<PAGE>
RULE NO. 424(b)(5)
REGISTRATION NO. 333-63565
PROSPECTUS SUPPLEMENT
(To Prospectus dated October 26, 1998)
$625,000,000 ASSET BACKED NOTES
AMERICREDIT AUTOMOBILE RECEIVABLES TRUST 1998-D
AFS FUNDING CORP.
Seller
[LOGO APPEARS HERE OF AMERICREDIT]
Servicer
THE TRUST--
. The notes will be issued by a trust.
CONSIDER
CAREFULLY . The sources for payment of the notes are a pool of
THE RISK auto loans held by the issuing trust, cash held by
FACTORS the issuing trust and a financial guaranty
BEGINNING ON insurance policy issued by:
PAGE S-11 OF
THIS
PROSPECTUS
SUPPLEMENT
AND PAGE 14
OF THE
PROSPECTUS.
[LOGO APPEARS HERE OF FSA]
THE NOTES--
. There are four classes of notes:
The notes <TABLE>
are asset- <CAPTION>
backed notes INITIAL PRINCIPAL
issued by a CLASS AMOUNT INTEREST RATE
trust. The --------- ----------------- -------------
notes are <S> <C> <C>
not Class A-1 $130,000,000 5.199%
interests in Class A-2 $240,000,000 LIBOR + .35%
or Class A-3 $100,000,000 LIBOR + .45%
obligations Class A-4 $155,000,000 LIBOR + .60%
of </TABLE>
AmeriCredit
or any
AmeriCredit
affiliate.
. Interest and principal on the notes are scheduled
to be paid monthly, on the 5th day of the month.
The first scheduled distribution date is December
7, 1998.
This
prospectus THE OFFERING--
supplement
may be used
to offer and
sell the
notes only
if
accompanied
by the
prospectus.
<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
CLASS PUBLIC PRICE(1) DISCOUNTS AMERICREDIT(1)(2)
----- --------------- ------------- -----------------
<S> <C> <C> <C>
A-1 100% 0.17% 99.83%
A-2 100% 0.24% 99.76%
A-3 100% 0.27% 99.73%
A-4 100% 0.31% 99.69%
Total $625,000,000.00 $1,547,500.00 $623,452,500.00
</TABLE>
-------
(1) Plus accrued interest, if any, from November 5,
1998.
(2) Before deducting expenses, estimated to be
$1,200,000.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON
NATIONSBANC MONTGOMERY SECURITIES LLC
The date of this Prospectus Supplement is October 29, 1998
<PAGE>
IMPORTANT NOTICE ABOUT THE INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We provide information to you about the notes in two separate documents
that progressively provide more detail: (1) the accompanying prospectus, which
provides general information, some of which may not apply to your series of
notes, and (2) this prospectus supplement, which describes the specific terms of
your series of notes.
This prospectus supplement does not contain complete information about the
offering of the notes. Additional information is contained in the prospectus.
You are urged to read both this prospectus supplement and the prospectus in
full. We cannot sell the notes to you unless you have received both this
prospectus supplement and the prospectus.
IF THE TERMS OF YOUR SERIES OF NOTES VARY BETWEEN THIS PROSPECTUS
SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS, YOU SHOULD RELY ON THE INFORMATION
IN THIS PROSPECTUS SUPPLEMENT.
We include cross-references in this prospectus supplement and the
accompanying prospectus to captions in these materials where you can find
further related discussions. The following table of contents and the table of
contents included in the accompanying prospectus provide the pages on which
these captions are located.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
AmeriCredit Financial Services, Inc. has filed with the Securities and
Exchange Commission a registration statement under the Securities Act of 1933,
as amended, with respect to the notes offered pursuant to this prospectus
supplement. This prospectus supplement and the prospectus, which form a part of
the registration statement, omit certain information contained in such
registration statement pursuant to the rules and regulations of the Commission.
You may inspect and copy the registration statement at the Public Reference Room
at the Commission at 450 Fifth Street, N.W., Washington, D.C. and the
Commission's regional offices at Seven World Trade Center, 13th Floor, New York,
New York 10048 and Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. You can obtain copies of such materials at
prescribed rates from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. In addition, the Commission
maintains a site on the World Wide Web containing reports, proxy materials,
information statements and other items. The address is http://www.sec.gov.
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. and its subsidiaries included
in, or as exhibits to, the following documents which have been filed with the
Commission by Financial Security Assurance Holdings Ltd., are hereby
incorporated by reference in this prospectus supplement:
(a) Annual Report on Form 10-K for the year ended December 31, 1997,
(b) Quarterly Report on Form 10-Q for the period ended March 31, 1998, and
(c) Quarterly Report on Form 10-Q for the period ended June 30, 1998.
All financial statements of Financial Security Assurance Inc., included in
documents filed by Financial Security Assurance Holdings Ltd. pursuant to
Section 13(a), 13(c), 14, or 15(d) of
S-2
<PAGE>
the Securities and Exchange Act of 1934 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.
AmeriCredit Financial Services, Inc. will provide without charge to any
person to whom this prospectus supplement is delivered, upon the oral or written
request of such person, a copy of any or all of the foregoing financial
statements incorporated herein by reference. Requests for such copies should be
directed to: AmeriCredit Financial Services Inc., 200 Bailey Avenue, Fort Worth,
Texas 76107-1220; telephone (817) 332-7000.
AmeriCredit Financial Services, Inc. on behalf of the Trust hereby
undertakes that, for purposes of determining any liability under the Securities
Act of 1933, each filing of the issuing trust's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act and each filing of the
financial statements of Financial Security Assurance Inc. included in or as an
exhibit to the annual report of Financial Security Assurance Holdings Ltd. filed
pursuant to Section 13(a) or Section 15(d) of the Securities and Exchange Act of
1934 that is incorporated by reference in the registration statement 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>
TABLE OF CONTENTS
Page
----
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE......................... 2
SUMMARY................................................................. 6
RISK FACTORS............................................................ 11
THE SERVICER............................................................ 13
THE SELLER.............................................................. 13
THE TRUST............................................................... 14
General............................................................... 14
The Owner Trustee..................................................... 14
The Indenture Trustee................................................. 14
THE TRUST PROPERTY...................................................... 14
AMERICREDIT'S AUTOMOBILE FINANCING PROGRAM.............................. 16
THE RECEIVABLES......................................................... 17
General............................................................... 17
Eligibility Criteria.................................................. 17
Composition........................................................... 18
YIELD AND PREPAYMENT CONSIDERATIONS..................................... 23
Delinquency and Loan Loss Information................................. 28
THE INSURER............................................................. 29
General............................................................... 29
Reinsurance........................................................... 29
Rating of Claims-Paying Ability....................................... 30
Capitalization........................................................ 30
Insurance Regulation.................................................. 30
DESCRIPTION OF THE NOTES................................................ 31
General............................................................... 31
Distribution Dates.................................................... 31
Payments of Interest.................................................. 31
Determination of LIBOR................................................ 32
Payments of Principal................................................. 33
Mandatory Redemption.................................................. 34
Optional Redemption................................................... 34
Events of Default..................................................... 34
DESCRIPTION OF THE PURCHASE AGREEMENTS AND THE TRUST DOCUMENTS......... 35
Sale and Assignment of Receivables.................................... 35
Accounts.............................................................. 36
Servicing Compensation and Trustees' Fees............................. 37
Certain Allocations................................................... 37
Distributions......................................................... 38
Statements to Noteholders............................................. 43
Credit Support........................................................ 44
Servicer Termination Event............................................ 44
Rights Upon Servicer Termination Event................................ 46
Waiver of Past Defaults............................................... 46
Amendment............................................................. 46
THE POLICY.............................................................. 47
Other Provisions of the Policy........................................ 48
CERTAIN FEDERAL INCOME TAX CONSEQUENCES................................. 49
Tax Characterization of the Trust..................................... 49
Tax Consequences to Holders of the Notes.............................. 49
STATE TAX CONSIDERATIONS................................................ 52
ERISA CONSIDERATIONS.................................................... 52
LISTING AND GENERAL INFORMATION......................................... 53
LEGAL INVESTMENT........................................................ 54
RATINGS................................................................. 54
UNDERWRITING............................................................ 54
EXPERTS................................................................. 55
LEGAL OPINIONS.......................................................... 56
REPORT OF INDEPENDENT ACCOUNTANTS....................................... 57
S-4
<PAGE>
Page
----
INDEX OF DEFINED TERMS.................................................. 60
ANNEX I GLOBAL
CLEARANCE, SETTLEMENT
AND TAX
DOCUMENTATION
PROCEDURES............................................................ A-1
Initial Settlement.................................................... A-1
Secondary Market Trading.............................................. A-1
Certain U.S. Federal Income Tax
Documentation Requirements......................................... A-3
S-5
<PAGE>
SUMMARY
. This summary highlights selected information from this prospectus supplement
and does not contain all of the information that you need to consider in
making your investment decision. To understand all of the terms of the
offering of the notes, read carefully this entire prospectus supplement and
the accompanying prospectus.
. This summary provides an overview of certain calculations, cash flows and
other information to aid your understanding and is qualified by the full
description of these calculations, cash flows and other information in this
prospectus supplement and the accompanying prospectus.
. You can find a listing of the pages where capitalized terms used in this
summary are defined under the caption "Index of Defined Terms" beginning on
page S-57 in this prospectus supplement.
PARTIES
THE TRUST
AmeriCredit Automobile Receivables Trust 1998-D is a Delaware business trust.
The trust will issue the notes and be liable for their payment. The issuing
trust's principal asset will be a pool of auto loans.
SELLER
AFS Funding Corp. is a Nevada corporation which is a wholly-owned special-
purpose subsidiary of AmeriCredit Financial Services, Inc. AFS Funding Corp.
will sell the auto loans to the issuing trust.
SERVICER
AmeriCredit Financial Services, Inc. is a Delaware corporation. AmeriCredit
Financial Services, Inc. will service the auto loans held by the issuing trust.
THE INSURER
Financial Security Assurance Inc. is a New York financial guaranty insurance
company. Financial Security Assurance Inc. will issue a policy, which will
guarantee the payment of timely interest and principal due on the notes but only
as set forth in the section of this prospectus supplement titled "The Policy."
THE TRUSTEE
Bank One, N.A. is a national banking association. Bank One, N.A. will be the
trust collateral agent, the indenture trustee and the backup servicer.
DATES
STATISTICAL CALCULATION DATE
. October 16, 1998. This is the date used for preparing the statistical
information used in this prospectus supplement.
INITIAL CUTOFF DATE
. November 1, 1998. The issuing trust will receive payments due on, or received
with respect to, the auto loans after this date.
CLOSING DATE
. November 5, 1998.
DESCRIPTION OF THE SECURITIES
GENERAL
The issuing trust will issue four classes of its asset backed notes. The notes
are designated as the "Class A-1 Notes-", the "Class A-2 Notes-", the "Class A-3
Notes-" and the "Class A-4 Notes-".
S-6
<PAGE>
Each class of notes will have the initial principal amount and interest rate set
forth in the following table. The dates on which the final payment of principal
and interest on each class of notes is scheduled to be made are also set forth
in the following table.
FINAL
INITIAL NOTE SCHEDULED
PRINCIPAL INTEREST DISTRIBUTION
CLASS BALANCE RATE DATE
- ----- ------------ -------- ------------
A-1 $130,000,000 5.199% November
1999
A-2 $240,000,000 LIBOR + April 2002
.35%
A-3 $100,000,000 LIBOR + January 2003
.45%
A-4 $155,000,000 LIBOR + March 2005
.60%
- ------------------------
LIBOR is the rate for deposits in U.S. dollars for a one-month period which
appears on the Dow Jones Telerate Page 3750 (or similar replacement page) as of
11:00 a.m., London time, on the related LIBOR determination date.
LIBOR will be determined on the following dates:
. November 3, 1998, for the period from the day of the closing to the first
distribution date; and
. thereafter, the second London business day prior to the prior distribution
date.
The notes will initially be issued in book-entry form only. The notes will be
issued in minimum denominations of $1,000 and multiples of $1,000 in excess
thereof.
You may hold your notes through The Depository Trust Company in the United
States or Cedel Bank, societe anonyme or in the Euroclear System in Europe.
Application will be made to list the notes on the Luxembourg Stock Exchange.
The notes will be secured solely by the pool of auto loans and the other assets
of the issuing trust which are described under the section entitled "The Trust
Assets."
DISTRIBUTION DATES
. When AmeriCredit Financial Services, Inc. is the servicer:
The distribution date will be the 5th day of each month, or, if such day is
not a business day, on the next succeeding business day, commencing on
December 7, 1998.
. If AmeriCredit Financial Services, Inc. is not the servicer:
The distribution date will become the twelfth day of each month, or if such
twelfth day is not a business day, the next following business day.
. Insured distributions:
Financial Security Assurance Inc. will make payment of any unpaid interest
and principal due on the notes on the twelfth day of each month, or if such
twelfth day is not a business day, the next following business day.
. The record date for all distribution dates is the close of business on the
business day immediately preceding such distribution date.
INTEREST
Interest on the notes of each class will accrue at the applicable interest rate
from a distribution date to the day before the next distribution date. In the
case of the first distribution date, interest begins to accrue on the day of the
closing.
Interest on the notes will be calculated on an "actual/360" basis.
PRINCIPAL
. Calculation:
S-7
<PAGE>
Principal of the notes will be payable on each distribution date in an amount
equal to (1) 100% of the principal amortization which occurred in the auto
loan pool during the prior calendar month, plus (2) the amount of excess
interest collected on the auto loans during the prior calendar month after
paying interest on the notes and other expenses, which is to be used to pay
principal on the notes, if any, for the calendar month preceding such
distribution date as described herein.
SEQUENTIAL PAY FEATURE:
. The classes of notes are "sequential pay" classes which will receive the
amount to be paid as principal to the noteholders on each distribution date
as follows:
- first, the Class A-1 Notes will be paid off;
- once the Class A-1 Notes are paid off, the Class A-2 Notes will begin to
amortize, until they are paid off;
- once the Class A-2 Notes are paid off, the Class A-3 Notes will begin to
amortize, until they are paid off; and
- once the Class A-3 Notes are paid off, the Class A-4 Notes will begin to
amortize, until they are paid off.
In addition, the outstanding principal amount of the notes of any class, to
the extent not previously paid, will be payable on the respective final
scheduled distribution date for such class (and, if not paid in full on such
date, will be paid on the twelfth day of the month of such final scheduled
distribution date).
THE TRUST ASSETS
GENERAL
The issuing trust's assets will include:
. certain motor vehicle retail installment sale contracts, secured by new and
used automobiles, light duty trucks and vans;
. certain monies received thereunder after November 1, 1998;
. an assignment of the security interests in the vehicles securing the auto
loan pool;
. the related files;
. all rights to proceeds from claims on certain physical damage, credit life
and disability insurance policies covering the vehicles or the obligors;
. all rights to liquidation proceeds with respect to the auto loan pool;
. an assignment of the rights of AFS Funding Corp. against dealers under
agreements between AmeriCredit Financial Services, Inc. and such dealers;
. certain bank accounts;
. all proceeds of the foregoing; and
. certain rights under the principal transaction documents for this offering.
THE AUTO LOAN POOL
GENERAL
The auto loans consist of motor vehicle retail installment sale contracts
originated by dealers and then acquired by AmeriCredit Financial Services, Inc.
pursuant to its contract acquisition program. The motor vehicle retail
installment sale contracts consist primarily of contracts with individuals with
less than perfect credit due to various factors, including, among other things,
the manner in which such individuals have handled previous credit, the limited
extent of their prior credit history and/or their limited financial resources.
STATISTICAL INFORMATION
The statistical information in this prospectus supplement is based on the auto
loans in the pool as of October 16, 1998. The statistical distribution of the
characteristics of the auto
S-8
<PAGE>
loan pool as of November 1, 1998 varies somewhat from the statistical
distribution of such characteristics as of October 16, 1998 as presented herein,
although such variance will not be material.
. As of October 16, 1998 the auto loans in the pool have:
- an aggregate principal balance of $388,284,840.60;
- a weighted average annual percentage rate of approximately 18.31%;
- a weighted average original maturity of approximately 58 months;
- a weighted average remaining maturity of approximately 57 months; and
- a remaining term of not more than 72 months and not less than 10
months (each).
. As of November 1, 1998 the auto loans in the pool are expected to have an
aggregate principal balance of approximately $468,750,000.
PRE-FUNDING FEATURE
Approximately $156,250,000 of the proceeds of the notes will be held by Bank
One, N.A. in an account which is formed solely to hold this money, and used to
purchase additional auto loans. The issuing trust will purchase from AFS
Funding Corp. additional auto loans from time to time on or before January 31,
1999, from funds on deposit in this account.
The auto loans acquired by the issuing trust during the period between the day
of the closing and January 31, 1999 will also have been originated by
AmeriCredit Financial Services, Inc. The characteristics of the subsequently-
acquired auto loans will not differ to any great extent from the auto loans
acquired by the issuing trust on the day of the closing.
THE INSURANCE POLICY
On the day of the closing, Financial Security Assurance Inc. will issue a
financial guaranty insurance policy for the benefit of the noteholders.
Pursuant to this policy, Financial Security Assurance Inc. will unconditionally
and irrevocably guarantee the payments of interest and principal with respect to
the notes required to be made during the term of such policy.
In the event that, on any distribution date, the noteholders did not receive the
full amount of the payment then due to them, such shortfall (together with, in
the case of an interest shortfall, interest thereon at the related interest
rate) is due and payable and will be funded on the twelfth day of such month
either from an account which holds money for this purpose or from the proceeds
of a drawing under the policy.
OPTIONAL REDEMPTION
The Class A-4 Notes, if still outstanding, may be redeemed in whole, but not in
part, on any distribution date on which AmeriCredit Financial Services, Inc.
exercises its "clean-up call" option to purchase the auto loan pool. This can
only occur after the pool balance declines to 10% or less of its original level.
The redemption price is equal to the unpaid principal amount of the notes of
each such class plus accrued and unpaid interest thereon.
MANDATORY REDEMPTION
IF PRE-FUNDING ACCOUNT IS NOT DEPLETED
Each class of notes will be redeemed in part in the event that any portion of
the approximately $156,250,000 deposited in a segregated account with Bank One,
N.A. remains on deposit in such account on January 31, 1999. 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
S-9
<PAGE>
class of notes) of the amount remaining in such account on January 31, 1999.
However, if the amount to be redeemed is $100,000 or less, such amount
will be applied to the "sequential pay" notes in accordance with their
"sequential pay" feature, and not pro rata, to reduce the outstanding principal
--- ----
balance of the class of notes then entitled to receive distributions of
principal.
UPON EVENT OF DEFAULT
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 Financial
Security Assurance Inc. is not in default, the power to declare an event of
default will be held by Financial Security Assurance Inc. In the case of such
an event of default, the notes will automatically be accelerated and subject to
immediate payment at par. The policy issued by Financial Security Assurance
Inc. does not guarantee payment of any amounts that become due on an accelerated
basis, unless Financial Security Assurance Inc. elects, in its sole discretion,
to pay such amounts in whole or in part.
RATING OF THE NOTES
The notes must receive at least the following ratings from Standard & Poor's, a
division of the McGraw-Hill Companies, Inc. and Moody's Investors Service, Inc.
in order to be issued:
CLASS RATING
- ---------- ----------------------------
S&P MOODY'S
- ---------- ----------- -------------
A-1 A-1+ P-1
A-2 AAA Aaa
A-3 AAA Aaa
A-4 AAA Aaa
S-10
<PAGE>
RISK FACTORS
You 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:
IF THE ISSUING TRUST DOES NOT USE ALL OF THE MONEY IN THE PRE-FUNDING
ACCOUNT A MANDATORY REDEMPTION OF A PORTION OF THE NOTES COULD RESULT.
If the issuing trust has not used all of the money deposited in the pre-
funding account to purchase additional auto loans by January 31, 1999, then the
noteholders will receive a prepayment of principal in an amount equal to the
unused amount. Any reinvestment risk from the prepayment of the notes from such
unused amount will be borne by the noteholders.
AMERICREDIT FINANCIAL SERVICES, INC. MAY NOT BE ABLE TO ORIGINATE
SUFFICIENT AUTO LOANS TO USE ALL MONEYS IN THE PRE-FUNDING ACCOUNT.
The ability of AmeriCredit Financial Services, Inc. to originate sufficient
additional auto loans may be affected by a variety of social and economic
factors including: interest rates, unemployment levels, the rate of inflation
and consumer perception of economic conditions generally. If AmeriCredit
Financial Services, Inc. does not originate sufficient additional auto loans
then the money deposited in the pre-funding account will not be used up and a
mandatory redemption of a portion of the notes could result.
THE RATE AT WHICH THE NOTES WILL AMORTIZE CANNOT BE PREDICTED.
All of the auto loans in the pool are prepayable at any time. The rate of
prepayments on the auto loans may be influenced by a variety of economic, social
and other factors, including the fact that a consumer obligor generally may not
sell or transfer the related financed vehicle securing an auto loan without the
consent of AmeriCredit Financial Services, Inc. In addition, under certain
circumstances, AFS Funding Corp. and AmeriCredit Financial Services, Inc. are
obligated to purchase auto loans pursuant to a sale and servicing agreement as a
result of breaches of certain representations and/or covenants. The
overcollateralization feature of the issuing trust results in accelerated
principal payments to the noteholders, amortizing the notes more quickly than
the auto loan pool. AmeriCredit Financial Services, Inc. also has the right,
subject to certain conditions, to purchase the auto loans 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 auto loans will be borne
entirely by the noteholders.
GEOGRAPHIC CONCENTRATION OF AUTO LOANS MAY INCREASE CONCENTRATION RISKS.
Obligors with respect to approximately 14.20% of the auto loans were
located in California, obligors with respect to approximately 9.04% of the auto
loans were located in Texas, and obligors with respect to approximately 7.93% of
the auto loans were located in Florida as of October 16, 1998 (based on
remaining principal balance and mailing address of the obligors). Adverse
economic conditions or other factors affecting any of these states could
increase the delinquency or loan loss experience of the issuing trust with
respect to the auto loans.
THE NOTES ARE ASSET-BACKED DEBT AND THE ISSUING TRUST HAS ONLY LIMITED
ASSETS.
The sole sources for repayment of the notes are payments on the auto loans,
amounts on deposit in the pre-funding account, other cash accounts held by Bank
One, N.A. and payments
S-11
<PAGE>
made under the insurance policy. The money in the pre-funding account will be
used solely to purchase additional auto loans and is not available to cover
losses on the auto loan pool. The capitalized interest account is designed to
cover obligations of the issuing trust relating to that portion of its assets
not invested in the auto loan pool and is not designed to provide protection
against losses on the auto loan pool. Similarly, although the insurance policy
will be available on the twelfth day of each month to cover shortfalls in
distributions of the payments due on the related distribution date, if Financial
Security Assurance Inc. defaults in its obligations under the insurance policy,
the issuing trust will depend on current distributions on the auto loan pool and
amounts, if any, available in certain collateral accounts maintained for the
benefit of Financial Security Assurance Inc. to make payments on the notes.
RATINGS ON NOTES ARE NOT GUARANTEED TO REMAIN IN PLACE.
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 Financial
Security Assurance Inc., 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 MAY RESULT IN AN ACCELERATION.
Upon the occurrence of an event of default under the indenture (so long as
Financial Security Assurance Inc. shall not have defaulted and such default is
not continuing), Bank One, N.A., as trust collateral agent, will continue to
submit claims under the insurance policy as necessary in accordance with the
terms thereof to enable the issuing trust to continue to make payments due with
respect to the notes on the twelfth day of each month. However, following the
occurrence of an event of default, Financial Security Assurance Inc. may, at its
option, elect to cause the liquidation of the assets of the issuing trust, in
whole or in part, and pay all or any portion of the outstanding amount of the
notes, plus accrued interest thereon.
S-12
<PAGE>
THE SERVICER
AmeriCredit Financial Services, Inc. (the "Servicer" or "AmeriCredit") is a
wholly-owned subsidiary of AmeriCredit Corp. The Servicer was incorporated in
Delaware on July 22, 1992. AmeriCredit purchases and services motor vehicle
retail installment sale contracts ("Receivables") secured by new and used
automobiles, light duty trucks and vans financed thereby (the "Financed
Vehicles"), 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 a sale and
servicing agreement, dated as of November 1, 1998 (the "Sale and Servicing
Agreement"), among the Trust, the Seller, the Servicer and Bank One, N.A. (the
"Trust Collateral Agent" and "Backup Servicer") 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 reissued 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
AFS Funding Corp. (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 this transaction that are
intended to ensure that a bankruptcy of AmeriCredit will not result in
consolidation of the assets and liabilities of the Seller with those of
AmeriCredit. The Seller has received a legal opinion 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 a bankruptcy of AmeriCredit. However, there can be no assurance
that a court would not conclude that the assets and liabilities of the Seller
should be consolidated with those of AmeriCredit. If a court were to reach such
a conclusion, or a filing were made under any bankruptcy or 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.
S-13
<PAGE>
THE TRUST
GENERAL
The Issuer, AmeriCredit Automobile Receivables Trust 1998-D (the "Trust" or
the "Issuer"), 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 Financial Security Assurance
Inc. (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), the Owner Trustee (the "Owner Trustee") under the
Trust Agreement dated as of October 23, 1998, as amended as of November 1, 1998,
between the Seller and the Owner Trustee (the "Trust Agreement"), is a Delaware
banking corporation and its principal offices are located at 1011 Centre Road,
Suite 200, Wilmington, Delaware 19805. 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
Bank One, N.A. is the Indenture Trustee (the "Indenture Trustee") under the
Indenture dated as of November 1, 1998, among the Trust and the Indenture
Trustee (the "Indenture"). Bank One, N.A. is a national banking association,
the principal offices of which are located at 100 East Broad Street, Columbus,
Ohio 43215.
THE TRUST PROPERTY
The property of the Trust (the "Trust Property") will include, among other
things, the following: (a) motor vehicle retail installment sale contracts (the
"Initial Receivables") secured by new and used automobiles, light duty trucks
and vans (the "Initial Financed Vehicles"); (b) certain monies received
thereunder (i) with respect to the Initial Receivables, after November 1,
S-14
<PAGE>
1998 (the "Initial Cutoff Date") or (ii) with respect to the Subsequent
Receivables, after the related cutoff date (each a "Subsequent Cutoff Date");
(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 and CP
Funding Corp. 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) the Receivables
Files; and (h) certain other rights under the Trust Documents.
The Trust Property also will include an assignment of the Seller's rights
against AmeriCredit and CP Funding Corp., a Nevada corporation which is a
wholly-owned subsidiary of AmeriCredit ("CP Funding"), under a purchase
agreement upon the occurrence of certain breaches of representations and
warranties. The Initial Receivables will be purchased by the Seller from
AmeriCredit and CP Funding pursuant to a purchase agreement (the "Purchase
Agreement") between the Seller, CP Funding 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 and 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 January
31, 1999, from funds on deposit in the Pre-Funding Account. The Subsequent
Receivables will be purchased by the Seller from AmeriCredit and CP Funding
pursuant to one or more subsequent purchase agreements (each, a "Subsequent
Purchase Agreement") between the Seller, CP Funding and AmeriCredit. The
purchase by the Trust of the Subsequent Receivables is subject to the
satisfaction of certain conditions. The Initial Receivables and the Subsequent
Receivables are hereinafter referred to as the "Receivables," and the Initial
Financed Vehicles and the Subsequent Financed Vehicles are hereinafter referred
to as the "Financed Vehicles."
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 calendar month (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 calendar month and all losses,
including Cram Down Losses, realized on Receivables liquidated during such
calendar month.
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 and 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 consumer purchases of used autos. Of the Contracts purchased
by AmeriCredit during the year ended June 30, 1998, approximately 90% were
originated by manufacturer-franchised dealers with used auto operations and 10%
by independent dealers specializing in used auto sales; of the Contracts
purchased in the three months ended September 30, 1998, the respective
percentages were 92% and 8%. AmeriCredit purchased Contracts from 9,204 dealers
during the year ended June 30, 1998 and from 6,981 dealers during the three
months ended September 30, 1998.
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.
As of September 30, 1998, AmeriCredit operated 149 branch offices in 41
states.
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 46 states.
See "AmeriCredit's Automobile Financing Program" in the prospectus for a
description of AmeriCredit's contract acquisition, servicing and collection
practices.
S-16
<PAGE>
THE RECEIVABLES
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 Initial Cutoff Date,
of not more than 72 months; (ii) each Initial Receivable had an original
maturity of not more than 72 months; (iii) each Initial Receivable had a
remaining Principal Balance as of the Initial Cutoff Date of at least $250 and
not more than $30,000; (iv) each Initial Receivable has an Annual Percentage
Rate of at least 9% and not more than 30%; (v) no Initial Receivable was more
than 30 days past due as of the Initial 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 CP Funding and to sell to the Trust the Subsequent Receivables.
The aggregate Principal Balance of the Subsequent Receivables is anticipated by
AmeriCredit to equal approximately $156,250,000. 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 and CP
Funding. The purchase price will be withdrawn from the Pre-Funding Account and
paid to the Seller for payment to AmeriCredit and CP Funding.
Any conveyance of Subsequent Receivables is subject to the following
conditions, among others: (i) each such Subsequent Receivable and/or Subsequent
Financed Vehicle must satisfy the eligibility criteria specified under "The
Receivables" in the prospectus and the criteria set forth in clauses (i) through
(v) of the second preceding paragraph, in each case, as of the respective
Subsequent Cutoff Date of such Subsequent Receivable; (ii) the Insurer (so long
as no Insurer Default shall have occurred and be continuing) shall have approved
the transfer of such Subsequent Receivables to the Trust; (iii) neither
AmeriCredit, CP Funding 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, CP Funding and the Seller will
deliver certain opinions of counsel with respect to the validity of the
conveyance of such Subsequent Receivables; and (v) Standard & Poor's, a division
of the McGraw-Hill Companies, Inc. ("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
S-17
<PAGE>
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 annual percentage rate ("APR") of the Receivables in the
Trust is not less than 18%; (ii) the weighted average remaining term of the
Receivables on such Subsequent Cutoff Date is not greater than 72 months; and
(iii) not more than 35% of the Receivables have Obligors whose mailing addresses
are in Texas and California. As to clauses (i) and (ii) in the immediately
preceding sentence, such criteria will be based on the characteristics of the
Initial Receivables on the Initial Cutoff Date and the Receivables, including
the Subsequent Receivables, on the related Subsequent Cutoff Date, and as to
clause (iii) in the immediately preceding sentence, such criteria will be based
on the mailing addresses of the Obligors of the Initial Receivables on the
Initial Cutoff Date and the Subsequent Receivables on the related Subsequent
Cutoff Dates.
Except for the criteria described in the preceding paragraphs, there are no
required characteristics of the Subsequent Receivables. Therefore, following
the transfer of Subsequent Receivables to the Trust, the aggregate
characteristics of the entire pool of Receivables included in the Trust,
including the composition of the Receivables, the geographic distribution, the
distribution by remaining Principal Balance, the distribution by APR, the
distribution by remaining term and the distribution of the Receivables secured
by new and used vehicles, may vary from those of the Initial Receivables.
COMPOSITION
The statistical information presented herein is based on the Initial
Receivables as of October 16, 1998 (the "Statistical Calculation Date"). The
Initial Receivables have an aggregate Principal Balance of $388,284,840.60 as of
the Statistical Calculation Date and an aggregate Principal Balance of
approximately $468,750,000 as of the Initial Cutoff Date. The additional
Receivables represent Receivables acquired by AmeriCredit after the Statistical
Calculation Date but prior to the Initial Cutoff Date. In addition, as of the
Statistical Calculation Date as to which statistical information is presented
herein, some amortization has occurred prior to the Initial Cutoff Date. In
addition, certain Receivables included as of the Statistical Calculation Date
have prepaid in full or have been determined not to meet the eligibility
requirements and have not been included. As a result of the foregoing, the
statistical distribution of characteristics as of the Initial Cutoff Date varies
somewhat from the statistical distribution of such characteristics as of the
Statistical Calculation Date as presented herein, although such variance is not
material.
The composition and distribution by APR and geographic concentration of the
Initial Receivables Pool as of the Statistical Calculation Date are set forth in
the following tables:
S-18
<PAGE>
COMPOSITION OF THE INITIAL RECEIVABLES AS OF THE
STATISTICAL CALCULATION DATE
<TABLE>
<CAPTION>
NEW USED TOTAL
--------------------- ---------------------- ----------------
<S> <C> <C> <C>
Aggregate Principal Balance/(1)/ $99,240,653.97 $289,044,186.63 $388,284,840.60
Number of Receivables 6,388 23,135 29,523
Percent of Aggregate Principal 25.56% 74.44% 100.00%
Balance
Average Principal Balance $ 15,535.48 $ 12,493.81 $ 13,151.94
Range of Principal Balances ($285.62 to $29,939.69) ($325.80 to $29,939.01)
Weighted Average APR/(1)/ 16.86% 18.80% 18.31%
Range of APRs (9.77% to 25.00%) (9.50% to 29.00%)
Weighted Average Remaining Term 60 months 56 months 57 months
Range of Remaining Terms (24 to 72 months) (10 to 72 months)
Weighted Average Original Term 60 months 57 months 58 months
Range of Original Terms (24 to 72 months) (12 to 72 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.
S-19
<PAGE>
DISTRIBUTION OF THE INITIAL RECEIVABLES BY APR AS OF THE
STATISTICAL CALCULATION DATE
<TABLE>
<CAPTION>
AGGREGATE % OF AGGREGATE % OF TOTAL
PRINCIPAL PRINCIPAL NUMBER OF NUMBER OF
APR RANGE BALANCE(1) BALANCE(2) RECEIVABLES RECEIVABLES(2)
- ----------------- -------------------- -------------------- --------------- ---------------------
<S> <C> <C> <C> <C>
9.000 to 9.999% $ 2,461,642.34 0.63% 141 0.48%
10.000 to 10.999 1,811,016.24 0.47% 100 0.34%
11.000 to 11.999 4,120,471.92 1.06% 237 0.80%
12.000 to 12.999 16,098,020.49 4.15% 952 3.22%
13.000 to 13.999 13,478,277.00 3.47% 810 2.74%
14.000 to 14.999 13,977,569.26 3.60% 865 2.93%
15.000 to 15.999 25,499,210.90 6.57% 1,629 5.52%
16.000 to 16.999 24,327,567.17 6.27% 1,625 5.50%
17.000 to 17.999 44,396,194.48 11.43% 3,114 10.55%
18.000 to 18.999 81,121,573.40 20.89% 6,114 20.71%
19.000 to 19.999 37,874,808.87 9.75% 2,883 9.77%
20.000 to 20.999 40,048,877.73 10.31% 3,250 11.01%
21.000 to 21.999 50,079,104.83 12.90% 4,526 15.33%
22.000 to 22.999 15,790,056.84 4.07% 1,474 4.99%
23.000 to 23.999 14,249,146.31 3.67% 1,491 5.05%
24.000 to 24.999 2,109,716.94 0.54% 207 0.70%
25.000 to 25.999 594,778.19 0.15% 72 0.24%
26.000 to 26.999 90,268.21 0.02% 12 0.04%
27.000 to 27.999 80,371.40 0.02% 10 0.03%
28.000 to 28.999 25,402.35 0.01% 3 0.01%
29.000 to 29.999 50,765.73 0.01% 8 0.03%
--------------- ------ ------ ------
TOTAL $388,284,840.60 100.00% 29,523 100.00%
=============== ====== ====== ======
</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 STATISTICAL CALCULATION DATE
<TABLE>
<CAPTION>
AGGREGATE % OF AGGREGATE % OF TOTAL
PRINCIPAL PRINCIPAL NUMBER OF NUMBER OF
STATE BALANCE(1) BALANCE(2) RECEIVABLES RECEIVABLES(2)
- -------------- ---------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Alabama $ 5,289,565.73 1.36% 388 1.31%
Arizona 14,096,878.12 3.63% 1,107 3.75%
California 55,155,688.40 14.20% 3,978 13.47%
Colorado 4,822,725.34 1.24% 410 1.39%
Connecticut 3,531,752.44 0.91% 280 0.95%
Delaware 1,832,621.01 0.47% 139 0.47%
Florida 30,799,169.60 7.93% 2,300 7.79%
Georgia 14,017,960.85 3.61% 973 3.30%
Illinois 17,292,197.17 4.45% 1,308 4.43%
Indiana 3,965,730.08 1.02% 319 1.08%
Kansas 3,970,835.89 1.02% 302 1.02%
Kentucky 6,044,389.27 1.56% 478 1.62%
Louisiana 3,074,180.44 0.79% 221 0.75%
Maryland 7,547,670.45 1.94% 535 1.81%
Massachusetts 6,040,191.70 1.56% 530 1.80%
Michigan 11,341,637.51 2.92% 884 2.99%
Minnesota 5,960,960.37 1.54% 487 1.65%
Mississippi 2,054,093.44 0.53% 145 0.49%
Missouri 6,308,951.79 1.62% 511 1.73%
Nevada 6,626,198.29 1.71% 492 1.67%
New Jersey 14,089,854.35 3.63% 1,091 3.70%
New Mexico 1,644,995.22 0.42% 122 0.41%
New York 19,513,039.44 5.03% 1,480 5.01%
North Carolina 11,145,960.88 2.87% 829 2.81%
Ohio 17,391,316.22 4.48% 1,376 4.66%
Oklahoma 4,676,555.47 1.20% 386 1.31%
Oregon 3,323,105.21 0.86% 261 0.88%
Pennsylvania 18,194,255.49 4.69% 1,437 4.87%
South Carolina 4,623,439.71 1.19% 339 1.15%
Tennessee 8,227,850.49 2.12% 596 2.02%
Texas 35,119,360.89 9.04% 2,664 9.02%
Utah 2,416,029.69 0.62% 198 0.67%
Virginia 15,642,702.93 4.03% 1,146 3.88%
Washington 8,897,895.89 2.29% 695 2.35%
West Virginia 2,141,869.48 0.55% 161 0.55%
Wisconsin 2,942,874.02 0.76% 240 0.81%
Other(3) 8,520,337.33 2.19% 715 2.42%
--------------- ------ ------ ------
TOTAL $388,284,840.60 100.00% 29,523 100.00%
=============== ====== ====== ======
</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 weighted 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 from 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 date on which the final distribution is scheduled
to be paid (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
S-22
<PAGE>
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 tables 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 three pools of Receivables with
the characteristics set forth in the following table; (ii) the Receivables
prepay in full at the specified constant percentage of ABS monthly, with no
defaults, losses or repurchases; (iii) each scheduled monthly payment on the
Receivables is made on the last day of each month and each month has 30 days;
(iv) the initial principal amount of each class of notes 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, 5.221%; Class A-2 Notes,
5.577%; Class A-3 Notes, 5.677%; and Class A-4 Notes, 5.827%; (vi) payments on
the notes are made on the 5th day of each month whether or not a Business Day;
(vii) the notes are purchased on November 6, 1998; (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 not 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>
ORIGINAL REMAINING
AGGREGATE TERM TO
PRINCIPAL ASSUMED MATURITY (IN MATURITY (IN
POOL BALANCE GROSS APR CUTOFFDATE MONTHS) MONTHS)
- ------------- ------------- ------------ ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
1 $468,750,000 18.31% 11/1/98 58 57
2 $131,250,000 18.31% 12/1/98 58 58
3 $ 25,000,000 18.31% 1/1/99 58 58
Total $625,000,000
============
</TABLE>
The ABS Table indicates, based on the assumptions set forth above, the
percentages of the initial principal amount of each class of notes that would be
outstanding after each of the Distribution Dates shown at various percentages of
ABS and the corresponding weighted average lives of such notes. The actual
characteristics and performance of the Receivables will differ from the
assumptions used in constructing the ABS Table. The assumptions used are
hypothetical and have been provided only to give a general sense of how the
principal cash flows might behave under varying prepayment scenarios. For
example, it is very unlikely that the Receivables will prepay at a constant
level of ABS until maturity, that all of the Receivables will prepay at the same
level of ABS or that the coupon rates on the notes will remain constant.
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-1 NOTES CLASS A-2 NOTES
-------------------------------------------- --------------------------------------------
DISTRIBUTION DATE 0.0% 1.0% 1.7% 2.5% 0.0% 1.0% 1.7% 2.5%
- -------------------- -------------------------------------------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Initial 100 100 100 100 100 100 100 100
12/5/98 93 90 87 84 100 100 100 100
1/5/99 85 77 71 64 100 100 100 100
2/5/99 75 63 54 43 100 100 100 100
3/5/99 66 49 37 23 100 100 100 100
4/5/99 56 35 20 2 100 100 100 100
5/5/99 47 21 3 0 100 100 100 91
6/5/99 37 8 0 0 100 100 93 80
7/5/99 27 0 0 0 100 97 84 70
8/5/99 17 0 0 0 100 90 76 59
9/5/99 8 0 0 0 100 82 67 50
10/5/99 0 0 0 0 99 76 60 42
11/5/99 0 0 0 0 95 71 55 35
12/5/99 0 0 0 0 92 67 49 28
1/5/00 0 0 0 0 89 62 43 21
2/5/00 0 0 0 0 86 57 37 14
3/5/00 0 0 0 0 82 53 31 7
4/5/00 0 0 0 0 79 48 26 0
5/5/00 0 0 0 0 76 43 20 0
6/5/00 0 0 0 0 72 39 15 0
7/5/00 0 0 0 0 69 34 10 0
8/5/00 0 0 0 0 66 30 4 0
9/5/00 0 0 0 0 62 25 0 0
10/5/00 0 0 0 0 58 21 0 0
11/5/00 0 0 0 0 55 16 0 0
12/5/00 0 0 0 0 51 12 0 0
1/5/01 0 0 0 0 47 7 0 0
2/5/01 0 0 0 0 43 3 0 0
3/5/01 0 0 0 0 40 0 0 0
4/5/01 0 0 0 0 36 0 0 0
5/5/01 0 0 0 0 32 0 0 0
6/5/01 0 0 0 0 27 0 0 0
7/5/01 0 0 0 0 23 0 0 0
8/5/01 0 0 0 0 19 0 0 0
9/5/01 0 0 0 0 15 0 0 0
10/5/01 0 0 0 0 11 0 0 0
11/5/01 0 0 0 0 6 0 0 0
12/5/01 0 0 0 0 2 0 0 0
1/5/02 0 0 0 0 0 0 0 0
2/5/02 0 0 0 0 0 0 0 0
3/5/02 0 0 0 0 0 0 0 0
4/5/02 0 0 0 0 0 0 0 0
5/5/02 0 0 0 0 0 0 0 0
6/5/02 0 0 0 0 0 0 0 0
7/5/02 0 0 0 0 0 0 0 0
8/5/02 0 0 0 0 0 0 0 0
9/5/02 0 0 0 0 0 0 0 0
10/5/02 0 0 0 0 0 0 0 0
11/5/02 0 0 0 0 0 0 0 0
12/5/02 0 0 0 0 0 0 0 0
1/5/03 0 0 0 0 0 0 0 0
2/5/03 0 0 0 0 0 0 0 0
3/5/03 0 0 0 0 0 0 0 0
4/5/03 0 0 0 0 0 0 0 0
5/5/03 0 0 0 0 0 0 0 0
Weighted Average 0.51 0.37 0.31 0.26 2.11 1.44 1.14 0.91
Life in Years(2)
</TABLE>
____________________________________
(1) The percentages in this table have been rounded to nearest whole number.
(2) The weighted average life of a note is determined by (i) multiplying the
amount of each principal payment on a note by the number of years from the
date of the issuance of the note to the related Distribution Date, (ii)
adding the results and (iii) dividing the sum by the related initial
principal amount of the note.
S-24
<PAGE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS ABS
PERCENTAGES/(1)/
<TABLE>
<CAPTION>
CLASS A-3 NOTES CLASS A-4 NOTES
- ---------------------- -------------------------- -------------------------
DISTRIBUTION DATE 0.0% 1.0% 1.7% 2.5% 0.0% 1.0% 1.7% 2.5%
- ---------------------- -------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Initial 100 100 100 100 100 100 100 100
12/5/98 100 100 100 100 100 100 100 100
1/5/99 100 100 100 100 100 100 100 100
2/5/99 100 100 100 100 100 100 100 100
3/5/99 100 100 100 100 100 100 100 100
4/5/99 100 100 100 100 100 100 100 100
5/5/99 100 100 100 100 100 100 100 100
6/5/99 100 100 100 100 100 100 100 100
7/5/99 100 100 100 100 100 100 100 100
8/5/99 100 100 100 100 100 100 100 100
9/5/99 100 100 100 100 100 100 100 100
10/5/99 100 100 100 100 100 100 100 100
11/5/99 100 100 100 100 100 100 100 100
12/5/99 100 100 100 100 100 100 100 100
1/5/00 100 100 100 100 100 100 100 100
2/5/00 100 100 100 100 100 100 100 100
3/5/00 100 100 100 100 100 100 100 100
4/5/00 100 100 100 100 100 100 100 100
5/5/00 100 100 100 85 100 100 100 100
6/5/00 100 100 100 69 100 100 100 100
7/5/00 100 100 100 54 100 100 100 100
8/5/00 100 100 100 40 100 100 100 100
9/5/00 100 100 98 25 100 100 100 100
10/5/00 100 100 86 12 100 100 100 100
11/5/00 100 100 74 0 100 100 100 99
12/5/00 100 100 62 0 100 100 100 90
1/5/01 100 100 50 0 100 100 100 82
2/5/01 100 100 39 0 100 100 100 74
3/5/01 100 97 28 0 100 100 100 66
4/5/01 100 87 17 0 100 100 100 59
5/5/01 100 77 7 0 100 100 100 52
6/5/01 100 67 0 0 100 100 98 45
7/5/01 100 57 0 0 100 100 91 39
8/5/01 100 47 0 0 100 100 85 32
9/5/01 100 37 0 0 100 100 79 27
10/5/01 100 27 0 0 100 100 73 21
11/5/01 100 18 0 0 100 100 67 16
12/5/01 100 8 0 0 100 100 62 11
1/5/02 93 0 0 0 100 99 56 6
2/5/02 82 0 0 0 100 93 51 2
3/5/02 71 0 0 0 100 88 46 1
4/5/02 60 0 0 0 100 82 42 0
5/5/02 48 0 0 0 100 76 37 0
6/5/02 37 0 0 0 100 70 33 0
7/5/02 25 0 0 0 100 65 29 0
8/5/02 13 0 0 0 100 59 25 0
9/5/02 0 0 0 0 100 54 21 0
10/5/02 0 0 0 0 92 49 18 0
11/5/02 0 0 0 0 84 44 15 0
12/5/02 0 0 0 0 76 39 12 0
1/5/03 0 0 0 0 67 34 10 0
2/5/03 0 0 0 0 59 29 8 0
3/5/03 0 0 0 0 50 24 6 0
4/5/03 0 0 0 0 41 20 4 0
5/5/03 0 0 0 0 33 15 3 0
6/5/03 0 0 0 0 24 11 1 0
7/5/03 0 0 0 0 14 6 1 0
8/5/03 0 0 0 0 5 2 0 0
9/5/03 0 0 0 0 3 1 0 0
10/5/03 0 0 0 0 0 0 0 0
Weighted Average Life in 3.52 2.77 2.21 1.74 4.37 3.96 3.39 2.60
Years(2)
</TABLE>
____________________________________
(1) The percentages in this table have been rounded to nearest whole number.
(2) The weighted average life of a note is determined by (i) multiplying the
amount of each principal payment on a note by the number of years from the
date of the issuance of the note to the related Distribution Date, (ii)
adding the results and (iii) dividing the sum by the related initial
principal amount of the note.
S-25
<PAGE>
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 SEPTEMBER 30, AT JUNE 30,
-------------------------------------------- -----------------------------------------------------
1998 1997 1998 1997
-------------------- ----------------------- ------------------------------ ---------------------
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
--------- ------ --------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio at end of 248,363 $2,716,891 133,888 $1,384,251 213,549 $2,302,516 112,847 $1,138,255
period(1)
Period of Delinquency
31-60 days(3) 16,123 170,236 9,663 95,360 12,325 126,743 7,761 73,956
61-90 days 4,288 44,436 2,558 25,162 2,929 30,248 2,164 20,213
91 days or more 4,557 47,966 4,318 39,940 5,173 47,016 3,467 31,012
Total Delinquencies(4) 24,968 $ 262,638 16,539 $ 160,462 20,427 $ 204,007 13,392 $ 125,181
Total Delinquencies as a 10.1% 9.7% 12.4% 11.6% 9.6% 8.9% 11.9% 11.0%
Percent of the Portfolio
</TABLE>
____________________________________
(1) All amounts and percentages are based on the Principal Balances of the
Receivables. Principal Balances include some portion of accrued interest.
All dollar amounts are in thousands of dollars.
(2) AmeriCredit considers a loan delinquent when an Obligor fails to make a
contractual payment by the due date. The period of delinquency is based on
the number of days payments are contractually past due.
(3) Amounts shown do not include loans which are less than 31 days delinquent.
(4) Financed Vehicles which have been repossessed but not yet liquidated are
considered delinquent accounts in the table above.
CREDIT LOSS EXPERIENCE
<TABLE>
<CAPTION>
THREE MONTHS ENDED FISCAL YEAR ENDED
SEPTEMBER 30, JUNE 30,
---------------------- -----------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Period-End Principal Outstanding(1) $2,716,891 $1,384,251 $2,302,516 $1,138,255
Average Month-End Amount Outstanding 2,507,140 1,259,022 1,649,416 792,155
During the Period(1)
Net Charge-Offs(2) 30,719 17,444 88,002 43,231
Net Charge-Offs as a Percentage of 4.5% 5.0% 3.8% 3.8%
Period-End Principal Outstanding
Net Charge-Offs as a Percent of Average 4.9% 5.5% 5.3% 5.5%
Month-End Amount Outstanding
</TABLE>
____________________________________
(1) All amounts and percentages are based on the Principal Balances of the
Receivables. Principal Balances include some portion of accrued interest.
All dollar amounts are in thousands of dollars.
(2) Net Charge-Offs equal Gross Charge-Offs minus Recoveries. Gross Charge-
Offs do not include unearned finance charges and other fees. Recoveries
include repossession proceeds received from the sale of repossessed
Financed Vehicles net of repossession expenses, refunds of unearned
premiums from credit life and credit accident and health insurance and
extended service contract costs obtained and financed in connection with
the vehicle financing and recoveries from Obligors on deficiency balances.
S-26
<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.,
MediaOne 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 from 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.
S-27
<PAGE>
RATING OF CLAIMS-PAYING ABILITY
Financial Security's insurance financial strength is rated "Aaa" by Moody's
Investors Service, Inc. Financial Security's insurer financial strength is
rated "AAA" by Standard & Poor's Ratings Services and Standard & Poor's
(Australia) Pty. Ltd. Financial Security's claims-paying ability is rated "AAA"
by Fitch IBCA, Inc. and Japan Rating and Investment Information, Inc. 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.
CAPITALIZATION
The following table sets forth the capitalization of Financial Security and
its wholly-owned subsidiaries on the basis of generally accepted accounting
principles as of June 30, 1998 (in thousands):
<TABLE>
<CAPTION>
JUNE 30, 1998
(UNAUDITED)
-------------
<S> <C>
Deferred Premium Revenue (net of prepaid reinsurance premiums)................... $ 457,615
Shareholders' Equity:
Common Stock.................................................................... 15,000
Additional Paid-In Capital...................................................... 614,067
Accumulated Other Comprehensive Income (net of deferred income taxes)........... 26,140
Accumulated Earnings............................................................ 294,418
----------
Total Shareholders' Equity 949,625
----------
Total Deferred Premium Revenue and Shareholders' Equity.......................... $1,407,240
==========
</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. Financial Security's financial
statements are included as exhibits to the Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q filed with the Commission by Holdings and may be
reviewed at the EDGAR website maintained by the Commission and at Holdings'
website, http://www.FSA.com. 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
S-28
<PAGE>
investments, payment of dividends, transactions with affiliates, mergers,
consolidations, acquisitions or sales of assets and incurrence of liabilities
for borrowings.
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 The
Depository Trust Company ("DTC") in the United States or Cedel Bank, societe
anonyme ("Cedel") or in the Euroclear System ("Euroclear") in Europe. See
"Description of the Notes -- Book-Entry Registration" in the prospectus and
Annex I hereto.
DISTRIBUTION DATES
For so long as AmeriCredit is the Servicer, payments of interest and
principal on the Notes will be made on the fifth day of each month (or, if such
fifth day is not a Business Day, on the next following Business Day; provided,
that such day for payment shall in no event be earlier than the third Business
Day of the month) (each, a "Distribution Date") commencing December 7, 1998.
Payments will be made to holders of record of the notes 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,
Ohio or New York are authorized or obligated to be closed.
The "Insured Distribution Date" will be the twelfth day of each month, or,
if such twelfth day is not a Business Day, the next following Business Day.
If the backup servicer or another successor servicer becomes the Servicer,
the "Distribution Date" will thereafter become the twelfth day of each month, or
if such twelfth day is not a Business Day, the next following Business Day
(i.e., the "Distribution Date" and the "Insured Distribution Date" will
thereafter be the same date).
The Final Scheduled Distribution Dates are as follows: for the Class A-1
Notes, the November 1999 Insured Distribution Date; for the Class A-2 Notes, the
April 2002 Insured Distribution Date; for the Class A-3 Notes, the January 2003
Insured Distribution Date; and for the Class A-4 Notes and the Class A-5 Notes,
the March 2005 Insured Distribution Date.
PAYMENTS OF INTEREST
Interest on the notes of each class will accrue at the applicable interest
rate from and including the most recent Distribution Date on which interest has
been paid (or, in the case of the first Distribution Date, from and including
November 5, 1998 (the "Closing Date") to, but excluding, the following
Distribution Date (each, an "Interest Period"). In the case of the first
Distribution Date, the Interest
S-29
<PAGE>
Period shall be 32 days. The interest which accrues during an Interest Period
shall accrue on the principal amount of the notes of each class outstanding as
of the end of the prior Distribution Date (or, in the case of the first
Distribution Date, as of the Closing Date); provided that if such principal
balance is further reduced by a payment of principal on the Insured Distribution
Date which immediately follows such prior Distribution Date, then such interest
shall accrue (i) from and including such prior Distribution Date to, but
excluding, such related Insured Distribution Date, on the principal balance
outstanding as of the end of the prior Distribution Date (or, in the case of the
first Distribution Date, as of the Closing Date) and (ii) from and including
such Insured Distribution Date, to, but excluding, the following Distribution
Date, on the principal balance outstanding as of the end of such Insured
Distribution Date. Interest on the notes for any Distribution Date due but not
paid on such Distribution Date will be due on the next Insured Distribution Date
together with, to the extent permitted by law, interest on such amount at the
applicable interest rate. The amount of interest distributable on the notes on
each Distribution Date will equal interest accrued during the related Interest
Period, plus any shortfall amount carried forward. Interest on the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 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 payments on the notes will be made from the Note Distribution
Amount (as defined herein) after payment of accrued and unpaid trustees' fees
and other administrative fees of the Trust and payment of the Servicing Fee.
See "Description of the Purchase Agreements and the Trust Documents --
Distributions" herein.
Interest on the Class A-2 Notes will accrue during each Interest Period at
a rate per annum equal to the sum of LIBOR plus .35%. Interest on the Class A-3
Notes will accrue during each Interest Period at a rate per annum equal to the
sum of LIBOR plus .45%. Interest on the Class A-4 Notes will accrue during each
Interest Period at a rate per annum equal to the sum of LIBOR plus .60%. Since
the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes bear interest
at a floating rate, which is uncapped, while the Receivables bear interest at a
fixed rate, the Trust will acquire an interest rate cap agreement from a
counterparty acceptable to the Insurer (the "Cap Agreement") for the purpose of
providing an additional source of funding.
DETERMINATION OF LIBOR
Pursuant to the Sale and Servicing Agreement, the Trust Collateral Agent
will determine LIBOR for purposes of calculating the interest rate for the Class
A-2 Notes, the Class A-3 Notes and the Class A-4 Notes for each given Interest
Period on the second business day prior to the commencement of each Interest
Period (each, a "LIBOR Determination Date"). For purposes of calculating
LIBOR, a business day means a business day and a day on which banking
institutions in the City of London, England are not required or authorized by
law to be closed.
"LIBOR" means, with respect to any Interest Period, the London interbank
offered rate for deposits in U.S. dollars having a maturity of one month
commencing on the related LIBOR Determination Date (the "Index Maturity") which
appears on Telerate Page 3750 as of 11:00 a.m., London time, on such LIBOR
Determination Date. If such rate does not appear on the Telerate page 3750, the
rate for that day will be determined on the basis of the rates at which deposits
in U.S. dollars, having the Index Maturity and in a principal amount of not less
than U.S. $1,000,000 are offered at approximately 11:00 a.m., London Time, on
such LIBOR Determination Date to prime banks in the London interbank market by
the Reference Banks. The Trust Collateral Agent will request the principal
London office of each of such Reference Banks to provide a quotation of its
rate. If at least two such quotations are provided, the rate for that day will
be the arithmetic mean, rounded upward, if necessary, to the nearest 1/100,000
of 1% (0.0000001), with five one-millionths of a percentage point rounded
upward, of all such quotations. If fewer than two such quotations are provided,
the rate for that day will be the
S-30
<PAGE>
arithmetic mean, rounded upward if necessary to the nearest 1/100,000 of 1%
(0.0000001), with five one-millionths of a percentage point rounded upward, of
the offered per annum rates that one or more leading banks in New York City,
selected by the Trust Collateral Agent, are quoting as of approximately 11:00
a.m., New York City time, on such LIBOR Determination Date to leading European
banks for United Sates dollar deposits for the Index Maturity; provided that if
the banks selected as aforesaid are not quoting as mentioned in this sentence,
LIBOR in effect for the applicable Interest Period will be LIBOR in effect for
the previous Interest Period.
"Telerate Page 3750" means the display page so designative on the Dow Jones
Telerate Services (or such other page as may replace that page on that service
for the purpose of displaying comparable name or rates).
"Reference Banks" means four major banks in the London interbank market
selected by the Trust Collateral Agent.
PAYMENTS OF PRINCIPAL
Principal payments will be due to the noteholders on each Distribution Date
in an amount equal to the sum of the Noteholders' Principal Distributable Amount
plus the Noteholders' Accelerated Principal Amount, if any, for such
Distribution Date, and will be due and payable on such Distribution Date only to
the extent of the funds available for such purpose on 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 Noteholders' Percentage will be 100% until the notes
have been paid in full, and thereafter will be zero. 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 calendar
month, 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 calendar month, (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 (as defined
below) 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 calendar month but were not so repurchased, and (iv) the
aggregate amount of Cram Down Losses during such calendar month. Principal
payments on the notes will be made from the funds available after payment of
accrued and unpaid trustees' fees and other administrative fees of the Trust,
payment of the Servicing Fee and after distribution of the Noteholders' Interest
Distributable Amount. See "Description of the Purchase Agreements and the Trust
Documents -- Distributions" herein.
Amounts available from the Spread Account and under the Policy are
available to pay the principal of the notes only in two circumstances (i) to
reduce, after taking into account all reductions funded from other sources, the
aggregate principal balance of the notes to the collateral balance (i.e., the
sum of the Pool Balance plus the Pre-Funded Amount), in the event that the note
principal balance would otherwise exceed the collateral balance and (ii) to pay
off the principal of the notes of each class on its Final Scheduled Distribution
Date, to the extent that such class is not paid off on or prior to such Final
Scheduled Distribution Date from other sources.
The Noteholders' Percentage will be 100% until the Class A-4 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, the Class A-3 Notes and the Class A-4 Notes, in that order,
until the respective principal amount of each such class of notes has been paid
in full so that
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no principal will be paid on a class of notes until the principal of all classes
of notes having a lower numerical class designation has been paid in full. In
addition, the outstanding principal amount of the notes of any class, to the
extent not previously paid, will be payable on the respective Final Scheduled
Distribution Date for such class (and, if not paid in full on such date, will be
paid on the Insured Distribution Date immediately following such Final Scheduled
Distribution Date). The actual date on which the aggregate outstanding principal
amount of any class of notes is paid may be earlier than the Final Scheduled
Distribution Date for such class, depending on a variety of factors.
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-4 Notes, to the extent still outstanding, may be redeemed in
whole, but not in part, on any Distribution Date on which the Servicer exercises
its option to purchase the Receivables. The Servicer may purchase the
Receivables when the Pool Balance has declined to 10% or less of the Original
Pool Balance, as described in the accompanying prospectus under "Description of
the Trust Agreements -- Termination." Such redemption will effect early
retirement of the notes of such class. The redemption price will be equal to
the unpaid principal amount of the notes of such class, plus accrued and unpaid
interest thereon (the "Redemption Price").
EVENTS OF DEFAULT
Unless an Insurer Default shall have occurred and be continuing, "Events of
Default" under the Indenture will consist of those events defined in the
Insurance Agreement as Insurance Agreement Indenture Cross Defaults, and will
constitute an Event of Default under the Indenture only if the Insurer shall
have delivered to the Indenture Trustee, and not rescinded, a written notice
specifying that any such Insurance Agreement Indenture Cross Default constitutes
an Event of Default under the Indenture. "Insurance Agreement Indenture Cross
Defaults" consist of: (i) a demand for payment being made under the Policy;
(ii) certain events of bankruptcy, insolvency, receivership or liquidation of
the Trust; (iii) the Trust becoming taxable as an association (or publicly
traded partnership) taxable as a corporation for federal or state income tax
purposes; (iv) on any Insured Distribution Date, after taking into account the
application of the sum of the Available Funds for the related calendar month
plus the Deficiency Claim Amount for the related Distribution Date, any amounts
listed in clauses 1, 2, 3 and 5 under "Description of the Purchase Agreements
and the Trust Documents -- Distributions" herein has not been paid in full; and
(v) any failure to observe or perform in any material respect any other
covenants or agreements in the Indenture, or any representation or warranty of
the Trust made in the Indenture or in any certificate or other writing delivered
pursuant thereto or in connection therewith proving to have been incorrect in
any material respect when made, and such failure continuing or not being cured,
or the circumstance or condition in respect of which such misrepresentation or
warranty was incorrect not having been eliminated or otherwise cured, for 30
days after the giving of written notice of such failure or incorrect
representation or warranty to the Trust and the Indenture Trustee by the
Insurer.
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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
financial guaranty insurance policy issued by the Insurer for the benefit of the
noteholders (the "Policy") or from certain events of bankruptcy, insolvency,
receivership or liquidation of the Trust. Following the occurrence of any Event
of Default, the Trust Collateral Agent 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 and CP Funding
will enter into a Purchase Agreement with the Seller pursuant to which
AmeriCredit and CP Funding 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 applicable 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 $156,250,000 (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) January 31, 1999. 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
February 1999 or (ii) if the last day of the Funding Period occurs on or prior
to the Calculation Date occurring in December 1998 or January 1999, the
Distribution Date relating to such Calculation Date.
On the Closing Date, a cash amount shall be deposited in an account (the
"Capitalized Interest Account") which will be established with the Trust
Collateral Agent. The amount, if any deposited in the Capitalized Interest
Account will be applied on the Distribution Dates occurring in December 1998,
January 1999 and February 1999 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
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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 calendar month (the "Basic Servicing Fee"). So
long as AmeriCredit is the Servicer, a portion of the Servicing Fee will be
payable to the Backup Servicer for agreeing to stand by as successor Servicer
and for performing certain other functions. The Servicer will also collect and
retain any late fees, prepayment charges and other administrative fees or
similar charges allowed by applicable law with respect to the Receivables, and
will be entitled to reimbursement from the Issuer for certain expenses.
Payments by or on behalf of Obligors will be allocated to scheduled payments,
late fees and other charges and principal and interest in accordance with the
Servicer's normal practices and procedures.
The Basic Servicing Fee will compensate the Servicer for performing the
functions of a thirdparty 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 calendar month 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 calendar month 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 calendar month.
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.
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DISTRIBUTIONS
DISTRIBUTION DATE CALCULATIONS AND PAYMENTS. On or prior to each
Distribution Date, the Servicer is required to instruct the Indenture Trustee to
make the following distributions in the following order of priority:
1. From the Available Funds, to the Servicer, the Servicing Fee for the
related calendar month, any Supplemental Servicing Fees for such month
and certain other amounts relating to mistaken deposits, postings or
checks returned for insufficient funds to the extent the Servicer has
not reimbursed itself in respect of such amount or to the extent not
retained by the Servicer.
2. From the Available Funds, to the Indenture Trustee and the Owner
Trustee, any accrued and unpaid trustees' fees and any accrued and
unpaid fees of the Trust Collateral Agent (in each case, to the extent
such fees have not been previously paid by the Servicer).
3. From the Available Funds, to the Note Distribution Account, the
Noteholders' Interest Distributable Amount.
4. From the Available Funds, to the Note Distribution Account, the
Noteholders' Principal Distributable Amount, to be distributed as
described under "Description of the Notes -- Payments of Principal."
5. From the Available Funds, to the Insurer, any amounts owing to the
Insurer under the Insurance Agreement and not paid.
6. From the Available Funds (less certain investment earnings), to the
Spread Account, an amount, if necessary, required to increase the
amount therein to its then required level.
7. From the Available Funds (less certain investment earnings), and
together with amounts, if any, available in accordance with the terms
of the Spread Account Agreement, to the Note Distribution Account, the
Noteholders' Accelerated Principal Amount.
8. From the Available Funds, to the Spread Account, or as otherwise
specified in the Trust Documents, any remaining funds.
Amounts on deposit in the Spread Account on any Insured Distribution Date
(after giving effect to all distributions made on such Insured Distribution Date
and the related Distribution Date) in excess of the Specified Spread Account
Requirement for such Distribution Date may be released to the certificateholder
without the consent of the noteholders.
If the notes are accelerated following an Event of Default under the
Indenture, amounts collected will be distributed in the order described above.
INSURED DISTRIBUTION DATE CALCULATIONS AND PAYMENTS. In the event that any
Servicer's Certificate delivered by the Servicer indicates that the Available
Funds with respect to a Distribution Date are insufficient to fund in full the
related Scheduled Payments plus the amounts described in clauses 1 and 5 above,
the Indenture Trustee shall request the Deficiency Claim Amount for the Spread
Account, at the time required by and pursuant to, the Spread Account Agreement.
Further, in the event that any Servicer's Certificate delivered by the Servicer
indicates that the sum of (i) the Available Funds with respect to a Distribution
Date, plus (ii) any related Deficiency Claim Amount is insufficient to fund in
full the related Scheduled Payments plus the amount described in clauses 1 and 2
above, the Indenture Trustee
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shall furnish to the Insurer no later than 12:00 noon New York City time on the
related Draw Date a completed notice of claim in the amount of the Policy Claim
Amount. Amounts paid by the Insurer pursuant to any such notice of claim shall
be deposited by the Insurer into the Note Distribution Account for payment to
noteholders on the related Insured Distribution Date.
For the purposes hereof, the following terms shall have the following
meanings:
"Accelerated 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.
The Insurer does not guarantee the payment of Accelerated Principal
Amounts.
"Additional Funds Available" means, with respect to any Insured
Distribution Date the sum of (i) the Deficiency Claim Amount, if any, received
by the Indenture Trustee with respect to such Insured Distribution Date plus
(ii) the Insurer Optional Deposit, if any, received by the Indenture Trustee
with respect to such Insured Distribution Date.
"Amount Financed" means, with respect to a Receivable, the aggregate amount
advanced under such Receivable toward the purchase price of the Financed Vehicle
and related costs, including amounts advanced in respect of accessories,
insurance premiums, service, car club and warranty contracts, other items
customarily financed as part of retail automobile installment sale contracts or
promissory notes, and related costs.
"Available Funds" means, with respect to any calendar month, the sum of (i)
the Collected Funds for such calendar month, (ii) all Purchase Amounts deposited
in the Collection Account during such calendar month, plus income on investments
held in the Collection Account, (iii) the Monthly Capitalized Interest Amount
with respect to the Distribution Date which immediately follows such calendar
month, (iv) the proceeds of any liquidation of the assets of the Trust, (v) any
remaining Pre-Funded Amount applied to the mandatory redemption of the notes and
(vi) any amounts received by the Trust Collateral Agent pursuant to the Cap
Agreement with respect to the Class A-2 Notes, the Class A-3 Notes and the Class
A-4 Notes.
"Collected Funds" means, with respect to any calendar month, the amount of
funds in the Collection Account representing collections on the Receivables
during such calendar month, including all Net Liquidation Proceeds collected
during such calendar month (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
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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,
after taking into account the application on the related Distribution Date of
the Available Funds for the related calendar month, an amount equal to the sum
of , without duplication, (i) any shortfall in the payment of the full amounts
described in clauses 1, 2, 3 and 5 under "Distributions" above, (ii) the
Noteholders' Parity Deficit Amount, if any, for such Distribution Date and (iii)
if the related Distribution Date is the Final Scheduled Distribution Date for
any class, any remaining outstanding principal balance of such class, to the
extent that such amount is available on the related Insured Distribution Date in
accordance with the terms of the Spread Account.
"Deficiency Notice" means, with respect to any Insured Distribution Date,
a written notice delivered by the Indenture Trustee to the Insurer, the Servicer
and any other person required under the Insurance Agreement, specifying the
Deficiency Claim Amount for such Insured Distribution Date.
"Determination Date" means, with respect to any calendar month, the earlier
of (i) the fourth Business Day preceding the related Insured Distribution Date
in the next calendar month, and (ii) the 5th day of the next calendar month, or
if such 5th day is not a Business Day, the next succeeding Business Day.
"Insurer Optional Deposit" means, with respect to any Insured Distribution
Date, an amount delivered by the Insurer, at its sole option, other than amounts
in respect of a Policy Claim Amount for deposit into the Collection Account for
any of the following purposes: (i) to provide funds in respect of the payment
of fees or expenses of any provider of services to the Trust with respect to
such Insured Distribution Date; or (ii) to include such amount as part of the
Additional Funds Available for such Insured Distribution Date to the extent that
without such amount a draw would be required to be made on a Policy.
"Liquidated Receivable" means, with respect to any calendar month, a
Receivable as to which, as of the last day of such calendar month, (i) 90 days
have elapsed since the Servicer repossessed the Financed Vehicle, (ii) the
Servicer has determined in good faith that all amounts it expects to recover
have been received, (iii) 5% or more of a scheduled payment shall have become
120 or more days delinquent, except in the case of repossessed Financed
Vehicles.
"Net Liquidation Proceeds" means, with respect to Liquidated Receivables,
(i) proceeds from the disposition of the underlying Financed Vehicle securing
the Liquidated Receivables, less the Servicer's reasonable out-of-pocket costs,
including repossession and resale expenses not already deducted from such
proceeds, and any amounts required by law to be remitted to the Obligor, (ii)
any insurance proceeds, or (iii) other monies received from the Obligor or
otherwise.
"Noteholders' Accelerated Principal Amount" means, with respect to any
Distribution Date, the Noteholders' Percentage of the Accelerated Principal
Amount on such Distribution Date, if any.
"Noteholders' Distributable Amount" means, with respect to any Distribution
Date, the sum of the Noteholders' Principal Distributable Amount and the
Noteholders' Interest Distributable Amount.
"Noteholders' Interest Carryover Amount" means, with respect to any class
of notes and any date of determination, all or any portion of the Noteholders'
Interest Distributable Amount for such class for the immediately preceding
Distribution Date, and any outstanding Noteholders' Interest Carryover
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Amount which remains unpaid as of such date of determination, plus interest on
such unpaid amount, to the extent permitted by law, at the interest rate borne
by such class of notes from such preceding Distribution Date to but excluding
such date of determination.
"Noteholders' Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Monthly Interest Distributable
Amount for each class of notes for such Distribution Date and the Noteholders'
Interest Carryover Amount, if any, for each class of notes, calculated as of
such Distribution Date.
"Noteholders' Monthly Interest Distributable Amount" means, with respect to
any Distribution Date and any class of notes, interest accrued during the
applicable Interest Period shall accrue on the principal amount of the notes of
each class outstanding as of the end of the prior Distribution Date (or, in the
case of the first Distribution Date, as of the Closing Date); provided that if
such principal balance is further reduced by a payment of principal on the
Insured Distribution Date which immediately follows such prior Distribution
Date, then such interest shall accrue (i) from and including such prior
Distribution Date to, but excluding, such related Insured Distribution Date, on
the principal balance outstanding as of the end of the prior Distribution Date
(or, in the case of the first Distribution Date, as of the Closing Date) and
(ii) from and including such Insured Distribution Date, to, but excluding, the
following Distribution Date, on the principal balance outstanding as of the end
of such Insured Distribution Date, calculated on the basis of a 360-day year and
the actual number of days elapsed.
"Noteholders' Monthly Principal Distributable Amount" means, with respect
to any Distribution Date, the Noteholders' Percentage of the Principal
Distributable Amount.
"Noteholders' Parity Deficit Amount" means, with respect to any
Distribution Date, the excess, if any, of (x) the aggregate remaining principal
balance of the notes outstanding on such Distribution Date, after giving effect
to all reductions in such aggregate principal balance from sources other than
(i) the Spread Account and (ii) the Policy over (y) the sum of the Pool Balance
and the Pre-Funded Amount at the end of the prior calendar month.
"Noteholders' Percentage" means (i) for each Distribution Date prior to the
Distribution Date on which the Class A-4 Notes are paid in full, 100%, (ii) on
the Distribution Date on which the Class A-4 Notes are paid in full, the
percentage equivalent of a fraction, the numerator of which is the outstanding
principal amount of the Class A-4 Notes immediately prior to such Distribution
Date, and the denominator of which is the Principal Distributable Amount for
such Distribution Date, and (iii) for any Distribution Date thereafter, zero.
"Noteholders' Principal Carryover Amount" means, as of any date of
determination, all or any portion of the Noteholders' Principal Distributable
Amount and any outstanding Noteholders' Principal Carryover Amount from the
preceding Distribution Date which remains unpaid as of such date of
determination.
"Noteholders' Principal Distributable Amount" means, with respect to any
Distribution Date (other than the Final Scheduled Distribution Date for any
class of notes), the sum of the Noteholders' Monthly Principal Distributable
Amount for such Distribution Date and the Noteholders' Principal Carryover
Amount, if any, as of such Distribution Date. The Noteholders' Principal
Distributable Amount on the Final Scheduled Distribution Date for any class of
notes will equal the sum of (i) the Noteholders' Monthly Principal Distributable
Amount for such Distribution Date, (ii) the Noteholders' Principal Carryover
Amount as of such Distribution Date, and (iii) the excess of the outstanding
principal amount of such class of notes, if any, over the amounts described in
clauses (i) and (ii).
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"Noteholders' Remaining Parity Deficit Amount" means, with respect to any
Distribution Date, the Noteholders' Parity Deficit Amount for such Distribution
Date minus any reduction in the aggregate principal balance of the notes on such
Distribution Date which is funded from the Spread Account.
"Policy Claim Amount" means, for any Insured Distribution Date, the sum of
(x) the excess, if any (without duplication), of (i) the sum of the Noteholders'
Interest Distributable Amount and the Noteholders' Parity Deficit Amount for the
related Distribution Date, together with (a) if such related Distribution Date
was the Mandatory Redemption Date, the Note Prepayment Amount and (b) if such
related Distribution Date was the Final Scheduled Distribution Date for any
class, the unpaid principal balance of such class over (ii) the sum of (a) the
amount actually deposited into the Note Distribution Account on such related
Distribution Date and (b) the Additional Funds Available, if any, for such
Insured Distribution Date plus (y) the Noteholders' Interest Carryover Amount,
if any, which has accrued since the related Distribution Date.
"Principal Balance" means, with respect to any Receivable, as of any date,
the sum of (x) the Amount Financed minus (i) that portion of all amounts
received on or prior to such date and allocable to principal in accordance with
the terms of the Receivable, and (ii) any Cram Down Loss in respect of such
Receivable plus (y) the accrued and unpaid interest on such Receivable as of
such date.
"Principal Distributable Amount" means, with respect to any Distribution
Date, the amount equal to the excess, if any, of (x) the sum of the following
amounts with respect to the related calendar month, 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 calendar month, (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 calendar month but were
not so repurchased and (iv) the aggregate amount of Cram Down Losses during the
related calendar month 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 calendar month.
"Step-Down Amount" means, with respect to any Distribution Date, the
excess, if any, of (x) the Required Pro Forma Note Balance over (y) the Pro
Forma Note Balance on such Distribution Date, calculated for this purpose only
without deduction for any Step-Down Amount (i.e., assuming that the entire
amount described in clause (x) of the definition of "Principal Distributable
Amount" is distributed as principal on the notes).
STATEMENTS TO NOTEHOLDERS
On or prior to each Insured Distribution Date, the Indenture Trustee will
be required to forward a statement to the noteholders setting forth certain
information required under the Trust Documents. Such
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statements will be based on the information in the related Servicer's
Certificate. Each such statement to be delivered to the noteholders will include
the following information as to the notes with respect to the related
Distribution Date and the related Insured Distribution Date, as applicable:
(i) the amount of the distribution(s) allocable to interest on or with
respect to the notes:
(ii) the amount of the distribution(s) allocable to principal with
respect to the notes;
(iii) the amount of the distribution, if any, payable pursuant to a claim
on the Policy;
(iv) the aggregate outstanding principal amount for each class of notes,
after giving effect to all payments reported under (ii) above on
such date;
(v) the Noteholders' Interest Carryover Shortfall and the Noteholders'
Principal Carryover Shortfall, if any, and the change in such
amounts from the preceding statement;
(vi) the amount of the Servicing Fee paid to the Servicer with respect to
the related calendar month; and
(vii) for each such date during the Funding Period, the remaining Pre-
Funded Amount, the amount in the Pre-Funding Account and the amount
remaining in the Capitalized Interest Account.
Each amount set forth pursuant to subclauses (i) through (vi) with respect
to notes will be expressed as a dollar amount per $1,000 of the initial
principal amount of the notes.
Unless and until Definitive Notes are issued, such reports will be sent on
behalf of the Trust to Cede & Co., as registered holder of the notes and the
nominee of DTC. See "Reports to Securityholders" and "Description of the
Securities" in the prospectus.
Within the required period of time after the end of each calendar year, the
Indenture Trustee will furnish to each person who at any time during such
calendar year was a noteholder, a statement as to the aggregate amounts of
interest and principal paid to such noteholder, information regarding the amount
of servicing compensation received by the Servicer and such other information as
the Seller deems necessary to enable such noteholder to prepare its tax returns.
CREDIT SUPPORT
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.
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 to the extent that the balance on deposit therein is below the then
required level. Amounts, if any, on deposit in the Spread Account on an Insured
Distribution Date will be available to the extent provided in the Spread Account
Agreement to fund any Deficiency Claim Amount with respect to such Insured
Distribution Date. Amounts on deposit in the Spread Account on any Insured
Distribution Date (after giving effect to all distributions made on such Insured
Distribution Date) in
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excess of the Specified Spread Account Requirement for such Insured Distribution
Date will be released to the Seller without the consent of the noteholders.
In addition, the Seller, the Insurer and the Trust Collateral Agent may
amend the Spread Account Agreement (and any provisions in the Insurance
Agreement relating to the Spread Account) in any respect (including, without
limitation, reducing or eliminating the Specified Spread Account Requirement
and/or reducing or eliminating the funding requirements of the Spread Account or
permitting such funds to be used for the benefit of persons other than
noteholders) without the consent of, or notice to, the Trustee, the Owner
Trustee or the noteholders. The Trust Collateral Agent shall not withhold or
delay its consent with respect to any amendment that does not adversely affect
the Trust Collateral Agent in its individual capacity. Notwithstanding any
reduction in or elimination of the funding requirements of the Spread Account or
the depletion thereof, the Insurer will be obligated on each Insured
Distribution Date to fund the full amount of each Scheduled Payment required to
be paid by such Insured Distribution Date, and which would not be paid in the
absence of a payment under the Policy. If the Insurer breaches its obligations,
any losses on the Receivables will be borne by the noteholders.
OVERCOLLATERALIZATION. Overcollateralization is created as a result of the
application of excess interest to the payment of principal on the notes and is
paid in the form of the Noteholders' Accelerated Principal Amount. Such "excess
interest" is interest which is collected on the Receivables in excess of the
amount of interest that is paid on the notes, used to pay certain fees, or,
under certain circumstances, deposited to the Spread Account. This application
of excess interest results in the outstanding principal balance of the notes
amortizing more quickly than the Pool Balance.
If the Insurer permits the required level of overcollateralization to step
down, principal collections which would otherwise be paid through to the
noteholders as part of the Principal Distributable Amount may be instead
released to the Seller.
SERVICER TERMINATION EVENT
"Servicer Termination Event" under the Sale and Servicing Agreement will
consist of the occurrence and continuance of any of the following:
(i) any failure by the Servicer to deliver to the Trust Collateral Agent
for distribution to the noteholders any required payment, which
failure continues unremedied for two Business Days, or any failure to
deliver the Servicer's Certificate (as defined in the Sale and
Servicing Agreement) by the fourth Business Day prior to the Insured
Distribution Date, and which shall comply with the requirements
therefor;
(ii) any failure by the Servicer duly to observe or perform in any material
respect any other covenant or agreement under the Sale and Servicing
Agreement or the Purchase Agreement (if AmeriCredit is the Servicer)
which failure continues unremedied for 60 days after the giving of
written notice of such failure (1) to the Servicer by the Insurer, the
Trust Collateral Agent or the Issuer, or (2) if a Insurer Default has
occurred and is continuing, to the Servicer by any holder of a note;
(iii)certain events of insolvency, readjustment of debt, marshalling of
assets and liabilities, or similar proceedings with respect to the
Servicer or, so long as AmeriCredit is Servicer, of any of its
affiliates, and certain actions by the Servicer, or, so long as
AmeriCredit is Servicer, of its affiliates, indicating its insolvency,
reorganization pursuant to bankruptcy proceedings, or inability to pay
its obligations;
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(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).
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.
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WAIVER OF PAST DEFAULTS
Notwithstanding anything to the contrary set forth under "Description of
the Trust Agreements -- Waiver of Past Defaults" in the prospectus, the Insurer
may, on behalf of all holders of 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
The following summary of the terms of the Policy does not purport to be
complete and is qualified in its entirety by reference to 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, on each Insured
Distribution Date, for the benefit of each noteholder the full and complete
payment of (i) Scheduled Payments (as defined below) on the notes and (ii) the
amount of any Scheduled Payment which subsequently is avoided in whole or in
part as a preference payment under applicable law. In the event the Trust
Collateral Agent fails to make a claim under the Policy, noteholders do not have
the right to make a claim directly under the Policy, but may sue to compel the
Trust Collateral Agent to do so.
The "Insured Distribution Date" will be the twelfth day of each month, or,
if such twelfth day is not a Business Day, the next following Business Day. In
the event that, on any Distribution Date, the noteholders did not receive the
full amount of the Scheduled Payment then due to them, such shortfall (together
with, in the case of an interest shortfall, interest thereon at the related
interest rate) shall be due
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and payable and shall be funded on the Insured Distribution Date either from the
Spread Account or from the proceeds of a drawing under the Policy. The Record
Date applicable to an Insured Distribution Date shall be the Record Date
applicable to the related Distribution Date.
"Scheduled Payments" means payments which are required 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 or the Indenture that has not been consented to by the Insurer,
which payments, with respect to any Insured Distribution Date, are (i) the
Noteholders' Interest Distributable Amount, with respect to the related
Distribution Date, (ii) the Noteholders' Remaining Parity Deficit Amount with
respect to the related Distribution Date and (iii) with respect to the Final
Scheduled Distribution Date for any class of notes, the outstanding principal
amount of such class on such Final Scheduled Distribution Date, after taking
into account reductions on such date of such outstanding principal amount from
all sources other than the Policy. 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 or of a Noteholders'
Interest Carryover Amount due to noteholders because the appropriate notice and
certificate for payment in proper form was not timely Received (as defined
below) by the Insurer, (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 the Insurer elects, in its sole discretion,
to pay such amount in whole or in part. Scheduled Payments shall not include,
nor shall coverage be provided under the Policy in respect of, any taxes,
withholding or other charge imposed with respect to any noteholder by any
governmental authority due in connection with the payment of any Scheduled
Payment to a noteholder.
Payment of claims on the Policy made in respect of Scheduled Payments will
be made by the Insurer following Receipt (as defined below) 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 on the later of (a)
the date when due to be paid pursuant to the Order referred to below or (b) the
first to occur of (i) the fourth Business Day following Receipt by the Insurer
from the Trust Collateral Agent of (A) a certified copy of the order (the
"Order") of the court or other governmental body that exercised jurisdiction to
the effect that the noteholder is required to return Scheduled Payments made
with respect to the notes during the term of the Policy because such payments
were avoidable as preference payments under applicable bankruptcy law, (B) a
certificate of the noteholder that the Order has been entered and is not subject
to any stay and (C) 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 (ii) the date of
Receipt (as defined below) by the Insurer from the Trust Collateral Agent of the
items referred to in clauses (A), (B) and (C) above if, at least four Business
Days prior to such date of Receipt, the Insurer shall have Received (as defined
below) written notice from the Trust Collateral Agent that such items
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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 pursuant to the Sale and
Servicing Agreement, including, without limitation, the right to direct all
matters relating to any preference claim and subrogation to the rights of the
Trust Collateral Agent and each noteholder in the conduct of any proceeding with
respect to a preference claim.
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 Columbus, Ohio 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 the Policy and 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, the Class A-3 Notes and the
Class A-4 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. To the extent that such ratings are
based on the Policy, such ratings apply to distributions due on the Insured
Distribution Dates, and not to distributions due on the Distribution Dates. A
rating is not a
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recommendation to purchase, hold or sell notes. In the event that the rating
initially assigned to any of the notes is subsequently lowered or withdrawn for
any reason, including by reason of a downgrading of the claims-paying ability of
the Insurer, no person or entity will be obligated to provide any additional
credit enhancement with respect to the notes. Any reduction or withdrawal of a
rating may have an adverse effect on the liquidity and market price of the
notes. See "Ratings" herein.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the material anticipated federal
income tax considerations to investors of the purchase, ownership and
disposition of the securities offered hereby. The discussion is based upon
laws, regulations, rulings and decisions now in effect, all of which are subject
to change. The discussion below does not purport to deal with all federal tax
considerations applicable to all categories of investors, some of which may be
subject to special rules. Investors should consult their own tax advisors in
determining the federal, state, local and any other tax consequences to them of
the purchase, ownership and disposition of the securities.
TAX CHARACTERIZATION OF THE TRUST
Assuming that the parties will comply with the terms of the Trust Agreement
and related documents, Dewey Ballantine LLP 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 Internal Revenue Service (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
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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 IRS in respect of the interest paid and original issue discount
("OID"), 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 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
(calculated by taking into account a reasonable prepayment assumption).
Market Discount. A subsequent purchaser who buys a note for less than its
principal amount may be subject to the "market discount" rules of Section 1276
through 1278 of the Code. If a subsequent purchaser of a note disposes of such
note (including certain nontaxable dispositions such as a gift), or receives a
principal payment, any gain upon such sale or other disposition will be
recognized, or the amount of such principal payment will be treated, as ordinary
income to the extent of any "market discount" accrued for the period that such
purchaser holds the note. Such holder may instead elect to include market
discount in income as it accrues with respect to all debt instruments acquired
in the year of acquisition of the notes and thereafter. Market discount
generally will equal the excess, if any, of the then current unpaid principal
balance of the note over the purchaser's basis in the note immediately after
such purchaser acquired the note. In general, market discount on a note will be
treated as accruing over the term of such note in the ratio of interest for the
current period over the sum of such current interest and the expected amount of
all remaining interest payments, or at the election of the holder, under a
constant yield method. At the request of a holder of a note, information will
be made available that will allow the holder to compute the accrual of market
discount under the first method described in the preceding sentence.
The market discount rules also provide that a holder who incurs or
continues indebtedness to acquire a note at a market discount may be required to
defer the deduction of all or a portion of the interest on such indebtedness
until the corresponding amount of market discount is included in income.
Notwithstanding the above rules, market discount on a note will be
considered to be zero if it is less than a de minimis amount, which is 0.25% of
the remaining principal balance of the note multiplied by its expected weighted
average remaining life (calculated by taking into account a reasonable
prepayment assumption). 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 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. 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). Regulations
implementing the provisions of the Tax Reform Act of 1986 provide for the use of
the constant yield
S-48
<PAGE>
method to determine the amortization of premiums. A holder that elects to
amortize premium must reduce his tax basis in the related obligation by the
amount of the aggregate deductions (or interest offsets) allowable for
amortizable premium. If a debt instrument purchased at a premium is redeemed in
full prior to its maturity, a purchaser who has elected to amortize premium
should be entitled to a deduction for any remaining unamortized premium in the
taxable year of redemption.
Sale or Redemption of Notes. If a note is sold or retired, the seller will
recognize gain or loss equal to the difference between the amount realized on
the sale and his adjusted basis in the note. Such adjusted basis generally will
equal the cost of the note to the seller, increased by any original issue
discount included in the seller's gross income in respect of the note (and by
any market discount which the taxpayer elected to include in income or was
required to include in income), and reduced by payments other than payments of
qualified stated interest in respect of the note received by the seller and by
any amortized premium. Similarly, a holder who receives a payment other than a
payment of qualified stated interest in respect of a note, either on the date on
which such payment is scheduled to be made or as a prepayment, will recognize
gain equal to the excess, if any, of the amount of the payment over his adjusted
basis in the note allocable thereto. A noteholder who receives a final payment
which is less than his adjusted basis in the note will generally recognize a
loss in the amount of the shortfall on the last day of his taxable year.
Generally, any such gain or loss realized by an investor who holds a note as a
"capital asset" within the meaning of Code Section 1221 should be capital gain
or loss, except as described above in respect of market discount and except that
a loss attributable to accrued but unpaid interest may be an ordinary loss.
Taxation of Certain Foreign Investors. Interest payments (including OID,
if any) 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.
S-49
<PAGE>
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. Although there is little guidance on the subject,
the Seller believes that the notes should be treated as indebtedness without
substantial equity features for purposes of the Plan Assets Regulation. This
determination is based in part on the traditional debt features of the notes,
including the reasonable expectation of purchasers of the notes that the notes
will be repaid when due, as well as the absence of conversion rights, warrants
and other typical equity features. The debt treatment of the notes could
change if the Trust incurs losses. However, even if the notes are treated as
debt 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
Issuer or any of its affiliates is or becomes a party in interest or a
disqualified person with respect to such Benefit Plan. In such case, certain
exemptions from the prohibited transaction rules could be applicable depending
on the type and circumstances of the plan fiduciary making the decision to
acquire a note. Included among these exemptions are: Prohibited Transaction
Class Exemption ("PTCE") 90-1, regarding investments by insurance company pooled
separate accounts; PTCE 95-60, regarding investments by insurance company
general accounts; PTCE 91-38, regarding investments by bank collective
investment funds; PTCE 96-23, regarding transactions affected by in-house asset
managers; and PTCE 84-14, regarding transactions effected by "qualified
professional asset managers." Each investor using the assets of a Benefit Plan
which acquires the notes, or to whom the notes are transferred, will be deemed
to have represented that the acquisition and continued holding of the notes will
be covered by one of the exemptions listed above or by another Department of
Labor Class Exemption.
Employee benefit plans that are governmental plans (as defined in Section
3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA)
are not subject to ERISA requirements. However, governmental plans may be
subject to comparable federal, state or local law restrictions, and church plans
may be subject to other types of prohibited transaction restrictions under the
Code. Accordingly, assets of such plans may be invested in notes without regard
to the ERISA considerations discussed herein, subject to the provisions of such
other applicable federal, state and local law.
A plan fiduciary considering the purchase of notes should consult its tax
and/or legal advisors regarding the applicability of the fiduciary
responsibility provisions of ERISA to such investment, whether the assets of the
Trust would be considered plan assets, the possibility of exemptive relief from
the prohibited transaction rules, the appropriateness of the notes as an
investment of the Plan, and other issues and their potential consequences.
S-50
<PAGE>
LISTING AND GENERAL INFORMATION
Application will be made to list the notes on the Luxembourg Stock
Exchange. In connection with the listing application, the Certificate of
Incorporation and By-laws of AmeriCredit, as well as legal notice relating to
the issuance of the notes will be deposited prior to listing with the Chief
Register of the District Court of Luxembourg, where copies thereof may be
obtained upon request. Once the notes have been approved for listing, trading
of the notes may be effected on the Luxembourg Stock Exchange. The notes have
been accepted for clearance through the facilities of DTC, Cedel and Euroclear.
The CUSIP numbers and International Securities Identification Numbers (ISIN) for
the Notes are as follows:
Class CUSIP ISIN
----- ----- ----
Class A-1.......... 03061NBN8 US03061NBN84
Class A-2.......... 03061NBP3 US03061NBP33
Class A-3.......... 03061NBQ1 USO3061NBQ16
Class A-4.......... 03061NBR9 USO3061NBR98
Common Code numbers will be available upon request of any Underwriter.
The transactions contemplated in this prospectus supplement were authorized
by resolutions adopted by the AmeriCredit's Board of Directors as of October 22,
1998.
Copies of the Indenture and the Trust Documents, the annual report of
independent public accountants described in "Description of the Trust Agreements
- -- Evidence as to Compliance" in the prospectus, the documents listed under
"Available Information" and the reports to Securityholders referred to under
"Reports to Securityholders" in the prospectus will be available free of charge
at the office of Banque Generale du Luxembourg, S.A. (the "Listing Agent"), 50
Avenue J.F. Kennedy, L-2951, Luxembourg. Financial information regarding
AmeriCredit is included in the consolidated financial statements of AmeriCredit
Corp. in AmeriCredit Corp.'s Annual Report on Form 10-K for the fiscal year
ended June 30, 1998. Such report is available, and reports for subsequent years
will be available, at the office of the Listing Agent.
So long as there is no Paying Agent and Transfer Agent in Luxembourg,
Banque Generale du Luxembourg, S.A. will act as intermediary agent in
Luxembourg. In the event that definitive notes are issued, a Paying Agent and
Transfer Agent will be appointed in Luxembourg.
The notes, the Indenture and the Trust Documents are governed by the laws
of the State of New York (except for the Trust Agreement, which is governed by
the laws of the State of Delaware).
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 Investors Service, Inc. ("Moody's"), and that the Class
A-2 Notes, the Class A-3 Notes and the Class A-4 Notes be rated AAA by S&P and
Aaa by Moody's. The ratings by the Rating Agencies of the notes will
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<PAGE>
be (i) with respect to the Class A-1 Notes, without regard to the Policy in the
case of S&P and substantially based on the Policy in the case of Moody's and
(ii) with respect to all other classes of notes, based primarily on the Policy.
To the extent that such ratings are based on the Policy, such ratings apply to
distributions due on the Insured Distribution Dates, and not to distributions
due on the Distribution Dates. There is no assurance that the ratings initially
assigned to the notes will not subsequently be lowered or withdrawn by the
Rating Agencies.
UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting Agreement
(the "Underwriting Agreement"), the Seller has agreed to cause the Trust to
sell to each of the Underwriters named below (collectively, the "Underwriters"),
and each of the Underwriters has severally agreed to purchase, the principal
amount of the notes set forth opposite its name below:
CLASS A-1 NOTES
PRINCIPAL AMOUNT
Chase Securities Inc...................................... $ 43,334,000
Credit Suisse First Boston Corporation.................... 43,333,000
Nationsbanc Montgomery Securities LLC..................... 43,333,000
Total.................................................. $130,000,000
============
CLASS A-2 NOTES
PRINCIPAL AMOUNT
Chase Securities Inc...................................... $ 80,000,000
Credit Suisse First Boston Corporation.................... 80,000,000
Nationsbanc Montgomery Securities LLC..................... 80,000,000
------------
Total.................................................. $240,000,000
============
CLASS A-3 NOTES
PRINCIPAL AMOUNT
Chase Securities Inc..................................... $ 33,334,000
Credit Suisse First Boston Corporation................... 33,333,000
Nationsbanc Montgomery Securities LLC.................... 33,333,000
------------
Total................................................. $100,000,000
============
CLASS A-4 NOTES
PRINCIPAL AMOUNT
Chase Securities Inc..................................... $ 51,668,000
Credit Suisse First Boston Corporation................... 51,666,000
Nationsbanc Montgomery Securities LLC.................... 51,666,000
------------
Total................................................. $155,000,000
============
The Seller has been advised by the Underwriters that they propose initially
to offer the notes to the public at the prices set forth herein, and to certain
dealers at such prices less the initial concession not in excess of 0.10% per
Class A-1 Note, 0.14% per Class A-2 Note, 0.16% per Class A-3 Note and 0.185%
per Class A-4 Note. The Underwriters may allow and such dealers may reallow a
concession not in excess of 0.10% per Class A-1 Note, 0.10% per Class A-2 Note,
0.10% per Class A-3 Note and 0.10% per Class A-4 Note to certain other dealers.
After the initial public offering of the notes, the public offering prices and
such concessions may be changed.
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<PAGE>
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.
Chase Securities Inc. ("CSI") or its affiliates have from time to time
performed certain investment banking services for affiliates of the Seller. In
addition, The Chase Manhattan Bank, an affiliate of CSI, performs certain
commercial paper banking services for affiliates of the Seller.
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.
EXPERTS
The consolidated balance sheets of the Insurer and its subsidiaries as of
December 31, 1997 and 1996 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, 1997, incorporated by reference in this prospectus
supplement, have been incorporated herein in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
that firm as experts in accounting and auditing.
The balance sheet of the Trust as of October 28, 1998 has been incorporated
herein in reliance on the report of PricewaterhouseCoopers LLP, 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 LLP, New York, New York. Certain legal matters
relating to the notes will be passed upon for the Underwriters by Dewey
Ballantine LLP, New York, New York. Certain legal matters will be passed upon
for the Insurer by Brian H. Mellstrom, Assistant General Counsel, to the
Insurer. The Insurer is represented by Mayer, Brown & Platt, New York, New
York.
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<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the managers of AmeriCredit Automobile Receivables Trust 1998-D:
In our opinion, the accompanying balance sheet presents fairly, in all
material respects, the financial position of AmeriCredit Automobile Receivables
Trust 1998-D as of October 28, 1998, in conformity with generally accepted
accounting principals. This financial statement is the responsibility of the
Trust's management; our responsibility is to express an opinion on this
financial statement based on our audit. We conducted our audit in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the balance sheet
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the balance sheet, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Fort Worth, Texas
October 28, 1998
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<PAGE>
AMERICREDIT AUTOMOBILE RECEIVABLES TRUST 1998-D
BALANCE SHEET
OCTOBER 28, 1998
ASSETS
Cash.................................................... $1,000
------
Total Assets............................................ $1,000
======
LIABILITES AND TRUST PRINCIPAL
Interest in Trust...................................... $1,000
------
Total liabilities and trust principal.................. $1,000
======
The accompanying notes are an integral part of this financial statement.
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<PAGE>
AMERICREDIT AUTOMOBILE RECEIVABLES TRUST 1998-D
NOTES TO FINANCIAL STATEMENT
_________________
1. Nature of Operations:
AmeriCredit Automobile Receivables Trust 1998-D (the "Trust"), was formed
in the State of Delaware on October 23, 1998. The Trust has been inactive since
that date.
The Trust was organized to engage exclusively in the following business and
financial activities: to acquire motor vehicle retail installment sale
contracts from AFS Funding Corp. and any of its affiliates; to issue and sell
notes collateralized by its assets; and to engage in any lawful act or activity
and to exercise any power that is incidental and is necessary or convenient to
the foregoing.
2. Capital Contribution:
AFS Funding Corp. purchased, for $1,000, a 100% beneficial ownership
interest in the Trust.
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<PAGE>
INDEX OF DEFINED TERMS
Page
----
ABS.................................................. 22
ABS Table............................................ 23
Accelerated Principal Amount......................... 37
Additional Funds Available........................... 37
Aggregate risks...................................... 28
AmeriCredit.......................................... 13
Amount Financed...................................... 37
APR.................................................. 18
Available Funds...................................... 37
Backup Servicer...................................... 13
Basic Servicing Fee.................................. 35
Benefit Plan......................................... 50
Business Day......................................... 29
Cap Agreement........................................ 30
Capitalized Interest Account......................... 34
Cedel................................................ 29
Class A-1 Notes...................................... 6
Class A-2 Notes...................................... 6
Class A-3 Notes...................................... 6
Closing Date......................................... 29
Code................................................. 48
Collected Funds...................................... 37
Collection Account................................... 34
Contracts............................................ 16
CP Funding........................................... 15
Cram Down Loss....................................... 37, 38
CSI.................................................. 53
Dealer Agreements.................................... 15
Deficiency Claim Amount.............................. 38
Deficiency Notice.................................... 38
Determination Date................................... 38
Distribution Date.................................... 29
DTC.................................................. 29
Euroclear............................................ 29
Events of Default.................................... 32
Final Scheduled Distribution Date.................... 22
Financed Vehicles.................................... 13, 15
Financial Security................................... 27
Funding Period....................................... 34
Holdings............................................. 27
Indenture............................................ 14
Indenture Trustee.................................... 14
Index Maturity....................................... 30
Initial Cutoff Date.................................. 15
Initial Financed Vehicles............................ 14
Initial Pre-Funded Amount............................ 34
Initial Receivables.................................. 14
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<PAGE>
Insurance Agreement Indenture Cross Defaults......... 32
Insured Distribution Date............................ 29, 44
Insurer.............................................. 6, 14
Insurer Default...................................... 43
Insurer Optional Deposit............................. 38
Interest Period...................................... 30
IRS.................................................. 48
Issuer............................................... 14
LIBOR................................................ 30
LIBOR Determination Date............................. 30
Liquidated Receivable................................ 38
Lockbox.............................................. 34
Lockbox Account...................................... 34
Mandatory Redemption Date............................ 34
Monthly Capitalized Interest Amount.................. 34
Moody's.............................................. 51
Net Liquidation Proceeds............................. 38
Non-U.S. Person...................................... 4
Note Distribution Account............................ 34
Note Prepayment Amount............................... 32
Noteholders' Accelerated Principal Amount............ 38
Noteholders' Distributable Amount.................... 38
Noteholders' Interest Carryover Amount............... 38
Noteholders' Interest Distributable Amount........... 39
Noteholders' Monthly Interest Distributable Amount... 39
Noteholders' Monthly Principal Distributable Amount.. 39
Noteholders' Parity Deficit Amount................... 39
Noteholders' Percentage.............................. 39
Noteholders' Principal Carryover Amount.............. 39
Noteholders' Principal Distributable Amount.......... 39
Noteholders' Remaining Parity Deficit Amount......... 40, 45
OID.................................................. 48
Order................................................ 45
Owner Trustee........................................ 14
Plan Assets Regulation............................... 50
Policy............................................... 33
Policy Claim Amount.................................. 40
Pool Balance......................................... 15
Precomputed Receivables.............................. 22
Pre-Funded Amount.................................... 34
Pre-Funding Account.................................. 34
Principal Balance.................................... 40
Principal Distributable Amount....................... 31, 40
Pro Forma Note Balance............................... 40
PTCE................................................. 50
Purchase Agreement................................... 15
Purchase Agreements.................................. 33
Purchase Amount...................................... 40
Receivables.......................................... 13, 15
Record Date.......................................... 29
Redemption Price..................................... 32
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<PAGE>
Reference Banks...................................... 31
Required Pro Forma Note Balance...................... 40
S&P.................................................. 17
Sale and Servicing Agreement......................... 13
Schedule of Receivables.............................. 34
Scheduled Payments................................... 45
Seller............................................... 13
Servicer............................................. 13
Servicer Termination Event........................... 42
Simple Interest Receivables.......................... 22
Single risks......................................... 28
Spread Account....................................... 41
Statistical Calculation Date......................... 18
Step-Down Amount..................................... 40
Subsequent Cutoff Date............................... 15
Subsequent Financed Vehicles......................... 15
Subsequent Purchase Agreement........................ 15
Subsequent Receivables............................... 15
Telerate Page 3750................................... 31
Trust................................................ 14
Trust Agreement...................................... 14
Trust Collateral Agent............................... 13
Trust Documents...................................... 33
Trust Property....................................... 14
U.S. Person.......................................... 4
Underwriters......................................... 52
Underwriting Agreement............................... 52
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<PAGE>
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION
PROCEDURES
Except in certain limited circumstances, the globally offered AmeriCredit
Automobile Receivables Trust 1998-D 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 tradable 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 notes 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.
A-1
<PAGE>
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to prior asset-
backed security issues in same-day funds.
Trading between CEDEL and/or Euroclear Participants. Secondary market
trading between CEDEL Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
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.
A-2
<PAGE>
Trading between CEDEL or Euroclear Seller and DTC Purchaser. Due to time
zone differences in their favor, CEDEL Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through the
respective Depository, to a DTC Participant. The seller will send instructions
to CEDEL or Euroclear through a CEDEL Participant or Euroclear Participant at
least one Business Day prior to settlement. In these cases CEDEL or Euroclear
will instruct the respective Depository, as appropriate, to credit the Global
Securities to the DTC Participant's account against payment. Payment will
include interest accrued on the Global Securities from and including the last
coupon payment to and excluding the settlement date on the basis of the actual
number of days in such accrual period and a year assumed to consist to 360 days.
For transactions settling on the 31st of the month, payment will include
interest accrued to and excluding the first day of the following month. The
payment will then be reflected in the account of CEDEL Participant or Euroclear
Participant the following day, and receipt of the cash proceeds in the CEDEL
Participant's or Euroclear Participant's account would be back-valued to the
value date (which would be the preceding day, when settlement occurred in New
York). In the event that the CEDEL Participant or Euroclear Participant have a
line of credit with its respective clearing system and elect to be in debt in
anticipation of receipt of the sale proceeds in its account, the back-valuation
will extinguish any overdraft incurred over that one-day period. If settlement
is not completed on the intended value date (i.e., the trade fails), receipt of
the cash proceeds in the CEDEL Participant's or Euroclear Participant's account
would instead be valued as of the actual settlement date.
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:
A-3
<PAGE>
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 the Owners of a Global Securities or their agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Owner of a Global
Security or, in the case of a Form 1001 or a Form 4224 filer, his agent, files
by submitting the appropriate form to the person through whom it holds (the
clearing agency, in the case of persons holding directly on the books of the
clearing agency). Form W-8 and Form 1001 are effective for three calendar years
and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity, taxable as such for
federal income tax purposes, organized in or under the laws of the United States
or any state thereof (including the District of Columbia) (iii) an estate that
is subject to U.S. federal income tax regardless of the source of its income or
(iv) a trust other than a "foreign trust" as defined in Section 7701(a)(31) of
the Internal Revenue Code of 1986, as amended. 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 as well as the application of recently issued
Treasury regulations relating to tax documentation requirements that are
generally effective with respect to payments made after December 31, 1999.
Investors are advised to consult their own tax advisors for specific tax advice
concerning their holding and disposing of the Global Securities.
A-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 14 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 14.
- --------------------------------------------------------------------------------
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 October 26, 1998.
<PAGE>
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to a series of Securities to be
offered hereunder, among other things, will set forth with respect to such
series of Securities: (i) a description of the Class or Classes of such
Securities, (ii) the rate of interest, the "Pass-Through Rate" or "Interest
Rate" or other applicable rate (or the manner of determining such rate) and
authorized denominations of such Class of such Securities; (iii) certain
information concerning the Receivables and insurance polices, cash accounts,
letters of credit, financial guaranty insurance policies, third party guarantees
or other forms of credit enhancement, if any, relating to one or more pools of
Receivables or all or part of the related Securities; (iv) the specified
interest, if any, of each Class of Securities in, and manner and priority of,
the distributions from the Trust Property; (v) information as to the nature and
extent of subordination with respect to such series of Securities, if any; (vi)
the payment date to Securityholders; (vii) information regarding the Servicer(s)
for the related Receivables; (viii) the circumstances, if any, under which the
Trust Property may be subject to early termination; (ix) information regarding
tax considerations; and (x) additional information with respect to the method of
distribution of such Securities.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission
(the "Commission") a Registration Statement (together with all amendments and
exhibits thereto, referred to herein as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Securities offered pursuant to this Prospectus. For further information,
reference is made to the Registration Statement which may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549; and at the Commission's regional
offices at 500 West Madison, 14th Floor, Chicago, Illinois 60661 and Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies of the Registration
Statement may be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
No person has been authorized to give any information or to make any
representation other than those contained in this Prospectus and any Prospectus
Supplement with respect hereto and, if given or made, such information or
representations must not be relied upon. This Prospectus and any Prospectus
Supplement with respect hereto do not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the Securities offered
hereby and thereby, nor an offer of the Securities to any person in any state or
other jurisdiction in which such offer would be unlawful. The delivery of this
Prospectus at any time does not imply that information herein is correct as of
any time subsequent to its date.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents subsequently filed by the Company with respect to the
Registration Statement, either on its own behalf or on behalf of a Trust,
relating to any series of Securities referred to in the accompanying Prospectus
Supplement, with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), after the
date of this Prospectus and prior to the termination of any offering of the
Securities issued by the Issuer, shall be deemed to be incorporated by reference
in this Prospectus and to be a part of this Prospectus from the date of the
filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein (or in the accompanying Prospectus Supplement) or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein, modifies or replaces such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
2
<PAGE>
REPORTS TO SECURITYHOLDERS
So long as the Securities are in book-entry form, monthly and annual
reports concerning the Securities and the Trust will be sent by the Trustee to
Cede & Co., as the nominee of DTC and as registered holder of the Securities
pursuant to the related Pooling and Servicing Agreement. DTC will supply such
reports to Securityholders in accordance with its procedures. To the extent
required by the Securities Exchange Act of 1934, as amended, the Trust will
provide financial information to the Securityholders which has been examined and
reported upon, with an opinion expressed by, an independent public accountant;
to the extent not so required, such financial information will be unaudited. The
Company has determined that the financial statements of no entity other than the
Security Insurer are material to the offering made hereby. The Trust will be
formed to own the Receivables, hold and administer the Pre-Funding Account, to
issue the Securities and to acquire the Subsequent Receivables, if available.
The Trust will have no assets or obligations prior to issuance of the Securities
and will engage in no activities other than those described herein. Accordingly,
no financial statements with respect to the Trust are included in the related
Prospectus Supplement. The audited financial statements of the Certificate
Insurer are set forth in Appendix A to the related Prospectus Supplement, and
the unaudited interim financial statements of the Certificate Insurer are set
forth in Appendix B to the related Prospectus Supplement. The Company intends to
discontinue filing periodic reports at the beginning of the company's next
fiscal year, to the extent permitted by Section 15(d) of the Exchange Act.
3
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to
the detailed information appearing elsewhere in this Prospectus and by reference
to the information with respect to the Securities of any series contained in the
related Prospectus Supplement to be prepared and delivered in connection with
the offering of such Securities. Certain capitalized terms used in the summary
are defined elsewhere in the Prospectus on the pages indicated in the "Index of
Terms."
Issuer.................. With respect to each series of Securities,
either the Company, a special-purpose finance
subsidiary of the Company which may be organized
and established by the Company with respect to
the Trust Property (each such special-purpose
finance subsidiary, a "Transferor") or a trust
(each, a "Trust") to be formed by the Company.
For purposes of this Prospectus, the term
"Company" includes the term "Transferor". The
Company, a Transferor or a Trust issuing
Securities pursuant to this Prospectus and the
related Prospectus Supplement shall be referred
to herein as the "Issuer" with respect to the
related Securities. See "The Issuers."
Company................ AmeriCredit Financial Services, Inc. ("AFS" or,
the "Company"), a Delaware corporation. The
Receivables will be either (i) originated by
various dealers, which may or may not be
affiliated with one or more manufacturers of
vehicles ("Dealers", and together with such
manufacturers, "Vendors") or (ii) acquired by
the Company from other originators or owners of
Receivables. The Company's principal executive
offices are located at 200 Bailey Avenue, Fort
Worth, Texas 76107, and its telephone number is
(817) 332-7000. See "The Company and the
Servicer."
Servicer............... AmeriCredit Financial Services, Inc. ("AFS" or,
in its capacity as the servicer, the
"Servicer"). See "AmeriCredit's Automobile
Financing Program -Servicing and Collections."
Trustee................ The Trustee for each series of Securities will
be specified in the related Prospectus
Supplement. In addition, a Trust may separately
enter into an Indenture and may issue Notes
pursuant to such Indenture; in any such case the
Trust and the Indenture will be administered by
separate, independent trustees as required by
the rules and regulations under the Trust
Indenture Act of 1939 and the Investment Company
Act of 1940.
The Securities......... Each Class of Securities of any series will
either evidence beneficial ownership in a
segregated pool of assets (the "Trust Property")
(such Securities, "Certificates") or will
represent indebtedness of the Issuer secured by
the Trust Property (such Securities, "Notes"),
as described herein and in the related
Prospectus Supplement. The Trust Property may
consist of any combination of retail installment
sales contracts between manufacturers, dealers
or certain other originators and retail
purchasers secured by new and used automobiles
and light duty trucks financed thereby, or
participation interests therein, together with
all monies received relating thereto (the
"Contracts"). The Trust Property also may
include a security interest in the underlying
new and used automobiles and light duty trucks
and property relating thereto, together with the
proceeds thereof (the "Vehicles" and together
with the Contracts, the "Receivables").
4
<PAGE>
The Trust Property will include Receivables with
respect to which the related Contract or the
related Vehicles is subject to federal or state
registration or titling requirements. No Trust
Property will include Receivables with respect
to which the underlying Contracts or Vehicles
relate to office equipment, aircraft, ships or
boats, firearms or other weapons, railroad
rolling stock or facilities such as factories,
warehouses or plants subject to state laws
governing the manner in which title or security
interest in real property is determined or
perfected.
If and to the extent specified in the related
Prospectus Supplement, credit enhancement with
respect to the Trust Property or any class of
Securities may include any one or more of the
following: a financial guaranty insurance policy
(a "Policy") issued by an insurer specified in
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.
5
<PAGE>
Securities Will Be Non-Recourse.
The Securities will not be obligations, either recourse or non-
recourse (except for certain non-recourse debt described under
"Certain Tax Considerations"), of the Company, the related
Servicer or any person other than the related Issuer. The Notes
of a given series represent obligations of the Issuer, and the
Certificates of a given series represent beneficial interests in
the related Issuer only and do not represent interests in or
obligations of the Company, the related Servicer or any of their
respective affiliates other than the related Issuer. In the case
of Securities that represent beneficial ownership interest in
the related Issuer, such Securities will represent the
beneficial ownership interests in such Issuer and the sole
source of payment will be the assets of such Issuer. In the case
of Securities that represent debt issued by the related Issuer,
such Securities will be secured by assets in the related Trust
Property. Notwithstanding the foregoing, and as to be described
in the related Prospectus Supplement, certain types of credit
enhancement, such as a letter of credit, financial guaranty
insurance policy or reserve fund may constitute a full recourse
obligation of the issuer of such credit enhancement.
General Nature of the Securities as Investments.
All of the Securities offered pursuant to this Prospectus and
the related Prospectus Supplement will be rated in one of the
four highest rating categories by one or more Rating Agencies
(as defined herein).
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
6
<PAGE>
("Accrual Securities"), as to which certain accrued interest
will not be distributed but rather will be added to the
principal balance (or nominal balance, in the case of Accrual
Securities which are also Strip Securities) thereof on each
Payment Date, as hereinafter defined, or in the manner described
in the related Prospectus Supplement.
If so provided in the related Prospectus Supplement, a series
may include one or more other Classes of Fixed Income Securities
(collectively, the "Senior Securities") that are senior to one
or more other Classes of Fixed Income Securities (collectively,
the "Subordinate Securities") in respect of certain
distributions of principal and interest and allocations of
losses on Receivables.
In addition, certain Classes of Senior (or Subordinate)
Securities may be senior to other Classes of Senior (or
Subordinate) Securities in respect of such distributions or
losses.
General Payment Terms of Securities.
As provided in the related Trust Agreement and as described in
the related Prospectus Supplement, the holders of the Securities
("Securityholders") will be entitled to receive payments on
their Securities on specified dates (each, a "Payment Date").
Payment Dates with respect to Fixed Income Securities will occur
monthly, quarterly or semi-annually, as described in the related
Prospectus Supplement.
The related Prospectus Supplement will describe a date (the
"Record Date") preceding such Payment Date, as of which the
Trustee or its paying agent will fix the identity of the
Securityholders for the purpose of receiving payments on the
next succeeding Payment Date. As described in the related
Prospectus Supplement, the Payment Date will be a specified day
of each month, commonly the tenth, twelfth, fifteenth or twenty-
fifth day of each month (or, in the case of quarterly-pay
Securities, the tenth, twelfth, fifteenth or twenty-fifth day of
every third month; and in the case of semi-annual pay
Securities, the tenth, twelfth, fifteenth or twenty-fifth day of
every sixth month) and the Record Date will be the close of
business as of the last day of the calendar month that precedes
the calendar month in which such Payment Date occurs.
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.
7
<PAGE>
Any such interest only or revolving period may,
upon the occurrence of certain events to be
described in the related Prospectus Supplement,
terminate prior to the end of the specified
period and result in the earlier than expected
amortization of the related Securities.
In addition, and as may be described in the
related Prospectus Supplement, the related Trust
Agreement may provide that all or a portion of
such collected payments may be retained by the
Trustee (and held in certain temporary
investments, including Receivables) for a
specified period prior to being used to fund
payments of principal to Securityholders.
Such retention and temporary investment by the
Trustee of such collected payments may be
required by the related Trust Agreement for the
purpose of (a) slowing the amortization rate of
the related Securities relative to the
installment payment schedule of the related
Receivables, or (b) attempting to match the
amortization rate of the related Securities to
an amortization schedule established at the time
such Securities are issued. Any such feature
applicable to any Securities may terminate upon
the occurrence of events to be described in the
related Prospectus Supplement, resulting in
distributions to the specified Securityholders
and an acceleration of the amortization of such
Securities.
As more fully specified in the related
Prospectus Supplement, neither the Securities
nor the underlying Receivables will be
guaranteed or insured by any governmental agency
or instrumentality or the Company, the related
Servicer, any Trustee, or any of their
affiliates.
No Investment Companies... Neither the Company nor any Trust will register
as an "investment company" under the Investment
Company Act of 1940, as amended (the "Investment
Company Act").
The Residual Interest With respect to each
Trust, the "Residual Interest" at any time
represents the rights to the related Trust
Property in excess of the Securityholders'
interest of all series then outstanding that
were issued by such Trust. The Residual Interest
in any Trust Property will fluctuate as the
aggregate Pool Balance (as hereinafter defined)
of such Trust Fund changes from time to time. A
portion of the Residual Interest in any Trust
may be sold separately in one or more public or
private transactions.
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
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overcollateralization account that provides
credit enhancement for more than one series of
Securities issued pursuant to the related Trust
Agreement).
Trust Property......... As specified in the related Prospectus
Supplement, the Trust Property will consist of
the related Contracts, and may include a
security interest in the related Vehicles. If
and to the extent specified in the related
Prospectus Supplement, credit enhancement with
respect to Trust Property or any class of
Securities may include any one or more of the
following: a Policy issued by an insurer
specified in the related Prospectus Supplement,
a reserve account, letters of credit, credit or
liquidity facilities, repurchase obligations,
third party payments or other support, cash
deposits or other arrangements. In addition to
or in lieu of the foregoing, credit enhancement
may be provided by means of subordination,
cross-support among the Receivables or over-
collateralization. See "Description of the Trust
Agreement -- Credit and Cash Flow Enhancement."
The Contracts are obligations for the purchase
of the Vehicles, or evidence borrowings used to
acquire the Vehicles. As specified in the
related Prospectus Supplement, the Contracts may
consist of any combination of Rule of 78s
Contracts, Fixed Value Contracts or Simple
Interest Contracts. Generally, "Rule of 78s
Contracts" provide for fixed level monthly
payments which will amortize the full amount of
the Contract over its term. The Rule of 78s
Contracts provide for allocation of payments
according to the "sum of periodic balances" or
"sum of monthly payments" method (the "Rule of
78s"). Each Rule of 78s Contract provides for
the payment by the Obligor of a specified total
amount of payments, payable in monthly
installments on the related due date, which
total represents the principal amount financed
and finance charges in an amount calculated on
the basis of a stated annual percentage rate
("APR") for the term of such Contract. The rate
at which such amount of finance charges is
earned and, correspondingly, the amount of each
fixed monthly payment allocated to reduction of
the outstanding principal balance of the related
Contract are calculated in accordance with the
Rule of 78s. Under the Rule of 78s, the portion
of each payment allocable to interest is higher
during the early months of the term of a
Contract and lower during later months than that
under a constant yield method for allocating
payments between interest and principal.
Notwithstanding the foregoing, as specified in
the related Prospectus Supplement, all payments
received by the related Servicer on or in
respect of the Rule of 78s Contracts may be
allocated on an actuarial or simple interest
basis.
Generally, the "Fixed Value Contracts" provide
for monthly payments with a final fixed value
payment which is greater than the scheduled
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.
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"Simple Interest Contracts" provide for the
amortization of the amount financed under the
receivable over a series of fixed level monthly
payments. However, unlike the monthly payment
under Rule of 78s Contracts, each monthly
payment consists of an installment of interest
which is calculated on the basis of the
outstanding principal balance of the receivable
multiplied by the stated APR and further
multiplied by the period elapsed (as a fraction
of a calendar year) since the preceding payment
of interest was made. As payments are received
under a Simple Interest Contract, the amount
received is applied first to interest accrued to
the date of payment and the balance is applied
to reduce the unpaid principal balance.
Accordingly, if an Obligor pays a fixed monthly
installment before its scheduled due date, the
portion of the payment allocable to interest for
the period since the preceding payment was made
will be less than it would have been had the
payment been made as scheduled, and the portion
of the payment applied to reduce the unpaid
principal balance will be correspondingly
greater. Conversely, if an Obligor pays a fixed
monthly installment after its scheduled due
date, the portion of the payment allocable to
interest for the period since the preceding
payment was made will be greater than it would
have been had the payment been made as
scheduled, and the portion of the payment
applied to reduce the unpaid principal balance
will be correspondingly less. In either case,
the Obligor pays a fixed monthly installment
until the final scheduled payment date, at which
time the amount of the final installment is
increased or decreased as necessary to repay the
then outstanding principal balance.
If an Obligor elects to prepay a Rule of 78s
Contract in full, it is entitled to a rebate of
the portion of the outstanding balance then due
and payable attributable to unearned finance
charges. If a Simple Interest Contract is
prepaid, rather than receive a rebate, the
Obligor is required to pay interest only to the
date of prepayment. The amount of a rebate under
a Rule of 78s Contract calculated in accordance
with the Rule of 78s will always be less than
had such rebate been calculated on an actuarial
basis and generally will be less than the
remaining scheduled payments of interest that
would be due under a Simple Interest Contract
for which all payments were made on schedule.
Distributions to Securityholders may not be
affected by Rule of 78s rebates under the Rule
of 78s Contracts because pursuant to the related
Prospectus Supplement such distributions may be
determined using the actuarial or simple
interest method.
The related Prospectus Supplement will further
describe the type and characteristics of the
Contracts included in the Trust Property
relating to the Securities offered pursuant to
this Prospectus and the related Prospectus
Supplement.
The Receivables comprising the Trust Property
will be originated by the Company; such
Receivables will have theretofore been either
(i) originated by Vendors and acquired by the
Company or (ii) acquired by the Company from
other originators or owners of Receivables.
The Company will either transfer Receivables to
a Trust pursuant to a Pooling Agreement or
pledge the Company's right, title and interest
in and to such Receivables to a Trustee on
behalf of Securityholders pursuant to an
Indenture. The obligations of the Company, the
Servicer, the related Trustee and the related
Indenture Trustee, if any, under the
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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."
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.
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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.
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
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circumstances and in the manner specified in
"Description of The Trust Agreement --
Termination" and in the related Prospectus
Supplement.
Tax Considerations...... Securities of each series offered hereby will,
for federal income tax purposes, constitute
either (i) interests in a Trust treated as a
grantor trust under applicable provisions of the
Code ("Grantor Trust Securities"), (ii) debt
issued by a Trust or by the Company ("Debt
Securities") or (iii) interests in a Trust which
is treated as a partnership ("Partnership
Interests").
The Prospectus Supplement for each series of
Securities will summarize, subject to the
limitations stated therein, federal income tax
considerations relevant to the purchase,
ownership and disposition of such Securities.
Investors are advised to consult their tax
advisors and to review "Certain Federal and
State Income Tax Consequences" in the related
Prospectus Supplement.
ERISA Considerations..... The Prospectus Supplement for each series of
Securities will summarize, subject to the
limitations discussed therein, considerations
under the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), relevant to
the purchase of such Securities by employee
benefit plans and individual retirement
accounts. See "ERISA Considerations" in the
related Prospectus Supplement.
Ratings................. Each Class of Securities offered pursuant to
this Prospectus and the related Prospectus
Supplement will be rated in one of the four
highest rating categories by one or more
"national statistical rating organizations", as
defined in the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and commonly
referred to as "Rating Agencies". Such ratings
will address, in the opinion of such Rating
Agencies, the likelihood that the Issuer will be
able to make timely payment of all amounts due
on the related Securities in accordance with the
terms thereof. Such ratings will neither address
any prepayment or yield considerations
applicable to any Securities nor constitute a
recommendation to buy, sell or hold any
Securities.
The ratings expected to be received with respect
to any Securities will be set forth in the
related Prospectus Supplement.
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RISK FACTORS
Prospective Securityholders should consider, among other things, the
following factors in connection with the purchase of the Securities:
Limited Liquidity. There can be no assurance that a secondary market
for the Securities of any series or Class will develop or, if it does develop,
that it will provide Securityholders with liquidity of investment or that it
will continue for the life of such Securities. The Prospectus Supplement for any
series of Securities may indicate that an underwriter specified therein intends
to establish and maintain a secondary market in such Securities; however, no
underwriter will be obligated to do so. The Securities will not be listed on any
securities exchange.
Ownership of Contracts. In connection with the issuance of any
series of Securities, the Company will originate Contracts. The Company will
warrant in a Trust Agreement (i) if the Company retains title to the Contracts,
that the Trustee for the benefit of Securityholders has a valid security
interest in such Contracts, or (ii) if the Company transfers such Contracts to a
Trust, that the transfer of the Contracts to such Trust is either a valid
assignment, transfer and conveyance of the Contracts to the Trust or the Trustee
on behalf of the Securityholders has a valid security interest in such
Contracts. As to be described in the related Prospectus Supplement, the related
Trust Agreement will provide either that the Trustee will be required to
maintain possession of the original copies of all Contracts that constitute
chattel paper or that the Company or the Servicer will retain possession of such
Contracts; provided that in case the Company retains possession of the related
Contracts, the Servicer may take possession of such original copies as necessary
for the enforcement of any Contract. If any Contracts remain in the possession
of the Company, the related Prospectus Supplement may describe specific trigger
events that will require delivery to the Trustee. If the Company, the Servicer,
the Trustee or other third party, while in possession of the Contracts, sells or
pledges and delivers such Contracts to another party, in violation of the
Receivables Acquisition Agreement or the Trust Agreement, there is a risk that
such other party could acquire an interest in such Contracts having a priority
over the Issuer's interest. Furthermore, if the Company, the Servicer or a third
party, while in possession of the Contracts, is rendered insolvent, such event
of insolvency may result in competing claims to ownership or security interests
in the Contracts. Such an attempt, even if unsuccessful, could result in delays
in payments on the Securities. If successful, such attempt could result in
losses to the Securityholders or an acceleration of the repayment of the
Securities. The Company will be obligated to repurchase any Contract originated
by the Company and currently in the related Trust Property if there is a breach
of the Company's representations and warranties that materially and adversely
affects the interests of the Trust in such Contract and such breach has not been
cured.
Security Interests. The transfer of the Receivables by the Company
to the Trustee pursuant to the related Pooling Agreement, Indenture or Trust
Agreement, the perfection of the security interests in the Receivables and the
enforcement of rights to realize on the Vehicles as collateral for the
Receivables are subject to a number of federal and state laws, including the UCC
as in effect in various states. As specified in each Prospectus Supplement, the
Servicer will take such action as is required to perfect the rights of the
Trustee in the Receivables. If, through inadvertence or otherwise, a third party
were to purchase (including the taking of a security interest in) a Receivable
for new value in the ordinary course of its business, without actual knowledge
of the Trust's interest, and take possession of a Receivable, the purchaser
would acquire an interest in such Receivable superior to the interest of the
Trust. As further specified in each Prospectus Supplement, no action will be
taken to perfect the rights of the Trustee in proceeds of a VSI Insurance Policy
(as hereinafter defined) or of any other insurance policies covering individual
Vehicles or Obligors. Therefore, the rights of a third party with an interest in
such proceeds could prevail against the rights of the Trust prior to the time
such proceeds are deposited by the Servicer into a Trust Account (as hereinafter
defined). See "Certain Legal Aspects of the Receivables".
Except to the extent specified in the related Prospectus Supplement,
each Contract will include a perfected security interest in the related Vehicle
in favor of the Trustee or the Company (and, if perfected in the name of the
Company, assigned pursuant to the related Pooling Agreement, Indenture or Trust
Agreement to the Trustee for the benefit of the Securityholders). However, to
the extent provided in the 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
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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. 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
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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.
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
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directly or indirectly through Indirect Participants. See "Description of the
Securities -- Book Entry Registration."
Security Rating. The rating of Securities credit enhanced by a
letter of credit, financial guaranty insurance policy, reserve fund, credit or
liquidity facilities, cash deposits or other forms of credit enhancement
(collectively "Credit Enhancement") will depend primarily on the
creditworthiness of the issuer of such external Credit Enhancement device (a
"Credit Enhancer"). Any reduction in the rating assigned to the claims-paying
ability of the related Credit Enhancer to honor its obligations pursuant to any
such Credit Enhancement below the rating initially given to the Securities would
likely result in a reduction in the rating of the Securities.
Maturity and Prepayment Considerations. Because the rate of payment
of principal on the Securities will depend, among other things, on the rate of
payment on the related Contracts, the rate of payment of principal on the
Securities cannot be predicted. Payments on the Contracts will include scheduled
payments as well as partial and full prepayments (to the extent not replaced
with substitute Contracts), payments upon the liquidation of Defaulted
Contracts, payments upon acquisitions by the Servicer or the Company of
Contracts from the related Trust Property on account of a breach of certain
representations and warranties in the related Trust Agreement, payments upon an
optional acquisition by the Servicer or the Company of Contracts from the
related Trust Property (any such voluntary or involuntary prepayment or other
early payment of a Contract, a "Prepayment"), and residual payments. The rate of
early terminations of Contracts due to Prepayments and defaults may be
influenced by a variety of economic and other factors, including, among others,
obsolescence, then current economic conditions and tax considerations. The risk
of reinvesting distributions of the principal of the Securities will be borne by
the Securityholders. The yield to maturity on Strip Securities or Securities
purchased at premiums or discounts to par will be extremely sensitive to the
rate of Prepayments on the related Receivables. In addition, the yield to
maturity on certain other types of classes of Securities, including Strip
Securities, Accrual Securities or certain other Classes in a series including
more than one Class of Securities, may be relatively more sensitive to the rate
of prepayment of the related Contracts than other Classes of Securities.
The rate of Prepayments of Contracts cannot be predicted and is
influenced by a wide variety of economic, social, and other factors, including
prevailing interest rates, the availability of alternate financing and local and
regional economic conditions. Therefore, no assurance can be given as to the
level of Prepayments that a Trust will experience.
Securityholders should consider, in the case of Securities purchased
at a discount, the risk that a slower than anticipated rate of Prepayments on
the Receivables could result in an actual yield that is less than the
anticipated yield and, in the case of any Securities purchased at a premium, the
risk that a faster than anticipated rate of Prepayments on the Receivables could
result in an actual yield that is less than the anticipated yield.
Limitations on Interest Payments and Foreclosures. Generally, under
the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended
(the "Relief Act"), or similar state legislation, an Obligor who enters military
service after the origination of the related Receivable (including an Obligor
who is a 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.
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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."
Year 2000 Issue. The year 2000 issue is whether the Company's or its
vendors' computer system will properly recognize date sensitive information when
the year changes to 2000. Systems that do not properly recognize such
information could generate erroneous data or fail.
The Company has developed a comprehensive project plan for achieving
year 2000 readiness. An inventory of critical hardware and software has been
completed and information technology components have been assessed. This
assessment included major suppliers and business partners and the Company is
monitoring their continued progress toward year 2000 compliance; however, the
Company does not rely on any single supplier or partner to conduct business. The
Company is currently in the process of renovating or replacing critical systems
and plans to complete this phase by December 31, 1998. Integrated testing and
installation of all renovated systems is planned for early calendar 1999 with an
estimated completion date of March 31, 1999. In addition, the Company expects to
have contingency plans for critical systems complete by December 31, 1998.
The Company presently believes that with modifications to existing
systems and/or conversion to new systems, the year 2000 issue will not pose
significant operational problems for the Company. However, if such modifications
and conversions are not made, or are not completed in a timely manner, the year
2000 issue could have a material impact on the operations of the Company. In
addition, there can be no assurance that unforeseen problems in the Company's
computer systems, or the systems of third parties on which the Company's
computers rely, would not have an adverse effect on the Company's systems or
operations.
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 "Description of the Securities -- Forward Commitments;
Pre-Funding." In addition, to the extent specified in the related Prospectus
Supplement, some combination of Credit Enhancements may be issued to or held by
the Trustee on behalf of the related Trust for the benefit of the holders of one
ore more classes of Securities.
The Receivables comprising the Trust Property will, as specifically
described in the related Prospectus Supplement, be either (i) originated by the
Company, (ii) originated by various manufacturers and acquired by the Company,
(iii) originated by various Dealers and acquired by the Company or (iv) acquired
by the Company from originators or owners of Receivables.
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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.
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
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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.
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
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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.
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.
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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 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.
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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.
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.
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THE TRUSTEE
The Trustee for each series of Securities will be specified in the
related Prospectus Supplement. The Trustee's liability in connection with the
issuance and sale of the related Securities is limited solely to the express
obligations of such Trustee set forth in the related Trust Agreement.
With respect to each series of Securities, the procedures for the
resignation or removal of the Trustee and the appointment of a successor Trustee
shall be specified in the related Prospectus Supplement.
DESCRIPTION OF THE SECURITIES
General
The Securities will be issued in series. Each series of Securities
(or, in certain instances, two or more series of Securities) will be issued
pursuant to a Trust Agreement. The following summaries (together with additional
summaries under "The Trust Agreement" below) describe all material terms and
provisions relating to the Securities common to each Trust Agreement. The
summaries do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, all of the provisions of the Trust Agreement for
the related Securities and the related Prospectus Supplement.
All of the Securities offered pursuant to this Prospectus and the
related Prospectus Supplement will be rated in one of the four highest rating
categories by one or more Rating Agencies.
The Securities will generally be styled as debt instruments, having
a principal balance and a specified Interest Rate. The Securities may either
represent beneficial ownership interests in the related Receivables held by the
related Trust or debt secured by certain assets of the related Issuer.
Each series or Class of Securities offered pursuant to this
Prospectus may have a different Interest Rate, which may be a fixed or
adjustable interest rate. The related Prospectus Supplement will specify the
Interest Rate for each series or Class of Securities described therein, or the
initial interest rate and the method for determining subsequent changes to the
Interest Rate.
A series may include one or more Classes of Strip Securities
entitled (i) to principal distributions, with disproportionate, nominal or no
interest distributions, or (ii) to interest distributions, with
disproportionate, nominal or no principal distributions. In addition, a series
of Securities may include two or more Classes of Securities that differ as to
timing, sequential order, priority of payment, Interest Rate or amount of
distribution of principal or interest or both, or as to which distributions of
principal or interest or both on any Class may be made upon the occurrence of
specified events, in accordance with a schedule or formula, or on the basis of
collections from designated portions of the related pool of Receivables. Any
such series may include one or more Classes of Accrual Securities, as to which
certain accrued interest will not be distributed but rather will be added to the
principal balance (or nominal balance, in the case of Accrual Securities which
are also Strip Securities) thereof on each Payment Date, as hereinafter defined,
or in the manner described in the related Prospectus Supplement.
If so provided in the related Prospectus Supplement, a series may
include one or more other Classes of Senior Securities that are senior to one or
more other Classes of Subordinate Securities in respect of certain distributions
of principal and interest and allocations of losses on Receivables.
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
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receiving payments on the next succeeding Payment Date. As more fully described
in the related Prospectus Supplement, the Payment Date may be the tenth,
twelfth, fifteenth or twenty-fifth day of each month (or, in the case of
quarterly-pay Securities, the tenth, twelfth, fifteenth or twenty-fifth day of
every third month; and in the case of semi-annual pay Securities, the tenth,
twelfth, fifteenth or twenty-fifth day of every sixth month) and the Record Date
will be the close of business as of the last day of the calendar month that
precedes the calendar month in which such Payment Date occurs.
Each Trust Agreement will describe a Remittance Period preceding
each Payment Date (for example, in the case of monthly-pay Securities, the
calendar month preceding the month in which a Payment Date occurs). As more
fully provided in the related Prospectus Supplement, collections received on or
with respect to the related Receivables held by a Trust during a Remittance
Period will be required to be remitted by the Servicer to the related Trustee
prior to the related Payment Date and will be used to fund payments to
Securityholders on such Payment Date. As may be described in the related
Prospectus Supplement, the related Trust Agreement may provide that all or a
portion of the payments collected on or with respect to the related Receivables
may be applied by the related Trustee to the acquisition of additional
Receivables during a specified period (rather than be used to fund payments of
principal to Securityholders during such period) with the result that the
related Securities will possess an interest-only period, also commonly referred
to as a revolving period, which will be followed by an amortization period. Any
such interest only or revolving period may, upon the occurrence of certain
events to be described in the related Prospectus Supplement, terminate prior to
the end of the specified period and result in the earlier than expected
amortization of the related Securities.
In addition, and as may be described in the related Prospectus
Supplement, the related Trust Agreement may provide that all or a portion of
such collected payments may be retained by the Trustee (and held in certain
temporary investments, including Receivables) for a specified period prior to
being used to fund payments of principal to Securityholders.
Such retention and temporary investment by the Trustee of such
collected payments may be required by the related Trust Agreement for the
purposes of (a) slowing the amortization rate of the related Securities relative
to the installment payment schedule of the related Receivables, or (b)
attempting to match the amortization rate of the related Securities to an
amortization schedule established at the time such Securities are issued. Any
such feature applicable to any Securities may terminate upon the occurrence of
events to be described in the related Prospectus Supplement, resulting in
distributions to the specified Securityholders and an acceleration of the
amortization of such Securities.
Neither the Securities nor the underlying Receivables will be
guaranteed or insured by any governmental agency or instrumentality or the
Company, the Servicer, any Trustee or any of their respective affiliates unless
specifically set forth in the related Prospectus Supplement.
As may be described in the related Prospectus Supplement, Securities
of each series covered by a particular Trust Agreement will either evidence
specified beneficial ownership interests in the Trust Property or represent debt
secured by the related Trust Property. To the extent that any Trust Property
includes certificates of interest or participations in Receivables, the related
Prospectus Supplement will describe the material terms and conditions of such
certificates or participations.
Indexed Securities
To the extent so specified in any Prospectus Supplement, any class
of Securities of a given series may consist of Securities ("Indexed Securities")
in which the principal amount payable at the final scheduled Payment Date (the
"Indexed Principal Amount") is determined by reference to a measure (the
"Index") which will be related to (i) the difference in the rate of exchange
between United States dollars and a currency or composite currency (the "Indexed
Currency") specified in the applicable Prospectus Supplement (such Indexed
Securities, "Currency Indexed Securities"); (ii) the difference in the price of
a specified commodity (the "Indexed Commodity") on specified dates (such Indexed
Securities, "Commodity Indexed Securities"); (iii) the difference in the level
of a specified stock index (the "Stock Index"), which may be based on U.S. or
foreign stocks, on specified dates (such Indexed Securities, "Stock Indexed
Securities"); or (iv) such other objective price or economic measures as are
described in the applicable Prospectus Supplement. The manner of determining the
Indexed Principal Amount of an Indexed Security and historical and other
information concerning the Indexed Currency, the Indexed Commodity,
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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.
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
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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 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.
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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 "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
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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.
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
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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 organization 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.
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.
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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.
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.
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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.
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.
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Distributions
With respect to each series of Securities, beginning on the Payment
Date specified in the related Prospectus Supplement, distributions of principal
and interest (or, where applicable, of principal or interest only) on each Class
of such Securities entitled thereto will be made by the applicable Indenture
Trustee to the holders of Notes (the "Noteholders") and by the applicable
Trustee to the holders of Certificates (the "Certificateholders") of such
series. The timing, calculation, allocation, order, source, priorities of and
requirements for each class of Noteholders and all distributions to each class
of Certificateholders of such series will be set forth in the related Prospectus
Supplement.
With respect to each series of Securities, on each Payment Date
collections on the related Receivables will be transferred from the Collection
Account to the Distribution Account for distribution to Securityholders,
respectively, to the extent provided in the related Prospectus Supplement.
Credit Enhancement, such as a reserve account, may be available to cover any
shortfalls in the amount available for distribution on such date, to the extent
specified in the related Prospectus Supplement. As more fully described in the
related Prospectus Supplement, and unless otherwise specified therein,
distributions in respect of principal of a Class of Securities of a given series
will be subordinate to distributions in respect of interest on such Class, and
distributions in respect of the Certificates of such series may be subordinate
to payments in respect of the Notes of such series.
Credit and Cash Flow Enhancements
The amounts and types of Credit Enhancement arrangements, if any,
and the provider thereof, if applicable, with respect to each class of
Securities of a given series will be set forth in the related Prospectus
Supplement. If and to the extent provided in the related Prospectus Supplement,
credit enhancement may be in the form of a Policy, subordination of one or more
Classes of Securities, reserve accounts, overcollateralization, letters of
credit, credit or liquidity facilities, third party payments or other support,
surety bonds, guaranteed cash deposits or such other arrangements as may be
described in the related Prospectus Supplement or any combination of two or more
of the foregoing. If specified in the applicable Prospectus Supplement, Credit
Enhancement for a Class of Securities may cover one or more 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
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certificate, the period from the applicable Closing Date) with certain standards
relating to the servicing of the Receivables.
Each Trust Agreement will also provide for delivery to the related
Trust and/or the applicable Indenture Trustee of a certificate signed by an
officer of the Servicer stating that the Servicer either has fulfilled its
obligations under such Trust Agreement in all material respects throughout the
preceding 12 months (or, in the case of the first such certificate, the period
from the applicable Closing Date) or, if there has been a default in the
fulfillment of any such obligation in any material respect, describing each such
default. The Servicer also will agree to give each Indenture Trustee and each
Trustee notice of certain Servicer Defaults (as hereinafter defined) under the
related Trust Agreement.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the applicable Indenture
Trustee or the applicable Trustee.
Certain Matters Regarding the Servicers
Each Trust Agreement will provide that the Servicer may not resign
from its obligations and duties as Servicer thereunder, except upon
determination that the performance by the Servicer of such duties is no longer
permissible under applicable law. No such resignation will become effective
until the related Trustee or a successor servicer has assumed the Servicer's
servicing obligations and duties under the Trust Agreement.
Except as otherwise provided in the related Prospectus Supplement,
each Trust Agreement will further provide that neither the Servicer nor any of
its respective directors, officers, employees, or agents shall be under any
liability to the related Issuer or the related Securityholders for taking any
action or for refraining from taking any action pursuant to such Trust
Agreement, or for errors in judgment; provided, however, that neither the
Servicer nor any such person will be protected against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties thereunder. In addition, such Trust Agreement will
provide that the Servicer is under no obligation to appear in, prosecute, or
defend any legal 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.
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Rights upon Servicer Default
As more fully described in the related Prospectus Supplement, as
long as a Servicer Default under a Trust Agreement remains unremedied, the
applicable Trustee, Credit Enhancer or holders of Securities of the related
series evidencing not less than 50% of the voting rights of such then
outstanding Securities may terminate all the rights and obligations of the
Servicer, if any, under such Trust Agreement, whereupon a successor servicer
appointed by such Trustee or such Trustee will succeed to all the
responsibilities, duties and liabilities of the Servicer under such Trust
Agreement and will be entitled to similar compensation arrangements. If,
however, a bankruptcy trustee or similar official has been appointed for the
Servicer, and no Servicer Default other than such appointment has occurred, such
bankruptcy trustee or official may have the power to prevent the applicable
Trustee or such Securityholders from effecting a transfer of servicing. In the
event that the Trustee is unwilling or unable to so act, it may appoint, or
petition a court of competent jurisdiction for the appointment of, a successor
with a net worth of at least $25,000,000 and whose regular business includes the
servicing of a similar type of receivables. Such Trustee may make such
arrangements for compensation to be paid, which in no event may be greater than
the servicing compensation payable to the Servicer under the related Trust
Agreement.
Waiver of Past Defaults
With respect to each Trust, unless otherwise provided in the related
Prospectus Supplement and subject to the approval of any Credit Enhancer, the
holders of Notes evidencing at least a majority of the voting rights of such
then outstanding Securities may, on behalf of all Securityholders of the related
Securities, waive any default by the Servicer in the performance of its
obligations under the related Trust Agreement and its consequences, except a
default in making any required deposits to or payments from any of the Trust
Accounts in accordance with such Trust Agreement. No such waiver shall impair
the Securityholders' rights with respect to subsequent defaults.
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
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such required notice will not prevent or delay termination of any Trust. Upon
termination of any Trust, the applicable Trustee shall direct that the assets of
such Trust be promptly sold (other than the related Trust Accounts) in a
commercially reasonable manner and on commercially reasonable terms. The
proceeds from any such sale, disposition or liquidation of such Receivables will
be treated as collections on such Receivables and deposited in the related
Collection Account. If the proceeds from the liquidation of such Receivables and
any amounts on deposit in the Reserve Account, if any, and the related
Distribution Account are not sufficient to pay the Securities of the related
series in full, and no additional Credit Enhancement is available, the amount of
principal returned to Securityholders will be reduced and some or all of such
Securityholders will incur a loss.
Each Trust Agreement will provide that the applicable Trustee does
not have the power to commence a voluntary proceeding in bankruptcy with respect
to any related Trust without the unanimous prior approval of all
Certificateholders (including the Company, if applicable) of such Trust and the
delivery to such Trustee by each such Certificateholder of a certificate
certifying that such Certificateholder reasonably believes that such Trust is
insolvent.
Termination
With respect to each Trust, the obligations of the Servicer, the
Company and the applicable Trustee pursuant to the related Trust Agreement will
terminate upon the earlier to occur of (i) the maturity or other liquidation of
the last related Receivable and the disposition of any amounts received upon
liquidation of any such remaining Receivables and (ii) the payment to
Securityholders of the related series of all amounts required to be paid to them
pursuant to such Trust Agreement. As more fully described in the related
Prospectus Supplement, in order to avoid excessive administrative expense, the
Servicer will be permitted in respect of the applicable Trust Property, unless
otherwise specified in the related Prospectus Supplement, at its option to
purchase from such Trust Property, as of the end of any Collection Period
immediately preceding a Payment Date, if the Pool Balance of the related
Contracts is less than a specified percentage (set forth in the related
Prospectus Supplement) of the initial Pool Balance in respect of such Trust
Property, all such remaining Receivables at a price equal to the aggregate of
the Purchase Amounts thereof as of the end of such Collection Period. The
related Securities will be redeemed following such purchase.
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
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specified in each Prospectus Supplement, no action will be taken to perfect the
rights of the Trustee in proceeds of any insurance policies covering individual
Vehicles or Obligors. Therefore, the rights of a third party with an interest in
such proceeds could prevail against the rights of the Trust prior to the time
such proceeds are deposited by the Servicer into a Trust Account.
Security Interests in the Financed Vehicles
General
Retail installment sale contracts such as the Receivables evidence
the credit sale of automobiles and light duty trucks by dealers to consumers.
The contracts also constitute personal property security agreements and include
grants of security interests in the related automobiles and light duty trucks
under the UCC. Perfection of security interests in automobiles and light duty
trucks is generally governed by the vehicle registration or titling laws of the
state in which each vehicle is registered or titled. In most states a security
interest in a vehicle is perfected by notation of the secured party's lien on
the vehicle's certificate of title.
Perfection
Pursuant to the Trust Agreement, the Company will sell and assign
the Receivables it has originated or acquired and its security interests in the
Vehicles to the Trustee. Alternatively, the Company may sell and assign the
Receivables and its interest in the Vehicles to a Finance Subsidiary which will,
in turn, sell and assign such Receivables and related security interests to the
Trustee. Each of the related Prospectus Supplements will specify whether,
because of the administrative burden and expense, the Company, the Servicer or
the Trustee will amend any certificate of title to identify the Trustee as the
new secured party on the certificates of title relating to the Vehicles. Each of
the related Prospectus Supplements will specify the UCC financing statements to
be filed in order to perfect the transfer to the Finance Subsidiary of
Receivables and the transfer by the Finance Subsidiary to the Trustee of the
Receivables. Further, although the Trustee will not rely on possession of the
Receivables as the legal basis for the perfection of its interest therein or in
the security interests in the Vehicles, the Servicer, as specified in the
related Prospectus Supplement, will continue to hold the Receivables and any
certificates of title relating to the Vehicles in its possession as custodian
for the Trustee pursuant to the related Trust Agreement which, as a practical
matter, should 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
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rights of subsequent purchasers of a Vehicle or subsequent creditors who take a
security interest in a Vehicle. In the related Trust Agreement, the Company or
its Finance Subsidiary will represent and warrant that it has, or has taken all
action necessary to obtain, a perfected security interest in each Vehicle. If
there are any Vehicles as to which the Company failed to obtain a first priority
perfected security interest, the Company's security interest would be
subordinate to, among others, subsequent purchasers of such Vehicles and holders
of first priority perfected security interests therein. Such a failure, however,
would constitute a breach of the Company's or the Finance Subsidiary's
representations and warranties under the related Trust Agreement. Accordingly,
pursuant to the related Trust Agreement, the Company or Finance Subsidiary would
be required to repurchase the related Receivables from the Trustee unless the
breach were cured.
Continuity of Perfection
Under the laws of most states, a perfected security interest in a
motor vehicle continues for four months after the vehicle is moved to a new
state from the one in which it is initially registered and thereafter until the
owner re-registers such motor vehicle in the new state. A majority of states
generally require surrender of a certificate of title to re-register a vehicle.
In those states that require a secured party to hold possession of the
certificate of title to maintain perfection of the security interest, the
secured party would learn of the re-registration through the request from the
Obligor under the related installment sale contract to surrender possession of
the certificate of title to assist in such re-registration. In the case of
vehicles registered in states providing for the notation of a lien on the
certificate of title but not requiring possession by the secured party (such as
Texas), the secured party would receive notice of surrender from the state of
re-registration if the security interest is noted on the certificate of title.
Thus, the secured party would have the opportunity to reperfect its security
interest in the vehicle in the state of relocation. However, these procedural
safeguards will not protect the secured party if, through fraud, forgery or
administrative error, the debtor somehow procures a new certificate of title
that does not list the secured party's lien. Additionally, in states that do not
require surrender of a certificate of title for re-registration of a vehicle,
re-registration could defeat perfection. In each of the Trust Agreements, the
Servicer will be required to take steps to effect re-perfection upon receipt of
notice of re-registration or information from the Obligor as to relocation.
Similarly, when an Obligor sells a Vehicle, the Servicer will have an
opportunity to require satisfaction of the related Receivable before release of
the lien, either because the Servicer will be required to surrender possession
of the certificate of title in connection with the sale, or because the Servicer
will receive notice as a result of its lien noted thereon. Pursuant to the
related Trust Agreement, the related Servicer will hold 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.
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Repossession
In the event of default by an Obligor, the holder of the related
retail installment sale contract has all the remedies of a secured party under
the UCC, except where specifically limited by other state laws. The UCC remedies
of a secured party include the right to repossession by self-help means, unless
such means would constitute a breach of the peace. Unless a vehicle is
voluntarily surrendered, self-help repossession is accomplished simply by taking
possession of the related financed vehicle. In cases where the Obligor objects
or raises a defense to repossession, or if otherwise required by applicable
state law, a court order is obtained from the appropriate state court, and the
vehicle must then be recovered in accordance with that order. In some
jurisdictions, the secured party is required to notify the debtor of the default
and the intent to repossess the collateral and give the debtor a time period
within which to cure the default prior to repossession. Generally, this right of
cure may only be exercised on a limited number of occasions during the term of
the related contract. Other jurisdictions permit repossession without prior
notice if it can be accomplished without a breach of the peace (although in some
states, a course of conduct in which the creditor has accepted late payments has
been held to create a right by the Obligor to receive prior notice).
Notice of Sale; Redemption Rights
The UCC and other state laws require a secured party to provide the
Obligor with reasonable notice of the date, time and place of any public sale
and/or the date after which any private sale of the collateral may be held. In
addition, some states also impose substantive timing requirements on the sale of
repossessed vehicles in certain circumstances and/or various substantive timing
and content requirements on such notices. In some states, under certain
circumstances after a financed vehicle has been repossessed, the Obligor may
redeem the collateral by paying the delinquent installments and other amounts
due. The Obligor has the right to redeem the collateral prior to actual sale or
entry by the secured party into a contract for sale of the collateral by paying
the secured party the unpaid principal balance of the obligation, accrued
interest thereon, reasonable expenses for repossessing, holding, and preparing
the collateral for disposition and arranging for its sale, plus, in some
jurisdictions, reasonable attorneys' fees and legal expenses or in some other
states, by payment of delinquent installments on the unpaid principal balance of
the related obligation.
Deficiency Judgments and Excess Proceeds
The proceeds of resale of the Vehicles generally will be applied
first to the expenses of resale and repossession and then to the satisfaction of
the indebtedness. In many instances, the remaining principal amount of such
indebtedness will exceed such proceeds. Under the UCC and laws applicable in
some 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
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subordinate lien with respect to the vehicle or if no such lienholder exists or
if there are remaining funds, the UCC requires the creditor to remit the surplus
to the Obligor under the contract.
Consumer Protection Laws
Numerous federal and state consumer protection laws and related
regulations impose substantial requirements upon creditors and servicers
involved in consumer finance. These laws include the Truth-in-Lending Act, the
Equal Credit Opportunity Act, the Federal Trade Commission Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Magnuson-Moss
Warranty Act, the Federal Reserve Board's Regulations B and Z, state adaptations
of the Uniform Consumer Credit Code, state motor vehicle retail installment sale
acts, state "lemon" laws and other similar laws. In addition, the laws of
certain states impose finance charge ceilings and other restrictions on consumer
transactions and require contract disclosures in addition to those required
under federal law. These requirements impose specific statutory liabilities upon
creditors who fail to comply with their provisions. In some cases, this
liability could affect the ability of an assignee such as the Trustee to enforce
consumer finance contracts such as the Receivables.
The so-called "Holder-in-Due-Course Rule" of the Federal Trade
Commission (the "FTC Rule") has the effect of subjecting any assignee of the
seller in a consumer credit transaction (and certain related creditors and their
assignees) to all claims and defenses which the Obligor in the transaction could
assert against the seller. Liability under the FTC Rule is limited to the
amounts paid by the Obligor under the contract, and the holder of the contract
may also be unable to collect any balance remaining due thereunder from the
Obligor. The FTC Rule is generally duplicated by the Uniform Consumer Credit
Code, other state statutes or the common law in certain states. To the extent
that the Receivables will be subject to the requirements of the FTC Rule, the
Trustee, as holder of the Receivables, will be subject to any claims or defenses
that the purchaser of the related Vehicle may assert against the seller of such
Vehicle. Such claims will be limited to a maximum liability equal to the amounts
paid by the Obligor under the related Receivable.
Under most state vehicle dealer licensing laws, sellers of
automobiles and light duty trucks are required to be licensed to sell vehicles
at retail sale. In addition, with respect to used vehicles, the Federal Trade
Commission's Rule on Sale of Used Vehicles requires that all sellers of used
vehicles prepare, complete and display a "Buyer's Guide" which explains the
warranty coverage for such vehicles. Furthermore, Federal Odometer Regulations
promulgated under the Motor Vehicle Information and Cost Savings Act and the
motor vehicle title laws of most states require that all sellers of used
vehicles furnish a written statement signed by the seller certifying the
accuracy of the odometer reading. If a seller is not properly licensed or if
either a Buyer's Guide or Odometer Disclosure Statement was not provided to the
purchaser of a Vehicle, the Obligor may be able to assert a defense against the
seller of the Vehicle. If an Obligor on a Receivable were successful in
asserting any such claim or defense, the Servicer would pursue 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.
40
<PAGE>
As specified in the related Prospectus Supplement, the Company (or
its Finance Subsidiary, if any) will represent and warrant under the related
Trust Agreement that each Receivable complies with all requirements of law in
all material respects. Accordingly, if an Obligor has a claim against the
Trustee for violation of any law and such claim materially and adversely affects
the Trustee's interest in a Receivable, such violation would constitute a breach
of representation and warranty under the related Trust Agreement and would
create an obligation of the Company (or its Finance Subsidiary, if any) to
repurchase such Receivable unless the breach were cured.
Soldiers' and Sailors' Civil Relief Act of 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of
1940, as amended (the "Relief Act"), an Obligor who enters military service
after the origination of such Obligor's Receivable (including an Obligor who was
in reserve status and is called to active duty after origination of the
Receivable), may not be charged interest (including fees and charges) above an
annual rate of 6% during the period of such Obligor's active duty status, unless
a court orders otherwise upon application of the lender. The Relief Act applies
to Obligors who are members of the Army, Navy, Air Force, Marines, National
Guard, Reserves, Coast Guard, and officers of the U.S. Public Health Service
assigned to duty with the military. Because the Relief Act applies to Obligors
who enter military service (including reservists who are called to active duty)
after origination of the related Receivable, no information can be provided as
to the number of loans that may be effected by the Relief Act. Application of
the Relief Act would adversely affect, for an indeterminate period of time, the
ability of the Servicer to collect full amounts of interest on certain of the
Receivables. Any shortfall in interest collections resulting from the
application of the Relief Act or similar legislation or regulations, which would
not be recoverable from the related Receivables, would result in a reduction of
the amounts distributable to the holders of the related Securities, and would
not be covered by advances, any form of Credit Enhancement provided in
connection with the related series of Securities. In addition, the Relief Act
imposes limitations that would impair the ability of the Servicer to foreclose
on an affected Receivable during the Mortgagor's period of active duty status,
and, under certain circumstances, during an additional three month period
thereafter. Thus, in the event that the Relief Act or similar legislation or
regulations applies to any Receivable which goes into default, there may be
delays in payment and losses on the related Securities in connection therewith.
Any other interest shortfalls, deferrals or forgiveness of payments on the
Receivables resulting from similar legislation or regulations may result in
delays in payments or losses to Securityholders of the related series.
Other Limitations
In addition to the laws limiting or prohibiting deficiency
judgments, numerous other statutory 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.
41
<PAGE>
METHODS OF DISTRIBUTION
The Securities offered hereby and by the related Prospectus
Supplement will be offered in series through one or more of the methods
described below. The Prospectus Supplement prepared for each series will
describe the method of offering being utilized for that series and will state
the public offering or purchase price of such series and the net proceeds to the
Company from such sale.
The Company intends that Securities will be offered through the
following methods from time to time and that offerings may be made concurrently
through more than one of these methods or that an offering of a particular
series of Securities may be made through a combination of two or more of these
methods. Such methods are as follows:
1. By negotiated firm commitment or best efforts underwriting and
public re-offering by underwriters;
2. By placements by the Company with institutional investors
through dealers;
3. By direct placements by the Company with institutional
investors; and
4. By competitive bid.
In addition, if specified in the related Prospectus Supplement, a
series of Securities may be offered in whole or in part in exchange for the
Receivables (and other assets, if applicable) that would comprise the Trust
Property in respect of such Securities.
If underwriters are used in a sale of any Securities (other than in
connection with an underwriting on a best efforts basis), such Securities will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions, at
fixed public offering prices or at varying prices to be determined at the time
of sale or at the time of commitment therefor. The Securities will be set forth
on the cover of the Prospectus Supplement relating to such series and the
members of the underwriting syndicate, if any, will be named in such Prospectus
Supplement.
In connection with the sale of the Securities, underwriters may receive
compensation from the Company or from purchasers of the Securities in the form
of discounts, concessions or commissions. 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.
42
<PAGE>
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 LLP, New York, New
York, or other counsel specified in the related Prospectus Supplement.
FINANCIAL INFORMATION
Certain specified Trust Property will secure each series of
Securities, however, 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 the capital contribution made to any Trust which is a Delaware
business trust. Accordingly, financial statements with respect to the Trust
Property of any Trust which is a Delaware business trust will be included in the
related Prospectus Supplement.
A Prospectus Supplement may also contain the financial statements of
the related Credit Enhancer, if any.
ADDITIONAL INFORMATION
This Prospectus, together with the Prospectus Supplement for each
series of Securities, contains a summary of the material terms of the applicable
exhibits to the Registration Statement and the documents referred to herein and
therein. Copies of such exhibits are on file at the offices of the Securities
and Exchange Commission in Washington, D.C., and may be obtained at rates
prescribed by the Commission upon request to the Commission and may be
inspected, without charge, at the Commission's offices.
43
<PAGE>
INDEX OF TERMS
Set forth below is a list of the defined terms used in this
Prospectus and the pages on which the definitions of such terms may be found
herein.
Accrual Securities ..................................................... 7
Additional Receivables ................................................. 11
AFS .................................................................... 4
APR .................................................................... 9, 20
Cede.................................................................... 11
CEDEL Participants ..................................................... 27
Certificateholders ..................................................... 33
Certificates ........................................................... 1, 4
Class................................................................... 1
Closing Date ........................................................... 29, 30
Collection Account ..................................................... 31
Collectors ............................................................. 23
Commission ............................................................. 2
Commodity Indexed Securities ........................................... 25
Company ................................................................ 4
Contracts ..............................................................1, 4, 21
Cooperative ............................................................ 28
Credit Enhancement ..................................................... 17
Credit Enhancer ........................................................ 17
Currency Indexed Securities ............................................ 25
Dealers ................................................................ 4
Debt Securities ........................................................ 13
Definitive Securities .................................................. 28
Depositaries ........................................................... 26
Direct Participants .................................................... 16
Distribution Account ................................................... 31
DTC .................................................................... 11
Eligible Deposit Account ............................................... 31
Eligible Institution ................................................... 31
Eligible Investments ................................................... 31
ERISA .................................................................. 13
Euroclear Operator ..................................................... 28
Euroclear Participants ................................................. 28
Event of Default ....................................................... 28
Exchange Act ........................................................... 2, 13
Face Amount ............................................................ 26
Finance Subsidiary ..................................................... 15
Fixed Income Securities ................................................ 6
Fixed Value Contracts .................................................. 9, 20
Forward Purchase Agreement ............................................. 29
FTC Rule ............................................................... 40
Funding Period ......................................................... 30
Grantor Trust Securities ............................................... 13
Holder-in-Due-Course Rule .............................................. 40
Indenture .............................................................. 5
Indenture Trustee ...................................................... 5
Index .................................................................. 25
Indexed Commodity ...................................................... 25
Indexed Currency ....................................................... 25
Indexed Principal Amount ............................................... 25
44
<PAGE>
Indexed Securities ..................................................... 25
Indirect Participants .................................................. 16, 26
Insolvency Event ....................................................... 34
Insolvency Laws ........................................................ 15
Interest Rate .......................................................... 2, 6
Investment Company Act ................................................. 8
Investment Earnings .................................................... 31
Issuer ................................................................. 4, 19
Noteholders ............................................................ 33
Notes .................................................................. 1, 4
Participants ........................................................... 26
Partnership Interests .................................................. 13
Pass-Through Rate ...................................................... 2
Payment Date ........................................................... 7
Policy ................................................................. 1, 5
Pool Balance ........................................................... 23
Pool Factor ............................................................ 23
Pooling Agreement ...................................................... 5
Pre-Funding Account .................................................... 11, 30
Pre-Funding Period ..................................................... 11
Prepayment ............................................................. 17
Prospectus Supplement .................................................. 1
Rating Agencies ........................................................ 13
Receivables ............................................................ 1, 4
Record Date ............................................................ 7
Registration Statement ................................................. 2
Relief Act ............................................................. 17, 41
Remittance Period ...................................................... 7
Residual Interest ...................................................... 8
Rule of 78s ............................................................ 9, 20
Rule of 78s Contracts .................................................. 9, 19
Rules .................................................................. 27
Securities ............................................................. 1
Securities Act ......................................................... 2
Security Insurer ....................................................... 11
Securityholder ......................................................... 27
Securityholders ........................................................ 7
Senior Securities ...................................................... 7
Servicer ............................................................... 1, 4
Servicer Default ....................................................... 34
Servicing Agreement .................................................... 5
Servicing Fee .......................................................... 32
Servicing Fee Rate ..................................................... 32
Simple Interest Contracts .............................................. 10, 20
Stock Index ............................................................ 25
Stock Indexed Securities ............................................... 25
Strip Securities ....................................................... 6
Subordinate Securities ................................................. 7
Terms and Conditions ................................................... 28
Transferor ............................................................. 4
Trust .................................................................. 1, 4
Trust Accounts ......................................................... 31
Trust Agreement ........................................................ 5, 30
45
<PAGE>
Trust Property ......................................................... 1, 4
Trustee ................................................................ 5
Vehicles ............................................................... 1, 4
Vendors ................................................................ 4
46
<PAGE>
PRINCIPAL OFFICE OF
AMERICREDIT FINANCIAL SERVICES, INC.
200 BAILEY AVENUE
FORTH WORTH, TEXAS 76107-1220
OWNER TRUSTEE
BANKERS TRUST DELAWARE
1011 CENTRE ROAD
SUITE 200
WILMINGTON, DELAWARE 19805
INDENTURE TRUSTEE
BANK ONE, N.A.
100 EAST BROAD STREET
COLUMBUS, OHIO 43215
PAYING AGENT AND TRANSFER AGENT
THE CHASE MANHATTAN BANK
450 WEST 33RD STREET
NEW YORK, NEW YORK 10036
LISTING AND INTERMEDIARY AGENT
BANQUE GENERALE DU LUXEMBOURG, S.A.
50 AVENUE J.F. KENNEDY
L-2951 LUXEMBOURG
LEGAL ADVISOR TO AMERICREDIT AND TO THE UNDERWRITERS
AS TO UNITED STATES LAW
DEWEY BALLANTINE LLP
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
INDEPENDENT ACCOUNTANTS TO AMERICREDIT
PRICEWATERHOUSE COOPERS LLP
301 COMMERCE STREET
FORTH WORTH, TEXAS 76102
<PAGE>
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE
HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANY PERSON TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THE INFORMATION IN THIS DOCUMENT SPEAKS ONLY AS
OF ITS DATE, AND MAY NOT BE ACCURATE AT ANY TIME AFTER ITS DATE. THIS DOCUMENT
IS NOT AN OFFER TO SELL THESE SECURITIES, AND IT IS NOT SOLICITING AN OFFER TO
BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-------
PROSPECTUS SUPPLEMENT
<S> <C>
Incorporation of Certain Documents By Reference......................... S-2
Table of Contents....................................................... S-4
Summary................................................................. S-6
Risk Factors............................................................ S-11
The Servicer............................................................ S-13
The Seller.............................................................. S-13
The Trust............................................................... S-14
The Trust Property...................................................... S-14
AmeriCredit's Automobile Financing Program.............................. S-16
The Receivables......................................................... S-17
Yield and Prepayment Considerations..................................... S-22
The Insurer............................................................. S-27
Description of the Notes................................................ S-29
Description of the Purchase Agreements and the Trust Documents.......... S-33
The Policy.............................................................. S-44
Certain Federal Income Tax Consequences................................. S-47
State Tax Considerations................................................ S-49
ERISA Considerations.................................................... S-50
Listing and General Information......................................... S-51
Legal Investment........................................................ S-51
Ratings................................................................. S-51
Underwriting............................................................ S-52
Experts................................................................. S-53
Legal Opinions.......................................................... S-53
Report of Independent Public Accountants................................ S-54
Index of Defined Terms.................................................. S-57
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............................................................ 14
The Trust Property...................................................... 18
The Issuers............................................................. 19
The Receivables......................................................... 19
AmeriCredit's Automobile Financing Program.............................. 21
Pool Factors............................................................ 23
Use of Proceeds......................................................... 23
The Company and the Servicer............................................ 23
The Trustees............................................................ 24
Description of the Securities........................................... 24
Description of the Trust Agreements..................................... 30
Certain Legal Aspects of the Receivables................................ 36
Certain Tax Considerations.............................................. 41
ERISA Considerations.................................................... 41
Method of Distribution.................................................. 42
Legal Opinions.......................................................... 43
Financial Information................................................... 43
Additional Information.................................................. 43
Index of Terms.......................................................... 44
</TABLE>
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UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS THAT
EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND THE PROSPEC-
TUS TO WHICH IT RELATES. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DE-
LIVER A PROSPECTUS SUPPLEMENT AND THE RELATED PROSPECTUS WHEN ACTING AS UNDER-
WRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENT OR SUBSCRIPTIONS.
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PROSPECTUS SUPPLEMENT
$625,000,000
AMERICREDIT AUTOMOBILE
RECEIVABLES TRUST 1998-D
$130,000,000 CLASS A-1 5.199%
ASSET BACKED NOTES
$240,000,000 CLASS A-2 FLOATING RATE
ASSET BACKED NOTES
$100,000,000 CLASS A-3 FLOATING RATE
ASSET BACKED NOTES
$155,000,000 CLASS A-4 FLOATING RATE
ASSET BACKED NOTES
AFS FUNDING CORP.
Seller
[LOGO APPEARS HERE OF AMERICREDIT]
Servicer
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON
NATIONSBANK MONTGOMERY SECURITIES LLC
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