<PAGE>1
PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED MARCH 17, 1993)
$1,032,828,625.73
GMAC 1995-A GRANTOR TRUST
7.15% ASSET BACKED CERTIFICATES, CLASS A
__________
GMAC AUTO RECEIVABLES CORPORATION
SELLER
__________
GENERAL MOTORS ACCEPTANCE CORPORATION
SERVICER
__________
The 7.15% Asset Backed Certificates (the "Certificates") will consist of two
classes of Certificates, the Class A Certificates and the Class B
Certificates. Only the Class A Certificates are being offered hereby.
The Class A Certificates will evidence in the aggregate an undivided
ownership interest of 93.5% in the GMAC 1995-A Grantor Trust (the
"Trust") to be formed pursuant to a Pooling and Servicing Agreement
to be entered into among GMAC Auto Receivables Corporation, as
Seller (the "Seller"), General Motors Acceptance Corporation,
as Servicer (the "Servicer"), and The First National Bank of
Chicago, as Trustee (the "Trustee"). The rights of the
Class B Certificateholders to receive distributions
with respect to the Receivables are subordinated
to the rights of the Class A Certificateholders,
to the extent described herein.
Principal, and interest to the extent of the Pass Through Rate of 7.15% per
annum, will be distributed on the 15th day of each month (or the next
following business day) beginning April 17, 1995 (each, a "Distribution
Date"). The Trust property will include a pool of retail instalment
sale contracts secured by automobiles and light trucks (the
"Receivables"), certain monies due or received thereunder on
and after March 1, 1995, security interests in the vehicles
financed thereby and certain other property. The aggregate
amount financed under the Receivables is $1,104,629,546.23.
The final scheduled Distribution Date on the
Certificates will be March 15, 2000.
There is currently no secondary market for the Certificates. The
Underwriters expect to make a market in the Class A Certificates,
but are not obligated to do so. There can be no assurance that
a secondary market for the Class A Certificates will develop
or, if it does develop, that it will continue. The Class A
Certificates will not be listed on any securities exchange.
The Class A Certificates initially will be represented by Certificates
registered in the name of Cede & Co., the nominee of The Depository
Trust Company ("DTC"). The interests of beneficial owners of the
Class A Certificates will be represented by book entries on the
records of DTC and participating members thereof. Definitive
Certificates will be available only under limited
circumstances.
<PAGE>
<PAGE>2
PROCEEDS OF THE ASSETS OF THE TRUST AND CERTAIN LIMITED AMOUNTS ON DEPOSIT IN
THE SUBORDINATION SPREAD ACCOUNT ARE THE SOLE SOURCES OF PAYMENTS ON THE
CLASS A CERTIFICATES. THE CERTIFICATES DO NOT REPRESENT AN INTEREST IN
OR OBLIGATION OF, AND ARE NOT INSURED OR GUARANTEED BY, GENERAL MOTORS
ACCEPTANCE CORPORATION, GMAC AUTO RECEIVABLES CORPORATION OR ANY OF
THEIR RESPECTIVE AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
_____________________________________________________________________________
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT SELLER(1)(2)
_____________________________________________________________________________
Per Class A Certificate 99.96875% 0.175% 99.79375%
Total $1,032,505,866.78 $1,807,450.10 $1,030,698,416.68
_____________________________________________________________________________
(1) Plus accrued interest at the Pass Through Rate from March 15, 1995.
(2) Before deducting expenses payable by the Seller estimated to be
$700,000.00.
The Class A Certificates are offered subject to receipt and acceptance by
the Underwriters, to prior sale and to the Underwriters' right to reject any
order in whole or in part and to withdraw, cancel or modify the offer without
notice. It is expected that delivery of the Class A Certificates will be made
in book-entry form through the facilities of DTC, on or about March 16, 1995,
against payment therefor in immediately available funds.
J.P. MORGAN SECURITIES INC.
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS MARCH 9, 1995.
<PAGE>
<PAGE> 3
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
SELLER, THE SERVICER OR THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, THE SECURITIES OFFERED HEREBY TO ANYONE IN ANY JURISDICTION IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT
INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SINCE THE DATE OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS.
TABLE OF CONTENTS
Page
----
Prospectus Supplement
The Certificates .............................. S-3
The Receivables Pool .......................... S-4
ERISA Considerations .......................... S-6
Underwriting .................................. S-6
Legal Matters ................................. S-6
Prospectus
Available Information ......................... 2
Reports to Class A Certificateholders
By The Trustee .............................. 2
Prospectus Summary ............................ 3
The Trusts .................................... 7
The Receivables ............................... 7
Class A Pool Factor and Trading Information ... 9
Use of Proceeds ............................... 9
The Seller .................................... 9
The Servicer .................................. 9
The Certificates .............................. 10
Certain Legal Aspects of the Receivables ...... 25
Federal Income Tax Consequences ............... 28
ERISA Considerations .......................... 31
Plan of Distribution .......................... 33
Legal Opinions ................................ 33
Index of Terms ................................ 34
Until June 7, 1995, all dealers effecting transactions in the Class A
Certificates, whether or not participating in this distribution, may be
required to deliver a Prospectus Supplement and the Prospectus to which it
relates. This delivery requirement is in addition to the obligation of
dealers to deliver a Prospectus Supplement and Prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
S-2<PAGE>
<PAGE>4
THE CERTIFICATES OFFERED BY THIS PROSPECTUS SUPPLEMENT CONSTITUTE PART OF
A SEPARATE SERIES OF CERTIFICATES BEING OFFERED BY THE SELLER PURSUANT TO ITS
PROSPECTUS DATED MARCH 17, 1993, OF WHICH THIS PROSPECTUS SUPPLEMENT IS A
PART AND WHICH ACCOMPANIES THIS PROSPECTUS SUPPLEMENT. THE PROSPECTUS
CONTAINS IMPORTANT INFORMATION REGARDING THIS OFFERING WHICH IS NOT CONTAINED
HEREIN, AND PROSPECTIVE INVESTORS ARE URGED TO READ THE PROSPECTUS AND THIS
PROSPECTUS SUPPLEMENT IN FULL. SALES OF THE CERTIFICATES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS
A CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE CERTIFICATES
The Certificates are a series of Certificates described in the attached
Prospectus. The Series of Certificates consists of two classes, entitled
7.15% Asset Backed Certificates, Class A (the "Class A Certificates") and
7.15% Asset Backed Certificates, Class B (the "Class B Certificates"). Only
the Class A Certificates are being offered hereby. The Class B Certificates
are not being offered hereby and initially will be held by the Seller. The
Certificates will be issued by the GMAC 1995-A Grantor Trust (the "Trust") to
be formed by GMAC Auto Receivables Corporation (the "Seller") pursuant to a
Pooling and Servicing Agreement between the Seller, General Motors Acceptance
Corporation (the "Servicer") and The First National Bank of Chicago, as
Trustee (the "Trustee"), which incorporates the GMAC Grantor Trusts Standard
Terms and Conditions of Agreement Effective March 1, 1993 (together, the
"Agreement"), to be dated as of March 16, 1995 (the "Closing Date"). In
addition to the terms and conditions set forth below, reference is made to the
Prospectus for the terms and conditions of the Certificates.
Aggregate Amount Financed .................................. $1,104,629,546.23
Class A Percentage .................................................... 93.50%
Class B Percentage ..................................................... 6.50%
Initial Class A Certificate Balance ........................ $1,032,828,625.73
Initial Class B Certificate Balance ........................ $ 71,800,920.50
Pass Through Rate ...................................................... 7.15%
Cutoff Date .................................................... March 1, 1995
Subordination Initial Deposit ............................. $ 1,656,944.32
Minimum Subordination Spread Amount ....................... $ 8,284,721.60
Maximum Subordination Spread Amount ....................... $ 35,900,460.25
Specified Subordination Percentage .................................... 9.75%
Subordination Spread Trigger ............................... $ 110,000,000.00
Trigger Subordination Spread Amount ........................ $ 16,569,443.19
Basic Servicing Fee Rate ............................................... 1.00%
<PAGE>5
The final Distribution Date, assuming the Servicer does not exercise its
option to purchase the Receivables as described under the caption
"Termination" in the Prospectus, will be no later than March 15, 2000.
S-3
THE RECEIVABLES POOL
The Receivables to be included in the Receivables Pool related to this
series of Certificates were selected from the Servicer's portfolio based on
several criteria, including that each such Receivable (i) has a first
payment due date after January 1, 1994, (ii) has an original term of 6
to 60 months, (iii) provides for finance charges at an annual percentage
rate between 8.75% and 20.00%, (iv) as of the Cutoff Date, was not more than
29 days past due and (v) satisfies the other criteria set forth in the
Prospectus under the caption "The Receivables." As of the Cutoff Date,
Scheduled Interest Receivables represented approximately 50.9% of the
Receivables Pool by aggregate principal balance, with the remainder being
Simple Interest Receivables.
The composition and distribution by annual percentage rate of the
Receivables Pool are as set forth in the following tables:
COMPOSITION OF THE RECEIVABLES POOL
Term
Weighted
Average Weighted
Annual Weighted Average
Percentage Average Remaining
Rate of Aggregate Number of Average Original Term to
Receivables Amount Contracts Amount Term to Maturity
(Range) Financed in Pool Financed Maturity (Range)
- ----------- ---------------- --------- --------- ----------- ------------
12.26% $1,104,629,546.23 87,999 $12,552.75 54.81 months 51.41 months
(8.75% to 20.00%) (6 to 60 months)
Scheduled
Weighted
Average
Life(1)
------------
28.69 months
__________
(1) Based on Scheduled Payments due on and after the Cutoff Date and
assuming that no prepayments on the Receivables are made and that
all payments on Simple Interest Receivables are received on their
respective due dates.
<PAGE>6
DISTRIBUTION BY ANNUAL PERCENTAGE RATE OF THE RECEIVABLES POOL
Percentage of
Annual Percentage Number of Amount Aggregate Amount
Rate Range Contracts Financed Financed
- ------------------ --------- -------- ----------------
8.75% to 9.00% 8,960 $ 122,705,327.87 11.1%
9.01 to 10.00 17,133 236,229,777.88 21.4
10.01 to 11.00 12,932 175,901,112.98 15.9
11.01 to 12.00 9,158 119,647,820.55 10.8
12.01 to 13.00 6,937 84,113,194.40 7.6
13.01 to 14.00 5,647 66,040,753.16 6.0
14.01 to 15.00 5,222 58,771,853.22 5.3
15.01 to 16.00 4,805 54,748,470.27 5.0
16.01 to 17.00 4,198 46,805,614.36 4.2
17.01 to 18.00 4,632 50,262,721.41 4.6
18.01 to 20.00 8,375 89,402,900.13 8.1
_______ _________________ ______
Total 87,999 $1,104,629,546.23 100.0%
======= ================= ======
S-4
The Receivables Pool includes Receivables originated in 46 states
and the District of Columbia. The following table sets forth the percentage
of the Aggregate Amount Financed in the states with the largest concentration
of Receivables. No other state accounts for more than 4.3% of the Aggregate
Amount Financed.
Percentage of Aggregate
State(1) Amount Financed
__________ _______________________
Texas ......................... 17.3%
California ......................... 9.3
Florida ......................... 8.2
Georgia ......................... 6.2
Illinois ......................... 5.8
__________
(1) Based on billing address of the obligors on the Receivables.
Approximately 50.0% of the aggregate principal balance of the
Receivables, constituting 40.7% of the number of Receivables, as of the Cutoff
Date, represent Receivables secured by new vehicles. The remainder are
secured by used vehicles.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Set forth below is certain information concerning General Motors
Acceptance Corporation's experience in the United States pertaining to
delinquencies on new and used retail automobile and light truck receivables
and repossessions and net loss information relating to its entire vehicle
portfolio (including receivables previously sold which General Motors
Acceptance Corporation continues to service). There can be no assurance that
the delinquency, repossession and net loss experience on the Receivables Pool
will be comparable to that set forth below.
<PAGE>7
YEARS ENDED DECEMBER 31
--------------------------------------
1994 1993 1992 1991 1990
----- ----- ----- ----- -----
NEW AND USED VEHICLE CONTRACTS
Total Retail Contracts
Outstanding at End of the
Period (in thousands) .......... 3,892 4,589 5,217 5,777 6,575
Average Daily Delinquency
31-60 Days ...................... 2.32% 2.35% 2.43% 2.54% 2.32%
61-90 Days ...................... 0.12 0.11 0.12 0.14 0.14
91 Days or More ................. 0.02 0.02 0.02 0.02 0.03
Percent of Portfolio with
Recourse to Dealers at
End of the Period ............... 3.6% 4.1% 6.0% 7.0% 9.1%
Repossessions as a Percent
of Average Number of
Contracts Outstanding ........... 2.31 2.17 2.41 2.80 2.79
Net Losses as a Percent of
Liquidations (1)................. 0.96 1.03 1.46 1.86 1.98
Net Losses as a Percent of
Average Receivables (1).......... 0.57 0.64 0.89 1.08 1.11
________________
(1) Percentages based on gross accounts receivable including unearned income.
The net loss figures above reflect the fact that General Motors
Acceptance Corporation had recourse to dealers on a portion of its retail
instalment sale contracts. The percentage of the Aggregate Amount Financed
with recourse to dealers in the Receivables Pool is 0.2%. General Motors
Acceptance Corporation applies the same underwriting standards to the purchase
of contracts without regard to whether dealer recourse is provided. Based on
its experience, General Motors Acceptance Corporation believes that there is
no material difference between the rates of delinquency and repossession on
contracts with recourse against dealers as compared to contracts without
recourse against dealers. However, the net loss experience of contracts
without recourse against dealers is higher than that of contracts with
recourse against dealers because, under its recourse obligation, the dealer is
responsible to General Motors Acceptance Corporation for payment of the unpaid
balance of the contract, provided General Motors Acceptance Corporation
retakes the car from the obligor and returns it to the dealer within a
specified time. In the event of a dealer's bankruptcy, a bankruptcy
S-5
trustee might attempt to characterize recourse sales of contracts as loans to
the dealer secured by the contracts. Such an attempt, if successful, could
result in payment delays or losses on the affected Receivables.
ERISA CONSIDERATIONS
The Exemption described in the Prospectus under the caption "ERISA
Considerations" refers to the exemption granted to J.P. Morgan Securities Inc.
(Prohibited Transaction Exemption 90-23; Exemption Application No. D-7989, 55
Fed. Reg. 20,545 (1990)).
<PAGE>8
Investors that are insurance companies should consult with their counsel
with respect to a purchase of the Class A Certificates, whether the investment
is through its general or separate accounts.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting
agreement (the "Underwriting Agreement"), the Seller has agreed to sell to
each of the Underwriters named below, and each of the Underwriters, for whom
J.P. Morgan Securities Inc. is acting as representative (the
"Representative"), have severally agreed to purchase from the Seller the
principal amount of Class A Certificates set forth opposite its name below:
AGGREGATE PRINCIPAL
AMOUNT OF CLASS A
CERTIFICATES
UNDERWRITERS TO BE PURCHASED
- ------------ -------------------
J.P. Morgan Securities Inc. . . . . . . . . . . . . .$ 207,228,625.73
Bear, Stearns & Co. Inc. . . . . . . . . . . . . . . . 206,400,000.00
Lehman Brothers Inc. . . . . . . . . . . . . . . . . . 206,400,000.00
Merrill Lynch, Pierce,
Fenner & Smith Incorporated .. . . . . . 206,400,000.00
Salomon Brothers Inc . . . . . . . . . . . 206,400,000.00
-------------------
Total . . $ 1,032,828,625.73
===================
The Seller has been advised by the Representative that the several
Underwriters propose initially to offer the Class A Certificates to the public
at the price set forth on the cover page hereof, and to certain dealers at
such price less a concession not in excess of 0.125% of the Class A
Certificate denominations. The Underwriters may allow and such dealers may
reallow a concession not in excess of 0.100% of the Class A Certificate
denominations to certain other dealers. After the initial public offering,
the public offering price and such concessions may be changed.
John G. Smale, a director of J.P. Morgan & Co. Incorporated, of which
J.P. Morgan Securities Inc. is an indirect wholly-owned subsidiary, is
Chairman of the Board of General Motors Corporation. Dennis Weatherstone, a
director of J.P. Morgan & Co. Incorporated, is also a director of General
Motors Corporation.
LEGAL MATTERS
In addition to the legal opinions described in the Prospectus, certain
legal matters relating to the Certificates will be passed upon for the
Underwriters by Mayer, Brown & Platt. Mayer, Brown & Platt has from time to
time represented, and is currently representing, General Motors Corporation
and certain of its affiliates.
As described in the Prospectus, the Receivables are being sold by GMAC
to the Seller. The Tenth Circuit Court has found that accounts sold prior to
a bankruptcy should be treated as property of the bankruptcy estate. In the
unlikely event that GMAC were a debtor in a bankruptcy proceeding, if the
bankruptcy court applied this analysis, delays or reductions in distributions
of collections to Certificateholders could occur.
S-6
<PAGE>9
PROSPECTUS
GMAC GRANTOR TRUSTS
ASSET BACKED CERTIFICATES, CLASS A
GMAC AUTO RECEIVABLES CORPORATION
SELLER
GENERAL MOTORS ACCEPTANCE CORPORATION
SERVICER
------------------------
The Asset Backed Certificates (the "Certificates") described herein 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 (a "Prospectus Supplement"). Each series of Certificates
will consist of two classes of Certificates, the Class A Certificates and the
Class B Certificates.
The Class A Certificates of any series will evidence in the aggregate an
undivided ownership interest of the Class A Percentage (as defined in the
related Prospectus Supplement) in the grantor trust to be formed with respect
to such series (a "Trust"). The property of each Trust will include a pool of
retail instalment sale contracts secured by automobiles and light trucks (the
"Receivables"), certain monies due or received thereunder on and after the
Cutoff Date set forth in the related Prospectus Supplement, security interests
in the vehicles financed thereby and certain other property. Each Trust will
be formed pursuant to a Pooling and Servicing Agreement (an "Agreement") to be
entered into among GMAC Auto Receivable Corporation, as Seller (the "Seller"),
General Motors Acceptance Corporation, as Servicer (the "Servicer"), and The
First National Bank of Chicago, as Trustee (the "Trustee").
Principal and interest, to the extent of the Pass Through Rate set forth
in the related Prospectus Supplement, with respect to the Receivables held by
the related Trust will be distributed on the 15th day of each month (or the
next following business day) beginning on the date set forth in the related
Prospectus Supplement (each, a "Distribution Date"). The rights of Class B
Certificateholders to receive distributions will be subordinated to the rights
of the related Class A Certificateholders to the extent described herein.
There is currently no secondary market for the Certificates. There can
be no assurance that a secondary market for the Certificates will develop or,
if it does develop, that it will continue. The Certificates will not be
listed on any securities exchange.
Unless otherwise provided in the related Prospectus Supplement, the Class
A Certificates initially will be represented by Certificates registered in the
name of Cede & Co., the nominee of The Depository Trust Company ("DTC"). The
interests of beneficial owners of the Class A Certificates will be represented
by book entries on the records of DTC and participating members thereof.
Definitive Certificates will be available only under limited circumstances.
_________
PROCEEDS OF THE ASSETS OF EACH TRUST AND CERTAIN LIMITED AMOUNTS ON DEPOSIT IN
A SUBORDINATION SPREAD ACCOUNT ARE THE SOLE SOURCES OF PAYMENTS ON THE RELATED
CERTIFICATES. THE CERTIFICATES DO NOT REPRESENT AN INTEREST IN OR OBLIGATION
OF, AND ARE NOT INSURED OR GUARANTEED BY, GENERAL MOTORS ACCEPTANCE
CORPORATION, GMAC AUTO RECEIVABLES CORPORATION OR ANY OF THEIR RESPECTIVE
AFFILIATES.
_________
<PAGE>10
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.
________
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of securities offered hereby unless accompanied by a
Prospectus Supplement.
The date of this Prospectus is March 17, 1993.
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR
THE RELATED PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
SELLER, THE SERVICER OR ANY UNDERWRITER. THIS PROSPECTUS AND THE RELATED
PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO BUY, ANY SECURITIES OFFERED THEREBY TO ANYONE IN ANY JURISDICTION
IN WHICH THE PERSON MAKING SUCH OFFER AND SOLICITATION IS NOT QUALIFIED TO
DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS AND THE RELATED
PROSPECTUS SUPPLEMENT NOR ANY SALE MADE THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT INFORMATION HEREIN OR THEREIN IS
CORRECT AS OF ANY TIME SINCE THE DATE HEREOF.
__________
AVAILABLE INFORMATION
GMAC Auto Receivables Corporation, as originator of each Trust, has filed
with the Securities and Exchange Commission (the "Commission") a Registration
Statement under the Securities Act of 1933 with respect to the Class A
Certificates offered pursuant to this Prospectus. The Registration Statement,
amendments thereof and exhibits thereto are available for inspection without
charge at the public reference facilities of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and the regional
offices of the Commission at Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and 75 Park Place, New York, New
York 10007. Copies of such information can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates.
REPORTS TO CLASS A CERTIFICATEHOLDERS BY THE TRUSTEE
Unless otherwise provided in the related Prospectus Supplement, the
Trustee for the Class A Certificateholders and Class B Certificateholders
(collectively, the "Certificateholders") will provide to such Class A
Certificateholders (which, unless otherwise provided in the related Prospectus
Supplement, will be Cede & Co. as nominee of DTC unless Definitive
Certificates are issued under the limited circumstances described herein)
unaudited monthly and annual reports concerning the Receivables. See "The
Certificates -- Statements to Class A Certificateholders."
2
PROSPECTUS SUMMARY
This Prospectus 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 Certificates contained in the related
Prospectus Supplement to be prepared and delivered in connection with the
offering of such series. Certain capitalized terms used in this Prospectus
Summary are defined elsewhere in this Prospectus. A listing of the pages on
which some of such terms are defined is found in the "Index of Terms."
<PAGE>11
Issuer .................. With respect to each series of Certificates, a
grantor trust (a "Trust") will be formed by
GMAC Auto Receivables Corporation (the
"Seller") pursuant to a Pooling and Servicing
Agreement between the Seller, General Motors
Acceptance Corporation (the "Servicer") and The
First National Bank of Chicago, as Trustee (the
"Trustee"), which incorporates the General Motors
Acceptance Corporation Standard Terms and
Conditions identified therein (together, an
"Agreement") to be dated the Closing Date (as
defined in the related Prospectus Supplement).
Seller .................. GMAC Auto Receivables Corporation.
Servicer ................ General Motors Acceptance Corporation.
Securities Offered ...... Each series of Certificates will consist of two
classes, the Asset Backed Certificates, Class A
(the "Class A Certificates") and the Asset Backed
Certificates, Class B (the "Class B
Certificates"), in each case as designated in the
related Prospectus Supplement. Each Certificate
will represent an undivided ownership interest in
the related Trust. The property of each Trust
will include a pool (a "Receivables Pool") of
retail instalment sale contracts for automobiles
and light trucks (the "Receivables"), certain
monies due or received thereunder on and after
the Cutoff Date (as defined in the related
Prospectus Supplement), security interests in the
vehicles financed thereby (the "Financed
Vehicles"), certain bank accounts and the
proceeds thereof, any proceeds from claims on
certain insurance policies and certain rights
under the related Purchase Agreement. See "The
Trust." Unless otherwise provided in the related
Prospectus Supplement, the Class A Certificates
will be issued in fully registered form in
minimum denominations of $1,000 and integral
multiples thereof.
For any series, the Class A Certificates will
evidence in the aggregate an undivided ownership
interest of the Class A Percentage (as defined in
the related Prospectus Supplement) of the related
Trust and the Class B Certificates will evidence
in the aggregate an undivided ownership interest
of the Class B Percentage (as defined in the
related Prospectus Supplement) of such Trust.
The Class B Certificates will be subordinated to
the Class A Certificates of the related series to
the extent described herein.
<PAGE>12
Interest ................ With respect to each series of Certificates, on
each Distribution Date, interest will be passed
through to the holders of record of Class A
Certificates (the "Class A Certificateholders")
as of the day immediately preceding such
Distribution Date (or, if Definitive Certificates
are issued, the last day of the preceding Monthly
Period)(the "Record Date") at the Pass Through
Rate (as defined in the related Prospectus
3
Supplement) on the Class A Certificate Balance.
Interest on the Class A Certificates will accrue
from the most recent Distribution Date on which
interest has been paid to but excluding the
current Distribution Date, to the extent of funds
available from (i) the Class A Percentage of the
Available Interest, (ii) the Subordination Spread
Account and (iii) the Class B Distributable
Amount. The "Class A Certificate Balance" will
equal, initially, the applicable Class A
Percentage of the Aggregate Amount Financed and
thereafter, except as provided in the related
Agreement, will equal the initial Class A
Certificate Balance reduced by all principal
distributions on the Class A Certificates. A
"Monthly Period" with respect to a Distribution
Date will be the calendar month preceding the
month in which such Distribution Date occurs.
See "The Certificates" and "Federal Income Tax
Consequences."
Principal ............... With respect to each series of Certificates, on
each Distribution Date, the Trustee will pass
through and distribute pro rata to Class A
Certificateholders as of the Record Date, with
respect to Scheduled Interest Receivables, all
Scheduled Payments of principal, the principal
portion of all prepayments in full and certain
partial prepayments received during the related
Monthly Period and, with respect to Simple
Interest Receivables, all payments allocable to
principal that are received by the Trustee during
the related Monthly Period, in each case to the
extent of funds available from (i) the Class A
Percentage of the Available Principal, (ii) the
Subordination Spread Account and (iii) the
remainder of the Total Available Amount. See
"The Certificates" and "The Receivables Pool."
Receivables ............. The aggregate Amount Financed under the
Receivables held by each Trust (the "Aggregate
Amount Financed") will be the amount specified in
the related Prospectus Supplement. Each
Receivable will be either a Scheduled Interest
Receivable or a Simple Interest Receivable. All
of the Receivables will be prepayable at any time
without penalty to the obligor. See "The
Receivables." Information with respect to each
Receivables Pool, including the weighted average
annual percentage rate and the weighted average
remaining maturity, will be set forth in the
related Prospectus Supplement.
<PAGE>13
Subordination ........... The rights of the holders of Class B Certificates
(the "Class B Certificateholders") to receive
distributions to which they would otherwise be
entitled with respect to the Receivables held by
the related Trust will be subordinated to the
rights of the related Class A Certificateholders,
as described more fully herein.
Subordination
Spread Account .......... A Subordination Spread Account for each series will
be created with an initial deposit by the Seller
of cash or certain investments maturing on or
prior to the related initial Distribution Date
and having a value equal to the Subordination
Initial Deposit (as defined in the related
Prospectus Supplement). The funds in each
Subordination Spread Account will thereafter be
supplemented by the deposit of amounts otherwise
distributable to the related Class B
Certificateholders until the amount of funds in
such Subordination Spread Account reaches an
amount equal to the applicable Specified
Subordination Spread Account Balance.
Thereafter, amounts otherwise distributable to
the Class B Certificateholders will be deposited
in the Subordination Spread Account to the extent
necessary to maintain the amount of funds in such
Subordination Spread Account at an amount equal
to the Specified Subordination Spread Account
Balance. Amounts in each Subordination Spread
4
Account on any Distribution Date (after giving
effect to all distributions made on such
Distribution Date) in excess of the Specified
Subordination Spread Account Balance for such
Distribution Date generally will be released to
the Class B Certificateholders of the related
Trust. The "Specified Subordination Spread
Account Balance" with respect to any Distribution
Date will be equal to the Minimum Subordination
Spread Amount (as defined in the related
Prospectus Supplement), subject to adjustment in
the manner described more fully herein. See "The
Certificates -- Subordination of the Class B
Certificates; Subordination Spread Account." In
no event will the Specified Subordination Spread
Account Balance be more than the Maximum
Subordination Spread Amount (as defined in the
related Prospectus Supplement) or less than the
Minimum Subordination Spread Amount. As of any
Distribution Date, the amount of funds actually
on deposit in the Subordination Spread Account
may, in certain circumstances, be less than the
Specified Subordination Spread Account Balance.
Each Subordination Spread Account will be
maintained with the Trustee as a segregated trust
account, but will not be part of the related
Trust.
<PAGE>14
Monthly Advances ........ With respect to any series of Certificates, the
Servicer each month will advance to the related
Trust, with respect to each Scheduled Interest
Receivable, that portion of Scheduled Payments
that was not timely made (a "Scheduled Interest
Advance"). The Servicer will be entitled to
reimbursement of a Scheduled Interest Advance
from subsequent payments and collections on or
with respect to the Receivables. The Servicer
will not be required to make any Scheduled
Interest Advance to the extent that it does not
expect to recover such Advance from subsequent
collections or recoveries on the Receivables.
With respect to Simple Interest Receivables, the
Servicer will advance each month the aggregate
interest shortfall, if any, resulting from
payments being received other than on their
respective due dates (a "Simple Interest Advance"
and together with a Scheduled Interest Advance, a
"Monthly Advance"). Any monthly surplus
resulting from payments on Simple Interest
Receivables being received other than on their
due dates ("Excess Simple Interest Collections")
will be paid to the Servicer. See "The
Certificates--Monthly Advances."
Total Servicing Fee ..... With respect to each series of Certificates, the
Servicer will receive each month a fee for
servicing the related Receivables equal to the
sum of (i) the product of one-twelfth of the
Basic Servicing Fee Rate (as defined in the
related Prospectus Supplement) and the aggregate
Principal Balance as of the last day of the
preceding Monthly Period, (ii) any interest
earned on the amounts deposited in the Collection
Account and the Payment Ahead Servicing Account
and (iii) to the extent payable as provided
herein, Additional Servicing. In addition, the
Servicer will be entitled to any late fees,
prepayment charges and other administrative fees
and expenses or similar charges collected during
such Monthly Period. See "The
Certificates--Servicing Compensation and Payment
of Expenses."
Optional Purchase ....... With respect to each series of Certificates, the
Servicer may purchase all of the property of the
related Trust as of the last day of the related
Monthly Period on or after which the aggregate
Principal Balance declines below 10% of the
5
Aggregate Amount Financed. In each such case,
the purchase price will be equal to the aggregate
of the Administrative Purchase Payment plus the
appraised value of any other property held as
part of such Trust (less related Liquidation
Expenses). See "The Certificates--Termination."
<PAGE>15
Trustee ................. The First National Bank of Chicago.
Tax Status .............. In the opinion of Kirkland & Ellis, special
counsel for the Seller, each Trust will
constitute a grantor trust for federal income tax
purposes and will not be subject to federal
income tax. Class A Certificate Owners must
report their respective allocable shares of all
income earned on the related Trust assets (except
to the extent, if any, that "stripped coupon" or
other amounts are treated for tax purposes as
retained by the Seller), and, subject to certain
limitations on individuals, estates and trusts,
may deduct their respective allocable shares of
reasonable servicing and other fees. Individuals
should consult their own tax advisors to
determine the federal, state, local and other tax
consequences of the purchase, ownership and
disposition of the Class A Certificates.
Prospective investors should note that no rulings
have been or will be sought from the Internal
Revenue Service (the "Service") with respect to
any of the federal income tax consequences
discussed herein, and no assurance can be given
that the Service will not take contrary
positions. See "Federal Income Tax
Consequences."
ERISA Considerations .... As described herein and in the Prospectus
Supplement, the Class A Certificates may be
purchased by employe benefit plans that are
subject to the Employee Retirement Income
Security Act of 1974, as amended. Any benefit
plan fiduciary considering the purchase of Class
A Certificates should, among other things,
consult with its counsel in determining whether
all required conditions have been satisfied. See
"ERISA Considerations."
Rating .................. As a condition of issuance, the Class A
Certificates of each series will be rated in the
highest rating category by at least one
nationally recognized rating agency. There is no
assurance that a rating will not be lowered or
withdrawn by a rating agency if circumstances so
warrant. In the event that the rating initially
assigned to any Class A Certificates is
subsequently lowered for any reason, no person or
entity is obligated to provide any additional
credit enhancement.
6
<PAGE>16
THE TRUSTS
With respect to each series of Certificates, the Seller will establish a
Trust by selling and assigning the Trust property to the Trustee in exchange
for such Certificates. The property of each Trust will include (i) a pool (a
"Receivables Pool") of retail instalment sale contracts for new and used
automobiles and light trucks (the "Receivables") and, in the case of Scheduled
Interest Receivables, all Scheduled Payments due thereunder on and after the
Cutoff Date and, in the case of Simple Interest Receivables, all payments
received thereunder on or after the Cutoff Date, in each case exclusive of any
amount allocable to the premium for physical damage insurance force-placed by
the Servicer, (ii) such amounts as from time to time may be held in separate
trust accounts established and maintained pursuant to the related Agreement
and the proceeds of such accounts, (iii) security interests in the Financed
Vehicles and, to the extent permitted by law, any accessions thereto, (iv) any
recourse against dealers with respect to the Receivables, (v) except for
those Receivables originated in Wisconsin, the right to proceeds of credit
life, credit disability, physical damage or other insurance policies covering
the Financed Vehicles and (vi) certain rights of the Seller under the related
Purchase Agreement. The Subordination Spread Account for a series of
Certificates will not be included in the property of the related Trust but
will be a segregated trust account held by the Trustee for the benefit of the
holders of the related Certificates.
The Servicer will continue to service the Receivables held by each Trust
and will receive fees for such services. See "The Certificates--Servicing
Compensation and Payment of Expenses." To facilitate the servicing of the
Receivables, the Trustee will authorize the Servicer to retain physical
possession of the Receivables held by each Trust and other documents relating
thereto as custodian for the Trustee. Due to the administrative burden and
expense, the certificates of title to the Financed Vehicles will not be
amended to reflect the sale and assignment of the security interest in the
Financed Vehicles to the Trustee. In the absence of such an amendment, the
Trustee may not have a perfected security interest in the Financed Vehicles in
all states. The Trustee will not be responsible for the legality, validity or
enforceability of any security interest in any Financed Vehicle. See "Certain
Legal Aspects of the Receivables," "The Certificates--Sale and Assignment of
Receivables and Warranties Thereon" and "The Certificates--Duties of the
Trustee."
If the protection provided to the Class A Certificateholders by the
subordination of the related Class B Certificates and by the related
Subordination Spread Account is insufficient, the Class A Certificateholders
would have to look principally to the obligors on the related Receivables, the
proceeds from the repossession and sale of Financed Vehicles which secure
defaulted Receivables and the proceeds from any recourse against dealers with
respect to such Receivables. In such event, certain factors, such as the
Trustee's not having perfected security interests in the Financed Vehicles in
all states, may affect the Trust's ability to repossess and sell the
collateral securing the Receivables, and thus may reduce the proceeds to be
distributed to Certificateholders. See "The Certificates--Subordination of
the Class B Certificates; Subordination Spread Account" and "Certain Legal
Aspects of the Receivables."
THE RECEIVABLES
The Receivables in each Receivables Pool have been or will be acquired by
General Motors Acceptance Corporation through its nationwide branch system,
directly or through General Motors Corporation, from automobile and light
truck dealers pursuant to agreements with General Motors dealers and
dealerships affiliated with General Motors dealers. See "The Seller" and "The
Servicer."
<PAGE>17
The Receivables have been or will be originated by participating dealers
in accordance with General Motors Acceptance Corporation's requirements under
the dealer agreements. The Receivables have been or will be acquired in
accordance with General Motors Acceptance Corporation's underwriting
standards, which evaluate the prospective purchaser's ability to pay and
creditworthiness, as well as the asset value of the vehicle to be financed.
General Motors Acceptance Corporation's standards also require physical damage
insurance to be maintained on each Financed Vehicle.
The Receivables have been or will be acquired by the Servicer in the
ordinary course of business. The Receivables to be held by each Trust will
be selected from General Motors Acceptance Corporation's portfolio for
inclusion in a Receivables Pool by several criteria, including that, unless
otherwise provided in the related Prospectus Supplement, each Receivable (i)
7
is secured by a new or used vehicle, (ii) was originated in the United States,
(iii) provides for level monthly payments (except for the first and last
payments which may be different from the level payments) that fully amortize
the amount financed over its original term to maturity and (iv) satisfies the
other criteria set forth in the related Prospectus Supplement. The "Amount
Financed" with respect to a Receivable will equal the aggregate amount
advanced toward the purchase price of the Financed Vehicle, including
accessories, insurance premiums, service and warranty contracts and other
items customarily financed as part of retail automobile instalment sale
contracts and related costs, exclusive of any amount allocable to the premium
for physical damage insurance covering the Financed Vehicle force-placed by
General Motors Acceptance Corporation, less, in the case of a Scheduled
Interest Receivable, payments due from the related obligor prior to the
related Cutoff Date allocable to principal and, in the case of a Simple
Interest Receivable, payments received from the related obligor prior to the
related Cutoff Date allocable to principal.
All of the Receivables are prepayable at any time without penalty to the
obligor, and, except for those originated in Wisconsin, all contain due on
sale provisions. The rate of prepayments on the Receivables may be influenced
by a variety of economic, social and other factors. (For this purpose the
term "prepayments" includes liquidations due to defaults and repurchases by
the Seller or the Servicer pursuant to the Agreement, as well as receipt of
proceeds from credit life and casualty insurance policies.) The Servicer
believes that the actual rate of prepayments will result in a shorter weighted
average life for any Receivables Pool than its scheduled weighted average
life. Any reinvestment risks resulting from prepayments of Receivables will
be borne entirely by the Certificateholders. See "The Certificates -
Termination."
Scheduled Interest Receivables will represent that portion of the
aggregate principal balance of the Receivables Pool held by each Trust
specified in the related Prospectus Supplement. "Scheduled Interest
Receivables" are Receivables pursuant to which payments are allocated between
finance charges and principal on a scheduled basis, without regard to the
period of time which has elapsed since the preceding payment was made, using
the actuarial method or the method known as the Rule of 78s or
sum-of-the-digits method. If an obligor elects to prepay a Scheduled Interest
Receivable in full, the obligor is entitled to a rebate of the portion of
monthly scheduled payments thereon (the "Scheduled Payments") attributable
to unearned finance charges. The amount of the rebate is determined with
reference to the contract type and applicable state law. With minor
variations based on state law, actuarial rebates are calculated on the basis
<PAGE>18
of a constant interest rate. Rebates calculated on a Rule of 78s or
sum-of-the-digits basis are smaller than the corresponding rebates under the
actuarial method. Scheduled Interest Receivables provide for Rule of 78s
rebates except in states that require the actuarial method. Distributions to
Class A Certificateholders will not be affected by Rule of 78s rebates because
all allocations with respect to Scheduled Interest Receivables for purposes of
the related Trust are made using the actuarial method.
The balance of the Receivables held by any Trust are Simple Interest
Receivables. "Simple Interest Receivables" provide for allocation of payments
between finance charges and principal based on the actual date on which a
payment is received. Late payments (or early payments) on a Simple Interest
Receivable may result in the obligor making a greater (or smaller) number of
payments than originally scheduled. The amount of any such additional
payments required to pay the outstanding principal balance in full generally
will not exceed the amount of any originally scheduled payment. If an obligor
elects to prepay a Simple Interest Receivable in full, the obligor will not
receive a rebate attributable to unearned finance charges. Instead, the
obligor is required to pay finance charges only to the date of prepayment.
The amount of finance charges on a Simple Interest Receivable that would have
accrued from and after the date of prepayment if all monthly payments had been
made as scheduled will generally be greater than the rebate on a Scheduled
Interest Receivable that provides for a Rule of 78s rebate, and will generally
be equal to the rebate on a Scheduled Interest Receivable that provides for an
actuarial rebate.
Information with respect to each Receivables Pool will be set forth in
the related Prospectus Supplement, including, to the extent appropriate, the
composition, distribution by annual percentage rate ("APR"), states of
origination and portion secured by new and used vehicles.
8
CLASS A POOL FACTOR AND TRADING INFORMATION
The "Class A Pool Factor" for any series of Certificates is a seven-digit
decimal which the Servicer will compute indicating the related Class A
Certificate Balance as of each Distribution Date (after giving effect to all
distributions made on such Distribution Date), as a fraction of the original
Class A Certificate Balance of such series. The Class A Pool Factor for each
series will initially be 1.0000000; thereafter, the Class A Pool Factor will
decline to reflect reductions in the related Class A Certificate Balance. The
amount of a Class A Certificateholder's pro rata share of the related Class A
Certificate Balance can be determined by multiplying the original denomination
of the holder's Certificate by the then current Class A Pool Factor. The
Class A Pool Factor as of each Distribution Date will be made available on or
about the tenth day of the month in which the related Distribution Date
occurs.
USE OF PROCEEDS
Unless otherwise provided in the related Prospectus Supplement, the net
proceeds to be received by the Seller from the sale of the Certificates will
be applied to the purchase of the related Receivables from General Motors
Acceptance Corporation.
<PAGE>19
THE SELLER
The Seller, a wholly owned subsidiary of General Motors Acceptance
Corporation, was incorporated in the State of Delaware on November 16, 1990.
The Seller is organized for the limited purposes of purchasing receivables
from General Motors Acceptance Corporation and transferring such receivables
to third parties and any activities incidental to and necessary or convenient
for the accomplishment of such purposes. The principal executive offices of
the Seller are located at Corporation Trust Center, 1209 Orange Street,
Wilmington, Delaware 19801.
The Seller has taken steps in structuring the transactions contemplated
hereby that are intended to make it unlikely that the voluntary or involuntary
application for relief by General Motors Acceptance Corporation under the
United States Bankruptcy Code or similar applicable state laws ("Insolvency
Laws") will result in consolidation of the assets and liabilities of the
Seller with those of General Motors Acceptance Corporation. These steps
include the creation of the Seller as a separate, limited-purpose subsidiary
pursuant to a certificate of incorporation containing certain limitations
(including restrictions on the nature of the Seller's business and a
restriction on the Seller's ability to commence a voluntary case or proceeding
under any Insolvency Law without the unanimous affirmative vote of all of its
directors). The Seller's By-laws include a provision that, under certain
circumstances, requires the Seller to have two directors who qualify under the
By-laws as "Independent Directors."
If, notwithstanding the foregoing measures, a court concluded that the
assets and liabilities of the Seller should be consolidated with the assets
and liabilities of General Motors Acceptance Corporation in the event of the
application of the federal bankruptcy laws to General Motors Acceptance
Corporation, a filing were made under any Insolvency Law by or against the
Seller, or an attempt were made to litigate the consolidation issue, then
delays in distributions on the Certificates (and possible reductions in the
amount of such distributions) could occur.
THE SERVICER
General Motors Acceptance Corporation, a wholly owned subsidiary of
General Motors Corporation, was incorporated in 1919 under the New York
Banking Law relating to investment companies. Operating directly and through
subsidiaries and associated companies in which it has equity investments,
General Motors Acceptance Corporation offers a wide variety of automotive
financial services to and through franchised General Motors dealers in many
countries throughout the world. Financial services also are offered to other
automobile dealerships in which General Motors dealers have an interest and to
the customers of those dealerships. Other financial services offered by
9
General Motors Acceptance Corporation or its subsidiaries include insurance,
mortgage banking, marine financing and investment services.
The principal business of General Motors Acceptance Corporation and its
subsidiaries is to finance the acquisition by franchised General Motors
dealers for resale of various new automotive and nonautomotive products
manufactured by General Motors Corporation or certain of its subsidiaries and
associates, and to acquire from such dealers, either directly or indirectly,
instalment obligations covering retail sales and leases of new General Motors
products as well as used units of any make. In addition, new products of
other manufacturers are financed. General Motors Acceptance Corporation also
leases motor vehicles and certain types of capital equipment to others.
<PAGE>20
General Motors Acceptance Corporation has its principal office at 767
Fifth Avenue, New York, New York 10153 (Tel. No. 212-418-6120) and
administrative offices at 3044 West Grand Boulevard, Detroit, Michigan 48202
(Tel. No. 313-556-5000).
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Certain information concerning General Motors Acceptance Corporation's
experience in the United States pertaining to delinquencies on new and used
retail automobile and light truck receivables and repossessions and net loss
information relating to its entire vehicle portfolio (including receivables
previously sold which General Motors Acceptance Corporation continues to
service) will be set forth in each Prospectus Supplement. There can be no
assurance that the delinquency, repossession and net loss experience on any
Receivables Pool will be comparable to prior experience.
THE CERTIFICATES
The Certificates will be issued in series. Each series of Certificates
will be issued pursuant to an Agreement to be entered into between the Seller,
the Servicer and the Trustee, a form of which has been filed as an exhibit to
the Registration Statement of which this Prospectus is a part. Citations to
the relevant sections of the form of Agreement as filed appear below in
parentheses. The following summary does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all of the
provisions of the related Agreement. Where particular provisions or terms
used in an Agreement are referred to, the actual provisions (including
definitions of terms) are incorporated by reference as part of such summaries.
GENERAL
The Class A Certificates will be offered for purchase in fully registered
form in minimum denominations of $1,000 and integral multiples thereof.
Unless otherwise provided in the related Prospectus Supplement, the
Certificates will initially be represented by physical certificates registered
in the name of the nominee of The Depository Trust Company ("DTC" and,
together with any successor depository selected by the Servicer, the
"Depository"), except as provided below. The Seller has been informed by DTC
that DTC's nominee will be Cede & Co. ("Cede"). No person acquiring an
interest in Class A Certificates (a "Class A Certificate Owner" or
"Certificate Owner") will be entitled to receive a certificate representing
such person's interest in such Class A Certificates, except as described below
under "Definitive Certificates." Unless and until Definitive Certificates are
issued under the limited circumstances described herein, all references herein
to actions by Class A Certificateholders will refer to actions taken by DTC
upon instructions from its Participants, and all references herein to
distributions, notices, reports and statements to Class A Certificateholders
will refer to distributions, notices, reports and statements to DTC or Cede,
as the registered holder of such Class A Certificates, as the case may be, for
distribution to Certificate Owners in accordance with DTC procedures.
(Sections 5.01 and 5.08). See "Book-Entry Registration."
The Certificates will evidence interests in the Trust created pursuant
to the related Agreement. The Class A Certificates will evidence in the
aggregate an undivided ownership interest of the Class A Percentage of the
related Trust and the Class B Certificates will evidence in the aggregate an
undivided ownership interest of the Class B Percentage of the related Trust.
(Section 5.03).
10
<PAGE>21
BOOK-ENTRY REGISTRATION
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 Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. DTC was created to hold
securities for its participating organizations ("Participants") and facilitate
the clearance and settlement of securities transactions between Participants
through electronic book-entry changes in accounts of its Participants, thereby
eliminating the need for physical movement of certificates. Participants
include securities brokers and dealers (including the Underwriters), banks,
trust companies and clearing corporations and may include certain other
organizations. 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").
Certificate Owners that are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of, or other
interests in, Class A Certificates may do so only through Participants and
Indirect Participants. In addition, Certificate Owners will receive all
distributions of principal of and interest on the Class A Certificates from
the Trustee through DTC and its Participants. Under a book-entry format,
Certificate Owners may experience some delay in their receipt of payments,
because such payments will be forwarded by the Trustee to Cede, as nominee for
DTC. DTC will forward such payments to its Participants which thereafter will
forward them to Indirect Participants or Certificate Owners. It is
anticipated that the only "Class A Certificateholder" will be Cede, as nominee
of DTC. Certificate Owners will not be recognized by the Trustee as Class A
Certificateholders, as such term is used in each related Agreement, and
Certificate Owners will only be permitted to exercise the rights of Class A
Certificateholders 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
among Participants on whose behalf it acts with respect to the Class A
Certificates and is required to receive and transmit distributions of
principal of and interest on the Class A Certificates. Participants and
Indirect Participants with which Certificate Owners have accounts with respect
to the Class A Certificates similarly are required to make book-entry
transfers and receive and transmit such payments on behalf of their respective
Certificate Owners. Accordingly, although Class A Certificate Owners will not
possess Class A Certificates, 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
Certificate Owner to pledge Class A Certificates to persons or entities that
do not participate in the DTC system, or otherwise take actions in respect of
such Class A Certificates, may be limited due to the lack of physical
certificates for such Class A Certificates.
DTC has advised the Seller that it will take any action permitted to be
taken by a Class A Certificateholder under the related Agreement only at the
direction of one or more Participants to whose account with DTC the Class A
Certificates are credited. DTC may take conflicting actions with respect to
an undivided interest held by a Participant to the extent that it is directed
to do so by such Participant based on such Participant's instructions from
various Certificate Owners.
<PAGE>22
Neither the Seller nor the Trustee will have any liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests of the Class A Certificates held by Cede, as nominee for DTC, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
DEFINITIVE CERTIFICATES
Unless otherwise provided in the related Prospectus Supplement, the Class
A Certificates will be issued in fully registered, certificated form
("Definitive Certificates") to Certificate Owners or their nominees, rather
than to DTC or its nominee, only if (i) the Seller advises the Trustee in
11
writing that DTC is no longer willing or able to discharge properly its
responsibilities as Depository with respect to the Class A Certificates and
the Seller is unable to locate a qualified successor, (ii) the Seller, at its
option, advises the Trustee in writing that it elects to terminate the
book-entry system through DTC or (iii) after the occurrence of an Event of
Default for any series, Certificate Owners representing in the aggregate not
less than 51% of the voting interests of the Class A Certificates of such
series advise the Trustee and DTC through Participants in writing that the
continuation of a book-entry system through DTC (or a successor thereto) is no
longer in the best interests of the Certificate Owners. The "voting
interests" of the Class A Certificates will be allocated among the Class A
Certificate Owners in accordance with the Class A Certificate Balance
represented thereby; except that in certain circumstances any Class A
Certificates held by the Seller, the Servicer or any of their respective
affiliates shall be excluded from such determination.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Trustee is required to notify DTC of the availability
of Definitive Certificates. Upon surrender by DTC of the Class A Certificates
and receipt of instructions for registration, the Trustee will issue the Class
A Certificates as Definitive Certificates, and thereafter the Trustee will
recognize the holders of such Definitive Certificates as Class A
Certificateholders under the related Agreement (the "Holders"). (Section
5.10).
Distribution of principal of and interest on the Class A Certificates
will be made by the Trustee directly to Holders of Definitive Certificates in
accordance with the procedures set forth herein and in the related Agreement.
Distributions of principal of and interest on each Distribution Date will be
made to Holders in whose names such Definitive Certificates were registered at
the close of business on the last day of the related Monthly Period. The
final payment on any Class A Certificate (whether a Definitive Certificate or
a Class A Certificate registered in the name of Cede) will be made only upon
presentation and surrender of such Class A Certificate at the office or agency
specified in the related notice of final distribution to Certificateholders.
(Sections 5.10 and 10.01).
Definitive Certificates will be transferable and exchangeable at the
offices of the Trustee. No service charge will be imposed for any
registration of transfer or exchange, but the Trustee may require payment of a
sum sufficient to cover any tax or other governmental charge imposed in
connection therewith. (Section 5.03).
<PAGE>23
SALE AND ASSIGNMENT OF RECEIVABLES AND WARRANTIES THEREON
On or prior to a Trust Formation Date, pursuant to the related Purchase
Agreement (a "Purchase Agreement"), General Motors Acceptance Corporation will
sell and assign to the Seller, without recourse, its entire interest in the
related Receivables, including the security interests in the Financed
Vehicles, the proceeds from certain insurance policies and the proceeds from
recourse against dealers with respect to such Receivables. The "Trust
Formation Date" will mean the date specified as such in the related Agreement.
On the Trust Formation Date, the Seller will sell and assign to the Trustee,
without recourse, the Seller's entire interest in the related Receivables,
including the security interests in the Financed Vehicles, the proceeds from
certain insurance policies and the proceeds from recourse against dealers with
respect to such Receivables. (Section 2.01). Each Receivable with respect to
a Trust will be identified in a schedule which will be on file at the
locations set forth in an exhibit to the related Purchase Agreement and the
related Agreement (the "Schedule of Receivables"). The Trustee will,
concurrently with such sale and assignment, authenticate and deliver the
Certificates to the Seller in exchange for such Receivables. (Section 5.02).
The Seller will sell the Class A Certificates to the underwriters specified in
the related Prospectus Supplement. See "Underwriting."
In each Purchase Agreement, General Motors Acceptance Corporation will
represent and warrant to the Seller, among other things, that (i) the
information set forth in the related Schedule of Receivables is correct in all
material respects, (ii) the obligor on each related Receivable is required to
maintain physical damage insurance covering the Financed Vehicle in accordance
with General Motors Acceptance Corporation's normal requirements, (iii) as of
the related Trust Formation Date, to the best of its knowledge, the related
Receivables are free and clear of all security interests, liens, charges and
encumbrances and no offsets, defenses or counterclaims have been asserted or
threatened, (iv) as of the related Trust Formation Date, each of the related
Receivables is or will be secured by a first perfected security interest in
favor of General Motors Acceptance Corporation in the Financed Vehicle and (v)
each related Receivable, at the time it was originated complied, and on the
12
related Trust Formation Date complies, in all material respects with
applicable state and federal laws, including, without limitation, consumer
credit, truth-in-lending, equal credit opportunity and disclosure laws.
(Section 2.04). In each related Pooling and Servicing Agreement, the Seller
will assign the representations and warranties of the Servicer, as set forth
above, to the Trust, and will represent and warrant to the Trust that the
Seller has taken no action which would cause such representations and
warranties of the Servicer to be false in any material respect as of the
Closing Date.
As of the last day of the second (or, if the Seller so elects, the first)
month following the discovery by the Seller, the Servicer or the Trustee of a
breach of any representation or warranty of the Seller or the Servicer that
materially and adversely affects the interests of the Certificateholders of
any series in any Receivable held by the related Trust, the Seller, unless the
breach is cured, will repurchase (or will enforce the obligation of General
Motors Acceptance Corporation under the related Purchase Agreement to
repurchase) such Receivable (a "Warranty Receivable") from the Trustee at a
price equal to: (a) in the case of a Scheduled Interest Receivable, the sum of
all remaining Scheduled Payments on such Receivable, plus all past due
Scheduled Payments with respect to which a Scheduled Interest Advance has not
been made, plus all outstanding Scheduled Interest Advances on such
<PAGE>24
Receivable, plus an amount equal to any reimbursements of outstanding Schedule
Interest Advances made to the Servicer with respect to such Receivable from
the proceeds of other Receivables, minus (i) the rebate that would be payable
to the obligor on such Receivable were the obligor to prepay such Receivable
in full on such day and (ii) any Liquidation Proceeds with respect to such
Receivable previously received (to the extent applied to reduce the Principal
Balance of such Receivable); or (b) in the case of a Simple Interest
Receivable, the Amount Financed minus (i) that portion of all payments
received on or prior to the last day of the related Monthly Period allocable
to principal and (ii) any Liquidation Proceeds with respect to such Receivable
(to the extent applied to reduce the Principal Balance of such Receivable) (in
either case, the "Warranty Payment"). The Seller or the Servicer, as
applicable, will be entitled to receive any amounts held by the Servicer or in
the Payment Ahead Servicing Account with respect to such Warranty Receivable.
This repurchase obligation constitutes the sole remedy available to
Certificateholders or the Trustee for any such uncured breach. (Sections 2.04
and 2.05).
In each Agreement, the Servicer will covenant that (i) except as
contemplated in such Agreement, the Servicer will not release any Financed
Vehicle from the security interest, (ii) the Servicer will do nothing to
impair the rights of the Certificateholders in the related Receivables and
(iii) the Servicer will not amend or otherwise modify any Receivable such that
the Amount Financed, the APR or the total number of Scheduled Payments, in the
case of a Scheduled Interest Receivable, or the number of originally scheduled
due dates, in the case of a Simple Interest Receivable, is altered or such
that the last Scheduled Payment, in the case of a Scheduled Interest
Receivable, or the last scheduled due date, in the case of a Simple Interest
Receivable, occurs after the final scheduled Distribution Date. As of the
last day of the second (or, if the Servicer so elects, the first) month
following the discovery by the Servicer or the Trustee of a breach of any
covenant that materially and adversely affects any Receivable held by the
related Trust and unless such breach is cured, the Servicer will, with respect
to such Receivable (an "Administrative Receivable"): (i) in the case of a
Scheduled Interest Receivable, (a) release all claims for reimbursement of
Scheduled Interest Advances made on such Receivable and (b) purchase such
Receivable from the Trust at a price equal to the sum of all remaining
Scheduled Payments on such Receivable plus an amount equal to any
reimbursements of outstanding Scheduled Interest Advances made to the Servicer
with respect to such Receivable from the proceeds of other Receivables, plus
all past due Scheduled Payments with respect to which a Scheduled Interest
Advance has not been made, minus the rebate that would be payable to the
obligor on such Receivable were the obligor to prepay such Receivable in full
on such day; or (ii) in the case of a Simple Interest Receivable, purchase
such Receivable from the Trust at a price equal to the Amount Financed minus
that portion of all payments made on or prior to the last day of the related
Monthly Period allocable to principal (in either case, the "Administrative
Purchase Payment"). The Servicer will be entitled to receive any amounts held
by the Servicer or in the Payment Ahead Servicing Account with respect to such
Administrative Receivable. This repurchase obligation constitutes the sole
remedy available to Certificateholders or the Trustee for any such uncured
breach. (Sections 3.07 and 3.08).
13
<PAGE>25
Pursuant to each Agreement, the Trustee will designate the Servicer as
custodian to maintain possession, as the Trustee's agent, of the retail
instalment sale contracts and any other documents relating to the Receivables
held by the related Trust. (Section 2.02). To assure uniform quality in
servicing both the Receivables and the Servicer's own portfolio of
receivables, as well as to facilitate servicing and save administrative costs,
the documents will not be physically segregated from other similar documents
that are in the Servicer's possession or otherwise stamped or marked to
reflect the transfer to the related Trust so long as the Servicer is the
custodian of such documents. However, Uniform Commercial Code financing
statements reflecting the sale and assignment of such Receivables to the
Trustee will be filed, and the Servicer's accounting records and computer
files will reflect such sale and assignment. Because such Receivables will
remain in the Servicer's possession and will not be stamped or otherwise
marked to reflect such assignment to the Trustee, if a subsequent purchaser
were able to take physical possession of the Receivables without knowledge of
the assignment, the Trustee's interest in such Receivables could be defeated.
See "Certain Legal Aspects of the Receivables--Security Interest in Vehicles."
COLLECTIONS
With respect to each series of Certificates, the Servicer will establish
two accounts in the name of the Trustee on behalf of the Certificateholders,
the first into which certain payments made on or with respect to the related
Receivables will be deposited (the "Collection Account"), and the second from
which all distributions with respect to the related Receivables and the
Certificates will be made (the "Certificate Account"). The Servicer will also
establish with respect to each series of Certificates an additional account
(the "Payment Ahead Servicing Account") in the name of the Trustee, into
which, to the extent required by the related Agreement, early payments by or
on behalf of obligors on a Scheduled Interest Receivable which do not
constitute either Scheduled Payments or Prepayments will be deposited until
such time as payment falls due. Each Collection Account and each Payment
Ahead Servicing Account will be maintained with the Trustee so long as (i) the
Trustee's short-term unsecured debt obligations have a rating of P-l by
Moody's Investors Service, Inc., a rating of A-l+ by Standard & Poor's
Corporation and, if rated by Fitch Investors Service, Inc., a rating of F-1+
by Fitch Investors Service, Inc. (the "Required Deposit Rating") or (ii) such
Accounts are maintained in the trust department of the Trustee. If the
short-term unsecured debt obligations of the Trustee do not have the Required
Deposit Rating, the Servicer will, with the Trustee's assistance as necessary,
cause any Collection Account and any Payment Ahead Servicing Account to be
moved to a bank whose short-term unsecured debt obligations have the Required
Deposit Rating or moved to the trust department of the Trustee. Unless
otherwise provided in the related Prospectus Supplement, each Collection
Account, Payment Ahead Servicing Account and Certificate Account will
initially be maintained in the trust department of the Trustee. (Section
4.01).
<PAGE>26
The Servicer will deposit all payments on Receivables held by any Trust
received from obligors and all proceeds of such Receivables collected during
each Monthly Period into the related Collection Account not later than two
business days after receipt. However, at any time that (i) General Motors
Acceptance Corporation is the Servicer, (ii) there exists no Event of Default
and (iii) either (A) the short-term unsecured debt of the Servicer is rated at
least A-1 by Standard & Poor's Corporation and P-1 by Moody's Investors
Service, Inc. or (B) certain arrangements are made which are acceptable to the
relevant rating agency or agencies, the Servicer may retain such amounts until
the related Distribution Date. Pending deposit into the Collection Account,
collections may be employed by the Servicer at its own risk and for its own
benefit and will not be segregated from its own funds. (Section 4.02).
Collections on a Scheduled Interest Receivable held by any Trust made
during a Monthly Period (other than an Administrative Receivable or a Warranty
Receivable) which are not late fees, prepayment charges or certain other
similar fees or charges will be applied first to any outstanding Scheduled
Interest Advances made by the Servicer with respect to such Receivable and
then to the Scheduled Payment. Any collections on such a Receivable remaining
after such applications will be considered an "Excess Payment." Such Excess
Payment will be held by the Servicer (or, if the Servicer has not satisfied
conditions (i), (ii) and (iii) described in the preceding paragraph, will be
deposited in the Payment Ahead Servicing Account), and will be deemed a
"Payment Ahead," except as described in the following sentence. If and to the
14
extent that an Excess Payment (i) together with any unapplied Payments Ahead,
exceeds the sum of three Scheduled Payments or (ii) constitutes, either alone
or together with any previous unapplied Payments Ahead, full prepayment, then
such portion of such Excess Payment shall not be deemed a Payment Ahead and
shall instead be applied as a full or partial prepayment of such Receivable (a
"Prepayment"). (Section 4.03(a)).
Collections made during a Monthly Period with respect to Simple Interest
Receivables held by any Trust (other than Administrative Receivables or
Warranty Receivables) which are not late fees or certain other similar fees or
charges will be applied first to the payment to the Servicer of Excess Simple
Interest Collections, if any, and next to principal and interest on all such
Receivables held by the related Trust. (Section 4.03(b)). With respect to a
Monthly Period, "Excess Simple Interest Collections" represent the excess, if
any, of (i) all payments received during such Monthly Period on all Simple
Interest Receivables held by the related Trust to the extent allocable to
interest over (ii) the amount of interest that would be due during such
Monthly Period on all Simple Interest Receivables held by such Trust, assuming
that the payment on each such Receivable was received on its respective due
date. Collections on Administrative Receivables and Warranty Receivables
(including Administrative Purchase Payments and Warranty Payments) will
generally be applied in the same manner, except that unapplied Payments Ahead
on a Scheduled Interest Receivable will be made to the Servicer or the Seller,
as applicable, and Administrative Purchase Payments and Warranty Payments on a
Simple Interest Receivable will not be applied to Excess Simple Interest
Collections. (Section 4.03(c)).
MONTHLY ADVANCES
If the full Scheduled Payment due on a Scheduled Interest Receivable held
by any Trust is not received by the end of the month in which it is due,
whether as the result of any extension granted to the obligor or otherwise,
the amount of Payments Ahead, if any, not previously applied with respect to
such Receivable will be applied by the Servicer to the extent of the shortfall
and the Payments Ahead will be reduced accordingly. If any shortfall remains,
the Servicer will make a Scheduled Interest Advance equal to the amount
<PAGE>27
of such shortfall. The Servicer will be obligated to make a Scheduled
Interest Advance only to the extent that the Servicer, in its sole discretion,
expects to recoup such Advance from subsequent collections or recoveries on
such Scheduled Interest Receivable. The Servicer will be reimbursed for any
such Scheduled Interest Advances from subsequent payments or collections
relating to such Scheduled Interest Receivable. Upon the determination that
reimbursement from the preceding sources is unlikely, the Servicer will be
entitled to recoup its Scheduled Interest Advance from collections from other
Receivables. (Section 4.04(a)).
With respect to any series of Certificates, for each Monthly Period, the
Servicer will make a Simple Interest Advance equal to the excess, if any, of
(i) the amount of interest that would be due during such Monthly Period on all
Simple Interest Receivables held by the related Trust assuming that the
payment on each such Receivable was received on its respective due date over
(ii) all payments received during such Monthly Period on all Simple Interest
Receivables held by the related Trust to the extent allocable to interest. In
addition, the Servicer will be paid, to the extent all previously made Simple
Interest Advances exceed all Excess Simple Interest Collections previously
paid to the Servicer, all Liquidation Proceeds realized with respect to Simple
Interest Receivables allocable to accrued and unpaid interest thereon (but not
including interest for the then current Monthly Period). The Servicer will
not make any advance with respect to principal on any Simple Interest
Receivable. (Section 4.04(b)).
DISTRIBUTIONS
With respect to each series of Certificates, on or before each
Distribution Date, the Servicer or the Trustee, as the case may be, will
transfer collections on the Receivables held by the related Trust for the
related Monthly Period and all Prepayments to the related Certificate Account.
On each Distribution Date, the Trustee will cause collections made during such
Monthly Period which constitute Payments Ahead to be transferred from such
Certificate Account to the Servicer or to the related Payment Ahead Servicing
Account, if required. (Sections 4.01 and 4.06).
15
The Trustee will make distributions to the Certificateholders out of the
amounts on deposit in the related Certificate Account. The amount to be
distributed to the Certificateholders will be determined in the manner
described below.
DETERMINATION OF AVAILABLE AMOUNTS. The "Total Available Amount" for a
Distribution Date will be the sum of the Available Interest and the Available
Principal.
The "Available Interest" with respect to each series of Certificates for
a Distribution Date will be the sum, with respect to the related Monthly
Period, of: (i) that portion of all collections on the Receivables held by the
related Trust (other than Liquidating Receivables) allocable to interest or
Prepayment Surplus (including, in the case of Scheduled Interest Receivables,
the interest portion of existing Payments Ahead being applied in such Monthly
Period but excluding Excess Payments made during such Monthly Period that are
treated as Payments Ahead), (ii) proceeds ("Liquidation Proceeds") of the
liquidation of defaulted Receivables ("Liquidating Receivables"), to the
<PAGE>28
extent allocable to interest in accordance with the Servicer's customary
servicing procedures, (iii) all Simple Interest Advances, (iv) all Scheduled
Interest Advances to the extent allocable to interest and (v) the Warranty
Payment or the Administrative Purchase Payment of each Receivable that the
Seller repurchased or the Servicer purchased during such related Monthly
Period, to the extent allocable to accrued interest or Prepayment Surplus
thereon.
With respect to each series of Certificates, the "Available Principal"
for a Distribution Date will be the sum, with respect to the related Monthly
Period, of: (i) that portion of all collections on the Receivables held by the
related Trust (other than Liquidating Receivables) allocable to principal
(including, in the case of Scheduled Interest Receivables, the principal
portion of Prepayments and existing Payments Ahead being applied in such
Monthly Period but excluding Excess Payments made during such Monthly Period
that are treated as Payments Ahead), (ii) Liquidation Proceeds to the extent
allocable to principal in accordance with the Servicer's customary servicing
procedures, (iii) all Scheduled Interest Advances to the extent allocable to
principal and (iv) to the extent allocable to principal, the Warranty Payment
or the Administrative Purchase Payment received with respect to each
Receivable that the Seller repurchased or the Servicer purchased during such
related Monthly Period.
The Available Interest and the Available Principal with respect to any
series of Certificates on any Distribution Date will exclude: (i) amounts
received on any Scheduled Interest Receivable (other than Liquidating
Receivable) to the extent that the Servicer has previously made an
unreimbursed Scheduled Interest Advance, (ii) Liquidation Proceeds with
respect to Scheduled Interest Receivables to the extent of any unreimbursed
Scheduled Interest Advances, (iii) any Excess Simple Interest Collections,
(iv) Liquidation Proceeds with respect to Simple Interest Receivables paid to
the Servicer as described above under "Monthly Advances" and (v) amounts
representing reimbursement for certain Liquidation Expenses.
CALCULATION OF DISTRIBUTABLE AMOUNTS. With respect to any series of
Certificates, the "Class A Distributable Amount" with respect to a
Distribution Date will equal the sum of (i) the "Class A Principal
Distributable Amount," consisting of the Class A Percentage of the following
items: (a) the principal portion of all Scheduled Payments with respect to the
related Monthly Period on Scheduled Interest Receivables held by the related
Trust (other than Liquidating Receivables) and the principal portion of all
payments received by the Trustee during the related Monthly Period on Simple
Interest Receivables held by the related Trust (other than Liquidating
Receivables), (b) the principal portion of all Prepayments received during the
related Monthly Period (except to the extent included in (a) above) and (c)
the Principal Balance of each Receivable that the Servicer became obligated to
purchase, the Seller became obligated to repurchase or that became a
Liquidating Receivable during the related Monthly Period (except to the extent
included in (a) or (b) above), and (ii) the "Class A Interest Distributable
Amount," consisting of one month's interest at the Pass Through Rate on the
Class A Certificate Balance as of the last day of the related Monthly Period.
The "Class A Certificate Balance" with respect to any series of
Certificates will equal, initially, the Class A Percentage of the Aggregate
Amount Financed and, thereafter, will equal such initial Class A Certificate
Balance, reduced by all distributions of Class A Principal Distributable
Amounts actually made to Class A Certificateholders.
16
<PAGE>29
With respect to any series of Certificates, the "Class B Distributable
Amount" with respect to a Distribution Date will be an amount equal to the sum
of (i) the "Class B Principal Distributable Amount," consisting of the Class B
Percentage of the amounts set forth under (i)(a) through (i)(c) above with
respect to the Class A Principal Distributable Amount, and (ii) the "Class B
Interest Distributable Amount," consisting of (a) one month's interest at the
Pass Through Rate on the Class B Certificate Balance as of the last day of the
related Monthly Period, (b) an amount equal to (1) all Surplus Interest with
respect to Receivables held by the related Trust less (2) Additional Servicing
payable on such Distribution Date and (c) all Prepayment Surplus with respect
to Scheduled Interest Receivables held by the related Trust to which a
Prepayment is to be applied, net of one month's interest at the applicable
Pass Through Rate on the aggregate Principal Balance of such Scheduled
Interest Receivables as of the first day of the related Monthly Period.
With respect to any series of Certificates, the "Class B Certificate
Balance" will equal, initially, the Class B Percentage of the Aggregate Amount
Financed and, thereafter, will equal the initial Class B Certificate Balance,
reduced by (i) all distributions of Class B Principal Distributable Amounts
actually made on or prior to such date to Class B Certificateholders (or
deposited on or prior to such date in the Subordination Spread Account, not
including the Subordination Initial Deposit), (ii) the Class A Principal
Carryover Shortfall as of the preceding Distribution Date and (iii) any
shortfalls from prior Distribution Dates in principal distributions to the
Class B Certificateholders.
With respect to each series of Certificates, the "Prepayment Surplus"
with respect to any Distribution Date on which a Prepayment is to be applied
with respect to a Scheduled Interest Receivable, will equal that portion of
such Prepayment, net of any rebate to the obligor of the portion of the
Scheduled Payments attributable to unearned finance charges, which is not
allocable to principal.
With respect to each series of Certificates, the "Surplus Interest" with
respect to any Distribution Date will equal the product of (i) in the case of
a Scheduled Interest Receivable, the interest portion of the Scheduled Payment
on such Receivable or, in the case of a Simple Interest Receivable, the amount
of interest that would be due during such Monthly Period on such Receivable
assuming that such payment was received on its due date and (ii) the remainder
of (a) one minus (b) a fraction, the numerator of which equals the sum of the
applicable Pass Through Rate and the Basic Servicing Fee Rate and the
denominator of which equals the APR on such Receivable.
CALCULATION OF AMOUNTS TO BE DISTRIBUTED. Prior to each Distribution
Date, the Servicer will calculate the amount to be distributed to
Certificateholders.
The holders of the Class A Certificates will receive on each Distribution
Date, to the extent of available funds, an amount equal to the sum of the
related Class A Distributable Amount and any outstanding Class A Interest
Carryover Shortfall and Class A Principal Carryover Shortfall (each as defined
below). On each Distribution Date on which the sum of the Class A Interest
Distributable Amount and any outstanding Class A Interest Carryover Shortfall
from the preceding Distribution Date exceeds the related Class A Percentage of
the Available Interest (after payment of the Total Servicing Fee including any
unpaid Total Servicing Fees with respect to prior Monthly Periods), the Class
A Certificateholders will be entitled to receive such excess: first, from the
related Class B Percentage of such Available Interest, second, if such amounts
<PAGE>30
are insufficient, from amounts on deposit in the related Subordination Spread
Account, and third, if such amounts are insufficient, from the related Class B
Percentage of the Available Principal. (Section 4.06). With respect to any
series of Certificates, the "Class A Interest Carryover Shortfall" as of the
close of any Distribution Date means the excess of the Class A Interest
Distributable Amount for such Distribution Date plus any outstanding Class A
Interest Carryover Shortfall from the preceding Distribution Date, to the
extent permitted by law, at the applicable Pass Through Rate from such
preceding Distribution Date through the current Distribution Date, over the
amount of interest that the holders of the Class A Certificates actually
received on such current Distribution Date.
With respect to any series of Certificates, on each Distribution Date on
which the sum of the Class A Principal Distributable Amount and any
outstanding Class A Principal Carryover Shortfall from the preceding
Distribution Date exceeds the Class A Percentage of the Available Principal on
17
such Distribution Date, the Class A Certificateholders will be entitled to
receive such excess, first, from the related Class B Percentage of the
Available Principal, second, if such amounts are insufficient, from amounts on
deposit in the related Subordination Spread Account, and third, if such
amounts are insufficient, from any remaining related Available Interest.
(Section 4.06). With respect to any series of Certificates, the "Class A
Principal Carryover Shortfall" as of the close of any Distribution Date means
the excess of the Class A Principal Distributable Amount plus any outstanding
Class A Principal Carryover Shortfall from the preceding Distribution Date
over the amount of principal that the holders of the Class A Certificates
actually received on such current Distribution Date.
The holders of the Class B Certificates will be entitled to receive on
any Distribution Date an amount equal to the sum of the related Class B
Interest Distributable Amount and the Class B Principal Distributable Amount
(and any shortfalls from prior Distribution Dates in payments to the Class B
Certificateholders), after giving effect to (i) amounts required to pay the
related Total Servicing Fee payable to the Servicer on such Distribution Date,
and (ii) any amounts required to be distributed to the holders of Class A
Certificates pursuant to the subordination of the rights of the holders of
such Class B Certificates. (Section 4.06).
SUBORDINATION OF THE CLASS B CERTIFICATES; SUBORDINATION SPREAD ACCOUNT
The rights of the Class B Certificateholders to receive distributions
with respect to the Receivables held by the related Trust will be subordinated
to the rights of the Class A Certificateholders of the related series in the
event of defaults and delinquencies on such Receivables as provided in the
related Agreement. The protection afforded to the Class A Certificateholders
will be effected both by the preferential right of the Class A
Certificateholders to receive current distributions with respect to the
Receivables held by the related Trust and by the establishment of a
Subordination Spread Account. Each Subordination Spread Account will be
created with an initial deposit by the Seller of the applicable Subordination
Initial Deposit and will thereafter be increased by deposit therein of amounts
otherwise distributable to the related Class B Certificateholders until the
amount in such Subordination Spread Account reaches an amount equal to the
applicable Specified Subordination Spread Account Balance. Thereafter,
amounts otherwise distributable to the Class B Certificateholders will be
deposited in such Subordination Spread Account to the extent necessary to
maintain the amount in such Subordination Spread Account at the applicable
Specified Subordination Spread Account Balance. (Section 4.07).
<PAGE>31
With respect to any series of Certificates, the "Specified Subordination
Spread Account Balance" with respect to any Distribution Date, will be the
Minimum Subordination Spread Amount, except that, unless otherwise provided in
the related Prospectus Supplement, if on any Distribution Date (i) the average
of the Charge-off Rates for the preceding three months exceeds 2.0% or (ii)
the average of the Delinquency Percentages for the preceding three months
exceeds 1.5%, then such Specified Subordination Spread Account Balance for
such Distribution Date will be an amount equal to a specified percentage of
the aggregate Principal Balance. Such specified percentage shall be
determined by deducting from the Specified Subordination Percentage (as
defined in the related Prospectus Supplement) the following fraction,
expressed as a percentage: (x) 1 minus (y) a fraction, the numerator of which
is the related Class A Certificate Balance and the denominator of which is the
aggregate Principal Balance. Notwithstanding the foregoing, in no event
(except as described below) will any Specified Subordination Spread Account
Balance be more than the Maximum Subordination Spread Amount or less than the
Minimum Subordination Spread Amount. As of any Distribution Date, the amount
of funds actually on deposit in any Subordination Spread Account may, in
certain circumstances, be less than the applicable Specified Subordination
Spread Account Balance. Finally, on any Distribution Date on which the
related Class A Certificate Balance is equal to or less than the Subordination
Spread Trigger (as defined in the related Prospectus Supplement) after giving
effect to distributions on such Distribution Date, the Specified Subordination
Spread Account Balance will be the greater of the applicable balance
determined as described above or the Trigger Subordination Spread Amount (as
defined in the related Prospectus Supplement).
With respect to any series of Certificates, the "Charge-off Rate" with
respect to a Monthly Period will equal the Aggregate Net Losses with respect
to the Receivables held by the related Trust expressed, on an annualized
basis, as a percentage of the average of (x) the aggregate Principal Balance
18
on the last day of the Monthly Period preceding such Monthly Period and (y)
the aggregate Principal Balance on the last day of such Monthly Period; the
"Aggregate Net Losses" with respect to a Monthly Period will equal the
aggregate Principal Balance of all Receivables newly designated during such
Monthly Period as Liquidating Receivables minus Liquidation Proceeds collected
during such Monthly Period with respect to all Liquidating Receivables; and
the "Delinquency Percentage" with respect to a Monthly Period will equal the
ratio of all outstanding Receivables which are 61 days or more delinquent as
of the last day of such Monthly Period, determined in accordance with the
Servicer's normal practices, divided by the number of outstanding Receivables
on the last day of such Monthly Period.
A Subordination Spread Account will not be a part of or otherwise
includable in the related Trust and will be a segregated trust account held by
the Trustee. With respect to any series of Certificates, on each Distribution
Date, (i) if the amounts on deposit in the related Subordination Spread
Account are less than the Specified Subordination Spread Account Balance for
such Distribution Date, the Trustee will, after payment of any amounts
required to be distributed to holders of the Class A Certificates and the
payment of the Total Servicing Fee due with respect to the related Monthly
<PAGE>32
Period, withdraw from the related Certificate Account and deposit in the
related Subordination Spread Account the amount remaining in the Certificate
Account that would otherwise be distributed to the holders of the Class B
Certificates, or such lesser portion thereof as is sufficient to bring the
amount in such Subordination Spread Account up to such Specified Subordination
Spread Account Balance and (ii) if the amount on deposit in the related
Subordination Spread Account on such Distribution Date (after giving effect to
all deposits or withdrawals therefrom on such Distribution Date) is greater
than the applicable Specified Subordination Spread Account Balance for such
Distribution Date, the Trustee will release and distribute any such excess to
the holders of the Class B Certificates. Upon any such distribution to the
Class B Certificateholders, the Class A Certificateholders of such series will
have no further rights in, or claims to, such amounts. (Section 4.07).
Amounts held from time to time in each Subordination Spread Account will
continue to be held for the benefit of holders of the Certificates. Funds in
each Subordination Spread Account will be invested as provided in the related
Agreement. The holders of the Class B Certificates will be entitled to
receive all investment earnings on amounts in the related Subordination Spread
Account. Investment income on amounts in any Subordination Spread Account
will not be available for distribution to the holders of the related Class A
Certificates or otherwise subject to any claims or rights of the holders of
the related Class A Certificates. (Section 4.07).
If on any Distribution Date the holders of the Class A Certificates do
not receive the sum of the related Class A Distributable Amount, Class A
Interest Carryover Shortfall and Class A Principal Carryover Shortfall for
such Distribution Date (after giving effect to any amounts applied to such
deficiency which were withdrawn from the related Subordination Spread Account
or withheld from the related Class B Distributable Amount), the holders of the
Class B Certificates of such series will not receive any portion of the Total
Available Amount.
The subordination of the Class B Certificates and the related
Subordination Spread Account is intended to enhance the likelihood of receipt
by the Class A Certificateholders of the full amount of principal and interest
on the Receivables held by the related Trust due them and to decrease the
likelihood that the Class A Certificateholders will experience losses.
However, in certain circumstances, the related Subordination Spread Account
could be depleted and shortfalls could result.
So long as certain conditions are satisfied, the Servicer is permitted
for administrative convenience to deposit in each Certificate Account only the
net amount distributable to Certificateholders on the Distribution Date.
(Section 4.08). Similarly, the Seller is entitled to net its payment
obligations to the Trustee against any amounts distributable on the related
Class B Certificates on any Distribution Date. The amounts available for
distribution to Certificateholders as described above could be reduced if
certain indemnification or reimbursement payments were required to be made
from the related Certificate Account as described under "Monthly Advances,"
"Certain Matters Regarding the Servicer" and "The Trustee."
19
<PAGE>33
The following chart sets forth an example of the application of the
foregoing provisions to a hypothetical monthly distribution:
September 1-
September 30 ........ Monthly Period. The Servicer receives
payments and other proceeds in respect of the
Receivables.
October 10 ............ The tenth calendar day of the month. On or
before this date the Servicer notifies the
Trustee of, among other things, the amounts to be
distributed on the Distribution Date.
October 14 ............ Record Date. Distributions on the Distribution
Date are made to Certificateholders of record at
the close of business on this date (or, if
Definitive Certificates are issued, the Record
Date will be September 30).
October 15 ............ Distribution Date. On or before this date,
the Seller and the Servicer (or the Trustee)
make the required remittances and transfers to
the Collection Account and the Certificate
Account in immediately available funds, and the
Trustee pays the Total Servicing Fee, distributes
to holders of the Class A and Class B
Certificates amounts payable in respect of the
Certificates and remits amounts to the
Subordination Spread Account (if required).
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
With respect to each series of Certificates, the Servicer will receive a
servicing fee (the "Basic Servicing Fee") for each Monthly Period equal to
one-twelfth of the Basic Servicing Fee Rate multiplied by the aggregate
Principal Balance of all Receivables held by the related Trust as of the last
day of the preceding Monthly Period. With respect to each series of
Certificates, the Servicer will also receive for each Monthly Period an
additional amount (the "Additional Servicing") equal to the lesser of (i) the
amount by which (A) the aggregate amount of the Basic Servicing Fee for such
Distribution Date and all prior Distribution Dates exceeds (B) the aggregate
amount of Additional Servicing paid to the Servicer on all prior Distribution
Dates, and (ii) the amount, if any, by which (A) the sum of Available Interest
and Available Principal for the related Distribution Date exceeds (B) the sum,
without duplication, of (x) all amounts required to be distributed with
respect to the Class A Certificates and the Class B Certificates on such
Distribution Date, (y) the Basic Servicing Fee paid on such Distribution Date
and any unpaid Basic Servicing Fees from all prior Distribution Dates and (z)
the amount, if any, deposited into the Subordinated Spread Account on such
Distribution Date. On each Distribution Date the Servicer will be paid the
Basic Servicing Fee, any unpaid Basic Servicing Fees from all prior
Distribution Dates and the Additional Servicing (collectively, the "Total
Servicing Fee")to the extent of funds available therefor. In addition, with
respect to each series of Certificates, the Servicer will be entitled to any
late fees, prepayment charges or certain similar fees and charges collected
<PAGE>34
during the Monthly Period, plus any interest earned during the Monthly Period
on deposits in the related Collection Account and Payment Ahead Servicing
Account (the "Supplemental Servicing Fee"). The "Principal Balance," as of
any day, with respect to any Receivable, is equal to the Amount Financed minus
the sum of either (a) in the case of a Scheduled Interest Receivable, (i) that
portion of all Scheduled Payments due on or prior to such date allocable to
principal, (ii) that portion of any Warranty Payment or Administrative
Purchase Payment with respect to such Receivable allocable to principal and
(iii) any Prepayment applied by the Servicer to reduce the Principal Balance
of such Receivable; or (b) in the case of a Simple Interest Receivable, (i)
that portion of all payments received on or prior to such date allocable to
principal and (ii) that portion of any Warranty Payment or Administrative
Purchase Payment with respect to such Receivable allocable to principal.
The Total Servicing Fee and the Supplemental Servicing Fee with respect
to each series of Certificates is intended to compensate the Servicer for
performing the functions of a third party servicer of automobile receivables
as an agent for their beneficial owner, including collecting and posting all
payments, responding to inquiries of obligors on the Receivables,
investigating delinquencies, sending payment coupons to obligors, reporting
tax information to obligors, paying costs of collections and policing the
collateral. Such amounts will also compensate the Servicer for its services
20
as the Receivables Pool administrator, including making Monthly Advances,
accounting for collections, furnishing monthly and annual statements to the
Trustee with respect to distributions and generating federal income tax
information for the related Trust. Such amounts will also reimburse the
Servicer for certain taxes, the Trustee's fees, accounting fees, outside
auditor fees, data processing costs and other costs incurred in connection
with administering the related Receivables Pool. (Section 3.09).
SERVICING PROCEDURES
The Servicer will make reasonable efforts to collect all payments due
with respect to the Receivables held by any Trust and will, consistent with
the related Agreement, follow such collection procedures as it follows with
respect to comparable automotive receivables that it services for itself or
others. (Section 3.02). See "Certain Legal Aspects of the Receivables." The
Servicer is authorized to grant certain rebates, adjustments or extensions
with respect to a Receivable subject to certain restrictions on amending or
modifying Receivables, as described under "The Certificates -- Sale and
Assignment of Receivables and Warranties Thereon." (Sections 3.02 and 3.07).
If the Servicer determines that eventual payment in full of a Receivable
held by any Trust is unlikely, the Servicer will follow its normal practices
and procedures to realize upon such Receivable, including the repossession and
disposition of the Financed Vehicle securing such Receivable at a public or
private sale, or the taking of any other action permitted by applicable law.
(Section 3.04). The Servicer will be entitled to receive an amount specified
in the related Agreement as an allowance for amounts charged to the account of
the obligor, in keeping with the Servicer's customary procedures, for
refurbishing and disposition of the Financed Vehicle and other out-of-pocket
costs related to the liquidation ("Liquidation Expenses"). (Section 3.04).
<PAGE>35
STATEMENTS TO CLASS A CERTIFICATEHOLDERS
With respect to each series of Certificates, on each Distribution Date,
the Trustee will include with each distribution to each Class A
Certificateholder (which will be Cede as the nominee for DTC unless Definitive
Certificates are issued under the limited circumstances described herein) a
statement setting forth the following information with respect to the related
Monthly Period, to the extent applicable (Section 4.09(a)):
(i) the amount of the distribution allocable to principal;
(ii) the amount of the distribution allocable to interest;
(iii) the aggregate Principal Balance as of the close of business
on the last day of such Monthly Period;
(iv) the amount of the Total Servicing Fee paid to the Servicer
with respect to the related Monthly Period and the Certificateholder's
Class A Percentage of the Total Servicing Fee;
(v) the amount of the Class A Interest Carryover Shortfall and
Class A Principal Carryover Shortfall, if any, on such Distribution Date
and the change in such amounts from those of the prior Distribution Date;
(vi) the Class A Pool Factor on such Distribution Date (after giving
effect to payments allocated to principal reported under (i) above);
(vii) the amount otherwise distributable to the Class B
Certificateholders that is distributed to Class A Certificateholders on
such Distribution Date;
(viii) the balance of the Subordination Spread Account on such
Distribution Date, after giving effect to distributions made on such
Distribution Date, and the change in such balance from that of the prior
Distribution Date;
(ix) the aggregate amount in the Payment Ahead Servicing Account or
on deposit with the Servicer as Payments Ahead and the change in such
amount from the previous Distribution Date; and
21
(x) the amount of Monthly Advances on such Distribution Date.
Each amount set forth pursuant to subclauses (i), (ii), (iv) and (v)
above will be expressed as a dollar amount per $1,000 of original principal
balance of a Class A Certificate.
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year during the term of each related Agreement, the
Trustee will mail to each person who at any time during such calendar year
will have been a Class A Certificateholder, a statement containing the sum of
the amounts described in (i), (ii), (iv) and (v) above for the purposes of
such Class A Certificateholder's preparation of federal income tax returns.
(Section 4.09(b)). See "Federal Income Tax Consequences."
<PAGE>36
EVIDENCE AS TO COMPLIANCE
Each Agreement will provide that a firm of independent accountants will
furnish to the Trustee on or before August 15 of each year, beginning the
first August 15 which is at least twelve months after the related Closing
Date, a statement as to compliance by the Servicer during the preceding twelve
months ended June 30 with certain standards relating to the servicing of the
related Receivables, the Servicer's accounting records and computer files with
respect thereto and certain other matters. (Section 3.12).
Each Agreement will also provide for delivery to the Trustee, on or
before August 15 of such year, beginning the first August 15 which is at least
twelve months after the related Closing Date, of a certificate signed by an
officer of the Servicer stating that the Servicer has fulfilled its
obligations under the related Agreement throughout the preceding twelve months
ended June 30 or, if there has been a default in the fulfillment of any such
obligation, describing each such default. (Section 3.11).
CERTAIN MATTERS REGARDING THE SERVICER
Each Agreement will provide that General Motors Acceptance Corporation
may not resign from its obligations and duties as the Servicer thereunder,
except upon determination that General Motors Acceptance Corporation's
performance of such duties is no longer permissible under applicable law. No
such resignation will become effective until the Trustee or a successor
servicer has assumed General Motors Acceptance Corporation's servicing
obligations and duties under the related Agreement. (Section 7.05).
Each Agreement will further provide that neither the Servicer nor any of
its directors, officers, employes and agents will be under any liability to
the related Trust or the Certificateholders for taking any action or for
refraining from taking any action pursuant to such Agreement or for errors in
judgment; except that neither the Servicer nor any such person will be
protected against any liability that would otherwise be imposed by reason of
wilful misfeasance, bad faith or negligence (except errors in judgment) in the
performance of duties or by reason of reckless disregard of obligations and
duties thereunder. Each Agreement will further provide that the Servicer and
its directors, officers, employes and agents will be reimbursed by the Trustee
for any contractual damages, liability or expense incurred by reason of the
Trustee's wilful misfeasance, bad faith or negligence (except errors in
judgment) in the performance of the Trustee's duties thereunder or by reason
of reckless disregard of its obligations and duties thereunder. In addition,
each Agreement will provide that the Servicer is under no obligation to appear
in, prosecute or defend any legal action that is not incidental to the
Servicer's servicing responsibilities under such Agreement and that, in its
opinion, may involve it in any expense or liability. The Servicer may,
however, undertake any reasonable action that it may deem necessary or
desirable in respect of such Agreement and the rights and duties of the
parties thereto and the interests of the Certificateholders thereunder. In
such event, the legal expenses and costs of such action and any liability
resulting therefrom will be expenses, costs and liabilities of the related
Trust, and the Servicer will be entitled to be reimbursed therefor out of the
related Certificate Account. Any such indemnification or reimbursement will
reduce the amount otherwise available for distribution to Certificateholders.
(Section 7.03).
<PAGE>37
Any entity into which the Servicer or the Seller, as the case may be, may
be merged or consolidated, or any entity resulting from any merger, conversion
or consolidation to which the Servicer or the Seller, as the case may be, is a
party, or any corporation succeeding to the business of the Servicer or the
Seller, as the case may be, or any corporation, more than 50% of the voting
stock of which is owned, directly or indirectly, by General Motors
Corporation, and which assumes the obligations of the Servicer or the Seller,
as the case may be, will be the successor of the Servicer or the Seller, as
the case may be, under each Agreement. (Sections 6.02 and 7.02). The
Servicer may at any time subcontract any duties as Servicer under any
Agreement to any corporation more than 50% of the voting stock of which is
owned, directly or indirectly, by General Motors Corporation. In the event of
22
any such subcontract, the Servicer will remain responsible for the
subcontractor's performance in accordance with such Agreement. (Section
7.04).
EVENTS OF DEFAULT
With respect to any series of Certificates, "Events of Default" under the
related Agreement will consist of (i) any failure by the Servicer to deliver
to the Trustee for distribution to the Certificateholders any required
payment, which failure continues unremedied for five business days after
receipt by the Servicer of notice thereof from the Trustee or discovery of
such failure by an officer of the Servicer, (ii) any failure by the Seller or
the Servicer duly to observe or perform in any material respect any other of
its covenants or agreements in the related Agreement which failure materially
and adversely affects the rights of Certificateholders and which continues
unremedied for 90 days after the giving of written notice of such failure (A)
to the Seller or the Servicer, as applicable, by the Trustee or (B) to the
Seller or the Servicer, as applicable, and the Trustee by the holders of Class
A Certificates evidencing not less than 25% of the voting interests thereof
and (iii) certain events of insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings and certain actions by the
Seller or the Servicer indicating its insolvency, reorganization pursuant to
bankruptcy proceedings or inability to pay its obligations. (Section 8.01).
RIGHTS UPON EVENT OF DEFAULT
As long as an Event of Default under an Agreement remains unremedied, the
Trustee or holders of Class A Certificates evidencing not less than 51% of the
voting interests thereof may terminate all of the rights and obligations of
the Servicer under such Agreement, whereupon the Trustee will succeed to all
the responsibilities, duties and liabilities of the Servicer under such
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 Event of Default other than such appointment has occurred,
such trustee or official may have the power to prevent the Trustee or the
Certificateholders from effecting a transfer of servicing. If the Trustee is
unwilling or unable so to act, then it may appoint, or petition a court of
competent jurisdiction for the appointment of, a successor having a net worth
of at least $100,000,000 and whose regular business includes the servicing of
automobile receivables. The Trustee and such successor may agree upon the
servicing compensation to be paid, which in no event may be greater than the
servicing compensation to the Servicer under the related Agreement. (Sections
8.02 and 8.03).
The holders of Class A Certificates evidencing not less than 51% of the
voting interests thereof may waive any default by the Servicer in the
performance of its obligations under the related Agreement, except a default
in making any required deposits to or payments from the related Collection
Account or Certificate Account. (Section 8.05).
<PAGE>38
AMENDMENT
Each Agreement may be amended by the Seller, the Servicer and the
Trustee, without the consent of the Class A Certificateholders, (i) to cure
any ambiguity, (ii) to correct or supplement any provision therein that may be
defective or inconsistent with any other provision therein, (iii) to add or
supplement any credit enhancement for the benefit of the related Class A
Certificateholders, (iv) to add to the covenants, restrictions or obligations
of the Seller, the Servicer or the Trustee, or (v) to add, change or eliminate
any other provision of such Agreement in any manner that will not, as
evidenced by an opinion of counsel, adversely affect in any material respect
the interests of the related Class A Certificateholders. Each such Agreement
may also be amended by the Seller, the Servicer and the Trustee with the
consent of the holders of Certificates evidencing not less than 51% of the
voting interests of each class of Certificates for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of such Agreement or of modifying in any manner the rights of
Certificateholders; except that no such amendment may (i) increase or reduce
23
in any manner the amount of, or accelerate or delay the timing of, collection
of payments on Receivables held by the related Trust or distributions that are
required to be made on any related Certificate, the applicable Pass Through
Rate or the applicable Specified Subordinated Spread Account Balance or (ii)
reduce the aforesaid percentage required to consent to any such amendment
without the consent of the holders of all Certificates. (Section 11.01).
TERMINATION
The respective obligations and responsibilities of the Seller, the
Servicer and the Trustee created by each Agreement will terminate upon the
distribution to the related Certificateholders of all amounts required to be
distributed to them pursuant to such Agreement. In order to avoid excessive
administrative expense, the Servicer, or its successor, is permitted at its
option to purchase from the related Trust, as of the last day of any Monthly
Period as of which the aggregate Principal Balance of all Receivables held by
the related Trust is equal to or less than 10% of the Aggregate Amount
Financed, the corpus of such Trust at a price equal to the aggregate
Administrative Purchase Payments for the related Receivables plus the
appraised value of any other property held as part of such Trust less
Liquidation Expenses. Exercise of such right and the subsequent distribution
to Certificateholders of all amounts required to be distributed to them
pursuant to the related Agreement will effect early retirement of such
Certificates. In such case, the Trustee will give written notice of
termination to each Certificateholder of record. The final distribution to
any Certificateholder will be made only upon surrender and cancellation of
such Certificateholder's Certificate at an office or agency of the Trustee
specified in the notice of termination. (Sections 10.01 and 10.02).
DUTIES OF THE TRUSTEE
The Trustee will make no representations as to the validity or
sufficiency of any Agreement, the Certificates or any Receivables or related
documents, and will not be accountable for the use or application by the
Seller or the Servicer of any funds paid to the Seller or the Servicer in
respect of the Certificates or the Receivables, or the investment of any
monies by the Servicer before such monies are deposited into the related
<PAGE>39
Certificate Account. The Trustee will not independently verify any
Receivables. If no Event of Default has occurred, the Trustee will be
required to perform only those duties specifically required of it under the
related Agreement. Generally, those duties will be limited to the receipt of
the various certificates, reports or other instruments required to be
furnished to the Trustee, in which case it will only be required to examine
them to determine whether they conform to the requirements of the related
Agreement. (Sections 9.01 and 9.05).
THE TRUSTEE
The First National Bank of Chicago will be the Trustee. The Trustee and
any of its affiliates may hold Certificates in their own names. In addition,
for the purpose of meeting the legal requirements of certain local
jurisdictions, the Trustee, with the consent of the Servicer, will have the
power to appoint co-trustees or separate trustees of all or any part of each
Trust. In the event of such appointment, all rights, powers, duties and
obligations conferred or imposed upon the Trustee by an Agreement will be
conferred or imposed upon the Trustee and such separate trustee or co-trustee
jointly, or, in any jurisdiction in which the Trustee will be incompetent or
unqualified to perform certain acts, singly upon such separate trustee or
co-trustee who will exercise and perform such rights, powers, duties and
obligations solely at the direction of the Trustee. (Section 9.12).
The Trustee will be under no obligation to exercise any of the trusts or
powers vested in it by an Agreement or to make any investigation of matters
arising thereunder or to institute, conduct or defend any litigation
thereunder or in relation thereto at the request, order or direction of any of
the Certificateholders, unless such Certificateholders have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby. (Section 9.04). No
Certificateholder will have any right under an Agreement to institute any
proceeding with respect to such Agreement, unless such holder previously has
given to the Trustee written notice of default and unless the holders of Class
A Certificates evidencing not less than 25% of the voting interests of such
series have made written request upon the Trustee to institute such proceeding
in its own name as Trustee thereunder and have offered to the Trustee
24
reasonable indemnity and the Trustee for 30 days has neglected or refused to
institute any such proceedings. (Section 11.03).
The Trustee may resign at any time, in which event the Servicer, or its
successor, will be obligated to appoint a successor trustee. The Servicer may
also remove the Trustee if the Trustee ceases to be eligible to continue as
such under the related Agreement or if the Trustee becomes insolvent. In such
circumstances, the Servicer will be obligated to appoint a successor trustee.
Any resignation or removal of the Trustee and appointment of a successor
trustee will not become effective until acceptance of the appointment by the
successor trustee. (Section 9.09).
Each Agreement will provide that the Servicer will pay the Trustee's
fees. (Section 9.07). Each Agreement will further provide that the Trustee
will be entitled to indemnification by the Servicer for, and will be held
harmless against, any loss, liability or expense incurred by the Trustee
(other than through its own wilful misfeasance, bad faith or negligence (other
than errors in judgment) or by reason of a breach of any of its
representations or warranties set forth in such Agreement). (Sections 6.01,
7.01 and 9.07). Any such indemnification by a Trust will reduce the amount
otherwise available for distribution to Certificateholders.
<PAGE>40
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
SECURITY INTEREST IN VEHICLES
In all states in which the Receivables are originated, retail instalment
sale contracts such as the Receivables evidence the credit sale of automobiles
and light trucks by dealers to purchasers. The contracts also will constitute
personal property security agreements and include grants of security interests
in the vehicles under the Uniform Commercial Code. Perfection of security
interests in the vehicles is generally governed by the motor vehicle
registration laws of the state in which the vehicle is located. In all states
in which the Receivables are originated, a security interest in a vehicle is
perfected by notation of the secured party's lien on the vehicle's certificate
of title.
Pursuant to each Purchase Agreement, General Motors Acceptance
Corporation will assign its security interest in the Financed Vehicles
securing the Receivables held by the related Trust to the Seller and pursuant
to each Agreement, the Seller will assign its security interest in the
Financed Vehicles securing the Receivables held by the related Trust to the
Trustee. However, because of the administrative burden and expense, neither
the Servicer nor the Trustee will amend any certificate of title to identify
the related Trust as the new secured party on such certificate of title
relating to a Financed Vehicle. Also, the Servicer will continue to hold any
certificates of title relating to the vehicles in its possession as custodian
for the Trustee pursuant to the related Custodian Agreement. See "The
Certificates--Sale and Assignment of Receivables and Warranties Thereon."
In most states, an assignment such as that under both the related
Purchase Agreement and the related Agreement is an effective conveyance of a
security interest without amendment of any lien noted on a vehicle's
certificate of title, and the assignee succeeds thereby to the assignor's
rights as secured party. In the absence of fraud or forgery by the vehicle
owner or the Servicer or administrative error by state or local agencies, the
notation of the Servicer's lien on the certificates of title will be
sufficient to protect the related Trust against the rights of subsequent
purchasers of a Financed Vehicle from an obligor or subsequent lenders to an
obligor who take a security interest in a Financed Vehicle. If there are any
Financed Vehicles as to which General Motors Acceptance Corporation failed
to obtain a perfected security interest, its security interest would be
subordinate to, among others, subsequent purchasers of the Financed Vehicles
and holders of perfected security interests. Such a failure, however, would
constitute a breach of General Motors Acceptance Corporation's warranties
under the related Agreement and would create an obligation of General Motors
Acceptance Corporation to repurchase the related Receivable unless the
breach is cured. See "The Certificates--Sale and Assignment of Receivables
and Warranties Thereon." Similarly, the security interest of the related Trust
in the vehicle could be defeated through fraud or negligence and, because such
Trust is not identified as the secured party on the certificate of title, by
the bankruptcy petition of the obligor.
25
<PAGE>41
Under the laws of most states, the perfected security interest in a
vehicle would continue for four months after a vehicle is moved to a state
other than the state in which it is initially registered and thereafter until
the vehicle owner re-registers the vehicle in the new state. A majority of
states generally require surrender of a certificate of title to re-register a
vehicle. Accordingly, a secured party must surrender possession if it holds
the certificate of title to the vehicle or, in the case of vehicles registered
in states providing for the notation of a lien on the certificate of title but
not possession by the secured party, the secured party would receive notice of
surrender if the security interest is noted on the certificate of title.
Thus, the secured party would have the opportunity to re-perfect its security
interest in the vehicles in the state of relocation. In states that do not
require surrender of a certificate of title for registration of a motor
vehicle, re-registration could defeat perfection. In the ordinary course of
servicing receivables, the Servicer takes 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 must
surrender possession of the certificate of title or will receive notice as a
result of its lien noted thereon and accordingly will have an opportunity to
require satisfaction of the related Receivable before release of the lien.
Under each Agreement, the Servicer will be obligated to take appropriate
steps, at the Servicer's expense, to maintain perfection of security interests
in the Financed Vehicles.
Under the laws of most states, liens for repairs performed on a motor
vehicle and liens for unpaid taxes take priority over even a perfected
security interest in a financed vehicle. The Internal Revenue Code of 1986,
as amended, also grants priority to certain federal tax liens over the lien of
a secured party. The laws of certain states and federal law permit the
confiscation of motor vehicles by governmental authorities under certain
circumstances if used in unlawful activities, which may result in the loss of
a secured party's perfected security interest in the confiscated motor
vehicle. With respect to each series of Certificates, General Motors
Acceptance Corporation will have represented to the Seller that, as of the
date of issuance of the Certificates of such series, each security interest in
a Financed Vehicle is or will be prior to all other present liens (other than
tax liens and other liens that arise by operation of law) upon and security
interests in such Financed Vehicle. The Seller will have assigned such
representation, among others, to the related Trust pursuant to the related
Agreement. However, liens for repairs or taxes, or the confiscation of a
Financed Vehicle, could arise at any time during the term of a Receivable. No
notice will be given to the Trustee or Certificateholders of the related
series in the event such a lien or confiscation arises.
REPOSSESSION
In the event of default by vehicle purchasers, the assignee of the retail
instalment sale contract has all the remedies of a secured party under the
Uniform Commercial Code, except where specifically limited by other state
laws. The Uniform Commercial Code remedies of a secured party include the
right to perform self-help repossession unless such act would constitute a
breach of the peace. Self-help is the method employed by the Servicer in most
cases and is accomplished simply by taking possession of the Financed Vehicle.
In the event of default by the obligor, some jurisdictions require that the
obligor be notified of the default and be given a time period within which he
may cure the default prior to repossession. Generally, this right of
reinstatement may be exercised on a limited number of occasions in any
one-year period. In cases where the obligor objects or raises a defense to
repossession, or if otherwise required by applicable state law, a court order
must be obtained from the appropriate state court and the vehicle must then be
repossessed in accordance with that order. A secured party may be held
responsible for damages caused by a wrongful repossession of a vehicle.
<PAGE>42
NOTICE OF SALE; REDEMPTION RIGHTS
The Uniform Commercial Code and other state laws require the 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, a consent order between the Servicer and
the Federal Trade Commission ("FTC Repossession Consent Order") imposes
similar requirements for the giving of notice for any such sale. The obligor
has the right to redeem the collateral prior to actual sale by paying the
secured party the unpaid principal balance of the obligation plus reasonable
expenses for repossessing, holding and preparing the collateral for
26
disposition and arranging for its sale, plus, in some jurisdictions,
reasonable attorneys' fees or in some states, by payment of delinquent
instalments or the unpaid balance.
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. While some states impose prohibitions
or limitations on deficiency judgments if the net proceeds from resale do not
cover the full amount of the indebtedness, a deficiency judgment can be sought
in those states that do not prohibit or limit such judgments. 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.
Occasionally, after resale of a vehicle and payment of all expenses and
indebtedness, there is a surplus of funds. In that case, the Uniform
Commercial Code requires the creditor to remit the surplus to any holder of a
lien with respect to the vehicle or if no such lienholder exists or there are
remaining funds, the Uniform Commercial Code and the FTC Repossession Consent
Order require the creditor to remit the surplus to the former owner of the
vehicle.
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,
the Soldiers' and Sailors' Civil Relief Act of 1940, the Texas Consumer Credit
Code, state adaptations of the National Consumer Act and of the Uniform
Consumer Credit Code (the "UCCC") and state sales finance and other similar
laws. Also, state laws 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 an assignee's ability to enforce consumer
finance contracts such as the Receivables (or, if a seller with respect to a
Receivable is not liable for indemnifying the related Trust as assignee of the
Receivables from the Seller, failure to comply could impose liability on an
assignee in excess of the amount of the Receivable).
<PAGE>43
The so-called "Holder-in-Due-Course" rule of the Federal Trade
Commission (the "FTC Rule"), the provisions of which are generally duplicated
by the UCCC, other state statutes or the common law, has the effect of
subjecting a 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 an obligor under the contract, and the
holder of the contract may also be unable to collect any balance remaining due
thereunder from the obligor.
Most of the Receivables held by any Trust will be subject to the
requirements of the FTC Rule. Accordingly, the Trustee, as holder of the
Receivables, will be subject to any claims or defenses that the purchaser of
the related Financed Vehicle may assert against the seller of the Financed
Vehicle. Such claims are limited to a maximum liability equal to the amounts
paid by the obligor on the Receivable. If an obligor were successful in
asserting any such claim or defense, such claim or defense would constitute a
breach of the Servicer's warranties under the related Agreement and would
create an obligation of the Servicer to repurchase the Receivables unless the
breach is cured.
Courts have imposed general equitable principles upon secured parties
pursuing repossession and 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.
27
In several cases, consumers have asserted that the self-help remedies of
secured parties under the Uniform Commercial Code and related laws violate the
due process protections provided under the 14th Amendment to the Constitution
of the United States. Courts have generally upheld the notice provisions of
the Uniform Commercial Code and related laws as reasonable or have found that
the repossession and resale by the creditor does not involve sufficient state
action to afford constitutional protection to consumers.
Under each Purchase Agreement General Motors Acceptance Corporation will
represent to the Seller that each related Receivable complies with all
requirements of law in all material respects. The Seller will assign such
representation, among others, to the related Trust. Accordingly, if an
obligor has a claim against the Trust for violation of any law and such claim
materially and adversely affects such Trust's interest in a Receivable, such
violation would constitute a breach and would create an obligation of General
Motors Acceptance Corporation to repurchase such Receivable unless the breach
is cured. See "The Certificates--Sale and Assignment of the Receivables and
Warranties Thereon."
OTHER LIMITATIONS
In addition to 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 secured
party to realize upon collateral or to enforce a deficiency judgment. For
example, in a Chapter 13 proceeding under the federal bankruptcy law, a court
may prevent a creditor from repossessing the Financed Vehicle, and, as part of
the rehabilitation plan, reduce the amount of the secured indebtedness to the
market value of the Financed Vehicle at the time of bankruptcy, leaving the
creditor 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 finance charge and time of repayment of
the indebtedness.
<PAGE>44
TRANSFERS OF VEHICLES
The Receivables will prohibit the sale or transfer of a Financed Vehicle
without the Servicer's consent and, except for those originated in Wisconsin,
will permit the Servicer to accelerate the maturity of the Receivable upon a
sale or transfer without the Servicer's consent. The Servicer will not
consent to a sale or transfer and will require prepayment of the Receivable.
Although the Servicer, as agent of the Trustee, may enter into a transfer of
equity agreement with the secondary purchaser for the purpose of effecting the
transfer of the vehicle, the new obligation will not be included in the
related Receivables Pool.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the anticipated federal income
tax consequences of the purchase, ownership and disposition of Class A
Certificates which are purchased in the initial distribution thereof. This
summary is based upon laws, regulations, rulings and decisions currently in
effect, all of which are subject to change. The discussion below addresses
all material federal income tax consequences of the purchase, ownership and
disposition of the Class A Certificates generally applicable to investors.
However, it does not purport to deal with all federal tax consequences
applicable to all categories of investors, some of which may be subject to
special rules. In addition, this summary is generally limited to investors
who will hold the Class A Certificates as "capital assets" (generally,
property held for investment) within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended (the "Code"). Investors should
consult their own tax advisors to determine the federal, state, local and
other tax consequences of the purchase, ownership and disposition of the Class
A Certificates. Prospective investors should note that no rulings have been
or will be sought from the Internal Revenue Service (the "Service") with
respect to any of the federal income tax consequences discussed below, and no
assurance can be given that the Service will not take contrary positions.
TAX STATUS OF THE TRUST
In the opinion of Kirkland & Ellis, special counsel to the Seller ("Tax
Counsel"), each Trust will be classified as a grantor trust and not as an
association taxable as a corporation for federal income tax purposes. Subject
to the discussion below under "Treatment of Fees or Payments," each Class A
28
Certificate Owner will be treated as the owner of a pro rata undivided
interest in the applicable Class A Percentage of the ordinary income and
corpus portions of the related Trust.
INCOME OF CERTIFICATEHOLDERS
Subject to the discussion below under "Treatment of Fees or Payments,"
in the opinion of Tax Counsel, each Class A Certificate Owner will be required
to report on its federal income tax return, in a manner consistent with its
method of accounting, its pro rata share of the applicable Class A Percentage
of the entire income of the related Trust, including interest or finance
charges earned on the Receivables held by such Trust and any gain or loss upon
collection or disposition of such Receivables. The Trustee intends to report
income and expenses to Class A Certificate Owners on the assumption that Class
A Certificate Owners own an interest equal to the applicable Class A
Percentage in all of the principal and interest derived from the Receivables
<PAGE>45
and have an interest equal to the applicable Class A Percentage in all
expenses incurred by the related Trust less the portion of those items deemed
to have been retained by the Seller. The portion of each monthly payment to a
Class A Certificate Owner that is allocable to principal will represent a
recovery of capital, which will reduce the tax basis of such Class A
Certificate Owner's undivided interest in the Receivables held by the related
Trust. In computing its federal income tax liability, a Class A Certificate
Owner generally will be entitled to deduct, consistent with its method of
accounting, its pro rata share of reasonable servicing fees and other fees
paid or incurred by the related Trust as provided in Section 162 or 212 of the
Code. However, if a Class A Certificate Owner is an individual, estate or
trust, the deduction for its pro rata share of such fees will be subject to
certain limitations. In particular, the deduction (taken together with all of
such person's other miscellaneous itemized deductions) will be allowed, for
regular tax purposes, only to the extent that all of such person's
miscellaneous itemized deductions, including such person's share of such fees,
exceed 2% of such person's adjusted gross income (including any income from
the Certificates) and (in the case of an individual) only to the extent that
all of such person's itemized deductions (as defined in Section 68(c) of the
Code) exceed an amount equal to the lesser of (i) 3% of such person's adjusted
gross income in excess of certain statutorily-defined thresholds which are
adjusted annually for inflation (for 1993, $108,450 for married individuals
filing jointly) or (ii) 80% of such itemized deductions. The deduction will
not be allowed for alternative minimum tax purposes. Because the Trustee will
not report to Class A Certificate Owners the amount of income or deductions
attributable to the related Surplus Interest, Supplemental Servicing Fee or
Prepayment Surplus, any such Class A Certificate Owner who is an individual,
estate or trust may effectively underreport its net taxable
income.
TREATMENT OF FEES OR PAYMENTS. There are no authoritative federal income
tax guidelines as to the maximum compensation that may be considered
reasonable for servicing Receivables, providing the Subordination Spread
Account or performing other services in this or similar transactions.
However, by reason of the extent to which the weighted average APR of the
Receivables held by the related Trust exceeds the applicable Pass Through
Rate, it is expected for federal income tax purposes, although Tax Counsel
is unable to give an opinion on this point, that (a) the Basic Servicing,
Additional Servicing and Supplemental Servicing Fees paid to the Servicer will
be treated as expenses incurred by the related Trust in consideration for the
Servicer's servicing of the Receivables held by such Trust, and (b) the
portion of the Class B Distributable Amount that is attributable to Surplus
Interest and Prepayment Surplus will constitute an ownership interest in a
portion of the principal amounts or interest payments with respect to some or
all of the Receivables held by the related Trust.
As a result, the Servicer intends to report income to Class A Certificate
Owners on the assumption that such Receivables are subject to the "stripped
bond" rules under Section 1286 of the Code. Accordingly, the income and
deductions of the related Trust reported to Class A Certificate Owners will
not include the portion of the interest on the Receivables treated as retained
by the Seller, and the Trust's deductions will be limited to reasonable
servicing and other fees. In addition, a Class A Certificate Owner will be
subject to the original issue discount ("OID") rules (and will not be subject
to the market discount rules) of the Code with respect to the stripped
Receivables. See "Discount and Premium."
Alternatively, the Service could assert that for federal income tax
purposes the Seller has retained ownership of the Receivables held by a Trust
29
<PAGE>46
and that each Class A Certificate Owner of such Trust should be treated as
having loaned to the Seller the purchase price of its Class A Certificate,
which loan is secured by an undivided interest in such Receivables. Although
Tax Counsel is unable to give an opinion on this point, the likely effect of
such treatment is that the interest income of each Class A Certificate Owner
would be calculated by reference to the applicable Pass Through Rate, rather
than the APR of the related Receivables, and the deductions of the related
Trust would not be allocable to the Class A Certificate Owner. See "Discount
and Premium." Unless a Class A Certificate is purchased at a significant
discount from the portion of the principal balance of the underlying
Receivables allocable to such Class A Certificate, it is unlikely that
treatment as a secured loan would have materially adverse tax consequences to
a Class A Certificate Owner.
DISCOUNT AND PREMIUM. If the price at which a Class A Certificate Owner
were deemed to have acquired a Receivable is less than the remaining
principal balance of such Receivable by an amount which is less than a
statutorily defined DE MINIMIS amount, such Receivable would not be treated
as having OID. In general, under Temporary Regulations it appears that the
amount of OID on a Receivable treated as a "stripped bond" will be DE MINIMIS
if it is less than 1/4 of 1% for each full year remaining after the purchase
date until the final maturity of the Receivable, although the Service could
take the position that the weighted average maturity date, rather than the
final maturity date, should be used in performing this calculation. If the
amount of OID is DE MINIMIS under this rule, the actual amount of discount
on such a Receivable would be includible in income as principal payments are
received on the Receivable.
If the OID on a Receivable were not treated as DE MINIMIS, a Class A
Certificate Owner would be required to include any OID in income as it
accrues, regardless of when cash payments are received, using a method
reflecting a constant yield on the Receivables. Moreover, the Service could
assert that a prepayment assumption should be used in computing the yield to
maturity of a Receivable. If a Receivable is deemed to be acquired by a Class
A Certificate Owner at a significant discount, such prepayment assumption
could accelerate the accrual of income by a Class A Certificate Owner. No
representation is made, nor is Tax Counsel able to give an opinion, that the
Receivables will prepay at any particular rate.
In the opinion of Tax Counsel, in the event that a Receivable held by any
Trust is treated as purchased at a premium (i.e., the purchase price exceeds
the sum of principal payments to be made thereon), such premium will be
amortizable by a Class A Certificate Owner as an offset to interest income
(with a corresponding reduction in the Class A Certificate Owner's basis)
under a constant yield method over the term of such Receivable if an election
under Section 171 of the Code is made (or was previously in effect in
accordance with the provisions of the Tax Reform Act of 1986).
SALES OF A CLASS A CERTIFICATE. In the opinion of Tax Counsel, if a
Class A Certificate is sold, gain or loss will be recognized equal to the
difference between the amount realized on the sale and the Class A Certificate
Owner's adjusted basis in such Class A Certificate. A Class A Certificate
Owner's adjusted basis will equal the cost of the Class A Certificate,
increased by any discount previously included in income and decreased by any
deduction previously allowed for accrued premium and by the amount of
principal payments previously received on the Receivables held by the related
Trust. Any gain or loss will be capital gain or loss if such Class A
<PAGE>47
Certificate was held as a capital asset, except that gain will be treated in
whole or in part as ordinary interest income to the extent of the seller's
interest in accrued market discount not previously taken into income on
Receivables having a fixed maturity date of more than one year after the date
of origination. Due to the complexity of the market discount rules, Class A
Certificate Owners should consult their own tax advisors as to whether market
discount will result from the acquisition of Class A Certificates and as to
the tax treatment of any such discount.
FOREIGN CLASS A CERTIFICATE OWNERS
Interest attributable to the Receivables held by any Trust which is
received by a foreign Class A Certificate Owner who is not engaged in a trade
or business in the United States will generally not be subject to the normal
U.S. withholding tax of 30% (or lower applicable treaty rate) imposed with
respect to such payments, provided that such Class A Certificate Owner
fulfills certain certification requirements. Under such requirements, the
holder must certify, under penalties of perjury, that it is not a "United
States person" and provide its name and address. For this purpose, "United
States person" means a citizen or resident of the U.S., a corporation,
30
partnership, or other entity created or organized in or under the laws of the
U.S. or any political subdivision thereof or an estate or trust the income of
which is includable in gross income for U.S. federal income tax purposes,
regardless of its source. Potential investors who are not United States
persons should consult their own tax advisors regarding the specific tax
consequences to them of owning a Class A Certificate.
BACKUP WITHHOLDING
Payments made on Class A Certificates and proceeds from the sale of Class
A Certificates will not be subject to a "backup" withholding tax of 31%
unless, in general, the Class A Certificate Owner fails to comply with certain
reporting procedures and is not an exempt recipient under applicable
provisions of the Code.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Section 4975 of the Code prohibit a pension, profit
sharing or other employee benefit plan from engaging in certain transactions
involving "plan assets" with persons that are "parties in interest" under
ERISA or "disqualified persons" under the Code with respect to the plan.
ERISA also imposes certain duties and certain prohibitions on persons who are
fiduciaries of plans subject to ERISA. Under ERISA, generally, any person who
exercises any authority or control with respect to the management or
disposition of the assets of a plan is considered to be a fiduciary of such
plan. A violation of these "prohibited transaction" rules may generate excise
tax and other liabilities under ERISA and the Code for such persons.
Pursuant to a final regulation (the "Final Regulation") issued by the
Department of Labor ("DOL") concerning the definition of what constitutes the
"plan assets" of an employee benefit plan subject to ERISA or the Code or an
individual retirement account (collectively referred to as "Benefit Plans"),
the assets and properties of certain entities in which a Benefit Plan makes an
equity investment could be deemed to be assets of the Benefit Plan in certain
circumstances. Accordingly, if Benefit Plans purchase Class A Certificates,
the related Trust could be deemed to hold plan assets.
<PAGE>48
Unless otherwise provided in the related Prospectus Supplement, the DOL
has granted an administrative exemption (an "Exemption") to the underwriter
specified in the related Prospectus Supplement from certain of the prohibited
transaction and conflict of interest rules of ERISA with respect to the
initial purchase, the holding and the subsequent resale by Benefit Plans of
certificates in pass-through trusts with respect to which such underwriter is
the sole underwriter or the manager or co-manager of the underwriting
syndicate and that consist of certain receivables, loans and other obligations
that meet the conditions and requirements of such Exemption. The receivables
covered by an Exemption include motor vehicle instalment obligations such as
the Receivables. An Exemption will apply only if specific conditions (certain
of which are described below) are met. The Seller believes that an Exemption
will apply to the acquisition and holding of each series of Class A
Certificates by Benefit Plans and that all conditions of such Exemption other
than those within the control of the investors have been or will be met.
Among the conditions which must be satisfied for an Exemption to apply to
the acquisition by a Benefit Plan of Class A Certificates are the following:
(1) The acquisition of the Class A Certificates by a Benefit Plan
is on terms (including the price for the Certificates) that are at least
as favorable to the Benefit Plan as they would be in an arm's-length
transaction with an unrelated party;
(2) The rights and interests evidenced by the Class A Certificates
acquired by the Benefit Plan are not subordinated to the rights and
interests evidenced by other certificates of the related Trust;
(3) The Class A Certificates acquired by the Benefit Plan have
received a rating at the time of such acquisition that is in one of the
three highest generic rating categories from Standard & Poor's
Corporation, Moody's Investors Service, Inc., Duff & Phelps Credit Rating
Co. or Fitch Investors Service, Inc.;
31
(4) The sum of all payments made to the related underwriters in
connection with the distribution of such Class A Certificates represents
not more than reasonable compensation for underwriting such Class A
Certificates. The sum of all payments made to and retained by the Seller
pursuant to the sale of the Receivables to the related Trust represents
not more than the fair market value of such Receivables. The sum of all
payments made to and retained by the Servicer represents not more than
reasonable compensation for the Servicer's services as servicer under the
related Agreement and reimbursement of the Servicer's reasonable expenses
in connection therewith;
(5) The Trustee is not an "affiliate" (as defined in the
Exemption) of any other member of the Restricted Group (as defined below);
(6) The Benefit Plan investing in the Class A Certificates is an
"accredited investor" as defined in Rule 501(a)(1) of Regulation D of the
Commission under the Securities Act of 1933 as amended; and
(7) The related Trust satisfies the following requirements:
(a) the corpus of such Trust consists solely of assets of the
type which have been included in other investment pools,
(b) certificates in such other investment pools have been
rated in one of the three highest generic rating categories of
Standard & Poor's Corporation, Moody's Investors Service, Inc., Duff
& Phelps Credit Rating Co. or Fitch Investors Service, Inc. for at
least one year prior to the Benefit Plan's acquisition of Class A
Certificates, and
<PAGE>49
(c) certificates evidencing interests in such other investment
pools have been purchased by investors other than Benefit Plans for
at least one year prior to any Benefit Plan's acquisition of Class A
Certificates.
Certain transactions are not covered by an applicable exemption. An
Exemption does not exempt the acquisition and holding of Class A Certificates
by Benefit Plans sponsored by the Seller, the underwriters, the Trustee, the
Servicer or any "obligor" (as defined in the Exemption) with respect to
Receivables included in the related Trust constituting more than 5% of the
aggregate unamortized principal balance of the assets in such Trust or any
affiliate of such parties (the "Restricted Group"). Unless otherwise provided
in the related Prospectus Supplement, as of the date thereof, no obligor with
respect to Receivables included in any Trust will constitute more than five
percent of the aggregate unamortized principal balance of such Trust.
Moreover, the exemptive relief from the self-dealing/conflict of interest
prohibited transaction rules of ERISA is available, only if, among other
requirements (i) the person who has discretionary authority or renders
investment advice with respect to the investment of a Benefit Plan's assets in
the Class A Certificates (or such person's affiliate) is an obligor with
respect to five percent or less of the fair market value of the assets
contained in the related Trust, (ii) a Benefit Plan's investment in such Class
A Certificates does not exceed 25% of all of the Class A Certificates of such
series outstanding at the time of the acquisition, (iii) immediately after the
acquisition, no more than 25% of the assets of a Benefit Plan with respect to
which the person who has discretionary authority or renders investment advice
are invested in certificates representing an interest in a trust containing
assets sold or serviced by the same entity and (iv) in the case of the
acquisition of Class A Certificates in connection with their initial issuance,
at least 50% of such Class A Certificates are acquired by persons independent
of the Restricted Group and at least 50% of the aggregate interest in the
related Trust is acquired by persons independent of the Restricted Group.
An applicable Exemption will also apply to transactions in connection
with the servicing, management and operation of the related Trust, provided
that, in addition to the general requirements described above, (a) such
transactions are carried out in accordance with the terms of a binding pooling
and servicing agreement and (b) the pooling and servicing agreement is
provided to, or described in all material respects in the prospectus or
private placement memorandum provided to investing Benefit Plans before the
Plans purchase Class A Certificates issued by the related Trust. Each
Agreement is a pooling and servicing agreement as defined in the related
Exemption. All transactions relating to the servicing, management and
operations of each Trust will be carried out in accordance with the related
Agreement, which Agreement is described in all material respects in "The
Certificates" and in the related Prospectus Supplement.
Any Benefit Plan fiduciary considering the purchase of Class A
Certificates should consult with its counsel with respect to the applicability
of the related Exemption and other issues and determine on its own whether all
conditions have been satisfied and whether the Certificates are an appropriate
investment for a Benefit Plan under ERISA and the Code.
<PAGE>50
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in an underwriting
agreement (an "Underwriting Agreement") to be entered into with respect to
each series of Certificates, the Seller will agree to sell to each of the
underwriters named therein and in the related Prospectus Supplement, and each
of such underwriters will severally agree to purchase from the Seller, the
principal amount of Class A Certificates set forth therein and in the related
Prospectus Supplement (subject to proportional adjustment on the terms and
conditions set forth in the related Underwriting Agreement (if any) in the
event of an increase or decrease in the aggregate amount of Class A
Certificates offered hereby and by the related Prospectus Supplement).
32
In each Underwriting Agreement, the several underwriters will agree,
subject to the terms and conditions set forth therein, to purchase all the
Class A Certificates offered hereby and by the related Prospectus Supplement
if any of such Class A Certificates are purchased. In the event of a default
by any underwriter, each Underwriting Agreement will provide that, in certain
circumstances, purchase commitments of the nondefaulting underwriters may be
increased or the Underwriting Agreement may be terminated.
Each Prospectus Supplement will set forth the price at which the Class A
Certificates being offered thereby initially will be offered to the public and
any concessions that may be offered to certain dealers participating in the
offering of such Certificates. After the initial public offering, the public
offering price and such concessions may be changed.
Each Underwriting Agreement will provide that the Seller will indemnify
the related underwriters against certain liabilities, including liabilities
under the Securities Act of 1933, as amended.
The place and time of delivery for the Securities in respect of which
this Prospectus is delivered will be set forth in the accompanying
Prospectus Supplement.
LEGAL OPINIONS
Certain legal matters relating to the Certificates will be passed upon
for the Seller and the Servicer by Richard B. Wagner, Esq., General Counsel of
the Servicer, and by Kirkland & Ellis, special counsel to the Seller and the
Servicer. Mr. Wagner owns shares of each of the classes of General Motors
Corporation common stocks and has options to purchase shares of General Motors
Corporation common stock, $1-2/3 par value. Certain federal income tax
matters will be passed upon for the Seller by Kirkland & Ellis.
33
<PAGE>51
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.
Page*
----
Additional Servicing ................................... 20
Administrative Purchase Payment ........................ 13
Administrative Receivable .............................. 13
Aggregate Amount Financed .............................. PS
Aggregate Net Losses ................................... 19
Agreement .............................................. 1
Amount Financed ........................................ 8
APR .................................................... 8
Available Interest ..................................... 16
Available Principal .................................... 16
Basic Servicing Fee .................................... 20
Basic Servicing Fee Rate ............................... PS
Benefit Plans .......................................... 31
Cede ................................................... 10
Certificate Account .................................... 14
Certificate Owner ...................................... 10
Certificateholders ..................................... 2
Certificates ........................................... 1
Charge-off Rate ........................................ 18
Class A Certificateholder .............................. 3
Class A Certificates ................................... 3
Class A Certificate Balance ............................ 4
Class A Certificate Owner .............................. 10
Class A Distributable Amount ........................... 16
Class A Interest Carryover Shortfall ................... 17
Class A Interest Distributable Amount .................. 16
Class A Percentage ..................................... PS
Class A Pool Factor .................................... 9
Class A Principal Carryover Shortfall .................. 18
Class A Principal Distributable Amount ................. 16
Class B Certificateholder .............................. 4
Class B Certificates ................................... 3
Class B Certificate Balance ............................ 17
Class B Distributable Amount ........................... 17
Class B Interest Distributable Amount .................. 17
Class B Percentage ..................................... PS
Class B Principal Distributable Amount ................. 17
Code ................................................... 28
Collection Account ..................................... 14
Commission ............................................. 2
Cutoff Date ............................................ PS
Definitive Certificates ................................ 11
Delinquency Percentage ................................. 19
Depository ............................................. 10
Distribution Date ...................................... 1
DOL .................................................... 31
DTC .................................................... 1
ERISA .................................................. 31
- ------------------
* PS refers to the Prospectus Supplement
34
<PAGE>52
Page*
----
Events of Default ...................................... 23
Excess Payment ......................................... 14
Excess Simple Interest Collections...................... 5
Exemption .............................................. 31
Financed Vehicles ...................................... 3
FTC Repossession Consent Order ......................... 26
FTC Rule ............................................... 27
Holders ................................................ 12
Indirect Participants .................................. 11
Initial Class A Certificate Balance .................... PS
Initial Class B Certificate Balance .................... PS
Insolvency Laws ........................................ 9
Liquidating Receivables ................................ 16
Liquidation Expenses ................................... 21
Liquidation Proceeds ................................... 16
Maximum Subordination Spread Amount..................... PS
Minimum Subordination Spread Amount..................... PS
Monthly Advance ........................................ 5
Monthly Period ......................................... 4
Participants ........................................... 11
Pass Through Rate ...................................... PS
Payment Ahead .......................................... 14
Payment Ahead Servicing Account ........................ 14
Prepayment ............................................. 8
Prepayment Surplus ..................................... 17
Principal Balance ...................................... 20
Prospectus Supplement .................................. PS
Purchase Agreement ..................................... 12
Receivables ............................................ 1
Receivables Pool ....................................... 3
Record Date ............................................ 3
Required Deposit Rating ................................ 14
Restricted Group ....................................... 32
Rules .................................................. 11
Schedule of Receivables ................................ 12
Scheduled Interest Advance ............................. 5
Scheduled Interest Receivable .......................... 8
Scheduled Payments ..................................... 8
Seller ................................................. 1
Service ................................................ 6
Servicer ............................................... 1
Simple Interest Advance ................................ 5
Simple Interest Receivable ............................. 8
Specified Subordination Percentage ..................... PS
Specified Subordination Spread Account Balance ......... 5
Subordination Initial Deposit .......................... PS
Subordination Spread Trigger ........................... PS
Supplemental Servicing Fee ............................. 20
Surplus Interest ....................................... 17
Tax Counsel ............................................ 28
Total Available Amount ................................. 16
Total Servicing Fee .................................... 20
35
<PAGE>53
Page*
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Trigger Subordination Spread Amount .................... PS
Trust .................................................. 1
Trustee ................................................ 1
Trust Formation Date ................................... 12
UCCC ................................................... 27
Underwriters ........................................... 11
Underwriting Agreement ................................. 33
United States person ................................... 30
Warranty Payment ....................................... 13
Warranty Receivable .................................... 13
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* PS refers to the Prospectus Supplement
36
