<PAGE> 1
File Pursuant Rule 424b1
Registration No. 333-33745
PROSPECTUS
$350,000,000
FLEETWOOD CREDIT 1997-B GRANTOR TRUST
$337,750,000 6.40% ASSET BACKED CERTIFICATES, CLASS A
$12,250,000 6.65% ASSET BACKED CERTIFICATES, CLASS B
FLEETWOOD CREDIT RECEIVABLES CORP.,
SELLER
<TABLE>
<S> <C> <C>
FLEETWOOD CREDIT CORP.,
SERVICER AND
(LOGO) A WHOLLY OWNED SUBSIDIARY OF
ASSOCIATES FIRST CAPITAL
CORPORATION
</TABLE>
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The Fleetwood Credit 1997-B Grantor Trust Asset Backed Certificates (the
"Certificates") will consist of one class of senior certificates (the "Class A
Certificates") and one class of subordinated certificates (the "Class B
Certificates"). Principal, and interest to the extent of the Class A
Pass-Through Rate of 6.40% per annum, and the Class B Pass-Through Rate of 6.65%
per annum, will be distributed to the Class A Certificateholders and Class B
Certificateholders, respectively, on the 15th day of each month (or, if such day
is not a Business Day, on the next succeeding Business Day), beginning October
15, 1997. The Final Scheduled Distribution Date will be the May 2013
Distribution Date.
The Class A Certificates and the Class B Certificates will respectively
evidence in the aggregate undivided ownership interests of 96.5% and 3.5% of the
Fleetwood Credit 1997-B Grantor Trust (the "Trust"). The Trust will be formed
pursuant to a Pooling and Servicing Agreement to be entered into among Fleetwood
Credit Receivables Corp., as Seller (the "Seller"), Fleetwood Credit Corp., as
Servicer ("Fleetwood Credit" or, in its capacity as Servicer, the "Servicer"),
and The Chase Manhattan Bank, as Trustee (the "Trustee"). The rights of the
Class B Certificateholders to receive distributions of interest and principal
will be subordinated to the rights of the Class A Certificateholders to the
limited extent described herein.
The property of the Trust will primarily include a pool of simple interest
retail installment sale contracts (the "Initial Receivables") secured by new and
used recreational vehicles (the "Initial Financed Vehicles"), certain monies due
under the Initial Receivables on and after September 1, 1997, security interests
in the Initial Financed Vehicles, monies on deposit in a trust account (the
"Pre-Funding Account") to be established with the Trustee and certain other
property, as more fully described herein. From time to time on or before
November 17, 1997, additional simple interest retail installment sale contracts
(the "Subsequent Receivables" and, together with the Initial Receivables, the
"Receivables") secured by new and used recreational vehicles (the "Subsequent
Financed Vehicles" and, together with the Initial Financed Vehicles, the
"Financed Vehicles"), will be purchased by the Trust from the Seller from monies
on deposit in the Pre-Funding Account. In each case, the Receivables, including
the security interests in the Financed Vehicles, will be purchased by the Seller
from Fleetwood Credit concurrently with their conveyance to the Trust. See
"Property of the Trust."
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There currently is no market for either Class of Certificates and there is
no assurance that one will develop. The Underwriters expect, but will not be
obligated, to make a market in each Class of Certificates. There is no assurance
that any such market will develop, or if one does develop, that it will continue
or that it will provide sufficient liquidity.
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THE CERTIFICATES WILL REPRESENT INTERESTS IN THE TRUST AND WILL NOT REPRESENT
INTERESTS IN OR OBLIGATIONS OF FLEETWOOD CREDIT RECEIVABLES CORP., FLEETWOOD
CREDIT CORP., ASSOCIATES FIRST CAPITAL CORPORATION, THE TRUSTEE 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. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
==================================================================================================================
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO THE
PUBLIC(1) AND COMMISSIONS SELLER(1)(2)
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<S> <C> <C> <C>
Per Class A Certificate.................. 99.859375% .30% 99.559375%
- ------------------------------------------------------------------------------------------------------------------
Per Class B Certificate.................. 99.875% .45% 99.425%
- ------------------------------------------------------------------------------------------------------------------
Total.................................... $349,509,726.56 $1,068,375.00 $348,441,351.56
==================================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from the date of initial issuance.
(2) Before deduction of expenses payable by the Seller estimated at $360,000.
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The Certificates are being offered by the Underwriters subject to prior
sale, to withdrawal, cancellation or modification of the offer without notice,
to delivery to and acceptance by the Underwriters and to certain further
conditions. It is expected that delivery of the Certificates will be made in
book-entry form through the facilities of The Depository Trust Company on or
about September 15, 1997.
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MERRILL LYNCH & CO. SALOMON BROTHERS INC
THE DATE OF THIS PROSPECTUS IS SEPTEMBER 9, 1997.
<PAGE> 2
Certain persons participating in this offering may engage in transactions
that stabilize, maintain or otherwise affect the price of either Class of
Certificates. Such transactions may include stabilizing. For a description of
these activities, see "Underwriting."
UNTIL DECEMBER 8, 1997, ALL DEALERS EFFECTING TRANSACTIONS IN THE
CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. UPON RECEIPT OF A REQUEST BY AN INVESTOR, OR
SUCH INVESTOR'S REPRESENTATIVE, WITHIN THE PERIOD DURING WHICH THERE IS A
PROSPECTUS DELIVERY OBLIGATION, THE SELLER OR THE UNDERWRITERS WILL PROMPTLY
DELIVER, OR CAUSE TO BE DELIVERED, WITHOUT CHARGE AND IN ADDITION TO SUCH
DELIVERY REQUIREMENTS, A PAPER COPY OF THE PROSPECTUS OR A PROSPECTUS ENCODED IN
AN ELECTRONIC FORMAT.
------------------
AVAILABLE INFORMATION
The Seller has filed with the Securities and Exchange Commission (the
"Commission") on behalf of the Trust a Registration Statement on Form S-1
(together with all amendments and exhibits thereto, the "Registration
Statement"), of which this Prospectus is a part, under the Securities Act of
1933, as amended, with respect to the Certificates being offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain parts of which have been omitted in accordance with the rules
and regulations of the Commission. For further information, reference is made to
the Registration Statement which is available for inspection without charge at
the public reference facilities of the Commission at Judiciary Plaza, Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and the regional offices of the
Commission at Citicorp Center, Suite 1400, 500 West Madison Street, Chicago,
Illinois 60661-2511, and Suite 1300, Seven World Trade Center, New York, New
York 10048. Copies of such information can be obtained from the Public Reference
Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission also maintains a
site on the World Wide Web (http://www.sec.gov) that contains reports, proxy
statements and other information regarding registrants that file electronically
with the Commission. The Servicer, on behalf of the Trust, will also file or
cause to be filed with the Commission such periodic reports as are required
under the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder.
REPORTS TO CERTIFICATEHOLDERS BY THE TRUSTEE
The Chase Manhattan Bank, as Trustee, will provide to Certificateholders
(which shall be Cede & Co. as the nominee of The Depository Trust Company unless
Definitive Certificates are issued under the limited circumstances described
herein) unaudited monthly and annual reports concerning the Receivables. See
"The Certificates -- Statements to Certificateholders" and "-- Evidence as to
Compliance."
2
<PAGE> 3
SUMMARY
This Summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus. Certain capitalized terms
used and not otherwise defined herein shall have the meanings ascribed thereto
elsewhere in this Prospectus. See the Glossary of Terms for the location herein
of certain capitalized terms.
Trust..................... Fleetwood Credit 1997-B Grantor Trust.
Seller.................... Fleetwood Credit Receivables Corp. (the "Seller"), a
wholly owned, limited purpose subsidiary of
Fleetwood Credit Corp.
Servicer.................. Fleetwood Credit Corp. ("Fleetwood Credit" or, in its
capacity as Servicer, the "Servicer"), a wholly
owned subsidiary of Associates First Capital
Corporation. See "The Servicer."
Securities Offered........ The Fleetwood Credit 1997-B Grantor Trust Asset
Backed Certificates (the "Certificates") will
consist of one class of senior certificates (the
"Class A Certificates") and one class of
subordinated certificates (the "Class B
Certificates"). Each Certificate will represent a
fractional undivided interest in the Trust. The
property of the Trust will consist primarily of a
pool of simple interest retail installment sale
contracts (the "Initial Receivables") secured by
the new and used recreational vehicles financed
thereby (the "Initial Financed Vehicles"), certain
monies due under the Initial Receivables on and
after September 1, 1997 (the "Initial Cutoff
Date"), security interests in the Initial Financed
Vehicles, an interest bearing account initially
established with the Trustee (the "Certificate
Account") and the proceeds thereof, proceeds from
claims under certain insurance policies in respect
of individual Initial Financed Vehicles or the
related Obligors, and certain rights under the
Pooling and Servicing Agreement to be dated as of
September 1, 1997 (the "Agreement"), among the
Seller, the Servicer and The Chase Manhattan Bank,
as trustee (the "Trustee"), and amounts on deposit
in a trust account established for the benefit of
the Certificateholders (the "Pre-Funding Account").
From time to time on or before November 17, 1997,
additional simple interest retail installment sale
contracts (the "Subsequent Receivables" and,
together with the Initial Receivables, the
"Receivables") secured by the new and used
recreational vehicles financed thereby (the
"Subsequent Financed Vehicles" and, together with
the Initial Financed Vehicles, the "Financed
Vehicles"), certain monies due under the Subsequent
Receivables after the related Subsequent Cutoff
Dates, security interests in the related Subsequent
Financed Vehicles and proceeds from claims under
certain insurance policies in respect of individual
Subsequent Financed Vehicles or the related
Obligors will be purchased by the Trust from the
Seller from monies on deposit in the Pre-Funding
Account. See "Property of the Trust."
The Class A Certificates will evidence in the
aggregate an undivided ownership interest (the
"Class A Percentage") of 96.5% of the Trust
(initially representing $337,750,000) and the Class
B Certificates will evidence in the aggregate an
undivided ownership interest (the "Class B
Percentage") of 3.5% of the Trust (initially
representing $12,250,000). The Class B Certificates
will be subordinated to the Class A Certificates to
the limited extent described herein. The
Certificates will be issued pursuant to the
Agreement in denominations of $1,000 and integral
multiples thereof.
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<PAGE> 4
Registration of the
Certificates............ Each Class of Certificates will initially be
represented by one or more certificates registered
in the name of Cede & Co. ("Cede"), as the nominee
of The Depository Trust Company ("DTC"). No person
acquiring an interest in the Class A Certificates
(each, a "Class A Certificate Owner") or the Class
B Certificates (each, a "Class B Certificate Owner"
and, together with the Class A Certificate Owners,
the "Certificate Owners") will be entitled to
receive a definitive certificate representing such
person's interest, except in the event that
Definitive Certificates of the related Class are
issued under the limited circumstances described
herein. Unless and until Certificates of a Class
are issued in definitive form, all references
herein to distributions, notices, reports and
statements to and to actions by and effects upon
the related Certificateholders will refer to the
same actions and effects with respect to DTC or
Cede, as the case may be, for the benefit of the
related Certificate Owners in accordance with DTC
procedures. See "The Certificates -- General,"
"-- Book-Entry Registration" and "-- Definitive
Certificates."
Class A Pass-Through
Rate...................... 6.40% per annum, calculated on the basis of a 360-day
year consisting of twelve 30-day months (the "Class
A Pass-Through Rate"), payable monthly.
Class B Pass-Through
Rate...................... 6.65% per annum, calculated on the basis of a 360-day
year consisting of twelve 30-day months (the "Class
B Pass-Through Rate"), payable monthly.
The Receivables........... The Receivables arise from simple interest retail
installment sale contracts originated by dealers in
new and used recreational vehicles (the "Dealers")
which are purchased by Fleetwood Credit. All of the
Receivables will be selected from the contracts
owned by Fleetwood Credit based upon the criteria
described under "The Receivables" and "The
Certificates -- Sale and Assignment of the
Receivables."
On or before the date of initial issuance of the
Certificates (the "Closing Date"), Fleetwood Credit
will sell the Initial Receivables to the Seller
pursuant to a receivables purchase agreement to be
dated as of September 1, 1997 (the "Receivables
Purchase Agreement"), between the Seller and
Fleetwood Credit. The Seller, in turn, will sell
the Initial Receivables to the Trust pursuant to
the Agreement. As of the Initial Cutoff Date, the
Initial Receivables had an aggregate principal
balance of $311,845,802.40, a weighted average
annual percentage rate (the "APR") of 9.69%, a
weighted average original maturity of 154.53 months
and a weighted average remaining maturity of 148.86
months.
From time to time during the Funding Period, pursuant
to the Receivables Purchase Agreement, Fleetwood
Credit will be obligated to sell, and the Seller
will be obligated to purchase, Subsequent
Receivables at a purchase price equal to the
aggregate principal amount thereof as of a date in
the related month of transfer designated by
Fleetwood Credit and the Seller (each, a
"Subsequent Cutoff Date"). Pursuant to the
Agreement and one or more transfer agreements
(each, a "Transfer Agreement") among the Seller,
the Servicer and the Trustee, and subject to the
satisfaction of certain conditions described
herein, the Seller will in turn sell the Subsequent
Receivables to the Trust at a purchase price
4
<PAGE> 5
equal to the amount paid by the Seller to Fleetwood
Credit for such Subsequent Receivables, which
purchase price shall be paid from monies on deposit
in the Pre-Funding Account. The aggregate principal
balance of the Subsequent Receivables to be
conveyed to the Trust during the Funding Period
will not exceed $38,154,197.60 (i.e., 10.9% of the
sum of the Original Class A Certificate Balance and
the Original Class B Certificate Balance).
Subsequent Receivables will be transferred from
Fleetwood Credit to the Seller and from the Seller
to the Trust on the Business Day specified by
Fleetwood Credit and the Seller during the month in
which the related Subsequent Cutoff Date occurs
(each, a "Subsequent Transfer Date").
The Pre-Funding Account... The Pre-Funding Account will be established by
Fleetwood Credit, maintained as a trust account
with the Trustee and is designed solely to hold
funds to be applied by the Trustee during the
Funding Period to pay to the Seller the purchase
price for Subsequent Receivables. Monies on deposit
in the Pre-Funding Account will not be available to
cover losses on or in respect of the Receivables.
The Pre-Funding Account will be created with an
initial deposit by the Seller of $38,154,197.60
(the "Pre-Funded Amount"). The "Funding Period"
will be the period from the Closing Date until the
earliest to occur of (i) the date on which the
remaining Pre-Funded Amount is less than $100,000,
(ii) the date on which an Event of Default occurs
or (iii) the close of business on the November 17,
1997 Distribution Date. During the Funding Period,
on one or more Subsequent Transfer Dates, the
Trustee will use the Pre-Funded Amount to purchase
Subsequent Receivables from the Seller. The Seller
expects that the Pre-Funded Amount will be reduced
to less than $100,000 by the November 17, 1997
Distribution Date, although no assurances can be
given in this regard. Any portion of the Pre-Funded
Amount remaining on deposit in the Pre-Funding
Account at the end of the Funding Period will be
payable as principal to Certificateholders in
accordance with their respective Class Percentages.
See "The Certificates -- General" and "-- The
Pre-Funding Account; Mandatory Prepayment of the
Certificates."
Interest.................. On each Distribution Date, the Trustee will
distribute to holders of record of (i) the 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 immediately preceding calendar
month (each such date, a "Record Date"), interest
in an amount equal to one-twelfth of the product of
the Class A Pass-Through Rate, calculated on the
basis of a 360-day year consisting of twelve 30-day
months, and the Class A Certificate Balance as of
the immediately preceding Distribution Date (after
giving effect to distributions of principal made on
such immediately preceding Distribution Date), and
(ii) the Class B Certificates (the "Class B
Certificateholders" and, together with the Class A
Certificateholders, the "Certificateholders") as of
the related Record Date, interest in an amount
equal to one-twelfth of the product of the Class B
Pass-Through Rate, calculated on the basis of a
360-day year consisting of twelve 30-day months,
and the Class B Certificate Balance as of the
immediately preceding Distribution Date (after
giving effect to distributions of principal made on
such immediately preceding Distribution Date). In
the case of the first Distribution Date, the
Trustee will
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<PAGE> 6
distribute to Certificateholders of record as of
the related Record Date interest in an amount equal
to (a) the product of (i) the Class A Pass-Through
Rate or Class B Pass-Through Rate, as the case may
be, (ii) the Original Class A Certificate Balance
or Original Class B Certificate Balance, as the
case may be, and (iii) the number of days from and
including the Closing Date to but excluding such
Distribution Date, (b) divided by 360. The rights
of the Class B Certificateholders to receive
distributions of interest, to the extent of
collections on or in respect of the Receivables
allocable to interest and certain available amounts
on deposit in the Reserve Fund, will be
subordinated to the rights of Class A
Certificateholders to receive distributions of
interest, but will not be subordinated to the
rights of Class A Certificateholders to receive
distributions of principal, as described herein.
The "Class A Certificate Balance" will initially
equal $337,750,000 (the "Original Class A
Certificate Balance") and on any Distribution Date
will equal the Original Class A Certificate
Balance, reduced by all distributions of principal
actually made on or prior to such Distribution Date
to Class A Certificateholders. The "Class B
Certificate Balance" will initially equal
$12,250,000 (the "Original Class B Certificate
Balance") and on any Distribution Date will equal
the Original Class B Certificate Balance, reduced
by (i) all distributions of principal actually made
on or prior to such Distribution Date to Class B
Certificateholders and (ii) Realized Losses
allocable to the Class B Certificates. See "The
Certificates -- Distributions on the Certificates."
Principal................. On each Distribution Date, the Trustee will
distribute pro rata (i) to Class A
Certificateholders of record as of the related
Record Date an amount equal to the Class A
Percentage of all payments received by the Servicer
during the immediately preceding calendar month
(each, a "Collection Period") allocable to
principal on or in respect of the Receivables and
(ii) to Class B Certificateholders of record as of
the related Record Date an amount equal to the
Class B Percentage of all payments received by the
Servicer during the related Collection Period
allocable to principal on or in respect of the
Receivables. The rights of the Class B
Certificateholders to receive distributions of
principal will be subordinated to the rights of the
Class A Certificateholders to receive distributions
of interest and principal to the limited extent
described herein.
Distribution Dates........ The 15th day of each month (or, if such day is not a
Business Day, the next succeeding Business Day),
beginning October 15, 1997. The final scheduled
Distribution Date (the "Final Scheduled
Distribution Date") will be the May 2013
Distribution Date.
Mandatory Prepayment...... The Certificates will be prepaid in part on the
Distribution Date immediately succeeding the date
on which the Funding Period ends (or on the
Distribution Date on which the Funding Period ends
if the Funding Period ends on a Distribution Date)
in the event that any portion of the Pre-Funded
Amount remains on deposit in the Pre-Funding
Account after giving effect to the acquisition by
the Seller and sale to the Trust of all Subsequent
Receivables, including any such acquisition and
conveyance on the date on which the Funding Period
ends (a "Mandatory Prepayment"). The amount to be
distributed to Certificateholders of either Class
in connection with any Mandatory Prepayment will
equal the
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<PAGE> 7
Class A Percentage or the Class B Percentage, as
the case may be, multiplied by the remaining
Pre-Funded Amount. See "The Certificates -- The
Pre-Funding Account; Mandatory Prepayment of the
Certificates."
Subordination of the
Class B Certificates;
Reserve Fund............ The rights of the Class B Certificateholders to
receive distributions with respect to the
Receivables will be subordinated to the rights of
the Class A Certificateholders to the limited
extent described herein. This subordination is
intended to enhance the likelihood of timely
receipt by Class A Certificateholders of the full
amount of interest and principal required to be
paid to them, and to afford such Class A
Certificateholders limited protection against
losses in respect of the Receivables.
No distribution will be made to the Class B
Certificateholders on any Distribution Date in
respect of (i) interest until the full amount of
interest on the Class A Certificates payable on
such Distribution Date has been distributed to the
Class A Certificateholders and (ii) principal until
the full amount of interest on and principal of the
Class A Certificates payable on such Distribution
Date has been distributed to the Class A
Certificateholders. Distributions of interest on
the Class B Certificates, to the extent of
collections on or in respect of the Receivables
allocable to interest and certain available amounts
on deposit in the Reserve Fund, will not be
subordinated to the payment of principal on the
Class A Certificates.
The protection afforded to the Class A
Certificateholders by the subordination feature
described above will be effected both by the
preferential right of the Class A
Certificateholders to receive, to the extent
described herein, current distributions from
collections on or in respect of the Receivables and
by the establishment of a segregated trust account
held by the Trustee for the benefit of the
Certificateholders (the "Reserve Fund"). The
Reserve Fund will not be part of the Trust.
The Reserve Fund will be funded by the Seller on the
Closing Date in an amount equal to $2,625,000 plus
an amount attributable to the maximum aggregate
Negative Carry Amount. Thereafter, on each
Distribution Date all Excess Amounts, if any, will
be deposited from time to time in the Reserve Fund
to the extent necessary to maintain the Reserve
Fund at an amount to be specified in the Agreement
(the "Specified Reserve Fund Balance"). "Excess
Amounts" in respect of a Distribution Date will be
all interest collections on or in respect of the
Receivables on deposit in the Certificate Account
in respect of such Distribution Date, after the
Servicer has been reimbursed for any outstanding
Advances and has been paid the Servicing Fee
(including any unpaid Servicing Fees with respect
to one or more prior Collection Periods) and after
giving effect to all distributions of interest and
principal required to be made to the Class A and
Class B Certificateholders on such Distribution
Date. The Specified Reserve Fund Balance for the
first Distribution Date will be $2,625,000 plus an
amount attributable to the maximum aggregate
Negative Carry Amount and on any Distribution Date
thereafter will be calculated as described under
"The Certificates -- Subordination of the Class B
Certificates; Reserve Fund." On each Distribution
Date, funds will be withdrawn from the Reserve Fund
for distribution, first, to Class A
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<PAGE> 8
Certificateholders to the extent of shortfalls in
the amounts available to make required
distributions of interest on the Class A
Certificates, second, to Class B Certificateholders
to the extent of shortfalls in the amounts
available to make required distributions of
interest on the Class B Certificates, third, to
Class A Certificateholders to the extent of
shortfalls in the amounts available to make
required distributions of principal on the Class A
Certificates and fourth, to Class B
Certificateholders to the extent of shortfalls in
the amounts available to make required
distributions of principal on the Class B
Certificates. In addition, on each Distribution
Date relating to the Funding Period, the Negative
Carry Amount, if any, will be withdrawn from the
Reserve Fund and deposited into the Certificate
Account.
On each Distribution Date, after giving effect to all
distributions made on such Distribution Date, any
amounts in the Reserve Fund in excess of the
Specified Reserve Fund Balance will be distributed
to the Seller and upon such distribution the
Certificateholders will have no further rights in,
or claims to, such amounts. Notwithstanding the
foregoing, during the Funding Period, all Excess
Amounts will be deposited into the Reserve Fund and
will not be paid to the Seller until the
Distribution Date immediately succeeding the date
on which the Funding Period ends (or on the
Distribution Date on which the Funding Period ends
if the Funding Period ends on a Distribution Date).
See "The Certificates -- Subordination of the Class
B Certificates; Reserve Fund."
Advances.................. On the Business Day immediately preceding each
Distribution Date, the Servicer will advance, in
respect of each Receivable, an amount equal to all
interest at the related APR which accrued in
respect of such Receivable from the last day upon
which a payment was made on such Receivable through
the last day of the related Collection Period. The
Servicer will be required to make an Advance only
to the extent it determines, in its reasonable
judgment, such Advance will be recoverable from
future payments and collections on or in respect of
the Receivables or otherwise. See "The Certificates
-- Certain Payments by the Servicer."
Servicing Fee............. The Servicer will receive a monthly fee, payable on
each Distribution Date, equal to one-twelfth of the
product of 1.0% (the "Servicing Fee Rate") and the
Pool Balance as of the first day of the related
Collection Period. The Servicer will be entitled to
receive additional servicing compensation in the
form of certain late fees, prepayment charges and
other administrative fees or similar charges. See
"The Certificates -- Servicing Compensation."
Termination............... The Seller and the Servicer, or any successor to the
Servicer, will each have the option to purchase
from the Trust all Receivables then outstanding and
all other property in the Trust on any Distribution
Date following the last day of a Collection Period
as of which the Pool Balance is less than 10% of
the sum of the Pool Balance as of the Initial
Cutoff Date (the "Original Pool Balance") and the
aggregate principal balance of all Subsequent
Receivables conveyed to the Trust as of the related
Subsequent Cutoff Dates, at a purchase price
determined as described under "The
Certificates -- Termination."
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<PAGE> 9
If none of the Seller, the Servicer or any successor
to the Servicer exercises its optional termination
right within 90 days after the last day of the
Collection Period as of which such right can first
be exercised, the Trustee shall solicit bids for
the purchase of all Receivables remaining in the
Trust. In the event that satisfactory bids are
received as described in "The Certificates --
Termination," the sale proceeds will be distributed
to Certificateholders on the second Distribution
Date succeeding the last day of such Collection
Period. If satisfactory bids are not received, the
Trustee shall decline to sell the Receivables and
shall not be under any obligation to solicit any
further bids or otherwise negotiate any further
sale of the Receivables. See "The Certificates --
Termination."
Ratings................... It is a condition to the issuance of the Certificates
that the Class A Certificates be rated Aaa by
Moody's Investors Service, Inc. ("Moody's") and AAA
by Standard & Poor's Ratings Services ("Standard &
Poor's" and, together with Moody's, the "Rating
Agencies") and the Class B Certificates be rated at
least Baa2 by Moody's and A by Standard & Poor's.
The ratings of each Class of Certificates will be
based primarily on the value of the Initial
Receivables, the Pre-Funding Account, the terms of
the Certificates and the Reserve Fund. The
foregoing ratings do not address the likelihood
that the Certificates will be retired following the
sale of the Receivables by the Trustee as described
above under "Termination."
There is no assurance that any rating will not be
lowered or withdrawn by the assigning Rating Agency
if, in its judgment, circumstances so warrant. In
the event that the rating initially assigned to the
Class A Certificates or the Class B Certificates is
subsequently lowered or withdrawn for any reason,
no person or entity will be obligated to provide
any additional credit enhancement with respect to
such Certificates. There can be no assurance
whether any other rating agency will rate the Class
A Certificates or the Class B Certificates, or if
one does, what rating would be assigned by any such
other rating agency. A security rating is not a
recommendation to buy, sell or hold securities.
Tax Status................ In the opinion of special federal tax counsel to the
Seller, the Trust will be classified as a grantor
trust for federal income tax purposes and not as an
association taxable as a corporation. For federal
income tax purposes, the Certificateholders will be
considered to own interests in stripped bonds and
stripped coupons. See "Certain Federal Income Tax
Consequences." Certificateholders should consult
their own tax advisors as to the proper treatment
of original issue discount with respect to the
Receivables and the application of the stripped
bond rules.
ERISA Considerations...... Subject to the conditions described herein, the Class
A Certificates may be purchased by employee benefit
plans that are subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA").
SINCE THE CLASS B CERTIFICATES WILL BE SUBORDINATED
TO THE CLASS A CERTIFICATES, EMPLOYEE BENEFIT PLANS
SUBJECT TO ERISA WILL NOT BE ELIGIBLE TO PURCHASE
CLASS B CERTIFICATES. Any benefit plan fiduciary
considering purchase of the Certificates should,
among other things, consult with its counsel in
determining whether all required conditions have
been satisfied. See "ERISA Considerations."
9
<PAGE> 10
FORMATION OF THE TRUST
The Seller will establish the Trust by selling and assigning the property
of the Trust to the Trustee in exchange for the Certificates. The Servicer will
service the Receivables pursuant to the Agreement and will be compensated for
acting as such. To facilitate servicing and to minimize administrative burden
and expense, the Servicer will be appointed custodian for the Receivables by the
Trustee, but will not stamp the Receivables to reflect the sale and assignment
of the Receivables to the Trust, amend the certificates of title of the Financed
Vehicles or execute any transfer instrument (including, among other instruments,
UCC-3 assignments) relating to any Financed Vehicles. Consequently, in some
states, in the absence of such amendments and actions, the Trustee will have
certain risks with respect to its security interests in the Financed Vehicles.
See "Certain Legal Aspects of the Receivables."
If the protection provided to (i) the Class A Certificateholders by the
subordination of the Class B Certificates and by the Reserve Fund and (ii) the
Class B Certificateholders by the Reserve Fund is insufficient, the Trust will
look only to payments made by or on behalf of the Obligors on or in respect of
the Receivables, the proceeds from the repossession and sale of Financed
Vehicles securing Defaulted Receivables and the proceeds of Dealer repurchase
obligations, if any, more fully described below under "Property of the Trust,"
to make distributions on the Certificates. In such event, certain factors, such
as the failure of the Trustee to possess first perfected security interests in
the Financed Vehicles, may limit the ability of the Trust to realize on the
collateral securing the Receivables or may limit the amount realized to less
than the amount owed by the related Obligors. Certificateholders may thus be
subject to delays in payment and may incur losses on their investment in the
Certificates as a result of defaults or delinquencies by Obligors and
depreciation in the value of the related Financed Vehicles. The rights of the
Class B Certificateholders to receive distributions of principal will be
subordinated to the rights of the Class A Certificateholders to receive
distributions of interest and principal to the extent described herein. See "The
Certificates -- Subordination of the Class B Certificates; Reserve Fund" and
"Certain Legal Aspects of the Receivables."
PROPERTY OF THE TRUST
Each Certificate will represent a fractional undivided interest in the
Trust. The property of the Trust will include a pool of simple interest retail
installment sale contracts, originated on or before August 31, 1997 in the case
of the Initial Receivables and on or before November 17, 1997 in the case of the
Subsequent Receivables, between Dealers in new and used recreational vehicles,
manufactured primarily by Fleetwood Enterprises, Inc. ("Fleetwood Enterprises"),
and retail purchasers of those vehicles (the "Obligors"), and certain monies due
thereunder on and after the Initial Cutoff Date or the related Subsequent Cutoff
Date, as the case may be, and amounts on deposit in the Pre-Funding Account. The
Initial Receivables were, and the Subsequent Receivables will be, originated by
Dealers and subsequently assigned to Fleetwood Credit. Such Receivables will be
serviced by Fleetwood Credit and evidence the indirect financing made available
by Fleetwood Credit to the Obligors. On or before the Closing Date, Fleetwood
Credit will sell the Initial Receivables to the Seller, which, in turn will sell
them to the Trust. It is anticipated that Subsequent Receivables will be
conveyed to the Trust on one or more Subsequent Transfer Dates during the
Funding Period.
Neither the Seller nor the Servicer may substitute any other retail
installment sale contract for any Receivable sold to the Trust during the term
of the Agreement. The assets of the Trust will also include: (i) such amounts as
from time to time may be held in the Certificate Account, an interest bearing
trust account to be established and maintained by the Servicer with the Trustee
pursuant to the Agreement; (ii) security interests in the Financed Vehicles and
any accessions thereto; (iii) the right to proceeds from physical damage, credit
life and disability insurance policies, if any, covering individual Financed
Vehicles or Obligors, as the case may be; (iv) the right to receive proceeds of
Dealer repurchase obligations, if any; (v) any Servicer Letter of Credit; (vi)
the rights of the Seller under the Receivables Purchase Agreement; and (vii) any
and all proceeds of the foregoing. The Reserve Fund will be maintained with the
Trustee for the benefit of the Certificateholders, but will not be property of
the Trust.
10
<PAGE> 11
The "Pool Balance" as of the first day of a Collection Period will
represent the aggregate principal balance of the Receivables at the end of the
immediately preceding Collection Period, after giving effect to all payments of
principal received from or on behalf of Obligors and all payments of principal
on Receivables to be repurchased remitted by the Seller or the Servicer, as the
case may be, all for such immediately preceding Collection Period. The Pool
Balance will be computed by allocating payments on or in respect of the
Receivables to principal and to interest using the simple interest method. The
"Original Pool Balance" will mean the Pool Balance as of the Initial Cutoff
Date.
The Pool Balance as of the Initial Cutoff Date will equal the Original Pool
Balance. The Pool Balance will be increased during the Funding Period by the
principal amount of Subsequent Receivables conveyed to the Trust as of the
related Subsequent Cutoff Dates. Any such additions of Subsequent Receivables
will be conditioned on the compliance with the procedures described in the
Receivables Purchase Agreement and the Agreement. The Seller expects that the
principal balances of the Subsequent Receivables to be added to the Trust will
require application of the entire Pre-Funded Amount by the November 17, 1997
Distribution Date; however, there can be no assurance that a sufficient amount
of Subsequent Receivables will be available for such purpose. If the Pre-Funded
Amount has not been reduced to zero by the end of the Funding Period, the
remaining portion thereof will be distributed to Certificateholders as a
prepayment of principal as described under "The Certificates -- The Pre-Funding
Account; Mandatory Prepayment of the Certificates."
Pursuant to agreements between Fleetwood Credit and the Dealers, each
Dealer is obligated after origination to repurchase from Fleetwood Credit
recreational vehicle receivables which do not meet certain representations and
warranties made by such Dealer. Such representations and warranties relate
primarily to the origination of the receivables and the perfection of the
security interests in the related financed vehicles, and do not typically relate
to the creditworthiness of the related obligors or the collectability of such
receivables. Although any Dealer agreements with respect to the Receivables will
not be assigned to the Trustee, the Agreement will require that any recovery by
Fleetwood Credit pursuant to Dealer repurchase obligations be deposited in the
Certificate Account in satisfaction of the Servicer's repurchase obligations
under the Agreement. It is expected that the assignments by the Dealers of
receivables to Fleetwood Credit will not generally provide for recourse to the
Dealer for unpaid amounts in the event of a default by an Obligor, other than in
connection with a breach of the Dealer's representations and warranties.
THE RECEIVABLES
The Receivables will have been purchased by Fleetwood Credit from Dealers
in the ordinary course of business. The Initial Receivables were, and the
Subsequent Receivables will be, selected from Fleetwood Credit's portfolio of
recreational vehicle retail installment sale contracts by several criteria,
including the following: (i) each Receivable was originated in the United States
of America; (ii) each Receivable has a fixed APR equal to or greater than 7.75%;
(iii) each Receivable provides for level monthly payments which provide interest
at the related APR and fully amortize the amount financed over an original term
of no greater than 180 months; (iv) each Receivable is not more than 30 days
past due as of the Initial Cutoff Date or the relevant Subsequent Cutoff Date,
as the case may be; and (v) in the case of Obligors in the military service
(including an Obligor who is a member of the National Guard or is in the
reserves) whose Receivable is subject to the Soldiers' and Sailors' Civil Relief
Act of 1940, as amended (the "Soldiers' and Sailors' Relief Act"), or the
California Military Reservist Relief Act of 1991 (the "Military Reservist Relief
Act"), each such Obligor (each, a "Relief Act Obligor") must not have made a
claim to Fleetwood Credit that (A) the amount of interest on the related
Receivable should be limited to 6% pursuant to the Soldiers' and Sailors' Relief
Act during the period of such Obligor's active duty status or (B) payments on
such Receivable should be delayed pursuant to the Military Reservist Relief Act.
Interest in respect of the Receivables will accrue on a simple interest method
(i.e., the interest portion of each monthly payment will equal the interest on
the outstanding principal balance of the related Receivable for the number of
days since the most recent payment made on such Receivable and the balance, if
any, of such monthly payment will be applied to principal). The Financed
Vehicles will consist of motor homes and travel trailers.
11
<PAGE> 12
As of the Initial Cutoff Date, approximately 67% of the Initial
Receivables, by Original Pool Balance, were secured by motor homes and
approximately 33% were secured by travel trailers. Approximately 76% of the
Initial Receivables, by Original Pool Balance, represented financing of new
recreational vehicles and approximately 24% represented financing of used
recreational vehicles. As of the Initial Cutoff Date, the average outstanding
principal balances of Initial Receivables secured by motor homes and travel
trailers were $46,896.20 and $12,597.29, respectively. A significant portion of
the Initial Receivables represent financing of recreational vehicles
manufactured by Fleetwood Enterprises. Except in the case of breach of
representations by the related Dealer, as described above under "Property of the
Trust," it is expected that none of the Receivables will provide for recourse to
the Dealer who originated the related Receivable. Based upon information
presented by Obligors in their Receivables applications, as of the Initial
Cutoff Date the Initial Receivables were originated in 48 states. Based on
Original Pool Balance, approximately 19% of the Initial Receivables were
originated in the State of California, approximately 10% were originated in the
State of Oregon, approximately 9% were originated in the State of Texas,
approximately 7% were originated in the State of Florida and approximately 5%
were originated in the State of Arizona. Each other state accounts for less than
5% of the Initial Receivables by Original Pool Balance. As of the Initial Cutoff
Date, less than 1.00% of the Original Pool Balance represented Paid-Ahead
Receivables.
COMPOSITION OF THE INITIAL RECEIVABLES
<TABLE>
<S> <C>
Aggregate Principal Balance as of the Initial Cutoff Date... $311,845,802.40
Number of Initial Receivables............................... 12,677
Average Principal Balance as of the Initial Cutoff Date..... $24,599.34
Aggregate Original Amount Financed.......................... $322,305,117.13
Range of Original Amounts Financed.......................... $2,000.00 to $305,974.00
Weighted Average APR(1)..................................... 9.69%
Range of APRs............................................... 7.75% to 15.95%
Weighted Average Original Term(1)........................... 154.53 months
Range of Original Terms..................................... 24 to 180 months
Weighted Average Remaining Term as of the Initial Cutoff
Date(1)................................................... 148.86 months
Range of Remaining Terms as of the Initial Cutoff Date...... 13 to 180 months
</TABLE>
- ---------------
(1) Weighted by unpaid principal balance as of the Initial Cutoff Date.
DISTRIBUTION OF THE INITIAL RECEIVABLES BY APR
<TABLE>
<CAPTION>
PERCENTAGE
NUMBER OF OF NUMBER INITIAL PERCENTAGE OF
INITIAL OF INITIAL CUTOFF DATE ORIGINAL POOL
APR RANGE RECEIVABLES RECEIVABLES PRINCIPAL BALANCE BALANCE
--------- ----------- ----------- ----------------- -------------
<S> <C> <C> <C> <C>
7.75% to 7.99%.................... 11 0.09% $ 986,939.14 0.32%
8.00% to 8.99%.................... 1,558 12.29 83,457,216.54 26.76
9.00% to 9.99%.................... 5,302 41.82 149,453,035.76 47.93
10.00% to 10.99%.................. 3,823 30.16 59,397,846.29 19.05
11.00% to 11.99%.................. 1,423 11.23 14,746,066.74 4.73
12.00% to 12.99%.................. 470 3.71 3,322,621.58 1.07
13.00% to 13.99%.................. 75 0.59 389,853.23 0.13
14.00% to 14.99%.................. 13 0.10 81,295.62 0.03
15.00% to 15.99%.................. 2 0.02 10,927.50 *
------ ------ --------------- -------
Total................... 12,677 100.00%(1) $311,845,802.40 100.00%(1)
====== ====== =============== =======
</TABLE>
- ---------------
* Less than 0.01%.
(1) Percentages may not add to 100% due to rounding.
MATURITY AND PREPAYMENT CONSIDERATIONS
All of the Receivables are prepayable at any time without any penalty. If
prepayments are received on the Receivables, the actual weighted average life of
the Receivables can be shorter than the scheduled weighted average life, which
is based on the assumption that payments will be made as scheduled and that no
prepayments will be made. For this purpose the term "prepayments" includes,
among other items, voluntary prepayments by Obligors, regular installment
payments made in advance of their scheduled due dates, liquidations due to
default, proceeds from physical damage, credit life and credit disability
insurance policies
12
<PAGE> 13
and repurchases by the Seller or a Dealer or a purchase by the Servicer, as the
case may be, of certain Receivables as described herein. "Weighted average life"
means the average amount of time during which each dollar of principal on a
Receivable is outstanding. The rate of prepayments on the Receivables may be
influenced by a variety of economic, social and other factors, including the
fact that an Obligor may not sell or transfer a Financed Vehicle without the
consent of the Servicer. Any reinvestment risk resulting from the rate of
prepayment of the Receivables and the distribution of such prepayments to
Certificateholders will be borne entirely by the Certificateholders. In
addition, the weighted average life of the Certificates may be affected by any
Mandatory Prepayment under the circumstances described under "The
Certificates -- The Pre-Funding Account; Mandatory Prepayment of the
Certificates" and in addition, early retirement of the Certificates may be
effected by the exercise of the option of the Seller or the Servicer, or any
successor to the Servicer, to purchase all of the Receivables remaining in the
Trust when the Pool Balance is 10% or less of the sum of the Original Pool
Balance and the aggregate principal balance of all Subsequent Receivables
conveyed to the Trust as of the related Subsequent Cutoff Dates or, if no such
entity exercises such option, the solicitation of bids for, and the sale of, the
Receivables by the Trustee. See "The Certificates -- Termination."
No prediction can be made as to the rate of prepayments on the Receivables
in either stable or changing interest rate environments. Fleetwood Credit is not
aware of any publicly available industry statistics that set forth principal
prepayment experience for recreational vehicle retail installment sale contracts
similar to the Receivables over an extended period of time, and its experience
with respect to recreational vehicle receivables included in its portfolio is
insufficient to draw any specific conclusions with respect to the expected
prepayment rates on the Receivables.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Set forth below is certain information concerning Fleetwood Credit's
experience with respect to its portfolio of recreational vehicle receivables
similar to the Receivables.
Fleetwood Credit did not acquire recreational vehicle receivables similar
to the Receivables prior to July 1986. Accordingly, Fleetwood Credit's
experience with respect to such receivables is limited and only a small portion
of its recreational vehicle portfolio has reached maturity. There is no
assurance that Fleetwood Credit's delinquency, credit loss and repossession
experience with respect to recreational vehicle receivables in the future, or
the experience of the Trust with respect to the Receivables, will be similar to
that set forth below. Losses and delinquencies are affected by, among other
things, general and regional economic conditions and the supply of and demand
for recreational vehicles.
DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
AT JULY 31, AT DECEMBER 31,
-------------- ------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992
-------------- ------------ ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Portfolio Outstanding at End of
Period(1)(2)..................... $1,136,656,106 $949,664,166 $760,702,992 $661,517,831 $532,764,234 $479,714,355
Delinquencies at End of
Period(1)(3)
30-59 Days....................... $ 2,547,570 $ 3,160,686 $ 2,494,548 $ 1,520,815 $ 1,515,090 $ 1,791,830
60-89 Days....................... 362,077 342,035 419,116 141,132 193,591 202,035
90 Days or More.................. 194,965 33,902 169,736 81,964 324,765 146,067
-------------- ------------ ------------ ------------ ------------ ------------
Total Delinquencies................ $ 3,104,612 $ 3,536,623 $ 3,083,400 $ 1,743,911 $ 2,033,446 $ 2,139,932
============== ============ ============ ============ ============ ============
Total Delinquencies as a Percentage
of Portfolio Outstanding at End
of Period........................ 0.27% 0.37% 0.41% 0.26% 0.38% 0.45%
</TABLE>
- ---------------
(1) Includes recreational vehicle receivables that have been sold but are still
being serviced by the Servicer.
(2) The sum of all principal amounts outstanding under the recreational vehicle
receivables.
(3) The period of delinquency is based on the number of days payments are
contractually past due.
13
<PAGE> 14
CREDIT LOSS AND REPOSSESSION EXPERIENCE
<TABLE>
<CAPTION>
SEVEN MONTHS
ENDED JULY 31, YEAR ENDED DECEMBER 31,
-------------- ------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992
-------------- ------------ ------------ ------------ ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Average Portfolio
Outstanding(1)(2)(3)............ $1,042,381,785 $853,227,748 $720,418,169 $596,920,867 $512,484,430 $463,406,402
Average Number of Receivables
Outstanding(3).................. 43,710 36,665 30,367 25,455 22,724 20,589
Repossessions as a Percentage of
Average Number of Receivables
Outstanding..................... 0.77%(4) 0.66% 0.56% 0.50% 0.71% 0.67%
Net Losses(1)..................... $ 1,894,291 $ 2,210,186 $ 1,800,947 $ 1,255,618 $ 1,738,647 $ 1,495,961
Net Losses as a Percentage of
Average Portfolio Outstanding... 0.31%(4) 0.26% 0.25% 0.21% 0.34% 0.32%
</TABLE>
- ---------------
(1) Includes recreational vehicle receivables that have been sold but are still
being serviced by the Servicer.
(2) The sum of all principal amounts outstanding under the recreational vehicle
receivables.
(3) Amounts represent the average of month-end figures for each month in the
periods indicated.
(4) Annualized.
PAID-AHEAD RECEIVABLES
If an Obligor, in addition to making a regularly scheduled monthly payment,
makes one or more additional monthly payments in any Collection Period (for
example, because the Obligor intends to be on vacation the following month),
such additional payments will be treated as a prepayment of principal and
applied to reduce the principal balance of the related Receivable in such
Collection Period. Unless otherwise requested by the Obligor, the Obligor will
not be required to make any scheduled monthly payment in respect of such
Receivable (a "Paid-Ahead Receivable") for the number of months corresponding to
the number of such additional scheduled monthly payments that were made (the
"Paid-Ahead Period"). During the Paid-Ahead Period, interest will continue to
accrue on the principal balance of the related Receivable, as reduced by the
application of such additional scheduled monthly payments made in the Collection
Period in which such Receivable became a Paid-Ahead Receivable. A Paid-Ahead
Receivable will not be considered delinquent during the related Paid-Ahead
Period. An interest shortfall with respect to each Paid-Ahead Receivable will
exist during each Collection Period during the Paid-Ahead Period and the
Servicer may be required to make an Advance in respect of such shortfall, as
described under "The Certificates -- Certain Payments by the Servicer."
Notwithstanding the foregoing, no Advances will be made in respect of principal
in respect of a Paid-Ahead Receivable.
Because interest in respect of the Receivables will accrue on the simple
interest method, scheduled monthly payments on a Paid-Ahead Receivable paid by
an Obligor following the end of the Paid-Ahead Period may be insufficient to
cover the interest that has accrued since the last payment was made prior to the
Paid-Ahead Period. Notwithstanding such insufficiency, the related Receivable
will be considered current. This situation will continue until sufficient
payments have been made to cover all accrued interest on such Paid-Ahead
Receivable since the beginning of the Paid-Ahead Period and the principal
balance of such Receivable is once again being amortized. Depending on the
principal balance and APR of the related Paid-Ahead Receivables, and on the
number of payments that were paid-ahead, there may be extended periods of time
during which Paid-Ahead Receivables that are current are not amortizing. During
such periods, no distributions in respect of principal will be made to
Certificateholders with respect to such Receivables.
Paid-Ahead Receivables will affect the weighted average lives of the
Certificates. The distribution of the paid-ahead amount on the Distribution Date
following the Collection Period in which such amount was received will generally
shorten the weighted average lives of the Certificates. However, depending on
the length of time during which a Paid-Ahead Receivable is not amortized as
described above, the weighted average lives of the Certificates may be extended.
In addition, to the extent the Servicer makes Advances with respect to a
Paid-Ahead Receivable which subsequently goes into default, because liquidation
proceeds with respect to such Receivable will be applied first to reimburse the
Servicer for such Advances, the loss with respect to such Receivable may be
larger than would have been the case had such Advances not been made.
14
<PAGE> 15
As of the Initial Cutoff Date, based on the Original Pool Balance, less
than 1.00% of the Initial Receivables were Paid-Ahead Receivables. Fleetwood
Credit's portfolio of recreational vehicle installment sale receivables has
historically included receivables which have been paid-ahead by one or more
scheduled monthly payments. There can be no assurance as to the number of
Receivables which may become Paid-Ahead Receivables or the number or the
principal amount of the scheduled payments which may be paid-ahead.
RECREATIONAL VEHICLES
Motor homes are recreational camping and travel vehicles built on or as an
integral part of a self-propelled motor vehicle chassis. A motor home may
provide kitchen, sleeping and bathroom facilities, is equipped with the ability
to store and carry fresh water and sewage and may be one of the following types:
Motor Home: The living unit has been entirely constructed on a bare,
specially designed motor vehicle chassis.
Van Camper: A panel-type truck to which the manufacturer adds any two
of the following conveniences: sleeping, kitchen and toilet facilities. The
manufacturer also adds 110-volt hookup, fresh water storage, city water
hookup and top extension to provide more headroom.
Mini Motor Home: This unit is built on an automotive manufactured van
frame with an attached cab section having a gross vehicle weight rating of
6,500 pounds or more, with an overall height of less than eight feet. The
manufacturer completes the body section containing the living area and
attaches it to the cab section.
Compact Motor Home: This unit is built on an automotive manufactured
cab and chassis having a gross vehicle weight rating of less than 6,500
pounds. It may provide any or all of the conveniences of the larger units.
Travel trailers are trailers designed to be towed by a motorized vehicle
(e.g., automobile, van or pickup truck) and are of such size and weight as not
to require a special highway movement permit. A travel trailer is designed to
provide temporary living quarters for recreational, camping or travel use, does
not require permanent on-site hookup and can be one of the following types:
Conventional Travel Trailer: This unit ranges typically from 12 feet
to 35 feet in length, and is towed by means of a bumper or frame hitch
attached to the towing vehicle.
Park Trailer: These are designed for seasonal or temporary living.
When set up, the unit may be connected to utilities necessary for operation
of installed fixtures and appliances. The unit is built on a single chassis
mounted on wheels. Park trailers are no more than 40 feet in overall body
length and no more than 12 feet in overall body width when in the traveling
mode. The unit is designed for set-up by persons without special skills
using only hand tools which may include lifting, pulling or supporting
devices.
Fifth-Wheel Travel Trailer: This unit can be equipped the same as the
conventional travel trailer, but is constructed with a raised forward
section that allows a bi-level floor plan. This style is designed to be
towed by a vehicle equipped with a device known as a fifth-wheel hitch.
Folding Camping Trailer: This is a vehicular portable unit mounted on
wheels and constructed with collapsible partial sidewalls which fold for
towing by another vehicle and unfold at the campsite to provide temporary
living quarters for recreational, camping or travel use.
Slide-In Camper: This is a portable unit designed to be loaded onto
and unloaded from the bed of a pickup truck, constructed to provide
temporary living quarters for recreational travel or camping use.
15
<PAGE> 16
YIELD CONSIDERATIONS
Interest on the Receivables will be passed through to Certificateholders on
each Distribution Date to the extent of the Class A Pass-Through Rate and the
Class B Pass-Through Rate applied to the Class A Certificate Balance and the
Class B Certificate Balance, respectively, as of the immediately preceding
Distribution Date (after giving effect to distributions of principal to be made
on such immediately preceding Distribution Date) or, in the case of the first
Distribution Date, the Original Class A Certificate Balance or the Original
Class B Certificate Balance, as the case may be. In the case of each payment of
principal on a Receivable, Certificateholders will receive interest for the full
month, in part from the Non-Reimbursable Payment by the Servicer. See "The
Certificates -- Certain Payments by the Servicer."
Although the Receivables have different APRs, each Initial Receivable has,
and it is anticipated that each Subsequent Receivable will have, an APR that
exceeds the sum of the Class B Pass-Through Rate and the Servicing Fee Rate.
Therefore, disproportionate rates of prepayments between Receivables with higher
and lower APRs should not affect the yield to Certificateholders on the
principal balance of the outstanding Certificates of each Class.
The Class B Certificates will provide limited protection to the Class A
Certificates against losses on the Receivables. Accordingly, the yield on the
Class B Certificates will be extremely sensitive to the loss experience of the
Receivables and the timing of any such losses. If the actual rate and amount of
losses experienced by the Receivables exceed the rate and amount of such losses
assumed by an investor, the yield to maturity on the Class B Certificates may be
lower than anticipated.
POOL FACTORS AND TRADING INFORMATION
The "Class A Pool Factor" and the "Class B Pool Factor" will be seven-digit
decimal numbers which the Servicer will compute each month indicating the Class
A Certificate Balance and the Class B Certificate Balance at the end of the
related Collection Period as a fraction of the Original Class A Certificate
Balance or Original Class B Certificate Balance, as the case may be. Neither the
Class A Pool Factor nor the Class B Pool Factor will change as a result of the
conveyance of Subsequent Receivables to the Trust. Each Pool Factor will be
1.0000000 as of the Initial Cutoff Date and will thereafter decline to reflect
reductions in the Class A Certificate Balance or the Class B Certificate
Balance, as the case may be. The portion of the Class A Certificate Balance or
the Class B Certificate Balance for a given month allocable to a Class A
Certificateholder or a Class B Certificateholder, as the case may be, can be
determined by multiplying the original denomination of the holder's Certificate
by the related Pool Factor at the time of determination.
Pursuant to the Agreement, the Certificateholders will receive monthly
reports concerning the payments received on the Receivables, the Pool Balance,
the Class A Pool Factor and the Class B Pool Factor and various other items of
information pertaining to the Trust. Certificateholders during each calendar
year will be furnished information for tax reporting purposes not later than the
latest date permitted by law. See "The Certificates -- Statements to
Certificateholders."
16
<PAGE> 17
USE OF PROCEEDS
The net proceeds to be received by the Seller from the sale of the
Certificates will be applied to the purchase of the Initial Receivables from
Fleetwood Credit pursuant to the Receivables Purchase Agreement and to the
funding of the Pre-Funding Account with the Pre-Funded Amount, which monies will
be applied to purchase Subsequent Receivables pursuant to the Agreement and
related Transfer Agreements.
THE SELLER
Fleetwood Credit Receivables Corp. was incorporated in the State of
California on January 15, 1991 as a wholly owned, limited purpose subsidiary of
Fleetwood Credit. The principal executive offices of the Seller are located at
22840 Savi Ranch Parkway, Yorba Linda, California 92687. Its telephone number is
(714) 921-3400.
The Seller was organized principally for the purpose of purchasing
recreational vehicle retail installment sale contracts from Fleetwood Credit and
transferring such retail installment sale contracts to third parties in
connection with its activities as a limited purpose subsidiary of Fleetwood
Credit. The Seller's Articles of Incorporation limit the activities of the
Seller to the above purposes and to any activities incidental thereto.
THE SERVICER
GENERAL
Fleetwood Credit was incorporated in the State of California on December
31, 1985, and is a wholly owned subsidiary of Associates First Capital
Corporation, which acquired Fleetwood Credit from Fleetwood Enterprises in May
1996. Fleetwood Credit's principal activities are the financing of the
acquisition by Dealers for resale of various new recreational vehicles, a
significant portion of which to date have been manufactured by Fleetwood
Enterprises, and used recreational vehicles acquired in the ordinary course of
business and the acquisition from such Dealers of installment obligations with
respect to the sale of such recreational vehicles.
The principal executive offices of Fleetwood Credit are located at 22840
Savi Ranch Parkway, Yorba Linda, California 92687. Its telephone number is (714)
921-3400.
ORIGINATION AND SERVICING
Fleetwood Credit purchases retail installment sale contracts secured by new
and used recreational vehicles from Dealers located throughout the United
States. In keeping with the practice of Fleetwood Credit, the Initial
Receivables were, and the Subsequent Receivables will be, originated by Dealers
in accordance with Fleetwood Credit's requirements under agreements with such
Dealers. The Initial Receivables were, and the Subsequent Receivables will be,
purchased in accordance with Fleetwood Credit's underwriting standards, which
emphasize the prospective purchaser's ability to pay and creditworthiness, as
well as the asset value of the recreational vehicle to be financed. Fleetwood
Credit's standards also require physical damage insurance to be maintained on
each Financed Vehicle.
THE CERTIFICATES
The Certificates will be issued pursuant to the Agreement. Copies of the
Agreement (without exhibits) may be obtained by Certificateholders upon request
in writing to the Trustee at its Corporate Trust Office. Citations to certain
relevant sections of the Agreement appear below in parentheses. The following
summary does not purport to be complete and is subject to and qualified in its
entirety by reference to the Agreement.
GENERAL
The Certificates will evidence fractional undivided interests in the Trust
created pursuant to the Agreement and will not represent interests in or
obligations of the Seller, Fleetwood Credit, Associates First Capital
Corporation, the Trustee or any of their respective affiliates. The Class A
Certificates will evidence in
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the aggregate an undivided ownership interest of 96.5% of the Trust and the
Class B Certificates will evidence in the aggregate an undivided ownership
interest of 3.5% of the Trust.
In general, it is intended that Class A Certificateholders and Class B
Certificateholders receive, on each Distribution Date, the Class A Percentage
and Class B Percentage, respectively, of all payments allocated to principal on
or in respect of the Receivables collected by the Servicer during the related
Collection Period plus one month's interest at the Class A Pass-Through Rate on
the Class A Certificate Balance or the Class B Pass-Through Rate on the Class B
Certificate Balance, as the case may be, in each case as of the immediately
preceding Distribution Date (after giving effect to distributions of principal
to be made on such immediately preceding Distribution Date) or, in the case of
the first Distribution Date, interest in an amount equal to (i) the product of
(a) the Class A Pass-Through Rate or Class B Pass-Through Rate, as the case may
be, (b) the Original Class A Certificate Balance or Original Class B Certificate
Balance, as the case may be, and (c) the number of days from and including the
Closing Date to but excluding such Distribution Date, (ii) divided by 360.
Interest to Certificateholders may be provided by payments made by or on behalf
of Obligors on or in respect of the Receivables, payments from amounts on
deposit in the Reserve Fund and Advances and Non-Reimbursable Payments made by
the Servicer. (Sections 14.04, 14.05 and 14.08) See "Distributions on the
Certificates." A prepayment of a Receivable may be made by or on behalf of the
related Obligor, by application of certain insurance proceeds, as a result of a
repurchase made by the Seller or a Dealer or a purchase by the Servicer, as the
case may be, or as a result of the repossession and sale of the related Financed
Vehicle or other enforcement measure taken with respect to a Defaulted
Receivable. See "-- Sale and Assignment of the Receivables" and "-- Servicing
Procedures."
The Certificates will be offered for purchase in denominations of $1,000
and integral multiples thereof in book-entry form. Each Class of Certificates
will initially be represented by one or more certificates registered in the name
of Cede, the nominee of DTC. No beneficial owner of a Class A Certificate (a
"Class A Certificate Owner"), or a Class B Certificate (a "Class B Certificate
Owner" and, together with the Class A Certificate Owners, the "Certificate
Owners"), will be entitled to receive a certificate representing such owner's
interest, except as set forth below. Unless and until Certificates of a Class
are issued in fully registered certificated form ("Definitive Certificates")
under certain limited circumstances described below, all references herein to
distributions, notices, reports and statements to the related Certificateholders
will refer to the same actions made with respect to DTC or Cede, as the case may
be, for the benefit of Certificate Owners in accordance with DTC procedures.
(Section 16.09) See "Book-Entry Registration" and "Definitive Certificates."
BOOK-ENTRY REGISTRATION
DTC will act as securities depository for the Class A Certificates and the
Class B Certificates. Each Class of Certificates initially will be represented
by one or more certificates registered in the name of Cede, the nominee of DTC.
As such, it is anticipated that the only "Certificateholder" will be Cede, as
nominee of DTC. Certificate Owners will not be recognized by the Trustee as
"Certificateholders," as such term will be used in the Agreement, and
Certificate Owners will only be permitted to exercise the rights of holders of
Certificates of the related Class indirectly through DTC and its Participants,
as further described below.
DTC has advised the Seller that it is a limited-purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the Uniform Commercial
Code (the "UCC") in effect in the State of New York 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 members ("Participants") and to 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. Indirect access to the DTC system also is available to banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (the "Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the Commission.
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Certificate Owners that are not Participants or Indirect Participants but
that desire to purchase, sell or otherwise transfer ownership of, or an interest
in, Class A Certificates or Class B Certificates, as the case may be, may do so
only through Participants and Indirect Participants. Participants will receive a
credit for the Certificates on DTC's records. The ownership interest of each
Certificate Owner will in turn be recorded on the Participants' and Indirect
Participants' respective records. Certificate Owners will not receive written
confirmation from DTC of their purchase, but Certificate Owners are expected to
receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the Participant or Indirect
Participant through which the Certificate Owner entered into the transaction.
Transfers of ownership interests in the Certificates of a Class will be
accomplished by entries made on the books of Participants acting on behalf of
Certificate Owners.
To facilitate subsequent transfers, all Certificates deposited by
Participants with DTC will be registered in the name of Cede, the nominee of
DTC. The deposit of Certificates with DTC and their registration in the name of
Cede will effect no change in beneficial ownership. DTC will have no knowledge
of the actual Certificate Owners and its records will reflect only the identity
of the Participants to whose accounts such Certificates are credited, which may
or may not be the Certificate Owners. Participants and Indirect Participants
will remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Participants, by
Participants to Indirect Participants and by Participants and Indirect
Participants to Certificate Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time.
DTC's practice is to credit Participants' accounts on each Distribution
Date in accordance with their respective holdings shown on its records unless
DTC has reason to believe that it will not receive payment on such Distribution
Date. Payments by Participants and Indirect Participants to Certificate Owners
will be governed by standing instructions and customary practices, as is the
case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such Participants
and not of DTC, the Trustee (or any Paying Agent), the Seller or the Servicer,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Payment of principal of and interest on each Class of Certificates
to DTC will be the responsibility of the Trustee (or any Paying Agent),
disbursement of such payments to Participants will be the responsibility of DTC
and disbursement of such payments to the related Certificate Owners will be the
responsibility of Participants and Indirect Participants. As a result, under the
book-entry format, Certificate Owners may experience some delay in their receipt
of payments. DTC will forward such payments to its Participants which thereafter
will forward them to Indirect Participants or Certificate Owners.
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 Certificates to persons or entities that do not participate in
the DTC system, or otherwise take actions with respect to such Certificates, may
be limited due to the lack of a physical certificate for such Certificates.
Neither DTC nor Cede will consent or vote with respect to the Certificates.
Under its usual procedures, DTC will mail an "Omnibus Proxy" to the Trustee as
soon as possible after any applicable record date for such a consent or vote.
The Omnibus Proxy will assign Cede's consenting or voting rights to those
Participants to whose accounts the related Certificates are credited on that
record date (which record date will be identified in a listing attached to the
Omnibus Proxy).
Neither the Seller, the Servicer nor the Trustee (or any Paying Agent) will
have any liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests of the Certificates held by Cede, as
nominee for DTC, or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
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DEFINITIVE CERTIFICATES
Definitive Certificates will be issued to Certificate Owners rather than to
DTC, only if (i) DTC is no longer willing or able to discharge its
responsibilities as depository with respect to the Certificates, and neither the
Trustee nor the Seller is able to locate a qualified successor, (ii) the Seller,
at its option, elects to terminate the book-entry system through DTC or (iii)
after an Event of Default, Certificate Owners representing in the aggregate not
less than 51% of the voting interests of either Class of Certificates advise the
Trustee through DTC and its Participants in writing that the continuation of a
book-entry system for such Class of Certificates through DTC or its successor is
no longer in the best interests of the related Certificate Owners. (Section
16.11)
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the Trustee will be required to notify all Certificate
Owners, through Participants, of the availability of Definitive Certificates.
Upon surrender by DTC of the certificates representing all Certificates of
either Class and the receipt of instructions for re-registration, the Trustee
will issue Definitive Certificates to the related Certificate Owners.
Distributions on the related Certificates will thereafter be made by the
Trustee directly to holders of the related Definitive Certificates in accordance
with the procedures set forth herein and to be set forth in the Agreement.
Interest payments and any principal payments on the related Certificates on each
Distribution Date will be made to holders in whose names the Definitive
Certificates were registered at the close of business on the Record Date with
respect to such Distribution Date. Distributions will be made by check mailed to
the address of such holders as they appear on the Certificate Register. The
final payment on any Certificates (whether Definitive Certificates or
certificates registered in the name of Cede representing the Certificates),
however, will be made only upon presentation and surrender of such Certificates
or certificates at the office or agency specified in the notice of final
distribution to Certificateholders. The Trustee or Paying Agent will provide
such notice to registered Certificateholders not later than the twenty-fifth day
of the month preceding the month in which such final distribution is expected to
occur.
Definitive Certificates will be transferable and exchangeable at the
offices of the Trustee or the Certificate Registrar set forth in the Agreement.
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 16.03)
SALE AND ASSIGNMENT OF THE RECEIVABLES
The Initial Receivables. On or prior to the Closing Date, pursuant to the
Receivables Purchase Agreement, Fleetwood Credit will sell and assign to the
Seller, without recourse, its entire interest in and to the Initial Receivables,
including its security interests in the Initial Financed Vehicles. At the time
of initial issuance of the Certificates, the Seller will sell and assign to the
Trustee, on behalf of the Trust, without recourse, all of its right, title and
interest in and to the Initial Receivables, including its security interests in
the Initial Financed Vehicles. Each Initial Receivable will be identified in a
schedule appearing as an exhibit to each of the Receivables Purchase Agreement
and the Agreement (the "Schedule of Receivables"). The Trustee will,
concurrently with the sale and assignment of the Initial Receivables to it
pursuant to the Agreement, execute, authenticate and deliver the Certificates to
the Seller in exchange for the Initial Receivables. (Section 16.02) The Seller
will sell the Certificates to the Underwriters. The net proceeds received by the
Seller from the sale of the Certificates will be applied to the purchase of the
Initial Receivables and to the deposit of the Pre-Funded Amount in the
Pre-Funding Account.
The Subsequent Receivables. During the Funding Period, pursuant to the
Receivables Purchase Agreement, Fleetwood Credit will be obligated to sell and
the Seller will be obligated to purchase, Subsequent Receivables having an
aggregate principal balance as of the related Subsequent Cutoff Dates not to
exceed $38,154,197.60. On each Subsequent Transfer Date, Fleetwood Credit will
sell and assign to the Seller, without recourse, its entire right, title and
interest in and to the Subsequent Receivables, including its interest in
Fleetwood Credit's security interests in the Subsequent Financed Vehicles. Each
Subsequent Receivable will be identified in a supplement to the Schedule of
Receivables to be attached as a schedule to the related Transfer Agreement. The
purchase price to be paid to Fleetwood Credit for each Subsequent Receivable
will
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equal the principal amount thereof as of the related Subsequent Cutoff Date.
Pursuant to the Agreement and the related Transfer Agreement, the Seller will in
turn sell the Subsequent Receivables to the Trust. In connection with each
purchase of Subsequent Receivables, the Trust will be required to pay to the
Seller an amount equal to the amount paid by the Seller to Fleetwood Credit for
such Subsequent Receivables, which purchase price will be paid from monies on
deposit in the Pre-Funding Account. Upon the conveyance of Subsequent
Receivables to the Trust on a Subsequent Transfer Date, the Pool Balance will
increase in an amount equal to the aggregate principal balance of such
Subsequent Receivables as of the related Subsequent Cutoff Date.
Each conveyance of Subsequent Receivables will be subject to the following
conditions, among others: (i) such Subsequent Receivables must satisfy the
eligibility criteria described under "Representations and Warranties"; (ii) such
Subsequent Receivables were not selected by either Fleetwood Credit or the
Seller in a manner that it believes is adverse to the interests of the
Certificateholders; (iii) the weighted average APR of the Receivables (including
the related Subsequent Receivables) is not less than 9.65%; (iv) the weighted
average remaining term of the Receivables (including the Subsequent Receivables)
as of the related Subsequent Transfer Date is not greater than 160 months; (v)
the Seller and the Trustee shall not have been advised by either Rating Agency
that the conveyance of such Subsequent Receivables will result in a
qualification, modification or withdrawal of its then current rating of either
the Class A Certificates or the Class B Certificates; and (vi) the Trustee shall
have received certain opinions of counsel as to, among other things, the
enforceability and validity of the Transfer Agreement relating to such
conveyance of Subsequent Receivables.
Because the Subsequent Receivables may be originated after the Initial
Receivables, following their conveyance to the Trust, the characteristics of the
Receivables, including the Subsequent Receivables, may vary from those of the
Initial Receivables.
Representations and Warranties. In the Receivables Purchase Agreement,
Fleetwood Credit will represent and warrant to the Seller, and in the Agreement
and the Transfer Agreements, the Seller will represent and warrant to the
Trustee, among other things, that, on the Closing Date with respect to the
Initial Receivables and the Initial Financed Vehicles and on each Subsequent
Transfer Date with respect to the related Subsequent Receivables and Subsequent
Financed Vehicles: (i) the information set forth in the Schedule of Receivables
is correct in all material respects; (ii) the Obligor on each Receivable is
required to maintain physical damage insurance covering the related Financed
Vehicle in accordance with Fleetwood Credit's normal requirements; (iii) to the
knowledge of Fleetwood Credit or the Seller, as the case may be, on the Closing
Date or the related Subsequent Transfer Date, as the case may be, the related
Receivables are free and clear of all security interests, liens, charges and
encumbrances (other than those in favor of Fleetwood Credit or the Seller) and
no offsets, defenses or counterclaims against Fleetwood Credit or the Seller, as
the case may be, have been asserted or threatened; (iv) on the Closing Date or
the related Subsequent Transfer Date, each of the Initial Receivables or
Subsequent Receivables, as the case may be, is secured by a first perfected
security interest in the related Financed Vehicle in favor of Fleetwood Credit;
(v) each Receivable, at the time it was originated, complied and, on the Closing
Date or the related Subsequent Transfer Date, as the case may be, complies, in
all material respects with applicable federal and state laws, including, without
limitation, consumer credit, truth in lending, equal credit opportunity and
disclosure laws; and (vi) the related Obligor has not been identified by
Fleetwood Credit as being a Relief Act Obligor.
Repurchase of Certain Receivables by the Seller. As of the second (or, if
the Seller elects, the first) Record Date following the discovery by or notice
to the Seller of a breach of any such representation or warranty that materially
and adversely affects the interests of the Certificateholders in a Receivable,
the Seller, unless it cures the breach, will repurchase such Receivable from the
Trustee and, pursuant to the Receivables Purchase Agreement, Fleetwood Credit
will purchase such Receivable from the Seller, at a price equal to the unpaid
principal balance owed by the Obligor plus interest thereon at a rate equal to
the sum of (i) the weighted average of the Class A Pass-Through Rate and the
Class B Pass-Through Rate as of the Closing Date and (ii) the Servicing Fee Rate
to the last day of the month of repurchase (the "Repurchase Amount"). This
repurchase obligation will constitute the sole remedy available to the
Certificateholders or the Trustee for any such uncured breach. The obligation of
the Seller to repurchase a Receivable will not be
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conditioned on performance by Fleetwood Credit of its obligation to purchase
such Receivable from the Seller pursuant to the Receivables Purchase Agreement.
(Section 12.02)
SERVICING PROCEDURES
To assure uniform quality in servicing the Receivables and the Servicer's
own portfolio of recreational vehicle receivables and to reduce administrative
costs, the Trustee will appoint the Servicer as custodian of the Receivables.
(Section 12.04) The Receivables will not be physically segregated from other
recreational vehicle retail installment sale contracts of the Servicer, or those
which the Servicer services for others, to reflect the transfer to the Trust.
The Servicer's accounting records and computer systems will reflect the sale and
assignment of the Receivables to the Trust, and UCC financing statements
reflecting such sale and assignment will be filed. See "Certain Legal Aspects of
the Receivables -- General."
The Servicer will make reasonable efforts to collect all payments due with
respect to the Receivables and, in a manner consistent with the Agreement, will
continue such collection procedures as it follows with respect to comparable
recreational vehicle retail installment sale contracts it services for itself
and others. (Section 13.02) See "Certain Legal Aspects of the Receivables."
Consistent with its normal procedures, the Servicer may, in its discretion,
arrange with an Obligor to extend or modify the payment schedule on a
Receivable. Notwithstanding the foregoing, the Servicer may not extend the
stated maturity of a Receivable beyond the month that is six months prior to the
Final Scheduled Distribution Date. Such arrangements may result in the Servicer
being required to purchase the related Receivable for the Repurchase Amount,
while others may require the Servicer to make an Advance in respect of such
Receivable, without any reimbursement therefor. (Sections 13.07 and 14.04) The
Servicer will follow such normal collection practices and procedures as it deems
necessary or advisable to realize upon any Receivable with respect to which it
determines that eventual payment in full is unlikely. The Servicer may sell the
related Financed Vehicle securing such Receivable at a public or private sale,
or take any other action permitted by applicable law. (Section 13.03)
COLLECTIONS
The Servicer will deposit all payments on or in respect of the Receivables
received from or on behalf of Obligors and all proceeds of Receivables collected
during each Collection Period into the Certificate Account not later than two
Business Days after receipt. Notwithstanding the foregoing, so long as no Event
of Default has occurred and is continuing, the Servicer may remit such deposits
and collections in respect of a Collection Period to the Certificate Account on
a monthly basis not later than the Business Day immediately preceding the
related Distribution Date; provided that either (i) the Servicer's short-term
unsecured debt obligations are rated at least equal to Prime-1 by Moody's and
A-1 by Standard & Poor's (the "Required Servicer Ratings") or (ii) the Servicer
obtains a letter of credit, surety bond or insurance policy (the "Servicer
Letter of Credit") as will be provided in the Agreement under which demands for
payment will be made to secure timely remittance of monthly collections to the
Certificate Account and the Trustee is provided with a letter from each Rating
Agency to the effect that the utilization of such alternative remittance
schedule will not result in a Ratings Effect. As of the date of this Prospectus,
the Servicer will be permitted to remit to the Certificate Account all
collections received on or in respect of the Receivables on a monthly basis by
virtue of clause (i) above. In the event that the Servicer is permitted to make
remittances of collections to the Certificate Account on a monthly basis
pursuant to satisfaction of clause (ii) above, the Agreement will be modified,
to the extent necessary, without the consent of any Certificateholder. (Sections
14.02 and 22.01) Pending deposit into the Certificate Account, collections may
be invested by the Servicer at its own risk and for its own benefit and will not
be segregated from its own funds. The Seller or the Servicer, as the case may
be, will remit the aggregate Repurchase Amount of any Receivables to be
repurchased from the Trust into the Certificate Account on or before the
Business Day immediately preceding the related Distribution Date.
The Certificate Account shall be maintained (i) with the Trustee so long as
the short-term credit ratings of the Trustee are at least equal to Prime-1 by
Moody's and A-1+ by Standard & Poor's (the "Required Deposit Ratings") or (ii)
in a non-interest bearing segregated trust account for the benefit of the
Certificateholders, located in the corporate trust department of a depository
institution or trust company having corporate trust powers (which may include
the Trustee). If the short-term unsecured debt obligations
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of the Trustee are not rated at least equal to the Required Deposit Rating, the
Servicer will, with the Trustee's assistance as necessary, cause the Certificate
Account to be moved to a bank or trust company whose short-term unsecured debt
obligations are rated at least equal to the Required Deposit Ratings or moved to
a non-interest bearing segregated trust account located in a corporate trust
department of a depository institution or trust company as described above.
(Section 14.01)
For so long as the depository institution or trust company then maintaining
the Certificate Account has the Required Deposit Ratings, all amounts held in
the Certificate Account will, to the extent permitted by applicable law, be
invested, as directed by the Servicer, in Permitted Investments. Earnings on the
investment of funds in the Certificate Account will be paid to the Servicer.
"Permitted Investments" will be limited to investments that will not require the
Trust to register as an investment company under the Investment Company Act of
1940, as amended, and include the following obligations and securities: (i)
obligations of the United States or any agency thereof, backed by the full faith
and credit of the United States; (ii) general obligations of or obligations
guaranteed by any State, commercial paper and certificates of deposit, demand or
time deposits, federal funds or banker's acceptances issued by any depository
institution or trust company incorporated under the laws of the United States or
of any State and subject to supervision and examination by federal or state
banking authorities, in each case rated the highest rating of each Rating Agency
for such obligations, or such lower rating as will not result in the
qualification, downgrading or withdrawal of the rating then assigned to either
Class of Certificates by such Rating Agency (each, a "Ratings Effect"); (iii)
demand or time deposits or certificates of deposit issued by any bank, trust
company, savings bank or other savings institution, which deposits are fully
insured by the FDIC; (iv) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation as will not result in a Ratings Effect;
(v) certain specified repurchase obligations; and (vi) such other investments as
will not result in a Ratings Effect. Notwithstanding the foregoing, each
Permitted Investment shall mature no later than the Business Day prior to the
Distribution Date immediately following the date of purchase (other than
instruments of which the Trustee is the obligor, which may mature on the related
Distribution Date), and shall be required to be held to such maturity. (Sections
1.01 and 11.01)
THE PRE-FUNDING ACCOUNT; MANDATORY PREPAYMENT OF THE CERTIFICATES
The Pre-Funding Account. The Servicer will establish the Pre-Funding
Account in the name of the Trustee for the benefit of the Certificateholders
into which the Pre-Funded Amount will be deposited on the Closing Date from the
net proceeds received from the sale of the Certificates and from which monies
will be applied during the Funding Period to purchase Subsequent Receivables
from the Seller. The Pre-Funding Account will be maintained with the same entity
at which the Certificate Account is maintained. The Pre-Funding Account will be
part of the Trust but monies on deposit therein will not be available to cover
losses on or in respect of the Receivables. Any portion of the Pre-Funded Amount
remaining on deposit in the Pre-Funding Account at the end of the Funding Period
will be payable as described below as a prepayment of principal to the
Certificateholders. Monies on deposit in the Pre-Funding Account may be invested
in Permitted Investments under the circumstances and in the manner described in
the Agreement. Earnings on investment of funds in the Pre-Funding Account will
be deposited into the Certificate Account and losses will be charged against the
funds on deposit in the Pre-Funding Account. (Section 14.01)
Upon each conveyance of Subsequent Receivables to the Trust, an amount
equal to the purchase price paid by the Seller to Fleetwood Credit for such
Subsequent Receivables on the related Subsequent Transfer Date will be withdrawn
from the Pre-Funding Account and paid to the Seller.
Mandatory Prepayment of the Certificates. The Certificates will be subject
to Mandatory Prepayment on the Distribution Date immediately succeeding the date
on which the Funding Period ends (or on the Distribution Date on which the
Funding Period ends if the Funding Period ends on a Distribution Date), in the
event that any portion of the Pre-Funded Amount, exclusive of any investment
earnings thereon, remains on deposit in the Pre-Funding Account after giving
effect to the purchase by the Seller and conveyance to the Trust of all
subsequent Receivables on the related Subsequent Transfer Dates, including any
such purchase and conveyance on the date on which the Funding Period ends.
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Upon the occurrence of a Mandatory Prepayment, the holders of Certificates
of each Class will receive an amount equal to the Class A Percentage or the
Class B Percentage, as the case may be, multiplied by the portion of the
Pre-Funded Amount remaining in the Pre-Funding Account. It is anticipated that
the aggregate principal amount of Subsequent Receivables sold to the Trust
during the Funding Period will not be exactly equal to the Pre-Funded Amount and
that therefore there will be at least a nominal amount of principal prepaid to
Certificateholders. (Section 14.09)
CERTAIN PAYMENTS BY THE SERVICER
On the Business Day immediately preceding each Distribution Date, the
Servicer will be required, subject to the limitations set forth below, to
advance to the Trust an amount equal to all accrued interest, if any, on the
unpaid principal balance of each Receivable at the related APR since the most
recent date upon which a payment was made in respect of such Receivable by or on
behalf of the related Obligor through the last day of the related Collection
Period (an "Advance"). The obligation of the Servicer to make an Advance will be
limited to circumstances in which the Servicer, in its reasonable discretion,
determines such Advance will ultimately be reimbursable from subsequent payments
made by or on behalf of the related Obligor, from insurance proceeds, from
liquidation proceeds or otherwise, except in the case of the waiver by the
Servicer of any scheduled interest on a Receivable, in which case the Servicer
shall be required to make an Advance without the right of subsequent
reimbursement. In making Advances, the Servicer will endeavor to maintain
monthly payments of interest at the related Pass-Through Rate to
Certificateholders, rather than to guarantee or insure against losses.
Accordingly, all Advances shall be reimbursable (except as provided above with
respect to waivers of scheduled interest) to the Servicer, without interest, if
and when a payment relating to a Receivable with respect to which an Advance has
previously been made is subsequently received. In addition, Advances in respect
of a Receivable (other than a Repurchased Receivable) as to which (i) a
scheduled payment is 180 days delinquent or (ii) the Servicer has determined
that eventual payment in full is unlikely and has repossessed and liquidated the
related Financed Vehicle within such 180-day period (each, a "Defaulted
Receivable") shall also be reimbursable (except as provided above with respect
to waivers of scheduled interest) to the Servicer from collections on or in
respect of other Receivables to the extent that the Servicer determines, in its
reasonable discretion, that such Advance will not be recoverable from payments
made on or in respect of such Defaulted Receivable. (Section 14.04)
When a payment of principal is made on or in respect of a Receivable,
interest is paid on the unpaid principal balance of such Receivable only to the
date of such payment. To ensure that Certificateholders will not be adversely
affected by any shortfall in interest resulting from any such payment, the
Agreement will require the Servicer to deposit into the Certificate Account on
the Business Day immediately preceding each Distribution Date, without the right
of subsequent reimbursement, an amount, if any, as may be necessary to assure
that the distributions made on the related Distribution Date in respect of such
Receivable to the Servicer and Certificateholders include an amount equal to
interest at a rate equal to the sum of (i) the weighted average of the Class A
Pass-Through Rate and the Class B Pass-Through Rate as of the Closing Date and
(ii) the Servicing Fee Rate on the amount of such principal payment from the
date of payment through the last day of the related Collection Period (the
"Non-Reimbursable Payment"). (Section 14.05)
The Servicer will remit to the Certificate Account an amount equal to each
Advance and Non-Reimbursable Payment to be made in respect of a Collection
Period not later than the Business Day immediately preceding the related
Distribution Date.
NET DEPOSITS
For administrative convenience, the Servicer will be permitted to make the
deposit of collections, Advances, Non-Reimbursable Payments and Repurchase
Amounts for or in respect of each Collection Period net of distributions to be
made to the Servicer with respect to such Collection Period. The Servicer,
however, will account to the Trustee and to the Certificateholders as if all
deposits and distributions were made individually. (Sections 14.06 and 14.09)
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SERVICING COMPENSATION
The Servicer will be entitled to retain, out of interest collected on or in
respect of the Receivables, the Servicing Fee for each Collection Period equal
to the product of the Servicing Fee Rate and the Pool Balance as of the first
day of such Collection Period. The Servicing Fee will be calculated and paid
based upon a 360-day year consisting of twelve 30-day months. The Servicer will
also collect and retain any late fees, prepayment charges and other
administrative fees or similar charges allowed by applicable law with respect to
the Receivables. (Section 13.08)
The Servicing Fee will compensate the Servicer for performing the functions
of a third party servicer of recreational vehicle receivables as an agent for
the Trustee, including collecting and posting payments, responding to inquiries
of Obligors on the Receivables, investigating delinquencies, sending payment
statements and reporting tax information to Obligors, paying costs of
disposition of Defaulted Receivables and policing the collateral. (Section
13.01) The Servicing Fee also will compensate the Servicer for administering the
Receivables, including making Advances and Non-Reimbursable Payments, accounting
for collections and furnishing monthly and annual statements to the Trustee with
respect to distributions, generating federal income tax information and paying
certain taxes, accounting fees, outside auditor fees, data processing costs and
other costs incurred in connection with administering the Receivables. (Section
13.01)
DISTRIBUTIONS ON THE CERTIFICATES
On the eighth calendar day of each month or, if such day is not a Business
Day, the immediately succeeding Business Day (the "Determination Date"), the
Servicer will inform the Trustee of the amount of Available Funds collected on
or in respect of the Receivables, the Negative Carry Amount, if any, the amount
of Advances and Non-Reimbursable Payments to be made by the Servicer and the
amount of the Servicing Fee and other servicing compensation payable to the
Servicer, in each case with respect to the immediately preceding Collection
Period. On or prior to each Determination Date, the Servicer shall also
determine the Class A Distributable Amount, the Class B Distributable Amount
and, based on the Available Funds and other amounts available for distribution
on the related Distribution Date as described below, determine the amounts to be
distributed to the Class A Certificateholders and the Class B
Certificateholders. (Sections 13.09 and 14.07)
On each Distribution Date, the Trustee will cause the Negative Carry Amount
for the related Collection Period, if any, to be withdrawn from the Reserve Fund
and deposited in the Certificate Account. (Sections 14.01 and 14.07)
The Trustee shall make distributions to the Certificateholders out of
amounts on deposit in the Certificate Account. The amount to be distributed to
the Certificateholders following the Funding Period in connection with a
Mandatory Prepayment is described under "The Pre-Funding Account; Mandatory
Prepayment of the Certificates." The amount of other distributions to be made on
each Distribution Date shall be determined in the manner described below.
Determination of Available Funds. "Available Funds" with respect to each
Distribution Date will mean the sum of (i) the earnings received by the Trustee
during the related Collection Period from investment of the Pre-Funded Amount on
deposit in the Pre-Funding Account, (ii) an amount (the "Negative Carry Amount")
equal to the difference between (a) one month's interest on the Pre-Funded
Amount on deposit in the Pre-Funding Account as of the first day of such
Collection Period at a rate equal to the weighted average of the Class A and
Class B Pass-Through Rates and (b) the amount described in clause (i) above,
which Negative Carry Amount will be withdrawn from the Reserve Fund as described
under "Subordination of the Class B Certificates; Reserve Fund", (iii) all cash
received by the Servicer on or in respect of the Receivables during the related
Collection Period (including Non-Reimbursable Payments and Advances but other
than (a) late payment and extension fees, if any, and other administrative fees
and (b) recoveries collected on or in respect of all Receivables which have been
previously repurchased by the Seller or purchased by the Servicer pursuant to
the Agreement) and (iv) the Repurchase Amounts of all Receivables purchased or
repurchased under the Agreement in respect of the related Collection Period.
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With respect to each Collection Period (i) "Collected Interest" will mean
the sum of (a) the portion of all payments received by the Servicer on or in
respect of the Receivables during such Collection Period allocable to interest
and (b) the amounts described in clauses (i) and (ii) of the immediately
preceding paragraph with respect to such Collection Period, and (ii) "Collected
Principal" will mean the portion of all Available Funds received by the Servicer
on or in respect of the Receivables during such Collection Period allocable to
principal.
Calculation of Distributable Amounts. The "Class A Distributable Amount"
with respect to each Distribution Date will mean the sum of (i) the "Class A
Principal Distributable Amount," which will equal the Class A Percentage of the
Monthly Principal Payment (but not exceeding the Class A Certificate Balance as
of such Distribution Date) and (ii) the "Class A Interest Distributable Amount,"
which will equal one month's interest at the Class A Pass-Through Rate on the
Class A Certificate Balance as of the immediately preceding Distribution Date
(after giving effect to distributions of principal to be made on such
immediately preceding Distribution Date) or, in the case of the first
Distribution Date, (a) the product of (i) the Class A Pass-Through Rate, (ii)
the Original Class A Certificate Balance and (iii) the number of days from and
including the Closing Date to but excluding such Distribution Date, (b) divided
by 360.
In addition, with respect to the Distribution Date relating to the
Collection Period in which the last Receivable in the Trust is scheduled to
mature, the Class A Principal Distributable Amount will include the portion of
such amount necessary (after giving effect to the other amounts described above
to be distributed to the Class A Certificateholders on such Distribution Date
allocable to principal) to reduce the Class A Certificate Balance to zero.
The "Class B Distributable Amount" with respect to each Distribution Date
will be calculated in the same manner as the Class A Distributable Amount,
appropriately modified to relate to the Class B Certificates, but will also
include recoveries to the extent allocable to principal on Receivables which
became Defaulted Receivables in one or more prior Collection Periods. The "Class
B Principal Distributable Amount" and the "Class B Interest Distributable
Amount" with respect to each Distribution Date will be calculated in the same
manner as the Class A Principal Distributable Amount and the Class A Interest
Distributable Amount, respectively, in each case appropriately modified to
relate to the Class B Certificates.
The "Monthly Principal Payment" with respect to each Distribution Date will
equal (i) the sum of the Pool Balance (or, with respect to the first
Distribution Date, the Original Pool Balance) plus the amount on deposit in the
Pre-Funding Account (other than investment earnings), in each case as of the
first day of the related Collection Period, less (ii) the sum of the Pool
Balance plus the amount on deposit in the Pre-Funding Account (other than
investment earnings), in each case as of the last day of the related Collection
Period.
The "Class A Certificate Balance" will initially equal the Original Class A
Certificate Balance and on any Distribution Date will equal the Original Class A
Certificate Balance, reduced by all distributions actually made on or prior to
such Distribution Date to Class A Certificateholders allocable to principal. The
"Class B Certificate Balance" will initially equal the Original Class B
Certificate Balance and on any Distribution Date will equal the Original Class B
Certificate Balance, reduced by (i) all distributions actually made on or prior
to such Distribution Date to Class B Certificateholders allocable to principal
and (ii) Realized Losses allocable to the Class B Certificates. "Realized
Losses" with respect to each Collection Period will equal the amount by which
(a) the aggregate unpaid principal balance of all Receivables which became
Defaulted Receivables during such Collection Period exceeds (b) the sum of (i)
the aggregate liquidation proceeds recovered in respect of principal of such
Defaulted Receivables during such Collection Period and (ii) recoveries in
respect of all Defaulted Receivables received in such Collection Period, to the
extent not otherwise included in the amount determined pursuant to clause (i)
above.
Payment of Distributable Amounts. Prior to each Distribution Date, the
Servicer will calculate the amount to be distributed to the Certificateholders.
On each Distribution Date, the Trustee will distribute to Certificateholders the
following amounts in the following order of priority, to the extent of Available
Funds for such Distribution Date:
(i) to the Class A Certificateholders, an amount equal to the Class A
Interest Distributable Amount and any unpaid Class A Interest Carryover
Shortfall, such amount to be paid from Collected Interest (as Collected
Interest has been reduced by reimbursing the Servicer for any outstanding
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Advances and paying the Servicer the Servicing Fee, including any unpaid
Servicing Fees with respect to one or more prior Collection Periods); and
if such Collected Interest is insufficient, the Class A Certificateholders
will receive such deficiency first, from the Class B Percentage of
Collected Principal and second, if such amounts are still insufficient,
from monies on deposit in the Reserve Fund;
(ii) to the Class B Certificateholders, an amount equal to the Class B
Interest Distributable Amount and any unpaid Class B Interest Carryover
Shortfall, such amount to be paid from Collected Interest (after giving
effect to any reduction in Collected Interest described in clause (i)
above); and if such Collected Interest is insufficient, the Class B
Certificateholders will be entitled to receive such deficiency from monies
on deposit in the Reserve Fund;
(iii) to the Class A Certificateholders, an amount equal to the Class
A Principal Distributable Amount and any unpaid Class A Principal Carryover
Shortfall, such amount to be paid from Collected Principal (after giving
effect to the reduction in Collected Principal described in clause (i)
above); and if such Collected Principal is insufficient, the Class A
Certificateholders will be entitled to receive such deficiency first, from
Collected Interest (after giving effect to the reduction in Collected
Interest described in clauses (i) and (ii) above) and second, if such
amounts are still insufficient, from monies on deposit in the Reserve Fund;
and
(iv) to the Class B Certificateholders, an amount equal to the Class B
Principal Distributable Amount and any unpaid Class B Principal Carryover
Shortfall, such amount to be paid from Collected Principal (after giving
effect to the reduction in Collected Principal described in clauses (i) and
(iii) above); and if such Collected Principal is insufficient, the Class B
Certificateholders will be entitled to receive such deficiency first, from
Collected Interest (after giving effect to the reduction in Collected
Interest described in clauses (i), (ii) and (iii) above) and second, if
such amounts are still insufficient, from monies on deposit in the Reserve
Fund. (Section 14.07)
The "Class A Interest Carryover Shortfall" with respect to any Distribution
Date will equal the excess, if any, of the Class A Interest Distributable Amount
for such Distribution Date and any outstanding Class A Interest Carryover
Shortfall from the immediately preceding Distribution Date plus interest on such
outstanding Class A Interest Carryover Shortfall, to the extent permitted by
law, at the Class A Pass-Through Rate from such immediately preceding
Distribution Date through the current Distribution Date, over the amount of
interest distributed to the Class A Certificateholders on such Distribution
Date. The "Class A Principal Carryover Shortfall" with respect to any
Distribution Date will equal the excess of the Class A Principal Distributable
Amount plus any outstanding Class A Principal Carryover Shortfall with respect
to one or more prior Distribution Dates over the amount of principal that the
holders of the Class A Certificates actually received on such Distribution Date.
The "Class B Interest Carryover Shortfall" and the "Class B Principal
Carryover Shortfall" with respect to any Distribution Date will be calculated in
the same manner as the Class A Interest Carryover Shortfall and the Class A
Principal Carryover Shortfall, respectively, in each case appropriately modified
to relate to the Class B Certificates.
Any Excess Amounts in the Certificate Account with respect to any
Distribution Date, after giving effect to the distributions described in clauses
(i) through (iv) of the third preceding paragraph, will be distributed in the
following amounts and in the following order of priority: (i) to the Reserve
Fund until the amount on deposit therein equals the Specified Reserve Fund
Balance and (ii) to the Seller. Notwithstanding the foregoing, during the
Funding Period, all Excess Amounts will be deposited into the Reserve Fund and
will not be paid to the Seller until the Distribution Date immediately
succeeding the date on which the Funding Period ends (or on the Distribution
Date on which the Funding Period ends if the Funding Period ends on a
Distribution Date).
SUBORDINATION OF THE CLASS B CERTIFICATES; RESERVE FUND
The rights of the Class B Certificateholders to receive distributions with
respect to the Receivables will be subordinated to the rights of the Servicer
(to the extent that the Servicer is reimbursed for any outstanding
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Advances and is paid the Servicing Fee, including any unpaid Servicing Fees with
respect to one or more prior Collection Periods) and Class A Certificateholders
to the limited extent described below. This subordination is intended to enhance
the likelihood of timely receipt by Class A Certificateholders of the full
amount of interest and principal required to be paid to them, and to afford such
Certificateholders limited protection against losses in respect of the
Receivables.
No distribution will be made to the Class B Certificateholders on any
Distribution Date in respect of (i) interest until the full amount of interest
on the Class A Certificates payable on such Distribution Date has been
distributed to the Class A Certificateholders and (ii) principal until the full
amount of interest on and principal of the Class A Certificates payable on such
Distribution Date has been distributed to the Class A Certificateholders.
Distributions of interest on the Class B Certificates, to the extent of
Collected Interest and certain available amounts on deposit in the Reserve Fund,
will not be subordinated to the payment of principal on the Class A
Certificates. Because the rights of the Class B Certificateholders to receive
distributions of principal will be subordinated to the rights of the Class A
Certificateholders to receive distributions of interest and principal to the
extent described herein, the aggregate amount of principal distributions on the
Class B Certificates may be affected by the loss experience of the Receivables.
If the aggregate amount of losses experienced by the Receivables exceeds the
amount on deposit in the Reserve Fund, Class B Certificateholders may not
recover their initial investment in the Class B Certificates.
In the event of delinquencies or losses on the Receivables, the protection
afforded to the Class A Certificateholders will be effected both by the
application of available funds for such Distribution Date in the priorities
specified under "Distributions on the Certificates -- Payment of Distributable
Amounts," and the establishment of the Reserve Fund. The Reserve Fund will not
be a part of or otherwise includible in the Trust but will be a segregated trust
account held by the Trustee. The Reserve Fund will be funded by the Seller on
the Closing Date in an amount equal to $2,625,000 plus an amount attributable to
the maximum aggregate Negative Carry Amount. Thereafter, on each Distribution
Date, all Excess Amounts, if any, will be deposited from time to time in the
Reserve Fund to the extent necessary to maintain the amount in the Reserve Fund
at the Specified Reserve Fund Balance. Any assets (and earnings thereon) in the
Reserve Fund will be owned by, and taxed to, the Seller for federal income and
state and local franchise tax purposes.
The "Specified Reserve Fund Balance" with respect to the first Distribution
Date will equal $2,625,000 plus an amount equal to the maximum aggregate
Negative Carry Amount. On each Distribution Date thereafter, the Specified
Reserve Fund Balance will equal 1.75% of the sum of the Class A Certificate
Balance and the Class B Certificate Balance (after giving effect to
distributions of principal to be made on such Distribution Date); provided,
however, that so long as the foregoing sum of the Class A Certificate Balance
and the Class B Certificate Balance exceeds $3,500,000, the Specified Reserve
Fund Balance will not be less than $3,500,000. From and after the Distribution
Date as of which the foregoing sum of the Class A Certificate Balance and the
Class B Certificate Balance is less than $3,500,000, the Specified Reserve Fund
Balance will equal such sum. Notwithstanding the foregoing, on each Distribution
Date following any Fiscal Quarter in which losses or delinquencies in respect of
the Receivables exceed the percentages to be specified in the Agreement, the
Specified Reserve Fund Balance will be equal to the greater of the amount
described above or an amount equal to the Pool Balance as of the immediately
preceding Record Date multiplied by a percentage determined by subtracting from
18% a fraction (expressed as a percentage) equal to one minus a fraction, the
numerator of which will equal the Class A Certificate Balance and the
denominator of which will equal the Pool Balance plus an amount equal to the
amount on deposit in the Pre-Funding Account (other than investment earnings),
in each case as of the last day of the three related Collection Periods in such
Fiscal Quarter; provided, however, that following any Fiscal Quarter thereafter
in which the losses and delinquencies in respect of the Receivables are less
than the percentages to be specified in the Agreement, the Specified Reserve
Fund Balance shall return to the amount described in the first two sentences of
this paragraph. A "Fiscal Quarter" will mean each of the following three month
periods: (i) January, February and March; (ii) April, May and June; (iii) July,
August and September; and (iv) October, November and December. In addition, if
on any Distribution Date cumulative losses in respect of the Receivables exceed
1.5% of the Original Pool Balance and the aggregate principal balance of all
Subsequent Receivables conveyed to the Trust as of the related Subsequent Cutoff
Dates, the Specified Reserve Fund Balance shall remain at the level
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in effect as of such date and shall not be reduced further in accordance with
the first two sentences of this paragraph.
The Servicer may, from time to time after the date of this Prospectus,
request each Rating Agency to approve a formula for determining the Specified
Reserve Fund Balance that is different from that described above and would
result in a decrease in the amount of the Specified Reserve Fund Balance or the
manner by which it is funded. If each Rating Agency delivers a letter to the
Trustee to the effect that the use of any such new formulation will not result
in a Ratings Effect, then the Specified Reserve Fund Balance will be determined
in accordance with such new formula. The Agreement will accordingly be amended
to reflect such new calculation without the need for consent of any
Certificateholder.
On each Distribution Date, funds will be withdrawn from the Reserve Fund as
described above for distribution, first to Class A Certificateholders to the
extent of shortfalls in the amounts available to make required distributions of
interest on the Class A Certificates, second to Class B Certificateholders to
the extent of shortfalls in the amounts available to make required distributions
of interest on the Class B Certificates, third to Class A Certificateholders to
the extent of shortfalls in the amounts available to make required distributions
of principal on the Class A Certificates and fourth to Class B
Certificateholders to the extent of shortfalls in the amounts available to make
required distributions of principal on the Class B Certificates.
On each Distribution Date relating to the Funding Period, the amount of
Collected Interest for such Distribution Date will include an amount equal to
the Negative Carry Amount for the related Collection Period, if any, which
amount will be withdrawn from the Reserve Fund.
On each Distribution Date, the Trustee will deposit all Excess Amounts, if
any, into the Reserve Fund until the amount on deposit therein equals the
Specified Reserve Fund Balance. If the amount on deposit in the Reserve Fund on
such Distribution Date (after giving effect to all deposits thereto or
withdrawals therefrom on such Distribution Date) is greater than the Specified
Reserve Fund Balance, the Trustee will release and distribute such excess,
together with any Excess Amounts not required to be deposited into the Reserve
Fund, to the Seller. Notwithstanding the foregoing, during the Funding Period,
all Excess Amounts will be deposited into the Reserve Fund and will not be paid
to the Seller until the Distribution Date immediately succeeding the date on
which the Funding Period ends (or on the Distribution Date on which the Funding
Period ends if the Funding Period ends on a Distribution Date). Upon any such
release of amounts from the Reserve Fund, the Certificateholders will have no
further rights in, or claims to, such amounts. (Section 14.08)
Amounts held from time to time in the Reserve Fund will continue to be held
for the benefit of holders of the Certificates. Funds on deposit in the Reserve
Fund may be invested in Permitted Investments. Investment income on monies on
deposit in the Reserve Fund will not be available for distribution to
Certificateholders or otherwise subject to any claims or rights of the
Certificateholders and will be paid to the Seller. (Section 14.08)
If on any Distribution Date the Class B Certificate Balance equals zero and
amounts on deposit in the Reserve Fund have been depleted as a result of losses
in respect of the Receivables, the protection afforded to the Class A
Certificateholders by the subordination of the Class B Certificates and by the
Reserve Fund will be exhausted. In addition, if on any Distribution Date amounts
on deposit in the Reserve Fund have been depleted, the protection afforded to
the Class B Certificateholders by the Reserve Fund will be exhausted. In either
of the foregoing circumstances, the Class A Certificateholders or the Class B
Certificateholders, as the case may be, will bear directly the risks associated
with ownership of the Receivables.
Neither the Class B Certificateholders, the Seller nor the Servicer will be
required to refund any amounts properly distributed or paid to them, whether or
not there are sufficient funds on any subsequent Distribution Date to make full
distributions to the Class A Certificateholders.
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EXAMPLE OF DISTRIBUTIONS
The following chart sets forth an example of the application of the
foregoing provisions to the first monthly distribution in respect of the
Certificates:
September 1........... Initial Cutoff Date. The Original Pool Balance will
equal the aggregate unpaid principal balance of
the Receivables as of the opening of business on
this date.
September 1 - 30...... Collection Period. The Servicer will receive
monthly payments, prepayments and other proceeds
on or in respect of the Receivables.
October 8............. Determination Date. On this date, the Servicer will
notify the Trustee of, among other things, the
amounts to be distributed on the Distribution
Date.
October 14............ The Business Day immediately preceding the
Distribution Date. On or before this date, the
Servicer will make or will cause to be made the
required remittances to the Certificate Account.
October 14............ Record Date. Distributions on the Distribution Date
will be made to Certificateholders of record at
the close of business on this date.
October 15............ Distribution Date. On this date, the Trustee will
make the distributions described above.
STATEMENTS TO CERTIFICATEHOLDERS
On each Distribution Date, the Trustee will include with each distribution
to each Class A Certificateholder and Class B Certificateholder of record a
statement setting forth for such Distribution Date and the related Collection
Period, among other things, the following information:
(i) the amount of the distribution allocable to principal on the Class
A Certificates and the Class B Certificates;
(ii) the amount of the distribution allocable to interest on the Class
A Certificates and the Class B Certificates;
(iii) the Certificateholder's pro rata portion of the Servicing Fee
and any additional servicing compensation paid to the Servicer;
(iv) the Pool Balance, the Class A Pool Factor and the Class B Pool
Factor as of the related Record Date;
(v) the aggregate amount of unreimbursed Advances and the change in
such amount from the immediately preceding Collection Period;
(vi) the amount, if any, of proceeds received during the Collection
Period in connection with any physical damage insurance policies covering
Financed Vehicles;
(vii) the amount, if any, of proceeds received during the Collection
Period from Dealer repurchase obligations relating to Defaulted
Receivables;
(viii) the Reserve Fund balance, such amount as a percentage of the
Pool Balance and, in the event the amount on deposit in the Reserve Fund
has been reduced to zero, the number and aggregate dollar amount of
Defaulted Receivables;
(ix) the Class A Certificate Balance and the Class B Certificate
Balance as of such Record Date, after giving effect to payments allocated
to principal reported under (i) above;
(x) the amount of Class A Principal and Interest Carryover Shortfalls
and Class B Principal and Interest Carryover Shortfalls, if any, on such
Distribution Date and the change in such Class A and Class B Principal and
Interest Carryover Shortfalls from the immediately preceding Distribution
Date;
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(xi) the amount of Realized Losses, if any, on such Distribution Date
and the change in such amount from the immediately preceding Distribution
Date;
(xii) the amount otherwise distributable to the Class B
Certificateholders that is being distributed to the Class A
Certificateholders on such Distribution Date;
(xiii) the number and principal balance of Paid-Ahead Receivables and
the change in such number and amount from the immediately preceding
Collection Period;
(xiv) for Distribution Dates during the Funding Period, the remaining
Pre-Funded Amount on deposit in the Pre-Funding Account and the Negative
Carry Amount, if any, for the related Collection Period; and
(xv) for the first Distribution Date that is on or immediately
following the end of the Funding Period, the amount, if any, of the
Pre-Funded Amount that has not been used to purchase Subsequent Receivables
and is being distributed as a payment of principal to Certificateholders.
Items (i), (ii) and (iii) above will be presented on the basis of a
Certificate in the denomination of $1,000. In addition, within the prescribed
period of time for tax reporting purposes after the end of each calendar year
during the term of the Agreement, the Trustee will mail to each Person who at
any time during such calendar year shall have been a Certificateholder a
statement containing the sum of the amounts described in clauses (i) through
(iii) above for the purposes of such Certificateholder's preparation of federal
income tax returns. (Section 14.10) See "Certain Federal Income Tax
Consequences."
EVIDENCE AS TO COMPLIANCE
The Agreement will provide that a firm of independent public accountants
will furnish to the Trustee on or before April 30 of each year, beginning April
30, 1999, a statement as to compliance by the Servicer during the preceding 12
months ended December 31 (or longer period in the case of the first such
statement) with certain standards relating to the servicing of the Receivables.
(Section 13.11)
The Agreement will also provide for delivery to the Trustee, on or before
April 30 of each year, commencing April 30, 1999, of a certificate signed by an
officer of the Servicer stating that the Servicer has fulfilled its obligations
under the Agreement throughout the preceding 12 months ended December 31 (or
longer period in the case of the first such statement) or, if there has been a
default in the fulfillment of any such obligation, describing each such default.
(Section 13.10)
Copies of such statements and certificates may be obtained by
Certificateholders by a request in writing addressed to the Trustee.
CERTAIN MATTERS REGARDING THE SERVICER
The Agreement will provide that the Servicer may not resign from its
obligations and duties as Servicer thereunder, except upon determination that
its 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 the Servicer's servicing obligations and duties under the Agreement.
(Section 18.05)
The Agreement will further provide that neither the Servicer nor any of its
directors, officers, employees and agents will be under any liability to the
Trust or the Certificateholders for taking any action or for refraining from
taking any action pursuant to the Agreement; provided, however, that neither the
Servicer nor any such person will be protected against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or negligence
in the performance of duties or by reason of reckless disregard of obligations
and duties thereunder. The Servicer will be under no obligation to appear in,
prosecute or defend any legal action that is not incidental to its servicing
responsibilities under the Agreement and that, in its opinion, may cause it to
incur any expense or liability. (Section 18.04)
Any corporation into which the Servicer may be merged or consolidated, or
any corporation resulting from any merger or consolidation to which the Servicer
is a party, or any corporation succeeding to all or
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substantially all of the business of the Servicer, which corporation assumes the
obligations of the Servicer, will be the successor to the Servicer under the
Agreement. (Section 18.03)
EVENTS OF DEFAULT
"Events of Default" under the Agreement will consist of: (i) any failure by
the Servicer (or the Seller, so long as Fleetwood Credit is the Servicer) to
deliver to the Trustee as required by the Agreement for distribution to the
Certificateholders any required payment, or any failure by the Servicer to
deliver a Servicer's Certificate with respect to a Distribution Date, which
failure continues unremedied for three Business Days after discovery by an
officer of the Servicer (or the Seller, so long as Fleetwood Credit is the
Servicer), or written notice of such failure is given (a) to the Servicer or the
Seller, as the case may be, by the Trustee or (b) to the Seller or the Servicer,
as the case may be, and to the Trustee by holders of Certificates evidencing not
less than 25% of the voting interests of the Class A Certificates and the Class
B Certificates, voting together as a single class; (ii) any failure by the
Servicer (or the Seller, so long as Fleetwood Credit is the Servicer) duly to
observe or perform in any material respect any other covenant or agreement in
the Agreement which failure materially and adversely affects the rights of
Certificateholders and which continues unremedied for 60 days after the giving
of written notice of such failure (a) to the Servicer or the Seller, as the case
may be, by the Trustee or (b) to the Servicer or the Seller, as the case may be,
and to the Trustee by holders of Certificates evidencing not less than 25% of
the voting interests of the Class A Certificates and the Class B Certificates,
voting together as a single class; and (iii) certain events of bankruptcy,
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings and certain actions by the Servicer (or the Seller, so long
as Fleetwood Credit is the Servicer) indicating its insolvency, reorganization
pursuant to bankruptcy proceedings or inability to pay its obligations. (Section
19.01)
RIGHTS UPON EVENT OF DEFAULT
As long as an Event of Default remains unremedied, the Trustee or holders
of Certificates evidencing not less than 51% of the voting interests of the
Class A Certificates and the Class B Certificates, voting together as a single
class, may terminate all the rights and obligations of the Servicer under the
Agreement, whereupon the Trustee will succeed, without further action, to all
the responsibilities, duties and liabilities of the Servicer in its capacity as
such under the 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 such Certificateholders from effecting a transfer of servicing. In the event
that the Trustee is unwilling or unable so to act, it may appoint or petition a
court of competent jurisdiction to appoint a successor with a net worth of at
least $100,000,000 and whose regular business includes the servicing of
recreational vehicle or motor vehicle receivables. The Trustee may make such
arrangements for compensation to be paid, which in no event may be greater than
the servicing compensation paid to the Servicer under the Agreement. (Sections
19.01 and 19.02) Notwithstanding such termination, the Servicer shall be
entitled to payment of certain amounts payable to it prior to such termination,
for services rendered prior to such termination.
WAIVER OF PAST DEFAULTS
The holders of Certificates evidencing not less than 51% of the voting
interests of the Class A Certificates and the Class B Certificates, voting
together as a single class, may waive any default by the Servicer in the
performance of its obligations under the Agreement and its consequences, except
a default in making any required deposits to or payments from the Certificate
Account in accordance with the Agreement or in respect of a covenant or
provision of the Agreement that cannot be modified or amended without the
consent of each Certificateholder (in which event the related waiver will
require the approval of holders of all of the Certificates). No such waiver will
impair the Certificateholders' rights with respect to subsequent defaults.
(Section 19.05)
VOTING INTERESTS
For purposes of the Agreement, the "voting interests" of the (i) Class A
Certificates will be allocated among the Class A Certificateholders or Class A
Certificate Owners, as the case may be, in accordance with the Class A
Certificate Balance represented thereby and (ii) Class B Certificates will be
allocated among the Class B Certificateholders or Class B Certificate Owners, as
the case may be, in accordance with the Class B
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Certificate Balance represented thereby; except that in certain circumstances
any Class A Certificates or Class B Certificates, as the case may be, held by
the Seller, the Servicer or any of their respective affiliates shall be excluded
from such determination.
AMENDMENT
The Agreement may be amended by the Seller, the Servicer and the Trustee,
without the consent of the Certificateholders, to cure any ambiguity, correct or
supplement any provision therein which may be inconsistent with any other
provision therein, to add any other provisions with respect to matters or
questions arising under such Agreement which are not inconsistent with the
provisions of the Agreement, to add or provide for any credit enhancement for
the Class B Certificates or to permit certain changes with respect to the
Specified Reserve Fund Balance or any Servicer Letter of Credit; provided,
however, that any such action will not, in the opinion of counsel satisfactory
to the Trustee, materially and adversely affect the interest of any
Certificateholder (including any amendment that would adversely affect the
Trust's status as a grantor trust for federal income tax purposes), and
provided, further, that in the case of a change with respect to the Specified
Reserve Fund Balance or any Servicer Letter of Credit the Trustee receives a
letter from each Rating Agency to the effect that such amendment will not result
in a Ratings Effect.
The Agreement may also be amended from time to time 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 all Certificates, voting
together as a single class, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Agreement or
of modifying in any manner the rights of each Class of Certificateholders;
provided, however, that no such amendment may (i) except as described above,
increase or reduce in any manner the amount of or accelerate or delay the timing
of collections of payments on or in respect of the Receivables or (ii) reduce
the aforesaid percentage of the voting interests of which the holders of either
Class of Certificates are required to consent to any such amendment, without the
consent of the holders of all of the relevant Class of Certificates. (Section
22.01)
LIST OF CERTIFICATEHOLDERS
Upon a written request of the Servicer, the Trustee, as Certificate
Registrar, will provide to the Servicer within 15 days after receipt of such
request, a list of the names and addresses of all Certificateholders. In
addition, three or more Certificateholders or holders of either Class of
Certificates evidencing not less than 25% of the voting interests of such Class,
upon compliance by such Certificateholders with certain provisions of the
Agreement, may request that the Trustee, as Certificate Registrar, afford such
Certificateholders access during business hours to the current list of
Certificateholders for purposes of communicating with other Certificateholders
with respect to their rights under the Agreement. (Section 16.06)
The Agreement will not provide for the holding of any annual or other
meetings of Certificateholders.
TERMINATION
The obligations of the Servicer, the Seller and the Trustee pursuant to the
Agreement will terminate with respect to the Certificateholders upon the
earliest to occur of (i) the maturity or other liquidation of the last
Receivable and the disposition of any amounts received upon liquidation of any
property remaining in the Trust, (ii) the payment to Certificateholders of all
amounts required to be paid to them pursuant to the Agreement and (iii) the
occurrence of either event described below.
In order to avoid excessive administrative expenses, the Seller or the
Servicer, or any successor to the Servicer, will be permitted at its option to
purchase from the Trust, on any Distribution Date following the last day of a
Collection Period as of which the Pool Balance is 10% or less of the sum of the
Original Pool Balance and the aggregate principal balance of all Subsequent
Receivables conveyed to the Trust as of the related Subsequent Cutoff Dates, all
remaining Receivables at a price equal to the aggregate Repurchase Amounts for
the Receivables (including Defaulted Receivables), plus the appraised value of
any other property held by the Trust (less liquidation expenses). In the event
that both the Seller and the Servicer, or any successor to the Servicer, elect
to purchase the Receivables, the party first notifying the Trustee (based on the
Trustee's receipt of such notice) shall be permitted to purchase the
Receivables. Exercise of such right will effect early retirement of the
Certificates.
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If neither the Seller nor the Servicer (nor any successor to the Servicer)
exercises its optional termination right within 90 days after the last day of
the Collection Period as of which such right can first be exercised, the Trustee
shall solicit bids for the purchase of the Receivables remaining in the Trust.
In the event that satisfactory bids are received as described below, the sale
proceeds will be distributed to Certificateholders on the second Distribution
Date succeeding the last day of such Collection Period. Any purchaser of the
Receivables must agree to the continuation of the then current Servicer as
Servicer on terms substantially similar to those in the Agreement. Any such sale
will effect early retirement of the Certificates.
The Trustee must receive at least two bids from prospective purchasers that
are considered at the time to be competitive participants in the market for
motor vehicle retail installment sale contracts. The highest bid may not be less
than the fair market value of such Receivables and must equal the sum of (i) the
greater of (a) the aggregate Repurchase Amounts for the Receivables (including
Defaulted Receivables), plus the appraised value of any other property held by
the Trust (less liquidation expenses) or (b) an amount that when added to
amounts on deposit in the Certificate Account that would constitute Available
Funds for such second succeeding Distribution Date would result in proceeds
sufficient to distribute the sum of (1) the Class A Distributable Amount plus
any unpaid Class A Principal and Interest Carryover Shortfalls and (2) the Class
B Distributable Amount plus any unpaid Class B Principal and Interest Carryover
Shortfalls, and (ii) the sum of (a) an amount sufficient to reimburse the
Servicer for any outstanding Advances and (b) the Servicing Fee payable on such
final Distribution Date, including any unpaid Servicing Fees with respect to one
or more prior Collection Periods. The Trustee may consult with financial
advisors, including the Underwriters, to determine if the fair market value of
such Receivables has been offered. Upon the receipt of such bids, the Trustee
shall sell and assign such Receivables to the highest bidder and the
Certificates shall be retired on such Distribution Date. If any of the foregoing
conditions are not met, the Trustee shall decline to consummate such sale and
shall not be under any obligation to solicit any further bids or otherwise
negotiate any further sale of Receivables remaining in the Trust. In such event,
however, the Trustee may from time to time solicit bids in the future for the
purchase of such Receivables upon the same terms described above.
The Trustee will give written notice of termination to each
Certificateholder of record. The final distribution to each Certificateholder
will be made only upon surrender and cancellation of such holder's Certificates
at any office or agency of the Trustee specified in the notice of termination.
Any funds remaining in the Trust, after the Trustee has taken certain measures
to locate a Certificateholder and such measures have failed, will be distributed
to the United Way. (Sections 21.01 and 21.02)
DUTIES OF THE TRUSTEE
The Trustee will make no representations as to the validity or sufficiency
of the Agreement, the Certificates (other than the execution and authentication
thereof) or of 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 Certificate Account. The Trustee will not independently verify the
Receivables. If no Event of Default has occurred and is continuing, the Trustee
will be required to perform only those duties specifically required of it under
the 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 under the Agreement, in which case it will only be required to
examine them to determine whether they conform to the requirements of the
Agreement. The Trustee will not be charged with knowledge of a failure by the
Servicer to perform its duties under the Agreement which failure constitutes an
Event of Default unless the Trustee obtains actual knowledge of such failure as
specified in the Agreement. (Sections 20.01 and 20.05)
The Trustee will be under no obligation to exercise any of the rights or
powers vested in it by the 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
that may be incurred therein or thereby. No Certificateholder will have any
right under the Agreement to institute any proceeding with respect to the
Agreement, unless such holder previously has
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given to the Trustee written notice of default and (i) the Event of Default
arises from the Servicer's failure to remit payments when due or (ii) the
holders of Certificates evidencing not less than 25% of the voting interests of
the Class A Certificates and the Class B Certificates, voting together as a
single class, have made written request upon the Trustee to institute such
proceeding in its own name as the Trustee thereunder and have offered to the
Trustee reasonable indemnity and the Trustee for 30 days has neglected or
refused to institute any such proceedings. (Section 20.04)
THE TRUSTEE
The Chase Manhattan Bank will be the Trustee under the Agreement. The
Trustee and any of its affiliates may hold Certificates in their own names or as
pledgees. (Section 20.06) For the purpose of meeting the legal requirements of
certain jurisdictions, the Servicer and the Trustee acting jointly (or in some
instances, the Trustee acting alone) will have the power to appoint co-trustees
or separate trustees of all or any part of the Trust. In the event of such an
appointment, all rights, powers, duties and obligations conferred or imposed
upon the Trustee by the 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 20.13)
The Trustee may resign at any time, in which event the Servicer 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
Agreement, becomes legally unable to act or 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 such successor
trustee. (Section 20.10)
The Agreement will provide that the Servicer will pay the Trustee's fees.
(Section 20.07) The 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 not resulting
from its own willful misfeasance, bad faith or negligence (other than by reason
of a breach of any of its representations or warranties set forth in the
Agreement). (Section 18.02)
The Trustee's Corporate Trust Office is located at 450 West 33rd Street,
New York, New York 10001.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
GENERAL
The transfer of the Receivables to the Trustee, the perfection of the
security interest in the Receivables and the enforcement of rights to realize on
the Financed Vehicles as collateral for the Receivables are subject to a number
of federal and state laws, including the UCC as in effect in various states. The
Servicer and the Seller will take such action as is required to perfect the
rights of the Trustee in the Receivables. If, through inadvertence or otherwise,
another party purchases (including the taking of a security interest in) the
Receivables for new value in the ordinary course of its business, without actual
knowledge of the Trust's interest, and takes possession of the Receivables, such
purchaser would acquire an interest in the Receivables superior to the interest
of the Trust.
SECURITY INTERESTS IN THE FINANCED VEHICLES
General. Retail installment sale contracts such as the Receivables evidence
the credit sale of recreational vehicles by dealers to obligors; the contracts
also constitute personal property security agreements and include grants of
security interests in the related recreational vehicles under the UCC. In most
states (including California, the state in which the greatest number of Financed
Vehicles are currently registered), perfection rules relating to security
interests in recreational vehicles are generally governed under state
certificate of title statutes (Alabama, Connecticut, Georgia, Maine,
Massachusetts, Minnesota, Mississippi, New Hampshire, New York, Rhode Island and
Vermont have adopted the Uniform Motor Vehicle Certificate of Title and
Anti-Theft Act) or by the vehicle registration laws of the state in which each
recreational vehicle is located. In
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states which have adopted the Uniform Motor Vehicle Certificate of Title and
Anti-Theft Act, security interests in recreational vehicles may be perfected
either by notation of the secured party's lien on the certificate of title or by
delivery of the certificate of title and payment of a fee to the state motor
vehicle authority, depending on particular state law. In states that do not have
a certificate of title statute or that make no provision for notation of a
security interest on a certificate of title, perfection is usually accomplished
by filing pursuant to the provisions of the UCC. Notwithstanding the foregoing,
in certain states, folding camping trailers and/or slide-in campers are not
subject to state titling and vehicle registration laws and a security interest
in such recreational vehicles is perfected by filing pursuant to the provisions
of the UCC. In most states, including California, a security interest in a
recreational vehicle is perfected by notation of the secured party's lien on the
vehicle's certificate of title. Each Receivable prohibits the sale or transfer
of the related Financed Vehicle without the consent of Fleetwood Credit.
All retail installment sale contracts that Fleetwood Credit originates or
acquires from Dealers name Fleetwood Credit as obligee or assignee and as the
secured party. Fleetwood Credit also takes all actions necessary under the laws
of the state in which the related recreational vehicles are located to perfect
its security interest in such recreational vehicles, including, where
applicable, having a notation of its lien recorded on the related certificate of
title or delivering the required documents and fees, obtaining possession of the
certificate of title (if possible) or, where applicable, by perfecting its
security interest in the related recreational vehicles under the UCC.
Perfection. Pursuant to the Receivables Purchase Agreement, Fleetwood
Credit will sell and assign its security interests in the Financed Vehicles to
the Seller and, pursuant to the Agreement and the Transfer Agreements, the
Seller will assign its security interests in the Financed Vehicles to the
Trustee. However, because of the administrative burden and expense, neither
Fleetwood Credit, the Seller nor the Trustee will amend any certificate of title
to identify the Trustee as the new secured party on the certificates of title
relating to the Financed Vehicles nor will any such entity execute any transfer
instrument (including, among other instruments, UCC-3 assignments). In some
states, in the absence of such an amendment or execution, the assignment to the
Trustee of a security interest in Financed Vehicles registered therein may not
be effective or such security interest may not be perfected. If any otherwise
effectively assigned security interest in favor of the Trustee is not perfected,
such assignment of the security interest to the Trustee may not be effective
against creditors or a trustee in bankruptcy of Fleetwood Credit, which
continues to be specified as lienholder on any certificates of title or as
secured party on any UCC filing. However, UCC financing statements with respect
to the transfer of Fleetwood Credit's security interest in the Financed Vehicles
to the Seller and the transfer to the Trustee of the Seller's security interest
in the Financed Vehicles will be filed. In addition, the Servicer will continue
to hold any certificates of title relating to the Financed Vehicles in its
possession as custodian for the Trustee pursuant to the Agreement. See "The
Certificates -- Sale and Assignment of the Receivables."
A security interest in a motor vehicle registered in the State of
California (in which the greatest number of Financed Vehicles are currently
registered) may be perfected only by depositing with the Department of Motor
Vehicles a properly endorsed certificate of title for the vehicle showing the
secured party as legal owner thereon or if the vehicle has not been previously
registered, an application in usual form for an original registration together
with an application for registration of the secured party as legal owner.
However, under the California Vehicle Code, a transferee of a security interest
in a motor vehicle is not required to reapply to the Department of Motor
Vehicles for a transfer of registration when the interest of the transferee
arises from the transfer of a security agreement by the legal owner to secure
payment or performance of an obligation. Accordingly, under California law, an
assignment such as that under each of the Receivables Purchase Agreement, the
Agreement and each Transfer Agreement is an effective conveyance of Fleetwood
Credit's and the Seller's security interest, as the case may be, without such
re-registration, and under the Receivables Purchase Agreement the Seller will
succeed to Fleetwood Credit's, and under the Agreement and each Transfer
Agreement the Trustee will succeed to the Seller's, rights as secured party.
With respect to Financed Vehicles registered in other states, the Trustee may
not have a first perfected security interest in such Financed Vehicles.
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In most states, assignments such as those under the Receivables Purchase
Agreement, the Agreement and each Transfer Agreement are 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. Although re-registration of the recreational vehicle is not
necessary to convey a perfected security interest in the Financed Vehicles to
the Trustee, because the Trustee will not be listed as legal owner on the
certificates of title to the Financed Vehicles, its security interest could be
defeated through fraud or negligence. However, in the absence of fraud, forgery
or administrative error, the notation of Fleetwood Credit's lien on the
certificates of title will be sufficient in most states to protect the Trust
against the rights of subsequent purchasers of a Financed Vehicle or subsequent
creditors who take a security interest in a Financed Vehicle. In the Receivables
Purchase Agreement, Fleetwood Credit will represent and warrant, and in the
Agreement and the related Transfer Agreement the Seller will represent and
warrant, that it has, or has taken all action necessary to obtain, a perfected
security interest in each Financed Vehicle. If there are any Financed Vehicles
as to which Fleetwood Credit failed to obtain a first perfected security
interest, its security interest would be subordinate to, among others,
subsequent purchasers of such Financed Vehicles and holders of first perfected
security interests therein. Such a failure, however, would constitute a breach
of Fleetwood Credit's representations and warranties under the Receivables
Purchase Agreement and the Seller's representations and warranties under the
Agreement and each Transfer Agreement, and pursuant to the Agreement, the Seller
would be required to repurchase the related Receivable from the Trustee and,
pursuant to the Receivables Purchase Agreement, Fleetwood Credit would be
required to purchase such Receivable from the Seller, in each case unless the
breach were cured. See "The Certificates -- Sale and Assignment of the
Receivables." The Seller will assign its rights under the Receivables Purchase
Agreement to the Trustee.
Continuity of Perfection. Under the laws of most states, a perfected
security interest in a recreational vehicle continues for four months after the
vehicle is moved to a new state from the one in which it is initially registered
and thereafter until the owner re-registers such recreational vehicle in the new
state. A majority of states require surrender of a certificate of title to
re-register a vehicle. In those states (including California) that call for the
return of the certificate of title to the holder of the first security interest
listed thereon, the secured party would learn of the re-registration through the
request from the obligor under the related installment sale contract to
surrender possession of the certificate of title. 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 from the state of re-registration if the security interest
is noted on the certificate of title. Thus, the secured party would have the
opportunity to re-perfect its security interest in the vehicles in the state of
relocation. However, these procedural safeguards will not protect the secured
party if through fraud, forgery or administrative error, the debtor somehow
procures a new certificate of title that does not list the secured party's lien.
Additionally, in states that do not require a certificate of title for
registration of a vehicle, re-registration could defeat perfection. In the
ordinary course of servicing the Receivables, Fleetwood Credit will take steps
to effect re-perfection upon receipt of notice of re-registration or information
from the Obligor as to relocation. Similarly, when an Obligor sells a Financed
Vehicle, Fleetwood Credit 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 the Agreement, the Servicer will be obligated
to take appropriate steps, at its own expense, to maintain perfection of a
security interest in the Financed Vehicles.
Priority of Certain Liens Arising by Operation of Law. Under the laws of
California and of most states, liens for repairs performed on a recreational
vehicle and liens for unpaid taxes take priority over even a first perfected
security interest in such 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 a confiscated recreational
vehicle. Fleetwood Credit will represent and warrant to the Seller in the
Receivables Purchase Agreement and the Seller will represent and warrant to the
Trustee in the Agreement and in each Transfer Agreement that, as of the Closing
Date or the related subsequent Transfer Date, as the case may be, the security
interest in each Financed Vehicle is prior to all other present liens upon and
security interests in such Financed Vehicle. However, liens for repairs or taxes
could arise at any time during the term of a Receivable.
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No notice will be given to the Trustee or Certificateholders in the event such a
lien or confiscation arises and any such lien or confiscation arising after the
Closing Date would not give rise to Fleetwood Credit's repurchase obligation
under the Receivables Purchase Agreement or the Seller's repurchase obligation
under the Agreement.
REPOSSESSION
In the event of default by an obligor, the holder of the related retail
installment sale contract has all the remedies of a secured party under the UCC,
except where specifically limited by other state laws. The UCC remedies of a
secured party include the right to repossession by self-help means, unless such
means would constitute a breach of the peace. Self-help repossession is the
method employed by the Servicer in most cases and is accomplished simply by
taking possession of the related recreational vehicle. 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 recovered in accordance with that order. In
some jurisdictions (not including California), the secured party is required to
notify the debtor of the default and the intent to repossess the collateral and
be given a time period within which to cure the default prior to repossession.
In most states (including California), under certain circumstances after the
vehicle has been repossessed, the obligor may reinstate the related contract by
paying the delinquent installments and other amounts due.
NOTICE OF SALE; REDEMPTION RIGHTS
In the event of default by the obligor, some jurisdictions (not including
California) require that the obligor be notified of the default and be given a
time period within which to cure the default prior to repossession. Generally,
this right of cure may only be exercised on a limited number of occasions during
the term of the related contract.
The UCC 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. 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, accrued
interest thereon plus reasonable expenses for repossessing, holding and
preparing the collateral for disposition and arranging for its sale, plus, in
some jurisdictions, reasonable attorneys' fees or in some states, by payment of
delinquent installments or the unpaid principal balance of the related
obligation.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of the Financed Vehicles generally will be applied
first to the expenses of resale and repossession and then to the satisfaction of
the related indebtedness. 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 California
and certain other states that do not prohibit or limit such judgments. In
addition to the notice requirement, the UCC requires that every aspect of the
sale or other disposition, including the method, manner, time, place and terms,
be "commercially reasonable." Generally, courts have held that when a sale is
not "commercially reasonable," the secured party loses its right to a deficiency
judgment. In addition, the UCC permits the debtor or other interested party to
recover for any loss caused by noncompliance with the provisions of the UCC.
Also, prior to a sale, the UCC permits the debtor or other interested person to
restrain the secured party from disposing of the collateral if the debtor or
other interested party establishes that the secured party is not proceeding in
accordance with the "default" provisions under the UCC. However, the deficiency
judgment would be a personal judgment against the obligor for the shortfall, and
a defaulting obligor can be expected to have very little capital or sources of
income available following repossession. Therefore, in many cases, it may not be
useful to seek a deficiency judgment or, if one is obtained, it may be settled
at a significant discount or may be uncollectible.
Occasionally, after resale of a recreational vehicle and payment of all
expenses and indebtedness, there is a surplus of funds. In that case, the UCC
requires the creditor to remit the surplus to any holder of a subordinate lien
with respect to such vehicle or, if no such lienholder exists, to the former
owner of the vehicle.
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CERTAIN BANKRUPTCY CONSIDERATIONS
The Seller has taken steps in structuring the transactions described herein
that are intended to make it unlikely that the voluntary or involuntary
application for relief by Fleetwood Credit under the United States Bankruptcy
Code or similar applicable state laws (collectively, "Insolvency Laws") will
result in consolidation of the assets and liabilities of the Seller with those
of Fleetwood Credit. These steps include the creation of the Seller as a wholly
owned, limited purpose subsidiary pursuant to articles of incorporation
containing certain limitations (including requiring that the Seller must have at
least two "Independent Directors" and restrictions on the nature of the Seller's
business and on its ability to commence a voluntary case or proceeding under any
Insolvency Law without the affirmative vote of a majority of its directors,
including each Independent Director). In addition, to the extent that the Seller
granted a security interest in the Receivables to the Trust, and that interest
was validly perfected before the bankruptcy or insolvency of Fleetwood Credit
and was not taken or granted in contemplation of insolvency or with the intent
to hinder, delay or defraud Fleetwood Credit or its creditors, that security
interest should not be subject to avoidance, and payments to the Trust with
respect to the Receivables should not be subject to recovery by a creditor or
trustee in bankruptcy of Fleetwood Credit. If, notwithstanding the foregoing,
(i) a court concluded that the assets and liabilities of the Seller should be
consolidated with those of Fleetwood Credit in the event of the application of
applicable Insolvency Laws to Fleetwood Credit or following the bankruptcy or
insolvency of Fleetwood Credit the security interest in the Receivables granted
by the Seller to the Trustee should be avoided; (ii) a filing were made under
any Insolvency Law by or against the Seller; or (iii) an attempt were made to
litigate any of the foregoing issues, delays in payments on the Certificates and
possible reductions in the amount of such payments could occur. On the Closing
Date, counsel to Fleetwood Credit and the Seller will render an opinion which
concludes that following the bankruptcy of Fleetwood Credit, a court, applying
the principles set forth in such opinion, would not allow a creditor or trustee
in bankruptcy to consolidate the assets and liabilities of Fleetwood Credit and
the Seller on the basis of any applicable legal theory theretofore recognized by
a court of competent jurisdiction so as to adversely affect the ultimate payment
of all amounts owing under the Class A Certificates and the Class B
Certificates.
Fleetwood Credit and the Seller will treat the transactions described
herein as a sale of the Receivables to the Seller, such that the automatic stay
provisions of the United States Bankruptcy Code would not apply to the
Receivables in the event that Fleetwood Credit were to become a debtor in a
bankruptcy case. A case decided by the United States Court of Appeals for the
Tenth Circuit in 1993 contains language to the effect that under the UCC
accounts sold by a debtor would remain property of the debtor's bankruptcy
estate, whether or not the sale of accounts was perfected under the UCC. UCC
Article 9 applies to the sale of chattel paper as well as the sale of accounts
and although the Receivables constitute chattel paper under the UCC rather than
accounts, perfection of a security interest in both chattel paper and accounts
may be accomplished by the filing of a UCC-1 financing statement. If, following
a bankruptcy of Fleetwood Credit, a court were to follow the reasoning of the
Tenth Circuit reflected in the case described above, then the Receivables would
be included in the bankruptcy estate of Fleetwood Credit and delays in payments
of collections on or in respect of the Receivables could occur.
CONSUMER PROTECTION LAWS
Numerous federal and state consumer protection laws and related regulations
impose substantial requirements upon creditors and services 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 Billing 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' Relief Act, the Military Reservist Relief Act, state
adaptations of the National Consumer Act and of the Uniform Consumer Credit Code
and state motor vehicle retail installment sales acts, retail installment sales
acts and other similar laws. Also, the laws of California and of certain other
states impose finance charge ceilings and other restrictions on consumer
transactions and require contract disclosures in addition to those required
under federal law. These requirements impose specific statutory liabilities upon
creditors who fail to comply with their provisions. In some cases, this
liability could affect the ability of an assignee such as the Trustee to enforce
consumer finance contracts such as the Receivables.
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The so-called "Holder-in-Due-Course Rule" of the Federal Trade Commission
(the "FTC Rule"), has the effect of subjecting any assignee of the seller in a
consumer credit transaction to all claims and defenses which the obligor in the
transaction could assert against the seller of the goods. Liability under the
FTC Rule is limited to the amounts paid by the obligor under the contract, and
the holder of the contract may also be unable to collect any balance remaining
due thereunder from the obligor. The FTC Rule is generally duplicated by the
Uniform Consumer Credit Code, other state statutes or the common law in certain
states. Most of the Receivables 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 under the related
Receivables.
Under California law and most state vehicle dealer licensing laws, sellers
of recreational vehicles are required to be licensed to sell vehicles at retail
sale. In addition, with respect to used vehicles, the Federal Trade Commission's
Rule on Sale of Used Vehicles requires that all sellers of used vehicles
prepare, complete and display a "Buyer's Guide" which explains the warranty
coverage for such vehicles. Furthermore, Federal Odometer Regulations
promulgated under the Motor Vehicle Information and Cost Savings Act require
that all sellers of used vehicles furnish a written statement signed by the
seller certifying the accuracy of the odometer reading. If a seller is not
properly licensed or if either a Buyer's Guide or Odometer Disclosure Statement
was not provided to the purchaser of a Financed Vehicle, the Obligor may be able
to assert a defense against the seller of the Financed Vehicle. If an Obligor on
a Receivable were successful in asserting any such claim or defense, the
Servicer would pursue on behalf of the Trust any reasonable remedies against the
seller or manufacturer of the vehicle, subject to certain limitations as to the
expense of any such action specified in the Agreement.
Courts have applied general equitable principles to secured parties
pursuing repossession or litigation involving deficiency balances. These
equitable principles may have the effect of relieving an obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies of
secured parties under the UCC and related laws violate the due process
protections of the Fourteenth Amendment to the Constitution of the United
States. Courts have generally either upheld the notice provisions of the UCC and
related laws as reasonable or have found that the creditor's repossession and
resale do not involve sufficient state action to afford constitutional
protection to consumers.
Fleetwood Credit will represent and warrant under the Receivables Purchase
Agreement and the Seller will represent and warrant under the Agreement and
under each Transfer Agreement that each Receivable complies with all
requirements of law in all material respects. Accordingly, if an Obligor has a
claim against the Trustee for violation of any law and such claim materially and
adversely affects the interests of the Certificateholders in a Receivable, such
violation would constitute a breach of such representation and warranty under
the Receivables Purchase Agreement, the Agreement and under the related Transfer
Agreement and would create an obligation of Fleetwood Credit and the Seller to
repurchase such Receivable unless the breach were cured. See "The
Certificates -- Sale and Assignment of the Receivables."
Any shortfall in payments on or in respect of the Receivables described
under this subheading, to the extent not otherwise covered by amounts otherwise
payable to the Class B Certificateholders pursuant to the subordination of the
Class B Certificateholders or from amounts on deposit in the Reserve Fund, could
result in losses to the Class A Certificateholders. In addition, any such
shortfall, to the extent not covered by amounts on deposit in the Reserve Fund,
could result in losses to the Class B Certificateholders.
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a creditor to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
creditor from repossessing a recreational vehicle, and, as part of the
rehabilitation plan, reduce the amount of the secured indebtedness to the market
value of the recreational
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vehicle at the time of bankruptcy (as determined by the court), leaving the
party providing financing as a general unsecured creditor for the remainder of
the indebtedness. A bankruptcy court may also reduce the monthly payments due
under the related contract or change the rate of interest and time of repayment
of the indebtedness.
Under the terms of the Soldiers' and Sailors' Relief Act, an Obligor who
enters the military service after the origination of such Obligor's Receivable
(including an Obligor who is a member of the National Guard or is in reserve
status at the time of the origination of the Obligor and is later called to
active duty) may not be charged interest above an annual rate of 6% during the
period of such Obligor's active duty status, unless a court orders otherwise
upon application of the lender. In addition, pursuant to the Military Reservist
Relief Act, under certain circumstances, California residents called into active
duty with the reserves can delay payments on retail installment contracts,
including the Receivables, for a period, not to exceed 180 days, beginning with
the order to active duty and ending 30 days after release. It is possible that
the foregoing could have an effect on the ability of the Servicer to collect
full amounts of interest on certain of the Receivables. In addition, the Relief
Acts impose limitations which would impair the ability of the Servicer to
repossess an affected Receivable during the Obligor's period of active duty
status. Thus, in the event that such a Receivable goes into default, there may
be delays and losses occasioned by the inability to realize upon the related
Financed Vehicle in a timely fashion.
Any shortfall pursuant to either of the two immediately preceding
paragraphs, to the extent not otherwise covered by amounts otherwise payable to
the Class A Certificateholders pursuant to the subordination of the Class B
Certificates or from amounts on deposit in the Reserve Fund, could result in
losses to the Class A Certificateholders. In addition, any such shortfall, to
the extent not covered by amounts on deposit in the Reserve Fund, could result
in losses to the Class B Certificateholders.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain federal income tax
consequences of the purchase, ownership and disposition of the Certificates.
This summary is based upon laws, regulations, rulings and decisions currently in
effect, all of which are subject to change, possibly on a retroactive basis. The
discussion does not 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
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"), and who do not hold the Certificates as part of a
"straddle," a "hedge" or a "conversion transaction." Furthermore, no authority
exists concerning the tax treatment of some aspects of the Certificates, and
there can be no assurance that the Treasury Department will not issue
regulations under Section 1286 of the Code which would modify the treatment
described below. Accordingly, the ultimate federal income tax treatment of the
Certificates may differ substantially from that described below. 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
Certificates. Prospective investors should note that no rulings have been or
will be sought from the Internal Revenue Service ("IRS") with respect to any of
the federal income tax consequences discussed below, and no assurance can be
given that the IRS will not take contrary positions.
TAX STATUS OF THE TRUST
In the opinion of Arter & Hadden, special federal tax counsel to the
Seller, the Trust will be classified as a grantor trust under subpart E, part I
of subchapter J of the Code and not as an association taxable as a corporation
for federal income tax purposes. As a result, each Certificateholder will be
subject to federal income taxation as if it owned directly the portion of the
Trust's assets allocable to its Certificates and as if it paid directly its
share of the reasonable expenses paid by the Trust.
GENERAL
For purposes of federal income tax, the Trust will be deemed to have
acquired the following assets: (i) the principal portion of each Receivable plus
a portion of the interest due on each Receivable (the "Trust
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Stripped Bond"), (ii) a portion of the interest due on each Receivable equal to
the difference between the Class B Pass-Through Rate and the Class A
Pass-Through Rate which difference is then multiplied by the Class B Percentage
of each Receivable (the "Trust Stripped Coupon") and (iii) the right to receive
payments from the Reserve Fund. All interest due on each Receivable in excess of
that portion of such interest included in either the Trust Stripped Bond or the
Trust Stripped Coupon above has been retained by the Seller (the "Excess
Receivable Amounts").
The Class A Certificateholders in the aggregate will own the Class A
Percentage of the Trust Stripped Bond and the right to receive payments from the
Reserve Fund, and accordingly each Class A Certificateholder will be treated as
owning its pro rata share of such assets. The Class A Certificateholders will
not own any portion of the Trust Stripped Coupon. The Class B Certificateholders
in the aggregate own the Class B Percentage of the Trust Stripped Bond plus 100%
of the Trust Stripped Coupon, if any, and the right to receive payments from the
Reserve Fund, and accordingly each Class B Certificateholder will be treated as
owning its pro rata share in such assets.
Each Certificateholder 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 entire gross income of the Trust, including interest or finance charges
earned on the Receivables, Negative Carry Amounts received during the Funding
Period from the Reserve Fund, any payment from the Reserve Fund and any gain or
loss upon collection or disposition of the Receivables. Payments from the
Reserve Fund will have the same character as the amounts they replace (i.e.,
interest or finance charges on, or principal of, the Receivables). In computing
its federal income tax liability, a Certificateholder will be entitled to
deduct, consistent with its method of accounting, its pro rata share of
reasonable fees payable to the Servicer that are paid or incurred by the Trust
as provided in Sections 162 or 212 of the Code. If a Certificateholder is an
individual, estate or trust the deduction for its pro rata share of such fees
will be allowed only to the extent that all of its miscellaneous itemized
deductions, including its share of such fees, exceed 2% of its adjusted gross
income. In addition, Code Section 68 provides that itemized deductions otherwise
allowable for a taxable year of an individual taxpayer whose adjusted gross
income exceeds a specified amount will be reduced by the lesser of (i) 3% of the
excess, if any, of adjusted gross income over such amount, or (ii) 80% of the
amount of itemized deductions otherwise allowable for such year. As a result,
such investors holding Certificates, directly or indirectly through a
pass-through entity, may have aggregate taxable income in excess of the
aggregate amount of cash received on such Certificates with respect to interest
at the related Pass-Through Rate on such Certificates. Subject to the discussion
of original issue discount below, a Certificateholder using the cash method of
accounting must take into account its pro rata share of income and deductions as
and when collected by or paid by the Trust. A Certificateholder using the
accrual method of accounting must take into account its pro rata share of income
and deductions as and when such amounts become due to or payable by the Trust.
The Trust Stripped Bond will be treated as a "stripped bond" within the
meaning of Section 1286 of the Code. The Trust Stripped Coupon will be treated
as a "stripped coupon" within the meaning of Section 1286 of the Code. As a
result, the Certificateholders will be deemed to hold interests in "stripped
bonds" and "stripped coupons." For purposes of Code Section 1271 through 1288,
Code Section 1286 treats a stripped bond or a stripped coupon as an obligation
issued on the date that such stripped interest is created.
Guidance by the IRS suggests that a servicing fee in excess of reasonable
servicing ("excess servicing") will be treated under the stripped bond rules. It
is expected that for federal income tax purposes, the Seller will be viewed as
having retained a portion of each interest payment on each Receivable sold to
the Trust. To the extent that the Receivables are characterized as "stripped
bonds," as described above, the income of the Trust allocable to
Certificateholders will not include the portion of the interest on the Excess
Receivable Amounts or the excess servicing treated as strips, and the deductions
allocable to Certificateholders will be limited to their respective shares of
reasonable servicing and other fees. In addition, a Certificateholder will not
be subject to the market discount and premium rules discussed below with respect
to the stripped Receivables, but instead will be subject to the original issue
discount rules contained in the Code. A Certificateholder will be required to
include any original issue discount in income as it accrues, regardless of its
regular method of accounting and whether cash payments are received, using a
method reflecting a constant rate of interest on the Receivables.
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STRIPPED BONDS AND STRIPPED COUPONS
Although the tax treatment of stripped bonds is not entirely clear, based
on guidance by the IRS, each purchaser of a Certificate will be treated as the
purchaser of a stripped bond which generally should be treated as a single debt
instrument issued on the day it is purchased for purposes of calculating any
original issue discount. Generally, under Treasury regulations (the "Section
1286 Treasury Regulations"), if the discount on a stripped bond certificate is
larger than a de minimis amount (as calculated for purposes of the original
issue discount rules of the Code) such stripped bond certificate will be
considered to have been issued with original issue discount. See "Accrual of
Original Issue Discount." Based on the preamble to the Section 1286 Treasury
Regulations, although the matter is not entirely clear, the interest income on
the Class A Certificates and the Class B Certificates (less the Trust Stripped
Coupon Amount) at the sum of the Class A Pass-Through Rate and the portion of
the Servicing Fee Rate that does not constitute excess servicing will be treated
as "qualified stated interest" within the meaning of the Section 1286 Treasury
Regulations and such income will be so treated in the Trustee's tax information
reporting.
ACCRUAL OF ORIGINAL ISSUE DISCOUNT
In determining whether a Certificateholder has purchased its interest in
the Receivables (or any Receivable) at a discount, a portion of the purchase
price for a Certificate may be allocated to the accrued interest on the
Receivables at the time of purchase as though such accrued interest were a
separate asset, thus, in each case, reducing the portion of the purchase price
allocable to the Certificateholder's undivided interest in the Receivables (the
"Purchase Price"). If the Certificates are considered to be issued with original
issue discount either because of a discount in the Purchase Price or under the
stripped bond rules, the rules described in this paragraph would apply.
Generally, the owner of a stripped bond issued or acquired with original issue
discount must include in gross income, as it accrues, the sum of the "daily
portions," as defined below, of the original issue discount on such Certificate
for each day on which it owns a Certificate, including the date of purchase but
excluding the date of disposition. In the case of an original Certificateholder,
the daily portions of original issue discount with respect to a Certificate
generally would be determined as follows. A calculation will be made of the
portion of original issue discount that accrues on the Certificate during each
successive monthly accrual period (or shorter period in respect of the date of
original issue or the final Distribution Date). This will be done, in the case
of each full monthly accrual period, by adding (i) the present value as of the
close of such accrual period of all remaining payments to be received on the
Certificate under the prepayment assumption used in respect of the Certificates
and (ii) any payments received during such accrual period, and subtracting from
that total the "adjusted issue price" of the Certificate at the beginning of
such accrual period. No representation is made that the Receivables will prepay
at any prepayment assumption. The "adjusted issue price" of a Certificate at the
beginning of the first accrual period is its issue price (as determined for
purposes of the original issue discount rules of the Code) and the "adjusted
issue price" of a Certificate at the beginning of a subsequent accrual period is
the "adjusted issued price" at the beginning of the immediately preceding
accrual period plus the amount of original issue discount allocable to that
accrual period and reduced by the amount of any payment made at the end of or
during that accrual period. The original issue discount accruing during such
accrual period will then be divided by the number of days in the period to
determine the daily portion of original issue discount for each day in the
period. With respect to an initial accrual period shorter than a full monthly
accrual period, the daily portions of original issue discount must be determined
according to any reasonable method set forth in the Treasury Regulations with
respect to original issue discount.
With respect to the Certificates, the method of calculating original issue
discount as described above will cause the accrual of original issue discount to
either increase or decrease (but never below zero) in any given accrual period
to reflect the fact that prepayments are occurring at a faster or slower rate
than the prepayment assumption used in respect of the Certificates.
Subsequent purchasers that purchase Certificates at more than a de minimis
discount should consult their tax advisors with respect to the proper method to
accrue such original issue discount.
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PREMIUM
The purchase of a Certificate at more than its adjusted principal amount
(except to the extent that such premium is allocable to accrued but unpaid
interest) will result in the creation of a premium with respect to the interest
in the underlying Receivables represented by such Certificates. In determining
whether a Certificateholder has purchased its interest in the Receivables (or
any Receivable) at a premium, a portion of the purchase price for a Certificate
may be allocated to the accrued interest on the Receivables at the time of
purchase as though such accrued interest were a separate asset, thus, in each
case, reducing the portion of the purchase price allocable to the
Certificateholder's undivided interest in the Receivables. A purchaser (who does
not hold the Certificate for sale to customers or in inventory) may elect under
Section 171 of the Code to amortize such premium. Under the Code, premium is
allocated among the interest payments on the Receivables to which it relates and
is considered as an offset against (and thus a reduction of) such interest
payments. With certain exceptions, such an election would apply to all debt
instruments held or subsequently acquired by the electing holder.
Holders of Certificates acquired at a premium are urged to consult with
their own tax advisors regarding the proper treatment of the Certificates for
federal income tax purposes.
SALE OF A CERTIFICATE
If a Certificate is sold, gain or loss will be recognized equal to the
difference between the amount realized on the sale (exclusive of amounts
attributable to accrued and unpaid interest, which will be treated as ordinary
income) allocable to each of the Receivables and the Certificateholder's
adjusted basis therein. A Certificateholder's adjusted basis will equal the
Certificateholder's cost for the Certificate, increased by any original issue
discount previously included in income, and decreased (but not below zero) by
any previously amortized premium and by the amount of payments (other than
qualified stated interest) previously received on the Receivables. Any gain or
loss will be capital gain or loss if the 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 underlying Receivables having a fixed maturity
date of more than one year from the date of origination. Net capital gain of an
individual is subject to varying tax rates depending upon the holding period of
the Certificates.
CLASS B CERTIFICATEHOLDERS
General. As stated above, the Class B Pass-Through Rate will be equal to
the sum of (i) the Class B Percentage of the Pool Balance multiplied by the
Class A Pass-Through Rate, (ii) a portion of the interest accrued on each
Receivable (i.e., the Trust Stripped Coupon) and (iii) the right to receive
certain payments from the Reserve Fund. Because the purchase price paid by each
Class B Certificateholder will be allocated between that Certificateholder's
interest in the Trust Stripped Bond and the Trust Stripped Coupon based on the
relative fair market values of each asset on the date such Class B Certificate
is purchased, the Trust Stripped Bond may be issued with original issue
discount.
Trust Stripped Bond. Except to the extent modified below, the income on the
Trust Stripped Bond represented by the Certificates will be reported in the same
manner as described above for holders of the Certificates. The interest income
on the Class B Certificates at the Class A Pass-Through Rate and the portion of
the Servicing Fee Rate that does not constitute excess servicing will be treated
as qualified stated interest.
Trust Stripped Coupon. The Trust Stripped Coupon will be treated as a debt
instrument with original issue discount equal to the excess of the total amount
payable with respect to such Trust Stripped Coupon (based on the prepayment
assumption used in pricing the Certificates) over the portion of the purchase
price allocated thereto. The sum of the daily portions of original issue
discount on the Trust Stripped Coupon for each day during a year in which the
Class B Certificateholder holds the Trust Stripped Coupon will be included based
upon the accrual method, regardless of the Certificateholder's regular method of
accounting, in the Class B Certificateholder's income.
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Effect of Subordination. If the Class B Certificateholders receive
distributions of less than their share of the Trust's receipts of principal or
interest (the "Shortfall Amount") because of the subordination of the Class B
Certificates, holders of Class B Certificates would probably be treated for
federal income tax purposes as if they had (i) received as distributions their
full share of such receipts, (ii) paid over to the Class A Certificateholders an
amount equal to such Shortfall Amount and (iii) retained the right to
reimbursement of such amounts to the extent such amounts are otherwise available
as a result of collections on the Receivables or amounts available in the
Reserve Fund.
Under this analysis, (a) Class B Certificateholders would be required to
accrue as current income any interest or original issue discount income of the
Trust that was a component of the Shortfall Amount, even though such amount was
in fact paid to the Class A Certificateholders, (b) a loss would only be allowed
to the Class B Certificateholders when their right to receive reimbursement of
such Shortfall Amount became worthless (i.e., when it becomes clear that amount
will not be available from any source to reimburse such loss) and (c)
reimbursement of such Shortfall Amount prior to such a claim of worthlessness
would not be taxable income to Class B Certificateholders because such amount
was previously included in income. Those results should not significantly affect
the inclusion of income for Class B Certificateholders on the accrual method of
accounting, but could accelerate inclusion of income to Class B
Certificateholders on the cash method of accounting by, in effect, placing them
on the accrual method. Moreover, the character and timing of loss deductions on
certificates such as the Class B Certificates is unclear. Class B
Certificateholders are strongly urged to consult their own tax advisors
regarding the appropriate timing, amount and character of any losses sustained
with respect to the Class B Certificates, including any loss resulting from the
failure to recover previously accrued interest or discount income.
FOREIGN CERTIFICATEHOLDERS
Interest attributable to Receivables which is received by a foreign
Certificateholder generally will not be subject to the normal 30% withholding
tax imposed with respect to such payments, provided that (i) the foreign
Certificateholder does not own, directly or indirectly, 10% or more of, and is
not a controlled foreign corporation related to, the Seller and (ii) such holder
fulfills certain certification requirements. Under such requirements, the holder
must certify, under penalty 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 United States, a corporation, partnership or other
entity created or organized in or under the laws of the United States or any
political subdivision thereof or an estate or trust the income of which is
includible in gross income for United States federal income tax purposes,
regardless of its source. Gain realized upon the sale of a Certificate by a
foreign Certificateholder generally will not be subject to United States
withholding tax. If, however, such interest or gain is effectively connected to
the conduct of a trade or business within the United States by such foreign
Certificateholder, such holder will be subject to United States federal income
tax thereon at regular rates. Potential investors who are not United States
persons should consult their own tax advisors regarding the specific tax
consequences to them of owning a Certificate.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Trustee will furnish or make available, within the prescribed period of
time for tax reporting purposes after the end of each calendar year, to each
Certificateholder or each person holding a Certificate on behalf of a
Certificateholder at any time during such year, such information as the Trustee
deems necessary or desirable to assist Certificateholders in preparing their
federal income tax returns. Payments made on the Certificates and proceeds from
the sale of the Certificates will not be subject to a "backup" withholding tax
of 31% unless, in general, a Certificateholder fails to comply with certain
reporting procedures and is not an exempt recipient under applicable provisions
of the Code.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE
CERTIFICATES, INCLUDING THE TAX CONSE-
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QUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS
OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
Section 406 of 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 on persons who are fiduciaries of plans
subject to ERISA and prohibits certain transactions between a plan and parties
in interest with respect to such plans. Under ERISA, 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 (subject to
certain exceptions not here relevant). 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 (an "IRA") (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 Trust could be deemed to hold plan assets unless one of the
exceptions under the Final Regulation is applicable to the Trust.
The DOL has granted an administrative exemption to Merrill Lynch, Pierce,
Fenner & Smith Incorporated (Prohibited Transaction Exemption 90-29; Exemption
Application No. D-8012, 55 Fed. Reg. 21459 (May 24, 1990), as amended) (the
"Exemption") from certain of the prohibited transaction rules of ERISA with
respect to the initial purchase, the holding and the subsequent resale by
Benefit Plans of certificates in pass-through trusts that consist of certain
receivables, loans and other obligations that meet the conditions and
requirements of the Exemption. The receivables covered by the Exemption include
recreational vehicle installment obligations such as the Receivables. The
Exemption will apply to the acquisition, holding and resale of Class A
Certificates by a Benefit Plan, provided that specific conditions (certain of
which are described below) are met. It is believed that the Exemption will apply
to the acquisition, holding and disposition in the secondary markets of Class A
Certificates by Benefit Plans and that all conditions of the Exemption other
than those within the control of the investors have been or will be met.
Among the conditions which must be satisfied for the Exemption to apply to
the acquisition by a Benefit Plan of the Class A Certificates are the following
(each of which has been or will be met in connection with the Class A
Certificates):
(i) The acquisition of the Class A Certificates by a Benefit Plan is
on terms (including the price for the Class A 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.
(ii) 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 Trust.
(iii) 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 any of Standard & Poor's,
Moody's, Duff & Phelps Inc. or Fitch Investors Service, Inc.
(iv) The Trustee must not be an affiliate of any other member of the
Restricted Group (as defined below).
(v) The sum of all payments made to the Underwriters in connection
with the distribution of the Class A Certificates represents not more than
reasonable compensation for underwriting the Class A Certificates. The sum
of all payments made to and retained by the Seller pursuant to the sale of
the Receivables to the Trust represents not more than the fair market value
of such Receivables. The sum of
46
<PAGE> 47
all payments made to and retained by the Servicer represents not more than
reasonable compensation for the Servicer's services under the Agreement and
reimbursement of the Servicer's reasonable expenses in connection
therewith.
In addition, it is a condition that 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.
The Exemption does not apply to Benefit Plans sponsored by the Seller, the
Underwriters, the Trustee, the Servicer, any Obligor with respect to the
Receivables included in the Trust constituting more than 5% of the aggregate
unamortized principal balance of the assets in the Trust or any affiliate of
such parties (the "Restricted Group"). As of the date hereof, no Obligor with
respect to the Receivables included in the Trust constitutes more than 5% of the
aggregate unamortized principal balance of the Trust (i.e., the initial
principal amount of the Certificates). Moreover, the Exemption provides relief
from certain self-dealing/conflict of interest prohibited transactions, only if,
among other requirements (i) a Benefit Plan's investment in the Class A
Certificates does not exceed 25% of all of the Class A Certificates outstanding
at the time of the acquisition and (ii) immediately after the acquisition, no
more than 25% of the assets of a Benefit Plan with respect to which a person 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.
The Exemption will not be available for Class B Certificates because the
Class B Certificates are subordinate interests. Accordingly, no Plan will be
eligible to purchase or otherwise hold Class B Certificates and no beneficial
interest therein may be sold or otherwise transferred to a Plan.
Due to the complexities of these rules and the penalties imposed upon
persons involved in prohibited transactions, it is important that the fiduciary
of an employee benefit plan considering the purchase of Class A Certificates
consult with its counsel regarding the applicability of the prohibited
transaction provisions of ERISA and the Code to such investment.
The Department of Labor issued Prohibited Transaction Class Exemption
("PTCE") 95-60 on July 12, 1995 in response to the United States Supreme Court
decision John Hancock Mutual Life Insurance Co. v. Harris Trust and Savings
Bank, 114 S. Ct. 517 (1993), in which the Supreme Court held that assets held in
an insurance company's general account may be deemed to be "plan assets" for
ERISA purposes under certain circumstances. Subject to certain conditions, PTCE
95-60 provides general relief from the prohibited transaction rules that would
otherwise be applicable to assets held in an insurance company's general
account. Prospective insurance company purchasers should consult with their
counsel to determine whether the decision in John Hancock, as modified by PTCE
95-60, affects their ability to make purchases of the Certificates.
47
<PAGE> 48
UNDERWRITING
Under the terms and subject to the conditions contained in an Underwriting
Agreement dated September 9, 1997 (the "Underwriting Agreement"), the
Underwriters named below (the "Underwriters"), for whom Merrill Lynch, Pierce,
Fenner & Smith Incorporated is acting as representative (the "Representative"),
have severally but not jointly agreed to purchase from the Seller the following
respective principal amounts of Class A Certificates and Class B Certificates:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF PRINCIPAL AMOUNT
CLASS A OF CLASS B
UNDERWRITERS CERTIFICATES CERTIFICATES
------------ ------------ ----------------
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.............................. $168,875,000 $ 6,125,000
Salomon Brothers Inc................................... 168,875,000 6,125,000
------------ -----------
Total.................................................. $337,750,000 $12,250,000
============ ===========
</TABLE>
The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all the Certificates if any are
purchased.
The Underwriters have advised the Seller that the Underwriters propose
initially to offer the Class A Certificates and Class B Certificates to the
public at the respective public offering prices set forth on the cover page of
this Prospectus, and to certain dealers at such prices less a concession not in
excess of .20% of the Class A Certificate denominations and .30% of the Class B
Certificate denominations. The Underwriters may allow and such dealers may
reallow a concession not in excess of .10% of the Class A Certificate
denominations and .20% of the Class B Certificate denominations. After the
initial public offering, the public offering prices and such concessions may be
changed.
The Underwriting Agreement provides that the Seller and Fleetwood Credit
will jointly and severally indemnify the Underwriters against certain
liabilities, including liabilities under applicable securities laws, or
contribute to payments the Underwriters may be required to make in respect
thereof.
Upon receipt of a request by an investor who has received an electronic
Prospectus from an Underwriter or a request by such investor's representative
within the period during which there is an obligation to deliver a Prospectus,
the Seller or the Underwriters will promptly deliver, or cause to be delivered,
without charge, a paper copy of the Prospectus.
Until the distribution of the Certificates is completed, rules of the
Commission may limit the ability of the Underwriters and certain selling group
members to bid for and purchase the Certificates. As an exemption to these
rules, the Underwriters are permitted to engage in certain transactions that
stabilize the price of the Certificates. Such transactions consist of bids or
purchases for the purpose of pegging, fixing or maintaining the price of the
Certificates.
Neither the Seller nor either Underwriter makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the prices of the Certificates. In addition, neither
the Seller nor either Underwriter makes any representation that the Underwriters
will engage in such transactions or that such transactions, once commenced, will
not be discontinued without notice.
48
<PAGE> 49
LEGAL OPINIONS
Certain legal matters relating to the Certificates will be passed upon for
the Seller by Timothy M. Hayes, Esq., Vice President and Assistant General
Counsel to Associates First Capital Corporation, the parent company of the
Servicer. Mr. Hayes owns shares of Class A Common Stock of Associates First
Capital Corporation, and has options to purchase additional shares of such Class
A Common Stock. Arter & Hadden, Washington, D.C. will act as special counsel to
the Seller with respect to certain matters relating to the Certificates,
including certain federal income tax matters relating to the Certificates. Brown
& Wood LLP, San Francisco, California will act as counsel for the Underwriters.
Brown & Wood LLP has from time to time represented Fleetwood Credit in certain
matters not related to the offering of the Certificates.
FINANCIAL INFORMATION
The Seller has determined that its financial statements are not material to
the offering made hereby.
49
<PAGE> 50
GLOSSARY OF TERMS
Set forth below is a list of certain of the more significant terms used in
this Prospectus and the pages on which the definitions of such terms may be
found herein.
<TABLE>
<CAPTION>
TERM PAGE
- ---- ----
<S> <C>
Advance..................................................... 24
Agreement................................................... 3
APR......................................................... 4
Available Funds............................................. 25
Benefit Plans............................................... 46
Cede........................................................ 4
Certificate Account......................................... 3
Certificate Owner........................................... 4, 18
Certificateholders.......................................... 5
Certificates................................................ 1, 3
Class A Certificate......................................... 1, 3
Class A Certificate Balance................................. 6, 26
Class A Certificate Owner................................... 4, 18
Class A Certificateholders.................................. 5
Class A Distributable Amount................................ 26
Class A Interest Carryover Shortfall........................ 27
Class A Interest Distributable Amount....................... 26
Class A Pass-Through Rate................................... 4
Class A Percentage.......................................... 3
Class A Pool Factor......................................... 16
Class A Principal Carryover Shortfall....................... 27
Class A Principal Distributable Amount...................... 26
Class B Certificate......................................... 1, 3
Class B Certificate Balance................................. 6, 26
Class B Certificate Owner................................... 4, 18
Class B Certificateholders.................................. 5
Class B Distributable Amount................................ 26
Class B Interest Distributable Amount....................... 26
Class B Interest Carryover Shortfall........................ 27
Class B Pass-Through Rate................................... 4
Class B Percentage.......................................... 3
Class B Principal Carryover Shortfall....................... 27
Class B Principal Distributable Amount...................... 26
Class B Pool Factor......................................... 16
Closing Date................................................ 4
Code........................................................ 41
Collected Interest.......................................... 26
Collected Principal......................................... 26
Collection Period........................................... 6
Commission.................................................. 2
Corporate Trust Office...................................... 35
Dealers..................................................... 4
Defaulted Receivable........................................ 24
Definitive Certificates..................................... 18
Determination Date.......................................... 25
Distribution Dates.......................................... 6
DOL......................................................... 46
DTC......................................................... 4
ERISA....................................................... 9
Event of Default............................................ 32
Excess Amounts.............................................. 7
Final Scheduled Distribution Date........................... 6
</TABLE>
50
<PAGE> 51
<TABLE>
<CAPTION>
TERM PAGE
- ---- ----
<S> <C>
Financed Vehicles........................................... 1, 3
Fleetwood Credit............................................ 1, 3
Fleetwood Enterprises....................................... 10
Funding Period.............................................. 5
Initial Cutoff Date......................................... 3
Initial Financed Vehicles................................... 1, 3
Initial Receivables......................................... 1, 3
IRS......................................................... 41
Mandatory Prepayment........................................ 6
Military Reservist Relief Act............................... 11
Monthly Principal Payment................................... 26
Moody's..................................................... 9
Negative Carry Amount....................................... 25
Non-Reimbursable Payment.................................... 24
Obligors.................................................... 10
Original Class A Certificate Balance........................ 6
Original Class B Certificate Balance........................ 6
Original Pool Balance....................................... 8, 11
Paid-Ahead Period........................................... 14
Paid-Ahead Receivable....................................... 14
Permitted Investments....................................... 23
Pool Balance................................................ 11
Pre-Funded Amount........................................... 5
Pre-Funding Account......................................... 1, 3
Rating Agency............................................... 9
Ratings Effect.............................................. 23
Realized Losses............................................. 26
Receivables................................................. 1, 3
Receivables Purchase Agreement.............................. 4
Record Date................................................. 5
Relief Act Obligor.......................................... 11
Repurchase Amount........................................... 21
Reserve Fund................................................ 7
Schedule of Receivables..................................... 20
Seller...................................................... 1, 3
Servicer.................................................... 1, 3
Servicer Letter of Credit................................... 22
Servicing Fee Rate.......................................... 8
Soldiers' and Sailors' Relief Act........................... 11
Specified Reserve Fund Balance.............................. 7
Standard & Poor's........................................... 9
Subsequent Cutoff Date...................................... 4
Subsequent Financed Vehicles................................ 1, 3
Subsequent Receivables...................................... 1, 3
Subsequent Transfer Date.................................... 5
Transfer Agreement.......................................... 4
Trust....................................................... 1
Trustee..................................................... 3
UCC......................................................... 18
voting interests............................................ 32
</TABLE>
51
<PAGE> 52
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NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS 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 ANY OF THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE
TO WHICH IT RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY,
TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................... 2
Reports to Certificateholders by the
Trustee............................... 2
Summary................................. 3
Formation of the Trust.................. 10
Property of the Trust................... 10
The Receivables......................... 11
Yield Considerations.................... 16
Pool Factors and Trading Information.... 16
Use of Proceeds......................... 17
The Seller.............................. 17
The Servicer............................ 17
The Certificates........................ 17
Certain Legal Aspects of the
Receivables........................... 35
Certain Federal Income Tax
Consequences.......................... 41
ERISA Considerations.................... 46
Underwriting............................ 48
Legal Opinions.......................... 49
Financial Information................... 49
Glossary of Terms....................... 50
</TABLE>
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$350,000,000
FLEETWOOD CREDIT
1997-B GRANTOR TRUST
$337,750,000
6.40% ASSET BACKED CERTIFICATES,
CLASS A
$12,250,000
6.65% ASSET BACKED CERTIFICATES,
CLASS B
FLEETWOOD CREDIT
RECEIVABLES CORP.,
SELLER
FLEETWOOD CREDIT CORP.,
SERVICER AND
A WHOLLY OWNED SUBSIDIARY OF
ASSOCIATES FIRST CAPITAL CORPORATION
---------------------------
PROSPECTUS
---------------------------
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
SEPTEMBER 9, 1997
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