<PAGE>
Filed pursuant to Regulation
424(b)(2) under
the 1993 Act; Commission No.
333-17981
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED FEBRUARY 28, 1997)
$250,000,000
AMERICREDIT AUTOMOBILE RECEIVABLES TRUST 1997-B
$68,000,000 CLASS A-1 5.79% ASSET BACKED NOTES
$96,250,000 CLASS A-2 6.36% ASSET BACKED NOTES
$85,750,000 CLASS A-3 6.67% ASSET BACKED NOTES
AFS FUNDING CORP.
SELLER
[LOGO]
SERVICER
---------------------
AmeriCredit Automobile Receivables Trust 1997-B (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 $68,000,000 aggregate principal amount of Class
A-1 5.79% Asset Backed Notes (the "Class A-1 Notes"), $96,250,000 aggregate
principal amount of Class A-2 6.36% Asset Backed Notes (the "Class A-2 Notes")
and $85,750,000 aggregate principal amount of Class A-3 6.67% 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 May 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 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 May 1, 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-11 HEREIN AND BEGINNING ON PAGE 13
IN THE ACCOMPANYING PROSPECTUS.
---------------------
THE NOTES REPRESENT OBLIGATIONS OF THE TRUST ONLY AND DO NOT
REPRESENT INTERESTS IN OR OBLIGATIONS OF THE SELLER,
THE SERVICER OR ANY AFFILIATE
THEREOF.
FULL AND COMPLETE PAYMENT OF THE NOTEHOLDERS' DISTRIBUTABLE AMOUNT ON EACH
DISTRIBUTION DATE IS UNCONDITIONALLY AND IRREVOCABLY GUARANTEED PURSUANT TO A
FINANCIAL GUARANTY INSURANCE POLICY (THE "POLICY") 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>
UNDERWRITING PROCEEDS TO
PRICE TO PUBLIC(1) DISCOUNT SELLER(1)(2)
<S> <C> <C> <C>
Per Class A-1 Note.................................... 100.00000% 0.265% 99.73500%
Per Class A-2 Note.................................... 99.99407% 0.300% 99.69407%
Per Class A-3 Note.................................... 99.97852% 0.400% 99.57852%
Total................................................. $249,975,873.28 $811,950.00 $249,163,923.28
</TABLE>
(1) Plus accrued interest, if any, from May 21, 1997.
(2) Before deducting expenses, estimated to be $900,000.
The Notes are offered by the Underwriters when, as and if issued by the
Trust, delivered to and accepted by the Underwriters and subject to their right
to reject orders in whole or in part. It is expected that delivery of the Notes
in book-entry form will be made through the facilities of The Depository Trust
Company ("DTC") against payment in immediately available funds and Cedel Bank,
societe anonyme ("Cedel") and the Euroclear System ("Euroclear") on or about May
21, 1997.
--------------------------
BEAR, STEARNS & CO. INC. CREDIT SUISSE FIRST BOSTON
---------------
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS MAY 15, 1997.
<PAGE>
(Continued from preceding page).
From time to time on or before July 18, 1997, additional motor vehicle
retail installment sale contracts (the "Subsequent Receivables," and together
with the Initial Receivables, the "Receivables") secured by new and used
automobiles, light duty trucks and vans financed thereby (the "Subsequent
Financed Vehicles," and together with the Initial Financed Vehicles, the
"Financed Vehicles"), certain amounts received under the Subsequent Receivables
on and after the related Subsequent Cutoff Dates (as defined herein), security
interests in the Subsequent Financed Vehicles and certain other property, as
more fully described herein, are intended to be purchased by the Trust from
amounts deposited in a pre-funding account established with the Trust Collateral
Agent (the "Pre-Funding Account") on the date of issuance of the Notes.
Subsequent Receivables with an aggregate Principal Balance of up to
$62,500,002.61 may be acquired by the Trust.
The Notes will be secured by the assets of the Trust pursuant to the
Indenture. Interest on the Notes will accrue at the per annum interest rates
specified above. Interest on the Notes will generally be payable on the twelfth
day of each month (each, a "Distribution Date"), commencing on June 12, 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 Distribution Date with respect to any class of Notes on which the final
distribution is scheduled to be paid is the "Final Schedule Distribution Date"
for such class. The Final Scheduled Distribution Date for the Class A-l Notes
will be the June 1998 Distribution Date, for the Class A-2 Notes will be the
September 2000 Distribution Date and for the Class A-3 Notes will be the
February 2003 Distribution Date. However, payment in full of a Class of Notes
may occur earlier than such dates as described herein. In addition, the Class
A-3 Notes will be subject to redemption in whole, but not in part, on any
Distribution Date on which the Servicer exercises its option to purchase the
Receivables. The Servicer may purchase the Receivables when the aggregate
Principal Balance of the Receivables has declined to 10% or less of the Original
Pool Balance (as hereinafter defined).
There currently is no secondary market for the Notes. The Underwriters
expect to make a market in the Notes but have no obligation to do so. There is
no assurance that any such market will develop or continue or that it will
provide Noteholders with sufficient liquidity of investment.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE NOTES. ADDITIONAL INFORMATION IS CONTAINED IN THE PROSPECTUS
AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS IN FULL. SALES OF THE NOTES MAY NOT BE CONSUMMATED UNLESS THE
PURCHASER HAS RECEIVED A FINAL PROSPECTUS SUPPLEMENT AND THE FINAL PROSPECTUS.
TO THE EXTENT ANY STATEMENTS IN THIS PROSPECTUS SUPPLEMENT CONFLICT WITH
STATEMENTS IN THE PROSPECTUS, THE STATEMENTS IN THIS PROSPECTUS SUPPLEMENT SHALL
CONTROL.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE NOTES AT
LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
Unless and until Definitive Notes are issued, unaudited monthly and annual
reports containing information concerning the Receivables will be sent on behalf
of the Trust to Cede & Co., as registered holder of the Notes and the nominee of
DTC. See "Description of the Notes -- Reports to Noteholders" and "--
Book-Entry Registration" in the accompanying Prospectus (the "Prospectus").
Such reports will not
S-2
<PAGE>
constitute financial statements prepared in accordance with generally
accepted accounting principles. None of the Seller, the Servicer, or the
Insurer intends to send any of its financial reports to Noteholders. The
Servicer, on behalf of the Trust, will file with the Securities and Exchange
Commission (the "Commission") periodic reports concerning the Trust to the
extent required under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission thereunder.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
In addition to the documents described in the Prospectus under
"Incorporation of Certain Documents by Reference," the consolidated financial
statements of Financial Security Assurance Inc. (the "Insurer") and Subsidiaries
included in, or as exhibits to, the following documents which have been filed
with the Commission by Financial Security Assurance Holdings Ltd. ("Holdings"),
are hereby incorporated by reference in this Prospectus Supplement:
(a) Annual Report on Form 10-K for the year ended December 31, 1996, and
(b) Quarterly Report on Form 10-Q for the period ended March 31, 1997.
All financial statements of the Insurer and Subsidiaries included in
documents filed by Holdings pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus Supplement and prior to
the termination of the offering of the Notes shall be deemed to be incorporated
by reference into this Prospectus Supplement and to be a part hereof from the
respective dates of filing of such documents.
The Seller on behalf of the Trust hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Trust's annual report pursuant to section 13(a) or section 15(d) of the Exchange
Act and each filing of the financial statements of the Insurer included in or as
an exhibit to the annual report of Holdings filed pursuant to section 13(a) or
section 15(d) of the Exchange Act that is incorporated by reference in the
Registration Statement (as defined in the accompanying Prospectus) shall be
deemed to be a new registration statement relating to the Notes offered hereby,
and the offering of such Notes at that time shall be deemed to be the initial
bona fide offering thereof.
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.
<TABLE>
<S> <C>
Issuer........................ AmeriCredit Automobile Receivables Trust 1997-B (the "Trust"
or the "Issuer"), a Delaware business trust to be formed
pursuant to a Trust Agreement, dated as of May 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........... May 1, 1997.
Closing Date.................. May 21, 1997.
The Notes..................... The Trust will issue Class A-1 5.79% Asset Backed Notes (the
"Class A-1 Notes") in the aggregate original principal
amount of $68,000,000, Class A-2 6.36% Asset Backed Notes
(the "Class A-2 Notes") in the aggregate original principal
amount of $96,250,000, and Class A-3 6.67% Asset Backed
Notes (the "Class A-3 Notes") in the aggregate original
principal amount of $85,750,000. 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 May 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 Notes--Book-Entry
Registration" in the Prospectus and Annex I hereto.
The Notes will be secured by the assets of the Trust
pursuant to the Indenture.
</TABLE>
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<TABLE>
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The Certificate............... The Trust will issue an Asset Backed Certificate (the
"Certificate") which represents the equity ownership in the
Trust, and is subordinate in right of payment to the Notes.
The Certificate does not have a principal balance. The
Certificate will be issued pursuant to the Trust Agreement.
The Certificate is not being offered hereby.
Trust Property................ Each Note will represent an obligation of the Trust. The
Trust's assets (the "Trust Property") will include, among
other things, certain motor vehicle retail installment sale
contracts (the "Initial Receivables"), secured by new and
used automobiles, light duty trucks and vans (the "Initial
Financed Vehicles"), certain monies received thereunder
after the Initial Cutoff Date, an assignment of the security
interests in the Initial Financed Vehicles securing the
Initial Receivables, the related Receivables Files, all
rights to proceeds from claims on certain physical damage,
credit life and disability insurance policies covering the
Initial Financed Vehicles or the Obligers, as the case may
be, all rights to liquidation proceeds with respect to the
Initial Receivables, an assignment of the right of the
Seller against Dealers under agreements between AmeriCredit
and such Dealers, certain bank accounts, all proceeds of the
foregoing, and certain rights under the Trust Documents. The
Trust Property also will include an assignment of the
Seller's rights against AmeriCredit under the Purchase
Agreement upon the occurrence of certain breaches of
representations and warranties. The Initial Receivables will
be purchased by the Seller from AmeriCredit pursuant to a
purchase agreement (the "Purchase Agreement") between the
Seller and AmeriCredit on or prior to the date of issuance
of the Notes.
Additional motor vehicle retail installment sale contracts
(the "Subsequent Receivables") secured by new or used
automobiles, light duty trucks and vans (the "Subsequent
Financed Vehicles") and related property are intended to be
purchased by the Trust from the Seller from time to time on
or before July 18, 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."
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
</TABLE>
S-5
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<S> <C>
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 19.92%, a weighted average
original maturity of 55 months and a weighted average
remaining maturity of 54 months. The Initial Receivables
have an aggregate Principal Balance of $187,499,997.39 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 3 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 $62,500,002.61. 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 twelfth day is
not a Business Day, on the next following Business Day
(each, a "Distribution Date") commencing June 12, 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.
</TABLE>
S-6
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<TABLE>
<S> <C>
B. Final Scheduled
Distribution Dates.......... For the Class A-1 Notes, the June 1998 Distribution Date;
for the Class A-2 Notes, the September 2000 Distribution
Date; and for the Class A-3 Notes, the February 2003
Distribution Date.
C. Interest Rates............. The Notes will bear interest at the respective fixed per
annum rates set forth on the cover page hereof. 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 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-2 Notes and the Class A-3 Notes will
be calculated on the basis of a 360-day year consisting of
twelve 30-day months. See "Description of the
Notes--Payments of Interest" herein.
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.
</TABLE>
S-7
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<S> <C>
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. 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").
G. Mandatory Redemption....... Each Class of Notes will be redeemed in part on the
Mandatory Redemption Date (as defined under "Pre-Funding
Account" below) in the event that any portion of the
Pre-Funded Amount remains on deposit in the Pre-Funding
Account at the end of the Funding Period. The aggregate
principal amount of each Class of Notes to be redeemed will
be an amount equal to such Class's pro rata share (based on
the respective current principal amount of each Class of
Notes) of the Pre-Funded Amount at the end of the Funding
Period (such Class's "Note Prepayment Amount"); provided,
that if the aggregate remaining amount in the Pre-Funding
Account is $100,000 or less, such amount will be applied
exclusively to reduce the outstanding principal balance of
the Class of Notes then entitled to receive distributions of
principal.
The Notes may be accelerated and subject to immediate
payment at par upon the occurrence of an Event of Default
under the Indenture. So long as no Insurer Default shall
have occurred and be continuing, an Event of Default under
the Indenture will occur only upon delivery by the Insurer
to the Indenture Trustee of notice of the occurrence of
certain events of default under the Insurance and Indemnity
Agreement, dated as of May 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
Policy does not guarantee payment of any amounts that
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S-8
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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 Policy" herein.
Pre-Funding Account........... On the Closing Date, a cash amount equal to approximately
$62,500,002.61 (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) July 18, 1997. The Initial
Pre-Funded Amount as reduced from time to time during the
Funding Period by the amount thereof used to purchase
Subsequent Receivables in accordance with the Sale and
Servicing Agreement is referred to herein as the "Pre-Funded
Amount." The Seller expects that the Pre-Funded Amount will
be reduced to less than $100,000 on or before the end of the
Funding Period. Any Pre-Funded Amount remaining at the end
of the Funding Period will be payable to the Noteholders on
the Mandatory Redemption Date as described herein. The
"Mandatory Redemption Date" is the earlier of (i) the
Distribution Date in August 1997 or (ii) if the last day of
the Funding Period occurs on or prior to the Determination
Date (as defined herein) occurring in June or July 1997, the
Distribution Date relating to such Determination Date.
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 June, July
and August 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 on the portion of the Notes
having a principal balance in excess of the Principal
Balances of the Initial Receivables (which portion will
equal the Pre-Funded Amount). Any amounts remaining in the
Capitalized Interest Account on the Mandatory Redemption
Date and not used for such purposes are required to be paid
directly to the Seller on such date. See "Description of the
Purchase Agreements and the Trust Documents--Accounts."
The Policy.................... On the Closing Date, the Insurer will issue to the Trust
Collateral Agent as agent for the Indenture Trustee, a
financial guaranty insurance policy (the "Policy"). Pursuant
to the Policy, the Insurer will unconditionally and
irrevocably guarantee to the Noteholders payment of the
Scheduled Payments (as defined herein) for each Distribution
Date. See "The Policy" 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
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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. 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"). 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
and the Class A-3 Notes be rated AAA by S&P and Aaa by
Moody's. The ratings by the Rating Agencies of the Notes
will be (i) with respect to the Class A-1 Notes, without
regard to the Policy in the case of S&P and substantially
based on the Policy in the case of Moody's and (ii) with
respect to all other Classes of Notes, based on the Policy.
There is no assurance that the ratings initially assigned to
the Notes will not subsequently be lowered or withdrawn by
the Rating Agencies. See "Risk Factors--Ratings on Notes"
herein.
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<PAGE>
RISK FACTORS
Prospective Noteholders should consider, in addition to the factors
described under "Risk Factors" in the Prospectus, the following risk factors in
connection with the purchase of the Notes.
Prepayment from the Pre-Funding Account; Ability to Originate Subsequent
Receivables
To the extent that the Pre-Funded Amount has not been fully applied to the
purchase of Subsequent Receivables by the Trust by the end of the Funding
Period, the Noteholders will receive a prepayment of principal on the Mandatory
Redemption Date in an amount equal to their pro rata share (based on the current
principal balance of each Class) of the Pre-Funded Amount (exclusive of
investment earnings) remaining in the Pre-Funding Account at the end of the
Funding Period; provided, that if the aggregate remaining amount in the
Pre-Funding Account is $100,000 or less, such amount will be applied exclusively
to reduce the outstanding principal balance of the Class of Notes then entitled
to receive distributions of principal. Any reinvestment risk from the
prepayment of the Notes from the Pre-Funded Amount at the end of the Funding
Period will be borne by the Noteholders. See "Yield and Prepayment
Considerations" herein.
The conveyance of Subsequent Receivables to the Trust during the Funding
Period is subject to the conditions described herein under "The Receivables --
Eligibility Criteria." The ability of the Trust to invest in Subsequent
Receivables is dependent upon the ability of AmeriCredit to originate through
Dealers a sufficient amount of motor vehicle retail installment sales contracts
that meet such eligibility criteria. The ability of AmeriCredit to originate
sufficient Subsequent Receivables may be affected by a variety of social and
economic factors. Economic factors include interest rates, unemployment levels,
the rate of inflation and consumer perception of economic conditions generally.
Neither AmeriCredit nor the Seller has any basis to predict whether or the
extent to which economic or social factors will affect the availability of
Subsequent Receivables. See "The Receivables" herein.
Maturity and Prepayment Assumptions
All of the Receivables are prepayable at any time. The rate of prepayments
on the Receivables may be influenced by a variety of economic, social and other
factors, including the fact that an Obligor generally may not sell or transfer
the related Financed Vehicle securing a Receivable without the consent of
AmeriCredit. (For this purpose the term "prepayments" includes prepayments in
full, certain partial prepayments related to refunds of extended service
contract costs and unearned insurance premiums, liquidations due to default,
Cram Down Losses, as well as receipts of proceeds from physical damage,
repossession loss, credit life and credit accident and health insurance policies
and certain other Receivables repurchased for administrative reasons.) The rate
of prepayment on the Receivables may also be influenced by the structure of the
loan, the nature of the Obligors and the Financed Vehicles and servicing
decisions as discussed above. In addition, under certain circumstances, the
Seller and the Servicer are obligated to purchase Receivables pursuant to the
Sale and Servicing Agreement as a result of breaches of certain covenants. The
Servicer also has the right, subject to certain conditions, to purchase the
Receivables when the Pool Balance is 10% or less of the Original Pool Balance.
Any reinvestment risks resulting from a faster or slower incidence of prepayment
of Receivables will be borne entirely by the Noteholders. See "Yield and
Prepayment Considerations".
Concentration of Receivables
As of the Initial Cutoff Date (based on Principal Balance and mailing
address of the Obligors), Obligors with respect to approximately 13.43% of the
Receivables were located in California, Obligors with respect to approximately
11.55% 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-21. See "The Receivables".
S-11
<PAGE>
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.
Limited Assets
The Trust will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables, the
Pre-Funding Account, the Capitalized Interest Account and the Policy. Holders
of the Notes must rely for repayment upon payments on the Receivables and, if
and to the extent available, amounts on deposit in the Pre-Funding Account, the
Capitalized Interest Account and payments of claims made under the Policy. The
Pre-Funded Amount on deposit in the Pre-Funding Account will be used solely to
purchase Subsequent Receivables and is not available to cover losses on the
Receivables. The Capitalized Interest Account is designed to cover obligations
of the Trust relating to that portion of its assets not invested in Receivables
and is not designed to provide protection against losses on the Receivables.
Similarly, although the Policy will be available on each Distribution Date to
cover shortfalls in distributions of the Noteholders' Distributable Amount on
such Distribution Date, if the Insurer defaults in its obligations under the
Policy, the Trust will depend on current distributions on the Receivables and,
amounts, if any, available therefor in certain collateral accounts maintained
for the benefit of the Insurer to make payments on the Notes. See "The Insurer"
and "The Policy" herein.
Ratings on Notes
A rating is not a recommendation to purchase, hold or sell Notes. The
ratings of the Notes address the likelihood of the payment of principal and
interest on the Notes pursuant to their terms. There is no assurance that a
rating will remain in effect for any given period of time or that a rating will
not be lowered or withdrawn entirely by a Rating Agency if in its judgment
circumstances in the future so warrant. In the event that any ratings initially
assigned to the Notes are subsequently lowered or withdrawn for any reason,
including by reason of a downgrading of the claims-paying ability of the
Insurer, no person or entity will be obligated to provide any additional credit
enhancement with respect to the Notes. Any reduction or withdrawal of a rating
may have an adverse effect on the liquidity and market price of the Notes.
Events of Default Under the Indenture
So long as no Insurer Default shall have occurred and be continuing,
neither the Indenture Trustee nor the Noteholders may declare an Event of
Default under the Indenture. So long as an Insurer Default shall not have
occurred and be continuing, an Event of Default will occur only upon delivery by
the Insurer to the Indenture Trustee of notice of the occurrence of certain
events of default under the Insurance Agreement. Upon the occurrence of an
Event of Default under the Indenture (so long as an Insurer Default shall not
have occurred and be continuing), the Insurer will have the right, but not the
obligation, to cause the liquidation, in whole or in part, of the Trust
Property, which will result in redemption, in whole or in part, of the Notes.
Following the occurrence of an Event of Default, the Indenture Trustee and the
Owner Trustee will continue to submit claims under the Policy as necessary to
enable the Trust to continue to make payments of the Noteholders' Distributable
Amount on each Distribution Date. However, following the occurrence of an Event
of Default, the Insurer may elect to pay all or any portion of the outstanding
amount of the Notes, plus accrued interest thereon.
S-12
<PAGE>
USE OF PROCEEDS
The net proceeds to be received by the Trust from the sale of the Notes
will be used to pay the Seller, and in turn, AmeriCredit or a warehouse
facility, the purchase price for the Receivables, to make the deposits of the
Pre-Funded Amount into the Pre-Funding Account and to make the initial deposit
into the Capitalized Interest Account.
THE SERVICER
The Servicer is a wholly-owned subsidiary of AmeriCredit Corp. The
Servicer was incorporated in Delaware on July 22, 1992. AmeriCredit purchases
and services automobile loans which are originated and assigned to AmeriCredit
by automobile dealers. AmeriCredit is the primary operating subsidiary of
AmeriCredit Corp., a Texas corporation the common shares of which are listed on
the New York Stock Exchange. The Servicer's executive offices are located at
200 Bailey Avenue, Fort Worth, Texas 76107-1220; telephone (817) 332-7000.
The Servicer will initially service the Receivables pursuant to the Sale
and Servicing Agreement and will be compensated for acting as the Servicer. The
Servicer will be appointed custodian for the Receivables and the Receivables
will be delivered to and held by the Servicer. Prior to delivery of the
Receivables to the Servicer, as custodian, AmeriCredit will stamp the
Receivables to reflect the sale and assignment of the Receivables to the Issuer.
AmeriCredit will not seek to have amended or re-issued the certificates of title
of the Financed Vehicles. In the absence of amendments to the certificates of
title, the Issuer may not have perfected security interests in the Financed
Vehicles securing the receivables originated in some states, including Texas and
California. See "Certain Legal Aspects of Receivables."
THE SELLER
The Seller was incorporated in the State of Nevada in April, 1996. The
Seller is organized for the limited purpose of purchasing receivables from
AmeriCredit and transferring such receivables to third parties and any
activities incidental to and necessary or convenient for the accomplishment of
such purposes. The Seller is a wholly-owned subsidiary of AmeriCredit. The
principal executive offices of the Seller are located at 1325 Airmotive Way,
Reno, Nevada 89502; telephone (702) 322-2221.
The Seller has taken steps in structuring the transaction contemplated
hereby that are intended to ensure that the voluntary or involuntary application
for relief by AmeriCredit under Insolvency Laws will not result in consolidation
of the assets and liabilities of the Seller with those of AmeriCredit. These
steps include the creation of the Seller as a separate, limited-purpose
subsidiary pursuant to a certificate of incorporation containing certain
limitations (including restrictions on the nature of the Seller's business, the
requirement of an independent director being on the Board of Directors of the
Seller and a restriction on the Seller's ability to commence a voluntary case or
proceeding under any Insolvency Law without the prior unanimous affirmative vote
of all of its directors). The Seller has received the advice of counsel to the
effect that, subject to certain facts, assumptions and qualifications, it would
not be a proper exercise by a court of its equitable discretion to disregard the
separate corporate existence of the Seller and to require the consolidation of
the assets and liabilities of the Seller with the assets and liabilities of
AmeriCredit in the event of the application of the federal bankruptcy laws to
AmeriCredit. Among other things, it is assumed by counsel that the Seller will
follow certain procedures in the conduct of its affairs, including maintaining
records and books of account separate from those of AmeriCredit, refraining from
commingling its assets with those of AmeriCredit and refraining from holding
itself out as having agreed to pay, or being liable for, the debts of
AmeriCredit. The Seller intends to follow and has represented to such counsel
that it will follow these and other procedures related to maintaining its
separate corporate identity. However, in the event that the Seller did not
follow these procedures, there can be no assurance that a court would not
S-13
<PAGE>
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 Notes (and possible reductions in the amount of such
distributions) could occur. See "Risk Factors- Certain Legal Aspects."
THE TRUST
The following information supplements and, to the extent inconsistent
therewith, supersedes the information contained in the accompanying Prospectus.
General
The Issuer, AmeriCredit Automobile Receivables Trust 1997-B, is a business
trust formed under the laws of the State of Delaware pursuant to the Trust
Agreement for the transactions described in this Prospectus Supplement. After
its formation, the Trust will not engage in any activity other than
(i) acquiring, holding and managing the Receivables and the other assets of the
Trust and proceeds therefrom, (ii) issuing the Notes and the Certificate,
(iii) making payments on the Notes and (iv) engaging in other activities that
are necessary, suitable or convenient to accomplish the foregoing or are
incidental thereto or connected therewith.
The proceeds of the initial sale of the Notes will be used by the Trust to
purchase the Initial Receivables from the Seller pursuant to the Sale and
Servicing Agreement and to fund the deposits in the Pre-Funding Account, certain
collateral accounts maintained for the benefit of the Insurer and, the
Capitalized Interest Account.
The Trust's principal offices are in Wilmington, Delaware, in care of
Bankers Trust (Delaware), as Owner Trustee, at the address listed below under
"-- The Owner Trustee."
The Owner Trustee
Bankers Trust (Delaware) is the Owner Trustee under the Trust Agreement, is
a Delaware banking corporation and its principal offices are located at 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 of the Certificate and the
issuance and sale of the Notes is limited solely to the express obligations of
the Owner Trustee set forth in the Trust Agreement and the Sale and Servicing
Agreement.
The Indenture Trustee
LaSalle National Bank is the Indenture Trustee under the Indenture.
LaSalle National Bank is a national banking association, the principal offices
of which are located at 135 South LaSalle Street, Chicago, Illinois 60674.
S-14
<PAGE>
THE TRUST PROPERTY
The Trust Property will include, among other things, the following:
(a) motor vehicle retail installment sale contracts secured by new and used
vehicles, light duty trucks and vans; (b) certain monies received thereunder
after the Initial Cutoff Date or the Subsequent Cutoff Date, as the case may be;
(c) such amounts as from time to time that may be held in the Lockbox Accounts,
the Collection Account, the Pre-Funding Account, and the Capitalized Interest
Account; (d) an assignment of the security interests of AmeriCredit in the
Financed Vehicles; (e) an assignment of the rights of the Seller against Dealers
under agreements between AmeriCredit and such Dealers (the "Dealer Agreements");
(f) an assignment of the right to receive proceeds from claims on certain
physical damage, credit life and disability insurance policies covering the
Financed Vehicles or the Obligors; (g) an assignment of the rights of the Seller
under the Purchase Agreement and any Subsequent Purchase Agreements; (h) the
Receivables Files; and (i) certain other rights under the Trust Documents.
The Initial Receivables were, and the Subsequent Receivables were or will
be, originated by Dealers in accordance with AmeriCredit's requirements under
agreements with Dealers for assignment to AmeriCredit, have been or will be so
assigned, and evidence or will evidence the indirect financing made available to
the Obligors. Dealer Agreements may provide for repurchase or recourse against
the Dealer in the event of a breach of a representation or warranty by the
Dealer under a Dealer Agreement.
The "Pool Balance" at any time represents the aggregate Principal Balance
of the Receivables at the end of the preceding Monthly Period (plus the amount,
if any, then on deposit in the Pre-Funding Account on such date), after giving
effect to all payments received from Obligors and any Purchase Amounts to be
remitted by AmeriCredit or the Seller, for such Monthly Period and all losses,
including Cram Down Losses, realized on Receivables liquidated during such
Monthly Period.
Pursuant to the Indenture, the Trust will grant a security interest in the
Trust Property in favor of the Trust Collateral Agent for the benefit of the
Indenture Trustee on behalf of the Noteholders and for the benefit of the
Insurer in support of the obligations owing to it under the Insurance Agreement.
Any proceeds of such security interest in the Trust Property would be
distributed according to the Indenture, as described below under "Description of
the Purchase Agreements and the Trust Documents -- Distributions." The Insurer
would be entitled to such distributions only after payment of amounts owing to,
among others, holders of the Notes.
S-15
<PAGE>
AMERICREDIT'S AUTOMOBILE FINANCING PROGRAM
Through its branch offices and marketing representatives, AmeriCredit
serves as a funding source for franchised and independent automobile dealers to
finance their customers' purchase of new and used automobiles, light duty trucks
and vans. Dealers originate retail installment sale contracts ("Contracts")
which conform to AmeriCredit's credit policies which are then purchased by
AmeriCredit generally without recourse to the Dealers. AmeriCredit also
services the Contracts that it purchases.
AmeriCredit's indirect lending programs are designed to serve consumers who
have limited access to traditional auto financing. The typical borrower may
have had previous financial difficulties, but is now attempting to re-establish
credit, or may not yet have an established credit history. Because AmeriCredit
serves consumers who are unable to meet the credit standards imposed by most
traditional auto financing sources, AmeriCredit generally charges interest at
rates which are higher than those charged by traditional auto financing sources.
AmeriCredit also expects to sustain a higher level of delinquencies and credit
losses than that experienced by traditional auto financing sources since
AmeriCredit provides financing in a relatively high risk market.
AmeriCredit has established relationships with a variety of Dealers located
in the markets in which AmeriCredit has branch offices or marketing
representatives. While AmeriCredit occasionally finances purchases of new
autos, a substantial majority of AmeriCredit's Contracts were originated in
connection with Obligors' purchases of used autos. Of the Contracts purchased
by AmeriCredit during the year ended June 30, 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 nine months ended March 31, 1997, the respective percentages
were 83% and 17%. AmeriCredit purchased Contracts from 3,262 Dealers during the
year ended June 30, 1996 and from 4,410 Dealers during the nine months ended
March 31, 1997.
Contracts are generally purchased by AmeriCredit without recourse to the
Dealer, and accordingly, the Dealer usually has no liability to AmeriCredit if
the consumer defaults on the Contract. To mitigate AmeriCredit's risk from
potential credit losses, AmeriCredit typically charges the Dealers an
acquisition fee when purchasing Contracts. Such acquisition fees are negotiated
with Dealers on a contract-by-contract basis and are usually non-refundable.
Although Contracts are purchased without recourse to Dealers, Dealers typically
make certain representations as to the validity of the contract and compliance
with certain laws, and indemnify AmeriCredit against any claims, defenses and
set-offs that may be asserted against AmeriCredit because of assignment of the
Contract.
S-16
<PAGE>
As of March 31, 1997, AmeriCredit operated 79 branch offices in 30 states
as reflected in the following table:
STATE CITY STATE CITY
Arizona Phoenix New Mexico Albuquerque
Tucson
New York Buffalo
White Plains
North Carolina Charlotte
Raleigh-Durham
California San Jose Winston-Salem
San Francisco
Concord
Encino
Fresno
Irvine
Los Angeles Ohio Akron
Pasadena Columbus
San Diego Cleveland
Stockton Cincinnati
Sacramento Dayton
Colorado Colorado Springs Oklahoma Oklahoma City
Denver
Oregon Portland
Florida Tampa
Ft. Lauderdale Pennsylvania Allentown
Jacksonville Harrisburg
Orlando Pittsburgh
Philadelphia
Georgia Atlanta (3) Rhode Island Providence
Illinois Chicago (4)
Springfield South Carolina Columbia
Charleston
Indiana Indianapolis Tennessee Nashville
Memphis
Kentucky Louisville
Maryland Baltimore (2) Texas Dallas-Fort
Worth (2)
Houston
San Antonio
Massachusetts Boston Austin
Michigan Detroit (2)
Grand Rapids Utah Salt Lake City
Missouri Kansas City Virginia Vienna
St. Louis (2) Newport News
Norfolk
Richmond
Fredricksburg
Minnesota Minneapolis
Nevada Las Vegas Washington Seattle
Tacoma
New Jersey Marlton
Paramus
Somerset Wisconsin Milwaukee
S-17
<PAGE>
These branch offices solicit Dealers for Contracts and maintain AmeriCredit's
relationship with the Dealers in the geographic vicinity of the branch office.
AmeriCredit also has marketing representatives covering certain existing
branch territories and markets where the company does not have a branch
presence. AmeriCredit does business in a total of 40 states.
See "AmeriCredit's Automobile Financing Program" in the Prospectus for a
description of AmeriCredit's contract acquisition, servicing and collection
practices.
THE RECEIVABLES
The following information supplements the information contained under "The
Receivables" in the accompanying Prospectus.
General
The Receivables were, or will be, purchased by AmeriCredit in the ordinary
course of business pursuant to AmeriCredit's Contract Acquisition Program from
Dealers. The Receivables will consist of motor vehicle retail installment sale
contracts. The motor vehicle retail installment sale contracts consist
primarily of contracts with individuals with less than perfect credit due to
various factors, including, among other things, the manner in which such
individuals have handled previous credit, the limited extent of their prior
credit history and/or their limited financial resources.
Eligibility Criteria
The Receivables were or will be selected according to several criteria,
including those specified under "AmeriCredit's Automobile Financing Program --
Contract Acquisition" in the accompanying Prospectus. In addition, the Initial
Receivables were selected from AmeriCredit's portfolio of motor vehicle retail
installment contracts based on several criteria, including the following:
(i) each Initial Receivable had a remaining maturity, as of the Cutoff Date, of
not more than 60 months; (ii) each Initial Receivable had an original maturity
of not more than 60 months; (iii) each Initial Receivable had a remaining
Principal Balance as of the Cutoff Date of at least $250 and not more than
$30,000; (iv) each Initial Receivable has an Annual Percentage Rate of at least
14.25% and not more than 32.00%; (v) no Initial Receivable was more than 30 days
past due as of the Cutoff Date and (vi) no funds have been advanced by
AmeriCredit, any Dealer, or anyone acting on behalf of any of them in order to
cause any Initial Receivable to qualify under clause (v) above.
During the Funding Period, the Seller is obligated to purchase from
AmeriCredit and to sell to the Trust the Subsequent Receivables. The aggregate
Principal Balance of the Subsequent Receivables is anticipated by AmeriCredit to
equal approximately $62,500,002.61. 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
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<PAGE>
Subsequent Receivable; (ii) the Insurer (so long as no Insurer Default shall
have occurred and be continuing) shall have approved the transfer of such
Subsequent Receivables to the Trust; (iii) neither AmeriCredit nor the Seller
will have selected such Subsequent Receivables in a manner that either
believes is adverse to the interests of the Insurer or the Noteholders; (iv)
AmeriCredit and the Seller will deliver certain opinions of counsel with
respect to the validity of the conveyance of such Subsequent Receivables; and
(v) S&P shall confirm that the ratings on the Notes have not been withdrawn
or reduced as a result of the transfer of such Subsequent Receivables to the
Trust. Because the Subsequent Receivables may be originated after the
Initial Receivables, following their conveyance to the Trust the
characteristics of the Receivables, including the Subsequent Receivables, may
vary from those of the Initial Receivables.
In addition, the obligation of the Trust to purchase the Subsequent
Receivables on a Subsequent Transfer Date is subject to the condition that the
Receivables in the Trust, including the Subsequent Receivables to be conveyed to
the Trust on such Subsequent Transfer Date, meet the following criteria: (i) the
weighted average APR of the Receivables in the Trust is not less than 19%;
(ii) the weighted average remaining term of the Receivables on such Subsequent
Cutoff Date is not greater than 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 May 1, 1997 (the "Initial Cutoff Date").
S-19
<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>
<CAPTION>
NEW USED TOTAL
-------------------------- -------------------------- ------------------
<S> <C> <C> <C>
Aggregate Principal Balance(1) $27,558,357.08 $159,941,640.31 $187,499,997.39
Number of Receivables 1,890 14,599 16,489
Percent of Aggregate Principal
Balance 14.70% 85.30%
Average Principal Balance $14,581.14 $10,955.66 $11,371.22
Range of Principal Balances ($652.03 to $29,371.86) ($323.07 to $28,106.29)
Weighted Average APR(1) 18.47% 20.16% 19.92%
Range of APRs (14.25% to 25.00%) (14.25% to 32.00%)
Weighted Average Remaining Term 58 months 53 months 54 months
Range of Remaining Terms (4 to 60 months) (3 to 60 months)
Weighted Average Original Term 60 months 54 months 55 months
Range of Original Terms (12 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>
<CAPTION>
AGGREGATE % OF AGGREGATE
PRINCIPAL PRINCIPAL NUMBER OF % OF TOTAL NUMBER
APR RANGE BALANCE(1) BALANCE(2) RECEIVABLES OF RECEIVABLES(2)
- --------------------------------------- ------------------- ------------------- ----------- -----------------
<S> <C> <C> <C> <C>
14.000% to 14.999% $ 3,953,574.63 2.11% 256 1.55%
15.000 to 15.999 7,976,241.08 4.25 528 3.20
16.000 to 16.999 7,215,954.00 3.85 499 3.03
17.000 to 17.999 20,148,079.64 10.75 1,513 9.18
18.000 to 18.999 33,887,172.64 18.07 2,784 16.88
19.000 to 19.999 18,225,351.99 9.72 1,468 8.90
20.000 to 20.999 27,560,354.62 14.70 2,410 14.62
21.000 to 21.999 31,254,909.36 16.67 3,038 18.42
22.000 to 22.999 13,620,475.66 7.26 1,393 8.45
23.000 to 23.999 11,914,325.04 6.35 1,196 7.25
24.000 to 24.999 5,971,046.95 3.18 617 3.74
25.000 to 25.999 3,723,223.36 1.99 491 2.98
26.000 to 26.999 1,565,601.74 0.83 224 1.36
27.000 to 27.999 238,166.50 0.13 33 0.20
28.000 to 28.999 124,867.85 0.07 19 0.12
29.000 to 29.999 107,574.90 0.06 16 0.10
31.000 to 31.999 3,030.66 0.00 1 0.01
32.000 to 32.999 10,046.77 0.01 3 0.02
------------------- ------ ----------- ------
TOTAL $ 187,499,997.39 100.00% 16,489 100.00%
</TABLE>
(1) Aggregate Principal Balances include some portion of accrued interest.
(2) Percentages may not add to 100% because of rounding.
S-20
<PAGE>
Distribution of the Initial Receivables by Geographic Location of Obligor as
of the Initial Cutoff Date
<TABLE>
<CAPTION>
AGGREGATE % OF AGGREGATE
PRINCIPAL PRINCIPAL NUMBER OF % OF TOTAL NUMBER
STATE BALANCE(1) BALANCE(2) RECEIVABLES OF RECEIVABLES(2)
- --------------------------------------- ------------------- ------------------- ----------- -----------------
<S> <C> <C> <C> <C>
California $ 25,189,180.17 13.43% 2,092 12.69%
Texas 21,652,538.39 11.55 2,017 12.23
Ohio 11,390,278.99 6.07 1,025 6.22
Virginia 10,725,234.82 5.72 877 5.32
Florida 10,487,875.81 5.59 886 5.37
North Carolina 10,463,208.08 5.58 810 4.91
Illinois 10,316,627.58 5.50 944 5.73
Arizona 8,798,341.46 4.69 751 4.55
Washington 8,085,314.65 4.31 710 4.31
Georgia 6,504,895.61 3.47 558 3.38
Michigan 5,412,206.63 2.89 469 2.84
Pennsylvania 5,396,192.72 2.88 474 2.87
New Jersey 5,362,990.37 2.86 469 2.84
Maryland 5,140,051.86 2.74 419 2.54
Missouri 4,822,506.32 2.57 474 2.87
Tennessee 4,293,922.95 2.29 373 2.26
Nevada 4,182,376.62 2.23 400 2.43
Massachusetts 2,805,271.12 1.50 251 1.52
South Carolina 2,762,265.89 1.47 238 1.44
Kentucky 2,761,979.96 1.47 242 1.47
Colorado 2,338,149.15 1.25 270 1.64
Oklahoma 2,234,739.97 1.19 227 1.38
Utah 2,082,825.35 1.11 200 1.21
Oregon 1,865,059.26 0.99 171 1.04
Indiana 1,714,264.52 0.91 163 0.99
Other(3) 10,711,699.14 5.71 979 5.94
------------------- ------ ----------- ------
TOTAL.................................. $ 187,499,997.39 100.00% 16,489 100.00%
</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-21
<PAGE>
All Receivables provide for the payment by the Obligor of a specific total
amount of payments, payable in substantially equal monthly installments on each
due date, which total represents the amount financed plus interest charges on
the amount financed for the term of the Receivable. The amount of interest
charges on the Receivables are determined either by the simple-interest method
("Simple Interest Receivables") or by adding-on to the amount financed, as of
the date of the Receivable, a precomputed interest charge ("Precomputed
Receivables").
In a Simple Interest Receivable, the amount of an Obligor's fixed level
installment payment that is allocated to interest is equal to the product of the
fixed rate of interest on the loan (typically the APR) multiplied by the period
of time (expressed as a fraction of a year) elapsed since the preceding payment
under the loan. The remaining amount of the Obligor's payment is allocated to
reduce the principal amount financed.
The Issuer will account for all Receivables, including Simple Interest
Receivables and Precomputed Receivables, as if such Receivables provided for
amortization of the loans pursuant to the simple interest method. Amounts
received upon prepayment in full of a Precomputed Receivable in excess of the
sum of the then outstanding Principal Balance of such Receivable and accrued
interest thereon (calculated pursuant to the simple interest method) will not be
deposited to the Collection Account but will be paid (net of any amounts
required to be rebated to the Obligor) to the Servicer as Supplemental Servicing
Fees.
YIELD AND PREPAYMENT CONSIDERATIONS
ALL THE RECEIVABLES ARE PREPAYABLE AT ANY TIME. If prepayments are received
on the Receivables, the actual weighted average life of the Receivables may be
shorter than the scheduled weighed average life (i.e., the weighted average life
assuming that payments will be made as scheduled, and that no prepayments will
be made). (For this purpose, the term "prepayments" also includes liquidations
due to default, as well as receipt of proceeds from credit life, credit
disability, and casualty insurance policies.) Weighted average life means the
average amount of time during which each dollar of principal on a Receivable is
outstanding.
The rate of prepayments on the Receivables may be influenced by a variety of
economic, social, and other factors, including the fact that an Obligor may not
sell or transfer a Financed Vehicle without the consent of the Servicer. The
Servicer believes that the actual rate of prepayments will result in a
substantially shorter weighted average life than the scheduled weighted average
life of the Receivables. Any reinvestment risks resulting form a faster or
slower incidence of prepayment of Receivables will be borne by the Noteholders.
The rate of payment of principal of each Class of Notes will depend on the
rate of payment (including prepayments) of the Principal Balance of the
Receivables. As a result, final payment of any Class of Notes could occur
significantly earlier than the Final Scheduled Distribution Date for such Class
of Notes. Reinvestment risk associated with early payment of the Notes will be
borne exclusively by the Noteholders.
Prepayments on automobile receivables can be measured relative to a
prepayment standard or model. The model used in this Prospectus Supplement, the
Absolute Prepayment Model ("ABS"), represents an assumed rate of prepayment each
month relative to the original number of receivables in a pool of receivables.
ABS further assumes that all the receivables are the same size and amortize at
the same rate and that each receivable in each month of its life will either be
paid as scheduled or be prepaid in full. For example, in a pool of receivables
originally containing 10,000 receivables, a 1% ABS rate means that 100
receivables prepay each month. ABS does not purport to be an historical
description of prepayment experience or a prediction of the anticipated rate of
prepayment of any pool of receivables, including the Receivables.
The table captioned "Percent of Initial Note Principal Balance at Various
ABS Percentages" (the "ABS Table") has been prepared on the basis of the
following assumptions: (i) the Trust includes two pools
S-22
<PAGE>
of Receivables with the characteristics set forth in the following table; (ii)
the Receivables prepay in full at the specified constant percentage of ABS
monthly, with no defaults, losses or repurchases; (iii) each scheduled monthly
payment on the Receivables is made on the last day of each month and each month
has 30 days; (iv) the initial principal amount of each Class of Notes are as set
forth on the cover page hereof; (v) interest accrues during each Interest Period
at the following assumed coupon rates: Class A-1 Notes, 5.79%; Class A-2 Notes,
6.36%; and Class A-3 Notes, 6.67%; (vi) payments on the Notes are made on the
12th day of each month whether or not a Business Day; (vii) the Notes are
purchased on the Closing Date; (viii) the scheduled monthly payment for each
Receivable has been calculated on the basis of the assumed characteristics in
the following table such that each Receivable will amortize in amounts
sufficient to repay the Principal Balance of such Receivable by its indicated
remaining term to maturity; (ix) the first due date for each Receivable is the
last day of the month of the assumed cutoff date for such Receivable as set
forth in the following table; (x) the entire Pre-Funded Amount is used to
purchase Subsequent Receivables; (xi) the Servicer does exercise its option to
purchase the Receivables; (xii) Accelerated Principal Amounts are paid on each
Distribution Date until the later of the first Distribution Date on which the
Pro Forma Note Balance reaches the Required Pro Forma Note Balance and the Class
A-1 Notes are paid in full; and (xiii) the difference between the gross APR and
the net APR is equal to the Base Servicing Fee, and the net APR is further
reduced by the fees due to the Indenture Trustee, the Trust Collateral Agent,
the Owner Trustee and the Insurer.
<TABLE>
<CAPTION>
REMAINING
ORIGINAL TERM TERM
AGGREGATE GROSS ASSUMED CUTOFF TO MATURITY TO MATURITY
POOL PRINCIPAL APR DATE (IN MONTHS) (IN MONTHS)
- --------- ----------------- --------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
1 $ 187,499,997.39 19.92% 5/1/97 55 54
2 $ 62,500,002.61 19.92% 6/1/97 55 54
Total $ 250,000,000.00
-----------------
-----------------
</TABLE>
The ABS Table indicates, based on the assumptions set forth above, the
percentages of the initial principal amount of each Class of Notes that would be
outstanding after each of the Distribution Dates shown at various percentages of
ABS and the corresponding weighted average lives of such Notes. The actual
characteristics and performance of the Receivables will differ from the
assumptions used in constructing the ABS Table. The assumptions used are
hypothetical and have been provided only to give a general sense of how the
principal cash flows might behave under varying prepayment scenarios. For
example, it is very unlikely that the Receivables will prepay at a constant
level of ABS until maturity or that all of the Receivables will prepay at the
same level of ABS. Moreover, the diverse terms of Receivables could produce
slower or faster principal distributions than indicated in the ABS Table at the
various constant percentages of ABS specified, even if the original and
remaining terms to maturity of the Receivables are as assumed. Any difference
between such assumptions and the actual characteristics and performance of the
Receivables, including actual prepayment experience or losses, will affect the
percentages of initial balances outstanding over time and the weighted average
lives of each Class of Notes.
S-23
<PAGE>
Percent of Initial Note Principal Balance at Various ABS Percentages(1)
<TABLE>
<CAPTION>
CLASS A-2
CLASS A-1 NOTES NOTES
------------------------------------------ ---------
<S> <C> <C> <C> <C> <C>
DISTRIBUTION DATE 0.0% 1.0% 1.7% 2.5% 0.0%
- ------------------------------------------------------------------- --------- --------- --------- --------- ---------
Initial 100 100 100 100 100
6/12/97 94 91 89 87 100
7/12/97 86 79 74 68 100
8/12/97 78 67 59 51 100
9/12/97 69 55 45 34 100
10/12/97 62 44 32 18 100
11/12/97 54 33 19 2 100
12/12/97 46 22 6 0 100
1/12/98 38 12 0 0 100
2/12/98 30 1 0 0 100
3/12/98 22 0 0 0 100
4/12/98 14 0 0 0 100
5/12/98 6 0 0 0 100
6/12/98 0 0 0 0 100
7/12/98 0 0 0 0 100
8/12/98 0 0 0 0 100
9/12/98 0 0 0 0 96
10/12/98 0 0 0 0 93
11/12/98 0 0 0 0 89
12/12/98 0 0 0 0 86
1/12/99 0 0 0 0 82
2/12/99 0 0 0 0 78
3/12/99 0 0 0 0 74
4/12/99 0 0 0 0 71
5/12/99 0 0 0 0 67
6/12/99 0 0 0 0 63
7/12/99 0 0 0 0 59
8/12/99 0 0 0 0 54
9/12/99 0 0 0 0 50
10/12/99 0 0 0 0 46
11/12/99 0 0 0 0 42
12/12/99 0 0 0 0 37
1/12/00 0 0 0 0 33
2/12/00 0 0 0 0 28
3/12/00 0 0 0 0 23
4/12/00 0 0 0 0 19
5/12/00 0 0 0 0 14
6/12/00 0 0 0 0 9
7/12/00 0 0 0 0 4
8/12/00 0 0 0 0 0
9/12/00 0 0 0 0 0
10/12/00 0 0 0 0 0
11/12/00 0 0 0 0 0
12/12/00 0 0 0 0 0
1/12/01 0 0 0 0 0
2/12/01 0 0 0 0 0
3/12/01 0 0 0 0 0
<CAPTION>
<S> <C> <C> <C>
DISTRIBUTION DATE 1.0% 1.7% 2.5%
- ------------------------------------------------------------------- --------- --------- ---------
Initial 100 100 100
6/12/97 100 100 100
7/12/97 100 100 100
8/12/97 100 100 100
9/12/97 100 100 100
10/12/97 100 100 100
11/12/97 100 100 100
12/12/97 100 100 91
1/12/98 100 95 80
2/12/98 100 88 73
3/12/98 96 82 65
4/12/98 91 76 57
5/12/98 86 69 50
6/12/98 81 63 43
7/12/98 77 57 35
8/12/98 72 52 28
9/12/98 67 46 21
10/12/98 62 40 15
11/12/98 57 35 8
12/12/98 53 29 2
1/12/99 48 24 0
2/12/99 43 18 0
3/12/99 38 13 0
4/12/99 34 8 0
5/12/99 29 3 0
6/12/99 25 0 0
7/12/99 20 0 0
8/12/99 16 0 0
9/12/99 11 0 0
10/12/99 7 0 0
11/12/99 2 0 0
12/12/99 0 0 0
1/12/00 0 0 0
2/12/00 0 0 0
3/12/00 0 0 0
4/12/00 0 0 0
5/12/00 0 0 0
6/12/00 0 0 0
7/12/00 0 0 0
8/12/00 0 0 0
9/12/00 0 0 0
10/12/00 0 0 0
11/12/00 0 0 0
12/12/00 0 0 0
1/12/01 0 0 0
2/12/01 0 0 0
3/12/01 0 0 0
4/12/01 0 0 0 0 0
5/12/01 0 0 0 0 0
6/12/01 0 0 0 0 0
7/12/01 0 0 0 0 0
8/12/01 0 0 0 0 0
Weighted Average
Life in Years(2) 0.56 0.40 0.33 0.28 2.32
<CAPTION>
DISTRIBUTION DATE 1.0% 1.7% 2.5%
- ------------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
4/12/01 0 0 0
5/12/01 0 0 0
6/12/01 0 0 0
7/12/01 0 0 0
8/12/01 0 0 0
Weighted Average
Life in Years(2) 1.65 1.31 1.03
</TABLE>
- ------------------------
(1) The percentages in this table have been rounded to nearest whole number.
(2) The weighted average life of a Note is determined by (i) multiplying the
amount of each principal payment on a Note by the number of years from the
date of the issuance of the Note to the related Distribution Date, (ii)
adding the results and (iii) dividing the sum by the related initial
principal amount of the Note.
S-24
<PAGE>
Percent of Initial Note Principal Balance at Various ABS Percentages(1)
<TABLE>
<CAPTION>
CLASS A-3 NOTES
------------------------------------------
<S> <C> <C> <C> <C>
DISTRIBUTION DATE 0.0% 1.0% 1.7% 2.5%
- ------------------------------------------------------------------------------------- --------- --------- --------- ---------
Initial 100 100 100 100
6/12/97 100 100 100 100
7/12/97 100 100 100 100
8/12/97 100 100 100 100
9/12/97 100 100 100 100
10/12/97 100 100 100 100
11/12/97 100 100 100 100
12/12/97 100 100 100 100
1/12/98 100 100 100 100
2/12/98 100 100 100 100
3/12/98 100 100 100 100
4/12/98 100 100 100 100
5/12/98 100 100 100 100
6/12/98 100 100 100 100
7/12/98 100 100 100 100
8/12/98 100 100 100 100
9/12/98 100 100 100 100
10/12/98 100 100 100 100
11/12/98 100 100 100 100
12/12/98 100 100 100 100
1/12/99 100 100 100 95
2/12/99 100 100 100 88
3/12/99 100 100 100 81
4/12/99 100 100 100 75
5/12/99 100 100 100 68
6/12/99 100 100 97 62
7/12/99 100 100 92 56
8/12/99 100 100 87 51
9/12/99 100 100 81 45
10/12/99 100 100 76 40
11/12/99 100 100 71 35
12/12/99 100 98 66 30
1/12/00 100 93 62 0
2/12/00 100 88 57 0
3/12/00 100 83 53 0
4/12/00 100 79 48 0
5/12/00 100 74 44 0
6/12/00 100 69 40 0
7/12/00 100 65 36 0
8/12/00 99 60 33 0
9/12/00 93 56 29 0
10/12/00 87 51 0 0
11/12/00 81 47 0 0
12/12/00 75 43 0 0
1/12/01 69 39 0 0
2/12/01 63 34 0 0
3/12/01 57 30 0 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CLASS A-3 NOTES
------------------------------------------
DISTRIBUTION DATE 0.0% 1.0% 1.7% 2.5%
- ------------------------------------------------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
4/12/01 50 26 0 0
5/12/01 44 0 0 0
6/12/01 37 0 0 0
7/12/01 30 0 0 0
8/12/01 0 0 0 0
Weighted Average
Life in Years(2) 3.88 3.42 2.87 2.25
</TABLE>
- ------------------------
(1) The percentages in this table have been rounded to nearest whole number.
(2) The weighted average life of a Note is determined by (i) multiplying the
amount of each principal payment on a Note by the number of years from the
date of the issuance of the Note to the related Distribution Date, (ii)
adding the results and (iii) dividing the sum by the related initial
principal amount of the Note.
S-25
<PAGE>
DELINQUENCY AND LOAN LOSS INFORMATION
The following tables set forth information relating to AmeriCredit's
delinquency and loan loss experience for each period indicated with respect to
all Receivables it has purchased and serviced. This information includes the
experience with respect to all Receivables in AmeriCredit's portfolio of
Receivables serviced during each such period, including Receivables which do not
meet the criteria for selection as a Receivable.
DELINQUENCY EXPERIENCE
Financed Vehicles which have been repossessed but not yet liquidated
and bankrupt accounts which have not yet been charged off are both
included as delinquent accounts in the table below.
<TABLE>
<CAPTION>
AT MARCH 31, AT JUNE 30,
------------------------------------ -------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1997 1996 1996 1995 1994
----------------------- ----------------------- ----------------------- ----------------------- -----------
<CAPTION>
NUMBER NUMBER NUMBER NUMBER NUMBER
OF OF OF OF OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS
----------- ---------- ----------- ---------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio at end
of period(1) 94,871 $ 927,655 50,641 $ 422,577 59,913 $ 523,981 30,941 $ 240,491 9,375
Period of
Delinquency(2)
31-60 days(3) 5,757 $ 53,529 2,552 $ 20,434 3,886 $ 31,723 1,276 $ 9,692 235
61-90 days 1,569 $ 14,521 937 $ 7,231 1,215 $ 9,959 452 $ 3,391 87
91 days or more 3,247 $ 28,371 1,585 $ 12,255 1,696 $ 13,631 528 $ 3,271 110
Total ----------- ---------- ----------- ---------- ----------- ---------- ----------- ---------- -----
Delinquencies(4) 10,573 $ 96,421 5,074 $ 39,920 6,797 $ 55,313 2,256 $ 16,354 432
Total
Delinquencies as
a Percent of the
Portfolio 11.1% 10.4% 10.0% 9.4% 11.3% 10.6% 7.3% 6.8% 4.6%
<CAPTION>
<S> <C>
AMOUNT
---------
<S> <C>
Portfolio at end
of period(1) $ 67,636
Period of
Delinquency(2)
31-60 days(3) $ 1,600
61-90 days $ 560
91 days or more $ 709
Total ---------
Delinquencies(4) $ 2,869
Total
Delinquencies as
a Percent of the
Portfolio 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-26
<PAGE>
CREDIT LOSS EXPERIENCE
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31, FISCAL YEAR ENDED JUNE 30,
---------------------- ---------------------------------
<S> <C> <C> <C> <C> <C>
1997 1996 1996 1995 1994
---------- ---------- ---------- ---------- ---------
Period-End Principal Outstanding(1)................... $ 927,655 $ 422,577 $ 523,981 $ 240,491 $ 67,636
Average Month-End Amount Outstanding
During the Period(1)................................ $ 709,320 $ 318,724 $ 357,966 $ 141,526 $ 37,507
Net Charge-Offs(2).................................... $ 29,084 $ 13,458 $ 19,974 $ 6,409 $ 1,432
Net Charge-Offs as a Percentage of Period-End
Principal Outstanding(3)............................ 4.2% 4.3% 3.8% 2.7% 2.1%
Net Charge-Offs as a Percent of Average
Month-End Amount Outstanding(3)..................... 5.5% 5.6% 5.6% 4.5% 3.8%
</TABLE>
- ------------------------
(1) All amounts and percentages are based on the Principal Balances of the
Receivables. Principal Balances include some portion of accrued interest.
All dollar amounts are in thousands of dollars.
(2) Net Charge-Offs equal Gross Charge-Offs minus Recoveries. Gross Charge-Offs
do not include unearned finance charges and other fees. Recoveries include
repossession proceeds received from the sale of repossessed Financed
Vehicles net of repossession expenses, refunds of unearned premiums from
credit life and credit accident and health insurance and extended service
contract costs obtained and financed in connection with the vehicle
financing and recoveries from Obligors on deficiency balances.
(3) Percentages were annualized for the nine months ended March 31, 1997 and
1996, and are not necessarily indicative of results for the year.
S-27
<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 Notes" herein.
S-28
<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 March 31, 1997 (in thousands):
<TABLE>
<CAPTION>
MARCH 31, 1997
(UNAUDITED)
--------------
<S> <C>
Deferred Premium Revenue
(net of prepaid reinsurance premiums)........................................................... $ 361,589
Shareholder's Equity:
Common Stock.................................................................................... 15,000
Additional Paid-In Capital...................................................................... 654,127
Unrealized Gain (Loss) on Investments (net of deferred income taxes)............................ (2,030)
Accumulated Earnings............................................................................ 157,842
--------------
Total Shareholder's Equity........................................................................ 824,939
--------------
Total Deferred Premium Revenue and Shareholder's Equity........................................... $ 1,186,528
--------------
--------------
</TABLE>
For further information concerning Financial Security, see the Consolidated
Financial Statements of Financial Security and Subsidiaries, and the notes
thereto, incorporated by reference herein. Copies of the statutory quarterly and
annual statements filed with the State of New York Insurance Department by
Financial Security are available upon request to the State of New York Insurance
Department.
INSURANCE REGULATION
Financial Security is licensed and subject to regulation as a financial
guaranty insurance corporation under the laws of the State of New York, its
state of domicile. In addition, Financial Security and its insurance
subsidiaries are subject to regulation by insurance laws of the various other
jurisdictions in which they are licensed to do business. As a financial guaranty
insurance corporation licensed to do business in the State of New York,
Financial Security is subject to Article 69 of the New York Insurance Law which,
among other things, limits the business of each such insurer to financial
guaranty insurance and related lines, requires that each such insurer maintain a
minimum surplus to policyholders, establishes contingency, loss and unearned
premium reserve requirements for each such insurer, and limits the size of
individual transactions ("single risks") and the volume of transactions
("aggregate risks") that may be underwritten by each such insurer. Other
provisions of the New York Insurance Law, applicable to non-life insurance
companies such as Financial Security, regulate, among other things, permitted
investments, payment of dividends, transactions with affiliates, mergers,
consolidations, acquisitions or sales of assets and incurrence of liabilities
for borrowings.
The Policy is not covered by the Property/Casualty Insurance Security Fund
specified in Article 76 of the New York Insurance Law.
S-29
<PAGE>
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of the Indenture, a form of
which has been filed as an exhibit to the Registration Statement. The following
summary describes certain terms of the Notes and the Indenture. The summary does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, all the provisions of the Notes and the Indenture. The
following summary supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of the Notes of
any given series and the related Indenture set forth in the accompanying
Prospectus, to which description reference is hereby made.
The Notes will be offered for purchase in denominations of $1,000 and
integral multiples thereof in book-entry form only. Persons acquiring beneficial
interests in the Notes will hold their interests through DTC in the United
States or Cedel or Euroclear in Europe. See "Description of the
Notes--Book-Entry Registration" in the Prospectus and Annex I hereto.
PAYMENTS OF INTEREST
Interest on the 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 June 12, 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 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-2 Notes and 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.
PAYMENTS OF PRINCIPAL
Principal payments will be made to the Noteholders on each Distribution Date
in an amount equal to the Noteholders' Principal Distributable Amount and the
Noteholders' Accelerated Principal Amount, if any, for the calendar month (the
"Monthly Period") preceding such Distribution Date. The Noteholders' Principal
Distributable Amount will equal the sum of (x) the Noteholders' Percentage of
the Principal Distributable Amount and (y) any unpaid portion of the amount
described in clause (x) with respect to a prior Distribution Date. The
"Principal Distributable Amount" with respect to any Distribution Date will be
an amount equal to the sum of the following amounts with respect to the related
Monthly Period, computed in accordance with the simple interest method: (i)
collections on Receivables (other than Liquidated and Purchased Receivables)
allocable to principal, including full and partial principal prepayments, (ii)
the Principal Balance of all Receivables (other than Purchased Receivables) that
became Liquidated Receivables during the related Monthly Period, (iii) (A) the
portion of the Purchase Amount allocable to principal of all Receivables that
became Purchased Receivables as of the immediately preceding Record Date and (B)
at the option of the Insurer, the outstanding Principal Balance of those
Receivables that were required to be repurchased by the Seller and/or
AmeriCredit during such Monthly Period but were not so repurchased and (iv) the
aggregate amount of Cram Down Losses during such Monthly Period. Principal
payments on the Notes will be made from the Distribution Amount after payment of
accrued and unpaid trustees' fees and other administrative fees of the Trust,
payment of the
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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.
MANDATORY REDEMPTION
Each Class of Notes will be redeemed in part on the Mandatory Redemption
Date in the event that any portion of the Pre-Funded Amount remains on deposit
in the Pre-Funding Account at the end of the Funding Period. The aggregate
principal amount of each Class of Notes to be redeemed will be an amount equal
to such Class's pro rata share (based on the respective current principal amount
of each Class of Notes) of the remaining Pre-Funded Amount on such date (such
Class's "Note Prepayment Amount"); provided, that if the aggregate remaining
amount in the Pre-Funding Account is $100,000 or less, such amount will be
applied exclusively to reduce the outstanding principal balance of the Class of
Notes then entitled to receive distributions of principal.
OPTIONAL REDEMPTION
The Class A-3 Notes, to the extent still outstanding, may be redeemed in
whole, but not in part, on any Distribution Date on which the Servicer exercises
its option to purchase the Receivables. The Servicer may purchase the
Receivables when the Pool Balance has declined to 10% or less of the Original
Pool Balance, as described in the accompanying Prospectus under "Description of
the Trust Agreements--Termination." Such redemption will effect early retirement
of the Notes of such Class. The redemption price will be equal to the unpaid
principal amount of the Notes of such Class, plus accrued and unpaid interest
thereon (the "Redemption Price").
EVENTS OF DEFAULT
Unless an Insurer Default shall have occurred and be continuing, "Events of
Default" under the Indenture will consist of those events defined in the
Insurance Agreement as Insurance Agreement Indenture Cross Defaults, and will
constitute an Event of Default under the Indenture only if the Insurer shall
have delivered to the Indenture Trustee, and not rescinded, a written notice
specifying that any such Insurance Agreement Indenture Cross Default constitutes
an Event of Default under the Indenture. "Insurance Agreement Indenture Cross
Defaults" consist of: (i) a demand for payment being made under the Policy; (ii)
certain events of bankruptcy, insolvency, receivership or liquidation of the
Trust; (iii) the Trust becoming taxable as an association (or publicly traded
partnership) taxable as a corporation for federal or state income tax purposes;
(iv) on any 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 1-5 under "Description of the
Purchase Agreements and the Trust Documents--Distributions" herein; and (v) any
failure to observe or perform in any material respect any other covenants or
agreements in the Indenture, or any representation or warranty of the Trust made
in the Indenture or in any certificate or other writing delivered pursuant
thereto or in connection therewith proving to have been incorrect in any
material respect when made, and such failure continuing or not being cured, or
the circumstance or
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condition in respect of which such misrepresentation or warranty was incorrect
not having been eliminated or otherwise cured, for 30 days after the giving of
written notice of such failure or incorrect representation or warranty to the
Trust and the Indenture Trustee by the Insurer.
Upon the occurrence of an Event of Default, so long as an Insurer Default
shall not have occurred and be continuing, the Insurer will have the right, but
not the obligation, to cause the Trust Collateral Agent to liquidate the Trust
Property in whole or in part, on any date or dates following the acceleration of
the Notes due to such Event of Default as the Insurer, in its sole discretion,
shall elect, and to deliver the proceeds of such liquidation to the Indenture
Trustee for distribution in accordance with the terms of the Indenture. The
Insurer may not, however, cause the Trust Collateral Agent to liquidate the
Trust Property in whole or in part if the proceeds of such liquidation would not
be sufficient to pay all outstanding principal of and accrued interest on the
Notes, unless such Event of Default arose from a claim being made on the Policy
or from certain events of bankruptcy, insolvency, receivership or liquidation of
the Trust. Following the occurrence of any Event of Default, the Indenture
Trustee and the Owner Trustee will continue to submit claims under the Policy
for any shortfalls in the Scheduled Payments on the Notes. Following any Event
of Default under the Indenture, the Insurer may elect to pay all or any portion
of the outstanding amount of the Notes, plus accrued interest thereon. See "The
Policy" herein.
DESCRIPTION OF THE PURCHASE AGREEMENTS AND THE TRUST DOCUMENTS
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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ACCOUNTS
Each Obligor will be instructed to make payments with respect to the
Receivables after the Cutoff Date directly to one or more post office boxes or
other mailing locations (each, a "Lockbox") maintained by the Lockbox Bank, and
a segregated account will be established and maintained with a bank or banks
acceptable to the Insurer, in the name of the Indenture Trustee for the benefit
of the Noteholders, into which all payments made from Obligors to a Lockbox on
or with respect to the Receivables must be deposited within one business day of
receipt (the "Lockbox Account"). The Issuer will also establish and maintain
with the Indenture Trustee one or more accounts (the "Collection Account"), in
the name of the Indenture Trustee on behalf of the Noteholders and the Insurer,
into which all amounts previously deposited in the Lockbox Account in respect of
the Receivables will be transferred within three business days of deposit in the
Lockbox Account. The Collection Account will be maintained with the Indenture
Trustee so long as the Indenture Trustee's deposits have a rating acceptable to
the Insurer and the Rating Agencies. If the deposits of the Indenture Trustee or
its corporate parent no longer have such acceptable rating, the Servicer shall,
with the Indenture Trustee's assistance as necessary, cause such Accounts to be
moved within 30 days to a bank whose deposits have such rating.
The Servicer will also establish and maintain an account, in the name of the
Trust Collateral Agent, for the benefit of the Indenture Trustee, on behalf of
the Noteholders, and the Insurer in which amounts released from the Collection
Account for distribution to Noteholders will be deposited and from which all
distributions to Noteholders will be made (the "Note Distribution Account").
On the Closing Date, a cash amount equal to approximately $62,500,002.61
(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) July 18, 1997. The Initial Pre-Funded
Amount, as reduced from time to time during the Funding Period by the amount
thereof used to purchase Subsequent Receivables in accordance with the Sale and
Servicing Agreement, is referred to herein as the "Pre-Funded Amount." The
Seller expects that the Pre-Funded Amount will be reduced to less than $100,000
on or before the end of the Funding Period. Any Pre-Funded Amount remaining at
the end of the Funding Period will be payable to the Noteholders as described
herein. The "Mandatory Redemption Date" is the earlier of (i) the Distribution
Date in August 1997 or (ii) if the last day of the Funding Period occurs on or
prior to the Determination Date (as defined herein) occurring in June or July
1997, the Distribution Date relating to such Determination Date.
On the Closing Date, a cash amount shall be deposited in an account (the
"Capitalized Interest Account") which will be established with the Trust
Collateral Agent. The amount, if any deposited in the Capitalized Interest
Account will be applied on the Distribution Dates occurring in June, July and
August 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 on the portion of the Notes having a principal
balance in excess of the Principal Balances of the Receivables (which portion
will equal the Pre-Funded Amount). Any amounts remaining in the Capitalized
Interest Account on the Mandatory Redemption Date and not used for such purposes
are required to be paid directly to the Seller on such date. See "Description of
the Purchase Agreements and the Trust Documents--Accounts."
All such Accounts shall be Eligible Deposit Accounts (as defined in the
Prospectus) acceptable to the Insurer (so long as no Insurer Default has
occurred and is continuing).
SERVICING COMPENSATION AND TRUSTEES' FEES
The Servicer will be entitled to receive the Basic Servicing Fee on each
Distribution Date, equal to the product of one-twelfth times 2.25% of the
aggregate Principal Balance of the Receivables as of the opening of business on
the first day of the related Monthly Period (the "Basic Servicing Fee"). So long
as
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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.
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 Policy Claim
Amount, if any, to the Note Distribution Account, the Noteholders'
Interest Distributable Amount.
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4. From the Distribution Amount plus the related portion of any 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, to the Insurer, any amounts owing to the
Insurer under the Insurance Agreement and not paid.
6. 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.
7. 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.
8. 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 Certificateholder without the consent of the Noteholders.
If the Notes are accelerated following an Event of Default under the
Indenture, amounts collected will be distributed in the order described above.
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 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.
For the purposes hereof, the following terms shall have the following
meanings:
"ACCELERATED PAYMENT TERMINATION DATE" means, the later to occur of (i)
first Distribution Date on which the Pro Forma Note Balance equals the Required
Pro Forma Note Balance and (ii) the Distribution Date on which the principal
balance of the Class A-1 Notes is reduced to zero.
"ACCELERATED PRINCIPAL AMOUNT" for a Distribution Date will equal the
lesser of
(x) the sum of (i) excess, if any, of the amount of Available Funds on such
Distribution Date over the amounts payable on such Distribution Date pursuant to
clauses 1 through 6 under "Distributions" plus (ii) amounts, if any, available
in accordance with the terms of the Spread Account Agreement; and
(y) the greater of (a) the excess, if any, on such Distribution Date of (i)
the Pro Forma Note Balance for such Distribution Date over (ii) the Required Pro
Forma Note Balance for such Distribution Date and (b) the amount necessary
(after taking into account all other distributions to be made on such date) to
reduce the principal balance of the Class A-1 Notes to zero.
Notwithstanding the foregoing, the requirement to pay Accelerated
Principal Amounts will terminate on the Accelerated Payment Termination
Date.
The Insurer does not guarantee the payment of Accelerated Principal Amounts.
"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.
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"AVAILABLE FUNDS" means, with respect to any Determination Date, the sum of
(i) the Collected Funds for such Determination Date, plus (ii) all Purchase
Amounts deposited in the Collection Account during the related Monthly Period,
plus income on investments held in the Collection Account, plus (iii) the
Monthly Capitalized Interest Amount with respect to the related Distribution
Date.
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"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 5 under "Distributions" over the
amount of Available Funds with respect to such Determination Date to the extent
that such amounts are available in accordance with the terms of the Spread
Account Agreement.
"DEFICIENCY NOTICE" means a written notice delivered by the Indenture
Trustee to the Insurer, the Servicer and any other person required under the
Insurance Agreement, specifying the Deficiency Claim Amount for such
Distribution Date.
"DETERMINATION DATE" means, with respect to any Monthly Period, the earlier
of (i) the fourth Business Day preceding the Distribution Date in the next
calendar month, and (ii) the 5th day of the next calendar month, or if such 5th
day is not a Business Day, the next succeeding Business Day.
"DISTRIBUTION AMOUNT" means, with respect to any Distribution Date the sum
of (i) the Available Funds for the immediately preceding Determination Date plus
(ii) the Deficiency Claim Amount, if any, received by the Indenture Trustee with
respect to such Distribution Date 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 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.
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"NOTEHOLDERS' ACCELERATED PRINCIPAL AMOUNT" means, with respect to any
Distribution Date, the Noteholders' Percentage of the Accelerated Principal
Amount on such Distribution Date, if any.
"NOTEHOLDERS' DISTRIBUTABLE AMOUNT" means, with respect to any Distribution
Date, the sum of the Noteholders' Principal Distributable Amount and the
Noteholders' Interest Distributable Amount.
"NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, with respect to any
Distribution Date and a Class of Notes, the excess of the Noteholders' Interest
Distributable Amount for such Class for the preceding Distribution Date, over
the amount in respect of interest that was actually deposited in the Note
Distribution Account with respect to such Class on such preceding Distribution
Date, plus interest on the amount of interest due but not paid to Noteholders of
such Class on the preceding Distribution Date, to the extent permitted by law,
at the Interest Rate borne by such Class of Notes from such preceding
Distribution Date to but excluding the current Distribution Date.
"NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Noteholders' Monthly Interest Distributable
Amount for each Class of Notes for such Distribution Date and the Noteholders'
Interest Carryover Shortfall for each Class of Notes for such Distribution Date.
"NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date and any Class of Notes, interest accrued during the
applicable Interest Period at the Interest Rate borne by such Class of Notes on
the outstanding principal amount of such Class immediately prior to such
Distribution Date, calculated on the basis of a 360-day year and (a) the actual
number of days elapsed, in the case of the Class A-l Notes and (b) twelve 30-day
months, in the case of the Class A-2 Notes and 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).
"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.
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"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 NOTE BALANCE" means, with respect to any Distribution Date, the
aggregate remaining principal balance of the Notes outstanding on such
Distribution Date, after giving effect to distributions pursuant to clauses 1
through 4 under "Distributions."
"PURCHASE AMOUNT" means, with respect to a Receivable, the Principal
Balance as of the date of purchase.
"REQUIRED PRO FORMA NOTE BALANCE" means, with respect to any Distribution
Date, a dollar amount equal to product of (x) 90% and (y) the sum of the Pool
Balance and the Pre-Funded Amount as of the end of the prior Monthly Period.
"STEP-DOWN AMOUNT" means, with respect to any Distribution Date, the
excess, if any, of (x) the Required Pro Forma Note Balance over (y) the Pro
Forma Note Balance on such Distribution Date, calculated for this purpose only
without deduction for any Step-Down Amount (i.e., assuming that the entire
amount described in clause (x) of the definition of "Principal Distributable
Amount" is distributed as principal on the Notes).
STATEMENTS TO NOTEHOLDERS
On or prior to each Distribution Date, the Indenture Trustee will be
required to forward a statement to the Noteholders 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 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:
(ii) the amount of the distribution allocable to principal with respect
to the Notes;
(iii) the amount of the distribution payable pursuant to a claim on the
Policy, as the case may be;
(iv) the aggregate outstanding principal amount for each Class of Notes,
after giving effect to all payments reported under (ii) above on such date;
(v) the Noteholders' Interest Carryover Shortfall and the Noteholders'
Principal Carryover Shortfall, if any, and the change in such amounts from
the preceding statement;
(vi) the amount of the Servicing Fee paid to the Servicer with respect
to the related Monthly Period;
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(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.
Each amount set forth pursuant to subclauses (i) through (vi) with respect
to Notes will be expressed as a dollar amount per $1,000 of the initial
principal amount of the Notes.
Unless and until Definitive Notes are issued, such reports will be sent on
behalf of the Trust to Cede & Co., as registered holder of the Notes and the
nominee of DTC. See "Reports to Securityholders" and "Description of the
Securities" in the Prospectus.
Within the required period of time after the end of each calendar year, the
Indenture Trustee will furnish to each person who at any time during such
calendar year was a Noteholder, a statement as to the aggregate amounts of
interest and principal paid to such Noteholder, information regarding the amount
of servicing compensation received by the Servicer and such other information as
the Seller deems necessary to enable such Noteholder to prepare its tax returns.
CREDIT SUPPORT
The Accelerated Principal Amount and the Spread Account result in credit
support. This credit support is required to be increased to, and thereafter
maintained at, a level established by the Insurer. This level changes over time,
and may take two forms: the "Spread Account", which is a funded cash reserve
account and "overcollateralization". The Insurer may permit the required level
of credit support to reduce, or "step down", over time.
OVERCOLLATERALIZATION. Overcollateralization is created as a result of the
application of excess interest to the payment of principal on the Notes. Such
"excess interest" is interest which is collected on the Receivables in excess of
the amount of interest that is paid on the Notes, used to pay certain fees, or,
under certain circumstances, deposited to the Spread Account. This application
of excess interest results in the outstanding principal balance of the Notes
amortizing more quickly than the Pool Balance.
If the Insurer permits the required level of overcollateralization to step
down, principal collections which would otherwise be paid through to the
Noteholders as part of the Principal Distributable Amount 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 Noteholders.
In addition, the Seller, the Insurer and the Trust Collateral Agent may
amend the Spread Account Agreement (and any provisions in the Insurance
Agreement relating to the Spread Account) in any respect (including, without
limitation, reducing or eliminating the Specified Spread Account Requirement
and/or reducing or eliminating the funding requirements of the Spread Account or
permitting such funds to be used for the benefit of persons other than
Noteholders) without the consent of, or notice to, the Trustee, the Owner
Trustee or the Noteholders. The Trust Collateral Agent shall not withhold or
delay its consent
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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 Noteholders.
SERVICER TERMINATION EVENT
"Servicer Termination Event" under the Sale and Servicing Agreement will
consist of the occurrence and continuance of any of the following: (i) any
failure by the Servicer to deliver to the Trust Collateral Agent for
distribution to the Noteholders any required payment, which failure continues
unremedied for two Business Days, or any failure to deliver the Servicer's
Certificate (as defined in the Sale and Servicing Agreement) by the fourth
Business Day prior to the Distribution Date, and which shall comply with the
requirements therefor; (ii) any failure by the Servicer duly to observe or
perform in any material respect any other covenant or agreement under the Sale
and Servicing Agreement or the Purchase Agreement (if AmeriCredit is the
Servicer) which failure continues unremedied for 60 days after the giving of
written notice of such failure (1) to the Servicer by the Insurer, the Trust
Collateral Agent or the Issuer, or (2) if a
Insurer Default has occurred and is continuing, to the Servicer by any holder of
a Note; (iii) certain events of insolvency, readjustment of debt, marshalling of
assets and liabilities, or similar proceedings with respect to the Servicer or,
so long as AmeriCredit is Servicer, of any of its affiliates, and certain
actions by the Servicer, or, so long as AmeriCredit is Servicer, of its
affiliates, indicating its insolvency, reorganization pursuant to bankruptcy
proceedings, or inability to pay its obligations; (iv) any representation,
warranty or statement of the Servicer shall prove to be incorrect in any
material respect and which has a material adverse effect on the interests of the
Insurer, and the circumstances or conditions in respect of which such
representation, warranty or statement was incorrect shall not have been
eliminated or cured as provided thereunder; (v) so long as a Insurer Default
shall not have occurred and be continuing, the Insurer shall not have delivered
an extension notice; (vi) so long as a Insurer Default shall not have occurred
and be continuing, an Insurance Agreement Event of Default or an event of
default under any other Insurance and Indemnity Agreement relating to any series
of securities shall have occurred; or (vii) a claim is made under the Policy.
"Insurer Default" shall mean the occurrence and continuance of any of the
following events:
(a) the Insurer shall have failed to make a payment required under the
Policy in accordance with its terms;
(b) the Insurer shall have (i) filed a petition or commenced any case or
proceeding under any provision or chapter of the United States Bankruptcy
Code or any other similar federal or state law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization, (ii) made a
general assignment for the benefit of its creditors, or (iii) had an order
for relief entered against it under the United States Bankruptcy Code or any
other similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization which is final and
nonappealable; or
(c) a court of competent jurisdiction, the New York Department of
Insurance or other competent regulatory authority shall have entered a final
and nonappealable order, judgment or decree (i) appointing a custodian,
trustee, agent or receiver for the Insurer or for all or any material
portion of its property or (ii) authorizing the taking of possession by a
custodian, trustee, agent or receiver of the Insurer (or the taking of
possession of all or any material portion of the property of the Insurer).
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RIGHTS UPON SERVICER TERMINATION EVENT
As long as a Servicer Termination Event under the Sale and Servicing
Agreement remains unremedied, (x) provided no Insurer Default shall have
occurred and be continuing, the Insurer in its sole and absolute discretion or
(y) if a Insurer Default shall have occurred and be continuing, then the Trust
Collateral Agent or a Note Majority, may terminate all the rights and
obligations of the Servicer under such Agreement, whereupon (i) if AmeriCredit
is terminated under the Agreement, the Backup Servicer, or such other successor
servicer as shall have been appointed by the Insurer (so long as no Insurer
Default shall have occurred and be continuing) will succeed to all the
responsibilities, duties, and liabilities of the Servicer under such Agreement
or (ii) if a Servicer other than AmeriCredit is terminated under the Agreement,
a successor servicer will be appointed by the Insurer (or, if a Insurer Default
shall have occurred and be continuing, by the Trust Collateral Agent). Any such
successor Servicer will succeed to all the responsibilities, duties, and
liabilities of the Servicer under the Sale and Servicing Agreement and will be
entitled to similar compensation arrangements. There is no assurance that the
succession of a successor servicer will not result in a material disruption in
the performance of the duties of the servicer.
WAIVER OF PAST DEFAULTS
Notwithstanding anything to the contrary set forth under "Description of the
Trust Agreements-- Waiver of Past Defaults" in the Prospectus, the Insurer may,
on behalf of all holders of Notes, waive any default by the Servicer in the
performance of its obligations under the Sale and Servicing Agreement and its
consequences. No such waiver will impair the Noteholders' rights with respect to
subsequent defaults.
AMENDMENT
Notwithstanding anything to the contrary set forth under "Description of the
Trust Agreements-- Amendment" in the Prospectus, the Sale and Servicing
Agreement may be amended by the Seller, the Servicer and the Owner Trustee with
the consent of the Indenture Trustee, (which consent may not be unreasonably
withheld) and with the consent of the Insurer (so long as no Insurer Default has
occurred and is continuing), but without the consent of the Noteholders, to cure
any ambiguity, or to correct or supplement any provision therein which may be
inconsistent with any other provision therein; provided that such action shall
not adversely affect in any material respect the interests of any Noteholder;
provided, further, that if an Insurer Default has occurred and is continuing,
such action shall not materially adversely affect the interests of the Insurer.
The Seller, the Servicer and the Owner Trustee may also amend the Sale and
Servicing Agreement with the consent of the Insurer, the consent of the
Indenture Trustee, the consent of Noteholders holding a majority of the
principal amount of the Notes outstanding to add, change or eliminate any other
provisions with respect to matters or questions arising under such Agreement or
affecting the rights of the Noteholders; provided that such action will not (i)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on Receivables or distributions that are
required to be made for the benefit of the Noteholders or (ii) reduce the
aforesaid percentage of the Noteholders required to consent to any such
amendment, without, in either case, the consent of the holders of all Notes
outstanding; provided, further, that if an Insurer Default has occurred and is
continuing, such action shall not materially adversely affect the interest of
the Insurer. The Seller and Servicer must deliver to the Owner Trustee, the
Indenture Trustee and the Insurer upon the execution and delivery of the Sale
and Servicing Agreement and any amendment thereto an opinion of counsel,
satisfactory to the Indenture Trustee, that all financing statements and
continuation statements have been filed that are necessary to fully protect and
preserve the Trustee's interest in the Receivables.
THE POLICY
Simultaneously with the issuance of the Notes, the Insurer will deliver the
Policy to the Trust Collateral Agent as agent for the Indenture Trustee for the
benefit of each Noteholder. Under the Policy, the Insurer will unconditionally
and irrevocably guarantee to the Trust Collateral Agent for the benefit of
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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 Policy, Noteholders do not have the right to make a claim directly
under the Policy, but may sue to compel the Trust Collateral Agent to do so.
"Scheduled Payments" means payments which are scheduled to be made on the
Notes during the term of the Policy in accordance with the original terms of the
Notes when issued and without regard to any subsequent amendment or modification
of the Notes that has not been consented to by the Insurer, which payments are
(i) the Noteholders' Interest Distributable Amount and (ii) the Noteholders'
Principal Distributable Amount with respect to a Distribution Date; Scheduled
Payments do not include payments which become due on an accelerated basis as a
result of (a) a default by the Trust, (b) an election by the Trust to pay
principal on an accelerated basis, (c) the occurrence of an Event of Default
under the Indenture or (d) any other cause, unless the Insurer elects, in its
sole discretion, to pay in whole or in part such principal due upon
acceleration, together with any accrued interest to the date of acceleration. In
the event the Insurer does not so elect, the Policy will continue to guarantee
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 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 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 Policy, the Insurer shall cause such payment to be made no earlier than the
first to occur of (a) the fourth Business Day following Receipt by the Insurer
from the Trust Collateral Agent of (i) a certified copy of the order (the
"Order") of the court or other governmental body which exercised jurisdiction to
the effect that the Noteholder is required to return principal or interest paid
on the Notes during the term of the Policy because such payments were avoidable
as preference payments under applicable bankruptcy law, (ii) a certificate of
the Noteholder that the Order has been entered and is not subject to any stay
and (iii) an assignment duly executed and delivered by the Noteholder, in such
form as is reasonably required by the Insurer and provided to the Noteholder by
the Insurer, irrevocably assigning to the Insurer all rights and claims of the
Noteholder relating to or arising under the Notes against the Trust or otherwise
with respect to such preference payment, or (b) the date of Receipt (as defined
below) by the Insurer from the Trust Collateral Agent of the items referred to
in clauses (i), (ii) and (iii) above if, at least four Business Days prior to
such date of Receipt, the Insurer shall have received written notice from the
Trust Collateral Agent that such items were to be delivered on such date and
such date was specified in such notice. Such payment shall be disbursed to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Order and not to the Trust Collateral Agent or any Noteholder directly
(unless a Noteholder has previously paid such amount to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in.the Order,
in which case such payment shall be disbursed to the Trust Collateral Agent for
distribution to such Noteholder upon proof of such payment reasonably
satisfactory to the Insurer). In connection with the foregoing, the Insurer
shall have the rights provided in the Indenture.
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OTHER PROVISIONS OF THE POLICY
The terms "Receipt" and "Received" with respect to the Policy shall mean
actual delivery to the Insurer and to its fiscal agent, if any, prior to 12:00
noon, New York City time, on a Business Day; delivery either on a day that is
not a Business Day or after 12:00 noon, New York City time, shall be deemed to
be Received on the next succeeding Business Day. If any notice or certificate
given under the Policy by the Trust Collateral Agent is not in proper form or is
not properly completed, executed or delivered, it shall be deemed not to have
been Received, and the Insurer or its fiscal agent shall promptly so advise the
Trust Collateral Agent, and the Trust Collateral Agent may submit an amended
notice.
Under the Policy, "Business Day" means any day other than a Saturday,
Sunday, legal holiday or other day on which commercial banking institutions in
Wilmington, Delaware, the City of New York or Chicago, Illinois or any other
location of any successor Servicer, successor Owner Trustee or successor Trust
Collateral Agent are authorized or obligated by law, executive order or
governmental decree to be closed.
The Insurer's obligations under the Policy in respect of Scheduled Payments
shall be discharged to the extent funds are transferred to the Trust Collateral
Agent as provided in the Policy whether or not such funds are properly applied
by the Trust Collateral Agent.
The Insurer shall be subrogated to the rights of each Noteholder to receive
payments of principal and interest to the extent of any payment by the Insurer
under the Policy.
Claims under the Policy constitute direct, unsecured and unsubordinated
obligations of the Insurer ranking not less than PARI PASSU with other unsecured
and unsubordinated indebtedness of the Insurer for borrowed money. Claims
against the Insurer under each other financial guaranty insurance policy issued
thereby constitute PARI PASSU claims against the general assets of the Insurer.
The terms of the Policy cannot be modified or altered by any other agreement or
instrument, or by the merger, consolidation or dissolution of the Trust. The
Policy may not be canceled or revoked prior to distribution in full of all
Scheduled Payments. The Policy is not covered by the property/casualty insurance
security fund specified in Article 76 of the New York Insurance Law. The Policy
is governed by the laws of the State of New York.
It is a condition to issuance that the Class A-l Notes be rated A-l+ by S&P
and P-l by Moody's, and that the Class A-2 Notes and the Class A-3 Notes be
rated AAA by S&P and Aaa by Moody's. The ratings by the Rating Agencies of the
Notes will be (i) with respect to the Class A-1 Notes, without regard to the
Policy in the case of S&P and substantially based on the Policy in the case of
Moody's and (ii) with respect to all other Classes of Notes, based on the
issuance of the Policy. A rating is not a recommendation to purchase, hold or
sell Notes. In the event that the rating initially assigned to any of the Notes
is subsequently lowered or withdrawn for any reason, including by reason of a
downgrading of the claims-paying ability of the Insurer, no person or entity
will be obligated to provide any additional credit enhancement with respect to
the Notes. Any reduction or withdrawal of a rating may have an adverse effect on
the liquidity and market price of the Notes. See "Ratings" herein.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the material anticipated federal
income tax considerations to investors of the purchase, ownership and
disposition of the securities offered hereby. The discussion is based upon laws,
regulations, rulings and decisions now in effect, all of which are subject to
change. The discussion below does not purport to deal with all federal tax
considerations applicable to all categories of investors, some of which may be
subject to special rules. Investors should consult their own tax advisors in
determining the federal, state, local and any other tax consequences to them of
the purchase, ownership and disposition of the securities.
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TAX CHARACTERIZATION OF THE TRUST
Assuming that the terms of the Trust Agreement and related documents will be
complied with,Dewey Ballantine is of the opinion that, although no transaction
closely comparable to that contemplated herein has been the subject of any
Treasury regulation, revenue ruling or judicial decision, and therefore the
matter is subject to interpretation, the Trust will not be an association (or
publicly traded partnership) taxable as a corporation for federal income tax
purposes.
If the Trust were taxable as a corporation for federal income tax purposes,
the Trust would be subject to corporate income tax on its taxable income. The
Trust's taxable income would include all its income on the Receivables, possibly
reduced by its interest expense on the Notes. Any such corporate income tax
could materially reduce cash available to make payments on the Notes.
TAX CONSEQUENCES TO HOLDERS OF THE NOTES
TREATMENT OF THE NOTES AS INDEBTEDNESS. The Seller agrees, and the
Noteholders will agree by their purchase of Notes, to treat the Notes as debt
for all federal, state and local income tax purposes. There are no
regulations, published rulings or judicial decisions involving the
characterization for federal income tax purposes of securities with terms
substantially the same as the Notes. In general, whether instruments such as
the Notes constitute indebtedness for federal income tax purposes is a
question of fact, the resolution of which is based primarily upon the
economic substance of the instruments and the transaction pursuant to which
they are issued rather than merely upon the form of the transaction or the
manner in which the instruments are labeled. The IRS and the courts have set
forth various factors to be taken into account in determining, for federal
income tax purposes, whether or not an instrument constitutes indebtedness
and whether a transfer of property is a sale because the transferor has
relinquished substantial incidents of ownership in the property or whether
such transfer is a borrowing secured by the property. On the basis of its
analysis of such factors as applied to the facts and its analysis of the
economic substance of the contemplated transaction, counsel is expected to
conclude that, for federal income tax purposes, the Notes will be treated as
indebtedness of the Trust, and not as an ownership interest in the
Receivables, or an equity interest in the Trust or in a separate association
taxable as a corporation or other taxable entity.
Except as described below, interest paid or accrued on a Note will be
treated as ordinary income to the Noteholders and principal payments on a Note
will be treated as a return of capital to the extent of the Noteholder's basis
in the Note allocable thereto. An accrual method taxpayer will be required to
include in income interest on the Notes when earned, even if not paid, unless it
is determined to be uncollectible. The Trust will report to Noteholders of
record and the Internal Revenue Service (the "IRS") in respect of the interest
paid and original issue discount, if any, accrued on the Notes to the extent
required by law.
Although, as described above, it is the opinion of counsel that, for federal
income tax purposes, the Notes will be characterized as debt, such opinion is
not binding on the IRS and thus no assurance can be given that such a
characterization will prevail. If the IRS successfully asserted that one or more
of the Notes did not represent debt for federal income tax purposes, the Notes
would likely be treated as equity interests in the Trust.
ORIGINAL ISSUE DISCOUNT. It is anticipated that the Notes will not have any
original issue discount ("OID") other than possibly OID within a DE MINIMIS
exception and that accordingly the provisions of sections 1271 through 1273 and
1275 of the Internal Revenue Code of 1986, as amended (the "Code"), generally
will not apply to the Notes. OID will be considered DE MINIMIS if it is less
than 0.25% of the principal amount of a Note multiplied by its expected weighted
average life.
Market Discount. A subsequent purchaser who buys a Note for less than its
principal amount may be subject to the "market discount" rules of Section 1276
through 1278 of the Code. If a subsequent purchaser of a Note disposes of such
Note (including certain nontaxable dispositions such as a gift), or
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receives a principal payment, any gain upon such sale or other disposition will
be recognized, or the amount of such principal payment will be treated, as
ordinary income to the extent of any "market discount" accrued for the period
that such purchaser holds the Note. Such holder may instead elect to include
market discount in income as it accrues with respect to all debt instruments
acquired in the year of acquisition of the Notes and thereafter. Market discount
generally will equal the excess, if any, of the then current unpaid principal
balance of the Note over the purchaser's basis in the Note immediately after
such purchaser acquired the Note. In general, market discount on a Note will be
treated as accruing over the term of such Note in the ratio of interest for the
current period over the sum of such current interest and the expected amount of
all remaining interest payments, or at the election of the holder, under a
constant yield method. At the request of a holder of a Note, information will be
made available that will allow the holder to compute the accrual of market
discount under the first method described in the preceding sentence.
The market discount rules also provide that a holder who incurs or continues
indebtedness to acquire a Note at a market discount may be required to defer the
deduction of all or a portion of the interest on such indebtedness until the
corresponding amount of market discount is included in income.
Notwithstanding the above rules, market discount on a Note will be
considered to be zero if it is less than a DE MINIMIS amount, which is 0.25% of
the remaining principal balance of the Note multiplied by its expected weighted
average remaining life. If OID or market discount is DE MINIMIS, the actual
amount of discount must be allocated to the remaining principal distributions on
the Notes and, when each such distribution is received, capital gain equal to
the discount allocated to such distribution will be recognized.
MARKET PREMIUM. A subsequent purchaser who buys a Note for more than its
principal amount generally will be considered to have purchased the Note at a
premium. Such holder may amortize such premium, using a constant yield method,
over the remaining term of the Note and, except as future regulations may
otherwise provide, may apply such amortized amounts to reduce the amount of
interest reportable with respect to such Note over the period from the purchase
date to the date of maturity of the Note. Legislative history to the Tax Reform
Act of 1986 indicates that the amortization of such premium on an obligation
that provides for a partial principal payments prior to maturity should be
governed by the methods for accrual of market discount on such an obligation
(described above). Proposed regulations implementing the provisions of the Tax
Reform Act of 1986 provide for the use of the constant yield method to determine
the amortization of premiums. Such proposed regulations will apply to bonds
acquired on or after 60 days after the final regulations are published. A holder
that elects to amortize premium must reduce his tax basis in the related
obligation by the amount of the aggregate deductions (or interest offsets)
allowable for amortizable premium. If a debt instrument purchased at a premium
is redeemed in full prior to its maturity, a purchaser who has elected to
amortize premium should be entitled to a deduction for any remaining unamortized
premium in the taxable year of redemption.
SALE OR REDEMPTION OF NOTES. If a Note is sold or retired, the seller will
recognize gain or loss equal to the difference between the amount realized on
the sale and his adjusted basis in the Note. Such adjusted basis generally will
equal the cost of the Note to the seller, increased by any original issue
discount included in the seller's gross income in respect of the Note (and by
any market discount which the taxpayer elected to include in income or was
required to include in income), and reduced by payments other than payments of
qualified stated interest in respect of the Note 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.
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TAXATION OF CERTAIN FOREIGN INVESTORS. Interest payments (including OID) on
the Notes made to a Noteholder who is a nonresident alien individual, foreign
corporation or other non-United States person (a "foreign person") generally
will be "portfolio interest" which is not subject to United States tax if such
payments are not effectively connected with the conduct of a trade or business
in the United States by such foreign person and if the Trust (or other person
who would otherwise be required to withhold tax from such payments) is provided
with an appropriate statement that the beneficial owner of the Note identified
on the statement is a foreign person.
BACKUP WITHHOLDING. Distributions of interest and principal as well as
distributions of proceeds from the sale of the Notes, may be subject to the
"backup withholding tax" under Section 3406 of the Code at rate of 31% if
recipients of such distributions fail to furnish to the payor certain
information, including their taxpayer identification numbers, or otherwise fail
to establish an exemption from such tax. Any amounts deducted and withheld from
a distribution to a recipient would be allowed as a credit against such
recipient's federal income tax. Furthermore, certain penalties may be imposed by
the IRS on a recipient of distributions that is required to supply information
but that does not do so in the proper manner.
STATE TAX CONSIDERATIONS
Potential Noteholders should consider the state and local income tax
consequences of the purchase, ownership and disposition of the Notes. State and
local income tax laws may differ substantially from the corresponding federal
law, and this discussion does not purport to describe any aspect of the income
tax laws of any state or locality. Therefore, potential Noteholders should
consult their own tax advisors with respect to the various state and local tax
consequences of an investment in the Notes.
ERISA CONSIDERATIONS
Section 406 of ERISA, and/or Section 4975 of the Code, prohibits a pension,
profit-sharing or other employee benefit plan, as well as individual retirement
accounts and certain types of Keogh Plans (each a "Benefit Plan") from engaging
in certain transactions with persons that are "parties in interest" under ERISA
or "disqualified persons" under the Code with respect to such Benefit Plan. A
violation of these "prohibited transaction" rules may result in an excise tax or
other penalties and liabilities under ERISA and the Code for such persons. Title
I of ERISA also requires that fiduciaries of a Benefit Plan subject to ERISA
make investments that are prudent, diversified (except if prudent not to do so)
and in accordance with governing plan documents.
Certain transactions involving the purchase, holding or transfer of the
Notes might be deemed to constitute prohibited transactions under ERISA and the
Code if assets of the Trust were deemed to be assets of a Benefit Plan. Under a
regulation issued by the United States Department of Labor (the "Plan Assets
Regulation"), the assets of the Trust would be treated as plan assets of a
Benefit Plan for the purposes of ERISA and the Code only if the Benefit Plan
acquires an "Equity Interest" in the Trust and none of the exceptions contained
in the Plan Assets Regulation is applicable. An equity interest is defined under
the Plan Assets Regulation as an interest other than an instrument which is
treated as indebtedness under applicable local law and which has no substantial
equity features. The Seller believes that the Notes should be treated as
indebtedness without substantial equity features for purposes of the Plan Assets
Regulation. However, without regard to whether the Notes are treated as an
Equity Interest for such purposes, the acquisition or holding of Notes by or on
behalf of a Benefit Plan could be considered to give rise to a prohibited
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
S-46
<PAGE>
investment funds; PTCE 96-23, regarding transactions affected by in-house asset
managers; and PTCE 84-14, regarding transactions effected by "qualified
professional asset managers." Each investor using the assets of a Benefit Plan
which acquires the Notes, or to whom the Notes are transferred, will be deemed
to have represented that the acquisition and continued holding of the Notes will
be covered by one of the exemptions listed above or by another Department of
Labor Class Exemption.
Employee benefit plans that are governmental plans (as defined in Section
3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA)
are not subject to ERISA requirements.
A plan fiduciary considering the purchase of Notes should consult its tax
and/or legal advisors regarding whether the assets of the Trust would be
considered plan assets, the possibility of exemptive relief from the prohibited
transaction rules and other issues and their potential consequences.
LEGAL INVESTMENT
The Class A-1 Notes will be eligible securities for purchase by money market
funds under the Investment Company Act of 1940, as amended.
RATINGS
It is a condition to issuance that the Class A-1 Notes be rated A-1+ by S&P,
and P-1 by Moody's, and that the Class A-2 Notes and the Class A-3 Notes be
rated AAA by S&P and Aaa by Moody's. The ratings by the Rating Agencies of the
Notes will be (i) with respect to the Class A-1 Notes, without regard to the
Policy in the case of S&P and substantially based on the Policy in the case of
Moody's and (ii) with respect to all other Classes of Notes, based primarily on
the Policy. There is no assurance that the ratings initially assigned to the
Notes 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 Notes set forth opposite its name below:
CLASS A-1 NOTES
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
----------------
<S> <C>
Bear, Stearns & Co. Inc......................................................................... $ 34,000,000
Credit Suisse First Boston Corporation.......................................................... 34,000,000
----------------
Total....................................................................................... $ 68,000,000
</TABLE>
CLASS A-2 NOTES
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
----------------
<S> <C>
Bear, Stearns & Co. Inc......................................................................... $ 48,125,000
Credit Suisse First Boston Corporation.......................................................... 48,125,000
----------------
Total....................................................................................... $ 96,250,000
</TABLE>
S-47
<PAGE>
CLASS A-3 NOTES
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
----------------
<S> <C>
Bear, Stearns & Co. Inc......................................................................... $ 42,875,000
Credit Suisse First Boston Corporation.......................................................... 42,875,000
----------------
Total....................................................................................... $ 85,750,000
</TABLE>
The Seller has been advised by the Underwriters that they propose initially
to offer the Notes to the public at the prices set forth herein, and to certain
dealers at such prices less the initial concession not in excess of 0.16% per
Class A-1 Note, 0.18% per Class A-2 Note and 0.24% per Class A-3 Note. The
Underwriters may allow and such dealers may reallow a concession not in excess
of 0.125% per Class A-1 Note, 0.125% per Class A-2 Note and 0.15% per Class A-3
Note to certain other dealers. After the initial public offering of the Notes,
the public offering prices and such concessions may be changed.
Each Underwriter has represented and agreed that (a) it has not offered or
sold, and will not offer or sell, any Notes to persons in the United Kingdom
except to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purposes of
their businesses or otherwise in circumstances that do not constitute an offer
to the public in the United Kingdom for the purposes of the Public Offers of
Securities Regulations 1995, (b) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 of Great Britain with
respect to anything done by it in relation to the Notes in, from or otherwise
involving the United Kingdom and (c) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document in connection with the
issue of the Notes to a person who is of a kind described in Article 11(3) of
the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
1995 or is a person to whom the document may otherwise lawfully be issued or
passed on.
Upon receipt of a request by an investor who has received an electronic
Prospectus Supplement and Prospectus from an Underwriter or a request by such
investor's representative within the period during which there is an obligation
to deliver a Prospectus Supplement and Prospectus, the Seller of the Underwriter
will promptly deliver, or cause to be delivered, without charge, a paper copy of
the Prospectus Supplement and Prospectus.
EXPERTS
The consolidated balance sheets of the Insurer and Subsidiaries as of
December 31, 1996 and 1995 and the related consolidated statements of income,
changes in shareholder's equity and cash flows for each of the three years in
the period ended December 31, 1996, incorporated by reference in this Prospectus
Supplement, have been incorporated herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of that firm as
experts in accounting and auditing.
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus, certain
federal income tax and other matters will be passed upon for the Seller and the
Trust by Dewey Ballantine. Certain legal matters relating to the Notes will be
passed upon for the Underwriters by Dewey Ballantine. Certain legal matters will
be passed upon for the Insurer by Brian H. Mellstrom, Assistant General Counsel,
the Insurer. The Insurer is represented by Rogers & Wells.
S-48
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
ABS.................................................................................................. 22
ABS Table............................................................................................ 22
Accelerated Payment Termination Date................................................................. 35
Accelerated Principal Amount......................................................................... 35
Aggregate risks...................................................................................... 29
AmeriCredit.......................................................................................... 4
Amount Financed...................................................................................... 35
APR.................................................................................................. 6
Available Funds...................................................................................... 35
Basic Servicing Fee.................................................................................. 33
Benefit Plan......................................................................................... 10, 46
Business Day......................................................................................... 6
Capitalized Interest Account......................................................................... 9, 33
Cedel................................................................................................ 1, 4
Certificate.......................................................................................... 5
Class A-1 Notes...................................................................................... 1, 4
Class A-2 Notes...................................................................................... 1, 4
Class A-3 Notes...................................................................................... 1, 4
Code................................................................................................. 44
Collected Funds...................................................................................... 36
Collection Account................................................................................... 32
Commission........................................................................................... 3
Contracts............................................................................................ 16
Cram Down Loss....................................................................................... 36
Dealer Agreements.................................................................................... 15
Deficiency Claim Amount.............................................................................. 36
Deficiency Notice.................................................................................... 36
Determination Date................................................................................... 36
Distribution Amount.................................................................................. 36
Distribution Date.................................................................................... 2, 6
DTC.................................................................................................. 1
Euroclear............................................................................................ 1, 4
Events of Default.................................................................................... 31
Exchange Act......................................................................................... 3
Final Schedule Distribution Date..................................................................... 2
Financed Vehicles.................................................................................... 2, 5
Financial Security................................................................................... 28
Funding Period....................................................................................... 9, 33
Holdings............................................................................................. 3, 28
Indenture............................................................................................ 1
Indenture Trustee.................................................................................... 1, 4
Initial Cutoff Date.................................................................................. 1, 19
Initial Financed Vehicles............................................................................ 1, 5
Initial Pre-Funded Amount............................................................................ 9, 33
Initial Receivables.................................................................................. 1, 5
Insurance Agreement.................................................................................. 8
Insurance Agreement Indenture Cross Defaults......................................................... 31
</TABLE>
S-49
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
Insurer.............................................................................................. 3, 4
Insurer Default...................................................................................... 40
Insurer Optional Deposit............................................................................. 36
Interest Period...................................................................................... 7, 30
Interest Rate........................................................................................ 7
IRS.................................................................................................. 44
Issuer............................................................................................... 4
Liquidated Receivable................................................................................ 36
Lockbox.............................................................................................. 32
Lockbox Account...................................................................................... 32
Mandatory Redemption Date............................................................................ 9, 33
Monthly Capitalized Interest Amount.................................................................. 9, 33
Monthly Period....................................................................................... 7, 30
Moody's.............................................................................................. 10
Net Liquidation Proceeds............................................................................. 36
Note Distribution Account............................................................................ 33
Note Prepayment Amount............................................................................... 8, 31
Noteholder Monthly Interest Distributable Amount..................................................... 37
Noteholders.......................................................................................... 6
Noteholders' Accelerated Principal Amount............................................................ 36
Noteholders' Distributable Amount.................................................................... 37
Noteholders' Interest Carryover Shortfall............................................................ 37
Noteholders' Interest Distributable Amount........................................................... 37
Noteholders' Monthly Principal Distributable Amount.................................................. 37
Noteholders' Percentage.............................................................................. 37
Noteholders' Principal Carryover Shortfall........................................................... 37
Noteholders' Principal Distributable Amount.......................................................... 37
Notes................................................................................................ 1
OID.................................................................................................. 44
Order................................................................................................ 42
Original Pool Balance................................................................................ 8
Owner Trustee........................................................................................ 1, 4
Payment Date......................................................................................... 6
Plan Assets Regulation............................................................................... 46
Policy............................................................................................... 1, 9
Policy Claim Amount.................................................................................. 37
Pool Balance......................................................................................... 15
Pre-Funded Amount.................................................................................... 9, 33
Pre-Funding Account.................................................................................. 2, 8, 9, 33
Precomputed Receivables.............................................................................. 22
Principal Balance.................................................................................... 37
Principal Distributable Amount....................................................................... 7, 30, 38
Pro Forma Note Balance............................................................................... 38
Prospectus........................................................................................... 2
PTCE................................................................................................. 46
Purchase Agreement................................................................................... 5
Purchase Agreements.................................................................................. 32
Purchase Amount...................................................................................... 38
Rating Agencies...................................................................................... 10
Receivables.......................................................................................... 2
</TABLE>
S-50
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
Record Date.......................................................................................... 6
Redemption Price..................................................................................... 31
Required Pro Forma Note Balance...................................................................... 38
S&P.................................................................................................. 10
Schedule of Receivables.............................................................................. 32
Scheduled Payments................................................................................... 41
Seller............................................................................................... 1, 4
Servicer............................................................................................. 4
Servicer Termination Event........................................................................... 40
Simple Interest Receivables.......................................................................... 22
Single risks......................................................................................... 29
Step-Down Amount..................................................................................... 38
Subsequent Cutoff Date............................................................................... 6
Subsequent Financed Vehicles......................................................................... 2, 5
Subsequent Purchase Agreement........................................................................ 5
Subsequent Receivables............................................................................... 2, 5
Subsequent Transfer Date............................................................................. 6
Trust................................................................................................ 1, 4
Trust Agreement...................................................................................... 4
Trust Collateral Agent............................................................................... 1, 4
Trust Documents...................................................................................... 32
Trust Property....................................................................................... 5
Underwriters......................................................................................... 47
Underwriting Agreement............................................................................... 47
</TABLE>
S-51
<PAGE>
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered AmeriCredit
Automobile Receivables Trust 1997-B 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."
<TABLE>
<S> <C>
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
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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<PAGE>
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
8
<PAGE>
amortize the full amount of the Contract over
its term. The Rule of 78s Contracts provide
for allocation of payments according to the
"sum of periodic balances" or "sum of monthly
payments" method (the "Rule of 78s"). Each
Rule of 78s Contract provides for the payment
by the Obligor of a specified total amount of
payments, payable in monthly installments on
the related due date, which total represents
the principal amount financed and finance
charges in an amount calculated on the basis
of a stated annual percentage rate ("APR")
for the term of such Contract. The rate at
which such amount of finance charges is
earned and, correspondingly, the amount of
each fixed monthly payment allocated to
reduction of the outstanding principal
balance of the related Contract are
calculated in accordance with the Rule of
78s. Under the Rule of 78s, the portion of
each payment allocable to interest is higher
during the early months of the term of a
Contract and lower during later months than
that under a constant yield method for
allocating payments between interest and
principal. Notwithstanding the foregoing, as
specified in the related Prospectus Supplement,
all payments received by the related Servicer on
or in respect of the Rule of 78s Contracts may be
allocated on an actuarial or simple interest basis.
Generally, the "Fixed Value Contracts"
provide for monthly payments with a final
fixed value payment which is greater than the
scheduled monthly payments. A Fixed Value
Contract provides for amortization of the
loan over a series of fixed level payment
monthly installments, but also requires a
final fixed value payment due after payment
of such monthly installments which may be
satisfied by (i) payment in full in cash of
such amount, (ii) transfer of the vehicle to
the Company provided certain conditions are
satisfied or (iii) refinancing the fixed
value payment in accordance with certain
conditions. With respect to Fixed Value
Contracts, as specified in the related
Prospectus Supplement, only the principal and
interest payments due prior to the final
fixed value payment and not the final fixed
value payment may be included initially in
the related Trust Property.
"Simple Interest Contracts" provide for the
amortization of the amount financed under the
receivable over a series of fixed level
monthly payments. However, unlike the monthly
payment under Rule of 78s Contracts, each
monthly payment consists of an installment of
interest which is calculated on the basis of
the outstanding principal balance of the
receivable multiplied by the stated APR and
further multiplied by the period elapsed (as
a fraction of a calendar year) since the
preceding payment of interest was made. As
payments are received under a Simple Interest
Contract, the amount received is applied
first to interest accrued to the date of
payment and the balance is applied to reduce
the unpaid principal balance. Accordingly, if
an Obligor pays a fixed monthly installment
before its scheduled due date, the portion of
the payment allocable to interest for the
period since the preceding payment was made
will be less than it would have been had the
payment been made as scheduled, and the
portion of the payment applied to reduce the
unpaid principal balance will be
correspondingly greater. Conversely, if an
Obligor pays a fixed monthly installment
after its scheduled due date, the portion of
the payment allocable to interest for the
period since the preceding payment was made
will be greater than it would have been had
the payment been made as scheduled, and the
portion of the payment applied to reduce the
unpaid principal balance will be
correspondingly less. In either case, the
Obligor pays a fixed monthly installment
until the final scheduled payment date, at
which time the amount of the final
installment is increased or decreased as
necessary to repay the then outstanding
principal balance.
If an Obligor elects to prepay a Rule of 78s
Contract in full, it is entitled to a rebate
of the portion of the outstanding balance
then due and payable attributable to unearned
finance charges. If a Simple Interest
Contract is prepaid, rather than receive a
rebate, the Obligor is required to pay
interest only to the date of prepayment. The
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<PAGE>
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.
</TABLE>
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RISK FACTORS
Prospective Securityholders should consider, among other things, the
following factors in connection with the purchase of the Securities:
LIMITED LIQUIDITY. There can be no assurance that a secondary market for
the Securities of any series or Class will develop or, if it does develop, that
it will provide Securityholders with liquidity of investment or that it will
continue for the life of such Securities. The Prospectus Supplement for any
series of Securities may indicate that an underwriter specified therein intends
to establish and maintain a secondary market in such Securities; however, no
underwriter will be obligated to do so. The Securities will not be listed on any
securities exchange.
OWNERSHIP OF CONTRACTS. In connection with the issuance of any series of
Securities, the Company will originate Contracts. The Company will warrant in
a Trust Agreement (i) if the Company retains title to the Contracts, that the
Trustee for the benefit of Securityholders has a valid security interest in
such Contracts, or (ii) if the Company transfers such Contracts to a Trust,
that the transfer of the Contracts to such Trust is either a valid
assignment, transfer and conveyance of the Contracts to the Trust or the
Trustee on behalf of the Securityholders has a valid security interest in
such Contracts. As to be described in the related Prospectus Supplement, the
related Trust Agreement will provide either that the Trustee will be required
to maintain possession of the original copies of all Contracts that
constitute chattel paper or that the Company or the Servicer will retain
possession of such Contracts; provided that in case the Company retains
possession of the related Contracts, the Servicer may take possession of such
original copies as necessary for the enforcement of any Contract. If any
Contracts remain in the possession of the Company, the related Prospectus
Supplement may describe specific trigger events that will require delivery to
the Trustee. If the Company, the Servicer, the Trustee or other third party,
while in possession of the Contracts, sells or pledges and delivers such
Contracts to another party, in violation of the Receivables Acquisition
Agreement or the Trust Agreement, there is a risk that such other party could
acquire an interest in such Contracts having a priority over the Issuer's
interest. Furthermore, if the Company, the Servicer or a third party, while
in possession of the Contracts, is rendered insolvent, such event of
insolvency may result in competing claims to ownership or security interests
in the Contracts. Such an attempt, even if unsuccessful, could result in
delays in payments on the Securities. If successful, such attempt could
result in losses to the Securityholders or an acceleration of the repayment
of the Securities. The Company will be obligated to repurchase any Contract
originated by the Company and currently in the related Trust Property if
there is a breach of the Company's representations and warranties that
materially and adversely affects the interests of the Trust in such Contract
and such breach has not been cured.
SECURITY INTERESTS. The transfer of the Receivables by the Company to the
Trustee pursuant to the related Pooling Agreement, Indenture or Trust Agreement,
the perfection of the security interests in the Receivables and the enforcement
of rights to realize on the Vehicles as collateral for the Receivables are
subject to a number of federal and state laws, including the UCC as in effect in
various states. As specified in each Prospectus Supplement, the Servicer will
take such action as is required to perfect the rights of the Trustee in the
Receivables. If, through inadvertence or otherwise, a third party were to
purchase (including the taking of a security interest in) a Receivable for new
value in the ordinary course of its business, without actual knowledge of the
Trust's interest, and take possession of a Receivable, the purchaser would
acquire an interest in such Receivable superior to the interest of the Trust. As
further specified in each Prospectus Supplement, no action will be taken to
perfect the rights of the Trustee in proceeds of a VSI Insurance Policy (as
hereinafter defined) or of any other insurance policies covering individual
Vehicles or Obligors. Therefore, the rights of a third party with an interest in
such proceeds could prevail against the rights of the Trust prior to the time
such proceeds are deposited by the Servicer into a Trust Account (as hereinafter
defined). See "Certain Legal Aspects of the Receivables".
Except to the extent specified in the related Prospectus Supplement, each
Contract will include a perfected security interest in the related Vehicle in
favor of the Trustee or the Company (and, if perfected in the name of the
Company, assigned pursuant to the related Pooling Agreement, Indenture or Trust
Agreement to the Trustee for the benefit of the Securityholders). However, to
the extent provided in the
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<PAGE>
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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<PAGE>
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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<PAGE>
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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NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and other state laws require a secured party to provide the Obligor
with reasonable notice of the date, time and place of any public sale and/or the
date after which any private sale of the collateral may be held. In addition,
some states also impose substantive timing requirements on the sale of
repossessed vehicles in certain circumstances and/or various substantive timing
and content requirements on such notices. In some states, under certain
circumstances after a financed vehicle has been repossessed, the Obligor may
redeem the collateral by paying the delinquent installments and other amounts
due. The Obligor has the right to redeem the collateral prior to actual sale or
entry by the secured party into a contract for sale of the collateral by paying
the secured party the unpaid principal balance of the obligation, accrued
interest thereon, reasonable expenses for repossessing, holding, and preparing
the collateral for disposition and arranging for its sale, plus, in some
jurisdictions, reasonable attorneys' fees and legal expenses or in some other
states, by payment of delinquent installments on the unpaid principal balance of
the related obligation.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the Vehicles generally will be applied first to
the expenses of resale and repossession and then to the satisfaction of the
indebtedness. In many instances, the remaining principal amount of such
indebtedness will exceed such proceeds. Under the UCC and laws applicable in
some states, a creditor is entitled to bring an action to obtain a deficiency
judgment from a debtor for any deficiency on repossession and resale of a motor
vehicle securing such debtor's loan; however, in some states, a creditor may not
seek a deficiency judgment from a debtor whose financed vehicle had an initial
cash sales price less than a specified amount, usually $3,000. Some states,
impose prohibitions or limitations or notice requirements on actions for
deficiency judgments. In addition to the notice requirement described above, the
UCC requires that every aspect of the sale or other disposition, including the
method, manner, time, place and terms, be "commercially reasonable". Generally,
courts have held that when a sale is not "commercially reasonable", the secured
party loses its right to a deficiency judgment. In addition, the UCC permits the
debtor or other interested party to recover for any loss caused by noncompliance
with the provisions of the UCC. Also, prior to a sale, the UCC permits the
debtor or other interested person to obtain an order mandating that the secured
party refrain from disposing of the collateral if it is established that the
secured party is not proceeding in accordance with the "default" provisions
under the UCC. However, the deficiency judgment would be a personal judgment
against the Obligor for the shortfall, and a defaulting Obligor can be expected
to have very little capital or sources of income available following
repossession. Therefore, in many cases, it may not be useful to seek a
deficiency judgment or, if one is obtained, it may be settled at a significant
discount or be uncollectible.
Occasionally, after resale of a vehicle and payment of all expenses and
indebtedness, there is a surplus of funds. In that case, the UCC requires the
creditor to remit the surplus to any holder of a subordinate lien with respect
to the vehicle or if no such lienholder exists or if there are remaining funds,
the UCC requires the creditor to remit the surplus to the Obligor under the
contract.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related regulations
impose substantial requirements upon creditors and servicers involved in
consumer finance. These laws include the Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Federal Trade Commission Act, the Fair Credit Reporting
Act, the Fair Debt Collection Practices Act, the Magnuson-Moss Warranty Act, the
Federal Reserve Board's Regulations B and Z, state adaptations of the Uniform
Consumer Credit Code, state motor vehicle retail installment sale acts, state
"lemon" laws and other similar laws. In addition, the laws of certain states
impose finance charge ceilings and other restrictions on consumer transactions
and require contract disclosures in addition to those required under federal
law. These requirements impose specific statutory liabilities upon creditors who
fail to comply with their provisions. In some cases, this liability could affect
the ability of an assignee such as the Trustee to enforce consumer finance
contracts such as the Receivables.
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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.
<TABLE>
<S> <C>
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
</TABLE>
50
<PAGE>
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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 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-11
Use of Proceeds..................................... S-13
The Servicer........................................ S-13
The Seller.......................................... S-13
The Trust........................................... S-14
The Trust Property.................................. S-15
AmerCredit's Automobile Financing Program........... S-16
The Receivables..................................... S-18
Yield and Prepayment Considerations................. S-22
The Insurer......................................... S-28
Description of the Notes............................ S-30
Description of the Purchase Agreements and the Trust
Documents......................................... S-32
The Policy.......................................... S-41
Certain Federal Income Tax Consequences............. S-43
State Tax Considerations............................ S-46
ERISA Considerations................................ S-46
Legal Investment.................................... S-46
Ratings............................................. S-47
Underwriting........................................ S-47
Experts............................................. S-48
Legal Opinions...................................... S-48
Index of Defined Terms.............................. S-49
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>
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UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE SECURITIES DESCRIBED IN THIS PROSPECTUS
SUPPLEMENT, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
$250,000,000
AMERICREDIT AUTOMOBILE
RECEIVABLES TRUST 1997-B
$68,000,000 CLASS A-1 5.79%
ASSET BACKED NOTES
$96,250,000 CLASS A-2 6.36%
ASSET BACKED NOTES
$85,750,000 CLASS A-3 6.67%
ASSET BACKED NOTES
AFS FUNDING CORP.
SELLER
[LOGO]
SERVICER
--------------------------
PROSPECTUS SUPPLEMENT
----------------------------
BEAR, STEARNS & CO. INC.
CREDIT SUISSE FIRST BOSTON
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