregate Original Term Term
Principal Gross Assumed Cutoff to Maturity to Maturity
Pool Balance APR Date (in Months) (in Months)
- ---- --------- ----- -------------- ------------- -----------
1 $168,835,222.71 19.73% 2/24/1997 55 53
2 $56,164,777.29 19.73% 3/31/1997 55 54
Total $225,000,000.00
---------------
---------------
The ABS Table indicates, based on the assumptions set forth above, the
percentages of the initial principal amount of each Class of Notes and of the
Certificate Balance of the Certificates that would be outstanding after each
of the Distribution Dates shown at various percentages of ABS and the
corresponding weighted average lives of such Securities. The actual
characteristics and performance of the Receivables will differ from the
assumptions used in constructing the ABS Table. The assumptions used are
hypothetical and have been provided only to give a general sense of how the
principal cash flows might behave under varying prepayment scenarios. For
example, it is very unlikely that the Receivables will prepay at a constant
level of ABS until maturity, that all of the Receivables will prepay at the
same level of ABS or that LIBOR will remain constant at the level assumed or
at any other level. Moreover, the diverse terms of Receivables could produce
slower or faster principal distributions than indicated in the ABS Table at
the various constant percentages of ABS specified, even if the original and
remaining terms to maturity of the Receivables are as assumed. Any
difference between such assumptions and the actual characteristics and
performance of the Receivables, 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 and the Certificates.
S-25
<PAGE>
Percent of Initial Note Principal Balance or
Initial Certificate Balance at Various ABS Percentages(1)
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%
- ----------------- ---- ---- ---- ---- ---- ---- ---- ----
Initial 100 100 100 100 100 100 100 100
4/12/97 94 91 89 87 100 100 100 100
5/12/97 85 78 73 67 100 100 100 100
6/12/97 77 66 58 49 100 100 100 100
7/12/97 68 54 43 32 100 100 100 100
8/12/97 60 42 29 15 100 100 100 100
9/12/97 52 31 16 0 100 100 100 99
10/12/97 44 20 2 0 100 100 100 88
11/12/97 36 9 0 0 100 100 93 77
12/12/97 27 0 0 0 100 98 84 68
1/12/98 19 0 0 0 100 92 78 61
2/12/98 11 0 0 0 100 87 71 53
3/12/98 2 0 0 0 100 82 65 45
4/12/98 0 0 0 0 100 77 59 38
5/12/98 0 0 0 0 99 72 53 31
6/12/98 0 0 0 0 95 68 47 24
7/12/98 0 0 0 0 92 63 42 17
8/12/98 0 0 0 0 88 58 36 10
9/12/98 0 0 0 0 85 53 30 4
10/12/98 0 0 0 0 81 48 25 0
11/12/98 0 0 0 0 77 44 19 0
12/12/98 0 0 0 0 74 39 14 0
1/12/99 0 0 0 0 70 34 9 0
2/12/99 0 0 0 0 66 30 4 0
3/12/99 0 0 0 0 62 25 0 0
4/12/99 0 0 0 0 58 20 0 0
5/12/99 0 0 0 0 54 16 0 0
6/12/99 0 0 0 0 49 11 0 0
7/12/99 0 0 0 0 45 7 0 0
8/12/99 0 0 0 0 41 3 0 0
9/12/99 0 0 0 0 37 0 0 0
10/12/99 0 0 0 0 32 0 0 0
11/12/99 0 0 0 0 28 0 0 0
12/12/99 0 0 0 0 23 0 0 0
1/12/00 0 0 0 0 18 0 0 0
2/12/00 0 0 0 0 13 0 0 0
3/12/00 0 0 0 0 9 0 0 0
4/12/00 0 0 0 0 4 0 0 0
5/12/00 0 0 0 0 0 0 0 0
6/12/00 0 0 0 0 0 0 0 0
7/12/00 0 0 0 0 0 0 0 0
8/12/00 0 0 0 0 0 0 0 0
9/12/00 0 0 0 0 0 0 0 0
10/12/00 0 0 0 0 0 0 0 0
11/12/00 0 0 0 0 0 0 0 0
12/12/00 0 0 0 0 0 0 0 0
1/12/01 0 0 0 0 0 0 0 0
2/12/01 0 0 0 0 0 0 0 0
3/12/01 0 0 0 0 0 0 0 0
4/12/01 0 0 0 0 0 0 0 0
5/12/01 0 0 0 0 0 0 0 0
Weighted Average
Life in Years (2) 0.56 0.41 0.34 0.29 2.25 1.61 1.27 1.01
- ------------------
(1) The percentages in this table have been rounded to nearest whole number.
(2) The weighted average life of a Security is determined by (i) multiplying
the amount of each principal payment on a Security by the number of years
from the date of the issuance of the Security to the related Distribution
Date, (ii) adding the results and (iii) dividing the sum by the related
initial principal amount of the Security.
S-26
<PAGE>
Percent of Initial Note Principal Balance or
Initial Certificate Balance at Various ABS Percentages (1)
Class A-3 Notes Certificates
------------------------ -------------------------
Distribution Date 0.0% 1.0% 1.7% 2.5% 0.0% 1.0% 1.7% 2.5%
- ----------------- ---- ---- ---- ---- ---- ---- ---- ----
Initial 100 100 100 100 100 100 100 100
4/12/97 100 100 100 100 100 100 100 100
5/12/97 100 100 100 100 100 100 100 100
6/12/97 100 100 100 100 100 100 100 100
7/12/97 100 100 100 100 100 100 100 100
8/12/97 100 100 100 100 100 100 100 100
9/12/97 100 100 100 100 100 100 100 100
10/12/97 100 100 100 100 100 100 100 100
11/12/97 100 100 100 100 100 100 100 100
12/12/97 100 100 100 100 100 100 100 100
1/12/98 100 100 100 100 100 100 100 100
2/12/98 100 100 100 100 100 100 100 100
3/12/98 100 100 100 100 100 100 100 100
4/12/98 100 100 100 100 100 100 100 100
5/12/98 100 100 100 100 100 100 100 100
6/12/98 100 100 100 100 100 100 100 100
7/12/98 100 100 100 100 100 100 100 100
8/12/98 100 100 100 100 100 100 100 100
9/12/98 100 100 100 100 100 100 100 100
10/12/98 100 100 100 96 100 100 100 100
11/12/98 100 100 100 89 100 100 100 100
12/12/98 100 100 100 81 100 100 100 100
1/12/99 100 100 100 74 100 100 100 100
2/12/99 100 100 100 67 100 100 100 100
3/12/99 100 100 98 60 100 100 100 100
4/12/99 100 100 92 53 100 100 100 100
5/12/99 100 100 86 47 100 100 100 100
6/12/99 100 100 80 41 100 100 100 100
7/12/99 100 100 75 35 100 100 100 100
8/12/99 100 100 69 29 100 100 100 100
9/12/99 100 98 64 24 100 100 100 100
10/12/99 100 92 58 18 100 100 100 100
11/12/99 100 87 53 0 100 100 100 0
12/12/99 100 82 48 0 100 100 100 0
1/12/00 100 77 43 0 100 100 100 0
2/12/00 100 71 39 0 100 100 100 0
3/12/00 100 66 34 0 100 100 100 0
4/12/00 100 61 30 0 100 100 100 0
5/12/00 98 56 26 0 100 100 100 0
6/12/00 92 51 22 0 100 100 100 0
7/12/00 86 47 18 0 100 100 100 0
8/12/00 79 42 0 0 100 100 0 0
9/12/00 73 37 0 0 100 100 0 0
10/12/00 66 32 0 0 100 100 0 0
11/12/00 59 28 0 0 100 100 0 0
12/12/00 52 23 0 0 100 100 0 0
1/12/01 45 19 0 0 100 100 0 0
2/12/01 38 0 0 0 100 0 0 0
3/12/01 31 0 0 0 100 0 0 0
4/12/01 23 0 0 0 100 0 0 0
5/12/01 0 0 0 0 0 0 0 0
Weighted Average
Life in Years(2) 3.79 3.31 2.78 2.18 4.17 3.92 3.42 2.67
- -----------------------
(1) The percentages in this table have been rounded to nearest whole number.
(2) The weighted average life of a Security is determined by (i) multiplying
the amount of each principal payment on a Security by the number of years
from the date of the issuance of the Security to the related Distribution
Date, (ii) adding the results and (iii) dividing the sum by the related
initial principal amount of the Security.
S-27
<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 December 31, At June 30,
---------------------------------------- ------------------------------------------------------------
1996 1995 1996 1995 1994
----------------- ----------------- ---------------- ----------------- -------------------
Number Amount Number Number Number
of of of of of
Contracts Amount Contracts Amount Contracts Amount Contracts Amount Contracts Amount
--------- ------ --------- ------ --------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio at end of
period(1) 80,339 $761,716 42,675 $340,430 59,913 $523,981 30,941 $240,491 9,375 $67,636
Period of Delinquency(2)
31-60 days(3) 5,914 $52,476 3,160 $24,514 3,886 $31,723 1,276 $9,692 235 $1,600
61-90 days 1,766 $15,250 1,061 $8,025 1,215 $9,959 452 $3,391 87 $560
91 days or more 3,010 $25,337 1,583 $11,486 1,696 $13,631 528 $3,271 110 $709
------ ------- ----- ------- ----- ------- ----- ------- ---- ------
Total Delinquencies(4) 10,690 $93,063 5,804 $44,025 6,797 $55,313 2,256 $16,354 432 $2,869
Total Delinquencies as a
Percent of the
Portfolio 13.3% 12.2% 13.6% 12.9% 11.3% 10.6% 7.3% 6.8% 4.6% 4.2%
</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-28
<PAGE>
Credit Loss Experience
-------------------------------------------------------
Six Months Ended
December 31, Fiscal Year Ended June 30,
------------------- ----------------------------
1996 1995 1996 1995 1994
---- ---- ---- ---- ----
Period-End Principal
Outstanding(1) $761,716 $340,430 $523,981 $240,491 $67,636
Average Month-End
Amount Outstanding
During the Period(1) $701,731 $288,477 $357,966 $141,526 $37,507
Net Charge-Offs(2) $17,749 $8,215 $19,974 $6,409 $1,432
Net Charge-Offs as
a Percentage of
Period-End Principal
Outstanding(3) 4.7% 4.8% 3.8% 2.7% 2.1%
Net Charge-Offs as a
Percent of Average
Month-End Amount
Outstanding(3) 5.1% 5.7% 5.6% 4.5% 3.8%
- ------------------------
(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.
(3) Percentages were annualized for the six months ended December 31, 1996 and
1995, and are not necessarily indicative of results for the year.
S-29
<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, Nippon Investors Service Inc. and Standard & Poor's
(Australia) Pty. Ltd. Such ratings reflect only the views of the respective
rating agencies, are not recommendations to buy, sell or hold securities and
are subject to revision or withdrawal at any time by such rating agencies.
See "Risk Factors -- Ratings on Securities" herein.
S-30
<PAGE>
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 September 30, 1996 (in thousands):
September
30, 1996
(Unaudited)
-----------
Deferred Premium Revenue (net of prepaid reinsurance premiums) $ 358,145
Shareholder's Equity:
Common Stock 15,000
Additional Paid-In Capital 666,470
Unrealized Gain on Investments (net of deferred income taxes) 2,482
Accumulated Earnings 111,231
----------
Total Shareholder's Equity 795,183
----------
Total Deferred Premium Revenue and Shareholder's Equity $1,153,328
----------
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 Policies are not covered by the Property/Casualty Insurance Security
Fund specified in Article 76 of the New York Insurance Law.
S-31
<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
Securities -- Book-Entry Registration" in the Prospectus and Annex I hereto.
Payments of Interest
Interest on the principal amount of each Class of Notes will accrue at
the applicable Interest Rate and will be payable to the Noteholders of such
Class monthly on each Distribution Date, commencing April 14, 1997. Interest
will accrue from and including the most recent Distribution Date on which
interest has been paid (or, in the case of the first Distribution Date, from
and including the Closing Date) to but excluding the following Distribution
Date (each, an "Interest Period"). Interest on the Class A-1 Notes and the
Class A-2 Notes will be calculated on the basis of a 360-day year and the
actual number of days elapsed in the related Interest Period. Interest on
the Class A-3 Notes will be calculated on the basis of a 360-day year
consisting of twelve 30-day months. Interest accrued as of any Distribution
Date but not paid on such Distribution Date will be due on the next
Distribution Date, together with, to the extent permitted by law, interest on
such amount at the applicable Interest Rate. Interest payments on the Notes
will be made from the Note Distribution Amount (as defined herein) after
payment of accrued and unpaid trustees' fees and other administrative fees of
the Trust and payment of the Servicing Fee. See "Description of the Purchase
Agreements and the Trust Documents --Distributions" herein.
Interest on the Class A-2 Notes will accrue during each Interest Period
at a rate per annum equal to the sum of LIBOR plus ____%, subject to a
maximum rate equal to 12% per annum. In the event that the interest rate for
the Class A-2 Notes for any Interest Period calculated without giving effect
to the maximum rate would exceed the interest rate for such Interest Period
after giving effect to the maximum rate, the amount of such excess will not
be due as additional interest to the Class A-2 Noteholders on the related
Distribution Date, nor will it be carried forward and payable as additional
interest to the Class A-2 Noteholders on any subsequent Distribution Date.
In addition to the foregoing, any accrued and unpaid interest on the Class
A-1 Notes will be due and payable on the Class A-1 Final Scheduled
Distribution Date.
Determination of LIBOR
Pursuant to the Indenture, the Indenture Trustee will determine LIBOR for
purposes of calculating the Interest Rate for the Class A-2 Notes for each
given Interest Period on the second business day prior to the commencement of
each Interest Period (each, a "LIBOR Determination Date"). For purposes of
calculating LIBOR, a business day means a Business Day and a day on which
banking institutions in the City of London, England are not required or
authorized by law to be closed.
"LIBOR" means, with respect to any Interest Period, the London interbank
offered rate for deposits in U.S. dollars having a maturity of one month
commencing on the related LIBOR Determination Date (the "Index Maturity")
which appears on Telerate Page 3750 as of 11:00 a.m., London time, on such
LIBOR Determination Date. If such rate does not appear on the Telerate Page
3750, the rate for that day will be determined on the basis of the rates at
which deposits in U.S. dollars, having the Index Maturity and in a principal
amount of not less than U.S.
S-32
<PAGE>
$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 Indenture Trustee will request the principal London
office of each of such Reference Banks to provide a quotation of its rate.
If at least two such quotations are provided, the rate for that day will be
the arithmetic mean, rounded upward, if necessary, to the nearest 1/100,000
of 1% (0.0000001), with five one-millionths of a percentage point rounded
upward, of all such quotations. If fewer than two such quotations are
provided, the rate for that day will be the arithmetic mean, rounded upward,
if necessary, to the nearest 1/100,000 of 1% (0.0000001), with five
one-millionths of a percentage point rounded upward, of the offered per annum
rates that one or more leading banks in New York City, selected by the
Indenture Trustee, are quoting as of approximately 11:00 a.m., New York City
time, on such LIBOR Determination Date to leading European banks for United
States dollar deposits for the Index Maturity; provided that if the banks
selected as aforesaid are not quoting as mentioned in this sentence, LIBOR in
effect for the applicable Interest Period will be LIBOR in effect for the
previous Interest Period.
"Telerate Page 3750" means the display page so designated on the Dow
Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
"Reference Banks" means four major banks in the London interbank market
selected by the Indenture Trustee.
Payments of Principal
Principal payments will be made to the Noteholders on each Distribution
Date in an amount equal to the Noteholders' Principal Distributable Amount
and the Noteholders' Accelerated Principal Amount, if any, for the calendar
month (the "Monthly Period") preceding such Distribution Date. The
Noteholders' Principal Distributable Amount will equal the sum of (x) the
Noteholders' Percentage of the Principal Distributable Amount and (y) any
unpaid portion of the amount described in clause (x) with respect to a prior
Distribution Date. The "Principal Distributable Amount" with respect to any
Distribution Date will be an amount equal to the sum of the following amounts
with respect to the related Monthly Period, computed in accordance with the
simple interest method: (i) collections on Receivables (other than Liquidated
and Purchased Receivables) allocable to principal, including full and partial
principal prepayments, (ii) the Principal Balance of all Receivables (other
than Purchased Receivables) that became Liquidated Receivables during the
related Monthly Period, (iii) (A) the portion of the Purchase Amount
allocable to principal of all Receivables that became Purchased Receivables
as of the immediately preceding Record Date and (B) at the option of the
Insurer, the outstanding Principal Balance of those Receivables that were
required to be repurchased by the Seller and/or AmeriCredit during such
Monthly Period but were not so repurchased and (iv) the aggregate amount of
Cram Down Losses during such Monthly Period. In addition to the foregoing,
any remaining outstanding principal on the Class A-1 Notes will be due and
payable on the Class A-1 Final Scheduled Distribution Date. Principal
payments on the Notes will be made from the Distribution Amount after payment
of accrued and unpaid trustees' fees and other administrative fees of the
Trust, payment of the Servicing Fee and after distribution of the
Noteholders' Interest Distributable Amount. See "Description of the Purchase
Agreements and the Trust Documents -- Distributions" herein.
The Noteholders' Percentage will be 100% until the Class A-3 Notes have
been paid in full and thereafter will be zero. Principal payments on the
Notes will be applied on each Distribution Date sequentially, to the Class
A-1 Notes, the Class A-2 Notes and the Class A-3 Notes, in that order, until
the respective principal amount of each such Class of Notes has been paid in
full so that no principal will be paid on a Class of Notes until the
principal of all Classes of Notes having a lower numerical Class designation
has been paid in full. In addition, the outstanding principal amount of the
Notes of any Class, to the extent not previously paid, will be payable on the
respective Final Scheduled Distribution Date for such Class. The actual date
on which the aggregate outstanding principal amount of any Class of Notes is
paid may be earlier than the Final Scheduled Distribution Date for such
Class, depending on a variety of factors.
S-33
<PAGE>
Mandatory Redemption
Each Class of Notes will be redeemed in part on the Mandatory Redemption
Date in the event that any portion of the Pre-Funded Amount remains on
deposit in the Pre-Funding Account at the end of the Funding Period. The
aggregate principal amount of each Class of Notes to be redeemed will be an
amount equal to such Class's pro rata share (based on the respective current
principal amount of each Class of Notes and the Certificate Balance) of the
remaining Pre-Funded Amount on such date (such Class's "Note Prepayment
Amount"); 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 either of the Policies; (ii) certain events of bankruptcy, insolvency,
receivership or liquidation of the Trust; (iii) the Trust becoming taxable as
an association (or publicly traded partnership) taxable as a corporation for
federal or state income tax purposes; (iv) on any Distribution Date, the sum
of the Available Funds with respect to such Distribution Date plus the amount
(if any) available from certain collateral accounts maintained for the
benefit of the Insurer being less than the sum of the amounts described in
clauses 1-7 under "Description of the Purchase Agreements and the Trust
Documents -- Distributions" herein; and (v) any failure to observe or perform
in any material respect any other covenants or agreements in the Indenture,
or any representation or warranty of the Trust made in the Indenture or in
any certificate or other writing delivered pursuant thereto or in connection
therewith proving to have been incorrect in any material respect when made,
and such failure continuing or not being cured, or the circumstance or
condition in respect of which such misrepresentation or warranty was
incorrect not having been eliminated or otherwise cured, for 30 days after
the giving of written notice of such failure or incorrect representation or
warranty to the Trust and the Indenture Trustee by the Insurer.
Upon the occurrence of an Event of Default, so long as an Insurer Default
shall not have occurred and be continuing, the Insurer will have the right,
but not the obligation, to cause the Trust Collateral Agent to liquidate the
Trust Property in whole or in part, on any date or dates following the
acceleration of the Notes due to such Event of Default as the Insurer, in its
sole discretion, shall elect, and to deliver the proceeds of such liquidation
to the Indenture Trustee for distribution in accordance with the terms of the
Indenture. The Insurer may not, however, cause the Trust Collateral Agent to
liquidate the Trust Property in whole or in part if the proceeds of such
liquidation would not be sufficient to pay all outstanding principal of and
accrued interest on the Notes, unless such Event of Default arose from a
claim being made on the Note Policy or from certain events of bankruptcy,
insolvency, receivership or liquidation of the Trust. Following the
occurrence of any Event of Default, the Indenture Trustee and the Owner
Trustee will continue to submit claims under the Policies for any shortfalls
in the Scheduled Payments on the Notes and the Guaranteed Distributions on
the Certificates. Following any Event of Default under the Indenture, the
Insurer may elect to pay all or any portion of the outstanding amount of the
Notes, plus accrued interest thereon. See "The Policies" herein.
S-34
<PAGE>
DESCRIPTION OF THE CERTIFICATES
General
The Certificates will be issued pursuant to the terms of the Trust
Agreement, a form of which has been filed as an exhibit to the Registration
Statement. The following summary describes certain terms of the Certificates
and the Trust Agreement. The summary does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all the provisions
of the Certificates and the Trust Agreement. The following summary
supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Certificates of any
given series and the related Trust Agreement set forth in the Prospectus, to
which description reference is hereby made.
The Certificates will be offered for purchase in denominations of $1,000
and integral multiples thereof in book-entry form only. Persons acquiring
beneficial interests in the Certificates will hold their interest through
DTC. See "Description of the Securities -- Book-Entry Registration" in the
Prospectus. Distributions of Interest
Interest on the Certificate Balance immediately prior to a Distribution
Date will accrue at the Certificate Rate for the related Interest Period, and
will be distributable to Certificateholders of record on each Distribution
Date, commencing April 14, 1997. Interest for each Interest Period will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Interest distributions due for any Distribution Date but not distributed on
such Distribution Date will be due on the next Distribution Date together
with, to the extent permitted by law, interest on such amount at the
Certificate Rate. Interest distributions with respect to the Certificates
will be made from the Distribution Amount after the payment of accrued and
unpaid trustees' fees and other administrative fees of the Trust, the payment
of the Servicing Fee and the distribution of the Noteholders' Distributable
Amount. See "Description of the Purchase Agreements and the Trust Documents
- -- Distributions" herein.
Distributions of Principal
Certificateholders will be entitled to distributions of principal on each
Distribution Date on or after the date on which the Class A-3 Notes have been
paid in full in an amount equal to the Certificateholders' Percentage of the
Principal Distributable Amount, as defined under "Description of the Notes
- --Payments of Principal" and the Certificateholders' Accelerated Principal
Amount, if any; provided, however, that the amount distributable as principal
on the Distribution Date on which the Class A-3 Notes are paid in full will
be reduced by the amount necessary to pay the Class A-3 Notes in full.
Distributions with respect to principal payments will be made from Available
Funds after payment of accrued and unpaid trustees' fees and other
administrative fees of the Trust, payment of the Servicing Fee and the
distribution of the Noteholders' Distributable Amount and the
Certificateholders' Interest Distributable Amount. See "Description of the
Purchase Agreements and the Trust Documents --Distributions" herein.
Mandatory Prepayment
The Certificates will be prepaid in part on the Mandatory Redemption Date
in the event that any portion of the Pre-Funded Amount remains on deposit in
the Pre-Funding Account as of the end of the Funding Period. The aggregate
principal amount of the Certificates to be prepaid will be an amount equal to
the Certificateholders' pro rata share (based on the respective current
principal amount of each Class of Notes and the Certificate Balance) of the
remaining Pre-Funded Amount (the "Certificate Prepayment Amount"); 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.
S-35
<PAGE>
Upon the occurrence of an Event of Default under the Indenture (so long
as an Insurer Default shall not have occurred and be continuing), the Insurer
will have the right, but not the obligation, to cause the liquidation of the
Trust Property, in whole or in part, on any date or dates as the Insurer, in
its sole discretion, shall elect, as described under "Description of the
Notes -- Events of Default." Any such liquidation, in whole or in part, may
cause a full or partial prepayment of the Certificates.
Optional Prepayment
If the Servicer exercises its option to purchase the Receivables when the
Pool Balance declines to 10% or less of the Original Pool Balance,
Certificateholders will receive an amount in respect of the Certificates
equal to the outstanding Certificate Balance together with accrued interest
at the Certificate Rate, which distribution will effect early retirement of
the Certificates. See "Description of the Securities -- Termination" in the
Prospectus.
Transfers of Certificates
Certificateholders, other than individuals or entities holding
Certificates through a broker who reports sales of securities on Form 1099-B,
are required under the Trust Agreement to notify the Owner Trustee of any
transfer of their Certificates in a taxable sale or exchange within 30 days
of such transfer.
DESCRIPTION OF THE PURCHASE AGREEMENTS AND THE TRUST DOCUMENTS
The following summary describes certain terms of the Purchase Agreement
and any Subsequent Purchase Agreement (together, the "Purchase Agreements"),
and the Sale and Servicing Agreement, any Subsequent Transfer Agreement and
the Trust Agreement (together, the "Trust Documents"). Forms of the Purchase
Agreements and the Trust Documents have been filed as exhibits to the
Registration Statement. The summary does not purport to be complete and is
subject to, and qualified in its entirety by reference to, all the provisions
of the Purchase Agreements and the Trust Documents. The following summary
supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Trust Agreement (as
such term is used in the Prospectus) set forth in the Prospectus, to which
description reference is hereby made.
Sale and Assignment of Receivables
On or prior to the Closing Date, or, with respect to Subsequent
Receivables, the related Subsequent Transfer Date, AmeriCredit will enter
into a Purchase Agreement with the Seller pursuant to which AmeriCredit will,
on or prior to such Closing Date, or, with respect to Subsequent Receivables,
the related Subsequent Transfer Date, sell and assign to the Seller, without
recourse, its entire interest in and to the related Receivables, including
its security interest in the Financed Vehicles securing such Receivables and
its rights to receive all payments on, or proceeds with respect to, such
Receivables to the extent paid or payable after the applicable Cutoff Date.
Pursuant to the Purchase Agreement, AmeriCredit will agree that, upon the
occurrence of a breach of a representation or warranty under the Trust
Documents with respect to any of the Receivables which causes the Seller to
be obligated to repurchase a Receivable, the Owner Trustee will be entitled
to require AmeriCredit to repurchase such Receivables from the Trust. Such
rights of the Trust under the Purchase Agreement will constitute part of the
property of the Trust and may be enforced directly by the Owner Trustee and
the Insurer. In addition, the Owner Trustee will pledge such rights to the
Indenture Trustee as collateral for the Notes, if any, and such rights may be
enforced directly by the Indenture Trustee.
On the Closing Date, or, with respect to Subsequent Receivables, the
related Subsequent Transfer Date, the Seller will sell and assign to the
Owner Trustee, without recourse, the Seller's entire interest in the related
Receivables and the proceeds thereof, including its security interest in the
related Financed Vehicles. Each Receivable transferred by the Seller to the
Trust will be identified in a schedule appearing as an exhibit to the Trust
Documents (the "Schedule of Receivables").
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<PAGE>
Accounts
Each Obligor will be instructed to make payments with respect to the
Receivables after the Cutoff Date directly to one or more post office boxes
or other mailing locations (each, a "Lockbox") maintained by the Lockbox
Bank, and a segregated account will be established and maintained with a bank
or banks acceptable to the Insurer, in the name of the Indenture Trustee for
the benefit of the Securityholders, into which all payments made from
Obligors to a Lockbox on or with respect to the Receivables must be deposited
within one business day of receipt (the "Lockbox Account"). The Issuer will
also establish and maintain with the Indenture Trustee one or more accounts
(the "Collection Account"), in the name of the Indenture Trustee on behalf of
the Securityholders and the Insurer, into which all amounts previously
deposited in the Lockbox Account in respect of the Receivables will be
transferred within three business days of deposit in the Lockbox Account.
The Collection Account will be maintained with the Indenture Trustee so long
as the Indenture Trustee's deposits have a rating acceptable to the Insurer
and the Rating Agencies. If the deposits of the Indenture Trustee or its
corporate parent no longer have such acceptable rating, the Servicer shall,
with the Indenture Trustee's assistance as necessary, cause such Accounts to
be moved within 30 days to a bank whose deposits have such rating.
The Servicer will also establish and maintain an account, in the name of
the Trust Collateral Agent, for the benefit of the Indenture Trustee, on
behalf of the Noteholders, and the Insurer in which amounts released from the
Collection Account for distribution to Noteholders will be deposited and from
which all distributions to Noteholders will be made (the "Note Distribution
Account"). The Servicer will establish and maintain an account, in the name
of the Trust Collateral Agent, for the benefit of the Owner Trustee, on
behalf of the Certificateholders and the Insurer, in which amounts released
from the Collection Account for distribution to Certificateholders will be
deposited and from which all distributions to Certificateholders will be made
(the "Certificate Distribution Account").
On the Closing Date, a cash amount equal to approximately $56,164,777.29
(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) May __, 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 and Certificateholders as described herein. The "Mandatory
Redemption Date" is the earlier of (i) the Distribution Date in May 1997 or
(ii) if the last day of the Funding Period occurs on or prior to the
Determination Date (as defined herein) occurring in April 1997, April 14,
1997.
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 April and May
of 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 and Certificate Rate on the portion of the
Securities having a principal balance in excess of the Principal Balances of
the Receivables (which portion will equal the Pre-Funded Amount). Any
amounts remaining in the Capitalized Interest Account on the Mandatory
Redemption Date and not used for such purposes are required to be paid
directly to the Seller on such date. See "Description of the Purchase
Agreements and the Trust Documents -- Accounts."
All such Accounts shall be Eligible Deposit Accounts (as defined in the
Prospectus) acceptable to the Insurer (so long as no Insurer Default has
occurred and is continuing).
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<PAGE>
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.
On each Determination Date the Indenture Trustee will (based solely on
the information contained in the Servicer's Certificate delivered on the
related Determination Date) deliver to the Trust Collateral Agent, the
Insurer and the Servicer a Deficiency Notice specifying the Deficiency Claim
Amount, if any, for such Distribution Date. Such Deficiency Notice will
direct the Trust Collateral Agent to remit such Deficiency Claim Amount from
amounts on deposit in certain collateral accounts maintained for the benefit
of the Insurer for deposit in the Collection Account.
Distributions
On each Distribution Date, the Servicer is required to instruct the
Indenture Trustee to make the following distributions in the following order
of priority:
1. From the Distribution Amount, to the 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.
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2. From the Distribution Amount, to the Indenture Trustee and the Owner
Trustee, any accrued and unpaid trustees' fees and any accrued and
unpaid fees of the Trust Collateral Agent (in each case, to the extent
such fees have not been previously paid by the Servicer).
3. From the Distribution Amount plus the related portion of any Note
Policy Claim Amount, if any, to the Note Distribution Account, the
Noteholders' Interest Distributable Amount.
4. From the Distribution Amount plus the related portion of any Note
Policy Claim Amount, if any, to the Note Distribution Account, the
Noteholders' Principal Distributable Amount, to be distributed as
described under "Description of the Notes -- Payments of Principal."
5. From the Distribution Amount plus the related portion of any
Certificate Policy Claim Amount, if any, to the Certificate
Distribution Account, the Certificateholders' Interest Distributable
Amount.
6. From the Distribution Amount plus the related portion of any
Certificate Policy Claim Amount, if any, to the Certificate
Distribution Account the Certificateholders' Principal Distributable
Amount.
7. From the Distribution Amount, to the Insurer, any amounts owing to the
Insurer under the Insurance Agreement and not paid.
8. From Available Funds (less certain investment earnings), to the Spread
Account, an amount, if necessary, required to increase the amount
therein to its then required level.
9. From 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.
10. From 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 Certificate Distribution Account, the
Certificateholders' Accelerated Principal Amount.
11. From 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 Distribution Date (after
giving effect to all distributions made on such Distribution Date) in excess
of the Specified Spread Account Requirement for such Distribution Date may be
released to the Seller without the consent of the Securityholders.
In addition to the foregoing, any accrued and unpaid interest and any
remaining outstanding principal on the Class A-1 Notes will be due and
payable on the Class A-1 Final Scheduled Distribution Date, which, for
purposes of the definitions set forth below (insofar as they relate to the
Class A-1 Notes) shall be considered a "Distribution Date."
If the Notes are accelerated following an Event of Default under the
Indenture, amounts collected will be distributed in the order described
above.
In the event that the Servicer's Certificate indicates that the
Distribution Amount will be insufficient on any Distribution Date to cover
the distributions required pursuant to clauses 1 through 4 above on such
Distribution Date, the Indenture Trustee shall furnish to the Insurer no
later than 12:00 noon New York City time on the related Draw Date a completed
notice of claim in the amount of the Note Policy Claim Amount. Amounts paid
by the Insurer pursuant to any such notice of claim shall be deposited by the
Insurer into the Note Distribution Account for payment to Noteholders on the
related Distribution Date.
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In the event that the Servicer's Certificate indicates that the
Distribution Amount will be insufficient on any Distribution Date to cover
the distributions required by clauses 1 through 6 above on such Distribution
Date, the Indenture Trustee shall furnish to the Insurer no later than 12:00
noon New York City time on the related Draw Date a completed notice of claim
in the amount of the Certificate Policy Claim Amount. Amounts paid by the
Insurer pursuant to any such notice of claim shall be deposited by the
Insurer into the Certificate Distribution Account for payment to
Certificateholders on the related Distribution Date.
For the purposes hereof, the following terms shall have the following
meanings:
"Accelerated Payment Termination Date" means, the later to occur of (i)
first Distribution Date on which the Pro Forma Security Balance equals the
Required Pro Forma Security Balance and (ii) the Distribution Date on which
the principal balance of the Class A-1 Notes is reduced to zero.
"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 8 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 Security Balance for such Distribution Date
over (ii) the Required Pro Forma Security Balance for such
Distribution Date and (b) the amount necessary (after taking into
account all other distributions to be made on such date) to reduce
the principal balance of the Class A-1 Notes to zero.
Notwithstanding the foregoing, the requirement to pay Accelerated
Principal Amounts will terminate on the Accelerated Payment Termination Date.
The Insurer does not guarantee the payment of Accelerated Principal
Amounts.
"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 Determination Date, the sum
of (i) the Collected Funds for such Determination Date, plus (ii) all
Purchase Amounts deposited in the Collection Account during the related
Monthly Period, plus income on investments held in the Collection Account,
plus (iii) the Monthly Capitalized Interest Amount with respect to the
related Distribution Date.
"Certificate Balance" equals, initially, $7,875,000 and, thereafter,
equals the initial Certificate Balance reduced by all amounts allocable to
principal previously distributed to Certificateholders.
"Certificateholders' Accelerated Principal Amount" means, with respect to
any Distribution Date, the Certificateholders' Percentage of the Accelerated
Principal Amount on such Distribution Date, if any.
"Certificateholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Certificateholders' Principal Distributable
Amount and the Certificateholders' Interest Distributable Amount.
"Certificateholders' Interest Carryover Shortfall" means, with respect to
any Distribution Date, the excess of the Certificateholders' Interest
Distributable Amount for the preceding Distribution Date, over the amount in
respect of interest on the Certificates that was actually deposited in the
Certificate Distribution Account on such preceding Distribution Date, plus
interest on such excess, to the extent permitted by law, at the Certificate
Rate from such preceding Distribution Date to but excluding the current
Distribution Date.
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"Certificateholders' Interest Distributable Amount" means, with respect
to any Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date.
"Certificateholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, interest accrued during the related
Interest Period (including the initial Interest Period which will consist of
___ days) at the Certificate Rate on the Certificate Balance immediately
preceding such Distribution Date, calculated on the basis of a 360-day year
consisting of twelve 30-day months.
"Certificateholders' Monthly Principal Distributable Amount" means, with
respect to any Distribution Date, the Certificateholders' Percentage of the
Principal Distributable Amount.
"Certificateholders' Percentage" means (i) for each Distribution Date
prior to the Distribution Date on which the Class A-3 Notes are paid in full,
zero, (ii) on the Distribution Date on which the Class A-3 Notes are paid in
full, the percentage equivalent of a fraction, the numerator of which is the
excess, if any, of (x) the Principal Distributable Amount for such
Distribution Date over (y) the outstanding principal amount of the Class A-3
Notes immediately prior to such Distribution Date, and the denominator of
which is the Principal Distributable Amount for such Distribution Date, and
(iii) for each Distribution Date thereafter to and including the Distribution
Date on which the Certificate Balance is reduced to zero, 100%.
"Certificateholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Certificateholders'
Principal Distributable Amount for the preceding Distribution Date, over the
amount in respect of principal that was actually deposited in the Certificate
Distribution Account on such Distribution Date.
"Certificateholders' Principal Distributable Amount" means, with respect
to any Distribution Date (other than the Final Scheduled Distribution Date
for the Certificates), the sum of the Certificateholders' Monthly Principal
Distributable Amount for such Distribution Date and the Certificateholders'
Principal Carryover Shortfall as of the close of the preceding Distribution
Date; provided, however, that the Certificateholders' Principal Distributable
Amount shall not exceed the Certificate Balance. In addition, on the Final
Scheduled Distribution Date for the Certificates, the Certificateholders'
Principal Distributable Amount will equal the Certificate Balance on such
Distribution Date.
"Certificate Policy Claim Amount" for any Distribution Date, shall equal
the lesser of (i) the sum of the Certificateholders' Interest Distributable
Amount and the Certificateholders' Principal Distributable Amount for such
Distribution Date and (ii) the excess, if any, of the amount required to be
distributed pursuant to clauses 1 through 6 under "Distributions" over the
Distribution Amount with respect to such Distribution Date.
"Collected Funds" means, with respect to any Determination Date, the
amount of funds in the Collection Account representing collections on the
Receivables during the related Monthly Period, including all Net Liquidation
Proceeds collected during the related Monthly Period (but excluding any
Purchase Amounts).
"Cram Down Loss" means, with respect to a Receivable if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an
order reducing the amount owed on such Receivable or otherwise modifying or
restructuring the scheduled payments to be made on such Receivable, an amount
equal to (i) the excess of the Principal Balance of such Receivable
immediately prior to such order over the Principal Balance of such Receivable
as so reduced and/or (ii) if such court shall have issued an order reducing
the effective rate of interest on such Receivable, the 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) of the scheduled payments as so modified or restructured. A "Cram
Down Loss" shall be deemed to have occurred on the date of issuance of such
order.
"Deficiency Claim Amount" means, with respect to any Determination Date,
the excess, if any, of the sum of the amounts payable on the related
Distribution Date pursuant to clauses 1 through 7 under "Distributions" over
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the amount of Available Funds with respect to such Determination Date to the
extent that such amounts are available in accordance with the terms of the
Spread Account Agreement.
"Deficiency Notice" means a written notice delivered by the Indenture
Trustee to the Insurer, the Servicer and any other person required under the
Insurance Agreement, specifying the Deficiency Claim Amount for such
Distribution Date.
"Determination Date" means, with respect to any Monthly Period, the
earlier of (i) the fourth Business Day preceding the Distribution Date in the
next calendar month, and (ii) the 5th day of the next calendar month, or if
such 5th day is not a Business Day, the next succeeding Business Day.
"Distribution Amount" means, with respect to any Distribution Date the
sum of (i) the Available Funds for the immediately preceding Determination
Date plus (ii) the Deficiency Claim Amount, if any, received by the Indenture
Trustee with respect to such Distribution Date plus (ii) Insurer Optional
Deposit, if any, received by the Indenture Trustee with respect to such
Distribution Date.
"Insurer Optional Deposit" means, with respect to any Distribution Date,
an amount delivered by the Insurer, at its sole option, other than amounts in
respect of a Note Policy Claim Amount or a Certificate 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 Distribution Date; or
(ii) to include such amount as part of the Distribution Amount for such
Distribution Date to the extent that without such amount a draw would be
required to be made on a Policy.
"Liquidated Receivable" means, with respect to any Determination Date, a
Receivable as to which, as of the last day of the related Monthly Period, (i)
90 days have elapsed since the Servicer repossessed the Financed Vehicle,
(ii) the Servicer has determined in good faith that all amounts it expects to
recover have been received, (iii) 5% or more of a scheduled payment shall
have become 120 or more days delinquent, except in the case of repossessed
Financed Vehicles.
"Net Liquidation Proceeds" means, with respect to Liquidated Receivables,
(i) proceeds from the disposition of the underlying Financed Vehicle securing
the Liquidated Receivables, less the Servicer's reasonable out-of-pocket
costs, including repossession and resale expenses not already deducted from
such proceeds, and any amounts required by law to be remitted to the Obligor,
(ii) any insurance proceeds, or (iii) other monies received from the Obligor
or otherwise.
"Noteholders' Accelerated Principal Amount" means, with respect to any
Distribution Date, the Noteholders' Percentage of the Accelerated Principal
Amount on such Distribution Date, if any.
"Noteholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Principal Distributable Amount
and the Noteholders' Interest Distributable Amount.
"Noteholders' Interest Carryover Shortfall" means, with respect to any
Distribution Date and a Class of Notes, the excess of the Noteholders'
Interest Distributable Amount for such Class for the preceding Distribution
Date, over the amount in respect of interest that was actually deposited in
the Note Distribution Account with respect to such Class on such preceding
Distribution Date, plus interest on the amount of interest due but not paid
to Noteholders of such Class on the preceding Distribution Date, to the
extent permitted by law, at the Interest Rate borne by such Class of Notes
from such preceding Distribution Date to but excluding the current
Distribution Date.
"Noteholders' Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Monthly Interest Distributable
Amount for each Class of Notes for such Distribution Date and the
Noteholders' Interest Carryover Shortfall for each Class of Notes for such
Distribution Date.
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"Noteholders' Monthly Interest Distributable Amount" means, with respect
to any Distribution Date and any Class of Notes, interest accrued during the
applicable Interest Period at the Interest Rate borne by such Class of Notes
on the outstanding principal amount of such Class immediately prior to such
Distribution Date, calculated on the basis of a 360-day year and (a) the
actual number of days elapsed, in the case of the Class A-l Notes and the
Class A-2 Notes and (b) twelve 30-day months, in the case of the Class A-3
Notes.
"Noteholders' Monthly Principal Distributable Amount" means, with respect
to any Distribution Date, the Noteholders' Percentage of the Principal
Distributable Amount.
"Noteholders' Percentage" means (i) for each Distribution Date to the
Distribution Date on which the Class A-3 Notes are paid in full, 100%, (ii)
on the Distribution Date on which the Class A-3 Notes are paid in full, the
percentage equivalent of a fraction, the numerator of which is the
outstanding principal amount of the Class A-3 Notes immediately prior to such
Distribution Date, and the denominator of which is the Principal
Distributable Amount for such Distribution Date, and (iii) for any
Distribution Date thereafter, zero.
"Noteholders' Principal Carryover Shortfall" means, as of the close of
any Distribution Date, the excess of the Noteholders' Principal Distributable
Amount for the preceding Distribution Date over the amount in respect of
principal that was actually deposited in the Note Distribution Account on
such Distribution Date.
"Noteholders' Principal Distributable Amount" means, with respect to any
Distribution Date (other than the Final Scheduled Distribution Date for any
Class of Notes), the sum of the Noteholders' Monthly Principal Distributable
Amount for such Distribution Date and the Noteholders' Principal Carryover
Shortfall as of the close of the preceding Distribution Date. The
Noteholders' Principal Distributable Amount on the Final Scheduled
Distribution Date for any Class of Notes will equal the sum of (i) the
Noteholders' Monthly Principal Distributable Amount for such Distribution
Date, (ii) the Noteholders' Principal Carryover Shortfall as of the close of
the preceding Distribution Date, and (iii) the excess of the outstanding
principal amount of such Class of Notes, if any, over the amounts described
in clauses (i) and (ii).
"Note Policy Claim Amount" for any Distribution Date, shall equal the
lesser of (i) the sum of the Noteholders' Interest Distributable Amount and
Noteholders' Principal Distributable Amount for such Distribution Date and
(ii) the excess, if any, of the amount required to be distributed pursuant to
clauses 1 through 4 under "Distributions" over the Distribution Amount with
respect to such Distribution Date.
"Principal Balance" means, with respect to any Receivable, as of any
date, the 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 such Monthly Period over (y)
the Step-Down Amount, if any, for such Distribution Date.
"Pro Forma Security Balance" means, with respect to any Distribution
Date, the aggregate remaining principal balance of the Notes and the
Certificates outstanding on such Distribution Date, after giving effect to
distributions pursuant to clauses 1 through 6 under "Distributions."
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"Purchase Amount" means, with respect to a Receivable, the Principal
Balance as of the date of purchase.
"Required Pro Forma Security Balance" means, with respect to any
Distribution Date, a dollar amount equal to product of (x) 89% 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 Security Balance over (y) the
Pro Forma Security 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 and the
Certificates).
Statements to Securityholders
On or prior to each Distribution Date, the Indenture Trustee will be
required to forward a statement to the Noteholders and the Certificateholders
on such Distribution Date. Such statements will be based on the information
in the related Servicer's Certificate setting forth certain information
required under the Trust Documents. Each such statement to be delivered to
Noteholders will include the following information as to the Notes, and each
such statement to be delivered to Certificateholders will include the
following information as to the Certificates, with respect to such
Distribution Date or the period since the previous Distribution Date, as
applicable:
(i) the amount of the distribution allocable to interest on or with
respect to the Notes and the Certificates:
(ii) the amount of the distribution allocable to principal with respect
to the Notes and the Certificates;
(iii) the amount of the distribution payable pursuant to a claim on the
Note Policy or the Certificate Policy, as the case may be;
(iv) the aggregate outstanding principal amount for each Class of Notes
and the Certificate Balance for the Certificates, in each case, after giving
effect to all payments reported under (ii) above on such date;
(v) the Noteholders' Interest Carryover Shortfall, the Noteholders'
Principal Carryover Shortfall, the Certificateholders' Interest Carryover
Shortfall and the Certificateholders' Principal Carryover Shortfall, if any,
and the change in such amounts from the preceding statement;
(vi) the amount of the Servicing Fee paid to the Servicer with respect to
the related Monthly Period;
(vii) for each such date during the Funding Period, the remaining
Pre-Funded Amount, the amount in the Pre-Funding Account and the amount
remaining in the Capitalized Interest Account; and
(viii) for the final Subsequent Transfer Date, the amount of any
remaining Pre-Funded Amount that has not been used to fund the purchase of
Subsequent Receivables and is being passed through as payments of principal
of the Notes and Certificates.
Each amount set forth pursuant to subclauses (i) through (vi) with
respect to Certificates or Notes will be expressed as a dollar amount per
$1,000 of the initial principal amount of the Notes or initial Certificate
Balance, as applicable.
Unless and until Definitive Notes or Definitive Certificates are issued,
such reports will be sent on behalf of the Trust to Cede & Co., as registered
holder of the Notes and the Certificates and the nominee of DTC. See
"Reports to Securityholders" and "Description of the Securities" in the
Prospectus.
Within the required period of time after the end of each calendar year,
the Indenture Trustee will furnish to each person who at any time during such
calendar year was a Noteholder or Certificateholder, a statement as to
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the aggregate amounts of interest and principal paid to such Noteholder or
Certificateholder, information regarding the amount of servicing compensation
received by the Servicer and such other information as the Seller deems
necessary to enable such Noteholder or Certificateholder to prepare its tax
returns.
Credit Support
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
Securities. Such "excess interest" is interest which is collected on the
Receivables in excess of the amount of interest that is paid on the
Securities, 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 and the Certificates
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
Securityholders as part of the Principal Distributable Amount will 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
will be available to the extent provided in the Spread Account Agreement to
fund any Deficiency Claim Amount otherwise required to be made on a
Distribution Date. Amounts on deposit in the Spread Account on any
Distribution Date (after giving effect to all distributions made on such
Distribution Date) in excess of the Specified Spread Account Requirement for
such Distribution Date will be released to the Seller without the consent of
the Securityholders.
In addition, the Seller, the Insurer and the Trust Collateral Agent may
amend the Spread Account Agreement (and any provisions in the Insurance
Agreement relating to the Spread Account) in any respect (including, without
limitation, reducing or eliminating the Specified Spread Account Requirement
and/or reducing or eliminating the funding requirements of the Spread Account
or permitting such funds to be used for the benefit of persons other than
Securityholders) without the consent of, or notice to, the Trustee, the Owner
Trustee or the Securityholders. The Trust Collateral Agent shall not
withhold or delay its consent with respect to any amendment that does not
adversely affect the Trust Collateral Agent in its individual capacity.
Notwithstanding any reduction in or elimination of the funding requirements
of the Spread Account or the depletion thereof, the Insurer will be obligated
on each Distribution Date to fund the full amount of each Scheduled Payment
and each Guaranteed Distribution otherwise required to be made on such
Distribution Date. If the Insurer breaches its obligations, any losses on the
Receivables will be borne by the Securityholders.
Servicer Termination Event
"Servicer Termination Event" under the Sale and Servicing Agreement will
consist of the occurrence and continuance of any of the following: (i) any
failure by the Servicer to deliver to the Trust Collateral Agent for
distribution to the Securityholders any required payment, which failure
continues unremedied for two Business Days, or any failure to deliver the
Servicer's Certificate (as defined in the Sale and Servicing Agreement) by
the fourth Business Day prior to the Distribution Date, and which shall
comply with the requirements therefor; (ii) any failure by the Servicer duly
to observe or perform in any material respect any other covenant or agreement
under the Sale and Servicing Agreement or the Purchase Agreement (if
AmeriCredit is the Servicer) which failure continues unremedied for 60 days
after the giving of written notice of such failure (1) to the Servicer by the
Insurer, the Trust
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Collateral Agent or the Issuer, or (2) if a Insurer Default has occurred and
is continuing, to the Servicer by any holder of a Note or a Certificate;
(iii) certain events of insolvency, readjustment of debt, marshalling of
assets and liabilities, or similar proceedings with respect to the Servicer
or, so long as AmeriCredit is Servicer, of any of its affiliates, and certain
actions by the Servicer, or, so long as AmeriCredit is Servicer, of its
affiliates, indicating its insolvency, reorganization pursuant to bankruptcy
proceedings, or inability to pay its obligations; (iv) any representation,
warranty or statement of the Servicer shall prove to be incorrect in any
material respect and which has a material adverse effect on the 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 shall not have
delivered an extension notice; (vi) so long as a Insurer Default shall not
have occurred and be continuing, an Insurance Agreement Event of Default or
an event of default under any other Insurance and Indemnity Agreement
relating to any series of securities shall have occurred; or (vii) a claim is
made under the Policy.
"Insurer Default" shall mean the occurrence and continuance of any of the
following events:
(a) the Insurer shall have failed to make a payment required under
either Policy in accordance with its terms;
(b) the Insurer shall have (i) filed a petition or commenced any
case or proceeding under any provision or chapter of the United States
Bankruptcy Code or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (ii)
made a general assignment for the benefit of its creditors, or (iii) had an
order for relief entered against it under the United States Bankruptcy Code
or any other similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization which is final and
nonappealable; or
(c) a court of competent jurisdiction, the New York Department of
Insurance or other competent regulatory authority shall have entered a final
and nonappealable order, judgment or decree (i) appointing a custodian,
trustee, agent or receiver for the Insurer or for all or any material portion
of its property or (ii) authorizing the taking of possession by a custodian,
trustee, agent or receiver of the Insurer (or the taking of possession of all
or any material portion of the property of the Insurer).
Rights Upon Servicer Termination Event
As long as a Servicer Termination Event under the Sale and Servicing
Agreement remains unremedied, (x) provided no Insurer Default shall have
occurred and be continuing, the Insurer in its sole and absolute discretion
or (y) if a Insurer Default shall have occurred and be continuing, then the
Trust Collateral Agent or a Security Majority, may terminate all the rights
and obligations of the Servicer under such Agreement, whereupon (i) if
AmeriCredit is terminated under the Agreement, the Backup Servicer, or such
other successor servicer as shall have been appointed by the Insurer (so long
as no Insurer Default shall have occurred and be continuing) will succeed to
all the responsibilities, duties, and liabilities of the Servicer under such
Agreement or (ii) if a Servicer other than AmeriCredit is terminated under
the Agreement, a successor servicer will be appointed by the Insurer (or, if
a Insurer Default shall have occurred and be continuing, by the Trust
Collateral Agent). Any such successor Servicer will succeed to all the
responsibilities, duties, and liabilities of the Servicer under the Sale and
Servicing Agreement and will be entitled to similar compensation
arrangements. There is no assurance that the succession of a successor
servicer will not result in a material disruption in the performance of the
duties of the servicer.
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Waiver of Past Defaults
Notwithstanding anything to the contrary set forth under "Description of
the Trust Agreements -- Waiver of Past Defaults" in the Prospectus, the
Insurer may, on behalf of all holders of Securities, waive any default by the
Servicer in the performance of its obligations under the Sale and Servicing
Agreement and its consequences. No such waiver will impair the
Securityholders' rights with respect to subsequent defaults.
Amendment
Notwithstanding anything to the contrary set forth under "Description of
the Trust Agreements -- Amendment" in the Prospectus, the Sale and Servicing
Agreement may be amended by the Seller, the Servicer and the Owner Trustee
with the consent of the Indenture Trustee, (which consent may not be
unreasonably withheld) and with the consent of the Insurer (so long as no
Insurer Default has occurred and is continuing), but without the consent of
the Securityholders, to cure any ambiguity, or to correct or supplement any
provision therein which may be inconsistent with any other provision therein;
provided that such action shall not adversely affect in any material respect
the interests of any Securityholder; provided, further, that if an Insurer
Default has occurred and is continuing, such action shall not materially
adversely affect the interests of the Insurer. The Seller, the Servicer and
the Owner Trustee may also amend the Sale and Servicing Agreement with the
consent of the Insurer, the consent of the Indenture Trustee, the consent of
Noteholders holding a majority of the principal amount of the Notes and the
consent of Certificateholders holding a majority of the principal amount of
Certificates outstanding to add, change or eliminate any other provisions
with respect to matters or questions arising under such Agreement or
affecting the rights of the Noteholders or the Certificateholders; provided
that such action will not (i) increase or reduce in any manner the amount of,
or accelerate or delay the timing of, collections of payments on Receivables
or distributions that are required to be made for the benefit of the
Noteholders or Certificateholders or (ii) reduce the aforesaid percentage of
the Noteholders or Certificateholders required to consent to any such
amendment, without, in either case, the consent of the holders of all Notes
and Certificates outstanding; provided, further, that if an Insurer Default
has occurred and is continuing, such action shall not materially adversely
affect the interest of the Insurer. The Seller and Servicer must deliver to
the Owner Trustee, the Indenture Trustee and the Insurer upon the execution
and delivery of the Sale and Servicing Agreement and any amendment thereto an
opinion of counsel, satisfactory to the Indenture Trustee, that all financing
statements and continuation statements have been filed that are necessary to
fully protect and preserve the Trustee's interest in the Receivables.
THE POLICIES
Note Policy
Simultaneously with the issuance of the Notes, the Insurer will deliver
the Note Policy to the Trust Collateral Agent as agent for the Indenture
Trustee for the benefit of each Noteholder. Under the Note Policy, the
Insurer will unconditionally and irrevocably guarantee to the Trust
Collateral Agent for the benefit of each Noteholder the full and complete
payment of (i) Scheduled Payments (as defined below) on the Notes and (ii)
the amount of any Scheduled Payment which subsequently is avoided in whole or
in part as a preference payment under applicable law. In the event the Trust
Collateral Agent fails to make a claim under the Note Policy, Noteholders do
not have the right to make a claim directly under the Note Policy, but may
sue to compel the Trust Collateral Agent to do so.
"Scheduled Payments" means payments which are scheduled to be made on the
Notes during the term of the Note Policy in accordance with the original
terms of the Notes when issued and without regard to any subsequent amendment
or modification of the Notes that has not been consented to by the Insurer,
which payments are (i) the Noteholders' Interest Distributable Amount and
(ii) the Noteholders' Principal Distributable Amount with respect to a
Distribution Date or the Class A-1 Final Scheduled Distribution Date;
Scheduled Payments do not include payments which become due on an accelerated
basis as a result of (a) a default by the Trust, (b) an election by the Trust
to pay principal on an accelerated basis, (c) the occurrence of an Event of
Default under the Indenture or (d) any other cause, unless the Insurer
elects, in its sole discretion, to pay in whole or in part such principal due
upon
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acceleration, together with any accrued interest to the date of acceleration.
In the event the Insurer does not so elect, the Note Policy will continue to
guarantee Scheduled Payments due on the Notes in accordance with their
original terms. Scheduled Payments shall not include (x) any portion of a
Noteholders' Interest Distributable Amount due to Noteholders because the
appropriate notice and certificate for payment in proper form was not timely
Received (as defined below) by the Insurer, (y) any portion of a Noteholders'
Interest Distributable Amount due to Noteholders representing interest on any
Noteholders' Interest Carryover Shortfall accrued from and including the date
of payment of the amount of such Noteholders' Interest Carryover Shortfall
pursuant to the Note Policy, or (z) any Note Prepayment Amounts unless, in
each case, the Insurer elects, in its sole discretion, to pay such amount in
whole or in part.
Payment of claims on the Note Policy made in respect of Scheduled
Payments will be made by the Insurer following Receipt by the Insurer of the
appropriate notice for payment on the later to occur of (i) 12:00 noon, New
York City time, on the third Business Day following Receipt of such notice
for payment, and (ii) 12:00 noon, New York City time, on the date on which
such payment was due on the Notes.
If payment of any amount avoided as a preference under applicable
bankruptcy, insolvency, receivership or similar law is required to be made
under the Note Policy, the Insurer shall cause such payment to be made no
earlier than the first to occur of (a) the fourth Business Day following
Receipt by the Insurer from the Trust Collateral Agent of (i) a certified
copy of the order (the "Order") of the court or other governmental body which
exercised jurisdiction to the effect that the Noteholder is required to
return principal or interest paid on the Notes during the term of the Note
Policy because such payments were avoidable as preference payments under
applicable bankruptcy law, (ii) a certificate of the Noteholder that the
Order has been entered and is not subject to any stay and (iii) an assignment
duly executed and delivered by the Noteholder, in such form as is reasonably
required by the Insurer and provided to the Noteholder by the Insurer,
irrevocably assigning to the Insurer all rights and claims of the Noteholder
relating to or arising under the Notes against the Trust or otherwise with
respect to such preference payment, or (b) the date of Receipt (as defined
below) by the Insurer from the Trust Collateral Agent of the items referred
to in clauses (i), (ii) and (iii) above if, at least four Business Days prior
to such date of Receipt, the Insurer shall have received written notice from
the Trust Collateral Agent that such items were to be delivered on such date
and such date was specified in such notice. Such payment shall be disbursed
to the receiver, conservator, debtor-in-possession or trustee in bankruptcy
named in the Order and not to the Trust Collateral Agent or any Noteholder
directly (unless a Noteholder has previously paid such amount to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy named
in.the Order, in which case such payment shall be disbursed to the Trust
Collateral Agent for distribution to such Noteholder upon proof of such
payment reasonably satisfactory to the Insurer). In connection with the
foregoing, the Insurer shall have the rights provided in the Indenture.
Certificate Policy
Simultaneously with the issuance of the Certificates, the Insurer will
deliver the Certificate Policy to the Trust Collateral Agent as agent for the
Owner Trustee for the benefit of each Certificateholder. Under the
Certificate Policy, the Insurer will unconditionally and irrevocably
guarantee to the Trust Collateral Agent for the benefit of each
Certificateholder the full and complete payment of (i) Guaranteed
Distributions (as defined below) with respect to the Certificates and (ii)
the amount of any Guaranteed Distribution which subsequently is avoided in
whole or in part as a preference payment under applicable law. In the event
that the Trust Collateral Agent fails to make a claim under the Certificate
Policy, Certificateholders do not have the right to make a claim directly
under the Certificate Policy but may sue to compel the Trust Collateral Agent
to do so.
"Guaranteed Distributions" means the distributions to be made on the
Certificates with respect to a Distribution Date during the term of the
Certificate Policy in accordance with the original terms of the Certificates
when issued and without regard to any amendment or modification of the
Certificates or the Trust Agreement which has not been consented to by the
Insurer, which distributions are equal to (i) the Certificateholders'
Interest Distributable Amount and (ii) the Certificateholders' Principal
Distributable Amount provided, however, that Guaranteed Distributions shall
not include (x) any portion of a Certificateholder's Interest Distributable
Amount due to Certificateholders because the appropriate notice and
certificate for payment in proper form was not timely
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Received (as defined below) by the Insurer, (y) any portion of a
Certificateholder's Interest Distributable Amount due to Certificateholders
representing interest on any Certificateholders' Interest Carryover Shortfall
accrued from and including the date of payment of the amount of such
Certificateholders' Interest Carryover Shortfall pursuant to the Certificate
Policy, or (z) any Certificate Prepayment Amount, unless, in each case, the
Insurer elects, in its sole discretion, to pay such amount in whole or in
part. Guaranteed Distributions do not include, nor shall coverage be
provided under the Certificate Policy in respect of, any payments with
respect to Certificates held by the Seller.
Payment of claims on the Certificate Policy made in respect of Guaranteed
Distributions will be made by the Insurer following Receipt by the Insurer of
the appropriate notice for payment on the later to occur of (i) 12:00 noon
New York City time, on the third Business Day following Receipt (as defined
below) of such notice for payment, or (ii) 12:00 noon, New York City time, on
the date on which such payment was due on the Certificates.
If payment of any amount avoided as a preference under applicable
bankruptcy, insolvency, receivership or similar law is required to be made
under the Certificate Policy, the Insurer shall cause such payment to be made
no earlier than the first to occur of (a) the fourth Business Day following
Receipt by the Insurer from the Trust Collateral Agent of (i) a certified
copy of the order (the "Order") of the court or other governmental body which
exercised jurisdiction to the effect that the Certificateholder is required
to return the amount of any Guaranteed Distributions distributed with respect
to the Certificates during the term of the Certificate Policy because such
distributions were avoidable as preference payments under applicable
bankruptcy law, (ii) a certificate of the Certificateholder that the Order
has been entered and is not subject to any stay and (iii) an assignment duly
executed and delivered by the Certificateholder, in such form as is
reasonably required by the Insurer and provided to the Certificateholder by
the Insurer, irrevocably assigning to the Insurer all rights and claims of
the Certificateholder relating to or arising under the Certificates against
the debtor which made such preference payment or otherwise with respect to
such preference payment, or (b) the date of Receipt by the Insurer from the
Trust Collateral Agent of the items referred to in clauses (i), (ii) and
(iii) above if, at least four Business Days prior to such date of Receipt,
the Insurer shall have Received written notice from the Trust Collateral
Agent that such items were to be delivered on such date and such date was
specified in such notice. Such payment shall be disbursed to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the Order
and not to the Trust Collateral Agent or any Certificateholder directly
(unless a Certificateholder has previously paid such amount to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the Order
in which case such payment shall be disbursed to the Trust Collateral Agent
for distribution to such Certificateholder upon proof of such payment
reasonably satisfactory to the Insurer). In connection with the foregoing,
the Insurer shall have the rights provided in the Sale and Servicing
Agreement.
Other Provisions of the Policies
The terms "Receipt" and "Received" with respect to a Policy shall mean
actual delivery to the Insurer and to its fiscal agent, if any, prior to
12:00 noon, New York City time, on a Business Day; delivery either on a day
that is not a Business Day or after 12:00 noon, New York City time, shall be
deemed to be Received on the next succeeding Business Day. If any notice or
certificate given under a Policy by the Trust Collateral Agent is not in
proper form or is not properly completed, executed or delivered, it shall be
deemed not to have been Received, and the Insurer or its fiscal agent shall
promptly so advise the Trust Collateral Agent, and the Trust Collateral Agent
may submit an amended notice.
Under the Policies, "Business Day" means any day other than a Saturday,
Sunday, legal holiday or other day on which commercial banking institutions
in Wilmington, Delaware, the City of New York or Chicago, Illinois or any
other location of any successor Servicer, successor Owner Trustee or
successor Trust Collateral Agent are authorized or obligated by law,
executive order or governmental decree to be closed.
The Insurer's obligations under the respective Policies in respect of
Scheduled Payments and Guaranteed Distributions shall be discharged to the
extent funds are transferred to the Trust Collateral Agent as provided in the
related Policy whether or not such funds are properly applied by the Trust
Collateral Agent.
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The Insurer shall be subrogated to the rights of each Noteholder or
Certificateholder to receive payments of principal and interest to the extent
of any payment by the Insurer under the related Policy.
Claims under the Policies constitute direct, unsecured and unsubordinated
obligations of the Insurer ranking not less than pari passu with other
unsecured and unsubordinated indebtedness of the Insurer for borrowed money.
Claims against the Insurer under each other financial guaranty insurance
policy issued thereby constitute pari passu claims against the general assets
of the Insurer. The terms of the Policies cannot be modified or altered by
any other agreement or instrument, or by the merger, consolidation or
dissolution of the Trust. The Note Policy may not be canceled or revoked
prior to distribution in full of all Scheduled Payments, and the Certificate
Policy may not be canceled or revoked prior to distribution in full of all
Guaranteed Distributions. The Policies are not covered by the
property/casualty insurance security fund specified in Article 76 of the New
York Insurance Law. The Policies are governed by the laws of the State of
New York.
It is a condition to issuance that the Class A-l Notes be rated A-l+ by
S&P and P-l by Moody's, and that the Class A-2 Notes, the Class A-3 Notes and
the Certificates be rated AAA by S&P and Aaa by Moody's. The ratings by the
Rating Agencies of the Securities will be (i) with respect to the Class A-1
Notes, without regard to the Note Policy in the case of S&P and substantially
based on the Note Policy in the case of Moody's and (ii) with respect to all
other Classes of Notes and Certificates, based on the issuances of the
Policies. A rating is not a recommendation to purchase, hold or sell
Securities. In the event that the rating initially assigned to any of the
Securities is subsequently lowered or withdrawn for any reason, including by
reason of a downgrading of the claims-paying ability of the Insurer, no
person or entity will be obligated to provide any additional credit
enhancement with respect to the Securities. Any reduction or withdrawal of a
rating may have an adverse effect on the liquidity and market price of the
Securities. See "Ratings" herein.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the material anticipated federal
income tax considerations to investors of the purchase, ownership and
disposition of the securities offered hereby. The discussion is based upon
laws, regulations, rulings and decisions now in effect, all of which are
subject to change. The discussion below does not purport to deal with all
federal tax considerations applicable to all categories of investors, some of
which may be subject to special rules. Investors should consult their own
tax advisors in determining the federal, state, local and any other tax
consequences to them of the purchase, ownership and disposition of the
securities.
Tax Characterization of the Trust
Dewey Ballantine is of the opinion that, although no transaction closely
comparable to that contemplated herein has been the subject of any Treasury
regulation, revenue ruling or judicial decision, and therefore the matter is
subject to interpretation, the Trust will not be an association (or publicly
traded partnership) taxable as a corporation for federal income tax purposes.
This opinion is based on the assumption that the terms of the Trust Agreement
and related documents will be complied with, and on counsel's conclusions
that the nature of the income of the Trust exempts it from the rule that
certain publicly traded partnerships are taxable as corporations.
If the Trust were taxable as a corporation for federal income tax
purposes, the Trust would be subject to corporate income tax on its taxable
income. The Trust's taxable income would include all its income on the
Receivables, possibly reduced by its interest expense on the Notes. Any such
corporate income tax could materially reduce cash available to make payments
on the Notes and distributions on the Certificates, and Certificateholders
could be liable for any such tax that is unpaid by the Trust.
Tax Consequences to Holders of the Notes
Treatment of the Notes as Indebtedness. The Seller agrees, and the
Noteholders will agree by their purchase of Notes, to treat the Notes as debt
for all federal, state and local income tax purposes. There are no
regulations,
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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.
Although, as described above, it is the opinion of counsel that, for
federal income tax purposes, the Notes will be characterized as debt, such
opinion is not binding on the IRS and thus no assurance can be given that
such a characterization will prevail. If the IRS successfully asserted that
one or more of the Notes did not represent debt for federal income tax
purposes, the Notes would likely be treated as equity interests in the Trust.
If so treated, the Trust might be taxable as a corporation and the taxable
corporation would not be able to reduce its taxable income by deductions for
interest expense on Notes recharacterized as equity.
Original Issue Discount. It is anticipated that the Notes will not have
any original issue discount ("OID") other than possibly OID within a de
minimis exception and that accordingly the provisions of sections 1271
through 1273 and 1275 of the Internal Revenue Code of 1986, as amended (the
"Code"), generally will not apply to the Notes. OID will be considered de
minimis if it is less than 0.25% of the principal amount of a Note multiplied
by its expected weighted average life.
Market Discount. A subsequent purchaser who buys a Note for less than
its principal amount may be subject to the "market discount" rules of Section
1276 through 1278 of the Code. If a subsequent purchaser of a Note disposes
of such Note (including certain nontaxable dispositions such as a gift), or
receives a principal payment, any gain upon such sale or other disposition
will be recognized, or the amount of such principal payment will be treated,
as ordinary income to the extent of any "market discount" accrued for the
period that such purchaser holds the Note. Such holder may instead elect to
include market discount in income as it accrues with respect to all debt
instruments acquired in the year of acquisition of the Notes and thereafter.
Market discount generally will equal the excess, if any, of the then current
unpaid principal balance of the Note over the purchaser's basis in the Note
immediately after such purchaser acquired the Note. In general, market
discount on a Note will be treated as accruing over the term of such Note in
the ratio of interest for the current period over the sum of such current
interest and the expected amount of all remaining interest payments, or at
the election of the holder, under a constant yield method. At the request of
a holder of a Note, information will be made available that will allow the
holder to compute the accrual of market discount under the first method
described in the preceding sentence.
The market discount rules also provide that a holder who incurs or
continues indebtedness to acquire a Note at a market discount may be required
to defer the deduction of all or a portion of the interest on such
indebtedness until the corresponding amount of market discount is included in
income.
Notwithstanding the above rules, market discount on a Note will be
considered to be zero if it is less than a de minimis amount, which is 0.25%
of the remaining principal balance of the Note multiplied by its expected
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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 received by
the seller and by any amortized premium. Similarly, a holder who receives a
payment other than a payment of qualified stated interest in respect of a
Note, either on the date on which such payment is scheduled to be made or as
a prepayment, will recognize gain equal to the excess, if any, of the amount
of the payment over his adjusted basis in the Note allocable thereto. A
Noteholder who receives a final payment which is less than his adjusted basis
in the Note will generally recognize a loss in the amount of the shortfall on
the last day of his taxable year. Generally, any such gain or loss realized
by an investor who holds a Note as a "capital asset" within the meaning of
Code Section 1221 should be capital gain or loss, except as described above
in respect of market discount and except that a loss attributable to accrued
but unpaid interest may be an ordinary loss.
Taxation of Certain Foreign Investors. Interest payments (including OID)
on the Notes made to a Noteholder who is a nonresident alien individual,
foreign corporation or other non-United States person (a "foreign person")
generally will be "portfolio interest" which is not subject to United States
tax if such payments are not effectively connected with the conduct of a
trade or business in the United States by such foreign person and if the
Trust (or other person who would otherwise be required to withhold tax from
such payments) is provided with an appropriate statement that the beneficial
owner of the Note identified on the statement is a foreign person.
Backup Withholding. Distributions of interest and principal as well as
distributions of proceeds from the sale of the Notes, may be subject to the
"backup withholding tax" under Section 3406 of the Code at rate of 31% if
recipients of such distributions fail to furnish to the payor certain
information, including their taxpayer identification numbers, or otherwise
fail to establish an exemption from such tax. Any amounts deducted and
withheld from a distribution to a recipient would be allowed as a credit
against such recipient's federal income tax. Furthermore, certain penalties
may be imposed by the IRS on a recipient of distributions that is required to
supply information but that does not do so in the proper manner.
Tax Consequences to Holders of the Certificates
Treatment of the Trust as a Partnership. The Seller and AmeriCredit will
agree, and the Certificateholders will agree by their purchase of
Certificates, to treat the Trust as a partnership for purposes of federal and
state income tax, franchise tax and any other tax measured in whole or in
part by income, with the assets of the
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partnership being the assets held by the Trust, the partners of the
partnership being the Certificateholders, and the Notes being debt of the
partnership. However, the proper characterization of the arrangement
involving the Trust, the Certificates, the Notes, the Seller and AmeriCredit
is not clear because there is no authority on transactions closely comparable
to that contemplated herein.
For example, because the Certificates have certain features
characteristic of debt, the Certificates might be considered debt of the
Seller or the Trust. Generally, provided such Certificates are issued at or
close to face value, any characterization would not result in materially
adverse tax consequences to Certificateholders as compared to the
consequences from treatment of the Certificates as equity in a partnership,
described below. The following discussion assumes that the Certificates
represent equity interests in a partnership.
Partnership Taxation. As a partnership, the Trust will not be subject to
federal income tax unless treated as a publicly traded partnership taxable as
a corporation. Any such corporate income tax could materially reduce cash
available to make payments on the Notes and distributions on the
Certificates, and Certificateholders could be liable for any such tax that is
unpaid by the Trust. Assuming that the Trust is taxable as a partnership,
each Certificateholder will be required to separately take into account such
holder's allocated share of income, gains, losses, deductions and credits of
the Trust. In certain instances, however, the Trust could have an obligation
to make payments of withholding tax on behalf of a Certificateholder. See
"Backup Withholding" and "Tax Consequences to Foreign Certificateholders"
below. The Trust's income will consist primarily of interest and finance
charges earned on the Receivables (including appropriate adjustments for
market discount, OID and bond premium) and any gain upon collection or
disposition of Receivables. The Trust's deductions will consist primarily of
interest accruing with respect to the Notes, servicing and other fees, and
losses or deductions upon collection or disposition of Receivables.
The tax items of a partnership are allocable to the partners in
accordance with the Code, Treasury regulations and the partnership agreement
(here, the Trust Agreement and related documents). The Trust Agreement will
provide, in general, that the Certificateholders will be allocated taxable
income of the Trust for each month equal to the sum of (i) the interest that
accrues on the Certificates in accordance with their terms for such month,
including interest accruing at the Certificate Rate for such month and
interest on amounts previously due on the Certificates but not yet
distributed; (ii) any Trust income attributable to discount on the
Receivables that corresponds to any excess of the principal amount of the
Certificates over their initial issue price; (iii) prepayment premium payable
to the Certificateholders for such month; and (iv) any other amounts of
income payable to the Certificateholders for such month. Such allocation
will be reduced by any amortization by the Trust of premium on Receivables
that corresponds to any excess of the issue price of Certificates over their
principal amount. Based on the economic arrangement of the parties this
approach for allocating Trust income should be permissible under applicable
Treasury regulations, although Counsel is unable to opine that the IRS would
not require a greater amount of income to be allocated to Certificateholders.
Moreover, even under the foregoing method of allocation, Certificateholders
may be allocated income equal to the entire Certificate Rate plus the other
items described above even though the Trust might not have sufficient cash to
make current cash distributions of such amount. Thus, cash basis holders
will in effect be required to report income from the Certificates on the
accrual basis and Certificateholders may become liable for taxes on Trust
income even if they have not received cash from the Trust to pay such taxes.
In addition, because tax allocations and tax reporting will be done on a
uniform basis for all Certificateholders but Certificateholders may be
purchasing Certificates at different times and at different prices,
Certificateholders may be required to report on their tax returns taxable
income that is greater or less than the amount reported to them by the Trust.
Substantially all of the taxable income allocated to a Certificateholder
that is a pension, profit sharing or employee benefit plan or other
tax-exempt entity (including an individual retirement account) will
constitute "unrelated business taxable income" generally taxable to such a
holder under the Code.
An individual taxpayer's share of expenses of the Trust (including fees
to the Servicer but not interest expense) would be miscellaneous itemized
deductions. Such deductions might be disallowed to the individual in
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whole or in part and might result in such holder being taxed on an amount of
income that exceeds the amount of cash actually distributed to such holder over
the life of the Trust.
The Trust intends to make all tax calculations relating to income and
allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each Receivable, the
Trust might be required to incur additional expense but it is believed that
there would not be a material adverse effect on Certificateholders.
Discount and Premium. It is believed that the Receivables will not be
issued with OID, and, therefore, the Trust should not have OID income.
However, the purchase price paid by the Trust for the Receivables may be
greater or less than the remaining aggregate Principal Balance of the
Receivables at the time of purchase. If so, the Receivables will have been
acquired at a premium or discount, as the case may be. (As indicated above,
the Trust will make this calculation on an aggregate basis, but might be
required to recompute it on a Receivable-by-Receivable basis.)
If the Trust acquires the Receivables at a market discount or premium,
the Trust will elect to include any such discount in income currently as it
accrues over the life of the Receivables or to offset any such premium
against interest income on the Receivables. As indicated above, a portion of
such market discount income or premium deduction will be allocated to
Certificateholders.
Section 708 Termination. Under Section 708 of the Code, the Trust will
be deemed to terminate for federal income tax purposes if 50% or more of the
capital and profits interests in the Trust are sold or exchanged within a
12-month period. If such a termination occurs, the Trust will be considered
to distribute its assets to the partners, who would then be treated as
recontributing those assets to the Trust, as a new partnership. Under
proposed regulations issued on May 9, 1996, if such a termination occurs the
Trust will be considered to have transferred all of its assets and
liabilities to a new partnership in exchange for interests in the new
partnership, and then, immediately thereafter, to have distributed these
partnership interest to its partners in liquidation of the terminating
partnership. The Trust will not comply with certain technical requirements
that might apply when such a constructive termination occurs under either the
existing or proposed regulations. As a result, the Trust may be subject to
certain tax penalties and may incur additional expenses if it is required to
comply with those requirements. Furthermore, the Trust might not be able to
comply due to lack of data.
Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates
sold. A Certificateholder's tax basis in a Certificate will generally equal
the holder's cost increased by the holder's share of Trust income (includible
in income) and decreased by any distributions received with respect to such
Certificate. In addition, both the tax basis in the Certificates and the
amount realized on a sale of a Certificate would include the holder's share
of the Notes and other liabilities of the Trust. A holder acquiring
Certificates at different prices may be required to maintain a single
aggregate adjusted tax basis in such Certificate, and, upon sale or other
disposition of some of the Certificates, allocate a portion of such aggregate
tax basis to the Certificates sold (rather than maintaining a separate tax
basis in each Certificate for purposes of computing gain or loss on a sale of
that Certificate).
Any gain on the sale of a Certificate attributable to the holder's share
of unrecognized accrued market discount on the Receivables would generally be
treated as ordinary income to the holder and would give rise to special tax
reporting requirements. The Trust does not expect to have any other assets
that would give rise to such special reporting requirements. Thus, to avoid
those special reporting requirements, the Trust will elect to include market
discount in income as it accrues.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash distributions with respect thereto, such excess will generally give rise
to a capital loss upon the retirement of the Certificates.
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Allocations Between Transferors and Transferees. In general, the Trust's
taxable income and losses will be determined monthly and the tax items for a
particular calendar month will be apportioned among the Certificateholders in
proportion to the principal amount of Certificates owned by them as of the
close of the last day of such month. As a result, a holder purchasing
Certificates may be allocated tax items (which will affect its tax liability
and tax basis) attributable to periods before the actual transaction.
The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or
losses of the Trust might be reallocated among the Certificateholders. The
Owner Trustee is authorized to revise the Trust's method of allocation
between transferors and transferees to conform to a method permitted by
future regulations.
Section 754 Election. In the event that a Certificateholder sells its
Certificates at a profit (or loss), the purchasing Certificateholder will
have a higher (or lower) basis in the Certificates than the selling
Certificateholder had. The tax basis of the Trust's assets will not be
adjusted to reflect that higher (or lower) basis unless the Trust were to
file an election under Section 754 of the Code. In order to avoid the
administrative complexities that would be involved in keeping accurate
accounting records, as well as potentially onerous information reporting
requirements, the Trust will not make such election. As a result,
Certificateholders might be allocated a greater or lesser amount of Trust
income than would be appropriate based on their own purchase price for
Certificates.
Administrative Matters. The Owner Trustee is required to keep or have
kept complete and accurate books of the Trust. Such books will be maintained
for financial reporting and tax purposes on an accrual basis and the fiscal
year of the Trust will be the calendar year. The Trustee will file a
partnership information return (IRS Form 1065) with the IRS for each taxable
year of the Trust and will report each Certificateholder's allocable share of
items of Trust income and expense to holders and the IRS on Schedule K-1.
The Trust will provide the Schedule K-1 information to nominees that fail to
provide the Trust with the information statement described below and such
nominees will be required to forward such information to the beneficial
owners of the Certificates. Generally, holders must file tax returns that
are consistent with the information return filed by the Trust or be subject
to penalties unless the holder notifies the IRS of all such inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as a
nominee at any time during a calendar year is required to furnish the Trust
with a statement containing certain information on the nominee, the
beneficial owners and the Certificates so held. Such information includes
(i) the name, address and taxpayer identification number of the nominee and
(ii) as to each beneficial owner (x) the name, address and identification
number of such person, (y) whether such person is a United States person, a
tax-exempt entity or a foreign government, an international organization, or
any wholly owned agency or instrumentality of either of the foregoing, and
(z) certain information on Certificates that were held, bought or sold on
behalf of such person throughout the year. In addition, brokers and
financial institutions that hold Certificates through a nominee are required
to furnish directly to the Trust information as to themselves and their
ownership of Certificates. A clearing agency registered under Section 17A of
the Exchange Act is not required to furnish any such information statement to
the Trust. The information referred to above for any calendar year must be
furnished to the Trust on or before the following January 31. Nominees,
brokers and financial institutions that fail to provide the Trust with the
information described above may be subject to penalties.
The Seller will be designated as the tax matters partner in the related
Trust Agreement and, as such, will be responsible for representing the
Certificateholders in any dispute with the IRS. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on which
the partnership information return is filed. Any adverse determination
following an audit of the return of the Trust by the appropriate taxing
authorities could result in an adjustment of the returns of the
Certificateholders, and, under certain circumstances, a Certificateholder may
be precluded from separately litigating a proposed adjustment to the items of
the Trust. An adjustment could also result in an audit of a
Certificateholder's returns and adjustments of items not related to the
income and losses of the Trust.
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Tax Consequences to Foreign Certificateholders. As discussed below, an
investment in a Certificate is not suitable for any non-U.S. person which is
not eligible for a complete exemption from U.S. withholding tax on interest
under a tax treaty with the United States. Accordingly, no interest in a
Certificate should be acquired by or on behalf of any such non-U.S. person.
No regulations, published rulings or judicial decisions exist that would
discuss the characterization for federal withholding tax purposes with
respect to non-U.S. persons of a partnership with activities substantially
the same as the Trust. Depending upon the particular terms of the related
Trust Agreement and Sale and Servicing Agreement, a trust may be considered
to be engaged in a trade or business in the United States for purposes or
federal withholding taxes with respect to non-U.S. persons. If the Trust is
considered to be engaged in a trade or business in the United States for such
purposes, the income of the Trust distributable to a non-U.S. person would be
subject to federal withholding tax at a rate of 35% for persons taxable as a
corporation and 39.6% for all other non-US. persons. Also, in such cases, a
non-U.S. Certificateholder that is a corporation may be subject to the branch
profits tax. If the Trust is notified that a Certificateholder is a foreign
person, the Trust may withhold as if it were engaged in a trade or business
in the United States in order to protect the Trust from possible adverse
consequences of a failure to withhold. Subsequent adoption of Treasury
regulations or the issuance of other administrative pronouncements may
require the Trust to change its withholding procedures.
If a Trust is engaged in a trade or business, each foreign
Certificateholder will be required to file a U.S. individual or corporate
income tax return (including in the case of a corporation, the branch profits
tax) on its share of the Trust's income. Each foreign holder must obtain a
taxpayer identification number from the IRS and submit that number to the
withholding agent on Form W-8 in order to assure appropriate crediting of any
taxes withheld. A foreign holder generally would be entitled to file with
the IRS a claim for refund with respect to withheld taxes, taking the
position that no taxes were due because the Trust was not engaged in a U.S.
trade or business. However, interest payments made to (or accrued by) a
Certificateholder who is a foreign person may be considered guaranteed
payments to the extent such payments are determined without regard to the
income of the Trust and for that reason or because of the nature of the
Receivables, the interest will likely not be considered "portfolio interest."
As a result, even if the Trust is not considered to be engaged in a U.S.
trade or business, Certificateholders would be subject to United States
federal income tax which must be withheld at a rate of 30% on their share of
the Trusts income (without reduction for interest expense), unless reduced or
eliminated pursuant to an applicable income tax treaty. If the Trust is
notified that a Certificateholder is a foreign person, the Trust may be
required to withhold and pay over such tax, which can exceed the amounts
otherwise available for distribution to such a Certificateholder. A foreign
holder would generally be entitled to file with the IRS a refund claim for
such withheld taxes, taking the position that the interest was portfolio
interest and therefore not subject to U.S. tax. However, the IRS may
disagree and no assurance can be given as to the appropriate amount of tax
liability. As a result, each potential foreign Certificateholder should
consult its tax advisor as to whether the tax consequences of holding an
interest in a Certificate make it an unsuitable investment.
Backup Withholding. Distributions made on the Certificates and proceeds
from the sale of the Certificates will be subject to a "backup" withholding
tax of 31% if, in general, the Certificateholder fails to comply with certain
identification procedures, unless the holder is an exempt recipient under
applicable provisions of the Code.
STATE TAX CONSIDERATIONS
Potential Noteholders and Certificateholders should consider the state
and local income tax consequences of the purchase, ownership and disposition
of the Notes and Certificates. State and local income tax laws may differ
substantially from the corresponding federal law, and this discussion does
not purport to describe any aspect of the income tax laws of any state or
locality. Therefore, potential Noteholders and Certificateholders should
consult their own tax advisors with respect to the various state and local
tax consequences of an investment in the Notes and Certificates.
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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
Securities might be deemed to constitute prohibited transactions under ERISA
and the Code if assets of the Trust were deemed to be assets of a Benefit
Plan. Under a regulation issued by the United States Department of Labor (the
"Plan Assets Regulation"), the assets of the Trust would be treated as plan
assets of a Benefit Plan for the purposes of ERISA and the Code only if the
Benefit Plan acquires an "Equity Interest" in the Trust and none of the
exceptions contained in the Plan Assets Regulation is applicable. An equity
interest is defined under the Plan Assets Regulation as an interest other
than an instrument which is treated as indebtedness under applicable local
law and which has no substantial equity features. The Seller believes that
the Notes should be treated as indebtedness without substantial equity
features for purposes of the Plan Assets Regulation. However, without regard
to whether the Notes are treated as an Equity Interest for such purposes, the
acquisition or holding of Notes by or on behalf of a Benefit Plan could be
considered to give rise to a prohibited transaction if the Trust, the Owner
Trustee or the Indenture Trustee, the owner of collateral, or any of their
respective affiliates is or becomes a party in interest or a disqualified
person with respect to such Benefit Plan. In such case, certain exemptions
from the prohibited transaction rules could be applicable depending on the
type and circumstances of the plan fiduciary making the decision to acquire a
Note. Included among these exemptions are: Prohibited Transaction Class
Exemption ("PTCE") 90-1, regarding investments by insurance company pooled
separate accounts; PTCE 95-60, regarding investments by insurance company
general accounts; PTCE 91-38, regarding investments by bank collective
investment funds; PTCE 96-23, regarding transactions affected by in-house
asset managers; and PTCE 84-14, regarding transactions effected by "qualified
professional asset managers." Each investor using the assets of a Benefit
Plan which acquires the Notes, or to whom the Notes are transferred, will be
deemed to have represented that the acquisition and continued holding of the
Notes will be covered by one of the exemptions listed above or by another
Department of Labor Class Exemption.
The Certificates may not be acquired by (a) an employee benefit plan (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title
I of ERISA, (b) a plan described in Section 4975(e)(1) of the Code or (c) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity. By its acceptance of a Certificate, each
Certificateholder will be deemed to have represented and warranted that it is
not subject to the foregoing limitation.
Employee benefit plans that are governmental plans (as defined in Section
3(32) of ERISA) and certain church plans (as defined in Section 3(33) of
ERISA) are not subject to ERISA requirements.
A plan fiduciary considering the purchase of Notes should consult its tax
and/or legal advisors regarding whether the assets of the Trust would be
considered plan assets, the possibility of exemptive relief from the
prohibited transaction rules and other issues and their potential
consequences.
LEGAL INVESTMENT
The Class A-1 Notes will be eligible securities for purchase by money
market funds under the Investment Company Act of 1940, as amended.
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RATINGS
It is a condition to issuance that the Class A-1 Notes be rated A-1+ by
S&P, and P-1 by Moody's, and that the Class A-2 Notes, the Class A-3 Notes
and the Certificates be rated AAA by S&P and Aaa by Moody's. The ratings by
the Rating Agencies of the Securities will be (i) with respect to the Class
A-1 Notes, without regard to the Note Policy in the case of S&P and
substantially based on the Note Policy in the case of Moody's and (ii) with
respect to all other Classes of Notes and Certificates, based primarily on
the Policies. There is no assurance that the ratings initially assigned to
the Notes and the Certificates will not subsequently be lowered or withdrawn
by the Rating Agencies.
UNDERWRITING
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 Securities set forth opposite its name
below:
Class A-1 Notes
Principal Amount
Bear, Stearns & Co. Inc. $
Credit Suisse First Boston Corporation
Total $
Class A-2 Notes
Principal Amount
Bear, Stearns & Co. Inc. $
----------
Credit Suisse First Boston Corporation
Total $
Class A-3 Notes
Principal Amount
Bear, Stearns & Co. Inc. $
----------
Credit Suisse First Boston Corporation
Total $
Certificates
Principal Amount
Bear, Stearns & Co. Inc. $
----------
Credit Suisse First Boston Corporation
Total $
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The Seller has been advised by the Underwriters that they propose
initially to offer the Securities to the public at the prices set forth
herein, and to certain dealers at such prices less the initial concession not
in excess of _______% per Class A-1 Note, _______% per Class A-2 Note,
________% per Class A-3 Note and _____% per Certificate. The Underwriters
may allow and such dealers may reallow a concession not in excess of _______%
per Class A-1 Note, _______% per Class A-2 Note, ________% per Class A-3 Note
and _____% per Certificate to certain other dealers. After the initial
public offering of the Securities, 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 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 Financial Security and Subsidiaries as
of December 31, 1995 and 1994 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, 1995, 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
Securities will be passed upon for the Underwriters by Dewey Ballantine.
Certain legal matters will be passed upon for the Insurer by Bruce E. Stern,
General Counsel, the Insurer. The Insurer is represented by Rogers & Wells.
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INDEX OF DEFINED TERMS
Page
ABS 24
ABS Table 24
Accelerated Principal 40
Aggregate risks 31
AmeriCredit 4
Amount Financed 40
APR 6
Available Funds 40
Basic Servicing Fee 38
Benefit Plan 12, 57
Business Day 7
Capitalized Interest Account 11, 37
Cedel 1, 4
Certificate Balance 40
Certificate Distribution Account 37
Certificate Policy 11
Certificate Policy Claim Amount 41
Certificate Prepayment Amount 10, 35
Certificateholders 9
Certificateholders' Interest Carryover Shortfall 40
Certificateholders' Accelerated Principal Amount 40
Certificateholders' Distributable Amount 40
Certificateholders' Interest Distributable Amount 41
Certificateholders' Monthly Interest Distributable Amount 41
Certificateholders' Monthly Principal Distributable Amount 41
Certificateholders' Percentage 41
Certificateholders' Principal Carryover Shortfall 41
Certificateholders' Principal Distributable Amount 41
Certificates 1, 5
Class A-1 Final Scheduled Distribution Date 7
Class A-1 Notes 1, 4
Class A-2 Notes 1, 4
Class A-3 Notes 1, 4
Code 51
Collected Funds 41
Collection Account 37
Commission 3
Contracts 18
Cram Down Loss 41
Dealer Agreements 17
Deficiency Claim Amount 41
Deficiency Notice 42
Determination Date 42
Dissolution Event 15
Distribution Amount 42
Distribution Date 2, 7, 39
Distributions 40
DTC 1
Euroclear 1, 4
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Events of Default 34
Exchange Act 3
Final Schedule Distribution Date 2
Financed Vehicles 2, 6
Financial Security 30
Funding Period 11, 37
Guaranteed Distribution 48
Holdings 3, 30
Indenture 1
Indenture Trustee 1, 4
Index Maturity 32
Initial Cutoff Date 1, 21
Initial Financed Vehicles 1, 5
Initial Pre-Funded Amount 11, 37
Initial Receivables 1, 5
Insurance Agreement 9
Insurance Agreement Indenture Cross Defaults 34
Insurer 3, 4
Insurer Default 46
Insurer Optional Deposit 42
Interest Period 7, 32
Interest Rate 7
IRS 51
Issuer 4
LIBOR 7, 32
LIBOR Determination Date 32
Liquidated Receivable 42
Lockbox 37
Lockbox Account 37
Mandatory Redemption Date 11, 37
Monthly Capitalized Interest Amount 11, 37
Monthly Period 8, 33
Moody's 12
Net Liquidation Proceeds 42
Note Distribution Account 37
Note Policy 11
Note Policy Claim Amount 43
Note Prepayment Amount 9, 34
Noteholder Monthly Interest Distributable Amount 43
Noteholders 7
Noteholders' Accelerated Principal Amount 42
Noteholders' Distributable Amount 42
Noteholders' Interest Carryover Shortfall 42
Noteholders' Interest Distributable Amount 42
Noteholders' Monthly Principal Distributable Amount 43
Noteholders' Percentage 43
Noteholders' Principal Carryover Shortfall 43
Noteholders' Principal Distributable Amount 43
Notes 1, 4
OID 51
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Order 48, 49
Original Pool Balance 8
Owner Trustee 1, 4
Payment Date 7
Plan Assets Regulation 57
Policies 1
Pool Balance 17
Pre-Funded Amount 11 , 37
Pre-Funding Account 2, 9, 11, 37
Precomputed Receivables 24
Principal Balance 43
Principal Distributable Amount 8, 33, 43
Pro Forma Security Balance 43
Prospectus 3
PTCE 57
Purchase Agreement 5
Purchase Agreements 36
Purchase Amount 44
Rating Agencies 12
Receivables 2
Record Date 7
Redemption Price 34
Reference Banks 33
Required Pro Forma Security Balance 44
S&P 12
Schedule of Receivables 36
Scheduled Payments 47
Securities 1
Securityholders 9
Seller 1, 4
Servicer 4
Servicer Termination Event 45
Simple Interest Receivables 24
Single risks 31
Step-Down Amount 44
Subsequent Cutoff Date 6
Subsequent Financed Vehicles 2, 5
Subsequent Purchase Agreement 5
Subsequent Receivables 2, 5
Subsequent Transfer Date 6
Telerate Page 3750 33
Trust 1, 4
Trust Agreement 4
Trust Collateral Agent 1, 4
Trust Documents 36
Trust Property 5
Underwriters 58
Underwriting Agreement 58
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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-A 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.
AI-1
<PAGE>
Trading between CEDEL and/or Euroclear Participants. Secondary market
trading between CEDEL Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC, Seller and CEDEL or Euroclear Participants. When Global
Securities are to be transferred from the account of a DTC Participant to the
account of a CEDEL Participant or a Euroclear Participant, the purchaser will
send instructions to CEDEL or Euroclear through a CEDEL Participant or Euroclear
Participant at least one business day prior to settlement. CEDEL or Euroclear
will instruct the Relevant Depository, as the case may be, to receive the Global
Securities against payment. Payment will include interest accrued on the Global
Securities from and including the last coupon payment date to and excluding the
settlement date, on the basis of the actual number of days in such accrual
period and a year assumed to consist of 360 days. For transactions settling on
the 31st of the month, payment will include interest accrued to and excluding
the first day of the following month. Payment will then be made by the Relevant
Depository to the DTC Participant's account against delivery of the Global
Securities. After settlement has been completed, the Global Securities will be
credited to the respective clearing system and by the clearing system, in
accordance with its usual procedures, to the CEDEL Participant's or Euroclear
Participant's account. The securities credit will appear the next day (European
time) and the cash debt will be back-valued to, and the interest on the Global
Securities will accrue from, the value date (which would be the preceding day
when settlement occurred in New York). If settlement is not completed on the
intended value date (i.e., the trade fails), the CEDEL or Euroclear cash debt
will be valued instead as of the actual settlement date.
CEDEL Participants and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to preposition funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within CEDEL or Euroclear. Under this approach,
they may take on credit exposure to CEDEL or Euroclear until the Global
Securities are credited to their account one day later.
As an alternative, if CEDEL or Euroclear has extended a line of credit to
them, CEDEL Participants or Euroclear Participants can elect not to preposition
funds and allow that credit line to be drawn upon to finance settlement. Under
this procedure, CEDEL Participants or Euroclear Participants purchasing Global
Securities would incur overdraft charges for one day, assuming they cleared the
overdraft when the Global Securities were credited to their accounts. However,
interest on the Global Securities would accrue from the value date. Therefore,
in many cases the investment income on the Global Securities earned during that
one-day period may substantially reduce or offset the amount of such overdraft
charges, although the result will depend on each CEDEL Participant's or
Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for crediting Global Securities
to the respective European Depository for the benefit of CEDEL Participants or
Euroclear Participants. The sale proceeds will be available to the DTC seller
on the settlement date. Thus, to the DTC Participants a cross-market
transaction will settle no differently than a trade between two DTC
Participants.
Trading between CEDEL or Euroclear Seller and DTC Purchaser. Due to time
zone differences in their favor, CEDEL Participants and Euroclear
Participants may employ their customary procedures for transactions in which
Global Securities are to be transferred by the respective clearing system,
through the respective Depository, to a DTC Participant. The seller will
send instructions to CEDEL or Euroclear through a CEDEL Participant or
Euroclear Participant at least one business day prior to settlement. In
these cases CEDEL or Euroclear will instruct the respective Depository, as
appropriate, to credit the Global Securities to the DTC Participant's account
against payment. Payment will include interest accrued on the Global
Securities from and including the last coupon payment to and excluding the
settlement date on the basis of the actual number of days in such accrual
period and a year assumed to consist to 360 days. For transactions settling
on the 31st of the month, payment 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
AI-2
<PAGE>
of the cash proceeds in the CEDEL Participant's or Euroclear Participant's
account would be back-valued to the value date (which would be the preceding
day, when settlement occurred in New York). In the event that the CEDEL
Participant or Euroclear Participant have a line of credit with its
respective clearing system and elect to be in debt in anticipation of receipt
of the sale proceeds in its account, the back-valuation will extinguish any
overdraft incurred over that one-day period. If settlement is not completed
on the intended value date (i.e., the trade fails), receipt of the cash
proceeds in the CEDEL Participant's or Euroclear Participant's account would
instead be valued as of the actual settlement date.
Finally, day traders that use CEDEL or Euroclear and that purchase Global
Securities from DTC Participants for delivery to CEDEL Participants or Euroclear
Participants should note that these trades would automatically fail on the sale
side unless affirmative action is taken. At least three techniques should be
readily available to eliminate this potential problem:
(a) borrowing through CEDEL or Euroclear for one day (until the purchase
side of the trade is reflected in their CEDEL or Euroclear accounts) in
accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant no
later than one day prior to settlement, which would give the Global Securities
sufficient time to be reflected in their CEDEL or Euroclear account in order to
settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade so
that the value date for the purchase from the DTC Participant is at least one
day prior to the value date for the sale to the CEDEL Participant or Euroclear
Participant.
Certain U.S. Federal Income Tax Documentation Requirements
A beneficial owner of Global Securities holding securities through CEDEL or
Euroclear (or through DTC if the holder has an address outside the U.S.) will be
subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original issue discount) on registered debt issued by
U.S. Persons (as defined below), unless (i) each clearing system, bank or other
financial institution that holds customers' securities in the ordinary course of
its trade or business in the chain of intermediaries between such beneficial
owner and the U.S. entity required to withhold tax complies with applicable
certification requirements and (ii) such beneficial owner takes one of the
following steps to obtain an exemption or reduced tax rate:
Exemption for Non-U.S. Persons (Form W-8). Beneficial Owners of Global
Securities that are Non-U.S. Persons (as defined below) can obtain a complete
exemption from the withholding tax by filing a signed Form W-8 (Certificate of
Foreign Status). If the information shown on Form W-8 changes, a new Form W-8
must be filed within 30 days of such change.
Exemption for Non-U.S. Persons with effectively connected income (Form
4224). A Non-U.S. Person (as defined below), including a non-U.S. corporation
or bank with a U.S. branch, for which the interest income is effectively
connected with its conduct of a trade or business in the United States, can
obtain an exemption from the withholding tax by filing Form 4224 (Exemption
from Withholding of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons residing in a country that has a tax
treaty with the United States can obtain an exemption or reduced tax rate
(depending on the treaty terms) by filing Form 1001 (Ownership, Exemption or
Reduced Rate Certificate). If 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).
AI-3
<PAGE>
U.S. Federal Income Tax Reporting Procedure. The Owner of a Global
Security or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom it holds
(the clearing agency, in the case of persons holding directly on the books of
the clearing agency). Form W-8 and Form 1001 are effective for three calendar
years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity organized in or under
the laws of the United States or any political subdivision thereof or (iii) an
estate or trust that is subject to U.S. federal income tax regardless of the
source of its income. The term "Non-U.S. Person" means any person who is not a
U.S. Person. This summary does not deal with all aspects of U.S. Federal income
tax withholding that may be relevant to foreign holders of the Global
Securities. Investors are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of the Global
Securities.
AI-4
<PAGE>
PROSPECTUS
________________________________________________________________________________
Auto Receivables Backed Securities Issuable in Series
AMERICREDIT FINANCIAL SERVICES, INC.
This Prospectus describes certain Auto Receivables Backed Notes (the
"Notes") and Auto Receivables Backed Certificates (the "Certificates" and,
together with the Notes, the "Securities") that may be sold from time to time in
one or more series, in amounts, at prices and on terms to be determined at the
time of sale and to be set forth in a supplement to this Prospectus (each, a
"Prospectus Supplement"). Each series of Securities may include one or more
classes of Notes and one or more classes of Certificates, which will be issued
either by the Company, a Transferor (as hereinafter defined), or by a trust to
be formed by the Company for the purpose of issuing one or more series of such
Securities (each, a "Trust"). The Company, a Transferor or a Trust, as
appropriate, issuing Securities as described in this Prospectus and the related
Prospectus Supplement shall be referred to herein as the "Issuer."
Each class of Securities of any series will evidence beneficial ownership
in a segregated pool of assets (the "Trust Property") (such Securities,
"Certificates") or will represent indebtedness of the Issuer secured by the
Trust Property (such Securities, "Notes"), as described herein and in the
related Prospectus Supplement. The Trust Property may consist of any
combination of retail installment sales contracts between manufacturers, dealers
or certain other originators and retail purchasers secured by new and used
automobiles and light duty trucks financed thereby, or participation interests
therein, together with all monies received relating thereto (the "Contracts").
The Trust Property may also include a security interest in the underlying new
and used automobiles and light duty trucks and property relating thereto,
together with the proceeds thereof (the "Vehicles" together with the Contracts,
the "Receivables"). If and to the extent specified in the related Prospectus
Supplement, credit enhancement with respect to the Trust Property or any class
of Securities may include any one or more of the following: a financial
guaranty insurance policy (a "Policy") issued by an insurer specified in the
related Prospectus Supplement, a reserve account, letters of credit, credit or
liquidity facilities, third party payments or other support, cash deposits or
other arrangements. In addition to or in lieu of the foregoing, credit
enhancement may be provided by means of subordination, cross-support among the
Receivables or over-collateralization. See "Description of the Trust Agreements
- -- Credit and Cash Flow Enhancement." The Receivables in the Trust Property for
a series will have been originated by the Company on or prior to the date of
issuance of the related Securities, as described herein and in the related
Prospectus Supplement. The Receivables included in a Trust Fund will be
serviced by a servicer (the "Servicer") described in the related Prospectus
Supplement.
Each series of Securities may include one or more classes (each, a
"Class"). A series may include one or more Classes of Securities entitled to
principal distributions, with disproportionate, nominal or no interest
distributions, or to interest distributions, with disproportionate, nominal or
no principal distributions. The rights of one or more Classes of Securities of
any series may be senior or subordinate to the rights of one or more of the
other Classes of Securities. A series may include two or more Classes of
Securities which differ as to the timing, order or priority of payment, interest
rate or amount of distributions of principal or interest or both. Information
regarding each Class of Securities of a series, together with certain
characteristics of the related Receivables, will be set forth in the related
Prospectus Supplement. The rate of payment in respect of principal of the
Securities of any Class will depend on the priority of payment of such a Class
and the rate and timing of payments (including prepayments, defaults,
liquidations or repurchases of Receivables) on the related Receivables. A rate
of payment lower or higher than that anticipated may affect the weighted average
life of each Class of Securities in the manner described herein and in the
related Prospectus Supplement. See "Description of the Securities."
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" PAGE 13 HEREIN AND IN THE RELATED PROSPECTUS SUPPLEMENT.
THE NOTES OF A GIVEN SERIES REPRESENT OBLIGATIONS OF THE ISSUER ONLY AND DO NOT
REPRESENT OBLIGATIONS OF THE COMPANY, ANY SERVICER OR ANY OF THEIR RESPECTIVE
AFFILIATES. THE CERTIFICATES OF A GIVEN SERIES REPRESENT BENEFICIAL INTERESTS
IN THE RELATED TRUST ONLY AND DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS
OF THE COMPANY, ANY TRANSFEROR, ANY SERVICER OR ANY OF THEIR RESPECTIVE
AFFILIATES. NEITHER THE SECURITIES NOR THE UNDERLYING RECEIVABLES WILL BE
GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY THE
COMPANY, ANY SERVICER, ANY TRUSTEE OR ANY OF THEIR RESPECTIVE AFFILIATES, EXCEPT
AS SET FORTH IN THE RELATED PROSPECTUS SUPPLEMENT. SEE ALSO "RISK FACTORS" PAGE
13.
________________________________________________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
________________________________________________________________________________
Offers of the Securities may be made through one or more different
methods, including offerings through underwriters as more fully described under
"Method of Distribution" herein and in the related Prospectus Supplement. Prior
to issuance, there will have been no market for the Securities of any series,
and there can be no assurance that a secondary market for the Securities will
develop, or if it does develop, it will continue.
Retain this Prospectus for future reference. This Prospectus may not
be used to consummate sales of Securities unless accompanied by a Prospectus
Supplement.
________________________________________________________________________________
The date of this Prospectus is February 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.
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<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.
4
<PAGE>
If and to the extent specified in the related Prospectus Supplement,
credit enhancement with respect to the Trust Property or any class of
Securities may include any one or more of the following: a financial
guaranty insurance policy (a "Policy") issued by an insurer specified
in the related Prospectus Supplement, a reserve account, letters of
credit, credit or liquidity facilities, third party payments or other
support, cash deposits or other arrangements. In addition to or in
lieu of the foregoing, credit enhancement may be provided by means of
subordination, cross-support among the Receivables or
over-collateralization. The Company will originate Receivables or
acquire Receivables from one or more originators on or prior to the
date of issuance of the related Securities, as described herein and in
the related Prospectus Supplement.
With respect to Securities issued by a Trust, each Trust will be
established pursuant to an agreement (each, a "Pooling Agreement") by
and between the Company and the Trustee named therein. Each Pooling
Agreement will describe the related pool of Receivables held by the
Trust.
With respect to Securities that represent debt issued by the Issuer,
the Issuer will enter into an indenture (each, an "Indenture") by and
between the Issuer and the trustee named on such Indenture (the
"Indenture Trustee"). Each Indenture will describe the related pool
of Receivables comprising the Trust Property and securing the debt
issued by the related Issuer.
The Receivables comprising the Trust Property will be serviced by the
Servicer pursuant to a servicing agreement (each, a "Servicing
Agreement") by and between the Servicer and the related Issuer.
In the case of the Trust Property of any class of Securities, the
contractual arrangements relating to the establishment of a Trust, if
any, the servicing of the related Receivables and the issuance of the
related Securities may be contained in a single agreement, or in
several agreements which combine certain aspects of the Pooling
Agreement, the Servicing Agreement and the Indenture described above
(for example, a pooling and servicing agreement, or a servicing and
collateral management agreement). For purposes of this Prospectus,
the term "Trust Agreement" as used with respect to Trust Property
means, collectively, and except as otherwise described in the related
Prospectus Supplement, any and all agreements relating to the
establishment of a Trust, if any, the servicing of the related
Receivables and the issuance of the related Securities. The term
"Trustee" means any and all persons acting as a trustee pursuant to a
Trust Agreement.
Securities Will Be Non-Recourse.
The Securities will not be obligations, either recourse or
non-recourse (except for certain non-recourse debt described under
"Certain Tax Considerations"), of the Company, the related Servicer or
any person other than the related Issuer. The Notes of a given series
represent obligations of the Issuer, and the Certificates of a given
series represent beneficial interests in the related Issuer only and
do not represent interests in or obligations of the Company, the
related Servicer or any of their respective affiliates other than the
related Issuer. In the case of Securities that represent beneficial
ownership interest in the related Issuer, such Securities will
represent the beneficial ownership interests in such Issuer and the
sole source of payment will be the assets of such Issuer. In the case
of Securities that represent debt issued by the related Issuer, such
Securities will be secured by assets in the related Trust Property.
Notwithstanding the foregoing, and as to be described in the related
Prospectus Supplement, certain types of credit enhancement, such as a
letter of credit, financial guaranty insurance policy or reserve fund
may
5
<PAGE>
constitute a full recourse obligation of the issuer of such credit
enhancement.
General Nature of the Securities as Investments.
All of the Securities offered pursuant to this Prospectus and the
related Prospectus Supplement will be rated in one of the four highest
rating categories by one or more Rating Agencies (as defined herein).
Additionally, except to the extent provided in the related Prospectus
Supplement, all of the Securities offered pursuant to this Prospectus
and the related Prospectus Supplement will be of the fixed-income type
("Fixed Income Securities"). Fixed Income Securities will generally
be styled as debt instruments, having a principal balance and a
specified interest rate ("Interest Rate"). Fixed Income Securities
may either represent beneficial ownership interests in the related
Receivables held by the related Trust or debt secured by certain
assets of the related Issuer.
Each series or Class of Fixed Income Securities offered pursuant to
this Prospectus may have a different Interest Rate, which may be a
fixed or adjustable Interest Rate. The related Prospectus Supplement
will specify the Interest Rate for each series or Class of Fixed
Income Securities described therein, or the initial Interest Rate and
the method for determining subsequent changes to the Interest Rate.
A series may include one or more Classes of Fixed Income Securities
("Strip Securities") entitled (i) to principal distributions, with
disproportionate, nominal or no interest distributions, or (ii) to
interest distributions, with disproportionate, nominal or no principal
distributions. In addition, a series of Securities may include two or
more Classes of Fixed Income Securities that differ as to timing,
sequential order, priority of payment, Interest Rate or amount of
distribution of principal or interest or both, or as to which
distributions of principal or interest or both on any Class may be
made upon the occurrence of specified events, in accordance with a
schedule or formula, or on the basis of collections from designated
portions of the related pool of Receivables. Any such series may
include one or more Classes of Fixed Income Securities ("Accrual
Securities"), as to which certain accrued interest will not be
distributed but rather will be added to the principal balance (or
nominal balance, in the case of Accrual Securities which are also
Strip Securities) thereof on each Payment Date, as hereinafter
defined, or in the manner described in the related Prospectus
Supplement.
If so provided in the related Prospectus Supplement, a series may
include one or more other Classes of Fixed Income Securities
(collectively, the "Senior Securities") that are senior to one or more
other Classes of Fixed Income Securities (collectively, the
"Subordinate Securities") in respect of certain distributions of
principal and interest and allocations of losses on Receivables.
In addition, certain Classes of Senior (or Subordinate) Securities may
be senior to other Classes of Senior (or Subordinate) Securities in
respect of such distributions or losses.
General Payment Terms of Securities.
As provided in the related Trust Agreement and as described in the
related Prospectus Supplement, the holders of the Securities
("Securityholders") will be entitled to receive payments on their
Securities on specified dates (each, a "Payment Date"). Payment Dates
with respect to Fixed Income Securities will occur monthly, quarterly
or semi-annually, as described in the related Prospectus Supplement.
6
<PAGE>
The related Prospectus Supplement will describe a date (the "Record
Date") preceding such Payment Date, as of which the Trustee or its
paying agent will fix the identity of the Securityholders for the
purpose of receiving payments on the next succeeding Payment Date. As
described in the related Prospectus Supplement, the Payment Date will
be a specified day of each month, commonly the tenth, twelfth,
fifteenth or twenty-fifth day of each month (or, in the case of
quarterly-pay Securities, the tenth, twelfth, fifteenth or
twenty-fifth day of every third month; and in the case of semi-annual
pay Securities, the tenth, twelfth, fifteenth or twenty-fifth day of
every sixth month) and the Record Date will be the close of business
as of the last day of the calendar month that precedes the calendar
month in which such Payment Date occurs.
Each Trust Agreement will describe a period (each, a "Remittance
Period") preceding each Payment Date (for example, in the case of
monthly-pay Securities, the calendar month preceding the month in
which a Payment Date occurs). As more fully described in the related
Prospectus Supplement, collections received on or with respect to the
related Receivables constituting Trust Property during a Remittance
Period will be required to be remitted by the Servicer to the related
Trustee prior to the related Payment Date and will be used to fund
payments to Securityholders on such Payment Date. As may be described
in the related Prospectus Supplement, the related Trust Agreement may
provide that all or a portion of the payments collected on or with
respect to the related Receivables may be applied by the related
Trustee to the acquisition of additional Receivables during a
specified period (rather than be used to fund payments of principal to
Securityholders during such period), with the result that the related
Securities will possess an interest-only period, also commonly
referred to as a revolving period, which will be followed by an
amortization period. Any such interest only or revolving period may,
upon the occurrence of certain events to be described in the related
Prospectus Supplement, terminate prior to the end of the specified
period and result in the earlier than expected amortization of the
related Securities.
In addition, and as may be described in the related Prospectus
Supplement, the related Trust Agreement may provide that all or a
portion of such collected payments may be retained by the Trustee (and
held in certain temporary investments, including Receivables) for a
specified period prior to being used to fund payments of principal to
Securityholders.
Such retention and temporary investment by the Trustee of such
collected payments may be required by the related Trust Agreement for
the purpose of (a) slowing the amortization rate of the related
Securities relative to the installment payment schedule of the related
Receivables, or (b) attempting to match the amortization rate of the
related Securities to an amortization schedule established at the time
such Securities are issued. Any such feature applicable to any
Securities may terminate upon the occurrence of events to be described
in the related Prospectus Supplement, resulting in distributions to
the specified Securityholders and an acceleration of the amortization
of such Securities.
As more fully specified in the related Prospectus Supplement, neither
the Securities nor the underlying Receivables will be guaranteed or
insured by any governmental agency or instrumentality or the Company,
the related Servicer, any Trustee, or any of their affiliates.
No Investment Companies..... Neither the Company nor any Trust will register as
an "investment company" under the Investment
Company Act of 1940, as amended (the "Investment
Company Act").
The Residual Interest....... With respect to each Trust, the "Residual
Interest" at any time represents the rights to the
related Trust Property in excess of the
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Securityholders' interest of all series then
outstanding that were issued by such Trust. The
Residual Interest in any Trust Property will
fluctuate as the aggregate Pool Balance (as
hereinafter defined) of such Trust Fund changes
from time to time. A portion of the Residual
Interest in any Trust may be sold separately in
one or more public or private transactions.
Master Trusts; Issuance
of Additional
Series.............. As may be described in the related Prospectus
Supplement, the Company may cause one or more of the
Trusts (such a Trust, a "Master Trust") to issue
additional series of Securities from time to time.
Under each Trust Agreement relating to a Master Trust
(each, a "Master Trust Agreement"), the Company may
determine the terms of any such new series. See
"Description of the Securities -- Master Trusts."
The Company may cause the related Trustee to offer
any such new series to the public or other
investors, in transactions either registered under
the Securities Act or exempt from registration
thereunder, directly or through one or more
underwriters or placement agents, in fixed-price
offerings or in negotiated transactions or otherwise.
A new series to be issued by a Master Trust which
has a series outstanding may, only be issued upon
satisfaction of the conditions described herein
under "Description of the Securities -- Master
Trusts". Securities secured by Receivables held by a
Master Trust shall be entitled to moneys received
relating to such Receivables on a pari passu basis
with other Securities issued pursuant to the other
Trust Agreements by such Master Trust.
Cross-
Collateralization.... As described in the related Trust Agreement and
the related Prospectus Supplement, the source of
payment for Securities of each series will be the
assets of the related Trust Property only.
However, as may be described in the related
Prospectus Supplement, a series or class of
Securities may include the right to receive moneys
from a common pool of credit enhancement which may
be available for more than one series of Securities,
such as a master reserve account, master insurance
policy or a master collateral pool consisting of
similar Receivables. Notwithstanding the foregoing,
and as described in the related Prospectus
Supplement, no payment received on any Receivable
held by any Trust may be applied to the payment of
Securities issued by any other Trust (except to the
limited extent that certain collections in excess of
the amounts needed to pay the related Securities may
be deposited in a common master reserve account or
an overcollateralization account that provides
credit enhancement for more than one series of
Securities issued pursuant to the related Trust
Agreement).
Trust Property........As specified in the related Prospectus Supplement,
the Trust Property will consist of the related
Contracts, and may include a security interest in
the related Vehicles. If and to the extent
specified in the related Prospectus Supplement,
credit enhancement with respect to Trust Property
or any class of Securities may include any one or
more of the following: a Policy issued by an
insurer specified in the related Prospectus
Supplement, a reserve account, letters of credit,
credit or liquidity facilities, repurchase
obligations, third party payments or other
support, cash deposits or other arrangements. In
addition to or in lieu of the foregoing, credit
enhancement may be provided by means of
subordination, cross-support among the Receivables
or over-collateralization. See "Description of
the Trust Agreement -- Credit and Cash Flow
Enhancement." The Contracts are obligations for
the purchase of the Vehicles, or evidence
borrowings used to acquire the Vehicles. As
specified in the related Prospectus Supplement,
the Contracts may consist of any combination of
Rule of 78s Contracts, Fixed Value Contracts or
Simple Interest Contracts. Generally, "Rule of
78s Contracts" provide for fixed level monthly
payments which will
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amortize the full amount of the Contract over its
term. The Rule of 78s Contracts provide for
allocation of payments according to the "sum of
periodic balances" or "sum of monthly payments"
method (the "Rule of 78s"). Each Rule of 78s
Contract provides for the payment by the Obligor of
a specified total amount of payments, payable in
monthly installments on the related due date, which
total represents the principal amount financed and
finance charges in an amount calculated on the basis
of a stated annual percentage rate ("APR") for the
term of such Contract. The rate at which such
amount of finance charges is earned and,
correspondingly, the amount of each fixed monthly
payment allocated to reduction of the outstanding
principal balance of the related Contract are
calculated in accordance with the Rule of 78s.
Under the Rule of 78s, the portion of each payment
allocable to interest is higher during the early
months of the term of a Contract and lower during
later months than that under a constant yield method
for allocating payments between interest and
principal. Notwithstanding the foregoing, as
specified in the related Prospectus Supplement, all
payments received by the related Servicer on or in
respect of the Rule of 78s Contracts may be
allocated on an actuarial or simple interest basis.
Generally, the "Fixed Value Contracts" provide for
monthly payments with a final fixed value payment
which is greater than the scheduled monthly payments.
A Fixed Value Contract provides for amortization of
the loan over a series of fixed level payment monthly
installments, but also requires a final fixed value
payment due after payment of such monthly installments
which may be satisfied by (i) payment in full in cash
of such amount, (ii) transfer of the vehicle to the
Company provided certain conditions are satisfied or
(iii) refinancing the fixed value payment in
accordance with certain conditions. With respect to
Fixed Value Contracts, as specified in the related
Prospectus Supplement, only the principal and interest
payments due prior to the final fixed value payment
and not the final fixed value payment may be included
initially in the related Trust Property.
"Simple Interest Contracts" provide for the
amortization of the amount financed under the
receivable over a series of fixed level monthly
payments. However, unlike the monthly payment under
Rule of 78s Contracts, each monthly payment consists
of an installment of interest which is calculated on
the basis of the outstanding principal balance of the
receivable multiplied by the stated APR and further
multiplied by the period elapsed (as a fraction of a
calendar year) since the preceding payment of interest
was made. As payments are received under a Simple
Interest Contract, the amount received is applied
first to interest accrued to the date of payment and
the balance is applied to reduce the unpaid principal
balance. Accordingly, if an Obligor pays a fixed
monthly installment before its scheduled due date, the
portion of the payment allocable to interest for the
period since the preceding payment was made will be
less than it would have been had the payment been made
as scheduled, and the portion of the payment applied
to reduce the unpaid principal balance will be
correspondingly greater. Conversely, if an Obligor
pays a fixed monthly installment after its scheduled
due date, the portion of the payment allocable to
interest for the period since the preceding payment
was made will be greater than it would have been had
the payment been made as scheduled, and the portion of
the payment applied to reduce the unpaid principal
balance will be correspondingly less. In either case,
the Obligor pays a fixed monthly installment until the
final scheduled payment date, at which time the amount
of the final installment is increased or decreased as
necessary to repay the then outstanding principal
balance.
If an Obligor elects to prepay a Rule of 78s Contract
in full, it is entitled to a rebate of the portion of
the outstanding balance then due and payable
attributable to unearned finance charges. If a Simple
Interest Contract is prepaid, rather than receive a
rebate, the Obligor is required to pay interest only
to the date of prepayment. The
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amount of a rebate under a Rule of 78s Contract
calculated in accordance with the Rule of 78s will
always be less than had such rebate been calculated on
an actuarial basis and generally will be less than the
remaining scheduled payments of interest that would be
due under a Simple Interest Contract for which all
payments were made on schedule. Distributions to
Securityholders may not be affected by Rule of 78s
rebates under the Rule of 78s Contracts because
pursuant to the related Prospectus Supplement such
distributions may be determined using the actuarial or
simple interest method.
The related Prospectus Supplement will further
describe the type and characteristics of the Contracts
included in the Trust Property relating to the
Securities offered pursuant to this Prospectus and the
related Prospectus Supplement.
The Receivables comprising the Trust Property will be
originated by the Company; such Receivables will have
theretofore been either (i) originated by Vendors and
acquired by the Company or (ii) acquired by the
Company from other originators or owners of
Receivables.
The Company will either transfer Receivables to a
Trust pursuant to a Pooling Agreement or pledge the
Company's right, title and interest in and to such
Receivables to a Trustee on behalf of Securityholders
pursuant to an Indenture. The obligations of the
Company, the Servicer, the related Trustee and the
related Indenture Trustee, if any, under the related
Trust Agreement include those specified below and in
the related Prospectus Supplement.
In addition, if so specified in the related Prospectus
Supplement, the Trust Property will include monies on
deposit in a Pre-Funding Account (the "Pre-Funding
Account") to be established with the Trustee, which
will be used to acquire Additional Receivables (as
hereinafter defined) from time to time during the
"Pre-Funding Period" specified in the related
Prospectus Supplement. The Pre-Funding Account, if
any, will be reduced during the related Pre-Funding
Period by the amount thereof used to purchase
Additional Receivables. Any amount remaining in the
Pre-Funding Account at the end of the related
Pre-Funding Period will be distributed to the related
Securityholders, pro rata, on the Payment Date
immediately following the end of the Pre-Funding
Period.
If and to the extent provided in the related
Prospectus Supplement, the Company will be obligated
(subject only to the availability thereof) to either
transfer to a Trust or pledge to a Trustee on behalf
of Securityholders, additional Receivables (the
"Additional Receivables") from time to time during any
Pre-Funding Period specified in the related Prospectus
Supplement.
Registration of
Securities......... Securities may be represented by global securities
registered in the name of Cede & Co. ("Cede"), as
nominee of The Depository Trust Company ("DTC"), or
another nominee. In such case, Securityholders will
not be entitled to receive definitive securities
representing such Securityholders' interests, except
in certain circumstances described in the related
Prospectus Supplement. See "Description of the
Securities -- Book Entry Registration" herein.
Credit and Cash Flow
Enhancement ......... If and to the extent specified in the related Prospectus
Supplement, credit enhancement with respect to Trust
Property or any class of Securities may include any one
or more of the following: a Policy issued by an insurer
specified in the related Prospectus Supplement (a
"Security Insurer"), a reserve account, letters of credit,
credit or liquidity facilities, third party payments or
other support, cash deposits or other arrangements. Any
form of credit enhancement will have certain limitations
and exclusions from coverage thereunder, which will be
described in the related Prospectus Supplement. See
"Description of the Trust Agreement -- Credit and Cash
Flow Enhancement."
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Repurchase Obligations
and the Receivables
Acquisition
Agreement......... As more fully described in the related Prospectus
Supplement, the Company will be obligated to acquire
from the related Trust Property any Receivable which
was transferred pursuant to a Pooling Agreement or
pledged pursuant to an Indenture if the interest of the
Securityholders therein is materially adversely
affected by a breach of any representation or warranty
made by the Company with respect to such Receivable,
which breach has not been cured. In addition, if so
specified in the related Prospectus Supplement, the
Company may from time to time reacquire certain
Receivables of the Trust Property, subject to specified
conditions set forth in the related Trust Agreement.
Servicer's
Compensation...... The Servicer shall be entitled to receive a fee for
servicing the Trust Property equal to a specified
percentage of the value of such Trust Property, as
set forth in the related Prospectus Supplement. See
"Description of the Trust Agreements -- Servicing
Compensation" herein and in the related Prospectus
Supplement.
Certain Legal
Aspects of the
Contracts......... With respect to the transfer of the Contracts to the
related Trust pursuant to a Pooling Agreement or the
pledge of the related Issuer's right, title and
interest in and to such Contracts on behalf of
Securityholders pursuant to an Indenture, the Company
will warrant, in each case, that such transfer is
either a valid transfer and assignment of the
Contracts to the Trust or the grant of a security
interest in the Contracts. Each Prospectus Supplement
will specify what actions will be taken by which
parties as will be required to perfect either the
Issuer's or the Securityholders' security interest in
the Contracts. The Company may also warrant that, if
the transfer or pledge by it to the Trust or to the
Securityholders is deemed to be a grant to the Trust
or to the Securityholders of a security interest in
the Contracts, then the related Issuer or the
Securityholders will have a first priority perfected
security interest therein, except for certain liens
which have priority over previously perfected security
interests by operation of law, and, with certain
exceptions, in the proceeds thereof. Similar security
interest and priority representations and warranties,
as described in the related Prospectus Supplement, may
also be made by the Company with respect to the
Vehicles.
Perfection of security interests in automobiles and
light duty trucks is generally governed by the vehicle
registration or titling laws of the state in which
each vehicle is registered or titled. In most states,
a security interest in a vehicle is perfected by
notation of the secured party's lien on the vehicle's
certificate of title. Each Prospectus Supplement will
specify whether the Company, the Servicer or the
Trustee, in light of the administrative burden and
expense, will amend any certificate of title to
identify the Company or the Trustee as the new secured
party on the certificates of title relating to the
Vehicles. See "Certain Legal Aspects of the
Receivables."
Each Prospectus Supplement will specify if the Company
has filed or will be required to file UCC (as herein
defined) financing statements identifying the Vehicles
as collateral pledged in favor of the related Trust or
Trustee on behalf of the Securityholders. In the
absence of such filings any security interest in the
Vehicles will not be perfected in favor of the related
Trust or Trustee. See "Certain Legal Aspects of the
Receivables."
Optional
Termination......... The Servicer, the Company, or, if specified in the
related Prospectus Supplement, certain other
entities may, at their respective options, effect
early retirement of a series of Securities under
the circumstances and in the manner set forth
herein under "Description of The Trust Agreement
-- Termination" and in the related Prospectus
Supplement.
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Mandatory
Termination.......... The Trustee, the Servicer or certain other
entities specified in the related Prospectus
Supplement may be required to effect early
retirement of all or any portion of a series of
Securities by soliciting competitive bids for the
purchase of the Trust Property or otherwise, under
other circumstances and in the manner specified in
"Description of The Trust Agreement --
Termination" and in the related Prospectus
Supplement.
Tax Considerations..... Securities of each series offered hereby will, for
federal income tax purposes, constitute either
(i) interests in a Trust treated as a grantor trust
under applicable provisions of the Code ("Grantor Trust
Securities"), (ii) debt issued by a Trust or by the
Company ("Debt Securities") or (iii) interests in a
Trust which is treated as a partnership ("Partnership
Interests").
The Prospectus Supplement for each series of
Securities will summarize, subject to the limitations
stated therein, federal income tax considerations
relevant to the purchase, ownership and disposition of
such Securities.
Investors are advised to consult their tax advisors
and to review "Certain Federal and State Income Tax
Consequences" in the related Prospectus Supplement.
ERISA Considerations... The Prospectus Supplement for each series of
Securities will summarize, subject to the
limitations discussed therein, considerations
under the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), relevant to the
purchase of such Securities by employee benefit
plans and individual retirement accounts. See
"ERISA Considerations" in the related Prospectus
Supplement.
Ratings................ Each Class of Securities offered pursuant to this
Prospectus and the related Prospectus Supplement will
be rated in one of the four highest rating categories
by one or more "national statistical rating
organizations", as defined in the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and
commonly referred to as "Rating Agencies". Such
ratings will address, in the opinion of such Rating
Agencies, the likelihood that the Issuer will be able
to make timely payment of all amounts due on the
related Securities in accordance with the terms
thereof. Such ratings will neither address any
prepayment or yield considerations applicable to any
Securities nor constitute a recommendation to buy,
sell or hold any Securities.
The ratings expected to be received with respect to
any Securities will be set forth in the related
Prospectus Supplement.
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RISK FACTORS
Prospective Securityholders should consider, among other things, the
following factors in connection with the purchase of the Securities:
LIMITED LIQUIDITY. There can be no assurance that a secondary market for
the Securities of any series or Class will develop or, if it does develop,
that it will provide Securityholders with liquidity of investment or that it
will continue for the life of such Securities. The Prospectus Supplement for
any series of Securities may indicate that an underwriter specified therein
intends to establish and maintain a secondary market in such Securities;
however, no underwriter will be obligated to do so. The Securities will not
be listed on any securities exchange.
OWNERSHIP OF CONTRACTS. In connection with the issuance of any series of
Securities, the Company will originate Contracts. The Company will warrant
in a Trust Agreement (i) if the Company retains title to the Contracts, that
the Trustee for the benefit of Securityholders has a valid security interest
in such Contracts, or (ii) if the Company transfers such Contracts to a
Trust, that the transfer of the Contracts to such Trust is either a valid
assignment, transfer and conveyance of the Contracts to the Trust or the
Trustee on behalf of the Securityholders has a valid security interest in
such Contracts. As to be described in the related Prospectus Supplement, the
related Trust Agreement will provide either that the Trustee will be required
to maintain possession of the original copies of all Contracts that
constitute chattel paper or that the Company or the Servicer will retain
possession of such Contracts; provided that in case the Company retains
possession of the related Contracts, the Servicer may take possession of such
original copies as necessary for the enforcement of any Contract. If any
Contracts remain in the possession of the Company, the related Prospectus
Supplement may describe specific trigger events that will require delivery to
the Trustee. If the Company, the Servicer, the Trustee or other third party,
while in possession of the Contracts, sells or pledges and delivers such
Contracts to another party, in violation of the Receivables Acquisition
Agreement or the Trust Agreement, there is a risk that such other party could
acquire an interest in such Contracts having a priority over the Issuer's
interest. Furthermore, if the Company, the Servicer or a third party, while
in possession of the Contracts, is rendered insolvent, such event of
insolvency may result in competing claims to ownership or security interests
in the Contracts. Such an attempt, even if unsuccessful, could result in
delays in payments on the Securities. If successful, such attempt could
result in losses to the Securityholders or an acceleration of the repayment
of the Securities. The Company will be obligated to repurchase any Contract
originated by the Company and currently in the related Trust Property if
there is a breach of the Company's representations and warranties that
materially and adversely affects the interests of the Trust in such Contract
and such breach has not been cured.
SECURITY INTERESTS. The transfer of the Receivables by the Company to
the Trustee pursuant to the related Pooling Agreement, Indenture or Trust
Agreement, the perfection of the security interests in the Receivables and
the enforcement of rights to realize on the Vehicles as collateral for the
Receivables are subject to a number of federal and state laws, including the
UCC as in effect in various states. As specified in each Prospectus
Supplement, the Servicer will take such action as is required to perfect the
rights of the Trustee in the Receivables. If, through inadvertence or
otherwise, a third party were to purchase (including the taking of a security
interest in) a Receivable for new value in the ordinary course of its
business, without actual knowledge of the Trust's interest, and take
possession of a Receivable, the purchaser would acquire an interest in such
Receivable superior to the interest of the Trust. As further specified in
each Prospectus Supplement, no action will be taken to perfect the rights of
the Trustee in proceeds of a VSI Insurance Policy (as hereinafter defined) or
of any other insurance policies covering individual Vehicles or Obligors.
Therefore, the rights of a third party with an interest in such proceeds
could prevail against the rights of the Trust prior to the time such proceeds
are deposited by the Servicer into a Trust Account (as hereinafter defined).
See "Certain Legal Aspects of the Receivables".
Except to the extent specified in the related Prospectus Supplement, each
Contract will include a perfected security interest in the related Vehicle in
favor of the Trustee or the Company (and, if perfected in the name of the
Company, assigned pursuant to the related Pooling Agreement, Indenture or Trust
Agreement to the Trustee for the benefit of the Securityholders). However, to
the extent provided in the
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related Prospectus Supplement, due to the administrative burden and expense,
the certificates of title of the Vehicles securing certain Contracts which
reflect the security interest of the Company in such Vehicles may not be
endorsed to reflect the Trustee's interest therein or delivered to the
Trustee. In the absence of such endorsement and delivery, the Trustee may
not have a perfected security interest in such Vehicles. As a result, a
third party buyer of a Vehicle for value from an Obligor may extinguish the
interest of the Trust in the Vehicle, a subsequent perfected lienholder may
obtain a security interest senior in right to that of the Trust, and a
trustee in bankruptcy of the Company may be able to assert successfully that
the Trust did not have a security interest in the Vehicle. In addition,
statutory liens for repairs or unpaid taxes and other liens arising by
operation of law may have priority even over prior perfected security
interests in the name of the Trustee in the Vehicles.
RESTRICTIONS ON RECOVERIES. Unless specific limitations are described on
the related Prospectus Supplement with respect to specific Contracts, all
Contracts will provide that the obligations of the Obligors thereunder are
absolute and unconditional, regardless of any defense, set-off or abatement
which the Obligor may have against the Company or any other person or entity
whatsoever. The Company will warrant that no claims or defenses have been
asserted or threatened with respect to the Contracts and that all
requirements of applicable law with respect to the Contracts have been
satisfied.
In the event that the Company or the Trustee must rely on repossession
and disposition of Vehicles to recover scheduled payments due on Defaulted
Contracts (as defined in the related Pooling Agreement), the Issuer may not
realize the full amount due on a Contract (or may not realize the full amount
on a timely basis). Other factors that may affect the ability of the Issuer
to realize the full amount due on a Contract include whether amendments to
certificates of title relating to the Vehicles had been filed, whether
financing statements to perfect the security interest in the Vehicles had
been filed, depreciation, obsolescence, damage or loss of any Vehicle, and
the application of Federal and state bankruptcy and insolvency laws. As a
result, the Securityholders may be subject to delays in receiving payments
and suffer loss of their investment in the Securities.
INSOLVENCY AND BANKRUPTCY MATTERS. The Company will take steps in
structuring the transactions contemplated hereby that are intended to ensure
that the voluntary or involuntary application for relief by the Company under
the United States Bankruptcy Code or similar applicable state laws
("Insolvency Laws") will not result in the Trust Property becoming property
of the estate of the Company within the meaning of such Insolvency Laws.
Such steps will generally involve the creation by the Company of one or more
separate, limited-purpose subsidiaries (each, a "Finance Subsidiary")
pursuant to articles of incorporation containing certain limitations
(including restrictions on the nature of such Finance Subsidiary's business
and a restriction on such Finance Subsidiary's ability to commence a
voluntary case or proceeding under any Insolvency Law without the prior
unanimous affirmative vote of all its directors). However, there can be no
assurance that the activities of any Finance Subsidiary would not result in a
court's concluding that the assets and liabilities of such Finance Subsidiary
should be consolidated with those of the Company in a proceeding under any
Insolvency Law.
With respect to the Trust Property, the Trustee and all Securityholders
will covenant that they will not at any time institute against the Company or
the related Finance Subsidiary any bankruptcy, reorganization or other
proceeding under any federal or state bankruptcy or similar law.
While an originator is the Servicer, cash collections held by such
originator may, subject to certain conditions, be commingled and used for the
benefit of such originator prior to each Payment Date and, in the event of the
bankruptcy of such originator, the Company, a Trust or Trustee may not have a
perfected interest in such collections.
The Company believes that the transfer of the Receivables by the Company
to a Finance Subsidiary should be treated as a valid assignment, transfer and
conveyance of such Receivables. However, in the event of an insolvency of
the Company, a court, among other remedies, could attempt to recharacterize
the transfer of the Receivables by the Company to the Finance Subsidiary as a
borrowing by the Company from the Finance Subsidiary or the related
Securityholders, secured by a pledge of such Receivables. Such an attempt,
even if unsuccessful, could result in delays in payments on the Securities.
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If such an attempt were successful, a court, among other remedies, could
elect to accelerate payment of the Securities and liquidate the Receivables,
with the Securityholders entitled to the then outstanding principal amount
thereof and interest thereon at the applicable Security Interest Rate to the
date of payment. Thus, the Securityholders could lose the right to future
payments of interest and might incur reinvestment losses. As more fully
described in the related Prospectus Supplement, in the event the related
Issuer is rendered insolvent, the related Trustee for a Trust, in accordance
with the Trust Agreement, will promptly sell, dispose of or otherwise
liquidate the related Receivables in a commercially reasonable manner on
commercially reasonable terms. The proceeds from any such sale, disposition
or liquidation of such Receivables will be treated as collections on such
Receivables. If the proceeds from the liquidation of the Receivables and any
amount available from any credit enhancement, if any, are not sufficient to
pay Securities of the related series in full, the amount of principal
returned to such Securityholders will be reduced and such Securityholders
will incur a loss.
Obligors of the Vehicles may be entitled to assert against the Company, the
Issuer, or the Trust, if any, claims and defenses which they have against the
Company with respect to the Receivables. The Company will warrant that no such
claims or defenses have been asserted or threatened with respect to the
Receivables and that all requirements of applicable law with respect to the
Receivables have been satisfied.
INSURANCE ON VEHICLES. Each Receivable generally requires the Company to
maintain insurance covering physical damage to the Vehicle in an amount not less
than the unpaid principal balance of such Receivable pursuant to which the
Company is named as a loss payee. Since the Obligors select their own insurers
to provide the requisite coverage, the specific terms and conditions of their
policies vary.
In addition, although each Receivable generally gives the Company the right
to force place insurance coverage in the event the required physical damage
insurance on a Vehicle is not maintained by an Obligor, neither the Company nor
the Servicer is obligated to place such coverage. In the event insurance
coverage is not maintained by Obligors and coverage is not force placed, then
insurance recoveries may be limited in the event of losses or casualties to
Vehicles included in the Trust Property, as a result of which Securityholders
could suffer a loss on their investment.
DELINQUENCIES. There can be no assurance that the historical levels of
delinquencies and losses experienced by the Company on its respective loan and
vehicle portfolio will be indicative of the performance of the Contracts
included in the Trust or that such levels will continue in the future.
Delinquencies and losses could increase significantly for various reasons,
including changes in the federal income tax laws, changes in the local, regional
or national economies or due to other events.
SUBORDINATION; LIMITED ASSETS. To the extent specified in the related
Prospectus Supplement, distributions of interest and principal on one Class of
Securities of a series may be subordinated in priority of payment to interest
and principal due on other Classes of Securities of a related series. Moreover,
the Trust Property will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the related Receivables and,
to the extent provided in the related Prospectus Supplement, the related reserve
account and any other credit enhancement. The Securities represent obligations
solely of the related Trust or debt secured by the related Trust Property, and
will not represent a recourse obligation to other assets of the Company. No
Securities of any series will be insured or guaranteed by the Company, the
Servicer, or the applicable Trustee. Consequently, holders of the Securities of
any series must rely for repayment primarily upon payments on the Receivables
and, if and to the extent available, the reserve account, if any, and any other
credit enhancement, all as specified in the related Prospectus Supplement.
MASTER TRUSTS. As may be described in the related Prospectus Supplement, a
Master Trust may issue from time to time more than one series. While the terms
of any additional series will be specified in a supplement to the related Master
Trust Agreement, the provisions of such supplement and, therefore, the terms of
any additional series, will not be subject to prior review by, or consent of,
holders of the Securities of any series previously issued by such Master Trust.
Such terms may include methods for determining applicable investor percentages
and allocating collections, provisions creating different or
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additional security or credit enhancements and any other provisions which are
made applicable only to such series. The obligation of the related Trustee
to issue any new series is subject to the condition, among others, that such
issuance will not result in any Rating Agency reducing or withdrawing its
rating of the Securities of any outstanding series (any such reduction or
withdrawal is referred to herein as a "Ratings Effect"). There can be no
assurance, however, that the terms of any series might not have an impact on
the timing or amount of payments received by a Securityholder of another
series issued by the same Master Trust. See "Description of the Securities
- -- Master Trusts."
BOOK-ENTRY REGISTRATION. Issuance of the Securities in book-entry form may
reduce the liquidity of such Securities in the secondary trading market since
investors may be unwilling to purchase Securities for which they cannot obtain
definitive physical securities representing such Securityholders' interests,
except in certain circumstances described in the related Prospectus Supplement.
Since transactions in Securities will, in most cases, be able to be
effected only through DTC, direct or indirect participants in DTC's book-entry
system ("Direct Participants" or "Indirect Participants") or certain banks, the
ability of a Securityholder to pledge a Security to persons or entities that do
not participate in the DTC system, or otherwise to take actions in respect to
such Securities, may be limited due to lack of a physical security representing
the Securities.
Securityholders may experience some delay in their receipt of distributions
of interest on and principal of the Securities since distributions may be
required to be forwarded by the Trustee to DTC and, in such case, DTC will be
required to credit such distributions to the accounts of its Participants which
thereafter will be required to credit them to the accounts of the applicable
class of Securityholders either directly or indirectly through Indirect
Participants. See "Description of the Securities -- Book Entry Registration."
SECURITY RATING. The rating of Securities credit enhanced by a letter of
credit, financial guaranty insurance policy, reserve fund, credit or liquidity
facilities, cash deposits or other forms of credit enhancement (collectively
"Credit Enhancement") will depend primarily on the creditworthiness of the
issuer of such external Credit Enhancement device (a "Credit Enhancer"). Any
reduction in the rating assigned to the claims-paying ability of the related
Credit Enhancer to honor its obligations pursuant to any such Credit Enhancement
below the rating initially given to the Securities would likely result in a
reduction in the rating of the Securities.
MATURITY AND PREPAYMENT CONSIDERATIONS. Because the rate of payment of
principal on the Securities will depend, among other things, on the rate of
payment on the related Contracts, the rate of payment of principal on the
Securities cannot be predicted. Payments on the Contracts will include
scheduled payments as well as partial and full prepayments (to the extent not
replaced with substitute Contracts), payments upon the liquidation of
Defaulted Contracts, payments upon acquisitions by the Servicer or the
Company of Contracts from the related Trust Property on account of a breach
of certain representations and warranties in the related Trust Agreement,
payments upon an optional acquisition by the Servicer or the Company of
Contracts from the related Trust Property (any such voluntary or involuntary
prepayment or other early payment of a Contract, a "Prepayment"), and
residual payments. The rate of early terminations of Contracts due to
Prepayments and defaults may be influenced by a variety of economic and other
factors, including, among others, obsolescence, then current economic
conditions and tax considerations. The risk of reinvesting distributions of
the principal of the Securities will be borne by the Securityholders. The
yield to maturity on Strip Securities or Securities purchased at premiums or
discounts to par will be extremely sensitive to the rate of Prepayments on
the related Receivables. In addition, the yield to maturity on certain other
types of classes of Securities, including Strip Securities, Accrual
Securities or certain other Classes in a series including more than one Class
of Securities, may be relatively more sensitive to the rate of prepayment of
the related Contracts than other Classes of Securities.
The rate of Prepayments of Contracts cannot be predicted and is influenced
by a wide variety of economic, social, and other factors, including prevailing
interest rates, the availability of alternate financing
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and local and regional economic conditions. Therefore, no assurance can be
given as to the level of Prepayments that a Trust will experience.
Securityholders should consider, in the case of Securities purchased at a
discount, the risk that a slower than anticipated rate of Prepayments on the
Receivables could result in an actual yield that is less than the anticipated
yield and, in the case of any Securities purchased at a premium, the risk that a
faster than anticipated rate of Prepayments on the Receivables could result in
an actual yield that is less than the anticipated yield.
LIMITATIONS ON INTEREST PAYMENTS AND FORECLOSURES. Generally, under the
terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended (the
"Relief Act"), or similar state legislation, an Obligor who enters military
service after the origination of the related Receivable (including an Obligor
who is a member of the National Guard or is in reserve status at the time of
the origination of the Receivable and is later called to active duty) may not
be charged interest (including fees and charges) above an annual rate of 6%
during the period of such Obligor's active duty status, unless a court orders
otherwise upon application of the lender. It is possible that such action
could have an effect, for an indeterminate period of time, on the ability of
the Servicer to collect full amounts of interest on certain of the
Receivables. In addition, the Relief Act imposes limitations that would
impair the ability of the Servicer to foreclose on an affected Receivable
during the Obligor's period of active duty status. Thus, in the event that
such a Receivable goes into default, there may be delays and losses
occasioned by the inability of the Servicer to realize upon the Financed
Vehicle in a timely fashion.
FINANCIAL CONDITION OF AFS. The Company is generally not obligated to
make any payments in respect of the Securities or the Receivables of a
specific Trust. If the Company were to cease acting as Servicer, delays in
processing payments on the Receivables and information in respect thereof
could occur and result in delays in payments to the Securityholders.
In certain circumstances, the Company will be required to acquire
Receivables from the related Trust Property with respect to which such
representations and warranties have been breached. In the event that the
Company is incapable of complying with its reacquire obligations and no other
party is obligated to perform or satisfy such obligations, Securityholders may
be subject to delays in receiving payments and suffer loss of their investment
in the Securities.
The related Prospectus Supplement will set forth certain information
regarding the Company. In addition, the Company is subject to the information
requirements of the Exchange Act and, in accordance therewith, file reports and
other information with the Commission. For further information regarding the
Company reference is made to such reports and other information which are
available as described under "Available Information."
THE TRUST PROPERTY
The Trust Property will include, as specified in the related Prospectus
Supplement, (i) a pool of Receivables, (ii) all moneys (including accrued
interest) due thereunder on or after the applicable Cut-off Date, (iii) such
amounts as from time to time may be held in one or more accounts established and
maintained by the Servicer pursuant to the related Trust Agreement, as described
below and in the related Prospectus Supplement, (iv) the security interests, if
any, in the Vehicles relating to such pool of Receivables, (v) the right to
proceeds from claims on physical damage policies, if any, covering such Vehicles
or the related Obligors, as the case may be, (vi) the proceeds of any
repossessed Vehicles related to such pool of Receivables, (vii) the rights of
the Company under the related Receivables Acquisition Agreement and (viii)
interest earned on certain short-term investments held in such Trust Property,
unless the related Prospectus Supplement specifies that such earnings may be
paid to the Servicer or the Company. The Trust Property will also include, if
so specified in the related Prospectus Supplement, monies on deposit in a
Pre-Funding Account, which will be used by the Trustee to acquire or receive a
security interest in Additional Receivables from time to time during the
Pre-Funding Period specified in the related Prospectus Supplement. See
"Desciption of the Securities -- Forward Commitments; Pre-Funding." In
addition, to the extent specified in the related Prospectus Supplement,
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some combination of Credit Enhancements may be issued to or held by the
Trustee on behalf of the related Trust for the benefit of the holders of one
ore more classes of Securities.
The Receivables comprising the Trust Property will, as specifically
described in the related Prospectus Supplement, be either (i) originated by the
Company, (ii) originated by various manufacturers and acquired by the Company,
(iii) originated by various Dealers and acquired by the Company or (iv) acquired
by the Company from originators or owners of Receivables.
The Trust Property will include Receivables with respect to which the
related Contract or the related Vehicles is subject to federal or state
registration or titling requirements. No Trust Property will include
Receivables with respect to which the underlying Contracts or Vehicles relate to
office equipment, aircraft, ships or boats, firearms or other weapons, railroad
rolling stock or facilities such as factories, warehouses or plants subject to
state laws governing the manner in which title or security interest in real
property is determined or perfected.
The Receivables included in the Trust Property will be selected from those
Receivables held by the Company based on the criteria specified in the
applicable Trust Agreement and described herein or in the related Prospectus
Supplement.
With respect to each series of Securities, on or prior to the Closing Date
on which the Securities are delivered to Securityholders, the Company or a
Finance Subsidiary will form a Trust by either (i) transferring the related
Receivables into a Trust pursuant to a Trust Agreement between the Company or a
Finance Subsidiary and the Trustee or (ii) entering into an Indenture with an
Indenture Trustee, relating to the issuance of such Securities, secured by the
related Receivables.
The Receivables comprising the Trust Property will generally have been
originated by the Company or acquired by the Company from Dealers in accordance
with the Company's specified underwriting criteria. The underwriting criteria
applicable to the Receivables included in any Trust Property will be described
in all material respects in the related Prospectus Supplement.
THE ISSUERS
With respect to each series of Securities, the Company will either
establish a separate Trust that will issue such Securities, or the Company will
form a Finance Subsidiary that will issue such Securities, in each case pursuant
to the related Trust Agreement. For purposes of this Prospectus and the related
Prospectus Supplement, the Finance Subsidiary, if the Finance Subsidiary issues
the related Securities, or the related Trust, if a Trust issues the related
Securities, shall be referred to as the "Issuer" with respect to such
Securities.
Upon the issuance of the Securities of a given series, the proceeds from
such issuance will be used by the Company to originate Receivables. The
Servicer will service the related Receivables pursuant to the applicable
Servicing Agreement, and will be compensated for acting as the Servicer. To
facilitate servicing and to minimize administrative burden and expense, the
Servicer may be appointed custodian for the related Receivables by each Trustee
and the Company, as may be set forth in the related Prospectus Supplement.
If the protection provided to the Securityholders of a given class by the
subordination of another Class of Securities of such series and by the
availability of the funds in the reserve account, if any, or any other Credit
Enhancement for such series is insufficient, the Issuer must rely solely on the
payments from the Obligors on the related Contracts, and the proceeds from the
sale of Vehicles which secure the Defaulted Contracts. In such event, certain
factors may affect such Issuer's ability to realize on the collateral securing
such Contracts, and thus may reduce the proceeds to be distributed to the
Securityholders of such series.
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THE RECEIVABLES
RECEIVABLES POOLS
Information with respect to the Receivables in the related Trust Property
will be set forth in the related Prospectus Supplement, including, to the extent
appropriate, the composition of such Receivables and the distribution of such
Receivables by geographic concentration, payment frequency and current principal
balance as of the applicable Cut-off Date.
THE CONTRACTS
As specified in the related Prospectus Supplement, the Contracts may
consist of any combination of Rule of 78s Contracts, Fixed Value Contracts or
Simple Interest Contracts. Generally, "Rule of 78s Contracts" provide for fixed
level monthly payments which will amortize the full amount of the Contract over
its term. The Rule of 78s Contracts provide for allocation of payments
according to the "sum of periodic balances" or "sum of monthly payments" method
(the "Rule of 78s"). Each Rule of 78s Contract provides for the payment by the
Obligor of a specified total amount of payments, payable in monthly installments
on the related due date, which total represents the principal amount financed
and finance charges in an amount calculated on the basis of a stated annual
percentage rate ("APR") for the term of such Contract. The rate at which such
amount of finance charges is earned and, correspondingly, the amount of each
fixed monthly payment allocated to reduction of the outstanding principal
balance of the related Contract are calculated in accordance with the Rule of
78s. Under the Rule of 78s, the portion of each payment allocable to interest
is higher during the early months of the term of a Contract and lower during
later months than that under a constant yield method for allocating payments
between interest and principal. Notwithstanding the foregoing, as specified in
the related Prospectus Supplement, all payments received by the Servicer on or
in respect of the Rule of 78s Contracts may be allocated on an actuarial or
simple interest basis.
Generally, the "Fixed Value Contracts" provide for monthly payments with a
final fixed value payment which is greater than the scheduled monthly payments.
A Fixed Value Contract provides for amortization of the loan over a series of
fixed level payment monthly installments, but also requires a final fixed value
payment due after payment of such monthly installments which may be satisfied by
(i) payment in full in cash of such amount, (ii) transfer of the vehicle to the
Company, provided certain conditions are satisfied or (iii) refinancing the
fixed value payment in accordance with certain conditions. With respect to
Fixed Value Contracts, as specified in the related Prospectus Supplement, only
the principal and interest payments due prior to the final fixed value payment
and not the final fixed value payment may be included initially in the related
Trust Property.
"Simple Interest Contracts" provide for the amortization of the amount
financed under the receivable over a series of fixed level monthly payments.
However, unlike the monthly payment under Rule of 78s Contracts, each monthly
payment consists of an installment of interest which is calculated on the basis
of the outstanding principal balance of the receivable multiplied by the stated
APR and further multiplied by the period elapsed (as a fraction of a calendar
year) since the preceding payment of interest was made. As payments are
received under a Simple Interest Contract, the amount received is applied first
to interest accrued to the date of payment and the balance is applied to reduce
the unpaid principal balance. Accordingly, if an Obligor pays a fixed monthly
installment before its scheduled due date, the portion of the payment allocable
to interest for the period since the preceding payment was made will be less
than it would have been had the payment been made as scheduled, and the portion
of the payment applied to reduce the unpaid principal balance will be
correspondingly greater. Conversely, if an Obligor pays a fixed monthly
installment after its scheduled due date, the portion of the payment allocable
to interest for the period since the preceding payment was made will be greater
than it would have been had the payment been made as scheduled, and the portion
of the payment applied to reduce the unpaid principal balance will be
correspondingly less. In either case, the Obligor pays a fixed monthly
installment until the final scheduled payment date, at which time the amount of
the final installment is increased or decreased as necessary to repay the then
outstanding principal balance.
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If an Obligor elects to prepay a Rule of 78s Contract in full, it is
entitled to a rebate of the portion of the outstanding balance then due and
payable attributable to unearned finance charges. If a Simple Interest Contract
is prepaid, rather than receive a rebate, the Obligor is required to pay
interest only to the date of prepayment. The amount of a rebate under a Rule of
78s Contract calculated in accordance with the Rule of 78s will always be less
than had such rebate been calculated on an actuarial basis and generally will be
less than the remaining scheduled payments of interest that would be due under a
Simple Interest Contract for which all payments were made on schedule.
Distributions to Security holders may not be affected by Rule of 78s rebates
under the Rule of 78s Contract because pursuant to the related Prospectus
Supplement such distributions may be determined using the actuarial or simple
interest method.
DELINQUENCIES, REPOSSESSIONS, AND NET LOSSES
Certain information relating to the Company's delinquency, repossession and
net loss experience with respect to Contracts it has originated or acquired will
be set forth in each Prospectus Supplement. This information may include, among
other things, the experience with respect to all Contracts in the Company's
portfolio during certain specified periods. There can be no assurance that the
delinquency, repossession and net loss experience on any Trust Property will be
comparable to the Company's prior experience.
MATURITY AND PREPAYMENT CONSIDERATIONS
As more fully described in the related Prospectus Supplement, if a Contract
permits a Prepayment, such payment, together with accelerated payments resulting
from defaults, will shorten the weighted average life of the related pool of
Receivables and the weighted average life of the related Securities. The rate
of Prepayments on the Receivables may be influenced by a variety of economic,
financial and other factors. In addition, under certain circumstances, the
Company will be obligated to acquire Receivables from the related Trust Property
pursuant to the applicable Trust Agreement or Receivables Acquisition Agreement
as a result of breaches of representations and warranties. Any reinvestment
risks resulting from a faster or slower amortization of the related Securities
which results from Prepayments will be borne entirely by the related
Securityholders.
The related Prospectus Supplement will set forth certain additional
information with respect to the maturity and prepayment considerations
applicable to a particular pool of Receivables and the related series of
Securities, together with a description of any applicable prepayment penalties.
AMERICREDIT'S AUTOMOBILE FINANCING PROGRAM
GENERAL
Through its branch offices and marketing representatives, AFS serves as a
funding source for franchised and independent automobile dealers to finance
their customers' purchase of new and used automobiles and light duty trucks.
Retail installment sale contracts ("Contracts") originated by Dealers which
conform to AFS's credit policies are purchased by AFS generally without recourse
to Dealers. AFS also services the Contracts that it purchases.
AFS's indirect lending programs are designed to serve consumers who have
limited access to traditional auto financing. The typical borrower may have had
previous financial difficulties, but is now attempting to re-establish credit,
or may not yet have sufficient credit history. Because AFS serves consumers who
are unable to meet the credit standards imposed by most traditional auto
financing sources, AFS generally charges interest at rates which are higher than
those charged by traditional auto financing sources. AFS also expects to
sustain a higher level of delinquencies and credit losses than that experienced
by traditional auto financing sources since AFS provides financing in a
relatively high risk market.
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AFS has established relationships with a variety of Dealers located in the
markets in which AFS has branch offices or marketing representatives. While AFS
occasionally finances purchases of new autos, substantially all of AFS's
Contracts were originated in connection with Obligor's purchases of used autos.
Contracts are generally purchased by AFS without recourse to the Dealer,
and accordingly, the Dealer usually has no liability to AFS if the consumer
defaults on the Contract. To mitigate AFS's risk from potential credit losses,
AFS charges the Dealers an acquisition fee when purchasing Contracts. Such
acquisition fees are negotiated with Dealers on a contract-by-contract basis and
are usually non-refundable. Although Contracts are purchased without recourse
to Dealers, Dealers typically make certain representations as to the validity of
the contract and compliance with certain laws, and indemnify AFS against any
claims, defenses and set-offs that may be asserted against AFS because of
assignment of the Contract.
CONTRACT ACQUISITION
AFS purchases individual Contracts through its branch offices and through
its central purchasing office, which underwrites applications solicited by
certain marketing representatives. The central purchasing office operates in a
manner similar to the branch office network.
All credit extensions are executed at the branch level. Each branch
manager has a specific credit authority based upon their experience and
historical loan portfolio results and credit scoring parameters. Extensions of
credit outside these limits are reviewed and approved by a regional vice
president. Although the credit approval process is decentralized, all credit
decisions are guided by AFS's credit scoring strategies and overall credit and
underwriting policies and procedures.
The Company has implemented a credit scoring system across its branch
network to support the branch level credit approval process. The credit scoring
system was developed by Fair Isaac & Co., Inc. from the Company's loan
origination and portfolio databases. Credit scoring is used to prioritize
applications for processing and to tailor pricing and structure to an empirical
assessment of credit risk.
Loan application packages completed by prospective Obligors are received
via facsimile at the branch offices from Dealers. Application data is entered
into AFS's automated application processing system. A credit bureau report is
automatically generated and a credit score is computed. Depending on the credit
quality of the applicant, a customer service representative may then investigate
the residence, employment and credit history of the applicant or forward the
application directly to the branch manager. In either case, the Company's
credit policy requires that all applications be investigated prior to loan
funding. The branch manager reviews the application package and determines
whether to approve the application, approve the application subject to
conditions that must be met, or to deny the application. The branch manager
considers many factors in arriving at a credit decision, including the
applicant's credit score, capacity to pay, stability, character and intent to
pay and the contract terms and collateral value. In certain cases, a regional
vice president may review and approve the branch manager's credit decision. AFS
estimates that approximately 50% of applicants are denied credit by AFS
typically because of their credit histories or because their income levels are
not sufficient to support the proposed level of monthly auto payments. Dealers
are contacted regarding credit decisions by facsimile and/or telephone.
Declined applicants are also provided with appropriate notification of the
decision.
Completed loan packages are received from Dealers at the branch office.
Loan terms are reverified with the Obligor by branch personnel and the loan
packages are forwarded to the centralized loan services department where the
package is scanned to create an electronic copy. Key original documents are
stored in a fire-proof vault and the loan packages are further processed in an
electronic environment. The loans are reviewed for proper documentation and
regulatory compliance and are entered into the loan accounting system. A daily
report is generated for final review by consumer finance operations management.
Once cleared for funding by consumer finance operations management, the
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loan services department issues a funding check to the Dealer. Upon funding
of the Contract, AFS acquires a perfected security interest in the Vehicle.
AFS requires all consumers to obtain or provide evidence that they carry
current comprehensive and collision insurance. Through a third party
administrator, AFS tracks the insurance status of each Contract and sends
notices to Obligors when collateral becomes uninsured. If no action is taken by
the Obligor to insure the collateral, continuing efforts are made to persuade
the Obligor to comply with the insurance requirements of the Contract. Although
it has the right, AFS rarely repossesses a Vehicle due to its being uninsured.
AFS also does not typically force place insurance coverage and add the premium
to the Obligor's obligations, although it has the right to do so under the terms
of the Contracts.
SERVICING AND COLLECTIONS
AFS's servicing activities consist of collecting and processing Obligor
payments, responding to Obligor inquiries, initiating contact with Obligors who
are delinquent in payment of a Receivable installment, maintaining the security
interest in the Vehicle, and repossessing and liquidating collateral when
necessary. AFS utilizes various automated systems to support its servicing and
collections activities.
Approximately 15 days before an Obligor's first payment due date and each
month thereafter, AFS mails the Obligor a billing statement directing them to
mail payments to a lockbox banking facility for deposit in a lockbox account.
Payment receipt data is electronically transferred to AFS by a lockbox banking
facility for posting to AFS records. All subsequent payment processing and
customer account maintenance is performed centrally by AFS's loan services
department.
Collection activity on Contracts is performed by collection personnel
("Collectors") at AFS's headquarters facility. The Collectors follow
standardized collection policies and procedures. Collectors monitor the
Receivables portfolio through a computer assisted collection system and usually
take action on delinquencies within a few days after delinquency occurs.
A Collector's action is typically telephone contact with the Obligor
utilizing AFS's automated predictive dialing system. This system dials multiple
telephone numbers simultaneously based upon parameters set by management. When
a telephone connection is made, the call is routed to a collector and the
delinquent Obligor's account information is displayed on a Collector's computer
terminal. The Collector then attempts to work out the delinquency with the
Obligor.
If an Obligor continues to be delinquent, AFS's policy is to work out
suitable payment arrangements with the Obligor. However, if the Obligor becomes
seriously delinquent or deals in bad faith with AFS, AFS may ultimately have to
repossess the Vehicle and generally will take prompt action to do so.
Repossessions are handled by independent repossession firms engaged by AFS. All
repossessions are approved by collection officers.
AFS follows prescribed legal procedures for repossessions, which include
peaceful repossession, one or more notifications to Obligors, a prescribed
waiting period prior to disposition of the Vehicle, and return of personal items
to the Obligor.
Upon repossession and after any prescribed waiting period, the Vehicle is
typically sold at auction. AFS will pursue collection of deficiencies when it
deems such action to be appropriate.
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POOL FACTORS
The "Pool Factor" for each Class of Securities will be a seven-digit
decimal, which the Servicer will compute prior to each distribution with respect
to such Class of Securities, indicating the remaining outstanding principal
balance of such Class of Securities as of the applicable Payment Date, as a
fraction of the initial outstanding principal balance of such Class of
Securities. Each Pool Factor will be initially 1.0000000, and thereafter will
decline to reflect reductions in the outstanding principal balance of the
applicable Class of Securities. A Securityholder's portion of the aggregate
outstanding principal balance of the related Class of Securities is the product
of (i) the original aggregate purchase price of such Securityholder's Securities
and (ii) the applicable Pool Factor.
As more specifically described in the related Prospectus Supplement with
respect to each series of Securities, the related Securityholders of record will
receive reports on or about each Payment Date concerning the payments received
on the Receivables, the Pool Balance (as such term is defined in the related
Prospectus Supplement, the "Pool Balance"), each Pool Factor and various other
items of information. In addition, Securityholders of record during any
calendar year will be furnished information for tax reporting purposes not later
than the latest date permitted by law.
USE OF PROCEEDS
Except as provided in the related Prospectus Supplement, the proceeds from
the sale of the Securities of a given series will be used by the Company for the
acquisition of the related Receivables, for general corporate purposes,
including, but not limited to, the purchase of additional Receivables from
Dealers, repayment of indebtedness and general working capital purposes. The
Company expects that it will make additional transfers of Receivables to the
Trust from time to time, but the timing and amount of any such additional
transfers will be dependent upon a number of factors, including the volume of
Contracts originated or acquired by the Company, prevailing interest rates,
availability of funds and general market conditions.
THE COMPANY AND THE SERVICER
AFS is a wholly-owned subsidiary of AmeriCredit Corp. AFS was incorporated
in Delaware on July 22, 1992. AFS purchases and services automobile loans which
are originated and assigned to AFS by automobile dealers. AFS is the primary
operating subsidiary of AmeriCredit Corp., a Texas corporation the common shares
of which are listed on the New York Stock Exchange. AFS's executive offices are
located at 200 Bailey Avenue, Fort Worth, Texas 76107-1220; telephone (817)
332-7000.
THE TRUSTEE
The Trustee for each series of Securities will be specified in the related
Prospectus Supplement. The Trustee's liability in connection with the issuance
and sale of the related Securities is limited solely to the express obligations
of such Trustee set forth in the related Trust Agreement.
With respect to each series of Securities, the procedures for the
resignation or removal of the Trustee and the appointment of a successor Trustee
shall be specified in the related Prospectus Supplement.
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DESCRIPTION OF THE SECURITIES
GENERAL
The Securities will be issued in series. Each series of Securities (or, in
certain instances, two or more series of Securities) will be issued pursuant to
a Trust Agreement. The following summaries (together with additional summaries
under "The Trust Agreement" below) describe all material terms and provisions
relating to the Securities common to each Trust Agreement. The summaries do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all of the provisions of the Trust Agreement for the related
Securities and the related Prospectus Supplement.
All of the Securities offered pursuant to this Prospectus and the related
Prospectus Supplement will be rated in one of the four highest rating categories
by one or more Rating Agencies.
The Securities will generally be styled as debt instruments, having a
principal balance and a specified Interest Rate. The Securities may either
represent beneficial ownership interests in the related Receivables held by the
related Trust or debt secured by certain assets of the related Issuer.
Each series or Class of Securities offered pursuant to this Prospectus may
have a different Interest Rate, which may be a fixed or adjustable interest
rate. The related Prospectus Supplement will specify the Interest Rate for each
series or Class of Securities described therein, or the initial interest rate
and the method for determining subsequent changes to the Interest Rate.
A series may include one or more Classes of Strip Securities entitled (i)
to principal distributions, with disproportionate, nominal or no interest
distributions, or (ii) to interest distributions, with disproportionate, nominal
or no principal distributions. In addition, a series of Securities may include
two or more Classes of Securities that differ as to timing, sequential order,
priority of payment, Interest Rate or amount of distribution of principal or
interest or both, or as to which distributions of principal or interest or both
on any Class may be made upon the occurrence of specified events, in accordance
with a schedule or formula, or on the basis of collections from designated
portions of the related pool of Receivables. Any such series may include one or
more Classes of Accrual Securities, as to which certain accrued interest will
not be distributed but rather will be added to the principal balance (or nominal
balance, in the case of Accrual Securities which are also Strip Securities)
thereof on each Payment Date, as hereinafter defined, or in the manner described
in the related Prospectus Supplement.
If so provided in the related Prospectus Supplement, a series may include
one or more other Classes of Senior Securities that are senior to one or more
other Classes of Subordinate Securities in respect of certain distributions of
principal and interest and allocations of losses on Receivables.
In addition, certain Classes of Senior (or Subordinate) Securities may be
senior to other Classes of Senior (or Subordinate) Securities in respect of such
distributions or losses.
GENERAL PAYMENT TERMS OF SECURITIES
As provided in the related Trust Agreement and as described in the related
Prospectus Supplement, Securityholders will be entitled to receive payments on
their Securities on the specified Payment Dates. Payment Dates with respect to
the Securities will occur monthly, quarterly or semi-annually, as described in
the related Prospectus Supplement.
The related Prospectus Supplement will describe the Record Date preceding
such Payment Date, as of which the Trustee or its paying agent will fix the
identity of the Securityholders for the purpose of receiving payments on the
next succeeding Payment Date. As more fully described in the related Prospectus
Supplement, the Payment Date may be the tenth, twelfth, fifteenth or
twenty-fifth day of each month (or, in the case of quarterly-pay Securities, the
tenth, twelfth, fifteenth or twenty-fifth day of every third month; and in the
case of semi-annual pay Securities, the tenth, twelfth, fifteenth or
twenty-fifth day
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of every sixth month) and the Record Date will be the close of business as of
the last day of the calendar month that precedes the calendar month in which
such Payment Date occurs.
Each Trust Agreement will describe a Remittance Period preceding each
Payment Date (for example, in the case of monthly-pay Securities, the calendar
month preceding the month in which a Payment Date occurs). As more fully
provided in the related Prospectus Supplement, collections received on or with
respect to the related Receivables held by a Trust during a Remittance Period
will be required to be remitted by the Servicer to the related Trustee prior to
the related Payment Date and will be used to fund payments to Securityholders on
such Payment Date. As may be described in the related Prospectus Supplement,
the related Trust Agreement may provide that all or a portion of the payments
collected on or with respect to the related Receivables may be applied by the
related Trustee to the acquisition of additional Receivables during a specified
period (rather than be used to fund payments of principal to Securityholders
during such period) with the result that the related Securities will possess an
interest-only period, also commonly referred to as a revolving period, which
will be followed by an amortization period. Any such interest only or revolving
period may, upon the occurrence of certain events to be described in the related
Prospectus Supplement, terminate prior to the end of the specified period and
result in the earlier than expected amortization of the related Securities.
In addition, and as may be described in the related Prospectus Supplement,
the related Trust Agreement may provide that all or a portion of such collected
payments may be retained by the Trustee (and held in certain temporary
investments, including Receivables) for a specified period prior to being used
to fund payments of principal to Securityholders.
Such retention and temporary investment by the Trustee of such collected
payments may be required by the related Trust Agreement for the purposes of (a)
slowing the amortization rate of the related Securities relative to the
installment payment schedule of the related Receivables, or (b) attempting to
match the amortization rate of the related Securities to an amortization
schedule established at the time such Securities are issued. Any such feature
applicable to any Securities may terminate upon the occurrence of events to be
described in the related Prospectus Supplement, resulting in distributions to
the specified Securityholders and an acceleration of the amortization of such
Securities.
Neither the Securities nor the underlying Receivables will be guaranteed or
insured by any governmental agency or instrumentality or the Company, the
Servicer, any Trustee or any of their respective affiliates unless specifically
set forth in the related Prospectus Supplement.
As may be described in the related Prospectus Supplement, Securities of
each series covered by a particular Trust Agreement will either evidence
specified beneficial ownership interests in the Trust Property or represent debt
secured by the related Trust Property. To the extent that any Trust Property
includes certificates of interest or participations in Receivables, the related
Prospectus Supplement will describe the material terms and conditions of such
certificates or participations.
MASTER TRUSTS
As may be described in the related Prospectus Supplement, each Trust
Agreement may provide that, pursuant to any one or more supplements thereto, the
Company may direct the related Trustee to issue from time to time new series
subject to the conditions described below (each such issuance a "Master Trust
New Issuance"). Each Master Trust New Issuance will have the effect of
decreasing the Residual Interest in the related Master Trust. Under each such
Master Trust Agreement, the Company may designate, with respect to any newly
issued series: (i) its name or designation; (ii) its initial principal amount
(or method for calculating such amount); (iii) its Interest Rate (or formula for
the determination thereof); (iv) the Payment Dates and the date or dates from
which interest shall accrue; (v) the method for allocating collections to
Securityholders of such series; (vi) any bank accounts to be used by such series
and the terms governing the operation of any such bank accounts; (vii) the
percentage used to calculate monthly servicing fees; (viii) the provider and
terms of any form of Credit Enhancement with respect thereto; (ix) the terms on
which the Securities of such series may be repurchased or remarketed to other
investors; (x) the number of Classes of Securities of such series, and if such
series consists of
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more than one Class, the rights and priorities of each such Class; (xi) the
extent to which the Securities of such series will be issuable in book-entry
form; (xii) the priority of such series with respect to any other series; and
(xiii) any other relevant terms. None of the Company, the Servicer, the
related Trustee or any Master Trust is required or intends to obtain the
consent of any Securityholder of any outstanding series to issue any
additional series.
Each Master Trust Agreement provides that the Company may designate terms
such that each Master Trust New Issuance has an amortization period which may
have a different length and begin on a different date than such periods for any
series previously issued by the related Master Trust and then outstanding.
Moreover, each Master Trust New Issuance may have the benefits of Credit
Enhancements issued by enhancement providers different from the providers of the
Credit Enhancement, if any, with respect to any series previously issued by the
related Master Trust and then outstanding. Under each Master Trust Agreement,
the related Trustee shall hold any such Credit Enhancement only on behalf of the
Securityholders to which such Credit Enhancement relates. The Company will have
the option under each Master Trust Agreement to vary among series the terms upon
which a series may be repurchased by the Issuer or remarketed to other
investors. As more fully described in a related Prospectus Supplement, there is
no limit to the number of Master Trust New Issuances that the Company may cause
under a Master Trust Agreement. Each Master Trust will terminate only as
provided in the related Master Trust Agreement. There can be no assurance that
the terms of any Master Trust New Issuance might not have an impact on the
timing and amount of payments received by Securityholders of another series
issued by the same Master Trust.
Under each Master Trust Agreement and pursuant to a related supplement, a
Master Trust New Issuance may only occur upon the satisfaction of certain
conditions provided in each such Master Trust Agreement. The obligation of the
related Trustee to authenticate the Securities of any such Master Trust New
Issuance and to execute and deliver the supplement to the related Master Trust
Agreement is subject to the satisfaction of the following conditions: (a) on or
before the date upon which the Master Trust New Issuance is to occur, the
Company shall have given the related Trustee, the Servicer, the Rating Agency
and certain related providers of Credit Enhancement, if any, written notice of
such Master Trust New Issuance and the date upon which the Master Trust New
Issuance is to occur; (b) the Company shall have delivered to the related
Trustee a supplement to the related Master Trust Agreement, in form satisfactory
to such Trustee, executed by each party to the related Master Trust Agreement
other than such Trustee; (c) the Company shall have delivered to the related
Trustee any related Credit Enhancement agreement; (d) the related Trustee shall
have received confirmation from the Rating Agency that such Master Trust New
Issuance will not result in any Rating Agency reducing or withdrawing its rating
with respect to any other series or Class of such Trust (any such reduction or
withdrawal is referred to herein as a "Ratings Effect"); (e) the Company shall
have delivered to the related Trustee, the Rating Agency and certain providers
of Credit Enhancement, if any, an opinion of counsel acceptable to the related
Trustee that for federal income tax purposes (i) following such Master Trust New
Issuance the related Master Trust will not be deemed to be an association (or
publicly traded partnership) taxable as a corporation, (ii) such Master Trust
New Issuance will not affect the tax characterization as debt of Securities of
any outstanding series or Class issued by such Master Trust that were
characterized as debt at the time of their issuance and (iii) such Master Trust
New Issuance will not cause or constitute an event in which gain or loss would
be recognized by any Securityholders or the related Master Trust; and (f) any
other conditions specified in any supplement. Upon satisfaction of the above
conditions, the related Trustee shall execute the supplement to the related
Master Trust Agreement and issue the Securities of such new series.
INDEXED SECURITIES
To the extent so specified in any Prospectus Supplement, any class of Securities
of a given series may consist of Securities ("Indexed Securities") in which the
principal amount payable at the final scheduled Payment Date (the "Indexed
Principal Amount") is determined by reference to a measure (the "Index") which
will be related to (i) the difference in the rate of exchange between United
States dollars and a currency or composite currency (the "Indexed Currency")
specified in the applicable Prospectus Supplement (such Indexed Securities,
"Currency Indexed Securities"); (ii) the difference in the price of a specified
commodity (the "Indexed Commodity") on specified dates (such Indexed Securities,
"Commodity
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Indexed Securities"); (iii) the difference in the level of a specified stock
index (the "Stock Index"), which may be based on U.S. or foreign stocks, on
specified dates (such Indexed Securities, "Stock Indexed Securities"); or
(iv) such other objective price or economic measures as are described in the
applicable Prospectus Supplement. The manner of determining the Indexed
Principal Amount of an Indexed Security and historical and other information
concerning the Indexed Currency, the Indexed Commodity, the Stock Index or
other price or economic measures used in such determination will be set forth
in the applicable Prospectus Supplement, together with information concerning
tax consequences to the holders of such Indexed Securities.
If the determination of the Indexed Principal Amount of an Indexed Security
is based on an Index calculated or announced by a third party and such third
party either suspends the calculation or announcement of such Index or changes
the basis upon which such Index is calculated (other than changes consistent
with policies in effect at the time such Indexed Security was issued and
permitted changes described in the applicable Prospectus Supplement), then such
Index shall be calculated for purposes of such Indexed Security by an
independent calculation agent named in the applicable Prospectus Supplement on
the same basis, and subject to the same conditions and controls, as applied to
the original third party. If for any reason such index cannot be calculated on
the same basis and subject to the same conditions and controls as applied to the
original third party, then the Indexed Principal Amount of such Indexed Security
shall be calculated in the manner set forth in the applicable Prospectus
Supplement. Any determination of such independent calculation agent shall in
the absence of manifest error be binding on all parties.
Interest on an Indexed Security will be payable based on the amount
designated in the applicable Prospectus Supplement (the "Face Amount"). The
applicable Prospectus Supplement will describe whether the principal amount of
the related Indexed Security, if any, that would be payable upon redemption or
repayment prior to the applicable final scheduled Distribution Date will be the
Face Amount of such Indexed Security, the Indexed Principal Amount of such
Indexed Security at the time of redemption or repayment or another amount
described in such Prospectus Supplement.
Book-Entry Registration
As may be described in the related Prospectus Supplement, Securityholders
of a given series may hold their Securities through DTC (in the United States)
or CEDEL or Euroclear (in Europe) if they are participants of such systems, or
indirectly through organizations that are participants in such systems.
Cede, as nominee for DTC, will hold the global Securities in respect of a
given series. CEDEL and Euroclear will hold omnibus positions on behalf of the
CEDEL Participants (as defined below) and the Euroclear Participants (as defined
below) (collectively, the "Participants"), respectively, through customers'
securities accounts in CEDEL's and Euroclear's names on the books of their
respective depositaries (collectively, the "Depositaries") which in turn will
hold such positions in customers' securities accounts in the Depositaries' names
on the books of DTC.
DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York UCC and a "clearing agency"
registered pursuant to Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions between Participants through electronic book-entries,
thereby eliminating the need for physical movement of notes or certificates.
Participants include securities brokers and dealers, banks, trust companies and
clearing corporations. Indirect access to the DTC system also is available to
others such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants").
Transfers between DTC Participants will occur in accordance with DTC rules.
Transfers between CEDEL Participants and Euroclear Participants will occur in
the ordinary way in accordance with their applicable rules and operating
procedures.
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Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through CEDEL
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by its Depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its Depositary to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. CEDEL Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in CEDEL or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant CEDEL
Participant or Euroclear Participant on such business day. Cash received in
CEDEL or Euroclear as a result of sales of securities by or through a CEDEL
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
CEDEL or Euroclear cash account only as of the business day following settlement
in DTC.
The Securityholders of a given series that are not Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership of, or
other interests in, Securities of such series may do so only through
Participants and Indirect Participants. In addition, Securityholders of a given
series will receive all distributions of principal and interest through the
Participants who in turn will receive them from DTC. Under a book-entry format,
Securityholders of a given series may experience some delay in their receipt of
payments, since such payments will be forwarded by the applicable Trustee to
Cede, as nominee for DTC. DTC will forward such payments to its Participants,
which thereafter will forward them to Indirect Participants or such
Securityholders. It is anticipated that the only "Securityholder" in respect of
any series will be Cede, as nominee of DTC. Securityholders of a given series
will not be recognized as Securityholders of such series, and such
Securityholders will be permitted to exercise the rights of Securityholders of
such series only indirectly through DTC and its Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Securities of a given series among Participants on whose behalf it acts with
respect to such Securities and to receive and transmit distributions of
principal of, and interest on, such Securities. Participants and Indirect
Participants with which the Securityholders of a given series have accounts with
respect to such Securities similarly are required to make book-entry transfers
and receive and transmit such payments on behalf of their respective
Securityholders of such series. Accordingly, although such Securityholders will
not possess Securities, the Rules provide a mechanism by which Participants will
receive payments and will be able to transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Securityholder of a given series to pledge Securities of such series to persons
or entities that do not participate in the DTC system, or to otherwise act with
respect to such Securities, may be limited due to the lack of a physical
certificate for such Securities.
DTC will advise the Trustee in respect of each series that it will take any
action permitted to be taken by a Securityholder of the related series only at
the direction of one or more Participants to whose accounts with DTC the
Securities of such series are credited. DTC may take conflicting actions with
respect to other undivided interests to the extent that such actions are taken
on behalf of Participants whose holdings include such undivided interests.
CEDEL is incorporated under the laws of Luxembourg as a professional
depository. CEDEL holds securities for its participating organizations ("CEDEL
Participants") and facilitates the clearance and settlement of securities
transactions between CEDEL Participants through electronic book-entry changes
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in accounts of CEDEL Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in CEDEL in any of 28
currencies, including United States dollars. CEDEL provides to its CEDEL
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. CEDEL interfaces with domestic markets in several
countries. As a professional depository, CEDEL is subject to regulation by
the Luxembourg Monetary Institute. CEDEL Participants are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and
certain other organizations. Indirect access to CEDEL is also available to
others, such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a CEDEL Participant, either
directly or indirectly.
Euroclear was created in 1968 to hold securities for participants of the
Euroclear System ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in any of 28 currencies, including United
States dollars. The Euroclear System includes various other services, including
securities lending and borrowing and interfaces with domestic markets in several
countries generally similar to the arrangements for cross-market transfers with
DTC described above. Euroclear is operated by Morgan Guaranty Trust Company of
New York, Brussels, Belgium office, under contract with Euroclear Clearance
System, S.C., a Belgian cooperative corporation (the "Cooperative"). All
operations are conducted by the "Euroclear Operator" (as defined below), and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for the Euroclear System on behalf of Euroclear Participants. Euroclear
Participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include the
Underwriters. Indirect access to the Euroclear System is also available to
other firms that clear through or maintain a custodial relationship with a
Euroclear Participant, either directly or indirectly.
The "Euroclear Operator" is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it
is regulated and examined by the Board of Governors of the Federal Reserve
System and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System and applicable Belgian law
(collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under
the Terms and Conditions only on behalf of Euroclear Participants and has no
record of relationship with persons holding through Euroclear Participants.
Except as required by law, the Trustee in respect of a series will not have
any liability for any aspect of the records relating to or payments made or
account of beneficial ownership interests of the related Securities held by
Cede, as nominee for DTC, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
DEFINITIVE NOTES
As may be described in the related Prospectus Supplement, the Securities
will be issued in fully registered, certificated form ("Definitive Securities")
to the Securityholders of a given series or their nominees, rather than to DTC
or its nominee, only if (i) the Trustee in respect of the related series advises
in writing that DTC is no longer willing or able to discharge properly its
responsibilities as depository with respect to such Securities and such Trustee
is unable to locate a qualified successor, (ii) such Trustee, at its option,
elects to terminate the book-entry-system through DTC or (iii) after the
occurrence of an
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"Event of Default" under the related Indenture or a default by the Servicer
under the related Trust Agreements, Securityholders representing at least a
majority of the outstanding principal amount of such Securities advise the
applicable Trustee through DTC in writing that the continuation of a
book-entry system through DTC (or a successor thereto) is no longer in such
Securityholders' best interest.
Upon the occurrence of any event described in the immediately preceding
paragraph, the applicable Trustee will be required to notify all such
Securityholders through Participants of the availability of Definitive
Securities. Upon surrender by DTC of the definitive certificates representing
such Securities and receipt of instructions for re-registration, the applicable
Trustee will reissue such Securities as Definitive Securities to such
Securityholders.
Distributions of principal of, and interest on, such Securities will
thereafter be made by the applicable Trustee in accordance with the procedures
set forth in the related Indenture or Trust Agreement directly to holders of
Definitive Securities in whose names the Definitive Securities were registered
at the close of business on the applicable Record Date specified for such
Securities in the related Prospectus Supplement. Such distributions will be
made by check mailed to the address of such holder as it appears on the register
maintained by the applicable Trustee. The final payment on any such Security,
however, will be made only upon presentation and surrender of such Security at
the office or agency specified in the notice of final distribution to the
applicable Securityholders.
Definitive Securities in respect of a given series of Securities will be
transferable and exchangeable at the offices of the applicable Trustee or of a
certificate registrar named in a notice delivered to holders of such Definitive
Securities. No service charge will be imposed for any registration of transfer
or exchange, but the applicable Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge imposed in connection therewith.
REPORTS TO SECURITYHOLDERS
With respect to each series of Securities, on or prior to each Payment Date
for such series, the Servicer or the related Trustee will forward or cause to be
forwarded to each holder of record of such class of Securities a statement or
statements with respect to the related Trust Property setting forth the
information specifically described in the related Trust Agreement which
generally will include the following information:
(i) the amount of the distribution with respect to each class of
Securities;
(ii) the amount of such distribution allocable to principal;
(iii) the amount of such distribution allocable to interest;
(iv) the Pool Balance, if applicable, as of the close of business
on the last day of the related Remittance Period;
(v) the aggregate outstanding principal balance and the Pool
Factor for each Class of Securities after giving effect to all payments
reported under (ii) above on such Payment Date;
(vi) the amount paid to the Servicer, if any, with respect to the
related Remittance Period;
(vii) the amount of the aggregate purchase amounts for Receivables
that have been reacquired, if any, for such Remittance Period; and
(viii) the amount of coverage under any letter of credit, financial
guaranty insurance policy, reserve account or other form of credit
enhancement covering default risk as of the close of business on the
applicable Payment Date and a description of any Credit Enhancement
substituted therefor.
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Each amount set forth pursuant to subclauses (i), (ii), (iii) and (v) with
respect to the Securities of any series will be expressed as a dollar amount per
$1,000 of the initial principal balance of such Securities, as applicable. The
actual information to be set forth in statements to Securityholders of a series
will be described in the related Prospectus Supplement.
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year, the applicable Trustee will provide to the
Securityholders a statement containing the amounts described in (ii) and (iii)
above for that calendar year and any other information required by applicable
tax laws, for the purpose of the Securityholders' preparation of federal income
tax returns.
FORWARD COMMITMENTS; PRE-FUNDING
A Trust may enter into an agreement (each, a "Forward Purchase
Agreement") with the Sponsor whereby the Sponsor will agree to transfer
additional Mortgage Loans to such Trust following the date on which such Trust
is established and the related Certificates are issued. The Trust may enter
into Forward Purchase Agreements to permit the acquisition of additional
Mortgage Loans that could not be delivered by the Sponsor or have not formally
completed the origination process, in each case prior to the date on which the
Certificates are delivered to the Certificateholders (the "Closing Date"). Any
Forward Purchase Agreement will require that any Mortgage Loans so transferred
to the Trust conform to the requirements specified in such Forward Purchase
Agreement.
If a Forward Purchase Agreement is to be utilized, and unless
otherwise specified in the related Prospectus Supplement, the related Trustee
will be required to deposit in a segregated account (each, a "Pre-Funding
Account") up to 100% of the net proceeds received by the Trustee in connection
with the sale of one or more classes of Certificates of the related Series; the
additional Mortgage Loans will be transferred to the related Trust in exchange
for money released to the Sponsor from the related Pre-Funding Account. Each
Forward Purchase Agreement will set a specified period (the "Funding Period")
during which any such transfers must occur; for a Trust which elects federal
income treatment as REMIC or as a grantor trust, the related Funding Period will
be limited to three months from the date such Trust is established; for a Trust
which is treated as a mere security device for federal income tax purposes, the
related Funding Period will be limited to nine months from the date such Trust
is established. The Forward Purchase Agreement or the related Pooling and
Servicing Agreement will require that, if all moneys originally deposited to
such Pre-Funding Account are not so used by the end of the related Funding
Period, then any remaining moneys will be applied as a mandatory prepayment of
the related class or classes of Certificates as specified in the related
Prospectus Supplement.
During the Funding Period the moneys deposited to the Pre-Funding
Account will either (i) be held uninvested or (ii) will be invested in
cash-equivalent investments rated in one of the four highest rating categories
by at least one nationally recognized statistical rating orgnaization and which
will either mature prior to the end of the Funding Period, or will be drawable
on demand and in any event, will not constitute the type of investment which
would require registration of the related Trust as an "investment company" under
the Investment Company Act of 1940, as amended.
DESCRIPTION OF THE TRUST AGREEMENTS
The following summary describes certain terms of each Trust Agreement
pursuant to which a Trust Property will be created and the related Securities
in respect of such Trust Property will be issued. For purposes of this
Prospectus, the term "Trust Agreement" as used with respect to a Trust means,
collectively, and except as otherwise specified, any and all agreements
relating to the establishment of the related Trust, the servicing of the
related Receivables and the issuance of the related Securities, including
without limitation the Indenture, (i.e. pursuant to which any Notes shall be
issued). Forms of the Trust Agreement have been filed as exhibits to the
Registration Statement of which the Prospectus forms a part. The summary
does not purport to be complete. It is qualified in its entirety by reference
to the provisions of the Trust Agreements.
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ORIGINATION OF THE RECEIVABLES BY THE COMPANY AND ACQUISITION OF THE RECEIVABLES
PURSUANT TO A RECEIVABLES ACQUISITION AGREEMENT
On the closing date specified with respect to any given series of
Securities (the "Closing Date"), the Company or a Finance Subsidiary will
transfer Receivables originated by the Company either to a Trust pursuant to a
Pooling Agreement, or will pledge the Company's or the Finance Subsidiary's
right, title and interests in and to such Receivables to a Trustee on behalf of
the Securityholders pursuant to an Indenture. The Company or a Finance
Subsidiary will either transfer the Receivables to a Trust pursuant to a Pooling
Agreement, or will pledge the Company's right, title and interests in and to
such Receivables to a Trustee on behalf of Securityholders pursuant to an
Indenture. The obligations of the Company or a Finance Subsidiary and the
Servicer under the related Trust Agreement include those specified below and in
the related Prospectus Supplement.
As more fully described in the related Prospectus Supplement, the Company
will be obligated to acquire from the related Trust Property its interest in any
Receivable transferred to a Trust or pledged to a Trustee on behalf of
Securityholders if the interest of the Securityholders therein is materially
adversely affected by a breach of any representation or warranty made by the
Company with respect to such Receivable, which breach has not been cured
following the discovery by or notice to the Company of the breach. In addition,
if so specified in the related Prospectus Supplement, the Company may from time
to time reacquire certain Receivables or substitute other Receivables for such
Receivable subject to specified conditions set forth in the related Trust
Agreement.
ACCOUNTS
With respect to each series of Securities issued by a Trust, the Servicer
will establish and maintain with the applicable Trustee one or more accounts, in
the name of such Trustee on behalf of the related Securityholders, into which
all payments made on or with respect to the related Receivables will be
deposited (the "Collection Account"). The Servicer will also establish and
maintain with such Trustee separate accounts, in the name of such Trustee on
behalf of such Securityholders, in which amounts released from the Collection
Account and the reserve account or other Credit Enhancement, if any, for
distribution to such Securityholders will be deposited and from which
distributions to such Securityholders will be made (the "Distribution Account").
Any other accounts to be established with respect to a Trust, including any
reserve account, will be described in the related Prospectus Supplement.
For any series of Securities, funds in the Collection Account, the
Distribution Account, any reserve account and other accounts identified as such
in the related Prospectus Supplement (collectively, the "Trust Accounts") shall
be invested as provided in the related Trust Agreement in Eligible Investments.
"Eligible Investments" are generally limited to investments acceptable to the
Rating Agencies as being consistent with the rating of such Securities. Subject
to certain conditions, Eligible Investments may include securities issued by the
Company, the Servicer or their respective affiliates or other trusts created by
the Company or its affiliates. Except as described below or in the related
Prospectus Supplement, Eligible Investments are limited to obligations or
securities that mature not later than the business day immediately preceding the
related Payment Date. However, subject to certain conditions, funds in the
reserve account may be invested in securities that will not mature prior to the
date of the next distribution and will not be sold to meet any shortfalls.
Thus, the amount of cash in any reserve account at any time may be less than the
balance of such reserve account. If the amount required to be withdrawn from
any reserve account to cover shortfalls in collections on the related
Receivables exceeds the amount of cash in such reserve account a temporary
shortfall in the amounts distributed to the related Securityholders could
result, which could, in turn, increase the average life of the Securities of
such series. Except as otherwise specified in the related Prospectus
Supplement, investment earnings on funds deposited in the applicable Trust
Accounts, net of losses and investment expenses (collectively, "Investment
Earnings"), shall be deposited in the applicable Collection Account on each
Payment Date and shall be treated as collections of interest on the related
Receivables.
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The Trust Accounts will be maintained as Eligible Deposit Accounts.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so long as
any of the securities of such depository institution has a credit rating from
each Rating Agency in one of its generic rating categories which signifies
investment grade. "Eligible Institution" means, with respect to a Trust, (a)
the corporate trust department of the related Indenture Trustee or the
related Trustee, as applicable, or (b) a depository institution organized
under the laws of the United States of America or any one of the states
thereof or the District of Columbia (or any domestic branch of a foreign
bank), which (i) (A) has either (w) a long-term unsecured debt rating
acceptable to the Rating Agencies or (x) a short-term unsecured debt rating
or certificate of deposit rating acceptable to the Rating Agencies or (B) the
parent corporation of which has either (y) a long-term unsecured debt rating
acceptable to the Rating Agencies or (z) a short-term unsecured debt rating
or certificate of deposit rating acceptable to the Rating Agencies and (ii)
whose deposits are insured by the FDIC.
THE SERVICER
The Servicer under each Trust Agreement will be named in the related
Prospectus Supplement. The entity serving as Servicer may be the Company or an
affiliate of the Company and may have other business relationships with the
Company or the Company's affiliates. The Servicer with respect to each series
will service the Receivables contained in the Trust Fund for such series. Any
Servicer may delegate its servicing responsibilities to one or more
sub-servicers, but will not be relieved of its liabilities with respect thereto.
The Servicer will make certain representations and warranties regarding its
authority to enter into, and its ability to perform its obligations under, the
related Trust Agreement. An uncured breach of such a representation or warranty
that in any respect materially and adversely affects the interests of the
Securityholders will constitute a Servicer Default (as hereinafter defined) by
the Servicer under the related Trust Agreement.
SERVICING PROCEDURES
Each Trust Agreement will provide that the Servicer will make reasonable
efforts to collect all payments due with respect to the Receivables which are
part of the Trust Fund and, in a manner consistent with the related Trust
Agreement, will continue such collection procedures as the Servicer follows with
respect to the particular type of Receivable in the particular pool it services
for itself and others. Consistent with its normal procedures, the Servicer may,
in its discretion and on a case-by-case basis, arrange with the Obligor on a
Receivable to extend or modify the payment schedule. Some of such arrangements
(including, without limitation any extension of the payment schedule beyond the
final scheduled Payment Date for the related Securities) may result in the
Servicer acquiring such Receivable if such Contract becomes a Defaulted
Contract. The Servicer may sell the Vehicle securing the respective Defaulted
Contract, if any, at a public or private sale, or take any other action
permitted by applicable law. See "Certain Legal Aspects of the Receivables".
The material aspects of any particular Servicer's collections and other
relevant procedures will be set forth in the related Prospectus Supplement.
PAYMENTS ON RECEIVABLES
With respect to each series of Securities, unless otherwise specified in
the related Prospectus Supplement, the Servicer will deposit into the Collection
Account all payments on the related Receivables (from whatever source) and all
proceeds of such Receivables collected within three (3) business days of receipt
thereof in the related collection facility, such as a lock-box account or
collection account. Moneys deposited in such collection facility for Trust
Property may be commingled with funds from other sources.
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SERVICING COMPENSATION
As may be described in the related Prospectus Supplement with respect to
any series of securities issued by a Trust, the Servicer will be entitled to
receive a servicing fee for each Collection Period (the "Servicing Fee") in an
amount equal to a specified percentage per annum (as set forth in the related
Prospectus Supplement, the "Servicing Fee Rate") of the value of the assets of
the Trust Property, generally as of the first day of such Collection Period.
Each Prospectus Supplement and Servicing Agreement will specify the priority of
distributions with respect to the Servicing Fee (together with any portion of
the Servicing Fee that remains unpaid from prior Payment Dates). Generally, the
Servicing Fee will be paid prior to any distribution to the related
Securityholders.
The Servicer will also collect and retain any late fees, the penalty
portion of interest paid on past due amounts and other administrative fees or
similar charges allowed by applicable law with respect to the Receivables, and
will be entitled to reimbursement from each Trust for certain liabilities.
Payments by or on behalf of Obligors will be allocated to scheduled payments and
late fees and other charges in accordance with the Servicer's normal practices
and procedures.
The Servicing Fee will compensate the Servicer for performing the functions
of a third party servicer of similar types of receivables as an agent for their
beneficial owner, including collecting and posting all payments, responding to
inquiries of Obligors on the related Receivables, investigating delinquencies,
sending billing statements to Obligors, reporting tax information to Obligors,
paying costs of collection and disposition of defaults, and policing the
collateral. The Servicing Fee also will compensate the Servicer for
administering the related Receivables, accounting for collections and furnishing
statements to the applicable Trustee and the applicable Indenture Trustee, if
any, with respect to distributions. The Servicing Fee also will reimburse the
Servicer for certain taxes, accounting fees, outside auditor fees, data
processing costs and other costs incurred in connection with administering the
Receivables.
DISTRIBUTIONS
With respect to each series of Securities, beginning on the Payment Date
specified in the related Prospectus Supplement, distributions of principal and
interest (or, where applicable, of principal or interest only) on each Class of
such Securities entitled thereto will be made by the applicable Indenture
Trustee to the holders of Notes (the "Noteholders") and by the applicable
Trustee to the holders of Certificates (the "Certificateholders") of such
series. The timing, calculation, allocation, order, source, priorities of and
requirements for each class of Noteholders and all distributions to each class
of Certificateholders of such series will be set forth in the related Prospectus
Supplement.
With respect to each series of Securities, on each Payment Date collections
on the related Receivables will be transferred from the Collection Account to
the Distribution Account for distribution to Securityholders, respectively, to
the extent provided in the related Prospectus Supplement. Credit Enhancement,
such as a reserve account, may be available to cover any shortfalls in the
amount available for distribution on such date, to the extent specified in the
related Prospectus Supplement. As more fully described in the related
Prospectus Supplement, and unless otherwise specified therein, distributions in
respect of principal of a Class of Securities of a given series will be
subordinate to distributions in respect of interest on such Class, and
distributions in respect of the Certificates of such series may be subordinate
to payments in respect of the Notes of such series.
CREDIT AND CASH FLOW ENHANCEMENTS
The amounts and types of Credit Enhancement arrangements, if any, and the
provider thereof, if applicable, with respect to each class of Securities of a
given series will be set forth in the related Prospectus Supplement. If and to
the extent provided in the related Prospectus Supplement, credit enhancement may
be in the form of a Policy, subordination of one or more Classes of Securities,
reserve accounts, overcollateralization, letters of credit, credit or liquidity
facilities, third party payments or other support, surety bonds, guaranteed cash
deposits or such other arrangements as may be described in the
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related Prospectus Supplement or any combination of two or more of the
foregoing. If specified in the applicable Prospectus Supplement, Credit
Enhancement for a Class of Securities may cover one or more other Classes of
Securities of the same series, and Credit Enhancement for a series of
Securities may cover one or more other series of Securities.
The presence of Credit Enhancement for the benefit of any Class or series
of Securities is intended to enhance the likelihood of receipt by the
Securityholders or such Class or series of the full amount of principal and
interest due thereon and to decrease the likelihood that such Securityholders
will experience losses. As more specifically provided in the related Prospectus
Supplement, the credit enhancement for a Class or series of Securities will not
provide protection against all risks of loss and will not guarantee repayment of
the entire principal balance and interest thereon. If losses occur which exceed
the amount covered by any Credit Enhancement or which are not covered by any
Credit Enhancement, Securityholders of any Class or series will bear their
allocable share of deficiencies, as described in the related Prospectus
Supplement. In addition, if a form of Credit Enhancement covers more than one
series of Securities, Securityholders of any such series will be subject to the
risk that such Credit Enhancement will be exhausted by the claims of
Securityholders of other series.
STATEMENTS TO INDENTURE TRUSTEES AND TRUSTEES
Prior to each Payment Date with respect to each series of Securities, the
Servicer will provide to the applicable Indenture Trustee and/or the applicable
Trustee and Credit Enhancer as of the close of business on the last day of the
preceding related Collection Period a statement setting forth substantially the
same information as is required to be provided in the periodic reports provided
to Securityholders of such series described under "Description of the
Securities--Reports to Securityholders".
EVIDENCE AS TO COMPLIANCE
Each Trust Agreement will provide that a firm of independent public
accountants will furnish to the related Trust and/or the applicable Indenture
Trustee and Credit Enhancer, annually, a statement as to compliance by the
Servicer during the preceding twelve months (or, in the case of the first such
certificate, the period from the applicable Closing Date) with certain standards
relating to the servicing of the Receivables.
Each Trust Agreement will also provide for delivery to the related Trust
and/or the applicable Indenture Trustee of a certificate signed by an officer of
the Servicer stating that the Servicer either has fulfilled its obligations
under such Trust Agreement in all material respects throughout the preceding 12
months (or, in the case of the first such certificate, the period from the
applicable Closing Date) or, if there has been a default in the fulfillment of
any such obligation in any material respect, describing each such default. The
Servicer also will agree to give each Indenture Trustee and each Trustee notice
of certain Servicer Defaults (as hereinafter defined) under the related Trust
Agreement.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the applicable Indenture
Trustee or the applicable Trustee.
CERTAIN MATTERS REGARDING THE SERVICERS
Each Trust Agreement will provide that the Servicer may not resign from its
obligations and duties as Servicer thereunder, except upon determination that
the performance by the Servicer of such duties is no longer permissible under
applicable law. No such resignation will become effective until the related
Trustee or a successor servicer has assumed the Servicer's servicing obligations
and duties under the Trust Agreement.
Except as otherwise provided in the related Prospectus Supplement, each
Trust Agreement will further provide that neither the Servicer nor any of its
respective directors, officers, employees, or agents shall be under any
liability to the related Issuer or the related Securityholders for taking any
action or for refraining from taking any action pursuant to such Trust
Agreement, or for errors in judgment; PROVIDED,
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HOWEVER, that neither the Servicer nor any such person will be protected
against any liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties thereunder. In
addition, such Trust Agreement will provide that the Servicer is under no
obligation to appear in, prosecute, or defend any legal action that is not
incidental to its servicing responsibilities under such Trust Agreement and
that, in its opinion, may cause it to incur any expense or liability.
Under the circumstances specified in any such Trust Agreement, any entity
into which the Servicer may be merged or consolidated, or any entity resulting
from any merger or consolidation to which the Servicer is a party, or any entity
succeeding to the business of the Servicer or, with respect to its obligations
as Servicer, which corporation or other entity in each of the foregoing cases
assumes the obligations of the Servicer, will be the successor to the Servicer
under such Trust Agreement.
SERVICER DEFAULT
Except as otherwise provided in the related Prospectus Supplement,
"Servicer Default" under a Trust Agreement will include (i) any failure by the
Servicer to deliver to the applicable Trustee for deposit in any of the related
Trust Accounts any required payment or to direct such Trustee to make any
required distributions therefrom, which failure continues unremedied for more
than three (3) Business Days after written notice from such Trustee is received
by the Servicer or after discovery by the Servicer; (ii) any failure by the
Servicer duly to observe or perform in any material respect any other covenant
or agreement in such Trust Agreement, which failure materially and adversely
affects the rights of the related Securityholders and which continues unremedied
for more than thirty (30) days after the giving of written notice of such
failure (1) to the Servicer by the applicable Trustee or (2) to the Servicer,
and to the applicable Trustee by holders of the related Securities, as
applicable, evidencing not less than 50% of the voting rights of such
outstanding Securities; (iii) any Insolvency Event; and (iv) any claim being
made on a Policy issued as Credit Enhancement. An "Insolvency Event" shall mean
financial insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings with respect to the Servicer and certain
actions by the Servicer indicating its insolvency, reorganization pursuant to
bankruptcy proceedings, or inability to pay its obligations.
RIGHTS UPON SERVICER DEFAULT
As more fully described in the related Prospectus Supplement, as long as a
Servicer Default under a Trust Agreement remains unremedied, the applicable
Trustee, Credit Enhancer or holders of Securities of the related series
evidencing not less than 50% of the voting rights of such then outstanding
Securities may terminate all the rights and obligations of the Servicer, if any,
under such Trust Agreement, whereupon a successor servicer appointed by such
Trustee or such Trustee will succeed to all the responsibilities, duties and
liabilities of the Servicer under such Trust Agreement and will be entitled to
similar compensation arrangements. If, however, a bankruptcy trustee or similar
official has been appointed for the Servicer, and no Servicer Default other than
such appointment has occurred, such bankruptcy trustee or official may have the
power to prevent the applicable Trustee or such Securityholders from effecting a
transfer of servicing. In the event that the Trustee is unwilling or unable to
so act, it may appoint, or petition a court of competent jurisdiction for the
appointment of, a successor with a net worth of at least $25,000,000 and whose
regular business includes the servicing of a similar type of receivables. Such
Trustee may make such arrangements for compensation to be paid, which in no
event may be greater than the servicing compensation payable to the Servicer
under the related Trust Agreement.
WAIVER OF PAST DEFAULTS
With respect to each Trust, unless otherwise provided in the related
Prospectus Supplement and subject to the approval of any Credit Enhancer, the
holders of Notes evidencing at least a majority of the voting rights of such
then outstanding Securities may, on behalf of all Securityholders of the related
Securities, waive any default by the Servicer in the performance of its
obligations under the related Trust Agreement and its consequences, except a
default in making any required deposits to or payments from
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any of the Trust Accounts in accordance with such Trust Agreement. No such
waiver shall impair the Securityholders' rights with respect to subsequent
defaults.
AMENDMENT
As more fully described in the related Prospectus Supplement, each of the
Trust Agreements may be amended by the parties thereto, without the consent
of the related Securityholders, for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of such Trust
Agreements or of modifying in any manner the rights of such Securityholders;
PROVIDED that such action will not, in the opinion of counsel satisfactory to
the applicable Trustee, materially and adversely affect the interests of any
such Securityholder and subject to the approval of any Credit Enhancer. As
may be described in the related Prospectus Supplement, the Trust Agreements
may also be amended by the Company, the Servicer, and the applicable Trustee
with the consent of the holders of Securities evidencing at least a MAJORITY
of the voting rights of such then outstanding Securities for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of such Trust Agreements or of modifying in any manner the rights
of such Securityholders; PROVIDED, HOWEVER, that no such amendment may (i)
increase or reduce in any manner the amount or priority of, or accelerate or
delay the timing of, collections of payments on the related Receivables or
distributions that are required to be made for the benefit of such
Securityholders or (ii) reduce the aforesaid percentage of the Securities of
such series which are required to consent to any such amendment, without the
consent of the Securityholders of such series.
INSOLVENCY EVENT
As described in the related Prospectus Supplement, if an Insolvency Event
occurs with respect to a Debtor relating to the applicable Trust Property,
the related Trust will terminate, and the Receivables of the related Trust
Property will be liquidated and each such Trust will be terminated 90 days
after the date of such Insolvency Event, unless, before the end of such
90-day period, the Trustee of such Trust shall have received written
instructions from each of the related Securityholders (other than the
Company) and/or Credit Enhancer to the effect that such party disapproves of
the liquidation of such Receivables. Promptly after the occurrence of any
Insolvency Event with respect to a Debtor, notice thereof is required to be
given to such Securityholders and/or Credit Enhancer; PROVIDED, HOWEVER, that
any failure to give such required notice will not prevent or delay
termination of any Trust. Upon termination of any Trust, the applicable
Trustee shall direct that the assets of such Trust be promptly sold (other
than the related Trust Accounts) in a commercially reasonable manner and on
commercially reasonable terms. The proceeds from any such sale, disposition
or liquidation of such Receivables will be treated as collections on such
Receivables and deposited in the related Collection Account. If the proceeds
from the liquidation of such Receivables and any amounts on deposit in the
Reserve Account, if any, and the related Distribution Account are not
sufficient to pay the Securities of the related series in full, and no
additional Credit Enhancement is available, the amount of principal returned
to Securityholders will be reduced and some or all of such Securityholders
will incur a loss.
Each Trust Agreement will provide that the applicable Trustee does not have
the power to commence a voluntary proceeding in bankruptcy with respect to any
related Trust without the unanimous prior approval of all Certificateholders
(including the Company, if applicable) of such Trust and the delivery to such
Trustee by each such Certificateholder of a certificate certifying that such
Certificateholder reasonably believes that such Trust is insolvent.
TERMINATION
With respect to each Trust, the obligations of the Servicer, the Company
and the applicable Trustee pursuant to the related Trust Agreement will
terminate upon the earlier to occur of (i) the maturity or other liquidation of
the last related Receivable and the disposition of any amounts received upon
liquidation of any such remaining Receivables and (ii) the payment to
Securityholders of the related series of all amounts required to be paid to them
pursuant to such Trust Agreement. As more fully described in the related
Prospectus Supplement, in order to avoid excessive administrative expense, the
Servicer
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will be permitted in respect of the applicable Trust Property, unless
otherwise specified in the related Prospectus Supplement, at its option to
purchase from such Trust Property, as of the end of any Collection Period
immediately preceding a Payment Date, if the Pool Balance of the related
Contracts is less than a specified percentage (set forth in the related
Prospectus Supplement) of the initial Pool Balance in respect of such Trust
Property, all such remaining Receivables at a price equal to the aggregate of
the Purchase Amounts thereof as of the end of such Collection Period. The
related Securities will be redeemed following such purchase.
If and to the extent provided in the related Prospectus Supplement with
respect to the Trust Property, the applicable Trustee will, within ten days
following a Payment Date as of which the Pool Balance is equal to or less than
the percentage of the initial Pool Balance specified in the related Prospectus
Supplement, solicit bids for the purchase of the Receivables remaining in such
Trust, in the manner and subject to the terms and conditions set forth in such
Prospectus Supplement. If such Trustee receives satisfactory bids as described
in such Prospectus Supplement, then the Receivables remaining in such Trust
Property will be sold to the highest bidder.
As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed concurrently with
either of the events specified above and the subsequent distribution to the
related Certificateholders of all amounts required to be distributed to them
pursuant to the applicable Trust Agreement may effect the prepayment of the
Certificates of such series.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
GENERAL
The transfer of Receivables by the Company or its Finance Subsidiary to the
Trust pursuant to the related Trust Agreement, the perfection of the security
interests in the Receivables and the enforcement of rights to realize on the
Vehicles as collateral for the Receivables are subject to a number of federal
and state laws, including the UCC as in effect in various states. As specified
in each Prospectus Supplement, the Servicer will take such action as is required
to perfect the rights of the Trustee in the Receivables. If, through
inadvertence or otherwise, a third party were to purchase (including the taking
of a security interest in) a Receivable for new value in the ordinary course of
its business, without actual knowledge of the Trust's interest, and take
possession of a Receivable, the purchaser would acquire an interest in such
Receivable superior to the interest of the Trust. As further specified in each
Prospectus Supplement, no action will be taken to perfect the rights of the
Trustee in proceeds of any insurance policies covering individual Vehicles or
Obligors. Therefore, the rights of a third party with an interest in such
proceeds could prevail against the rights of the Trust prior to the time such
proceeds are deposited by the Servicer into a Trust Account.
SECURITY INTERESTS IN THE FINANCED VEHICLES
GENERAL
Retail installment sale contracts such as the Receivables evidence the
credit sale of automobiles and light duty trucks by dealers to consumers. The
contracts also constitute personal property security agreements and include
grants of security interests in the related automobiles and light duty trucks
under the UCC. Perfection of security interests in automobiles and light duty
trucks is generally governed by the vehicle registration or titling laws of the
state in which each vehicle is registered or titled. In most states a security
interest in a vehicle is perfected by notation of the secured party's lien on
the vehicle's certificate of title.
PERFECTION
Pursuant to the Trust Agreement, the Company will sell and assign the
Receivables it has originated or acquired and its security interests in the
Vehicles to the Trustee. Alternatively, the Company
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may sell and assign the Receivables and its interest in the Vehicles to a
Finance Subsidiary which will, in turn, sell and assign such Receivables and
related security interests to the Trustee. Each of the related Prospectus
Supplements will specify whether, because of the administrative burden and
expense, the Company, the Servicer or the Trustee will amend any certificate
of title to identify the Trustee as the new secured party on the certificates
of title relating to the Vehicles. Each of the related Prospectus
Supplements will specify the UCC financing statements to be filed in order to
perfect the transfer to the Finance Subsidiary of Receivables and the
transfer by the Finance Subsidiary to the Trustee of the Receivables.
Further, although the Trustee will not rely on possession of the Receivables
as the legal basis for the perfection of its interest therein or in the
security interests in the Vehicles, the Servicer, as specified in the related
Prospectus Supplement, will continue to hold the Receivables and any
certificates of title relating to the Vehicles in its possession as custodian
for the Trustee pursuant to the related Trust Agreement which, as a practical
matter, should preclude any other party from claiming a competing security
interest in the Receivables on the basis that the security interest is
perfected by possession.
A security interest in a motor vehicle registered in most states may be
perfected against creditors and subsequent purchasers without notice for
valuable consideration only by one or more of the following: depositing with the
related Department of Motor Vehicles or analogous state office a properly
endorsed certificate of title for the vehicle showing the secured party as legal
owner or lienholder thereon, or filing a sworn notice of lien with the related
Department of Motor Vehicles or analogous state office and noting such lien on
the certificate of title, or, if the vehicle has not been previously registered,
filing an application in usual form for an original registration together with
an application for registration of the secured party as legal owner or
lienholder, as the case may be. However, under the laws of most states, a
transferee of a security interest in a motor vehicle is not required to reapply
to the related Department of Motor Vehicles or analogous state office for a
transfer of registration when the security interest is sold or when the interest
of the transferee arises from the transfer of a security interest by the
lienholder to secure payment or performance of an obligation. Accordingly, under
the laws of such states, the assignment by the Company of its interest in the
Receivables to the Trustee under the related Trust Agreement is an effective
conveyance of the security interest of the Company in the Receivables, and
specifically, the Vehicles, without such re-registration and without amendment
of any lien noted on the related certificate of title, and (subject to the
immediately succeeding paragraphs) the Trustee will succeed to the Company's
rights as secured party.
Although re-registration of a Vehicle is not necessary to convey a
perfected security interest in the Vehicles to the Trustee, the Trustee's
security interest could be defeated through fraud, negligence, forgery or
administrative error since it may not be listed as legal owner or lienholder on
the certificates of title to the Vehicles. However, in the absence of fraud,
negligence, forgery or administrative error , the notation of the Company's lien
on the certificates of title will be sufficient to protect the Trust against the
rights of subsequent purchasers of a Vehicle or subsequent creditors who take a
security interest in a Vehicle. In the related Trust Agreement, the Company or
its Finance Subsidiary will represent and warrant that it has, or has taken all
action necessary to obtain, a perfected security interest in each Vehicle. If
there are any Vehicles as to which the Company failed to obtain a first priority
perfected security interest, the Company's security interest would be
subordinate to, among others, subsequent purchasers of such Vehicles and holders
of first priority perfected security interests therein. Such a failure,
however, would constitute a breach of the Company's or the Finance Subsidiary's
representations and warranties under the related Trust Agreement. Accordingly,
pursuant to the related Trust Agreement, the Company or Finance Subsidiary would
be required to repurchase the related Receivables from the Trustee unless the
breach were cured.
CONTINUITY OF PERFECTION
Under the laws of most states, a perfected security interest in a motor
vehicle continues for four months after the vehicle is moved to a new state from
the one in which it is initially registered and thereafter until the owner
re-registers such motor vehicle in the new state. A majority of states
generally require surrender of a certificate of title to re-register a vehicle.
In those states that require a secured party to hold possession of the
certificate of title to maintain perfection of the security interest, the
secured party would learn of the re-registration through the request from the
Obligor under the related installment
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sale contract to surrender possession of the certificate of title to assist
in such re-registration. In the case of vehicles registered in states
providing for the notation of a lien on the certificate of title but not
requiring possession by the secured party (such as Texas), the secured party
would receive notice of surrender from the state of re-registration if the
security interest is noted on the certificate of title. Thus, the secured
party would have the opportunity to reperfect its security interest in the
vehicle in the state of relocation. However, these procedural safeguards
will not protect the secured party if, through fraud, forgery or
administrative error, the debtor somehow procures a new certificate of title
that does not list the secured party's lien. Additionally, in states that do
not require surrender of a certificate of title for re-registration of a
vehicle, re-registration could defeat perfection. In each of the Trust
Agreements, the Servicer will be required to take steps to effect
re-perfection upon receipt of notice of re-registration or information from
the Obligor as to relocation. Similarly, when an Obligor sells a Vehicle,
the Servicer will have an opportunity to require satisfaction of the related
Receivable before release of the lien, either because the Servicer will be
required to surrender possession of the certificate of title in connection
with the sale, or because the Servicer will receive notice as a result of its
lien noted thereon. Pursuant to the related Trust Agreement, the related
Servicer will hold the certificates of title for the related Vehicles as
custodian for the Trustee. Under the related Trust Agreement, the Servicer
will be obligated to take appropriate steps, at its own expense, to maintain
perfected security interests in the Vehicles.
PRIORITY OF CERTAIN LIENS ARISING BY OPERATION OF LAW
Under the laws of most states, certain statutory liens such as mechanics',
repairmen's and garagemen's liens for repairs performed on a motor vehicle,
motor vehicle accident liens, towing and storage liens, liens arising under
various state and federal criminal statutes and liens for unpaid taxes take
priority over even a first priority perfected security interest in such vehicle
by operation of law. The UCC also grants priority to certain federal tax liens
over the lien of a secured party. The laws of most states and federal law
permit the confiscation of motor vehicles by governmental authorities under
certain circumstances if used in or acquired with the proceeds of unlawful
activities, which may result in the loss of a secured party's perfected security
interest in a confiscated vehicle. The Company will represent and warrant to
the Trustee in the related Trust Agreement that, as of the related Closing Date,
each security interest in a Vehicle shall be a valid, subsisting and enforceable
first priority security interest in such Vehicle. However, liens for repairs or
taxes superior to the security interest of the Trustee in any such Vehicle, or
the confiscation of such Vehicle, could arise at any time during the term of a
Receivable. No notice will be given to the Trustee or any Securityholder in the
event such a lien or confiscation arises and any such lien or confiscation
arising after the related Closing Date would not give rise to the Company's
repurchase obligation under the related Trust Agreement.
REPOSSESSION
In the event of default by an Obligor, the holder of the related retail
installment sale contract has all the remedies of a secured party under the UCC,
except where specifically limited by other state laws. The UCC remedies of a
secured party include the right to repossession by self-help means, unless such
means would constitute a breach of the peace. Unless a vehicle is voluntarily
surrendered, self-help repossession is accomplished simply by taking possession
of the related financed vehicle. In cases where the Obligor objects or raises a
defense to repossession, or if otherwise required by applicable state law, a
court order is obtained from the appropriate state court, and the vehicle must
then be recovered in accordance with that order. In some jurisdictions, the
secured party is required to notify the debtor of the default and the intent to
repossess the collateral and give the debtor a time period within which to cure
the default prior to repossession. Generally, this right of cure may only be
exercised on a limited number of occasions during the term of the related
contract. Other jurisdictions permit repossession without prior notice if it
can be accomplished without a breach of the peace (although in some states, a
course of conduct in which the creditor has accepted late payments has been held
to create a right by the Obligor to receive prior notice).
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<PAGE>
NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and other state laws require a secured party to provide the Obligor
with reasonable notice of the date, time and place of any public sale and/or the
date after which any private sale of the collateral may be held. In addition,
some states also impose substantive timing requirements on the sale of
repossessed vehicles in certain circumstances and/or various substantive timing
and content requirements on such notices. In some states, under certain
circumstances after a financed vehicle has been repossessed, the Obligor may
redeem the collateral by paying the delinquent installments and other amounts
due. The Obligor has the right to redeem the collateral prior to actual sale or
entry by the secured party into a contract for sale of the collateral by paying
the secured party the unpaid principal balance of the obligation, accrued
interest thereon, reasonable expenses for repossessing, holding, and preparing
the collateral for disposition and arranging for its sale, plus, in some
jurisdictions, reasonable attorneys' fees and legal expenses or in some other
states, by payment of delinquent installments on the unpaid principal balance of
the related obligation.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the Vehicles generally will be applied first to
the expenses of resale and repossession and then to the satisfaction of the
indebtedness. In many instances, the remaining principal amount of such
indebtedness will exceed such proceeds. Under the UCC and laws applicable in
some states, a creditor is entitled to bring an action to obtain a deficiency
judgment from a debtor for any deficiency on repossession and resale of a motor
vehicle securing such debtor's loan; however, in some states, a creditor may not
seek a deficiency judgment from a debtor whose financed vehicle had an initial
cash sales price less than a specified amount, usually $3,000. Some states,
impose prohibitions or limitations or notice requirements on actions for
deficiency judgments. In addition to the notice requirement described above,
the UCC requires that every aspect of the sale or other disposition, including
the method, manner, time, place and terms, be "commercially reasonable".
Generally, courts have held that when a sale is not "commercially reasonable",
the secured party loses its right to a deficiency judgment. In addition, the
UCC permits the debtor or other interested party to recover for any loss caused
by noncompliance with the provisions of the UCC. Also, prior to a sale, the UCC
permits the debtor or other interested person to obtain an order mandating that
the secured party refrain from disposing of the collateral if it is established
that the secured party is not proceeding in accordance with the "default"
provisions under the UCC. However, the deficiency judgment would be a personal
judgment against the Obligor for the shortfall, and a defaulting Obligor can be
expected to have very little capital or sources of income available following
repossession. Therefore, in many cases, it may not be useful to seek a
deficiency judgment or, if one is obtained, it may be settled at a significant
discount or be uncollectible.
Occasionally, after resale of a vehicle and payment of all expenses and
indebtedness, there is a surplus of funds. In that case, the UCC requires the
creditor to remit the surplus to any holder of a subordinate lien with respect
to the vehicle or if no such lienholder exists or if there are remaining funds,
the UCC requires the creditor to remit the surplus to the Obligor under the
contract.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related regulations
impose substantial requirements upon creditors and servicers involved in
consumer finance. These laws include the Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Federal Trade Commission Act, the Fair Credit Reporting
Act, the Fair Debt Collection Practices Act, the Magnuson-Moss Warranty Act, the
Federal Reserve Board's Regulations B and Z, state adaptations of the Uniform
Consumer Credit Code, state motor vehicle retail installment sale acts, state
"lemon" laws and other similar laws. In addition, the laws of certain states
impose finance charge ceilings and other restrictions on consumer transactions
and require contract disclosures in addition to those required under federal
law. These requirements impose specific statutory liabilities upon creditors
who fail to comply with their provisions. In some cases, this liability could
affect the ability of an assignee such as the Trustee to enforce consumer
finance contracts such as the Receivables.
41
<PAGE>
The so-called "Holder-in-Due-Course Rule" of the Federal Trade Commission
(the "FTC Rule") has the effect of subjecting any assignee of the seller in a
consumer credit transaction (and certain related creditors and their assignees)
to all claims and defenses which the Obligor in the transaction could assert
against the seller. Liability under the FTC Rule is limited to the amounts paid
by the Obligor under the contract, and the holder of the contract may also be
unable to collect any balance remaining due thereunder from the Obligor. The
FTC Rule is generally duplicated by the Uniform Consumer Credit Code, other
state statutes or the common law in certain states. To the extent that the
Receivables will be subject to the requirements of the FTC Rule, the Trustee, as
holder of the Receivables, will be subject to any claims or defenses that the
purchaser of the related Vehicle may assert against the seller of such Vehicle.
Such claims will be limited to a maximum liability equal to the amounts paid by
the Obligor under the related Receivable.
Under most state vehicle dealer licensing laws, sellers of automobiles and
light duty trucks are required to be licensed to sell vehicles at retail sale.
In addition, with respect to used vehicles, the Federal Trade Commission's Rule
on Sale of Used Vehicles requires that all sellers of used vehicles prepare,
complete and display a "Buyer's Guide" which explains the warranty coverage for
such vehicles. Furthermore, Federal Odometer Regulations promulgated under the
Motor Vehicle Information and Cost Savings Act and the motor vehicle title laws
of most states require that all sellers of used vehicles furnish a written
statement signed by the seller certifying the accuracy of the odometer reading.
If a seller is not properly licensed or if either a Buyer's Guide or Odometer
Disclosure Statement was not provided to the purchaser of a Vehicle, the Obligor
may be able to assert a defense against the seller of the Vehicle. If an
Obligor on a Receivable were successful in asserting any such claim or defense,
the Servicer would pursue on behalf of the Trust any reasonable remedies against
the seller or manufacturer of the vehicle, subject to certain limitations as to
the expense of any such action to be specified in the related Trust Agreement.
Any such loss, to the extent not covered by credit support (as specified in
the Related Prospectus Supplement), could result in losses to the
Securityholders. As specified in the related Prospectus Supplement, if an
Obligor were successful in asserting any such claim or defense as described in
this paragraph or the two immediately preceding paragraphs, such claim or
defense may constitute a breach of a representation and warranty under the
related Trust Agreement and may create an obligation of the Company to
repurchase such Receivable unless the breach were cured.
Courts have applied general equitable principles to secured parties
pursuing repossession or litigation involving deficiency balances. These
equitable principles may have the effect of relieving an Obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies of
secured parties under the UCC and related laws violate the due process
protections of the 14th Amendment to the Constitution of the United States.
Courts have generally either upheld the notice provisions of the UCC and related
laws as reasonable or have found that the creditor's repossession and resale do
not involve sufficient state action to afford constitutional protection to
consumers.
As specified in the related Prospectus Supplement, the Company (or its
Finance Subsidiary, if any) will represent and warrant under the related Trust
Agreement that each Receivable complies with all requirements of law in all
material respects. Accordingly, if an Obligor has a claim against the Trustee
for violation of any law and such claim materially and adversely affects the
Trustee's interest in a Receivable, such violation would constitute a breach of
representation and warranty under the related Trust Agreement and would create
an obligation of the Company (or its Finance Subsidiary, if any) to repurchase
such Receivable unless the breach were cured.
SOLDIERS' AND SAILORS' CIVIL RELIEF ACT OF 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), an Obligor who enters military service after the
origination of such Obligor's Receivable (including an Obligor who was in
reserve status and is called to active duty after origination of the
Receivable), may
42
<PAGE>
not be charged interest (including fees and charges) above an annual rate of
6% during the period of such Obligor's active duty status, unless a court
orders otherwise upon application of the lender. The Relief Act applies to
Obligors who are members of the Army, Navy, Air Force, Marines, National
Guard, Reserves, Coast Guard, and officers of the U.S. Public Health Service
assigned to duty with the military. Because the Relief Act applies to
Obligors who enter military service (including reservists who are called to
active duty) after origination of the related Receivable, no information can
be provided as to the number of loans that may be effected by the Relief Act.
Application of the Relief Act would adversely affect, for an indeterminate
period of time, the ability of the Servicer to collect full amounts of
interest on certain of the Receivables. Any shortfall in interest
collections resulting from the application of the Relief Act or similar
legislation or regulations, which would not be recoverable from the related
Receivables, would result in a reduction of the amounts distributable to the
holders of the related Securities, and would not be covered by advances, any
form of Credit Enhancement provided in connection with the related series of
Securities. In addition, the Relief Act imposes limitations that would
impair the ability of the Servicer to foreclose on an affected Receivable
during the Mortgagor's period of active duty status, and, under certain
circumstances, during an additional three month period thereafter. Thus, in
the event that the Relief Act or similar legislation or regulations applies
to any Receivable which goes into default, there may be delays in payment and
losses on the related Securities in connection therewith. Any other interest
shortfalls, deferrals or forgiveness of payments on the Receivables resulting
from similar legislation or regulations may result in delays in payments or
losses to Securityholders of the related series.
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a creditor to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
creditor from repossessing a motor vehicle, and, as part of the rehabilitation
plan, reduce the amount of the secured indebtedness to the market value of the
motor vehicle at the time of bankruptcy (as determined by the court), leaving
the party providing financing as a general unsecured creditor for the remainder
of the indebtedness. A bankruptcy court may also reduce the monthly payments
due under a contract or change the rate of interest and time of repayment of the
indebtedness. Any such shortfall, to the extent not covered by credit support
(as specified in each Prospectus Supplement), could result in losses to the
Securityholders.
CERTAIN TAX CONSIDERATIONS
The Prospectus Supplement for each series of Securities will summarize,
subject to the limitations stated therein, federal income tax considerations
relevant to the purchase, ownership and disposition of such Securities.
ERISA CONSIDERATIONS
The Prospectus Supplement for each series of Securities will summarize,
subject to the limitations discussed therein, considerations under ERISA
relevant to the purchase of such Securities by employee benefit plans and
individual retirement accounts.
METHODS OF DISTRIBUTION
The Securities offered hereby and by the related Prospectus Supplement will
be offered in series through one or more of the methods described below. The
Prospectus Supplement prepared for each series will describe the method of
offering being utilized for that series and will state the public offering or
purchase price of such series and the net proceeds to the Company from such
sale.
43
<PAGE>
The Company intends that Securities will be offered through the following
methods from time to time and that offerings may be made concurrently through
more than one of these methods or that an offering of a particular series of
Securities may be made through a combination of two or more of these methods.
Such methods are as follows:
1. By negotiated firm commitment or best efforts underwriting and
public re-offering by underwriters;
2. By placements by the Company with institutional investors through
dealers;
3. By direct placements by the Company with institutional investors;
and
4. By competitive bid.
In addition, if specified in the related Prospectus Supplement, a series of
Securities may be offered in whole or in part in exchange for the Receivables
(and other assets, if applicable) that would comprise the Trust Property in
respect of such Securities.
If underwriters are used in a sale of any Securities (other than in
connection with an underwriting on a best efforts basis), such Securities will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions, at
fixed public offering prices or at varying prices to be determined at the time
of sale or at the time of commitment therefor. The Securities will be set forth
on the cover of the Prospectus Supplement relating to such series and the
members of the underwriting syndicate, if any, will be named in such Prospectus
Supplement.
In connection with the sale of the Securities, underwriters may receive
compensation from the Company or from purchasers of the Securities in the form
of discounts, concessions or commissions. Underwriters and dealers
participating in the distribution of the Securities may be deemed to be
underwriters in connection with such Securities, and any discounts or
commissions received by them from the Company and any profit on the resale of
Securities by them may be deemed to be underwriting discounts and commissions
under the Securities Act. The Prospectus Supplement will describe any such
compensation paid by the Company.
It is anticipated that the underwriting agreement pertaining to the sale of
any series of Securities will provide that the obligations of the underwriters
will be subject to certain conditions precedent, that the underwriters will be
obligated to purchase all such Securities if any are purchased (other than in
connection with an underwriting on a best efforts basis) and that, in limited
circumstances, the Company will indemnify the several underwriters and the
underwriters will indemnify the Company against certain civil liabilities,
including liabilities under the Securities Act or will contribute to payments
required to be made in respect thereof.
The Prospectus Supplement with respect to any series offered by placements
through dealers will contain information regarding the nature of such offering
and any agreements to be entered into between the Company and purchasers of
Securities of such series.
Purchasers of Securities, including dealers, may, depending on the facts
and circumstances of such purchases, be deemed to be "underwriters" within the
meaning of the Securities Act in connection with reoffers and sales by them of
Securities. Holders of Securities should consult with their legal advisors in
this regard prior to any such reoffer or sale.
LEGAL OPINIONS
Certain legal matters relating to the issuance of the Securities of any
series, including certain federal and state income tax consequences with respect
thereto, will be passed upon by Dewey Ballantine, New York, New York, or other
counsel specified in the related Prospectus Supplement.
44
<PAGE>
FINANCIAL INFORMATION
Certain specified Trust Property will secure each series of Securities, no
Trust will engage in any business activities or have any assets or obligations
prior to the issuance of the related series of Securities, except for serial
issuances by a Master Trust. Accordingly, no financial statements with respect
to any Trust Property will be included in this Prospectus or in the related
Prospectus Supplement.
A Prospectus Supplement may contain the financial statements of the related
Credit Enhancer, if any.
ADDITIONAL INFORMATION
This Prospectus, together with the Prospectus Supplement for each series of
Securities, contains a summary of the material terms of the applicable exhibits
to the Registration Statement and the documents referred to herein and therein.
Copies of such exhibits are on file at the offices of the Securities and
Exchange Commission in Washington, D.C., and may be obtained at rates prescribed
by the Commission upon request to the Commission and may be inspected, without
charge, at the Commission's offices.
45
<PAGE>
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
46
<PAGE>
Indirect Participants.....................................................16, 27
Insolvency Event..............................................................36
Insolvency Laws...............................................................14
Interest Rate...............................................................2, 6
Investment Company Act.........................................................7
Investment Earnings...........................................................32
Issuer..................................................................1, 4, 18
Master Trust...................................................................8
Master Trust Agreement.........................................................8
Master Trust New Issuance.....................................................25
Noteholders...................................................................34
Notes.......................................................................1, 4
Participants..................................................................27
Partnership Interests.........................................................12
Pass-Through Rate..............................................................2
Payment Date...................................................................6
Policy......................................................................1, 5
Pool Balance..................................................................23
Pool Factor...................................................................23
Pooling Agreement..............................................................5
Pre-Funding Account...........................................................10
Pre-Funding Period............................................................10
Prepayment....................................................................16
Prospectus Supplement..........................................................1
Rating Agencies...............................................................12
Ratings Effect............................................................16, 26
Receivables..............................................................1, 4, 5
Record Date....................................................................7
Registration Statement.........................................................2
Relief Act................................................................17, 42
Remittance Period..............................................................7
Residual Interest..............................................................7
Rule of 78s................................................................9, 19
Rule of 78s Contracts.........................................................19
Rules.........................................................................28
Securities.....................................................................1
Securities Act.................................................................2
Security Insurer..............................................................10
Securityholder................................................................28
Securityholders................................................................6
Senior Securities..............................................................6
Servicer....................................................................1, 4
Servicer Default..............................................................36
Servicing Agreement............................................................5
Servicing Fee.................................................................34
Servicing Fee Rate............................................................34
Simple Interest Contracts..................................................9, 19
Stock Index...................................................................27
Stock Indexed Securities......................................................27
Strip Securities...............................................................6
Subordinate Securities.........................................................6
Terms and Conditions..........................................................29
Transferor.....................................................................4
Trust.......................................................................1, 4
Trust Accounts................................................................32
Trust Agreement............................................................5, 31
47
<PAGE>
Trust Property..............................................................1, 4
Trustee........................................................................5
Vehicles....................................................................1, 4
Vendors........................................................................4
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
48
<PAGE>
Insolvency Event..............................................................36
Insolvency Laws...............................................................14
Interest Rate...............................................................2, 6
Investment Company Act.........................................................7
Investment Earnings...........................................................32
Issuer..................................................................1, 4, 18
Master Trust...................................................................8
Master Trust Agreement.........................................................8
Master Trust New Issuance.....................................................25
Noteholders...................................................................34
Notes.......................................................................1, 4
Participants..................................................................27
Partnership Interests.........................................................12
Pass-Through Rate..............................................................2
Payment Date...................................................................6
Policy......................................................................1, 5
Pool Balance..................................................................23
Pool Factor...................................................................23
Pooling Agreement..............................................................5
Pre-Funding Account...........................................................10
Pre-Funding Period............................................................10
Prepayment....................................................................16
Prospectus Supplement..........................................................1
Rating Agencies...............................................................12
Ratings Effect............................................................16, 26
Receivables..............................................................1, 4, 5
Record Date....................................................................7
Registration Statement.........................................................2
Relief Act................................................................17, 42
Remittance Period..............................................................7
Residual Interest..............................................................7
Rule of 78s................................................................9, 19
Rule of 78s Contracts.........................................................19
Rules.........................................................................28
Securities.....................................................................1
Securities Act.................................................................2
Security Insurer..............................................................10
Securityholder................................................................28
Securityholders................................................................6
Senior Securities..............................................................6
Servicer....................................................................1, 4
Servicer Default..............................................................36
Servicing Agreement............................................................5
Servicing Fee.................................................................34
Servicing Fee Rate............................................................34
Simple Interest Contracts..................................................9, 19
Stock Index...................................................................27
Stock Indexed Securities......................................................27
Strip Securities...............................................................6
Subordinate Securities.........................................................6
Terms and Conditions..........................................................29
Transferor.....................................................................4
Trust.......................................................................1, 4
Trust Accounts................................................................32
Trust Agreement............................................................5, 31
Trust Property..............................................................1, 4
49
<PAGE>
Trustee........................................................................5
Vehicles....................................................................1, 4
Vendors........................................................................4
50
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE SELLER
OR THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE TRUST, THE RECEIVABLES OR THE SECURITY INSURER SINCE SUCH
DATE.
----------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
PROSPECTUS SUPPLEMENT
Incorporation of Certain Documents by Reference..... S-3
Summary of Terms.................................... S-4
Risk Factors........................................ S-13
Use of Proceeds..................................... S-15
The Servicer........................................ S-15
The Seller.......................................... S-15
The Trust........................................... S-16
The Trust Property.................................. S-17
AmerCredit's Automobile Financing Program........... S-18
The Receivables..................................... S-20
Yield and Prepayment Considerations................. S-24
The Insurer......................................... S-30
Description of the Notes............................ S-32
Description of the Certificates..................... S-35
Description of the Purchase Agreements and the Trust
Documents......................................... S-36
The Policies........................................ S-47
Certain Federal Income Tax Consequences............. S-50
State Tax Considerations............................ S-56
ERISA Considerations................................ S-57
Legal Investment.................................... S-57
Ratings............................................. S-58
Underwriting........................................ S-58
Experts............................................. S-59
Legal Opinions...................................... S-59
Index of Defined Terms.............................. S-60
Global Clearance Settlement and Tax Documentation
Procedures........................................ Annex I
PROSPECTUS
Prospectus Supplement............................... 2
Available Information............................... 2
Incorporation of Certain Documents by Reference..... 2
Reports to Securityholders.......................... 3
Summary of Terms.................................... 4
Risk Factors........................................ 13
The Trust Property.................................. 17
The Issuers......................................... 18
The Receivables..................................... 19
AmeriCredit's Automobile Financing Program.......... 20
Pool Factors........................................ 23
Use of Proceeds..................................... 23
The Company and the Servicer........................ 23
The Trustee......................................... 23
Description of the Securities....................... 24
Description of the Trust Agreements................. 31
Certain Legal Aspects of the Receivables............ 38
Certain Tax Considerations.......................... 43
ERISA Considerations................................ 43
Methods of Distribution............................. 43
Legal Opinions...................................... 44
Financial Information............................... 45
Additional Information.............................. 45
Index of Terms...................................... 46
</TABLE>
----------------------------------
UNTIL JUNE , 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT),
ALL DEALERS EFFECTING TRANSACTIONS IN THE SECURITIES DESCRIBED IN THIS
PROSPECTUS SUPPLEMENT, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
$225,000,000
AMERICREDIT AUTOMOBILE
RECEIVABLES TRUST 1997-A
$60,200,000
CLASS A-1 % ASSET BACKED NOTES
$86,625,000
CLASS A-2 FLOATING RATE ASSET
BACKED NOTES
$70,300,000
CLASS A-3 % ASSET BACKED NOTES
$7,875,000
% ASSET BACKED CERTIFICATES
AFS FUNDING CORP.
SELLER
AMERICREDIT FINANCIAL
SERVICES, INC.
SERVICER
----------------------------
PROSPECTUS SUPPLEMENT
----------------------------
BEAR, STEARNS & CO. INC.
CREDIT SUISSE FIRST BOSTON
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