PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JANUARY 13, 1994)
$1,000,000,000
SUPERIOR WHOLESALE INVENTORY FINANCING TRUST II
FLOATING RATE ASSET-BACKED TERM NOTES, SERIES 1995-A
WHOLESALE AUTO RECEIVABLES CORPORATION
SELLER
GENERAL MOTORS ACCEPTANCE CORPORATION
SERVICER
The Superior Wholesale Inventory Financing Trust II (the "Trust" or the
"Issuer") will be formed pursuant to a Trust Agreement, to be dated as of
August 22, 1995 (the "Initial Closing Date"), between the Seller and The
Chase Manhattan Bank (USA), as Owner Trustee, and will issue Floating Rate
Asset-Backed Term Notes, Series 1995-A (the "Offered Term Notes") in the
aggregate principal amount of $1,000,000,000 pursuant to an Indenture, to
be dated as of the Initial Closing Date, between the Issuer and The Bank of
New York, as Indenture Trustee. On the Initial Closing Date, the Trust will
also issue Certificates and Revolving Notes. The Trust may also from time
to time issue additional series of Term Notes and additional Certificates
and may increase the maximum balance of the Revolving Notes and issue
additional series of Revolving Notes. Only the Offered Term Notes are
offered hereby.
Interest on the Offered Term Notes will generally be payable on the
fifteenth day of each month, commencing September 15, 1995 (each, a
"Distribution Date"), and will accrue at a rate equal to 6.01281% per annum
from the Initial Closing Date to the first Distribution Date and at a
floating rate equal to LIBOR (as defined herein) plus 0.13% per annum
thereafter. Payments of interest on the Offered Term Notes will have equal
priority with interest payments on other series of Term Notes and the
Revolving Notes and will be senior to distributions of interest on the
Certificates. In the ordinary course, no principal payments on the Offered
Term Notes will be made until the Wind Down Period for the Trust. However,
under certain circumstances, the actual payment in full of the Offered Term
Notes could occur sooner. In general, on each Distribution Date with
respect to the Wind Down Period, the required amount of principal will be
paid on the Offered Term Notes prior to the payment of any principal on
Revolving Notes, if any, outstanding at such time. During the Wind Down
Period, payments of principal on the Offered Term Notes will have at least
equal priority with payments of principal on other series of Term Notes
that may be issued from time to time by the Trust, although some series of
Term Notes may have a Payment Period prior to the commencement of the Wind
Down Period. One or more series of Revolving Notes may also provide for
required payments of principal prior to the commencement of the Wind Down
Period. Principal payments on the Revolving Notes and all other series of
Term Notes will have equal priority (and will be made pro rata) with
principal payments on the Offered Term Notes during any Early Amortization
Period. No distributions with respect to Certificate Balance will be made
on any Certificates until all Notes are paid (or provided for) in full. The
Stated Final Payment Date for the Offered Term Notes will be the
Distribution Date in August 2000. The Targeted Final Payment Date for the
Offered Term Notes will initially be scheduled to occur on the Distribution
Date in October 1996, and will be automatically extended to the next
succeeding Distribution Date (but not beyond the Distribution Date in
October 1998) unless GMAC elects not to extend the then Scheduled Revolving
Period Termination Date as described herein.
(Continued on following page)
PROCEEDS OF THE ASSETS OF THE TRUST AND LIMITED AMOUNTS ON DEPOSIT IN THE
RESERVE FUND ARE THE SOLE SOURCES OF PAYMENTS ON THE OFFERED TERM NOTES.
THE OFFERED TERM NOTES DO NOT REPRESENT AN INTEREST IN OR OBLIGATION OF,
AND ARE NOT INSURED OR GUARANTEED BY, GENERAL MOTORS ACCEPTANCE
CORPORATION, WHOLESALE AUTO RECEIVABLES CORPORATION OR ANY OF THEIR
RESPECTIVE AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------------------------------------------------------
Price to Underwriting Proceeds to
Public Discount the Seller(1)
Per Offered
Term Note. . . . . 100.00% .225% 99.775%
TOTAL . . . . . . . $1,000,000,000 $2,250,000 $997,750,000
------------------------------------------------------------------------
(1) Before deducting expenses, estimated to be $500,000.
The Offered Term Notes are offered by the Underwriters when, as and if
issued and accepted by the Underwriters and subject to their right to
reject orders in whole or in part. It is expected that the Offered Term
Notes will be delivered in book-entry form on or about the Initial Closing
Date, through the facilities of DTC, against payment therefor in
immediately available funds.
SALOMON BROTHERS INC
BEAR, STEARNS & CO. INC.
CS FIRST BOSTON
MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES INC.
The date of this Prospectus Supplement is August 15, 1995.
(Continued from previous page)
The Trust's assets will include Receivables generated from time to time in
a portfolio of Accounts to finance Vehicles and Collections thereon, the
Basis Swaps described herein and certain other property.
There is currently no secondary market for the Offered Term Notes. The
Underwriters expect to make a market in the Offered Term Notes, but are not
obligated to do so. There can be no assurance that a secondary market for
the Offered Term Notes will develop or, if it does develop, that it will
continue. The Offered Term Notes will not be listed on any securities
exchange.
The Offered Term Notes initially will be represented by one or more term
notes registered in the name of Cede & Co., as nominee of The Depository
Trust Company ("DTC"). The interests of beneficial owners of the Offered
Term Notes will be represented by book entries on the records of DTC and
participating members thereof. Definitive Offered Term Notes will be
available only under limited circumstances.
_______________
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE OFFERED
TERM NOTES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
SUMMARY
The following summary is qualified in its entirety by reference to
the detailed information appearing elsewhere herein and in the Prospectus.
Certain capitalized terms used herein but not otherwise defined herein have
the meanings assigned such terms in the Prospectus.
Issuer. . . . . . . . . . . Superior Wholesale Inventory Financing
Trust II (the "Trust"), to be formed by
the Seller and the Owner Trustee pursuant
to the Trust Agreement
Seller. . . . . . . . . . . Wholesale Auto Receivables Corporation, a
wholly-owned subsidiary of General Motors
Acceptance Corporation.
Servicer. . . . . . . . . . General Motors Acceptance Corporation, a
wholly-owned subsidiary of General Motors
Corporation.
Indenture Trustee . . . . . The Bank of New York, as trustee under the
Indenture.
Owner Trustee . . . . . . . The Chase Manhattan Bank (USA), as trustee
under the Trust Agreement.
Capitalization of the
Trust. . . . . . . . . . . On August 22, 1995 (the "Initial Closing
Date"), the Trust will issue Floating Rate
Asset-Backed Term Notes, Series 1995-A
(the "Offered Term Notes"), Floating Rate
Asset-Backed Certificates, Class A, and
Floating Rate Asset-Backed Revolving
Notes, Series 1995-RN1. Only the Offered
Term Notes are being offered hereby.
Subsequent to this offering, the Trust may
issue from time to time additional series
of Term Notes and additional series of
Revolving Notes (together with the Offered
Term Notes and the Revolving Notes issued
on the Initial Closing Date, the "Notes")
and additional Certificates (together with
the Certificates issued on the Initial
Closing Date and the Notes, the
"Securities").
The Offered Term Notes. . . The Trust will issue the Offered Term
Notes in the aggregate original principal
amount of $1,000,000,000.
The Revolving Notes . . . . The Specified Maximum Revolver Balance
will initially be $1,000,000,000. Such
amount may be increased or decreased, and
additional series of Revolving Notes
(which may have different Revolver
Interest Rates, Targeted Final Payment
Dates, if any, and Stated Final Payment
Dates) may be issued from time to time as
described herein and in the Prospectus. No
additional borrowings may be made under
the Revolving Notes during the Wind Down
Period or any Early Amortization Period.
The Certificates. . . . . . The Trust will issue Certificates on the
Initial Closing Date with an aggregate
initial Certificate Balance of
$72,750,000. From time to time after the
Initial Closing Date, additional
Certificates may be issued.
S-3
The Trust Estate. . . . . . The property of the Trust (the "Trust
Estate") will include the Seller's right,
title and interest in, to and under (a)
the Eligible Receivables existing in the
Accounts included in the Pool of Accounts
on August 18, 1995 (the "Initial Cut-Off
Date") (or, in the case of an Additional
Account, the related Additional Cut-Off
Date) and the Eligible Receivables
generated under each such Account from
time to time thereafter so long as such
Account is included in the Pool of
Accounts, (b) Collections on such
Receivables and (c) the related Collateral
Security. The Trust Estate will also
include the Seller's rights and remedies
under the Pooling and Servicing Agreement
associated with the Receivables conveyed
to the Trust and the Basis Swaps described
below. Under certain circumstances,
Accounts may be added or removed from the
Pool of Accounts.
Terms of the Offered
Term Notes . . . . . . . . The principal terms of the Offered Term
Notes will be as described below:
A. Payment Dates. . . . . . Payments of interest on the Offered Term
Notes will be made on the fifteenth day of
each month or, if any such day is not a
Business Day, on the next succeeding
Business Day (each, a "Distribution
Date"), commencing September 15, 1995 (the
"Initial Distribution Date"). Payments
will be made to the holders of the Offered
Term Notes of record as of the day
immediately preceding such Distribution
Date (or, if Definitive Offered Term Notes
are issued, as of the last day of the
preceding month).
B. Interest . . . . . . . . Interest on the outstanding principal
balance of the Offered Term Notes will
accrue from and including the Initial
Closing Date or from and including the
most recent Distribution Date on which
interest has been paid to but excluding
the following Distribution Date. The
interest rate for the Offered Term Notes
will be equal to 6.01281% per annum for
the period from the Initial Closing Date
to but excluding the Initial Distribution
Date, and will be equal to LIBOR plus
0.13% per annum for each Distribution Date
thereafter. Interest on the Offered Term
Notes will be calculated on the basis of
actual days elapsed and a 360-day year.
Interest payments on the Offered Term
Notes will be derived from Available Trust
Interest and, to the extent necessary and
available therefor, Servicer Advances and
withdrawals from the Reserve Fund.
C. Principal. . . . . . . . In the ordinary course, no principal
payments will be made on the Offered Term
Notes until the commencement of the Wind
Down Period. Principal payments will be
made on a monthly basis during the Wind
Down Period to the extent of the
Controlled Deposit Amount for the Offered
Term Notes, with the entire outstanding
principal balance, if any, of the Offered
S-4
Term Notes payable on the Distribution
Date in August 2000 (the "Stated Final
Payment Date"). The Targeted Final Payment
Date will initially be the Distribution
Date in October 1996 and will be
automatically extended to the next
succeeding Distribution Date (but not
beyond the Distribution Date in October
1998) unless GMAC elects not to extend the
Scheduled Revolving Period Termination
Date as described below. During any Early
Amortization Period, principal payments
will be made on the Offered Term Notes,
any other series of Term Notes and the
Revolving Notes on a pro rata basis.
Basis Swap. . . . . . . . . On the Initial Closing Date, the Owner
Trustee, on behalf of the Trust, will
enter into an interest rate swap (the
"Basis Swap") with GMAC (in such capacity,
the "Basis Swap Counterparty"). In
accordance with the terms of the Basis
Swap, the Basis Swap Counterparty will be
obligated to pay to the Trust, on each
Distribution Date, an amount equal to the
sum of (a) interest accrued during the
related Collection Period on the daily
Term Notional Amount (as defined below) at
a rate equal to LIBOR with respect to such
Distribution Date plus 2.94% per annum
plus (b) an amount equal to interest
accrued during the related Collection
Period on the daily Revolving Notional
Amount (as defined below) at a rate equal
to the excess, if any, of LIBOR with
respect to such Distribution Date plus
1.50% per annum over the Prime Rate for
each such date. In exchange for each such
payment, the Trust will be obligated to
pay to the Basis Swap Counterparty, on
each Distribution Date, an amount equal to
interest accrued during the related
Collection Period on the daily Term
Notional Amount at a per annum rate equal
to the Prime Rate for each such date. The
"Term Notional Amount" for any day during
a Collection Period will equal the lesser
of (a) the sum of (i) the outstanding
principal balance of the Offered Term
Notes and (ii) the outstanding Certificate
Balance of the Certificates issued on the
Initial Closing Date (in each case, as of
the last day of such Collection Period,
including after giving effect to
unreimbursed Trust Charge-Offs as of the
close of business on the Distribution Date
during such Collection Period) and (b) the
Daily Trust Balance. The "Revolving
Notional Amount" for any day will equal
the excess, if any, of (a) the Daily Trust
Balance over (b) the Term Notional Amount.
Under the Basis Swap, on each Distribution
Date, the amount the Trust is obligated to
pay will be netted against the amount the
Basis Swap Counterparty is obligated to
pay such that only the net amount will be
due from the Trust or the Basis Swap
Counterparty, as the case may be.
S-5
The termination of the Basis Swap will be
an Early Amortization Event.
Credit and Liquidity Support . The Reserve Fund will be created for the
benefit of the Trust and the holders of
the Securities. The Reserve Fund Initial
Deposit will be made by the Seller in an
amount equal to $114,000,000. The Seller
may make additional limited deposits into
the Reserve Fund from time to time. The
Certificates will be subordinate to the
Notes (including the Offered Term Notes)
to the extent described herein. In
addition, the Servicer will make Servicer
Advances in certain circumstances.
Revolving Period. . . . . . The Revolving Period for the Trust will
begin on the Initial Cut-Off Date and will
end on the earlier of (a) the commencement
of an Early Amortization Period and (b)
the Scheduled Revolving Period Termination
Date. The Scheduled Revolving Period
Termination Date will initially be June
30, 1996 and will be automatically
extended to the last day of each
succeeding month unless GMAC elects not to
cause such extension, as described herein.
The Scheduled Revolving Period Termination
Date may not be extended beyond June 30,
1998. If terminated upon the commencement
of an Early Amortization Period, the
Revolving Period may recommence in certain
limited circumstances as described herein.
Wind Down Period. . . . . . Unless an Early Amortization Period has
commenced and is continuing, the Wind Down
Period for the Trust will begin on the day
immediately following the Scheduled
Revolving Period Termination Date and will
continue until the earlier of (a) the
commencement of an Early Amortization
Period and (b) the date on which all
outstanding Securities are paid in full.
On each Distribution Date for the Wind
Down Period, subject to the terms of any
series of Term Notes issued after the
Initial Closing Date, Available Trust
Principal will be applied to the Offered
Term Notes in an amount equal to the
Controlled Deposit Amount before
application to principal payments on the
Revolving Notes.
Early Amortization Period . An Early Amortization Period will begin
upon the occurrence of an Early
Amortization Event and, except as
described below, will end on the earlier
of (a) the date on which all outstanding
Securities are paid in full and (b) the
Trust Termination Date. When an Early
Amortization Period begins, the Revolving
Period and any then occurring Payment
Periods for any series of Term Notes or
the Wind Down Period, as the case may be,
will terminate, and Available Trust
Principal will thereafter be distributed
to the holders of the Offered Term Notes,
other Term Notes (if any) and the
S-6
Revolving Notes, pro rata on the basis of
their respective outstanding principal
balances, on each Distribution Date
beginning with the Distribution Date
following the Collection Period in which
such Early Amortization Period commenced.
If the Scheduled Revolving Period
Termination Date has not occurred, an
Early Amortization Period will terminate
and the Revolving Period may recommence in
certain limited circumstances as described
herein.
Tax Status. . . . . . . . . In the opinion of Kirkland & Ellis,
special tax counsel to the Seller, for
U.S. federal income tax purposes, the
Offered Term Notes (a) will constitute
indebtedness and (b) the Trust will not be
classified as an association or publicly
traded partnership taxable as a
corporation. Each Offered Term Noteholder,
by the acceptance of an Offered Term
Note, will agree to treat the Offered Term
Notes as indebtedness for federal, state
and local income and franchise tax
purposes. See "Certain Federal Income Tax
Consequences."
ERISA Considerations. . . . Subject to the considerations discussed
under "ERISA Considerations" in the
Prospectus, the Offered Term Notes are
eligible for purchase by employee benefit
plans.
Ratings . . . . . . . . . . As a condition of issuance, the Offered
Term Notes will be rated in the highest
rating category by at least one nationally
recognized rating agency. There is no
assurance that a rating will not be
lowered or withdrawn by a rating agency if
circumstances so warrant. In the event
that any rating initially assigned to the
Offered Term Notes is subsequently lowered
for any reason, no person or entity is
obligated to provide any additional
enhancement with respect to the Offered
Term Notes.
S-7
THE TRUST
GENERAL
The Trust is a business trust to be formed under the laws of the
State of Delaware pursuant to a Trust Agreement dated as of the Initial
Closing Date between the Seller and the Owner Trustee, acting thereunder
not in its individual capacity but solely as trustee for the Trust (as
amended and supplemented from time to time, the "Trust Agreement"). After
its formation, the Trust will not engage in any activity other than (a)
acquiring, holding and managing the Receivables and other assets as
contemplated herein and proceeds thereof, (b) issuing the Securities, (c)
making payments on the Securities and (d) engaging in other activities that
are necessary, suitable or convenient to accomplish any of the foregoing or
are incidental thereto or in connection therewith.
The Certificates represent the equity of the Trust. The Seller will
retain approximately 1.0% of the Certificate Balance to be issued on the
Initial Closing Date. The remainder of such Certificates will be sold to
third party investors that are expected to be unaffiliated with the Seller,
the Servicer or the Trust.
The Trust's principal offices will be located at 802 Delaware Avenue,
Wilmington, Delaware 19801.
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust as of
the Initial Closing Date, after giving effect to the sale of the Securities
contemplated hereby and assuming the Specified Maximum Revolver Balance was
borrowed on such date under the Revolving Notes:
Offered Term Notes. . . . . . . . . . . . . . $1,000,000,000
Revolving Notes . . . . . . . . . . . . . . . 1,000,000,000
Certificates. . . . . . . . . . . . . . . . . 72,750,000
--------------
TOTAL . . . . . . . . . . . . . . . . . . . $2,072,750,000
==============
The Specified Certificate Percentage will be 3.5%.
THE OWNER TRUSTEE
The Chase Manhattan Bank (USA), a Delaware banking corporation, is the
Owner Trustee under the Trust Agreement. Its principal offices are located
at 802 Delaware Avenue, Wilmington, Delaware 19801.
THE U.S. PORTFOLIO
GENERAL
As of June 30, 1995, there were approximately 8,700 active credit lines
with dealers in the U.S. Portfolio and the total U.S. Portfolio (which
includes both owned receivables and serviced receivables) consisted of
receivables with an aggregate principal balance of approximately $18.9
billion. GMAC is the primary source of floor plan financing for General
Motors-franchised dealers in the United States. In the second quarter of
1995, GMAC provided financing for approximately 71.2% of new factory sales
to General Motors dealers in the United States.
As of June 30, 1995, receivables with respect to New Vehicles
represented approximately 89% of the aggregate principal amount of all
receivables in the U.S. Portfolio, receivables with respect to Used
Vehicles represented approximately 6% of the aggregate principal amount of
all receivables in the U.S. Portfolio, and other receivables (generally
receivables with respect to heavy-duty trucks, off-highway vehicles and
marine units) represented approximately 5% of the aggregate principal
amount of all receivables in the U.S. Portfolio. As of June 30, 1995,
approximately 58% of the Used Vehicles in the U.S. Portfolio represented
Auction Vehicles. As of June 30, 1995, the average Account in the U.S.
Portfolio provided for credit lines for New Vehicles and Used Vehicles of
approximately 211 units and 38 units, respectively, and the average
aggregate principal balance of receivables thereunder was approximately
$2.3 million and $0.2 million, respectively.
S-8
For the first six months of 1995, the weighted average spread over Prime
Rate charged to dealers in the U.S. Portfolio was approximately 1%. This
spread over Prime Rate does not include the impact to many of these dealers
of a GMAC incentive program, which entitles them to a credit based on
interest charges. For such six month period, the average annual rate of
such credit ranged between 25 and 45 basis points. The amount of any such
credit is applied to a participating Dealer's interest charges on floor
plan and other loans, if any.
As of June 30, 1995, the aggregate principal amount financed with
respect to dealers assigned to "no credit" status was approximately $3.7
million or 0.02% of the aggregate principal amount financed in the U.S.
Portfolio.
LOSS EXPERIENCE
The following table sets forth GMAC's average principal balance of
receivables and loss experience for the U.S. Portfolio as a whole in each
of the periods shown. The U.S. Portfolio includes Fleet Accounts, Marine
Accounts, other accounts that are not Eligible Accounts as well as Accounts
that meet the eligibility criteria for inclusion in the Trust but were not
selected. Thus, the Accounts related to the Trust represent only a portion
of the entire U.S. Portfolio and, accordingly, actual loss experience with
respect to such Accounts may be different than that of the U.S. Portfolio
as a whole. There can be no assurance that the loss experience for
Receivables in the future will be similar to the historical experience set
forth below. The following historical experience reflects financial
assistance and incentives provided, from time to time, by General Motors
and GMAC to General Motors-franchised dealers, including those described in
the Prospectus under "The Dealer Floor Plan Financing Business --
Relationship of the Dealer Floor Plan Financing Business to General
Motors." If General Motors or GMAC reduced or was unable or elected not to
provide such assistance or incentives, the loss experience of the U.S.
Portfolio, including the Accounts, may be adversely affected. See "Special
Considerations -- Relationship of Each Trust to General Motors and GMAC" in
the Prospectus.
LOSS EXPERIENCE FOR THE U.S. PORTFOLIO
Six Months Year Ended December 31,
Ended ------------------------------
June 30, 1995 1994 1993 1992
------------- ---- ---- ----
(Dollars in millions)
Average Principal
Receivables
Balance (1). . . . . $17,611.5 $13,996.5 $13,710.5 $15,125.2
Net Losses
(Recoveries) (2) . . $3.5 $(1.2) $(3.6) $16.0
Net Losses (Recoveries)/
Liquidations (3) . . 0.007% (0.001)% (0.004)% 0.019%
Net Losses (Recoveries)/
Average Principal
Receivables Balance. 0.039%(4) (0.009)% (0.026)% 0.106%
__________
(1) "Average Principal Receivables Balance" is the average of the month-
end principal balances of receivables for each of the months during
such period.
(2) "Net Losses" in any period are gross losses less recoveries for such
period. Recoveries include recoveries from collateral security in
addition to vehicles.
(3) Liquidations include all principal reductions.
(4) Annualized rate.
S-9
AGING EXPERIENCE
The following table provides the age distribution of the receivables
for all dealers in the U.S. Portfolio as a percentage of total principal
balances of receivables outstanding at the date indicated. The aging is
based on the receivable's interest commencement date. In addition, if a
vehicle or the related receivable is reclassified for any reason (E.G. if
the dealer decides to designate a new vehicle for use as a demonstration
unit), the interest commencement date will generally be the date of such
reclassification. The actual age distribution with respect to the
Receivables related to any Trust may be different because such Receivables
will arise in Accounts representing only a portion of the entire U.S.
Portfolio. There can be no assurance that the aging experience for
receivables in the future will be similar to the historical experience set
forth below.
AGE DISTRIBUTION FOR THE U.S. PORTFOLIO
SIX MONTHS YEAR ENDED DECEMBER 31,
ENDED ---------------------------
DAYS JUNE 30, 1995 1994 1993 1992
---- ------------ ---- ---- ----
1-120 . . . . . . . . 76.1% 86.3% 91.2% 86.9%
121-180 . . . . . . . 11.0 7.1 3.3 4.4
181-270 . . . . . . . 9.5 3.9 3.1 4.6
Over 270. . . . . . . 3.4 2.7 2.4 4.1
MONTHLY PAYMENT RATES
The following table sets forth the highest and lowest monthly payment rates
for the U.S. Portfolio during any month in the periods shown and the
average of the monthly payment rates for all months during the periods
shown, in each case calculated as the percentage equivalent of a fraction,
the numerator of which is the aggregate of all collections of principal
during the period and the denominator of which is the aggregate ending
principal balance of receivables for such period. There can be no assurance
that the rate of principal collections for the Accounts in the Pool of
Accounts in the future will be similar to the historical experience set
forth below. The actual monthly payment rates with respect to such Accounts
may be different because, among other reasons, such Accounts will represent
only a portion of the entire U.S. Portfolio.
MONTHLY PAYMENT RATES FOR THE U.S. PORTFOLIO
Six Months Year Ended December 31,
Ended --------------------------
June 30, 1995 1994 1993 1992
------------- ---- ---- -----
Highest Month . . . . . 45.6% 62.0% 71.3% 57.6%
Lowest Month. . . . . . 37.3 41.4 42.8 38.6
Average for the Months
in the Period. . . . . 41.6 54.7 52.6 46.9
THE POOL OF ACCOUNTS
As of the close of business on July 17, 1995 (the "Pool Formation
Date"), there were 1,088 Accounts in the Pool of Accounts. As of the Pool
Formation Date, the average aggregate principal balance of Receivables in
such Accounts was approximately $2.3 million (approximately 88% of which
were Eligible Receivables) and the weighted average spread over the Prime
Rate charged to Dealers was approximately 1% for the prior calendar month.
This spread over Prime Rate does not include the impact to many of these
dealers of a GMAC incentive program, which entitles them to a credit based
on interest charges. As of the Pool Formation Date, the aggregate principal
balance of Receivables under such Accounts was $2,484,499,027.21 and, of
such amount, $2,189,758,558.36 were Eligible Receivables.
S-10
GEOGRAPHIC DISTRIBUTION
The following table provides, as of the Pool Formation Date, the
geographic distribution of the Accounts in the Pool of Accounts (based on
the address of the Dealer). As of the Pool Formation Date, no other state
accounts for more than 5% of the principal amount of Receivables
outstanding in such Accounts.
GEOGRAPHIC DISTRIBUTION OF POOL ACCOUNTS RELATED TO THE TRUST
Percentage Percentage of
of Total Number of Total Number
Receivables Receivables Dealer of Dealer
State Outstanding Outstanding Accounts Accounts
------------------------------------------------------------
(Thousands of
Dollars)
Texas . . . $246,899 9.9% 98 9.0%
Florida . . 200,191 8.1 56 5.1
Illinois. . 168,453 6.8 64 5.9
California. 162,447 6.5 55 5.1
New York. . 139,375 5.6 54 5.0
THE OFFERED TERM NOTES
GENERAL
The Offered Term Notes will be issued pursuant to the terms of an
Indenture to be dated as of the Initial Closing Date between the Trust and
the Indenture Trustee (as amended and supplemented from time to time, the
"Indenture"), a form of which has been filed as an exhibit to the
Registration Statement of which this Prospectus Supplement forms a part.
Additional series of Term Notes may be issued by the Trust subsequent to
the Initial Closing Date. A copy of the Indenture will be available from
the Seller upon request by holders of the Notes and Certificates and will
be filed with the Commission following the issuance of the Offered Term
Notes. The following summary describes certain terms of the Offered Term
Notes and the Indenture. The summary does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all of the
provisions of the Offered Term Notes, the Indenture and the Prospectus.
Where particular provisions or terms used in the Indenture are referred to,
the actual provisions are incorporated by reference as part of such
summary. The Bank of New York, a New York banking corporation, will be the
Indenture Trustee.
INTEREST
Interest on the outstanding principal balance of the Offered Term Notes
will accrue at the Interest Rate (as defined below) and will be payable on
each Distribution Date, commencing with the Initial Distribution Date. Each
Distribution Date will be a Payment Date (as defined in the Prospectus) for
the Offered Term Notes. The interest rate for the Offered Term Notes (the
"Interest Rate") will be 6.01281% per annum for the Initial Distribution Date,
and will be equal to LIBOR plus 0.13% per annum for each Distribution Date
thereafter. Interest on the Offered Term Notes will accrue from and including
the Initial Closing Date, or from and including the most recent Distribution
Date on which interest has been paid, to but excluding the current
Distribution Date, and will be calculated on the basis of a year of 360 days
for the actual number of days occurring in the period for which such interest
is payable. Interest on the Offered Term Notes accrued as of any Distribution
Date but not paid on such Distribution Date will be due on the next
Distribution Date.
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"LIBOR" means, with respect to each Distribution Date, the rate for deposits
in U.S. Dollars for a period of one month which appears on the Dow Jones
Telerate Service Page 3750 as of 11:00 a.m., London time, for the Term
Notional Amount, on the day that is two LIBOR Business Days prior to the
Distribution Date immediately preceding such Distribution Date and for the
Revolving Notional Amount, on the day that is two LIBOR Business Days prior
to the first day of the related Collection Period. A "LIBOR Business Day"
means any day other than a Saturday, Sunday or any other day on which banks
in London are required or authorized to be closed. If such rate does not
appear on such page (or such other page as may replace that page on that
service, or if such service is no longer offered, such other service for
displaying LIBOR or comparable rates as may be selected by the Indenture
Trustee after consultation with the Seller), the rate will be the Reference
Bank Rate. The "Reference Bank Rate" will be determined on the basis of the
rates at which deposits in U.S. Dollars are offered by the reference banks
(which shall be four major banks that are engaged in transactions in the
London interbank market, selected by the Indenture Trustee after consultation
with the Seller) as of 11:00 a.m., London time, on the day that is two LIBOR
Business Days prior to the immediately preceding Distribution Date to prime
banks in the London interbank market for a period of one month in amounts
approximately equal to the aggregate principal amount of the Notes and the
Certificate Balance of the Certificates then outstanding. The Indenture
Trustee will request the principal London office of each of the reference
banks to provide a quotation of its rate. If at least two such quotations are
provided, the rate will be the arithmetic mean of the quotations, rounded
upwards to the nearest one-sixteenth of one percent. If on any such date fewer
than two quotations are provided as requested, the rate will be the arithmetic
mean, rounded upwards to the nearest one-sixteenth of one percent, of the
rates quoted by one or more major banks in New York City, selected by the
Indenture Trustee after consultation with the Seller, as of 11:00 a.m., New
York City time, on such date to leading European banks for United States
dollar deposits for a period of one month in amounts approximately equal to
the aggregate principal amount of the Notes and the Certificate Balance of the
Certificates then outstanding. If no such quotation can be obtained, the rate
will be LIBOR for the prior Distribution Date.
Payments of interest on the Offered Term Notes will have equal priority
with payments of interest on other series of Term Notes and on the Revolving
Notes and will be senior in right of payment to distributions of interest on
the Certificates.
PRINCIPAL
REVOLVING PERIOD. During the Revolving Period, no payments of principal
on the Offered Term Notes and no distributions of Certificate Balance will be
made. During the Revolving Period, the Trust will make payments of principal
on, and additional borrowings (up to the Maximum Revolver Balance) under, the
Revolving Notes on a daily basis such that on each date the Daily Trust
Invested Amount is equal to the Daily Trust Balance (after giving effect to
any changes in the Cash Collateral Amount, all purchases of Receivables by the
Trust and all issuances of Securities on such date). The Trust may issue from
time to time, subject to the conditions described in the Prospectus under "The
Transfer and Servicing Agreements -- Additional Issuances; Changes in
Specified Maximum Revolver Balance," additional series of Term Notes,
including Term Notes that have Payment Periods prior to the commencement of
the Wind Down Period. Principal payments may also be required on one or more
series of Revolving Notes during the Revolving Period. The Scheduled Revolving
Period Termination Date will initially be June 30, 1996 and will be
automatically extended to the last day of each succeeding month (but not
beyond June 30, 1998) unless GMAC, prior to the then Scheduled Revolving
Period Termination Date, elects not to cause such extension by providing
written notice to such effect to the Seller, the Servicer, the Owner Trustee
(who shall be obligated to provide notice to the Certificateholders), the
Indenture Trustee (who shall be obligated to provide notice to the
Noteholders) and the Rating Agencies. Unless such notice is given, each such
extension becomes effective as of the business day prior to the then Scheduled
Revolving Period Termination Date. In the event GMAC elects not to extend the
then Scheduled Revolving Period Termination Date (and assuming no Early
Amortization Event has occurred), the Revolving Period will terminate upon the
occurrence of such Scheduled Revolving Period Termination Date and the Wind
Down Period will commence on the immediately following day.
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WIND DOWN PERIOD. During the Wind Down Period, subject to the terms of
any series of Term Notes issued after the Initial Closing Date, Available
Trust Principal will be applied on each related Distribution Date in the
priority set forth below. The first Distribution Date related to the Wind Down
Period is initially scheduled to be the Distribution Date in August 1996. Such
first scheduled Distribution Date will be extended to the next succeeding
Distribution Date (but not beyond the Distribution Date in August 1998) as the
Scheduled Revolving Period Termination Date is extended as described above.
(a) first, to the Offered Term Notes (i) on each Distribution Date prior to
the Targeted Final Payment Date for the Offered Term Notes, to the
extent of the Controlled Deposit Amount therefor and (ii) on and after
such Targeted Final Payment Date, until the Offered Term Notes are paid
in full;
(b) second, to the Revolving Notes until the Revolving Notes are paid in
full;
(c) third, to the Offered Term Notes until the Offered Term Notes are paid
in full; and
(d) fourth, to the Certificates until the Certificates are paid in full.
The terms of any series of Term Notes issued after the Initial Closing Date
that do not have a Payment Period may provide that principal on such Term
Notes will be payable during the Wind Down Period (a) to the extent of the
Controlled Deposit Amount for such Term Notes, together with the Controlled
Deposit Amount for the Offered Term Notes or (b) after payment of the
Controlled Deposit Amount on the Offered Term Notes and, subject to the
applicable Controlled Deposit Amount, if any, for such Term Notes, before,
together or after payment of principal on the Revolving Notes.
If the Offered Term Notes, any other series of Term Notes or any
Revolving Notes are not paid in full on or prior to the applicable Stated
Final Payment Date, an Early Amortization Period will commence. The Stated
Final Payment Date for the Offered Term Notes is the Distribution Date in
August 2000. The Targeted Final Payment Date for the Offered Term Notes means,
at any time, the Distribution Date related to the third month following the
then Scheduled Revolving Period Termination Date. The Targeted Final Payment
Date for the Offered Notes will initially be the Distribution Date in October
1996 and will be automatically extended to the next succeeding Distribution
Date (but not beyond the Distribution Date in October 1998) as the Scheduled
Revolving Period Termination Date is extended as described above.
EARLY AMORTIZATION PERIOD. During an Early Amortization Period,
Available Trust Principal will be applied on each related Distribution Date
to payments of principal on the Offered Term Notes, Term Notes of other series
and the Revolving Notes, pro rata on the basis of their respective outstanding
principal balances, on each Distribution Date beginning with the Distribution
Date following the Collection Period in which such Early Amortization Period
commenced. If an Early Amortization Event occurs during the Wind Down Period
or a Payment Period, any amounts on deposit in the Note Distribution Account
at the commencement of the related Early Amortization Period for payments on
any series of Term Notes that do not provide for monthly payments of principal
during the Wind Down Period or, if applicable, such Payment Period, will be
paid as principal on such Term Notes on the first Distribution Date for such
Early Amortization Period.
During the Wind Down Period or an Early Amortization Period, no
additional borrowings may be made under the Revolving Notes and no additional
Receivables will be purchased by the Trust.
CHARGE-OFFS. The outstanding principal balance of each series of Notes
(including the Offered Term Notes) will be reduced to the extent unreimbursed
Trust Charge-Offs exceed the Certificate Balance (calculated without reduction
for Trust Charge-Offs). Such excess will be applied to the Notes pro rata on
the basis of the principal balances of the Notes then outstanding (calculated
without reduction for Trust Charge-Offs) and will reduce the amount of
principal and interest payable on each series of Notes. See "The Transfer and
Servicing Agreements -- Defaults and Charge-Offs."
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CERTAIN DEFINED TERMS
"Available Trust Principal" means, for any Distribution Date, the sum
of (a) Trust Principal Collections for each day during the related
Collection Period, (b) the aggregate amount, if any, of Additional Trust
Principal for each day during the related Collection Period and for such
Distribution Date (provided that, with respect to the first Distribution
Date for any Early Amortization Period, no amount will be included pursuant
to clause (a) or (b) above for any day in such Collection Period that
occurred during the Revolving Period), (c) for the first Distribution Date
not related to the Revolving Period, the Cash Collateral Amount on the last
day of the Revolving Period, (d) amounts on deposit in the Reserve Fund to
the extent such amounts are required to be distributed as principal on such
Distribution Date as described below under "The Transfer and Servicing
Agreements -- Reserve Fund" and (e) for each Distribution Date related to
the Wind Down Period or an Early Amortization Period, if the amount on
deposit in the Reserve Fund on such Distribution Date exceeds zero, the
Supplemental Principal Allocation for such current Distribution Date.
"Trust Principal Collections" means, for any date, the amount of
Principal Collections on Receivables held by the Trust.
"Supplemental Principal Allocation" means, for any Distribution Date
related to the Wind Down Period or an Early Amortization Period, an amount
(not less than zero) equal to the lesser of (a) the excess, if any, of (i)
the product of (A) the percentage equivalent of a fraction (which will
never exceed 100%), the numerator of which is the Daily Trust Balance and
the denominator of which is the principal balance of all Receivables
(including Receivables owned by GMAC) in the Accounts included in the Pool
of Accounts, in each case, as of the termination of the Revolving Period,
and (B) the aggregate amount of Principal Collections on all Receivables
(including Receivables held by GMAC) in the Accounts in the Pool of
Accounts for each day during the related Collection Period over (ii) the
aggregate amount of Trust Principal Collections for each day during the
related Collection Period (provided that no amount will be included
pursuant to clause (i)(B) or (ii) for any day in such Collection Period
that occurred during the Revolving Period) and (b) an amount equal to (i)
the Daily Trust Balance as of the termination of the Revolving Period plus
(ii) the Cash Collateral Amount on the last day of the Revolving Period
minus (iii) the Available Trust Principal for each Distribution Date from
and after the final Distribution Date for the Revolving Period through but
excluding such current Distribution Date minus (iv) the amount added to
unreimbursed Trust Charge-Offs on each Distribution Date from and after the
final Distribution Date for the Revolving Period through and including such
current Distribution Date minus (v) Available Trust Principal for such
current Distribution Date (assuming the Supplemental Principal Allocation
for such Distribution Date was zero).
"Additional Trust Principal" means, for any date, the sum of (a) the
principal portion of all Warranty Payments and Administrative Purchase
Payments and (b) for any Distribution Date, the amount, if any, of
Available Trust Interest and funds in the Reserve Fund applied to cover the
Trust Defaulted Amount or to cover unreimbursed Trust Charge-Offs on such
Distribution Date.
"Controlled Deposit Amount" means, for any Distribution Date (a) for
the Offered Term Notes, the excess, if any, of (i) the product of (A) one-
third of the aggregate outstanding principal balance of the Offered Term
Notes as of the last day of the Revolving Period and (B) the number of
Distribution Dates that have occurred with respect to the Wind Down Period
through and including such Distribution Date over (ii) the aggregate amount
paid as principal on the Offered Term Notes during the Wind Down Period
prior to such Distribution Date, provided that the Controlled Deposit
Amount for the Offered Term Notes for any Distribution Date (together with
the Controlled Deposit Amount for any other series of Term Notes for such
Distribution Date to the extent provided by the terms of such Term Notes)
shall not exceed the Available Trust Principal for such Distribution Date,
and (b) for any other series of Term Notes, the amount provided by the
terms of such Term Notes; provided that the Controlled Deposit Amount for
any series of Term Notes will not exceed the then outstanding principal
balance of such Notes.
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PRIORITY AMONG TERM NOTES
Payments of interest on the Offered Term Notes will have equal
priority to payments of interest on all other Term Notes and the Revolving
Notes. Payments of principal on the Offered Term Notes will have at least
equal priority with payments of principal on other series of Term Notes
that may be issued from time to time by the Trust, although some series of
Term Notes may have a Payment Period prior to the commencement of the Wind
Down Period. A series of Term Notes may provide for payments of principal
thereon during the Wind Down Period (to the extent of the applicable
Controlled Deposit Amount) with equal priority to the payment of the
Controlled Deposit Amount on the Offered Term Notes. Principal payments on
the Offered Term Notes will be made on a pro rata basis with principal
payments on the Revolving Notes and other series of Term Notes during any
Early Amortization Period.
THE REVOLVING NOTES
GENERAL
The Revolving Notes will be issued pursuant to the Indenture. The
following summary describes certain terms of the Revolving Notes. The
summary does not purport to be complete and is subject, and qualified in
its entirety by reference to, all of the provisions of the Revolving Notes,
the Indenture and the Prospectus. Where particular provisions or terms used
in the Revolving Notes or the Indenture are referred to, the actual
provisions are incorporated by reference as part of such summary.
On the Initial Closing Date, the Trust will issue the Floating Rate
Asset-Backed Revolving Notes, Series 1995-RN1. References herein to such
Revolving Notes include all extensions and renewals thereof. It is expected
that the Revolving Notes will be privately placed with an accredited
investor on the Initial Closing Date.
INTEREST
Interest on the outstanding principal balance of the Revolving Notes
will accrue at the applicable Revolver Interest Rate and (unless otherwise
provided with respect to any series of Revolving Notes issued after the
Initial Closing Date) will be payable on each Distribution Date, commencing
with the first Distribution Date after the issuance of such Revolving
Notes. On each Distribution Date, interest will be calculated based on the
average daily Net Revolver Balance during the related Collection Period.
Interest on the Revolving Notes accrued as of any Distribution Date but not
paid on such Distribution Date will be due on the next Distribution Date.
The Revolver Interest Rate for the Revolving Notes issued on the
Initial Closing Date will be equal to, with respect to any Distribution
Date, the product of (i) a fraction, the numerator of which is the number
of days elapsed from and including the prior Distribution Date (or, in the
case of the Initial Distribution Date, from and including the Initial
Closing Date) to but excluding such Distribution Date and the denominator
of which is 360 and (ii) either (x) LIBOR plus 0.28% or, (y) in the case of
the Initial Distribution Date, 6.16281%.
Payments of interest on the Revolving Notes will have equal priority
to payments of interest on the Term Notes (including the Offered Term
Notes) and will be senior in right of payment to distributions of interest
on the Certificates.
PRINCIPAL
Aggregate borrowings may be made under the Revolving Notes during the
Revolving Period up to the Specified Maximum Revolver Balance. The
Specified Maximum Revolver Balance will initially be $1,000,000,000 and may
be increased or decreased from time to time after the Initial Closing Date
as described in the Prospectus under "The Transfer and Servicing Agreements
-- Additional Issuances; Changes in Specified Maximum Revolver Balance."
Additional series of Revolving Notes may be issued (with different Revolver
Interest Rates, Targeted Final Payment Dates, if any, and Stated Final
Payment Dates) subject to the Specified Maximum Revolver Balance. In
S-15
connection with the issuance of any such additional series, the Revolving
Notes outstanding on such date may be paid in full. No additional
borrowings may be made under the Revolving Notes during the Wind Down
Period or any Early Amortization Period.
Payments of principal on the Revolving Notes may be made on a daily
basis during the Revolving Period, subject to any applicable limitations
during the Payment Period for any additional series of Term Notes. During
the Revolving Period, payments of principal on the Revolving Notes will be
required to the extent set forth in the terms of such Revolving Notes. The
Targeted Final Payment Date for the Revolving Notes to be issued on the
Initial Closing Date will be the Distribution Date in October 1996 and the
Stated Final Payment Date for such Revolving Notes will be the Distribution
Date in August 2000. Such Revolving Notes may be extended or renewed (and
the Targeted Final Payment Date adjusted accordingly). Principal on such
Revolving Notes will be due (to the extent of funds available for such
purpose) in three instalments on the three consecutive Payment Dates ending
on the then-applicable Targeted Final Payment Date (which may be prior to
the Scheduled Revolving Period Termination Date) unless such Targeted Final
Payment Date has been extended to a date after the commencement of the Wind
Down Period. Such instalments will be based on the outstanding balance as
of the last day of the Collection Period immediately preceding the
Collection Period related to the first such Payment Date.
During the Wind Down Period, subject to the terms of any Term Notes
issued after the Initial Closing Date, on each Distribution Date, principal
payments will be made on the Revolving Notes, if any, then outstanding to
the extent of Available Trust Principal remaining after the required
principal payment on the Offered Term Notes (which, prior to the Targeted
Final Payment Date for the Offered Term Notes, will be equal to the
Controlled Deposit Amount therefor). Following the payment in full of the
Offered Term Notes, subject to the terms of any Term Notes issued after the
Initial Closing Date, all Available Trust Principal will be applied on each
Distribution Date for the Wind Down Period to principal payments on the
Revolving Notes. Any series of Term Notes issued after the Initial Closing
Date that does not have a Payment Period may provide for principal payments
during the Wind Down Period to be made prior to, together with or after
principal payments on the Revolving Notes. Such payments may be limited to
the applicable Controlled Deposit Amount, if any.
During an Early Amortization Period, principal payments on all
Revolving Notes and all Term Notes will be made on a pro rata basis
according to their respective outstanding principal balances. An Early
Amortization Period will commence if, among other things, any Notes are not
paid in full on the applicable Stated Final Payment Date.
THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of a Trust
Agreement, a form of which has been filed as an exhibit to the Registration
Statement of which this Prospectus Supplement forms a part. A copy of the
Trust Agreement will be filed with the Commission following the issuance of
the Notes and Certificates on the Initial Closing Date. The following
summary describes certain terms of the Certificates and the Trust
Agreement. The summary does not purport to be complete and is subject to,
and qualified in its entirety by reference to, all of the provisions of the
Certificates, the Trust Agreement and the Prospectus. Where particular
provisions or terms used in the Certificates and the Trust Agreement are
referred to, the actual provisions are incorporated by reference as part of
such summary.
INTEREST
Interest with respect to the Certificates will accrue at the
applicable Certificate Rate and will be payable on each Distribution Date,
commencing with the first Distribution Date after the issuance of such
Certificates. Interest on the Certificates accrued as of any Distribution
Date but not distributed on such Distribution Date will be due on the next
Distribution Date.
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The Certificate Rate for the Certificates issued on the Initial
Closing Date will be equal to, with respect to any Distribution Date, the
product of (i) a fraction, the numerator of which is the number of days
elapsed from and including the prior Distribution Date (or, in the case of
the Initial Distribution Date, from and including the Initial Closing Date)
to but excluding such Distribution Date and the denominator of which is 360
and (ii) either (x) LIBOR plus 0.30% or, (y) in the case of the Initial
Distribution Date, 6.18281%.
Payments of interest on the Notes will be senior to distributions of
interest on the Certificates as described below under "The Transfer and
Servicing Agreements -- Application of Collections -- Interest
Collections."
CERTIFICATE BALANCE
"Certificate Balance" means, as of any Distribution Date, (a)
$72,750,000, PLUS (b) the principal amount of Certificates issued after the
Initial Closing Date, minus (c) all distributions in respect of Certificate
Balance actually made on or prior to such date, minus (d) unreimbursed
Trust Charge-Offs on such Distribution Date (determined after giving effect
to the application of Available Trust Interest and other amounts available
to reimburse Trust Charge-Offs on such date as described below), up to the
Certificate Balance on such Distribution Date calculated without regard to
this clause (d). Any unreimbursed Trust Charge-Offs applied to reduce the
Certificate Balance will be applied against each class of Certificates on
such Distribution Date, pro rata on the basis of the Certificate Balance of
the Certificates of such class outstanding on the preceding Distribution
Date (calculated without reduction for any unreimbursed Trust Charge-Offs).
No distributions will be made with respect to Certificate Balance on
any Certificates until all Term Notes and all Revolving Notes (including
Notes issued after the Initial Closing Date) are paid (or provided for) in
full. The Stated Final Payment Date for the Certificates will be on the
Distribution Date in August 2000. If the Certificates have not been paid in
full on or prior to such date, an Early Amortization Period will commence.
ADDITIONAL ISSUANCES
From time to time after the Initial Closing Date, subject to the
satisfaction of certain conditions, the Trust may issue additional
Certificates. See "The Transfer and Servicing Agreements -- Additional
Issuances; Changes in Specified Maximum Revolver Balance" in the
Prospectus. The Certificate Rate for additional classes of Certificates
issued after the Initial Closing Date may be different than the Certificate
Rate for the Certificates issued on the Initial Closing Date.
THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of the Transfer and
Servicing Agreements. Forms of the Transfer and Servicing Agreements have
been filed as exhibits to the Registration Statement of which this
Prospectus Supplement is a part. A copy of the Transfer and Servicing
Agreements will be available from the Seller upon request to the holders of
Securities. The Transfer and Servicing Agreements will be filed with the
Commission following the Initial Closing Date. The summary does not purport
to be complete and is subject to, and qualified in its entirety by
reference to, all of the provisions of the Transfer and Servicing
Agreements and the Prospectus. Where particular provisions or terms used in
the Transfer and Servicing Agreements are referred to, the actual
provisions are incorporated by reference as part of such summary.
APPLICATION OF COLLECTIONS
INTEREST COLLECTIONS. For each Collection Period, Trust Interest
Collections together with the other amounts comprising Available Trust
Interest for the related Distribution Date will be applied in the following
order of priority:
(a) an amount equal to the Monthly Servicing Fee for such Distribution
Date will be paid to the Servicer;
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(b) (i) an amount equal to the Aggregate Noteholders' Interest for
such Distribution Date will be transferred to the Note Distribution
Account, (ii) an amount equal to the Revolver Interest for such
Distribution Date will be transferred to the Revolver Distribution
Account and (iii) the amount to be paid (or set aside for payment)
under any Specified Support Arrangement, if any, for such Distribution
Date will be paid in accordance with the terms of any such
arrangements;
(c) an amount equal to the Aggregate Certificateholders' Interest for
such Distribution Date will be transferred to the Certificate
Distribution Account;
(d) an amount equal to any Servicer Advances not previously reimbursed
will be paid to the Servicer (except as otherwise provided in the
Transfer and Servicing Agreements);
(e) an amount equal to any Trust Defaulted Amount will be treated as
Additional Trust Principal on such Distribution Date;
(f) an amount equal to the aggregate amount of unreimbursed Trust
Charge-Offs will be treated as Additional Trust Principal on such
Distribution Date; and
(g) an amount equal to any Reserve Fund Deposit Amount for such
Distribution Date will be deposited into the Reserve Fund.
Available Trust Interest for a Distribution Date not applied as
described above will generally be allocated and paid to the Seller as
compensation for making the initial deposit and any additional deposits
into the Reserve Fund.
To the extent Available Trust Interest for a Distribution Date is
not sufficient to make all of the applications described in clauses (a)
through (d) above, there will be a Deficiency Amount. If there is a
Deficiency Amount, the Servicer will advance, to the extent described
below, such amount to the Trust. The Servicer will be obligated to make
an advance (a "Servicer Advance") only to the extent that the Servicer,
in its sole discretion, expects to recover such advance from subsequent
collections or recoveries allocated to the Trust as described above. To
the extent that the Available Trust Interest for a Distribution Date
plus the Servicer Advance, if any, made for such Distribution Date are
insufficient to make the full amount of the applications described in
clauses (a) through (e) above, there will be an Unsatisfied Deficiency
Amount. Amounts on deposit in the Reserve Fund will be applied to reduce
such Unsatisfied Deficiency Amount in the priorities set forth above. To
the extent that, after application of the funds in the Reserve Fund, the
full amount of the Trust Defaulted Amount has not been treated as
Additional Trust Principal pursuant to clause (e) above, the amount of
such deficiency will be added to unreimbursed Trust Charge-Offs. See
"Defaults and Charge-Offs" below.
CERTAIN DEFINED TERMS
"Trust Interest Collections" means, for any Distribution Date, an
amount equal to the sum of (i) the product of (a) the Trust Percentage
and (b) Interest Collections for the related Collection Period and (ii)
recoveries during the related Collection Period on Eligible Receivables
that have previously become Defaulted Receivables. If, on any
Distribution Date, the Servicer does not make a Servicer Advance in the
amount of the full Deficiency Amount, Trust Interest Collections for
such Distribution Date will be adjusted to give effect to the actual
percentage of Eligible Receivables in those Accounts in the Pool of
Accounts in which the full amount of interest due for the related
Collection Period was not collected. Such adjustment will not effect the
amount of interest allocated to the Trust with respect to the other
Accounts in the Pool of Accounts.
S-18
"Trust Percentage" means, for any Distribution Date, the
percentage equivalent of a fraction (which will never exceed 100%), the
numerator of which is the average Daily Trust Balance during the related
Collection Period and the denominator of which is the average daily
aggregate principal balance of all Receivables (including Receivables
owned by GMAC) in the Accounts included in the Pool of Accounts during
the related Collection Period.
"Available Trust Interest" means, for any Distribution Date, the
sum of Trust Interest Collections, Investment Proceeds and amounts paid
to the Trust under any Specified Support Arrangements. If the Servicer
exercises its option to purchase the assets of the Trust as described
below under "Optional Purchase by the Servicer," a portion of the price
therefor will be included in Available Trust Interest as described
below.
"Aggregate Noteholders' Interest" means, for any Distribution
Date, the sum of (a) the Noteholders' Interest for all series of Term
Notes and (b) the Noteholders' Interest Carryover Shortfall for the
preceding Distribution Date.
"Noteholders' Interest" means, for any Distribution Date, (a) with
respect to the Offered Term Notes, the product of (i) the outstanding
principal balance of the Offered Term Notes on the last day of the
related Collection Period (or, in the case of the Initial Distribution
Date, the outstanding principal balance on the Initial Closing Date),
(ii) the Interest Rate for such Distribution Date and (iii) a fraction,
the numerator of which is the number of days elapsed from and including
the prior Distribution Date (or, in the case of the Initial Distribution
Date, from and including the Initial Closing Date) to but excluding such
Distribution Date and the denominator of which is 360 and (b) with
respect to any other series of Term Notes, the amount required to be
paid as, or set aside for payment of, interest on such series of Term
Notes on such Distribution Date pursuant to its terms (not including any
interest payable as a result of shortfalls from prior Distribution
Dates).
"Noteholders' Interest Carryover Shortfall" means, for any
Distribution Date, the excess of (a) the Aggregate Noteholders' Interest
for such Distribution Date over (b) the amount that was actually
deposited in the Note Distribution Account on such Distribution Date in
respect of Aggregate Noteholders' Interest.
"Aggregate Revolver Interest" means, for any Distribution Date,
the sum of (a) the Revolver Interest for all series of Revolving Notes
and (b) the Revolver Interest Carryover Shortfall for the preceding
Distribution Date.
"Revolver Interest" means, for any Distribution Date, for any
series of Revolving Notes, the product of (a) the average daily Net
Revolver Balance during the related Collection Period and (b) the
Revolver Interest Rate for such Distribution Date.
"Revolver Interest Carryover Shortfall" means, for any
Distribution Date, the excess of (a) the Aggregate Revolver Interest for
such Distribution Date over (b) the amount that was actually deposited
in the Revolver Distribution Account on such Distribution Date in
respect of Aggregate Revolver Interest.
"Specified Support Arrangement" means any letter of credit,
security bond, cash collateral account, spread account, guaranteed rate
agreement, maturity or liquidity facility, tax protection agreement,
interest rate swap agreement, interest rate cap agreement, other
derivative product or other arrangement to provide liquidity or credit
support for the benefit of holders of one or more series or classes of
Securities (other than the Reserve Fund), whether or not such
arrangement is an asset of the Trust, designated as such. As of the
Initial Closing Date, the Specified Support Arrangements will consist of
the Basis Swaps. Specified Support Arrangements for the benefit of any
series or classes of Securities, including those established in
connection with the issuance of any Securities after the date hereof,
may not inure to the benefit of other Securities (including the Offered
Term Notes) issued by the Trust.
S-19
"Aggregate Certificateholders' Interest" means, for any
Distribution Date, an amount equal to the sum of (a) the
Certificateholders' Interest for all classes of Certificates and (b) the
Certificateholders' Interest Carryover Shortfall for the preceding
Distribution Date.
"Certificateholders' Interest" means, for any Distribution Date,
for any class of Certificates, the product of (a) the Certificate
Balance on the prior Distribution Date (or, in the case of the first
Distribution Date following the issuance of such class of Certificates,
on the related Closing Date) plus the initial Certificate Balance of any
Certificates of such class issued since such prior Distribution Date and
(b) the Certificate Rate for such Distribution Date.
"Certificateholders' Interest Carryover Shortfall" means, for any
Distribution Date, the excess of (a) the Aggregate Certificateholders'
Interest for such Distribution Date over (b) the amount that was
actually deposited in the Certificate Distribution Account on such
Distribution Date in respect of Aggregate Certificateholders' Interest.
"Reserve Fund Deposit Amount" means, for any Distribution Date,
the excess, if any, of the Reserve Fund Required Amount over the amount
on deposit in the Reserve Fund.
"Reserve Fund Required Amount" means (a) for any Distribution Date
related to the Revolving Period or Wind Down Period, 5.50% of the
Maximum Pool Balance as of such Distribution Date (or if, as of such
Distribution Date, GMAC is rated less than BBB- by Standard & Poor's
Ratings Services, then 6.50%) and (b) for any Distribution Date related
to any Early Amortization Period, 5.50% of the Maximum Pool Balance as
of the last day of the Revolving Period. The Reserve Fund Required
Amount may be adjusted as described below under "Reserve Fund."
PRINCIPAL COLLECTIONS
REVOLVING PERIOD. As described in the Prospectus, on any date
during the Revolving Period, except to the extent otherwise provided
during the Payment Period for any series of Term Notes or for required
principal payments on Revolving Notes, Trust Principal Collections and
Additional Trust Principal will be applied towards the purchase of
additional Eligible Receivables from the Seller on such date and will be
paid to the Seller for such purpose; provided that the Cash Collateral
Amount will be held as described in the Prospectus under "The Transfer
and Servicing Agreements -- Application of Collections -- Principal
Collections." No payments of principal will be made on the Offered Term
Notes, and no funds will be set aside for such purpose, during the
Revolving Period. The Trust may issue one or more series of Term Notes
with Payment Periods during the Revolving Period. Principal payments may
also be required on one or more series of Revolving Notes (including the
Revolving Notes issued on the Initial Closing Date) during the Revolving
Period.
WIND DOWN PERIOD AND EARLY AMORTIZATION PERIOD. During the Wind
Down Period and any Early Amortization Period, all Trust Principal
Collections will be retained by the Trust for application to principal
payments on the Notes and distributions with respect to Certificate
Balance on the Certificates. Such amounts for any Collection Period will
be deemed included in the Cash Collateral Amount for purposes of
calculating the Daily Trust Invested Amount during such Collection
Period. On each Distribution Date during the Wind Down Period and any
Early Amortization Period, Trust Principal Collections during the
related Collection Period, together with other amounts comprising
Available Trust Principal (including amounts in the Reserve Fund as
described below), will be applied first to the payment of outstanding
principal on the Notes and second to the payment of the outstanding
Certificate Balance on the Certificates. Principal payments will be made
on the Term Notes of each series (including the Offered Term Notes) and
the Revolving Notes of each series as described in "The Offered Term
Notes -- Principal" above.
S-20
RESERVE FUND
The Reserve Fund will be an Eligible Deposit Account established
and maintained in the name of the Indenture Trustee for the benefit of
the holders of Securities. On the Initial Closing Date, the Reserve Fund
will be funded with the Reserve Fund Initial Deposit from the Seller in
an amount equal to $114,000,000. Additional amounts may be deposited in
the Reserve Fund (and the formula for the Reserve Fund Required Amount
adjusted) in connection with the issuance of additional series of Term
Notes or changes in the Specified Maximum Revolver Balance. In addition,
the Seller, in its sole discretion, may at any time make additional
deposits into the Reserve Fund as described in the Prospectus under "The
Transfer and Servicing Agreements -- Liquidity and Credit Support --
Reserve Fund." The Seller is not obligated to make any such additional
deposit and there can be no assurance that any such additional deposit
will be made.
If the amount in the Reserve Fund is less than the Reserve Fund
Required Amount for any Distribution Date, the amount of such
deficiency, to the extent available from Available Trust Interest, will
be deposited into the Reserve Fund as described above under "Application
of Collections -- Interest Collections."
Amounts on deposit in the Reserve Fund will be available to cover
the Unsatisfied Deficiency Amount on each Distribution Date as described
above under "Application of Collections -- Interest Collections."
Amounts on deposit in the Reserve Fund will be included in Available
Trust Principal and applied to make the final principal payments on the
Notes and the final distributions with respect to Certificate Balance on
the Certificates during the Wind Down Period and any Early Amortization
Period if and to the extent that, after giving effect to all other
required applications of the Reserve Fund on such Distribution Date and
all other amounts to be applied as Available Trust Principal on such
Distribution Date, the application of the amount on deposit in the
Reserve Fund as Available Trust Principal will reduce the outstanding
principal balance on all Notes and the outstanding Certificate Balance
with respect to all Certificates to zero (after giving effect to the
payment and distribution of all amounts otherwise on deposit (or to be
deposited) in the Distribution Accounts on such Distribution Date).
If the amount in the Reserve Fund is more than the Reserve Fund
Required Amount for any Distribution Date, the amount of such excess
(unless otherwise agreed by the Seller) will be paid to the Seller as
compensation for making the Reserve Fund Initial Deposit and other
deposits, if any, into the Reserve Fund. On the Trust Termination Date,
any funds remaining on deposit in the Reserve Fund will be distributed
to the Seller.
Any investment earnings (net of losses and investment expenses)
with respect to the Reserve Fund for a Collection Period will be
Investment Proceeds and included in Available Trust Interest.
BASIS SWAP
On the Initial Closing Date, the Owner Trustee, on behalf of the
Trust, will enter into the Basis Swap with GMAC as the Basis Swap
Counterparty.
In accordance with the terms of the Basis Swap, the Basis Swap
Counterparty will be obligated to pay to the Trust, on each Distribution
Date, an amount equal to the sum, as determined for each day during the
related Collection Period, of the sum of (a) the product of (i) the Term
Notional Amount for such day and (ii) 1/360 of LIBOR for such
Distribution Date plus 2.94% per annum plus (b) the product of (x) the
Revolving Notional Amount for such day and (y) a rate equal to 1/360 of
the excess, if any, of the sum of LIBOR for such Distribution Date plus
1.50% per annum over the Prime Rate for such date. In exchange for such
payments, the Trust will be obligated to pay to the Basis Swap
Counterparty, on each Distribution Date, an amount equal to the sum, as
determined for each day during the related Collection Period, of the
product of (i) the Term Notional Amount for such day and (ii) 1/360 of
the Prime Rate for such day.
S-21
Under the Basis Swap, on each Distribution Date, the amount the
Trust is obligated to pay will be netted against the amount the Basis
Swap Counterparty is obligated to pay such that only the net amount will
be due from the Trust or the Basis Swap Counterparty, as the case may
be. Such amount will be payable out of, or included in, Available Trust
Interest as described above under "Application of Collections --
Interest Collections."
The Basis Swap will terminate if, among other things, either party
defaults in the payment of any amount due thereunder and in the event of
certain events of bankruptcy, insolvency or receivership with respect to
the Basis Swap Counterparty. The termination of the Basis Swap will be
an Early Amortization Event.
LIQUIDITY AND CREDIT SUPPORT
Distributions on the Certificates will be subordinated to payments
on the Notes to the extent described herein. The Trust property will
include the Basis Swap and the Reserve Fund Initial Deposit will be made
into the Reserve Fund on the Initial Closing Date. The Servicer will
also make Servicer Advances as described above. Other credit, liquidity
and other enhancement arrangements may be established in connection with
the issuance of additional Securities or increases in the Specified
Maximum Revolver Balance. There can be no assurance that any such
arrangements will be for the benefit of the holders of Offered Term
Notes.
DEFAULTS AND CHARGE-OFFS
For any Distribution Date, Available Trust Interest and
withdrawals from the Reserve Fund will be available to cover the Trust
Defaulted Amount as described in "Application of Collections -- Interest
Collections" above. To the extent that, for any Distribution Date, the
full amount of the Trust Defaulted Amount has not been covered through
treatment as Additional Trust Principal as described above, such
deficiency will constitute Trust Charge-Offs. Unreimbursed Trust Charge-
Offs will be covered on any subsequent Distribution Date out of
Available Trust Interest and, to the extent available therefor,
withdrawals from the Reserve Fund as described above. For any date,
unreimbursed Trust Charge-Offs will equal (subject to reduction as
described below) the aggregate Trust Charge-Offs for all prior
Distribution Dates unless and to the extent such Trust Charge-Offs have
been so covered. The Daily Trust Invested Amount is reduced by the
amount of unreimbursed Trust Charge-Offs and will therefore be
reinstated to the extent any Trust Charge-Offs are reimbursed.
Unreimbursed Trust Charge-Offs will be applied first to reduce the
outstanding Certificate Balance on Certificates and then to reduce the
outstanding principal balance of Notes, pro rata on the basis of the
principal balances of such Notes. To the extent there are unreimbursed
Trust Charge-Offs in excess of the Certificate Balance (calculated
without reduction for Trust Charge-Offs) at the time the final principal
payment on any Notes is made, the principal amount payable on such Notes
will be reduced (and unreimbursed Trust Charge-Offs will be reduced
accordingly). Interest payments on Securities will be reduced to the
extent unreimbursed Trust Charge-Offs are applied against such
Securities as of any Distribution Date.
OPTIONAL PURCHASE BY THE SERVICER
During the Wind Down Period, from and after the time the Daily
Trust Balance is equal to or less than 10% of the sum of the Daily Trust
Balance plus the Cash Collateral Amount as of the last day of the
Revolving Period, the Servicer may, at its option, purchase from the
Trust, as of the last day of any Collection Period, all remaining
Receivables and other assets then held by the Trust, at a price equal to
the aggregate Administrative Purchase Payments for such Receivables plus
the appraised value of such other assets. Such amount will be treated on
the related Distribution Date as Additional Trust Principal to the
extent of the principal portion of the aggregate Administrative Purchase
Payments so paid, with the remainder being Available Trust Interest. See
"Application of Collections" above.
S-22
EARLY AMORTIZATION EVENTS
In addition to the Early Amortization Events set forth in the
Prospectus, an Early Amortization Event will occur upon the termination
of the Basis Swap or any similar arrangement related to any Securities
issued after the Initial Closing Date; provided, however, with respect
to the Early Amortization Events described in subparagraphs (a) and (b)
under "The Transfer and Servicing Agreements -- Early Amortization
Events" in the Prospectus, no Early Amortization Event will be deemed to
exist unless the Indenture Trustee or the holders of a majority in
principal amount of the Notes (or, if the Notes have been paid in full
and the Indenture has been discharged, the Owner Trustee or
Certificateholders whose Certificates evidence not less than a majority
of the Voting Interests), voting together as a single class on behalf of
all such securityholders, elect that such event shall constitute an
Early Amortization Event; and provided, further, with respect to the
Early Amortization Events described in subparagraph (d) under "The
Transfer and Servicing Agreements -- Early Amortization Events" in the
Prospectus, 25% shall be substituted for 20%. The Reserve Fund Trigger
Amount will be equal to $10,000,000.
As described in subparagraph (f) under "The Transfer and Servicing
Agreements -- Early Amortization Events" in the Prospectus, the Seller
may elect in certain limited circumstances to terminate an Early
Amortization Period and recommence the Revolving Period. The Revolving
Period may not otherwise be recommenced following the occurrence of an
Early Amortization Event.
OTHER MATTERS
With respect to the percentage set forth in clause (b) of the
definition of Dealer Overconcentration Receivables, 1.0% shall be
substituted for 1.5%.
TERMINATION
The Specified Trust Termination Date is April 1, 2010.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Kirkland & Ellis, special tax counsel to the
Seller, for U.S. federal income tax purposes, (a) the Offered Term Notes
will constitute indebtedness and (b) the Trust will not be classified as
an association taxable as a corporation or, under current law and under
certain proposed regulations issued on May 1, 1995 (the "Proposed PTP
Regulations"), either of which is subject to change as described in the
succeeding paragraph, as a publicly traded partnership taxable as a
corporation. Each Offered Term Noteholder, by the acceptance of an
Offered Term Note, will agree to treat the Offered Term Notes as
indebtedness for federal, state and local income and franchise tax
purposes.
POSSIBLE TREATMENT OF THE TRUST AS A PUBLICLY TRADED PARTNERSHIP.
Under the Code and the Proposed PTP Regulations, the Trust, as a
partnership, could be classified as a publicly traded partnership
("PTP") if equity interests therein are traded on an "established
securities market," or are "readily tradeable" on a "secondary market"
or its "substantial equivalent." In the event that the Proposed PTP
Regulations are substantially altered before adoption in final form and
certain safe harbors on which the Trust is relying to avoid treatment as
a PTP are not available in such final regulations, there can be no
assurance that the Trust would not become a PTP under such final
regulations, because the Seller may not be fully able to control whether
a Certificate or other interest in the Trust is readily tradeable or
actually traded in a manner which could evidence the existence of a
secondary market or its substantial equivalent. Therefore, there can be
no assurance that the Trust would continue to avoid characterization as
a PTP under such final regulations. Finally, the Trust, even if it
otherwise were classified as a PTP, would avoid taxation as a
corporation if 90% or more of its annual income constituted "qualifying
income" not derived in the conduct of a "financial business"; it is
unclear, however, whether the Trust's income would be so classified.
S-23
ORIGINAL ISSUE DISCOUNT CHANGES. The Proposed OID Regulations
described in the Prospectus have been promulgated in final form. In
general, the provisions of the final regulations do not differ
significantly from those of the Proposed OID Regulations. Under the
final regulations, interest payments on the Offered Term Notes may be
treated as not constituting "qualified stated interest" payments,
because no penalties are imposed on the Seller or the Trust as a result
of any failure to make timely interest payments. If the Offered Term
Notes were treated as not paying qualified stated interest, all of the
yield thereon would be includible in income as OID. In addition, the IRS
could take the position (under as-yet-unissued regulations pursuant to
Section 1272(a)(6) of the Code) that the Offered Term Notes have OID.
However, in the absence of such regulations it is unclear whether
Section 1272(a)(6) of the Code would apply to the Offered Term Notes.
See "Certain Federal Income Tax Consequences" and "State and Local
Tax Consequences" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Seller has agreed to sell to each of the Underwriters
named below, and each of the Underwriters, for whom Salomon Brothers Inc
is acting as the representative (the "Representative"), has severally
agreed to purchase from the Seller, the principal amount of Offered Term
Notes set forth opposite its name below.
AGGREGATE PRINCIPAL
AMOUNT OF OFFERED
TERM NOTES
UNDERWRITER TO BE PURCHASED
Salomon Brothers Inc. . . . . . . . . $200,000,000
Bear, Stearns & Co. Inc . . . . . . . 200,000,000
CS First Boston Corporation . . . . . 200,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated. . . . . . . . . 200,000,000
J.P. Morgan Securities Inc. . . . . . 200,000,000
--------------
Total. . . . . . . . . . . . . . $1,000,000,000
==============
In the Underwriting Agreement, the several Underwriters have
agreed, subject to the terms and conditions set forth therein, to
purchase all of the Offered Term Notes offered hereby if any of the
Offered Term Notes are purchased. In the event of a default by any
Underwriter, the Underwriting Agreement provides that, in certain
circumstances, purchase commitments of the nondefaulting Underwriters
may be increased or the Underwriting Agreement may be terminated.
The Seller has been advised by the Representative that the several
Underwriters propose initially to offer the Offered Term Notes to the
public at the prices set forth on the cover page hereof, and to certain
dealers at such prices less a selling concession not in excess of 0.175%
of the Offered Term Note denominations. The Underwriters may allow and
such dealers may reallow a concession not in excess of 0.125% of the
Offered Term Note denominations to certain other dealers. After the
initial public offering, the public offering price and such concessions
may be changed.
The Underwriting Agreement provides that the Seller will indemnify
the Underwriters against certain liabilities, including liabilities
under the Securities Act.
The Underwriters are also acting as initial purchasers of the
Certificates to be issued on the Initial Closing Date.
John G. Smale, a director of J.P. Morgan & Co. Incorporated, of
which J.P. Morgan Securities Inc. is an indirect wholly-owned
subsidiary, is Chairman of the Board of General Motors. Dennis
Weatherstone, a director of J.P. Morgan & Co. Incorporated, is also a
director of General Motors.
S-24
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus, certain
legal matters relating to the Offered Term Notes will be passed upon for
the Underwriters by Mayer, Brown & Platt. Mayer, Brown & Platt has from
time to time represented, and is currently representing, General Motors
and certain of its affiliates. Mayer, Brown & Platt is also representing
the Representative acting in its capacity as placement agent for the
Certificates to be issued on the Initial Closing Date.
S-25
PROSPECTUS
SUPERIOR WHOLESALE INVENTORY FINANCING TRUSTS
ASSET-BACKED TERM NOTES
_____________
WHOLESALE AUTO RECEIVABLES CORPORATION
SELLER
_____________
GENERAL MOTORS ACCEPTANCE CORPORATION
SERVICER
_____________
The Asset-Backed Term Notes (the "Term Notes") described herein may be
sold from time to time in one or more series, in amounts, at prices and on
terms to be determined at the time of sale and to be set forth in a
supplement to this Prospectus (a "Prospectus Supplement").
The Term Notes will be issued by one or more trusts (each, a "Trust").
The property of each Trust will consist of a pool of wholesale receivables
generated from time to time in a portfolio of revolving financing
arrangements with dealers to finance inventories of automobiles and light
trucks and collections thereon and certain other property. Each Trust will
be formed pursuant to a Trust Agreement (the "Trust Agreement") to be
entered into between Wholesale Auto Receivables Corporation, as Seller (the
"Seller"), and the Owner Trustee specified in the related Prospectus
Supplement (the "Owner Trustee"). The Term Notes of each Trust will be
issued and secured pursuant to an Indenture (the "Indenture") between such
Trust and the Indenture Trustee specified in the related Prospectus
Supplement (the "Indenture Trustee").
Each Trust will also issue Asset-Backed Certificates (the "Certificates")
and Asset-Backed Revolving Notes (the "Revolving Notes," together with the
Term Notes, the "Notes" and, collectively with the Term Notes and the
Certificates, the "Securities"). Only the Term Notes will be offered by
this Prospectus and any related Prospectus Supplement. The Certificates
will represent fractional undivided interests in the related Trust.
Each series of Term Notes will represent the right to receive specified
amounts of principal and interest in the manner described herein and in the
related Prospectus Supplement. Each series of Term Notes may have
different interest rates and different stated final payment dates. Each
Trust may issue one or more series of Term Notes entitled to principal
payments with disproportionate, contingent, nominal or no interest
distributions, or entitled to interest distributions with disproportionate,
contingent, nominal or no principal payments. Payments on the Term Notes
and the Revolving Notes issued by a Trust and distributions on the related
Certificates will have the priorities set forth in the related Prospectus
Supplement. For each Trust, payments of principal and interest on a series
of Term Notes may be senior (other than in circumstances related to the
occurrence of an Event of Default) or equivalent to the priority of
payments on the related Revolving Notes. Payments on the Notes will be
senior in right of payment to distributions on the related Certificates to
the extent described herein and in the related Prospectus Supplement. At
the time of issuance, each series of Term Notes will be rated as investment
grade securities by at least one Rating Agency.
EXCEPT AS OTHERWISE PROVIDED IN THE RELATED PROSPECTUS SUPPLEMENT, THE
ONLY OBLIGATIONS OF THE SELLER OR OF GENERAL MOTORS ACCEPTANCE CORPORATION
AS ORIGINATOR OF RECEIVABLES WITH RESPECT TO ANY TRUST WILL BE PURSUANT TO
CERTAIN REPRESENTATIONS AND WARRANTIES MADE BY SUCH PARTIES. GENERAL
MOTORS ACCEPTANCE CORPORATION WILL BE THE SERVICER (THE "SERVICER") WITH
RESPECT TO THE RECEIVABLES OF ANY TRUST. EXCEPT AS OTHERWISE SET FORTH IN
THE RELATED PROSPECTUS SUPPLEMENT, THE OBLIGATIONS OF THE SERVICER WILL BE
LIMITED TO ITS CONTRACTUAL SERVICING OBLIGATIONS.
There is currently no secondary market for the Term Notes. There can
be no assurance that a secondary market for the Term Notes will develop or,
if it does develop, that it will continue. The Term Notes will not be
listed on any securities exchange.
Unless otherwise provided in the related Prospectus Supplement, the
Term Notes initially will be represented by one or more term notes
registered in the name of Cede & Co., the nominee of The Depository Trust
Company ("DTC"). The interests of beneficial owners of the Term Notes will
be represented by book entries on the records of DTC and participating
members thereof. Definitive Term Notes will be available only under
limited circumstances.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE POTENTIAL RISK FACTORS SET
FORTH UNDER "SPECIAL CONSIDERATIONS."
_____________
EXCEPT AS OTHERWISE PROVIDED IN THE RELATED PROSPECTUS SUPPLEMENT, PROCEEDS
OF THE ASSETS OF EACH TRUST AND LIMITED AMOUNTS ON DEPOSIT IN THE RELATED
RESERVE FUND ARE THE SOLE SOURCES OF PAYMENTS ON THE TERM NOTES OF SUCH
TRUST. THE TERM NOTES DO NOT REPRESENT AN INTEREST IN OR OBLIGATION OF,
AND ARE NOT INSURED OR GUARANTEED BY, GENERAL MOTORS ACCEPTANCE
CORPORATION, WHOLESALE AUTO RECEIVABLES CORPORATION OR ANY OF THEIR
RESPECTIVE AFFILIATES, EXCEPT TO THE EXTENT, IF ANY, SET FORTH IN THE
RELATED PROSPECTUS SUPPLEMENT.
_____________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
_____________
Retain this Prospectus for future reference. This Prospectus may not
be used to consummate sales of Term Notes offered hereby unless accompanied
by a Prospectus Supplement.
THE DATE OF THIS PROSPECTUS IS JANUARY 13, 1994.
AVAILABLE INFORMATION
Wholesale Auto Receivables Corporation, as originator of each Trust,
has filed with the Securities and Exchange Commission (the "Commission") a
Registration Statement (together with all amendments and exhibits thereto,
referred to herein as the "Registration Statement") under the Securities
Act, with respect to the Term Notes offered pursuant to this Prospectus and
the related Prospectus Supplement. This Prospectus, which forms part of
the Registration Statement, does not contain all of the information
contained in the Registration Statement and is qualified in its entirety by
reference to the Registration Statement. The Registration Statement is
available for inspection without charge at the public reference facilities
of the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C.
20549 and at the regional offices of the Commission at 7 World Trade
Center, 13th Floor, New York, New York 10048 and the Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of such information can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington D.C. 20549,
at prescribed rates.
REPORTS TO TERM NOTEHOLDERS
Unless otherwise provided in the related Prospectus Supplement and
unless and until Definitive Term Notes have been issued under the limited
circumstances described herein, unaudited periodic reports concerning the
Receivables held by the Trust will be prepared by the Servicer and sent on
behalf of each Trust only to Cede, as nominee of DTC and the registered
holder of the Term Notes. See "The Term Notes Reports to Term Noteholders"
and " Book-Entry Registration." Such reports will not constitute financial
statements prepared in accordance with generally accepted accounting
principles. Each Trust will file with the Commission such periodic reports
as are required under the Exchange Act, and the rules and regulations of
the Commission thereunder, and any such reports filed prior to the
termination of this offering are hereby incorporated by reference into the
Registration Statement of which this Prospectus is a part. The Seller will
provide, without charge, to each person to whom this Prospectus is
delivered, upon the written or oral request of such person, a copy of any
such document incorporated by reference herein, other than exhibits to such
documents not specifically described above. Requests should be directed to
the Seller, in care of General Motors Acceptance Corporation, as Servicer,
3044 West Grand Boulevard, Detroit, Michigan 48202 (telephone number (313)
556-1281).
2
PROSPECTUS SUMMARY
THIS PROSPECTUS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
THE DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS AND THE
REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A PART AND IN THE
RELATED PROSPECTUS SUPPLEMENT TO BE PREPARED AND DELIVERED IN CONNECTION
WITH THE OFFERING OF ANY TERM NOTES. REFERENCE IS MADE TO THE GLOSSARY OF
TERMS FOR THE DEFINITIONS OF CERTAIN CAPITALIZED TERMS.
ISSUER. . . . . . . . . With respect to each series of Term
Notes, the Trust formed or to be
formed by the Seller and the Owner
Trustee pursuant to the related Trust
Agreement.
SELLER. . . . . . . . . Wholesale Auto Receivables
Corporation, a wholly-owned
subsidiary of General Motors
Acceptance Corporation.
SERVICER. . . . . . . . General Motors Acceptance
Corporation, a wholly-owned
subsidiary of General Motors
Corporation.
CAPITALIZATION OF THE
TRUST . . . . . . . . . Each Trust will issue one or more
classes of Certificates, one or more
series of Revolving Notes and one or
more series of Term Notes. Only the
Term Notes are being offered pursuant
to this Prospectus and any related
Prospectus Supplement.
THE TERM NOTES. . . . . With respect to each Trust, Term
Notes will be issued in one or more
series pursuant to an Indenture
between such Trust and the Indenture
Trustee. Unless otherwise specified
in the related Prospectus Supplement,
the Term Notes will be available for
purchase in denominations of $1,000
and integral multiples thereof, and
will be available in book-entry form
only. Unless otherwise specified in
the related Prospectus Supplement,
Term Noteholders will be entitled to
receive Definitive Term Notes only in
the limited circumstances described
herein or in the related Prospectus
Supplement.
Unless otherwise specified in the
related Prospectus Supplement, each
series of Term Notes will have a
stated principal amount and will bear
interest at a specified rate or
rates. Each series of Term Notes may
have a different Interest Rate, which
may be fixed, variable, contingent or
adjustable, or any combination of the
foregoing. The related Prospectus
Supplement will specify the Interest
Rate for each series of Term Notes,
or the initial Interest Rate and the
method for determining subsequent
changes in the Interest Rate, and
the amount, if any, of, or method for
determining, principal payments on
each series of Term Notes and the
timing of any such payments,
including the related Targeted
Payment Date, if any, and related
Stated Final Payment Date.
Unless otherwise specified in the
related Prospectus Supplement,
principal and interest on all series
of Term Notes issued by a Trust will
have the same priority of payment.
Payments of principal and interest on
a series of Term Notes may be senior
(other than in circumstances related
to the occurrence of an Event of
Default) or equivalent to the
priority of payments on the related
Revolving Notes as described in the
related Prospectus Supplement.
Payments of principal and interest on
Notes will be senior in right of
payment to distributions of
Certificate Balance and interest on
the related Certificates to the
extent described herein and in the
related Prospectus Supplement.
THE REVOLVING NOTES. . With respect to each Trust, one or
more series of Revolving Notes will
be issued pursuant to the
related Indenture from time to time.
The aggregate outstanding principal
balance of the Revolving Notes of a
Trust may fluctuate on a daily basis
(up to the Maximum Revolver Balance),
in connection with, among other
things, fluctuations in the principal
balance of Receivables held by the
Trust as payments of principal on
Receivables are received and new
Receivables arise in the related
Accounts. Each series of Revolving
Notes may have a different Revolver
Interest Rate and Targeted Final
Payment Date as set forth in the
related Prospectus Supplement.
THE CERTIFICATES . . . . With respect to each Trust,
Certificates will be issued pursuant
to a Trust Agreement between the
Seller and the Owner Trustee. The
Certificates will be issued in one or
more classes and will represent the
equity interest in the related Trust.
Unless otherwise specified in the
related Prospectus Supplement, the
Certificates of each Trust will have
a stated Certificate Balance and will
accrue interest on such Certificate
Balance at a specified rate (which
may vary by class of Certificate).
For each series of Term Notes, the
related Prospectus Supplement will
specify, for each class of
Certificates then outstanding or to
be issued in connection with such
Term Notes, the Certificate Rate, or
the initial Certificate Rate and the
method for determining subsequent
changes to the Certificate Rate, and
the amount of, or method for
determining, distributions with
respect to the Certificate Balance
and the timing of such distributions,
including the related Stated Final
Payment Date (which will be the same
for all classes of Certificates).
3
THE TRUST ESTATE . . . Except as otherwise provided in the
related Prospectus Supplement, the
property of each Trust will include
the Seller's right, title and
interest in, to and under (a) the
Eligible Receivables existing in the
Accounts included in the related Pool
of Accounts on the related Initial
Cut- Off Date (or, in the case of an
Additional Account, the related
Additional Cut-Off Date) and the
Eligible Receivables generated in
such Accounts from time to time
thereafter so long as such Accounts
are included in the related Pool of
Accounts, (b) Collections on such
Receivables and (c) the related
Collateral Security. The Trust
Estate will also include the Seller's
rights and remedies under the related
Pooling and Servicing Agreement
associated with the related Eligible
Receivables. In addition, the Trust
Estate may also include an interest
rate swap or swaps, funds on deposit
in certain bank accounts of such
Trust and other forms of liquidity,
credit or other enhancement (some or
all of which may be for the benefit
of only one series or class of
Securities) as set forth in the
related Prospectus Supplement. Under
certain circumstances, Accounts may
be added to or removed from the Pool
of Accounts related to a Trust. With
respect to each Trust, the Trust
Estate and the Trust's rights under
the related Trust Sale and Servicing
Agreement will be assigned to the
Indenture Trustee as collateral for
the related Notes.
THE ACCOUNTS. . . . . . The Accounts are lines of credit
represented by revolving dealer floor
plan financing agreements extended or
maintained by General Motors
Acceptance Corporation ("GMAC") to
retail dealers franchised by General
Motors Corporation ("General Motors")
and affiliates of such dealers to
finance their inventories
of automobiles and other vehicles
manufactured by General Motors and
other motor vehicle manufacturers.
See "The Dealer Floor Plan Financing
Business." With respect to each
Trust, the Accounts will be selected
from all Accounts in the U.S.
Portfolio that are Eligible Accounts.
THE RECEIVABLES . . . . The Receivables related to each Trust
represent rights to receive payments
on loans made or to be made under the
related Accounts. The aggregate
amount of such Receivables will
fluctuate from day to day as new
Receivables are generated and as
existing Receivables are collected,
charged-off as uncollectible or
otherwise adjusted or repurchased by
GMAC. See "The Accounts." In
general, each Receivable generated in
4
an Account is secured by all Vehicles
owned by the related dealer and, in
some circumstances, by other
collateral security owned by such
dealer. See "The Dealer Floor Plan
Financing Business" and "The Transfer
and Servicing Agreements--
Intercreditor Arrangements."
Only Receivables which represent
rights to receive payments on loans
made to purchase Vehicles will be
Eligible Receivables for the purposes
of each Trust. The principal amount
of a loan in respect of a New Vehicle
is equal to the wholesale purchase
price of the Vehicle and is generally
due upon the retail sale or lease of
the Vehicle. The principal amount of
a loan in respect of a Used Vehicle
(other than an Auction Vehicle) is up
to 90% of the wholesale book value
and is generally due upon the earlier
of 90 days from the date of the
advance and the retail sale or lease
of the Vehicle. The Receivables bear
interest at an adjustable rate as
described herein. See "The Dealer
Floor Plan Financing Business."
RESERVE FUND; SERVICER ADVANCES;
CREDIT AND
LIQUIDITY SUPPORT . . . Unless otherwise specified in the
related Prospectus Supplement, a
Reserve Fund will be created for each
Trust with an initial deposit by the
Seller equal to the Reserve Fund
Initial Deposit set forth in the
related Prospectus Supplement. In
addition, except as specified in the
related Prospectus Supplement, the
Trust Estate of each Trust will
include one or more interest rate
swaps and the Servicer will agree to
make Servicer Advances to each Trust
in certain circumstances. If and to
the extent specified in the related
Prospectus Supplement, additional
credit, liquidity and other
enhancement arrangements (including
additional reserve funds) may be
entered into for the benefit of any
class or series of Securities.
Unless otherwise specified in the
related Prospectus Supplement, such
arrangements will be limited and
will not provide protection against
all risks of loss or guarantee
repayment in full of any Notes or any
amount of distributions on
Certificates. Arrangements for the
benefit of any class or series of
Securities may not inure to the
benefit of other Securities issued by
the related Trust.
TRANSFER AND SERVICING
AGREEMENTS. . . . . . . With respect to each Trust, GMAC will
enter into a Pooling and Servicing
Agreement with the Seller, pursuant
to which GMAC will sell the
Receivables described therein. The
Seller in turn will sell and assign
such Receivables to the Trust
pursuant to a Trust Sale and
Servicing Agreement. With respect to
each Trust, the Servicer will agree
to be responsible for servicing,
managing and making collections on
all Receivables (including
Receivables not transferred to the
Trust) existing in the Accounts
related to the Trust. GMAC, as
Custodian, will maintain custody of
the receivable files on behalf of the
related Trust. Each Trust will be
created pursuant to a Trust
Agreement, and GMAC, as
Administrator, will undertake certain
administrative duties with respect to
each Trust under an Administration
Agreement.
REVOLVING PERIOD. . . . The Revolving Period for each Trust
will be the period beginning on the
related Initial Cut-Off Date and
ending on the earlier of (a) the
commencement of an Early Amortization
Period and (b) the date specified as
the Scheduled Revolving Period
Termination Date in the related
Prospectus Supplement. See "The
Transfer and Servicing Agreements
Early Amortization Events" and the
related Prospectus Supplement for a
discussion of certain events that
might lead to the early termination
of the Revolving Period and, in
certain limited circumstances, the
recommencement of the Revolving
Period. With respect to each Trust,
unless otherwise provided in the
related Prospectus Supplement and
except as described below for a
series of Term Notes during its
Payment Period, during the Revolving
Period, no payments of principal will
be made on the Term Notes and no
amounts will be set aside for such
purposes. If a series of Term Notes
does not provide for a Payment
Period, no principal payments will be
made thereon (or funds set aside
therefor) prior to the Wind Down
Period or an Early Amortization
Period. In addition, one or more
series of Revolving Notes for any
Trust may have a Targeted Final
Payment Date or otherwise require
principal payments during the related
Revolving Period.
5
PAYMENT PERIODS . . . . One or more series of Term Notes may
provide for payments of principal (or
the setting aside of amounts for such
purpose) prior to the Wind Down
Period for the related Trust, either
as the result of the occurrence of a
Scheduled Series Payment Period
Commencement Date or as the result of
the occurrence of a Series Early
Payment Event. During any such
Payment Period, Available Trust
Principal will be allocated to the
applicable series of Term Notes, and
principal payments will be made to
the holders thereof, in the amounts
and at the times set forth in the
related Prospectus Supplement.
During the Payment Period for a
series of Term Notes, principal
payments on the related Revolving
Notes will be permitted only to the
extent described in the related
Prospectus Supplement.
WIND DOWN PERIOD. . . . Unless an Early Amortization Period
has commenced, the Wind Down Period
with respect to each Trust will begin
on the day following the related
Scheduled Revolving Period
Termination Date and will continue
until the earlier of (a) the
commencement of an Early Amortization
Period and (b) the date on which all
Securities have been paid in full.
With respect to each Trust, during
the Wind Down Period, amounts of
Available Trust Principal will be set
aside for payments of principal on
the Notes and distributions with
respect to the Certificate Balance,
and such payments and distributions
will be made, to the extent described
in the related Prospectus Supplement.
Such amounts may, to the extent
described in the related Prospectus
Supplement, be limited for any series
of Term Notes of the related
Controlled Deposit Amount. In
addition, unless otherwise provided
in the related Prospectus Supplement,
during the Wind Down Period with
respect to each Trust, no additional
borrowings will be made under the
related Revolving Notes.
EARLY AMORTIZATION PERIOD With respect to each Trust, an Early
Amortization Period will commence
upon the occurrence of an Early
Amortization Event and will end on
the earlier of (a) the payment in
full of the outstanding principal
balance of all of the Notes issued by
the Trust and the distribution of the
entire related Certificate Balance
(less unreimbursed Trust
Charge-Offs), (b) the Trust
Termination Date and (c) the
recommencement of the Revolving
Period. With respect to each Trust,
when an Early Amortization Period
begins, the Revolving Period and any
then occurring Payment Periods or the
Wind Down Period, as the case may be,
6
will terminate, and Available Trust
Principal will thereafter be paid to
the holders of the related Securities
to the extent described in the
related Prospectus Supplement on each
Distribution Date beginning with the
Distribution Date related to the
Collection Period in which such Early
Amortization Period commenced. If an
Early Amortization Period commences
during a Payment Period or the Wind
Down Period, on the first
Distribution Date for such Early
Amortization Period, amounts, if any,
on deposit in the Note Distribution
Account will be paid to the related
holders to the extent described in
the related Prospectus Supplement.
The Controlled Deposit Amount, if
any, for a series of Term Notes will
not apply during any Early
Amortization Period. See "The
Transfer and Servicing Agreements
Early Amortization Events."
SERVICING . . . . . . . The Servicer is responsible for
servicing, managing and making
collections on the Receivables
(including Receivables not
transferred to the Trust) existing
under the Accounts related to each
Trust and will deposit the Trust's
share of Collections thereon into the
related Collection Account as
described herein. See "The Transfer
and Servicing Agreements
Collections." With respect to each
Trust, the Servicer is also
responsible for determining, and will
report to each Trustee, the amounts
to be allocated and distributed to
the related Securityholders and to
the Seller as described herein.
Unless otherwise specified in the
related Prospectus Supplement, the
Servicer will be entitled to receive
from each Trust a monthly fee for
servicing the Receivables equal to
the product of (a) the average daily
balance of the Daily Trust Invested
Amount for the related Collection
Period and (b) one- twelfth of the
Servicing Fee Rate.
INDENTURE TRUSTEE . . . The Indenture Trustee specified in
the related Prospectus Supplement.
OWNER TRUSTEE . . . . . The Owner Trustee specified in the
related Prospectus Supplement.
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES . . . . . Upon the issuance of each series of
Term Notes, except as otherwise
provided in the related Prospectus
Supplement, Kirkland & Ellis, special
tax counsel to the Seller, will
deliver an opinion to the effect
that, for U.S. federal income tax
purposes, (a) the Term Notes will
constitute indebtedness and (b) the
related Trust will not be classified
as an association or a publicly
traded partnership taxable as a
7
corporation. See "Certain Federal
Income Tax Consequences" and "State
and Local Tax Consequences" for
additional information concerning the
application of U.S. federal, state
and local laws.
ERISA CONSIDERATIONS . . Subject to the considerations
discussed under "ERISA
Considerations" herein and unless
otherwise specified in the related
Prospectus Supplement, the Term Notes
are eligible for purchase by employee
benefit plans.
RATINGS . . . . . . . . At the time of issuance, all Term
Notes will be rated as investment
grade securities by at least one
Rating Agency. Any other required
ratings for Term Notes will be set
forth in the related Prospectus
Supplement. See "Special
Considerations--Limited Nature of
Ratings."
8
SPECIAL CONSIDERATIONS
LIMITED LIQUIDITY
There is currently no market for the Term Notes. There can be no
assurance that a secondary market will develop or, if it does develop, that it
will provide holders with liquidity of investment or continue for the life of
any Term Notes.
LIMITED OBLIGATIONS
Each series of Term Notes will represent the right to receive payments of
principal and interest from the related Trust in the amounts and at the times
described herein and in the related Prospectus Supplement. Except as
otherwise set forth in the related Prospectus Supplement, the Term Notes will
not represent an interest in or obligation of General Motors, GMAC, the
Servicer, the Seller or any of their affiliates and the Term Notes will not be
guaranteed or insured by General Motors, GMAC, the Servicer, the Seller or*
any of their affiliates. Except as otherwise set forth in the related
Prospectus Supplement, proceeds of the assets of a Trust (and any related
liquidity, credit or other enhancement arrangements not included as assets of
such Trust) (other than any such assets or arrangements which are solely for
the benefit of other Securities of such Trust) will be the sole source of
payment on the Term Notes issued by such Trust, and there will be no recourse
to General Motors, GMAC, the Servicer, the Seller or any other entity if such
proceeds are insufficient or otherwise unavailable to make all payments
provided for under the Term Notes. Unless otherwise provided in the related
Prospectus Supplement, the only obligations of the foregoing entities with
respect to a Trust will be certain limited obligations of GMAC, the Servicer
and the Seller to repurchase certain Receivables if specified
representations, warranties and covenants in the related Pooling and
Servicing Agreement and the related Trust Sale and Servicing Agreement are
breached, to perform their other obligations set forth in the related
Transfer and Servicing Agreements, and, to the extent applicable, to perform
their obligations under any related liquidity, credit or other enhancement
arrangements. See "The Transfer and Servicing Agreements Sale and Assignment
of Receivables and Collateral Security." The Servicer will also make
Servicer Advances to each Trust unless otherwise described in the related
Prospectus Supplement.
RELATIONSHIP OF EACH TRUST TO GENERAL MOTORS AND GMAC
Each Trust and the Seller will be dependent on GMAC for the generation
of new Receivables. GMAC is the primary source of floor plan financing for
General Motors-franchised dealers in the United States. The ability of GMAC
to generate Receivables is in turn dependent to a large extent on the
manufacture and sale of automobiles and light trucks by General Motors,
which, in turn, depends to a large extent on the ability of dealers to sell
and lease such automobiles and light trucks to customers. There can be no
assurance that GMAC will generate Receivables at the same rate as receivables
were generated in the past. In addition, subject to certain limitations,
GMAC will retain the ability to change the terms of the Accounts, including
the interest rate charged to dealers and the amount of each dealer credit
line. GMAC can also change its underwriting procedures for extending credit.
Finally, if GMAC were to cease acting as Servicer, delays in processing
payments on the Receivables and information in respect thereof could occur
and result in delays in payments and distributions to the holders of the
Securities.
In connection with the sale, transfer and assignment of Receivables by
GMAC to the Seller and the sale, transfer and assignment of Receivables by
the Seller to a Trust, GMAC will make representations and warranties with
respect to the characteristics of such Receivables and the Seller will
represent and warrant that it has taken no action which would cause the
representations and warranties of GMAC to be false in any material respect.
Receivables with respect to which such representations and warranties have
been breached and not cured will be reassigned to GMAC or the Seller, as the
case may be, and related cash payments will be required. See "The Transfer
and Servicing Agreements Representations and Warranties."
9
Under agreements between General Motors and General Motors-franchised
dealers, General Motors is obligated to repurchase certain New Vehicles from
a dealer upon franchise termination. In addition, in the event of a
foreclosure upon the property of a dealer (whether by GMAC or any other
creditor of such dealer), General Motors has the option, which it has
typically exercised, to purchase such dealer's new General
Motors-manufactured vehicles at invoice price. The proceeds to a Dealer of
such purchases will generally be available for payments on the Receivables.
See "The Dealer Floor Plan Financing Business Dealer Status; Realization on
Collateral Security." General Motors has historically provided certain
financial assistance to General Motors-franchised dealerships from time to
time, but has no obligation to do so. In addition, the Motors Holding
Division of General Motors may also contribute capital to General Motors-
franchised dealers in the form of a minority equity investment in such
dealerships, typically if an existing dealer is starting a new franchise. If
General Motors were unable, or elected not, to exercise its purchase option
or provide any such financial assistance to Dealers or were unable to fulfill
the terms of any such agreements with Dealers, losses with respect to the
Receivables would likely increase and fewer Receivables may be generated.
See "The Dealer Floor Plan Financing Business Relationship of the Dealer
Floor Plan Financing Business to General Motors."
LIMITED SOURCE OF PAYMENTS
Payments on the Term Notes (as well as payments on the Revolving Notes
and distributions on the Certificates) are primarily payable from Collections
on the related Receivables. There can be no assurance that any particular
pattern of Dealer repayments will occur. Interest on the Receivables is
generally payable by Dealers monthly. The principal balance of Receivables
relating to New Vehicles is generally payable by Dealers upon the retail sale
or lease of the underlying Vehicle. GMAC generally requires that the
principal balance of receivables relating to Used Vehicles be paid upon the
earlier of 90 days (subject to extension to 180 days in the discretion of
GMAC) from the date of the advance or the retail sale or lease of the
underlying Vehicle. The timing of sales or leases of Vehicles is uncertain
and is dependent on a number of economic, social and other factors over which
GMAC, the Seller and the Trusts generally have no control. The timing of
sales and leases of Vehicles is also affected by sales incentive programs of
General Motors and other motor vehicle manufacturers, and financing incentive
programs of GMAC and other financing parties. Neither General Motors nor
GMAC is under any obligation to establish or maintain any incentive program.
There can be no assurance that payments on Receivables will be made in a
timely manner or that there will be additional Receivables created under any
Accounts.
LIMITED LIQUIDITY AND CREDIT SUPPORT
With respect to each Trust, unless otherwise specified in the related
Prospectus Supplement, credit, liquidity and other enhancement arrangements
will include one or more interest rate swaps, Servicer Advances and amounts
on deposit in a Reserve Fund. In addition, with respect to each Trust,
payments on the Notes will be senior in right of payment to distributions on
the related Certificates to the extent described in the related Prospectus
Supplement. Other such arrangements, if any, for the benefit of any
Securities will be described in the related Prospectus Supplement. The
presence of such arrangements is intended to increase the likelihood of
receipt by Securityholders of the full amounts of principal or Certificate
Balance, as the case may be, and interest due thereon and to decrease the
likelihood that Securityholders will experience losses. Unless otherwise
provided in the related Prospectus Supplement, such arrangements for the
benefit of any Securities will not provide protection against all risk of
loss and will not guarantee repayment of the entire principal balance or
Certificate Balance, as the case may be, and interest thereon. With respect
to each Trust, if losses occur which exceed the amount covered by such
arrangements, or which are not so covered, such losses will be allocated
among the Securities as described in the related Prospectus Supplement.
10
ADDITIONAL ISSUANCES; THE REVOLVING NOTES
Each Trust may issue additional series of Term Notes and additional
Certificates from time to time without the consent of the holders of the
Securities of such Trust then outstanding. The issuance of additional
Securities may not change the terms of outstanding Securities or the related
Trust Sale and Servicing Agreement as applied to such outstanding Securities,
other than pursuant to an amendment permitted under the Trust Sale and
Servicing Agreement. See "The Transfer and Servicing Agreements Additional
Issuances; Changes in Maximum Revolver Balance" and " Amendments." Unless
otherwise provided in the related Prospectus Supplement, with respect to each
Trust, so long as any series of Term Notes is outstanding, one condition,
among others, to the issuance by the Trust of additional Securities will be
that each Rating Agency has advised the Indenture Trustee that the issuance
of such Securities will not result in the reduction or withdrawal of its then
current rating of such Term Notes. There can be no assurance, however, that
the terms of any other Securities issued by a Trust might not have an impact
on the timing or amount of payments or distributions received by the holders
of other Securities of such Trust.
The outstanding principal balance of Revolving Notes may change on a
daily basis and, upon the satisfaction of certain conditions, the Specified
Maximum Revolver Balance may be increased or decreased. The Trust may issue
additional series of Revolving Notes (subject to the Maximum Revolver
Balance), with different interest rates and Stated Final Payment Dates.
Certificates issued after the Initial Closing Date may bear interest at a
different rate than those issued on the Initial Closing Date.
OTHER INTERESTS IN THE RECEIVABLES AND COLLATERAL
There are certain limited circumstances under applicable law under
which subsequent transferees of a Receivable could have an interest in such
Receivable with priority over the Trust's interest in such Receivable. See
"Certain Legal Aspects Transfer of Receivables." In each Pooling and
Servicing Agreement, GMAC will represent and warrant to the Seller that the
related Receivables have been transferred free and clear of any lien, and in
the related Trust Sale and Servicing Agreement the Seller will represent and
warrant to the Trust that the Seller has taken no action to make such
warranty false in any material respect. Each of GMAC and the Seller will
also covenant that it will not sell, pledge, assign, transfer or grant any
lien on any Receivable other than to the Seller or to the Trust or as
otherwise permitted by the Pooling and Servicing Agreement or the Trust Sale
and Servicing Agreement.
GMAC will represent and warrant in the Pooling and Servicing Agreement
that each Receivable sold to the Seller is secured by a first priority
perfected security interest in the related Vehicle. Generally, under
applicable state laws, a security interest in an automobile or light truck
which secures wholesale financing obligations may be perfected by the filing
of UCC financing statements. GMAC takes all actions it deems necessary under
applicable state laws to perfect GMAC's security interest in Vehicles.
However, at the time a Vehicle is sold or leased, GMAC's security interest in
the Vehicle will generally terminate. Therefore, if a Dealer fails to remit
to GMAC amounts owed with respect to any Vehicle that has been sold or
leased, the related Receivable will no longer be secured by such Vehicle, but
will be secured by the proceeds of such retail sale or lease and, to the
extent applicable, other Collateral Security.
The interests of the Seller and the related Trust in Collateral
Security other than Vehicles, if any, securing a Receivable will be
subordinate to any interests of GMAC therein arising in connection with
indebtedness other than the Receivables. See "The Transfer and Servicing
Agreements Intercreditor Arrangements."
11
CERTAIN MATTERS RELATING TO BANKRUPTCY
With respect to each Trust, the transfers of the related Receivables
from GMAC to the Seller and from the Seller to the Trust have been structured
to be treated as sales. In the event that GMAC or the Seller were to become
a debtor in a bankruptcy case and a creditor or trustee in bankruptcy of such
debtor or such debtor itself were to take the position that the transfer of
the Receivables should be recharacterized as a pledge of such Receivables to
secure a borrowing of such debtor, then delays in payments of Collections on
the Receivables to the Trust could occur and, if a court ruled in favor of
any such creditor, trustee in bankruptcy or debtor, reductions in the amount
of such payments could result. If the transfer of Receivables to the Seller
or a Trust were recharacterized as a pledge, then a tax or other similar lien
on the property of GMAC or the Seller might have priority over the interest
of the Seller or such Trust, respectively, in such Receivable. See "Certain
Legal Aspects Certain Matters Relating to Bankruptcy."
In addition, if GMAC or the Seller were to become a debtor in a
bankruptcy case and a creditor or trustee in bankruptcy of such debtor or
such debtor itself were to request a bankruptcy court to order that GMAC be
substantively consolidated with the Seller, delays and reductions in the
amount of payments and distributions on the Term Notes and other Securities
could result.
If certain events relating to the bankruptcy of General Motors, GMAC or
the Seller occur, then an Early Amortization Event will occur and, among
other things, additional Receivables will not be sold to the Trust and
payments of principal on the related Term Notes will (assuming no delays
arise from that proceeding) be made monthly and will not be limited by any
Controlled Deposit Amount. See "Certain Legal Aspects Certain Matters
Relating to Bankruptcy."
Transfers made in certain specified transactions contemplated by the
Transfer and Servicing Agreements (including payments made with respect to
repurchases or reassignments of Receivables) may be recoverable by GMAC, the
Servicer or the Seller, as debtor in possession, or by a creditor or a
trustee in bankruptcy of GMAC, the Servicer or the Seller as preferential
transfers from GMAC, the Servicer or the Seller if such transfers are made
within certain periods prior to the filing of a bankruptcy case in respect of
GMAC, the Servicer or the Seller.
LIMITED NATURE OF RATINGS
At the time of issuance, all Term Notes will be rated as investment
grade securities by at least one Rating Agency. Any other required ratings
for Term Notes will be set forth in the related Prospectus Supplement. There
is no assurance that a rating, once given, will not be lowered or withdrawn
by a Rating Agency if circumstances so warrant. In the event that the rating
initially assigned to any series of Term Notes is subsequently lowered or
withdrawn for any reason, no person or entity is obligated to provide any
additional enhancement with respect to such series. The rating of any series
does not constitute a recommendation to buy the security, and such rating
does not address the price of such security or the suitability of such
security to the investor. The rating addresses the likelihood of ultimate
payment of principal and interest on the security, but does not address the
timing of such payments.
BOOK-ENTRY NOTES
Unless otherwise set forth in the related Prospectus Supplement, the
Term Notes offered hereby will initially be issued to DTC or its nominee in
book-entry form. Under a book-entry format, beneficial owners of Term Notes
may experience delay in their receipt of payments of principal and interest,
because the Indenture Trustee will not send such payments directly to such
owners. Similarly, beneficial owners of Term Notes will be permitted to
exercise the rights of Term Noteholders only indirectly through DTC and its
participants. Finally, the ability of a beneficial owner to pledge Term
Notes to persons or entities that do not participate in the DTC system, or to
otherwise act with respect to such Term Notes, may be limited due to the lack
of a physical certificate for such Term Notes. Definitive Term Notes will
only be issued under certain limited circumstances. See "The Term Notes-
Definitive Term Notes."
12
GENERAL MOTORS ACCEPTANCE CORPORATION
GMAC, a wholly-owned subsidiary of General Motors, was incorporated in
1919 under the New York Banking Law relating to investment companies.
Operating directly and through subsidiaries and associated companies in which
it has equity investments, GMAC provides a wide variety of automotive
financial services to and through franchised General Motors dealers in many
countries throughout the world. Financial services are also offered to other
dealerships in which General Motors dealers have an interest and to the
customers of those dealerships. Other financial services offered by GMAC or
its subsidiaries include insurance, mortgage banking and investment services.
The principal business of GMAC and its subsidiaries is to finance the
acquisition and resale by franchised General Motors dealers of various new
automotive and nonautomotive products manufactured by General Motors or
certain of its subsidiaries and associates, and to acquire from such dealers,
either directly or indirectly, instalment obligations covering retail sales
and leases of new General Motors products as well as used units of any make.
In addition, new products of other manufacturers are financed. GMAC also
leases motor vehicles and certain types of capital equipment to others.
GMAC has its principal office at 767 Fifth Avenue, New York, New York
10153 (Tel. No. 212-418-6120) and administrative offices at 3044 West Grand
Boulevard, Detroit, Michigan 48202 (Tel. No. 313-556-5000).
WHOLESALE AUTO RECEIVABLES CORPORATION
Wholesale Auto Receivables Corporation was incorporated in the State of
Delaware on November 24, 1992, as a wholly-owned subsidiary of GMAC. The
Seller was organized for limited purposes, which include purchasing wholesale
and other receivables from GMAC and transferring such receivables to third
parties and any activities incidental or necessary thereto. The principal
executive offices of the Seller are located at Corporation Trust Center, 1209
Orange Street, Wilmington, Delaware 19801 (Tel. No. 302-658-7851).
The Seller has taken steps in structuring the transactions contemplated
hereby that are intended to make it unlikely that the Seller will be subject
to a voluntary or involuntary petition for relief under the Insolvency Laws
or that the voluntary or involuntary petition for relief by GMAC under the
Insolvency Laws will result in consolidation of the assets and liabilities of
the Seller with those of GMAC. See "Certain Legal Aspects Certain Matters
Relating to Bankruptcy." These steps include the creation of the Seller as
a separate, limited-purpose subsidiary pursuant to a certificate of
incorporation containing certain limitations, including restrictions on the
nature of the Seller's business. The Seller's certificate of incorporation
also provides that a unanimous affirmative vote of directors is required for
the Seller to commence a voluntary case or proceeding under any Insolvency
Law. The Seller's by-laws include a provision that, under certain circum-
stances, requires the Seller to designate two directors who qualify under the
by-laws as "Independent Directors." In addition, under each Trust Agreement,
the Trust (and the Owner Trustee on its behalf) and the related
Certificateholders and Certificate Owners, by accepting the related
Certificates (or an interest therein), will covenant that they will not, for
a period of one year and one day after the termination of the Trust
Agreement, institute against the Seller any bankruptcy, reorganization or
other preceding under any federal or state bankruptcy or similar law.
THE TRUSTS
GENERAL; THE TRUST ESTATE
The Seller will establish each Trust by selling, transferring and
assigning to each Trust, without recourse, in exchange for the Securities to
be issued on the Initial Closing Date specified in the related Prospectus
Supplement, the Seller's right, title and interest in, to and under (a) the
Eligible Receivables existing in each of the Accounts in the related Pool of
Accounts on the related Initial Cut-Off Date and the Eligible Receivables
generated in each Account in the Pool of Accounts from time to time
thereafter during the term of the Trust, (b) Collections on such Receivables
and (c) the related Collateral Security. GMAC will retain the Receivables in
the Accounts included in the related Pool of Accounts that it does not
13
transfer to the Seller and collections hereon (together with any Receivables
and collections thereon repurchased by GMAC from the Seller or the Trust as
described herein, the "Retained Property"). Under each Trust Sale and
Servicing Agreement, the Seller will also sell, transfer and assign to the
related Trust the Seller's rights and remedies under the related Pooling and
Servicing Agreement associated with the related Receivables. Unless
otherwise specified in the related Prospectus Supplement, the assets of each
Trust (the "Trust Estate") will also include one or more interest rate swaps
and funds on deposit in certain bank accounts of the Trust.
Pursuant to each Trust Sale and Servicing Agreement, the Seller will
have the right (subject to certain limitations) from time to time to
designate Additional Accounts to be included in the related Pool of Accounts
and from time to time to designate certain Accounts to be removed from such
Pool of Accounts. Once an Account is so designated for removal, or if an
Account ceases to be an Eligible Account, the Receivables originated
thereafter in such Account will not be transferred to the Trust. See "The
Transfer and Servicing Agreements Addition and Removal of Accounts."
With respect to each Trust and to the extent specified in the related
Prospectus Supplement, interest rate cap or swap agreements, cash collateral
accounts and other credit, liquidity and other enhancement arrangements may
be held by the Owner Trustee or the Indenture Trustee for the benefit of
holders of any Securities. Such items may be included as assets of a Trust
or may be held outside of a Trust. Arrangements for the benefit of holders
of one series or class of Securities of a Trust may not be available to the
holders of other series or classes of such Trust.
The principal offices of each Trust will be specified in the related
Prospectus Supplement.
CAPITALIZATION OF THE TRUST
With respect to each Trust, prior to the Initial Closing Date, the
Trust will have no assets or liabilities. No Trust is expected to engage in
any activities other than acquiring, managing and holding the related
Receivables and other assets contemplated herein and in the related
Prospectus Supplement and proceeds therefrom, issuing Securities and making
payments and distributions thereon and certain related activities. No Trust
is expected to have any source of capital other than its assets and any
related credit, liquidity or other enhancement arrangement.
With respect to each Trust, on the related Initial Closing Date, the
Trust is expected to issue one or more series of Term Notes, one or more
series of Revolving Notes and one or more classes of Certificates, all as
more fully described herein and in the Prospectus Supplement related to any
Term Notes offered hereby. See "The Revolving Notes" and "The Certificates."
From time to time thereafter, the Trust may issue additional series of Notes
and additional Certificates. See "The Transfer and Servicing
Agreements Additional Issuances; Changes in Maximum Revolver Balance." The
pro forma capitalization of a Trust at the time of the issuance of any Term
Notes will be set forth in the related Prospectus Supplement. The
Certificates will represent the equity in each Trust. The related Prospectus
Supplement will set forth the portion of the Certificates issued on (and, to
the extent applicable, since) the related Initial Closing Date retained or to
be retained by the Seller or its affiliates. Unless otherwise provided in
the related Prospectus Supplement, the remaining Certificates will be sold to
third party investors that are expected to be otherwise unaffiliated with the
Seller, GMAC and the Trust.
THE OWNER TRUSTEE
The Owner Trustee for each Trust will be specified in the related
Prospectus Supplement. The Owner Trustee's liability in connection with the
issuance and sale of the Securities is limited solely to the express
obligations of such Owner Trustee set forth in the related Trust Agreement.
An Owner Trustee may resign at any time, in which event the Servicer will be
obligated to appoint a successor trustee. The Administrator of a Trust may
also remove the Owner Trustee if the Owner Trustee ceases to be eligible to
continue as Owner Trustee under the related Trust Agreement or if the Owner
Trustee becomes insolvent. In such circumstances, the Administrator will be
obligated to appoint a successor trustee. Any resignation or removal of an
Owner Trustee and appointment of a successor trustee will not become
effective until acceptance of the appointment by the successor trustee.
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USE OF PROCEEDS
Unless otherwise provided in the related Prospectus Supplement, the net
proceeds from the sale of the related Term Notes will be paid to the Seller
and the Seller will use such proceeds to purchase Receivables from GMAC.
THE DEALER FLOOR PLAN FINANCING BUSINESS
GENERAL
The Accounts are individual lines of credit represented by revolving
dealer floor plan financing agreements extended or maintained by GMAC to
United States dealers (such lines of credit for all such dealers are referred
to collectively as the "U.S. Portfolio"). Funds loaned under such
arrangements (known generally as "wholesale" or "floor plan" financing) are
used by dealers primarily to finance new and used motor vehicles manufactured
or distributed by General Motors and other motor vehicle manufacturers and
distributors pending sale or lease to the ultimate customer. In general,
each receivable generated in an Account is secured by all vehicles owned by
the related dealer and, in some instances, by other collateral security owned
by such dealer. GMAC services the U.S. Portfolio through its administrative
office located in Detroit, Michigan and through a network of branch offices
located throughout the United States.
General Motors vehicles for which GMAC provides wholesale financing
include vehicles manufactured under the Buick, Cadillac, Chevrolet, Geo, GMC
Truck, Oldsmobile, Pontiac and Saturn trademarks. GMAC also extends credit to
dealers affiliated with General Motors dealers that operate franchises for
other motor vehicle manufacturers.
The U.S. Portfolio generally includes three types of credit lines or
accounts: (a) credit lines or accounts pursuant to which advances are made
to finance automobiles and light trucks (together, "Vehicles") and other
vehicles (including heavy duty trucks and off-highway vehicles); (b) credit
lines or accounts pursuant to which advances may be made to finance Vehicles
intended for sale to fleet customers generally in lots of more than 10
("Fleet Accounts"); and (c) credit lines or accounts pursuant to which
advances are made to finance new and used boats and related items ("Marine
Accounts"). For purposes of each Trust, Fleet Accounts and Marine Accounts
are not Eligible Accounts and, within an Eligible Account, an advance must be
made against a Vehicle and satisfy other criteria to be an Eligible
Receivable.
GMAC categorizes the Vehicles it finances as New Vehicles, Used
Vehicles or Auction Vehicles. Currently, New Vehicles consist of Vehicles of
any model year that are untitled and generally have been driven less than 200
miles, excluding any Vehicles purchased at a closed auction conducted by
General Motors or others ("Auction Vehicles"). In states where demonstration
cars must be titled, the Vehicles are generally considered New Vehicles if
driven less than 200 miles. Used Vehicles consist of Auction Vehicles and
Vehicles of any model year which have been previously titled (other than
demonstration vehicles described above). The categorization of New Vehicles,
Used Vehicles and Auction Vehicles may change in the future based on the
practices and policies of GMAC.
CREATION OF RECEIVABLES
GMAC makes advances to dealers in the U.S. Portfolio in an amount equal
to 100% of the wholesale invoice price of New Vehicles, which includes
destination and other miscellaneous charges and, with respect to Vehicles
manufactured by General Motors and certain other motor vehicle manufacturers,
a price rebate from the manufacturer to the dealer (known as a "holdback") in
varying amounts as a percentage of the invoice price. Rebates on General
Motors-manufactured vehicles sold or leased by a dealer are generally
returned to the dealer by General Motors on a monthly or quarterly basis,
depending on the dealer's arrangements with General Motors. For purposes of
each Trust, a receivable in respect of a New Vehicle is originated by GMAC on
the date on which interest thereon commences accruing on such receivable on
or following the estimated delivery date of such Vehicle to the dealer (which
date is approximately concurrent with the receipt of such Vehicle by the
dealer).
15
The amount advanced for a Used Vehicle (other than an Auction Vehicle)
is generally up to 90% of the wholesale book value for such Vehicle as set
forth in the National Automotive Dealers Association's Official Wholesale
Used Car Trade-In Guide for the region in which the Dealer is located. The
amount advanced for an Auction Vehicle is generally 100% of the auction
purchase price (including auction fees). Receivables in respect of Used
Vehicles are originated by GMAC on the date on which funds are actually
advanced to a dealer.
Once a dealer has commenced the floor plan financing of Vehicles
through GMAC, GMAC will finance virtually all purchases of New Vehicles by
such dealer from the applicable manufacturer or distributor. GMAC's credit
guidelines require that advances to finance Used Vehicles be approved on a
unit by unit basis. GMAC may limit or cancel a dealer's floor plan financing
arrangements at its discretion, including circumstances in which such dealer
has exceeded the credit guidelines set by GMAC or is experiencing financial
difficulties or a general deterioration in its creditworthiness. See "Dealer
Status; Realization on Collateral Security" below.
CREDIT UNDERWRITING PROCESS
GMAC extends credit to dealers through established lines of credit. A
dealer requesting a new credit line must apply to a GMAC branch office. The
local branch office investigates the dealer by reviewing bank references and
credit reports (including, in the case of existing dealers, reports from the
dealer's current financing source) and evaluating marketing capabilities,
financing resources, credit requirements and the dealer's current state of
operations and management. The local branch office prepares a written
recommendation either approving or disapproving the dealer's request and,
depending on the size of the requested credit line and the financial profile
of the dealer, transmits such recommendation with the requisite documentation
to the appropriate office including, in some cases, GMAC's executive offices,
for final approval or disapproval. GMAC generally applies the same
underwriting standards for dealers franchised by General Motors as for
dealers franchised by other motor vehicle manufacturers.
Upon approval, a dealer executes financing agreements with GMAC and, in
the case of General Motors-franchised dealers, General Motors. These
agreements evidence the debt and provide GMAC a security interest in the
vehicles to be financed and in certain other collateral. Under these agree-
ments, the Vehicles are insured against comprehensive loss or damage.
The size of a credit line offered to a dealer, which is expressed in
terms of number of vehicles or units, is based upon a number of factors,
including the dealer's sales record (or, in the case of a new dealership,
expected annual sales) and the dealer's net worth. Currently, a credit line
for New Vehicles is intended to be an amount sufficient to finance a 60-day
supply and for Used Vehicles is generally an amount sufficient to finance a
30-day supply. As described below, the credit lines establish guidelines,
not limits, which dealers may exceed from time to time.
COLLATERAL SECURITY
GMAC takes a first priority perfected purchase money security interest
in the Vehicles it finances for a dealer. Generally, the security interest
in the Vehicle terminates, as a matter of law, at the time of its sale or
lease by the dealer to a retail customer and no longer secures the related
receivable or the credit line, except to the extent of the proceeds from such
sale or lease. In some instances, GMAC may take a security interest in, or
a collateral assignment of, other assets of a dealer, including parts
inventory, real estate, fixtures, tools, equipment, furniture, signs, funds
held at GMAC and other receivables, as security for such dealer's account.
From time to time, GMAC also provides to certain dealers financing in the
form of working capital loans, real estate financing and equipment loans. In
such instances, to secure such loans, GMAC may take a security interest in
assets of the dealer, including, in some cases, Vehicles. GMAC, in its sole
discretion, may realize upon Collateral Security (other than Vehicles) for
its own benefit in respect of such loans or advances before such other
Collateral Security can be realized upon for the benefit of the related Trust
and Securityholders. Because of the subordinate position of the Trust in
respect of such other Collateral Security, there is no assurance that the
Trust will realize any proceeds in respect of any such other Collateral
Security. See "The Transfer and Servicing Agreements Intercreditor
Arrangements."
16
DEALER PAYMENT TERMS
GMAC may demand payment of interest and principal on a floor plan loan
at virtually any time, but, absent termination of the credit line by GMAC or
default by the dealer, GMAC generally requires payment of principal in full
of the related loan upon the retail sale or lease of a New Vehicle and upon
the earlier of 90 days (subject to extension to 180 days in the discretion of
GMAC) from the date of the advance or the retail sale or lease of a Used
Vehicle. Interest on floor plan loans is generally payable monthly.
GMAC charges dealers interest at a floating rate equal to the Prime
Rate PLUS, in most cases, a designated spread above the Prime Rate. In
general, the spread is 1% to 2% for New Vehicles and 1% to 2 1/2% for Used
Vehicles, though the actual spread for each dealer is based on, among other
things, competitive factors, the amount and status of the dealer's credit
lines and various incentive programs. Currently, one program, known as the
Wholesale Incentive Program, permits a reduction of up to 1% in the
designated spread for New Vehicles manufactured by General Motors.
In certain circumstances, under a policy known as Delayed Payment
Privilege ("DPP"), GMAC may agree with a dealer not to require payment of
principal promptly upon the sale or lease of the vehicle to a customer. DPP
receivables principally arise from sales to fleet customers under Fleet
Accounts. For purposes of the Trust, Fleet Accounts are not Eligible
Accounts, and thus such DPP receivables will not be transferred to the Trust.
In some cases, a dealer will request DPP treatment for receivables originated
in an account which is not a Fleet Account. For purposes of the Trust, if a
Receivable is subject to DPP treatment at the time of its origination, such
Receivable will not be an Eligible Receivable and therefore will not be
transferred to the Trust. If an Eligible Receivable becomes subject to
deferred payment after transfer to the Trust, GMAC will be obligated to
repurchase such Receivable (to the extent of the principal payment so
delayed) as described in "The Transfer and Servicing Agreements --
Representations and Warranties."
From time to time, dealers maintain funds with GMAC, which funds are
held for such dealers for cash management, liquidity and working capital
purposes. For purposes of each Trust, the principal balance of Receivables
with respect to any Dealer on any date is the aggregate principal balance of
Receivables net of any amount so held by GMAC on such date.
BILLING AND COLLECTION PROCEDURES
A statement setting forth billing and related account information is
prepared by GMAC and distributed on a monthly basis to each dealer. Interest
and other non-principal charges are billed in arrears and are required to be
paid immediately upon receipt of the bill. Dealers remit payment directly to
GMAC's local branch offices.
DEALER MONITORING
GMAC monitors the level of borrowing under each dealer's account.
Dealers may exceed their stated credit lines from time to time. For example,
a dealer might, prior to a seasonal sales peak, purchase more vehicles than
its existing credit lines would otherwise permit. At any time that a
dealer's balance exceeds its stated credit line, GMAC, after evaluating such
dealer's financial position, may temporarily suspend the granting of
additional credit, increase such dealer's credit line or modify such dealer's
credit category. See "Creation of Receivables" above and "Dealer Status;
Realization on Collateral Security."
Branch office personnel conduct audits of dealer vehicle inventories on
a regular basis. The timing of audits varies and no advance notice is given
to the audited dealer. Through the audit process, GMAC reconciles a dealer's
physical inventory with its records of financed vehicles. Among other
things, audits are intended to determine whether a dealer has sold or leased
vehicles without repaying the related loans as required.
17
DEALER STATUS; REALIZATION ON COLLATERAL SECURITY
Each dealer is assigned a credit category of "satisfactory," "limited,"
"programmed" or "no credit" based on various factors, including retail
merchandising practices, retail and wholesale performance, financial outlook,
capital sufficiency and credit history (with GMAC and others). Circumstances
under which GMAC will classify a dealer in "no credit" status include a
dealer's failure to remit principal or interest payments when due,
notifications of liens, levies or attachments or a general deterioration of
the dealer's financial condition. When a dealer is assigned to no credit
status, GMAC generally will not make further advances to such dealer.
GMAC frequently attempts to work with dealers to resolve the
circumstances that lead to programmed and no credit status. If, however,
such circumstances are not resolved, any of the following may occur: (a) an
orderly liquidation in which the dealer voluntarily liquidates its inventory
through normal sales and leases to customers; (b) a self-help or court-
ordered seizure and sale of the dealer's inventory by GMAC; or (c) a
voluntary surrender to GMAC and sale of the dealer's inventory. GMAC may
sell such inventories to the related motor vehicle manufacturer, including
pursuant to agreements entered into at the time the credit line was
established. In addition, GMAC may work with dealers and, in the case of
General Motors-franchised dealers, General Motors, to find third parties to
purchase troubled dealerships. The proceeds of any such sale will be
available to the creditors of such dealership, including GMAC or, if
applicable, a Trust. Once liquidation has commenced, GMAC performs an
analysis of its position and writes off any amounts identified at such time
as uncollectible. Actual losses by GMAC may be more or less than the amounts
initially written off as uncollectible. See "The Transfer and Servicing
Agreements Intercreditor Arrangements."
RELATIONSHIP OF THE DEALER FLOOR PLAN FINANCING BUSINESS TO GENERAL MOTORS
General Motors has historically provided certain financial assistance
to General Motors-franchised dealers from time to time, but has no obligation
to do so. Such assistance may take the form of guarantees and agreements to
repurchase inventory. The Motors Holding Division of General Motors may also
contribute capital to certain General Motors-franchised dealers in the form
of a minority equity investment in the dealership, typically when a dealer is
starting a new franchise.
In addition, General Motors offers financial and sales incentives to
General Motors-franchised dealers through a number of programs. For example,
General Motors currently has a supplemental floor plan assistance program
known as the Wholesale Floor Plan Protection Program pursuant to which
General Motors provides an interest subsidy to General Motors-franchised
dealers to assist such dealers in making interest payments to financing
sources, including GMAC.
The financial assistance and incentives provided by General Motors are
for the benefit of its dealers and do not relieve such dealers from their
obligations to GMAC. Such assistance and incentives are provided at the
option of General Motors, which may terminate any of such programs in whole
or in part at any time. If General Motors reduced or was unable, or elected
not, to provide such assistance or incentives, the timing and amounts of
payments to GMAC in respect of the U.S. Portfolio may be adversely affected.
In addition, if a dramatic disruption in the supply of General Motors-
manufactured vehicles occurred, the rate of sales of such vehicles would
decrease and it is likely that payment rates and the loss experience of the
U.S. Portfolio would also be adversely affected. A decrease in the rate of
sales of General Motors manufactured vehicles would also slow the addition of
new Eligible Receivables to the Trusts. Any such event may result in an
Early Amortization Event with respect to one or more Trusts.
18
Under agreements between General Motors and General Motors-franchised
dealers, General Motors has the obligation to repurchase certain New Vehicles
in dealer inventory at their invoice price less a specified margin upon
franchise termination. In most cases, General Motors repurchases only
current year New Vehicles that are undamaged and unmodified. General Motors
also agrees to repurchase from dealers, at the time of franchise termination,
parts inventory at specified percentages of the current list price. In
addition, in the event of a foreclosure upon the property of a dealer
(whether by GMAC or another creditor of such dealer), General Motors has the
option, which it typically exercises, to purchase such dealer's new General
Motors-manufactured vehicles at invoice price.
LOSS AND AGING EXPERIENCE
Certain information regarding loss and aging experience for the
receivables in the U.S. Portfolio will be set forth in the related Prospectus
Supplement. Because the Accounts related to any Trust will represent only a
portion of the entire U.S. Portfolio, actual loss and aging experience with
respect to the Accounts related to any Trust may be different than such
information. There can be no assurance that the loss and aging experience of
the receivables in the U.S. Portfolio in the future will be similar to the
historical loss and aging experience as set forth in any Prospectus
Supplement.
THE ACCOUNTS
The Receivables of any Trust are rights to receive payments on advances
made under the Accounts included in the Pool of Accounts for such Trust. The
initial Pool of Accounts related to any Trust will be selected from all of
the Accounts in the U.S. Portfolio that were Eligible Accounts as of the
Initial Cut-Off Date for such Trust. Eligible Accounts do not include Fleet
Accounts or Marine Accounts. Only Eligible Receivables will be transferred
to the related Trust. See "The Transfer and Servicing Agreements Sale and
Assignment of Receivables and Collateral Security." Certain information with
respect to the Accounts initially included in the Pool of Accounts for any
Trust will be set forth in the related Prospectus Supplement.
For each Trust, pursuant to the Trust Sale and Servicing Agreement, the
Seller will have the right (subject to certain limitations) to designate from
time to time Additional Accounts to be included in the Pool of Accounts and
to purchase from GMAC the Eligible Receivables then existing and thereafter
arising in such Account and to sell and assign such Receivables to the Trust.
See "The Transfer and Servicing Agreements Sale and Assignment of Receivables
and Collateral Security." The designation of Additional Accounts is subject
to the condition, among other things, that each such Additional Account must
be an Eligible Account. Under certain circumstances specified in the related
Trust Sale and Servicing Agreement, the Seller has the right to remove
Accounts from the Pool of Accounts. If an Account is so designated for
removal or ceases to be an Eligible Account, the Receivables originated
thereafter in such Account will not be transferred to the Trust. See "The
Transfer and Servicing Agreements Addition and Removal of Accounts.
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MATURITY AND PRINCIPAL CONSIDERATIONS
Full amortization of any Term Notes by the applicable Targeted Payment
Date, if any, and the applicable Stated Final Payment Date depends on, among
other things, payments by Dealers on Receivables, and may not occur if such
payments are insufficient. Because the Receivables generally are not paid
prior to the ultimate sale or lease of the underlying Vehicle, the timing of
such payments is uncertain. In addition, there is no assurance that GMAC
will generate additional Receivables under the Accounts, that Additional
Accounts will be available or added to any Pool of Accounts or that any
particular pattern of Dealer payments will occur.
The amount of new Receivables generated in any month and monthly
payment rates on the Receivables may vary because of seasonal variations in
vehicle sales and inventory levels, retail incentive programs provided by
vehicle manufacturers, incentive programs provided by financing sources and
various other factors affecting vehicle sales generally. Certain historical
information concerning the monthly payment rates for the receivables in the
U.S. Portfolio will be set forth in each Prospectus Supplement. There can be
no assurance that the rate of principal collections on the Receivables in any
Trust will be comparable to prior experience.
Full amortization of any Term Notes by the applicable Targeted Payment
Date, if any, and the applicable Stated Final Payment Date may also be
affected by payment requirements for, and allocations to, other series of
Term Notes and the related Revolving Notes and Certificates.
THE TERM NOTES
GENERAL
With respect to each Trust, one or more series of Term Notes will be
issued pursuant to the terms of an Indenture, a form of which has been filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part. The following summary does not purport to be complete and is subject
to, and is qualified in its entirety by reference to, all of the provisions
of the Term Notes and the Indenture. Where particular provisions or terms
used in the Indenture are referred to, the actual provisions are
incorporated by reference as part of this summary. The Seller will provide
a copy of the applicable Indenture (without exhibits) upon request of a
beneficial or record holder of Term Notes issued thereunder.
Unless otherwise specified in the related Prospectus Supplement, each
series of Term Notes will initially be represented by one or more Term Notes,
in each case registered in the name of the nominee of DTC (together with any
successor depository selected by the Trust, the "Depository") except as set
forth below. Unless otherwise specified in the related Prospectus
Supplement, Term Notes will be available for purchase in denominations of
$1,000 and integral multiples thereof in book-entry form only. The Seller
has been informed by DTC that DTC's nominee will be Cede. Accordingly, Cede
is expected to be the holder of record of the Term Notes. Unless and until
Definitive Term Notes are issued under the limited circumstances described
herein or in the related Prospectus Supplement, no Term Noteholder will be
entitled to receive a physical certificate representing a Term Note. Unless
otherwise indicated, all references herein to actions by Term Noteholders
refer to actions taken by DTC upon instructions from its participating
organizations ("Participants") and all references herein to distributions,
notices, reports and statements to Term Noteholders refer to distributions,
notices, reports and statements to DTC or Cede, as the registered holder of
the Term Notes, as the case may be, for distribution to Term Noteholders in
accordance with DTC's procedures with respect thereto. See "Book-Entry
Registration" and "Definitive Term Notes."
PRINCIPAL AND INTEREST ON THE TERM NOTES
The timing and priority of payment, seniority, Interest Rate, Targeted
Payment Date, if any, Stated Final Payment Date, Payment Period, if any, and
the amount of, or method for, determining payments of principal and interest
on a series of Term Notes will be described in the related Prospectus
Supplement. Interest payments on Term Notes will be made monthly, quarterly,
semi-annually or otherwise on Payment Dates as described in the related
Prospectus Supplement. With respect to each Trust, unless otherwise provided
in the related Prospectus Supplement and except for a series of Term Notes
during its Payment Period, if any, during the Revolving Period, no payments
of principal will be made on the Term Notes and no distributions of
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Certificate Balance will be made with respect to the Certificates and no
amounts will be set aside for such purpose. During the Payment Period, if
any, for a series of Term Notes, Principal Collections and other amounts
constituting Available Trust Principal will be allocated to principal
payments thereon and paid as set forth in the related Prospectus Supplement.
Any such principal payments may be due in instalments (and may be limited by
a Controlled Deposit Amount) or may be due in a lump sum payment. During the
Wind Down Period and any Early Amortization Period, Principal Collections and
other amounts constituting Available Trust Principal will be allocated to
principal payments on the Notes and will be set aside for such purpose as set
forth in the related Prospectus Supplement. Unless otherwise provided in the
related Prospectus Supplement, during the Wind Down Period and any Early
Amortization Period, if and so long as there are any funds on deposit in the
related Reserve Fund, to the extent that it would result in more principal
collections being allocated to the Trust than otherwise, Principal
Collections will be allocated to the Trust pro rata, based on the aggregate
percentage of all the Receivables in the Accounts that are Eligible
Receivables as of the commencement of such Wind Down Period or Early
Amortization Period (or, if such Early Amortization Period commences during
the Wind Down Period, as of the commencement of the Wind Down Period).
During the Wind Down Period, the amount so allocated may, to the extent
provided in the related Prospectus Supplement, be limited by any applicable
Controlled Deposit Amounts. If an Early Amortization Period commences during
any Payment Period or the Wind Down Period, amounts on deposit in the Note
Distribution Account, the Revolver Distribution Account and the Certificate
Distribution Account, if any, will be paid to holders of Securities on the
first Distribution Date for such Early Amortization Period as described in
the related Prospectus Supplement.
With respect to each Trust, unless otherwise specified in the related
Prospectus Supplement, principal and interest payments on all series of Term
Notes will have the same priority of payment. Payments of principal and
interest on a series of Term Notes may be senior (other than in circumstances
related to the occurrence of an Event of Default) or equivalent to the
priority of payments on the related Revolving Notes, as described in the
related Prospectus Supplement. To the extent specified in the related
Prospectus Supplement, payments of principal and interest on the Notes will
be senior in priority of payment to the distributions to be made on the
related Certificates outstanding from time to time. A series of Term Notes
may be entitled to (a) principal payments with disproportionate, contingent,
nominal or no interest payment, or (b) interest payments with
disproportionate, contingent, nominal or no principal payments ("Strip
Notes"). Each series of Term Notes issued by a Trust may have a different
Interest Rate, which may be fixed, variable, contingent or adjustable (and
which may be zero for certain series of Strip Notes), or any combination of
the foregoing. The related Prospectus Supplement will specify the Interest
Rate for each series of Term Notes, or the initial Interest Rate and the
method for determining subsequent changes in the Interest Rate. One or more
series of Term Notes of a Trust may be redeemable under the circumstances and
in the manner specified in the related Prospectus Supplement. Unless
otherwise specified in the related Prospectus Supplement, payments of
interest on the Term Notes will be made prior to payments of principal
thereon.
THE INDENTURE
MODIFICATION OF INDENTURE WITHOUT NOTEHOLDER CONSENT. Each Trust and
related Indenture Trustee (on behalf of such Trust) may, without consent of
the related Noteholders, enter into one or more supplemental indentures for
any of the following purposes: (a) to correct or amplify the description of
the collateral or add additional collateral; (b) to provide for the
assumption of the Notes and the Indenture obligations by a permitted
successor to the Trust; (c) to add additional covenants for the benefit of
the related Noteholders; (d) to convey, transfer, assign, mortgage or pledge
any property to or with the Indenture Trustee; (e) to cure any ambiguity
or correct or supplement any provision in the Indenture or in any
supplemental indenture which may be inconsistent with any other provision of
the Indenture or of any supplemental indenture; (f) to provide for the
acceptance of the appointment of a permitted successor Indenture Trustee or
to add to or change any of the provisions of the Indenture as shall be
necessary and permitted to facilitate the administration by more than one
trustee; (g) to modify, eliminate or add to the provisions of the Indenture
in order to comply with the Trust Indenture Act; (h) to increase the
Specified Maximum Revolver Balance (in accordance with the conditions
therefor in the related Trust Sale and Servicing Agreement); and (i) to add
any provisions to, change in any manner, or eliminate any of the provisions
of, the Indenture or modify in any manner the rights of Noteholders
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under the Indenture; provided that any action specified in this clause (i)
shall not, as evidenced by an opinion of counsel, adversely affect in any
material respect the interests of any related Noteholder unless Noteholder
consent is otherwise obtained as described below.
MODIFICATION OF INDENTURE WITH NOTEHOLDER CONSENT. With respect to
each Trust, with the consent of the holders of a majority in principal amount
of the outstanding Notes affected thereby, the Trust and the Indenture
Trustee may execute a supplemental indenture to add provisions to, change in
any manner or eliminate any provisions of, the related Indenture, or modify
in any manner the rights of the related Noteholders.
Without the consent of the holder of each outstanding related Note
affected thereby, however, no supplemental indenture will: (a) change the due
date of any instalment of principal of or interest on any Note or reduce the
principal amount thereof, the applicable interest rate or the redemption
price with respect thereto or change any place of payment where or the coin
or currency in which any Note or any interest thereon is payable or modify
any of the provisions of the Indenture in such manner as to affect the
calculation of the amount of any payment of interest or principal due on any
Note on any Payment Date; (b) impair the right to institute suit for the
enforcement of certain provisions of the Indenture regarding payment; (c)
reduce the percentage of the aggregate principal amount of the outstanding
Notes the consent of the holders of which is required for any such
supplemental indenture or the consent of the holders of which is required for
any waiver of compliance with certain provisions of the Indenture or of
certain defaults thereunder and their consequences as provided for in the
Indenture; (d) modify or alter the provisions of the Indenture regarding the
voting of Notes held by the related Trust, any other obligor on the Notes,
the Seller or an affiliate of any of them; (e) reduce the percentage of the
aggregate outstanding principal amount of the Notes the consent of the
holders of which is required to direct the Indenture Trustee to sell or
liquidate the Trust Estate if the proceeds of such sale would be insufficient
to pay the principal amount and accrued but unpaid interest on the
outstanding Notes; (f) decrease the percentage of the aggregate principal
amount of the Notes required to amend the sections of the Indenture which
specify the applicable percentage of aggregate principal amount of the Notes
necessary to amend the Indenture; or (g) permit the creation of any lien
ranking prior to or on a parity with the lien of the Indenture with respect
to any part of the Trust Estate or, except as otherwise permitted or
contemplated in the Indenture, terminate the lien of the Indenture on any
such collateral or deprive the holder of any Note of the security afforded by
the lien of the Indenture.
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT. With respect to each
Trust, unless otherwise specified in the related Prospectus Supplement,
"Events of Default" under the Indenture will consist of: (a) any failure to
pay interest on the related Notes as and when the same becomes due and
payable, which failure continues unremedied for five days; (b) any failure
(i) to make any required payment of principal on the related Notes or (ii) to
observe or perform in any material respect any other covenants or agreements
in the Indenture, which failure in the case of a default under
clause (b)(ii) materially and adversely affects the rights of related
Noteholders, and which failure in either case continues for 30 days after the
giving of written notice of such failure (x) to the Trust, the Seller or the
Servicer, as applicable, by the Indenture Trustee or (y) to the Seller or the
Servicer, as applicable, and the Indenture Trustee by the holders of not less
than 25% of the principal amount of the related Notes; (c) failure to pay the
unpaid principal balance of any related series of Notes by the respective
Stated Final Payment Date for such series; and (d) certain events of
bankruptcy, insolvency or receivership with respect to the Trust. However,
the amount of principal required to be paid to Term Noteholders under the
related Indenture will generally be limited to amounts available to be
deposited therefor in the Note Distribution Account. Therefore, unless
otherwise specified in the related Prospectus Supplement, the failure to pay
principal on a series of Term Notes will not result in the occurrence of an
Event of Default until the applicable Stated Final Payment Date.
If an Event of Default should occur and be continuing with respect to
the Notes of any Trust, the related Indenture Trustee or the holders of a
majority in principal amount of such Notes then outstanding, voting together
as a single class, may declare the principal of such Notes to be immediately
due and payable. Such declaration will constitute an Early Amortization
Event. Such declaration may, under certain circumstances, be rescinded by
the holders of a majority in principal amount of such Notes then outstanding.
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In such event, the Revolving Period will recommence in certain circumstances.
See "The Transfer and Servicing Agreements Early Amortization Events."
If the Notes of any Trust are declared due and payable following an
Event of Default with respect thereto, the related Indenture Trustee may
institute proceedings to (a) collect amounts due or foreclose on Trust
property, (b) exercise remedies as a secured party, (c) sell the related
Trust Estate or (d) elect to have the Trust maintain possession of the Trust
Estate and continue to apply Collections as if there had been no declaration
of acceleration (although the Early Amortization Period commenced by such
declaration will continue unless such declaration is rescinded). The
Indenture Trustee, however, is prohibited from selling the Receivables held
by the Trust following an Event of Default, unless (x) the holders of all the
outstanding Notes of such Trust consent to such sale, (y) the proceeds of
such sale are sufficient to pay in full the principal of and the accrued
interest on such outstanding Securities at the date of such sale or (z) in
certain cases, the Indenture Trustee determines that the Trust Estate would
not provide sufficient funds on an ongoing basis to make all payments on the
Notes as such payments would have become due if such obligations had not been
declared due and payable, and the Indenture Trustee obtains the consent of
the holders of a majority of the aggregate outstanding principal amount of
the Notes. Unless otherwise specified in the related Prospectus Supplement,
following a declaration that the Notes of a Trust are immediately due and
payable, (1) Noteholders will be entitled to pro rata repayment of principal
on the basis of their respective unpaid principal balances and (2) repayment
in full of the accrued interest on and unpaid principal balances of the Notes
will be made prior to any further distribution of interest on the
Certificates or in respect of the Certificate Balance.
Subject to the provisions of the related Indenture regarding the duties
of the Indenture Trustee, if an Event of Default occurs and is continuing
with respect to the Notes of any Trust, the Indenture Trustee will be under
no obligation to exercise any of the rights or powers under the Indenture at
the request or direction of any of the holders of such Notes, if the
Indenture Trustee reasonably believes it will not be adequately indemnified
against the costs, expenses and liabilities which might be incurred by it in
complying with such request. Subject to the provisions for indemnification
and certain limitations contained in the Indenture, the holders of a majority
in aggregate principal amount of the outstanding Notes of a Trust, voting
together as a single class, will have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the
Indenture Trustee and the holders of a majority in aggregate principal amount
of such Notes then outstanding, voting together as a single class, may, in
certain cases, waive any default with respect thereto, except a default in
the payment of principal or interest or a default in respect of a covenant or
provision of the Indenture that cannot be modified without the waiver or
consent of all of the holders of such Notes.
No holder of a Note will have the right to institute any proceeding
with respect to the related Indenture, unless (a) such holder previously has
given to the Indenture Trustee written notice of a continuing Event of
Default, (b) the holders of not less than 25% in aggregate principal amount
of the outstanding Notes, voting together as a single class, have made
written request of the Indenture Trustee to institute such proceeding in its
own name as Indenture Trustee, (c) such holder or holders have offered the
Indenture Trustee reasonable indemnity, (d) the Indenture Trustee has for 60
days failed to institute such proceeding and (e) no direction inconsistent
with such written request has been given to the Indenture Trustee during such
60-day period by the holders of a majority in aggregate principal amount of
such outstanding Notes.
If an Event of Default occurs and is continuing with respect to any
Trust and if it is known to the Indenture Trustee, the Indenture Trustee will
mail notice of the Event of Default to each Noteholder of such Trust within
90 days after it occurs. Except in the case of a failure to make any
required payment of principal or interest on any Note, the Indenture Trustee
may withhold the notice beyond such 90 day period if and so long as it
determines in good faith that withholding such notice is in the interests of
the Noteholders.
In addition, the Indenture Trustee and each Noteholder, by accepting
a Note, will covenant that they will not, for a period of one year and one
day after the termination of the related Trust Agreement, institute against
the related Trust or Seller any bankruptcy, reorganization or other
proceeding under any federal or state bankruptcy or similar law.
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Neither the Indenture Trustee in its individual capacity nor the Owner
Trustee in its individual capacity, nor any holder of a Certificate
including, without limitation, the Seller, nor any of their respective
owners, beneficiaries, agents, officers, directors, employees, affiliates,
successors or assigns will, in the absence of an express agreement to the
contrary, be personally liable for the payment of the principal of or
interest on the Notes or for the agreements of the related Trust contained in
the Indenture.
CERTAIN COVENANTS. Each Indenture provides that the related Trust may
not consolidate with or merge into any other entity, unless, among other
things (a) the entity formed by or surviving such consolidation or merger is
organized under the laws of the United States, any state or the District of
Columbia, (b) such entity expressly assumes the Trust's obligation to make
due and punctual payments on the Notes and the performance or observance of
every agreement and covenant of the Trust under the Indenture, (c) no Event
of Default shall have occurred and be continuing immediately after such
merger or consolidation, (d) the Trust has been advised that the ratings of
the related Securities would not be reduced or withdrawn by the Rating
Agencies as a result of such merger or consolidation and (e) the Trust has
received an opinion of counsel to the effect that such consolidation or
merger would have no material adverse tax consequences to the Trust or to any
related holder of Securities.
Each Trust will not, among other things, except as expressly permitted
by the Indenture, the Transfer and Servicing Agreements or certain related
documents for such Trust (collectively, the "Related Documents"), (a) sell,
transfer, exchange or otherwise dispose of any of the assets of the Trust,
(b) claim any credit on or make any deduction from the principal and interest
payable in respect of the related Notes (other than amounts withheld under
the Code or applicable state law) or assert any claim against any present or
former holder of such Notes because of the payment of taxes levied or
assessed upon the Trust, (c) dissolve or liquidate in whole or in part, (d)
permit the validity or effectiveness of the related Indenture to be impaired
or permit any person to be released from any covenants or obligations with
respect to the related Notes under such Indenture except as may be expressly
permitted thereby or (e) permit any lien, charge, excise, claim, security
interest, mortgage or other encumbrance to be created on or extend to or
otherwise arise upon or burden the Trust Estate or any part thereof, or any
interest therein or the proceeds thereof.
Except as specified in the related Prospectus Supplement, no Trust may
engage in any activity other than as described above under "The Trusts." No
Trust will incur, assume or guarantee any indebtedness other than
indebtedness incurred pursuant to the related Notes, the related Indenture,
or otherwise in accordance with the related Transfer and Servicing
Agreements.
ANNUAL COMPLIANCE STATEMENT. Each Trust will be required to file
annually with the related Indenture Trustee a written statement as to the
fulfillment of its obligations under the Indenture.
INDENTURE TRUSTEE'S ANNUAL REPORT. The Indenture Trustee will be
required to mail each year to all related Noteholders, to the extent required
under the Trust Indenture Act, a brief report relating to its eligibility and
qualification to continue as Indenture Trustee under the related Indenture,
any amounts advanced by it under the Indenture, the amount, interest rate and
maturity date of certain indebtedness owing by the Trust to the Indenture
Trustee in its individual capacity, the property and funds physically held by
the Indenture Trustee as such and any action taken by it that materially
affects the Notes and that has not been previously reported.
SATISFACTION AND DISCHARGE OF INDENTURE. The Indenture will be
discharged with respect to the Notes of any Trust upon the delivery of all
such Notes to the related Indenture Trustee for cancellation or, with certain
limitations, upon deposit of funds sufficient for the payment in full of all
of such Notes with the Indenture Trustee.
THE INDENTURE TRUSTEE
The Indenture Trustee for the Notes of a Trust will be specified in the
related Prospectus Supplement. The Indenture Trustee may give notice of its
intent to resign at any time, in which event the Trust will be obligated to
appoint a successor trustee. The Trust may also remove the Indenture Trustee
if the Indenture Trustee ceases to be eligible to continue as such under the
Indenture, becomes insolvent, or otherwise becomes incapable of acting. In
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such circumstances, the Trust will be obligated to appoint a successor
trustee. The holders of a majority of the aggregate principal amount of the
outstanding Notes will also be entitled to remove the Indenture Trustee and
appoint a successor. Any resignation or removal of the Indenture Trustee and
appointment of a successor trustee does not become effective until acceptance
of the appointment by the successor trustee.
REPORTS TO TERM NOTEHOLDERS
With respect to each Trust, on or prior to each Payment Date, the
Servicer will prepare and provide to the Indenture Trustee a statement to be
delivered to the related Term Noteholders on such Payment Date. With respect
to each series (to the extent applicable), each such statement will include
the following information as to the Term Notes with respect to such Payment
Date or the period since the previous Payment Date, as applicable:
(a) the amount, if any, of the distribution allocable to
principal on each series of Term Notes;
(b) the amount, if any, of the distribution allocable to
interest on each series of Term Notes;
(c) the aggregate outstanding principal balance for each series
of Term Notes, after giving effect to all payments reported under (a)
above on such date;
(d) the aggregate principal balance of the Revolving Notes and
the aggregate Certificate Balance;
(e) if applicable, the amount of outstanding Servicer Advances
on such date;
(f) the amount of the Monthly Servicing Fee paid to the
Servicer with respect to the related Collection Period or Periods, as
the case may be;
(g) the interest rate applicable for the next Payment Date for
any series of Term Notes with variable or adjustable rates;
(h) the amount, if any, withdrawn from or credited to any
Reserve Fund;
(i) the accumulated interest shortfalls, if any, on each series
or class of Securities and the change in such amounts from the
preceding Payment Date;
(j) the Trust Charge-Offs allocated to each series or class of
Securities and the change in such amounts from the preceding Payment
Date; and
(k) the balance of the Reserve Fund, if any, on such date,
after giving effect to changes therein on such date.
Each amount set forth pursuant to subclauses (a), (b) and (i) with
respect to Term Notes will be expressed as a dollar amount per $1,000 of the
initial principal balance of the Term Notes.
Within the prescribed period of time for tax reporting purposes after
the end of each calendar year during which any Term Notes are outstanding,
the Indenture Trustee will furnish (or cause to be furnished) to each person
who at any time during the preceding calendar year was a holder of record of
a Term Note (initially Cede, as the nominee of DTC), and received any payment
thereon from the Trust, a statement containing certain information for the
purpose of assisting such Noteholders in the preparation of their federal
income tax returns. As long as the holder of record of the Term Notes is
Cede, as nominee of DTC, beneficial owners of Term Notes will receive tax and
other information from Participants and Indirect Participants rather than
from the Indenture Trustee. See "Certain Federal Income Tax Consequences."
BOOK-ENTRY REGISTRATION
DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and
a "clearing agency" registered pursuant to Section 17A of the Exchange Act.
- 25 -
DTC was created to hold securities for its Participants and to facilitate the
clearance and settlement of securities transactions between Participants
through electronic book-entries, thereby eliminating the need for physical
movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations. Indirect access
to the DTC system is also available to others such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship
with a Participant, either directly or indirectly ("Indirect Participants").
Unless otherwise specified in the related Prospectus Supplement, owners
of beneficial interest in Notes ("Note Owners") that are not Participants or
Indirect Participants but desire to purchase, sell or otherwise transfer
ownership of, or other interests in, Term Notes may do so only through
Participants and Indirect Participants. In addition, Term Note Owners will
receive all distributions of principal and interest through Participants.
Under a book-entry format, Term Note Owners may experience some delay in
their receipt of payments since such payments will be forwarded by the
Indenture Trustee to Cede, as nominee for DTC. DTC will forward such
payments to Participants, which thereafter will forward them to Indirect
Participants or Term Note Owners. It is anticipated that the only "Term
Noteholder" of record will be Cede, as nominee of DTC. Term Note Owners will
not be recognized by the Indenture Trustee as Term Noteholders, as such term
is used in the Indenture, and Term Note Owners will be permitted to exercise
the rights of Term Noteholders only indirectly through DTC and its
Participants.
Under the rules, regulations and procedures creating and affecting DTC
and its operations (the "Rules"), DTC is required to make book-entry
transfers of Term Notes among Participants on whose behalf it acts with
respect to the Term Notes and to receive and transmit payments of principal
of, and interest on, the Term Notes. Participants and Indirect Participants
with which Term Note Owners have accounts with respect to the Term Notes
similarly are required to make book-entry transfers and receive and transmit
such payments on behalf of their respective Term Note Owners. Accordingly,
although Term Note Owners will not possess Term Notes, the Rules provide a
mechanism by which Term Note Owners will receive payments and will be able to
transfer their interests in Term Notes.
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 holder to
pledge Term Notes to persons or entities that do not participate in the DTC
system, or to otherwise act with respect to such Term Notes, may be limited
due to the lack of a physical certificate for such Term Notes.
DTC has advised the Seller that it will take any action permitted to be
taken by a Term Noteholder under the Indenture or other Related Document only
at the direction of one or more Participants to whose accounts with DTC the
Term Notes are credited. DTC may take conflicting actions with respect to
other undivided interests to the extent that such actions are taken on behalf
of Participants whose holdings include such undivided interests.
Except as required by law, neither the Administrator nor the Indenture
Trustee will have any liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of the Term Notes
of any series held by Cede, as nominee for DTC, or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
DEFINITIVE TERM NOTES
Unless otherwise specified in the related Prospectus Supplement, Term
Notes will be issued in fully registered, certificated form ("Definitive Term
Notes") to Term Noteholders or their nominees, rather than to DTC or its
nominee, only if (a) the Administrator advises the Indenture Trustee in
writing that DTC is no longer willing or able to discharge properly its
responsibilities as Depository with respect to the Term Notes and the Trust
is unable to locate a qualified successor, (b) the Administrator, at its
option, elects to terminate the book-entry system through DTC or (c) after
the occurrence of an Event of Default or a Servicing Default, holders
representing at least a majority of the outstanding principal amount of the
related Term Notes advise the appropriate trustee through DTC in writing that
the continuation of a book-entry system through DTC (or a successor thereto)
is no longer in the best interest of the Term Noteholders.
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Upon the occurrence of any event described in the immediately preceding
paragraph, DTC will notify the Note Owners and the Indenture Trustee of the
availability of Definitive Term Notes. Upon surrender by DTC of the
definitive certificates representing the Term Notes and receipt of
instructions for re-registration, the Indenture Trustee will reissue the
related Term Notes as Definitive Term Notes to holders thereof.
Payments of principal of, and interest on, the Definitive Term Notes
will thereafter be made in accordance with the procedures set forth in the
Indenture directly to holders of Definitive Term Notes in whose names the
Definitive Term Notes were registered at the close of business on the last
day of the preceding month. Such payments will be made by check mailed to
the address of such holder as it appears on the register maintained by the
Indenture Trustee. The final payment on any Definitive Term Note, however,
will be made only upon presentation and surrender of such Definitive Term
Note at the office or agency specified in the notice of final payment to the
holders thereof.
Definitive Term Notes will be transferable and exchangeable at the
offices of the appropriate trustee or of a registrar named in a notice
delivered to holders of Definitive Term Notes. No service charge will be
imposed for any registration of transfer or exchange, but the appropriate
trustee may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith.
THE REVOLVING NOTES
With respect to each Trust, one or more series of Revolving Notes will
be issued pursuant to the related Indenture on the Initial Closing Date and
may be issued from time to time thereafter. Each series of Revolving Notes
may have a different Revolver Interest Rate which may be fixed, variable,
contingent, adjustable or any combination of the foregoing, and a different
Targeted Final Payment Date. With respect to each Trust, the outstanding
principal balance of the Revolving Notes may fluctuate on a daily basis as
Principal Collections on the related Receivables not needed for principal
payments or distributions on related Term Notes or Certificates are, at the
discretion of the Seller or as otherwise described herein, (a) allocated to
the Seller in payment for Receivables purchased by the Trust, (b) allocated
to the Revolver Distribution Account as a payment of principal on the
Revolving Notes or (c) retained as the Cash Collateral Amount. With respect
to each Trust, the Seller, at its option, may on any day increase the
outstanding principal balance of the Revolving Notes to fund purchases of
Receivables, provided, however, that the Net Revolver Balance may not at any
time exceed the Maximum Revolver Balance. The Specified Maximum Revolver
Balance for a Trust will be set forth in the related Prospectus Supplement
and may be increased or decreased from time to time if certain conditions are
satisfied. See "The Transfer and Servicing Agreements--Additional
Issuances; Changes in Maximum Revolver Balance."
Unless otherwise provided in the related Prospectus Supplement, no
additional borrowings will be permitted under any Revolving Note during the
Wind Down Period or any Early Amortization Period for the related Trust.
Payments of principal on Revolving Notes will be made in the amounts and
priority, and at the times, specified in the related Prospectus Supplement.
One or more series of Revolving Notes for any Trust may have a Targeted Final
Payment Date or otherwise require principal payments during the related
Revolving Period and may provide for extensions and renewals under certain
circumstances. Unless otherwise specified in the related Prospectus
Supplement, each Revolving Note will initially be held by GMAC, but may be
transferred in whole or in part subject to certain conditions. Any
additional borrowings under, and principal payments on, the Revolving Notes
will be allocated among all outstanding Revolving Notes as determined by the
Seller in its sole discretion (subject to any agreements among the Seller and
any holders of the Revolving Notes). The Revolving Notes are not being
offered pursuant to this Prospectus or any related Prospectus Supplement.
THE CERTIFICATES
With respect to each Trust, the Certificates will be issued pursuant to
the terms of a Trust Agreement between the Seller and the Owner Trustee and
will represent the ownership interest in the Trust. Certificates will be
issued on the Initial Closing Date for a Trust and may be issued from time
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to time thereafter. The Certificate Rate for the Certificates may be fixed,
variable, contingent, adjustable or any combination of the foregoing, and may
vary by class of Certificate. The related Prospectus Supplement will set
forth the amount of, or method for determining, distributions of the
Certificate Balance and the timing of such distributions, including the
Stated Final Payment Date, which will be the same for each class of
Certificates related to each Trust. Unless otherwise specified in the
related Prospectus Supplement, principal and interest payments on the Notes
will be senior to distributions of Certificate Balance and interest on the
related Certificates. The Certificates are not being offered pursuant to
this Prospectus or any related Prospectus Supplement.
THE TRANSFER AND SERVICING AGREEMENTS
Except as otherwise specified in the related Prospectus Supplement, the
following summary describes certain terms of (a) the Pooling and Servicing
Agreement pursuant to which the Seller will purchase Eligible Receivables
from GMAC and the Servicer will agree to service all Receivables in the
related Accounts, (b) the Trust Sale and Servicing Agreement pursuant to
which the Trust will acquire the Receivables purchased by the Seller from the
Seller and agree to the servicing of the Receivables by the Servicer, (c) the
Trust Agreement pursuant to which the Trust will be created and Certificates
will be issued and (d) the Administration Agreement pursuant to which GMAC,
as administrator, will undertake certain administrative duties with respect
to the Trust (collectively, such agreements being referred to as the
"Transfer and Servicing Agreements"). Forms of the Transfer and Servicing
Agreements have been filed as exhibits to the Registration Statement of which
this Prospectus forms a part. The Seller will provide a copy of the Transfer
and Servicing Agreements (without exhibits) upon request of a holder of
Securities described therein. This summary does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, all of
the provisions of the Transfer and Servicing Agreements. Where particular
provisions or terms used in the Transfer and Servicing Agreements are
referred to, the actual provisions are incorporated by reference as part of
such summary.
SALE AND ASSIGNMENT OF RECEIVABLES AND COLLATERAL SECURITY
GMAC will sell and assign to the Seller, without recourse, on the
Initial Closing Date, its entire interest in the Eligible Receivables under
the Accounts included in the related Pool of Accounts as of the Initial Cut-
Off Date and, on each date on which Receivables are originated in an Account
in the related Pool of Accounts (except as described below under "Insolvency
Events"), its entire interest in, all Eligible Receivables created on such
date in the Accounts in the related Pool of Accounts and, in each case, the
related Collateral Security and the proceeds of all of the foregoing,
pursuant to a Pooling and Servicing Agreement between GMAC and the Seller.
For each Trust, on the Initial Closing Date and on each Receivables Purchase
Date, the Seller will transfer and assign to the applicable Trust, without
recourse (except as expressly provided therein), the Eligible Receivables and
the other assets purchased from GMAC on such date, pursuant to a Trust Sale
and Servicing Agreement among the Seller, the Servicer and the Trust. The
Owner Trustee, on behalf of the Trust, together with the Indenture Trustee
with respect to the Notes, concurrently with the initial transfer and
assignment to the Trust, will execute and deliver to the Seller the related
Notes and the related Certificates to be issued on the Initial Closing Date.
Unless otherwise provided in the related Prospectus Supplement, the Seller
will sell the Securities and will apply the net proceeds received from the
sale of the Securities to the purchase of the related Receivables from GMAC.
In each Pooling and Servicing Agreement, in connection with the sale of
the related Receivables to the Seller, GMAC will agree to indicate in its
records that the Receivables and Collateral Security have been sold to the
Seller, and that, upon the execution of a Trust Sale and Servicing Agreement,
the Seller has sold and assigned the Receivables to the Trust. In addition,
GMAC will agree to provide a complete list to the Seller showing for each
Account to be included in the Pool of Accounts, as of the Initial Cut-Off
Date, its account number and the outstanding principal balance of Receivables
that GMAC represents are Eligible Receivables under such Account. In the
related Trust Sale and Servicing Agreement, the Trust will accept the
designation of GMAC as custodian to maintain possession, as the Trust's
agent, of the documents relating to the Receivables. GMAC will not deliver
to the Seller, the Owner Trustee or the Indenture Trustee any records or
agreements relating to the Accounts or the Receivables. To assure uniform
quality in servicing both the Receivables related to any Trust and the
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Servicer's own portfolio of receivables, as well as to facilitate servicing
and save administrative costs, the records and agreements relating to the
Accounts and Receivables related to any Trust will not be segregated from
those relating to other accounts and receivables of GMAC or otherwise marked
to reflect the sale of the Receivables therein to the Seller or the
subsequent sale to the related Trust. However, with respect to each Trust,
GMAC will file UCC financing statements with respect to the sale, transfer
and assignment of Receivables to the Seller and the Seller will file UCC
financing statements with respect to the sale, transfer and assignment of the
Receivables to such Trust. In addition, each Trust will file UCC financing
statements with respect to the security interest in the Trust's assets
granted to the Indenture Trustee under the Indenture to secure the Trust's
obligations thereunder. See "Certain Legal Aspects Transfer of Receivables."
Because the documents evidencing the Receivables will remain in GMAC's
possession and will not be stamped or otherwise marked to reflect the sale
and assignment of the interests in the Receivables to the Seller or the
Trust, if a subsequent purchaser were able to take possession of the
Receivables without knowledge of the assignment (and if the Receivables are
deemed "chattel paper" under applicable law), the Trust's interests in such
Receivables could be defeated. See "Certain Legal Aspects Transfer of
Receivables."
With respect to each Trust, pursuant to the Trust Sale and Servicing
Agreement, as described in "Addition and Removal of Accounts" below, the
Seller has the right (subject to certain limitations) to designate from time
to time Additional Accounts to be included in the related Pool of Accounts.
In respect of any such designation, the Seller will purchase from GMAC the
Eligible Receivables in such Additional Accounts and GMAC will follow the
procedures set forth in the preceding paragraph, except that the list will
show information for such Additional Accounts as of the Additional Cut-Off
Date.
REPRESENTATIONS AND WARRANTIES
In each Pooling and Servicing Agreement, GMAC will represent and
warrant to the Seller, among other things, that: (a) as of the Initial Cut-
Off Date (or, in the case of an Additional Account, as of the related
Additional Cut-Off Date), each Account (or Additional Account) included in
the Pool of Accounts is an Eligible Account; and (b) as of the Initial Cut-
Off Date (or, in the case of an Additional Account, as of the related
Additional Cut-Off Date) and on each Receivables Purchase Date each
Receivable conveyed to the Seller on such date that is identified as an
Eligible Receivable is an Eligible Receivable.
In the related Trust Sale and Servicing Agreement, the Seller will
assign the representations and warranties of GMAC with respect to the
Accounts and the Receivables to the Trust, and will represent and warrant to
the Trust that the Seller has taken no action which would cause such
representations and warranties of GMAC to be false in any material respect as
of the Initial Cut-Off Date, each Additional Cut-Off Date and each
Receivables Purchase Date, as the case may be.
No later than two Business Days following the discovery by the Seller
and the Servicer of a breach of any representation or warranty of the Seller
or GMAC that materially and adversely affects the interests of the related
Trust in any Receivable or of any Receivable held by the Trust the payment of
a portion or all of which has been deferred pursuant to DPP, an instalment
sales program or similar arrangement (collectively, a "Warranty Receivable"),
unless and to the extent the breach is cured in all material respects, (a) if
such breach or deferral is a breach of a representation or warranty of GMAC,
the Seller and the Servicer will use reasonable efforts to enforce the
obligation of GMAC under the Pooling and Servicing Agreement to pay the
related Warranty Payment (as defined below) and repurchase such Receivable or
(b) if such breach or deferral is a breach of a representation or warranty of
the Seller, the Seller will repurchase such Receivable. Without limiting the
generality of the foregoing, a Receivable will not be an Eligible Receivable,
and thus will be subject to repurchase if and to the extent (i) the principal
amount thereof is adjusted downward because of a rebate, refund, credit
adjustment or billing error to the related Dealer or (ii) such Receivable was
created in respect of a Vehicle that was refused or returned by a Dealer.
The price for any such repurchase by GMAC or the Seller (the "Warranty
Payment") will be equal to the principal amount of such Receivable (or in the
case of a breach or deferral affecting less than the entire principal amount
of a Receivable, to the extent of the breach or deferral) plus all accrued
and unpaid interest thereon through the date of purchase. The principal
portion of the Warranty Payment will be treated as Additional
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Trust Principal and the remainder will be included in Interest Collections.
All such Warranty Payments will be deposited into the related Collection
Account on the related Distribution Date. Such repurchase obligations of the
Seller and GMAC constitute the sole remedy available to the Securityholders,
the Indenture Trustee or the Owner Trustee for any such uncured breach or
deferral.
In each Pooling and Servicing Agreement, GMAC will also make
representations and warranties to the Seller to the effect that, among other
things, as of the closing date for the sale of any Securities: (a) GMAC is
duly incorporated and in good standing, it has the authority to consummate
the transactions contemplated by the related Transfer and Servicing
Agreements and each such Transfer and Servicing Agreement constitutes a
legal, valid and binding obligation of GMAC; and (b) the transfer of the
Receivables and the related Vehicle Collateral Security, pursuant to the
related Pooling and Servicing Agreement constitutes a valid sale, transfer
and assignment to the Seller of all right, title and interest of GMAC
therein, whether then existing or thereafter created, and the proceeds
thereof. If the breach of any of the representations and warranties
described in this paragraph results in the obligation of the Seller under the
related Trust Sale and Servicing Agreement to purchase the Receivables and
the related Collateral Security as described below, GMAC will be obligated to
repurchase such property for an amount equal to the Reassignment Amount. In
other circumstances in which the Seller is obligated under a Trust Sale and
Servicing Agreement to purchase such property, GMAC will not be obligated to
repurchase such property.
In each Trust Sale and Servicing Agreement, the Seller will also make
representations and warranties to the related Trust to the effect that, among
other things, as of the closing date for the sale of any Securities: (a) the
Seller is duly incorporated and in good standing, it has the authority to
consummate the transactions contemplated by the Trust Sale and Servicing
Agreement and the Trust Sale and Servicing Agreement constitutes a legal,
valid and binding agreement of the Seller; and (b) the transfer of the
Receivables pursuant to the Trust Sale and Servicing Agreement constitutes a
valid sale, transfer and assignment to the Trust of all right, title and the
interest of the Seller in such Receivables and the related Collateral
Security, whether then existing or thereafter created, and the proceeds
thereof. With respect to each Trust, if the breach of any of the
representations and warranties described in this paragraph has a material
adverse effect on the interests of the Securityholders, then any of the
Indenture Trustee, the Owner Trustee or the holders of the outstanding
Securities evidencing not less than a majority of the outstanding principal
amount of the Notes and a majority of the Voting Interests of all outstanding
Certificates, by written notice to the Seller, may direct the Seller to
accept the reassignment of all Receivables and the related Vehicle Collateral
Security within 60 days of such notice, or within such longer period
specified in such notice. The Seller will be obligated to accept such
reassignment and pay such Reassignment Amount on a Distribution Date
occurring within such applicable period. Such reassignment will not be
required to be made, however, if at or prior to the end of such applicable
period, such representations and warranties are then true and correct in all
material respects and any material adverse effect caused by such breach has
been cured. With respect to each Trust, the payment of the Reassignment
Amount for all outstanding Securities will be considered as payment in full
for all Receivables and the related Collateral Security. The obligation of
the Seller to pay the Reassignment Amount as described above will constitute
the sole remedy respecting a breach of the representations and warranties
available to the Securityholders, the Owner Trustee or Indenture Trustee. It
is not expected that the Seller will have significant assets other than its
rights under the Pooling and Servicing Agreement and the Trust Sale and
Servicing Agreement with respect to each Trust.
In each Pooling and Servicing Agreement, GMAC will covenant that,
except for the sale and conveyances under the Pooling and Servicing Agreement
and the interests created under the Trust Sale and Servicing Agreement or as
otherwise permitted therein, GMAC will not sell, pledge, assign or transfer
any interest in any Eligible Receivables or the related Vehicle Collateral
Security subject to such agreements to any other person.
ADDITION AND REMOVAL OF ACCOUNTS
With respect to each Trust, and subject to the conditions described
below, under the Pooling and Servicing Agreement, GMAC may offer to
designate, and the Seller may request the designation of, additional Accounts
to be included in the Pool of Accounts and, under the Trust Sale and
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Servicing Agreement, the Seller has the right to designate from time to time
additional Accounts to be included in the related Pool of Accounts. Unless
otherwise specified in the related Prospectus Supplement, the addition of any
such Account to the related Pool of Accounts (an "Additional Account") is
subject to the following conditions, among others: (a) each such Additional
Account must be an Eligible Account; (b) the Seller must represent and
warrant that the inclusion of such Additional Accounts in the related Pool of
Accounts will not, in the reasonable belief of the Seller, cause an Early
Amortization Event to occur; and (c) unless otherwise set forth in the
related Prospectus Supplement, each Rating Agency must have provided written
confirmation that such addition will not result in a reduction or withdrawal
of the rating of any outstanding related Securities. On the Addition Date
for any Additional Account, all Eligible Receivables then in such Account
will be sold by GMAC to the Seller and will be transferred by the Seller to
the Trust.
With respect to each Trust, even though each Additional Account must be
an Eligible Account, Additional Accounts may not be of the same credit
quality as the initial Accounts because, among other things, such Accounts
may not have been part of the U.S. Portfolio on the Initial Cut-Off Date.
Additional Accounts may have been originated at a different time using credit
criteria different from those applied to the initial Accounts.
With respect to each Trust, upon the satisfaction of certain conditions
specified in the Trust Sale and Servicing Agreement, the Seller will have the
right to remove Accounts from the Pool of Accounts. To so remove Accounts,
after proper notice, the Seller (or the Servicer on its behalf) must, among
other things: (a) furnish to the Owner Trustee a list of the Accounts to be
so removed from the Pool of Accounts (the "Selected Accounts") specifying for
each Selected Account, its account number and the aggregate balance of
Eligible Receivables in such Account; (b) represent and warrant that the
removal of the Selected Accounts will not, in the reasonable belief of the
Seller, result in the occurrence of an Early Amortization Event; and
(c) represent and warrant that the Seller and the Servicer have not received
notice from any Rating Agencies that such removal will result in a reduction
or withdrawal of the rating of any of the outstanding related Securities. In
addition, if an Account in the Pool of Accounts ceases to be an Eligible
Account, such Account will be deemed a Selected Account on such date. In
either case, Receivables arising thereafter in the Selected Account will not
be transferred to the Trust. Receivables in such Account transferred to the
Trust prior to such date and Collections thereon will continue to be assets
of the Trust. Unless otherwise provided in the related Prospectus
Supplement, the Servicer will allocate all Principal Collections on
Receivables in a Selected Account to the oldest Receivables in such Selected
Account. A Selected Account will be deemed removed from the Pool of Accounts
on the date on which the balance of all Receivables in such Account held by
the Trust becomes zero.
BANK ACCOUNTS
With respect to each Trust, the Servicer will establish and maintain
with the related Indenture Trustee one or more accounts, in the name of the
Indenture Trustee on behalf of the holders of the related Securities, into
which the Trust's share of all payments made on or with respect to the
Receivables in the Accounts related to such Trust will be deposited (the
"Collection Account"). With respect to each Trust, the Servicer will
establish and maintain with the related Indenture Trustee one or more
accounts, in the name of the Indenture Trustee, on behalf of the holders of
the related Term Notes and on behalf of the related Revolving Notes, in which
amounts to be applied for payment to such Noteholders will be deposited and
from which all payments to such Noteholders will be made (the "Note
Distribution Account" and the "Revolver Distribution Account," respectively).
In addition, with respect to each Trust, the Servicer will establish and
maintain with the related Owner Trustee one or more accounts, in the name of
the Owner Trustee on behalf of the related Certificateholders, in which
amounts to be applied for distribution to such Certificateholders will be
deposited and from which all distributions to such Certificateholders will be
made (the "Certificate Distribution Account," and together with the Note
Distribution Account and the Revolver Distribution Account, the "Distribution
Accounts").
With respect to each Trust, funds in the Collection Account, the Note
Distribution Account, the Revolver Distribution Account and the Reserve Fund,
if any, and other accounts identified as such in the related Prospectus
Supplement (collectively, the "Designated Accounts") and the Certificate
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Distribution Account will be invested as provided in the Trust Sale and
Servicing Agreement in Eligible Investments. Eligible Investments will
generally be limited to investments acceptable to the Rating Agencies as
being consistent with the rating of the related Securities. Except as
described below or in the related Trust Sale and Servicing Agreement,
Eligible Investments will be limited to obligations or securities that mature
on or before the next Distribution Date or, in the case of the Note
Distribution Account, the date of the next payment with respect to the Term
Notes. To the extent permitted by the Rating Agencies, funds in any Reserve
Fund and other cash collateral accounts, if any, may be invested in related
Term Notes that will not mature prior to the date of the next payment or
distribution with respect to such Term Notes. Except as otherwise specified
in the related Prospectus Supplement, such Term Notes may only be sold prior
to their maturity at a price equal to or greater than the unpaid principal
balance thereof if, following such sale, the amount on deposit in any Reserve
Fund would be less than the related Reserve Fund Required Amount or other
applicable limits, if any. Thus, the amount of cash in any Reserve Fund at
any time may be less than the balance of the Reserve Fund. If the amount
required to be withdrawn from the Reserve Fund to cover shortfalls in
Collections on the Receivables or otherwise (as provided in the related
Prospectus Supplement) exceeds the amount of cash in the Reserve Fund, a
temporary shortfall in the amounts available for distribution could result.
Except as otherwise specified in the related Prospectus Supplement,
investment earnings on funds deposited in the Designated Accounts and the
Certificate Distribution Account, net of losses and investment expenses, will
be Investment Proceeds and will be available for distribution as described in
the related Prospectus Supplement. References to amounts on deposit in any
Designated Account or the Certificate Distribution Account will not include
the amount of any Investment Proceeds.
The Designated Accounts and the Certificate Distribution Account will
be maintained as Eligible Deposit Accounts. "Eligible Deposit Account" means
either (a) a segregated account with an Eligible Institution or (b) a
segregated trust account with the corporate trust department of a depository
institution organized under the laws of the United States of America or any
one of the states thereof or the District of Columbia (or any domestic branch
of a foreign bank), having corporate trust powers and acting as trustee for
funds deposited in such account, so long as any of the securities of such
depository institution has a credit rating from each Rating Agency then
rating such securities in one of its generic rating categories which
signifies investment grade. "Eligible Institution" means, with respect to a
Trust, either (a) the corporate trust department of the related Indenture
Trustee or Owner Trustee, as applicable, or (b) a depository institution
organized under the laws of the United States of America or any one of the
states thereof or the District of Columbia (or any domestic branch of a
foreign bank), (i) which has either (A) a long-term unsecured debt rating
acceptable to the Rating Agencies or (B) a short-term unsecured debt rating
or certificate of deposit rating acceptable to the Rating Agencies and (ii)
whose deposits are insured by the Federal Deposit Insurance Corporation or
any successor thereto.
Any other accounts to be established with respect to a Trust will be
described in the related Prospectus Supplement.
COLLECTIONS
With respect to each Trust, the Servicer will deposit Principal
Collections and Interest Collections on the related Receivables into the
related Collection Account on a daily basis. However, except as otherwise
described in the related Prospectus Supplement, at any time that (a) GMAC is
the Servicer, (b) no Servicing Default has occurred and is continuing and
(c) GMAC either (i) maintains a short-term debt rating of at least A-1 by
Standard & Poor's and P-1 by Moody's, (ii) arranges for and maintains a
letter of credit or other form of credit support or enhancement in respect of
the Servicer's obligations to make deposits of Collections on the related
Receivables in such Collection Account that is acceptable in form and
substance to each Rating Agency or (iii) otherwise obtains the written
confirmation from each Rating Agency that the failure by GMAC to make daily
deposits will not result in a downgrade, suspension or withdrawal of the
rating of any of the outstanding related Securities that it is then rating,
then the Servicer need not deposit Principal Collections and Interest
Collections into the Collection Account on a daily basis but may use all such
Collections for its own benefit until the Business Day immediately preceding
the related Distribution Date; provided, that the Cash Collateral Amount for
the last day of any Collection Period shall be deposited into the Collection
Account (to the extent not already on deposit therein) no later than the
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second Business Day of the following Collection Period. On any date on which
Collections are deposited in the Collection Account for a Trust, the Servicer
will distribute directly to GMAC (on account of the Retained Property) an
amount equal to Principal Collections on the Receivables included in the
Retained Property. Whether or not the Servicer is then making daily deposits
of Collections, if, at any time, the amount on deposit in a Collection
Account exceeds the amount required to be so deposited, the Servicer will be
permitted to withdraw from such Collection Account and pay to the Seller or
GMAC, as applicable, the amount of such excess.
APPLICATION OF COLLECTIONS
INTEREST COLLECTIONS. With respect to each Trust, except as set forth
in the related Prospectus Supplement, for each Collection Period, Trust
Interest Collections, receipts under credit, liquidity and other enhancement
arrangements, Servicer Advances, Investment Proceeds and amounts in the
Reserve Fund will be applied to make interest payments on the related
Securities, pay related Monthly Servicing Fees, make payments under credit,
liquidity and other enhancement arrangements, reimburse Servicer Advances and
cover certain losses on Defaulted Receivables, all as more fully set forth in
the related Prospectus Supplement. Unless otherwise provided in the related
Prospectus Supplement, Interest Collections in excess of Trust Interest
Collections will be paid to GMAC on account of the Retained Property.
PRINCIPAL COLLECTIONS.
REVOLVING PERIOD. During the Revolving Period for a Trust and
so long as no series of related Term Notes is in a Payment Period, unless
otherwise provided in the related Prospectus Supplement, no amount is
required to be set aside to make principal payments on such Term Notes and
distributions of Certificate Balance on related Certificates. Accordingly,
all Trust Principal Collections and Additional Trust Principal on any date
during the Revolving Period (together with the Cash Collateral Amount from
the prior date) will be available for reinvestment in additional Receivables
to be purchased from the Seller and will be paid to the Seller to the extent
so reinvested, provided that such amounts will be held as the Cash Collateral
Amount to the extent necessary to ensure that the Daily Trust Invested Amount
for such date equals the Daily Trust Balance for such date. Such
determination will be made after giving effect to any payments of principal
(including required principal payments) on, or additional borrowings under,
the Revolving Notes on such date and all collections on, and reinvestments
in, Receivables on such date. Unless otherwise provided in the related
Prospectus Supplement, Principal Collections in excess of Trust Principal
Collections will be paid to GMAC on account of the Retained Property.
PAYMENT PERIODS. During the Payment Period for any series of
Term Notes of a Trust, Available Trust Principal will be allocated to such
series and available to make principal payments on such Term Notes to the
extent described in the related Prospectus Supplement. Principal payments on
any such series of Term Notes will be made in the amounts and at the times
described in the related Prospectus Supplement. Available Trust Principal
not so allocated to Term Notes will be applied as described above under
"Revolving Period." The Payment Period, if any, for a series of Term Notes
will commence on the first to occur of the related Scheduled Series Payment
Period Commencement Date and the Series Early Payment Event.
EARLY AMORTIZATION AND WIND DOWN PERIODS. During an Early
Amortization Period or the Wind Down Period for any Trust, Trust Principal
Collections will be retained by the Trust and not paid to Seller to the
extent required to be set aside for the purpose of making payments of
principal on the related Notes and distributions with respect to Certificate
Balance on the related Certificates, all as more fully set forth in the
related Prospectus Supplement. Unless otherwise provided in the related
Prospectus Supplement, during any such period, no additional borrowings will
be permitted under the related Revolving Notes. For each Collection Period
during an Early Amortization Period or the Wind Down Period for a Trust,
Trust Principal Collections, together with other amounts, if any, comprising
Available Trust Principal, will be applied to make the required deposits into
the Note Distribution Account, the Revolver Distribution Account and the
Certificate Distribution Account. The relative priorities of such deposits
and the amounts required to be so deposited for any Distribution Date will be
set forth in the related Prospectus Supplement. Unless otherwise
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provided in the related Prospectus Supplement, during the Wind Down Period
for a Trust, the amount to be so applied to payments on Securities will be
limited by the applicable Controlled Deposit Amount. During an Early
Amortization Period for a Trust, any such limit will not apply and, in
general, all Trust Principal Collections and other amounts constituting
Available Trust Principal will be available to make payments on the
Securities. Payments will be made on Securities during the Wind Down Period
and any Early Amortization Period to the extent, if any, described in the
related Prospectus Supplement. Unless otherwise provided in the related
Prospectus Supplement, Principal Collections in excess of Trust Principal
Collections will be paid to GMAC on account of the Retained Property.
SERVICER ADVANCES
The Servicer will make advances (each, a "Servicer Advance") to each
Trust to the extent and for the purposes set forth in the related Prospectus
Supplement. Unless otherwise provided, the Servicer will agree to make
advances to the extent that the Servicer, in its sole discretion, expects to
recoup such advances from subsequent Collections and other amounts available
for such purpose as described in the related Prospectus Supplement.
LIQUIDITY AND CREDIT SUPPORT
The amounts and types of credit, liquidity and other enhancement
arrangements and the provider thereof, if applicable, with respect to each
Trust will be set forth in the related Prospectus Supplement. If and to the
extent provided in the related Prospectus Supplement, such arrangements may
be in the form of reserve accounts, letters of credit, credit or liquidity
facilities, repurchase obligations, third party payments or other support,
cash deposits or such other arrangements as may be described in the related
Prospectus Supplement or any combination of two or more of the foregoing. In
addition, Securities may have the benefit of interest rate swaps, caps and
floors and other derivative products, all as more fully described in the
related Prospectus Supplement. Such arrangements may be for the benefit of
one or more series or classes of Securities or all Securities issued by a
Trust as described in the related Prospectus Supplement.
The presence of a Reserve Fund and other forms of liquidity and credit
support, if any, are intended to increase the likelihood of receipt by the
Securityholders that are to benefit from such arrangements of the full amount
of principal or Certificate Balance, as the case may be, and interest due
thereon and to decrease the likelihood that such Securityholders will
experience losses. Unless otherwise specified in the related Prospectus
Supplement, such arrangements will not provide protection against all risks
of loss and will not guarantee repayment of the entire principal balance or
Certificate Balance, as the case may be, and interest thereon. If losses
occur which exceed the amount covered by applicable arrangements or which are
not so covered, Securityholders will bear their allocable share of
deficiencies as described herein and in the related Prospectus Supplement.
In addition, if an arrangement is for the benefit of more than one series or
class of Securities issued by a Trust, Securityholders of any such series or
class will be subject to the risk that such arrangement will be exhausted by
the claims of Securityholders of other series or classes.
RESERVE FUND. If so provided in the related Prospectus Supplement, for
each Trust, there will be established and maintained in the name of the
Indenture Trustee for the benefit of the Securityholders a Reserve Fund.
Such Reserve Fund will be an Eligible Deposit Account and funds in any
Reserve Fund will be invested in Eligible Investments. Except as otherwise
provided in the related Prospectus Supplement, with respect to each Trust,
any investment earnings (net of losses and investment expenses) with respect
to the related Reserve Fund will be Investment Proceeds and will be available
for distribution as described in the related Prospectus Supplement. Amounts
on deposit in any Reserve Fund (other than Investment Proceeds) will be
available to make payments and distributions on related Securities, to cover
any related Trust Defaulted Amounts and for other purposes to the extent
described in the related Prospectus Supplement. The Reserve Fund Initial
Deposit, if any, made by the Seller will be specified in the related
Prospectus Supplement. After the Initial Closing Date for any Trust, the
Seller may make additional deposits into any related Reserve Fund in
connection with the issuance of additional Securities or an increase in the
Specified Maximum Revolver Balance. In addition, during the term of any
Trust, the Seller will have the option to make an additional deposit into any
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related Reserve Fund in an amount not in excess of 1% of the Maximum Pool
Balance. Available Trust Interest will also be available for deposit into
any Reserve Fund to the extent described in the related Prospectus
Supplement. Unless otherwise provided in the related Prospectus Supplement,
with respect to each Trust, amounts on deposit in the Reserve Fund will be
paid to the Seller to the extent such amounts exceed the Reserve Fund
Required Amount set forth in the related Prospectus Supplement or as
otherwise agreed by the Seller, and on the Trust Termination Date any funds
remaining on deposit in the Reserve Fund will be distributed to the Seller.
Following distribution to the Seller of amounts from the Reserve Fund,
Securityholders will not have any rights in, or claims to, such amounts.
DISTRIBUTIONS
With respect to each Trust, payments of principal and interest on the
related Term Notes and Revolving Notes and distributions with respect to
Certificate Balance and interest on the related Certificates will be made
from amounts deposited into the Note Distribution Account, the Revolver
Distribution Account and the Certificate Distribution Account, respectively,
as described in the related Prospectus Supplement. The timing, calculation,
allocation, order, source, priorities and requirements for all payments to
each series of Noteholders and all distributions to Certificateholders will
be set forth in the related Prospectus Supplement. Payments of principal on
Notes and distributions in respect of Certificate Balance will be subordinate
to distributions in respect of interest, and distributions in respect of the
Certificates will be subordinate to payments on the Notes, all as more fully
described in the related Prospectus Supplement. With respect to each Trust,
unless otherwise specified in the related Prospectus Supplement, payments of
principal and interest on all series of Term Notes will have the same
priority of payment. Payments of principal and interest on Term Notes may be
senior (other than in circumstances related to the occurrence of an Event of
Default) or equivalent to payment on the related Revolving Notes, as
described in the related Prospectus Supplement.
NET DEPOSITS AND PAYMENTS
As an administrative convenience, the Servicer will be permitted to
make the deposit of Interest Collections, Principal Collections, Servicer
Advances and other amounts, for any Trust, including amounts relating to any
credit, liquidity or other enhancement arrangement, on any date net of
distributions or payments to be made to the Servicer on behalf of such Trust
on such date. The Servicer, however, will account to the Indenture Trustee,
the Owner Trustee and the Securityholders with respect to each Trust as if
all deposits, distributions and transfers were made individually. In
addition, in connection with any Trust, at any time that the Servicer is not
required to remit Collections on a daily basis and payments or distributions
on any Securities are not required to be made monthly, the Servicer may
retain amounts allocable to the Securities or the Distribution Accounts until
the related Payment Date or Distribution Date. Pending deposit into any such
Account, such Collections may be employed by the Servicer at its own risk and
for its own benefit and will not be segregated from its own funds. In such
cases, all distributions, deposits or other remittances will be treated as
having been distributed, deposited or remitted on the applicable Distribution
Date for purposes of determining other amounts required to be distributed,
deposited or otherwise remitted on such Distribution Date and other
Distribution Dates.
DEFAULTS AND CHARGE-OFFS
With respect to each Trust, the extent to which Trust Interest
Collections, funds in the related Reserve Fund and other amounts are
available to cover the Trust Defaulted Amount will be described in the
related Prospectus Supplement. Any Trust Defaulted Amount not so covered
will constitute Trust Charge-Offs. Trust Charge-Offs may be covered in
subsequent periods, but only to the extent described in the related
Prospectus Supplement. Amounts not so covered will reduce the principal
amount of the Notes or the Certificate Balance, as the case may be (which
will reduce the Daily Trust Invested Amount) and will be allocated among the
Securities as set forth in the related Prospectus Supplement.
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EARLY AMORTIZATION EVENTS
Unless otherwise provided in the related Prospectus Supplement, an
"Early Amortization Event" with respect to any Trust refers to any of the
following events:
(a) failure on the part of the Seller, GMAC or the Servicer to
observe or perform in any material respect any of its covenants or agreements
set forth in the related Pooling and Servicing Agreement or the related Trust
Sale and Servicing Agreement, as applicable, which failure continues
unremedied for any applicable grace period; provided, however, that no Early
Amortization Event will be deemed to exist if the Receivables affected by
such failure are repurchased by the Seller, GMAC or the Servicer, as
applicable, in accordance with the related Transfer and Servicing Agreements;
(b) any representation or warranty made by GMAC in the related
Pooling and Servicing Agreement or by the Seller in the related Trust Sale
and Servicing Agreement or any information contained on the Schedule of
Accounts proves to have been incorrect in any material respect when made and
continues to be incorrect in any material respect for a period of 60 days
after written notice and, as a result, the interests of the Securityholders
are materially and adversely affected; provided, however, that no Early
Amortization Event will be deemed to occur if the Receivables relating to
such representation or warranty are repurchased by GMAC or the Seller, as
applicable, in accordance with the related Transfer and Servicing Agreements;
(c) failure to pay (or set aside for payment) all amounts required to
be paid as principal on the Notes or distributed with respect to Certificate
Balance on the applicable Stated Final Payment Date;
(d) on any Distribution Date, the average of the Monthly Payment
Rates for the three preceding Collection Periods is less than 20%;
(e) the amount on deposit in the related Reserve Fund is less than
the Reserve Fund Required Amount on three consecutive Distribution Dates;
(f) a notice setting forth one or more Events of Default under the
related Indenture and declaring the unpaid principal amount of the related
Notes immediately due and payable has been given pursuant to such Indenture;
provided, however, that if no other Early Amortization Event has occurred and
is continuing and so long as the Scheduled Revolving Period Termination Date
has not occurred, if the Seller so elects, the Early Amortization Period
resulting from such occurrence will terminate and the Revolving Period will
recommence if a notice rescinding such declaration is given pursuant to such
Indenture;
(g) the occurrence of certain events of bankruptcy, insolvency or
receivership relating to any of General Motors, the Servicer (or GMAC, if it
is not the Servicer) or the Seller;
(h) on any Distribution Date, as of the last day of the related
Collection Period, the aggregate principal balance of Receivables owned by
the Trust which were advanced against Used Vehicles exceeds 10% of the Daily
Trust Balance (for purposes of this clause (h), General Motors vehicles which
are sold to daily rental car operations, repurchased pursuant to General
Motors repurchase agreements and subsequently sold at auction to a General
Motors-franchised dealer will not be considered to be Used Vehicles);
(i) on any Distribution Date, the Reserve Fund Required Amount for
such Distribution Date exceeds the amount on deposit in the related Reserve
Fund by more than the Reserve Fund Trigger Amount as specified in the related
Prospectus Supplement;
(j) on any Distribution Date, the average Daily Trust Balance is less
than 75% of the sum of the average outstanding principal balance of the
related Term Notes and the average Certificate Balance (in each case, such
average being determined over the six Collection Periods immediately
preceding such Distribution Date (or, if shorter, the period from the related
Initial Closing Date through and including the last day of the immediately
preceding Collection Period));
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(k) on any Distribution Date, as of the last day of each of the two
immediately preceding Collection Periods, the aggregate principal balance of
all related Available Receivables is less than 70% of the aggregate principal
balance of all Receivables (including Receivables owned by GMAC) in the
Accounts in the related Pool of Accounts;
(l) on the last day of any Collection Period the aggregate principal
balance of the related Eligible Receivables plus the Cash Collateral Amount
held in the related Collection Account equals less than the sum of the
aggregate outstanding principal balance of all related Notes plus the
aggregate outstanding Certificate Balance and such situation remains
unremedied on the tenth day of the following Collection Period; and
(m) any other Early Amortization Event set forth in the related
Prospectus Supplement.
Upon the occurrence of any event described above, an Early Amortization
Event with respect to a Trust will be deemed to have occurred without any
notice or other action on the part of any other party. The Early
Amortization Period will commence as of the day on which the Early
Amortization Event is deemed to occur. During an Early Amortization Period
for a Trust, Trust Principal Collections and other amounts constituting
Available Trust Principal will be allocated to principal payments on the
related Notes and distributions of Certificate Balance on the related
Certificates and will be paid as set forth in the related Prospectus
Supplement. No Controlled Deposit Amount will apply during any such period.
If an Early Amortization Period commences during a Payment Period or the Wind
Down Period, amounts, if any, on deposit in the Distribution Accounts will be
paid to Securityholders on the first Distribution Date for such Early
Amortization Period as described in the related Prospectus Supplement.
Except as otherwise described in the related Prospectus Supplement, no
additional borrowings may be made on the Revolving Notes during an Early
Amortization Period for the related Trust.
In certain circumstances, so long as the related Scheduled Revolving
Period Termination Date has not occurred, the Revolving Period may recommence
following the occurrence of an Early Amortization Event as described in
subparagraph (f) above or in the related Prospectus Supplement.
In addition to the consequences of an Early Amortization Event
discussed above, if an insolvency event occurs with respect to the Seller,
the Receivables of the Trust may be liquidated and the Trust terminated as
described below in "Insolvency Events."
ADDITIONAL ISSUANCES; CHANGES IN SPECIFIED MAXIMUM REVOLVER BALANCE
After the Initial Closing Date for a Trust, additional series of Term
Notes, additional series of Revolving Notes and additional Certificates may
be issued by the Trust from time to time and (whether or not additional
Revolving Notes are issued in connection therewith) the Specified Maximum
Revolver Balance may be increased or decreased without the consent of holders
of the outstanding Notes or Certificates upon the satisfaction of certain
conditions specified in the related Trust Sale and Servicing Agreement. Such
conditions include, among others, that (a) the Seller will have represented
and warranted that such issuance, increase or decrease will not, in the
reasonable belief of the Seller, cause an Early Amortization Event to occur,
and that (b) after giving effect to all issuances and all changes in the
Specified Maximum Revolver Balance, the outstanding Certificate Balance of
all then outstanding Certificates (less amounts held in the Certificate
Distribution Account) as a percentage of the Maximum Pool Balance equals or
exceeds the Trust's Specified Certificate Percentage (in each case, as set
forth in the related Prospectus Supplement). Any such issuance or increase
in the Specified Maximum Revolver Balance is also subject to the condition
that each Rating Agency provide written confirmation that such issuance or
increase will not result in a reduction or withdrawal of the rating of any
outstanding Securities. There is no limit to the number of series of Term
Notes that may be issued under the related Trust Sale and Servicing Agreement
or the related Indenture.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
With respect to each Trust, unless otherwise provided in the related
Prospectus Supplement, as compensation for its servicing activities with
respect to the related Receivables, on each Distribution Date, the Servicer
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will receive a servicing fee (the "Monthly Servicing Fee") for the preceding
Collection Period equal to one-twelfth of the Servicing Fee Rate multiplied
by the average daily balance of the Daily Trust Invested Amount for such
Collection Period. The Monthly Servicing Fee will be payable to the Servicer
solely to the extent amounts are available for distribution therefor as
described in the related Prospectus Supplement.
The Monthly Servicing Fee associated with each Trust is intended to
compensate the Servicer for performing the functions of a third party
servicer of wholesale receivables as an agent for their beneficial owner,
including, without limitation, collecting and recording payments,
communicating with dealers, investigating payment delinquencies, evaluating
the increase of credit limits and maintaining records with respect to the
Accounts and Receivables arising thereunder. With respect to any Pool of
Accounts, the Servicer will service the Receivables included in the Retained
Property as well as the Receivables sold to the related Trust. The Monthly
Servicing Fee will also compensate the Servicer for managerial and custodial
services performed by the Servicer on behalf of the Trust, including
accounting for collections, furnishing monthly and annual statements to the
Owner Trustee and the Indenture Trustee with respect to payments and
distributions, making Servicer Advances, if any, providing assistance in any
inspections of the documents and records relating to the Accounts and
Receivables by the Indenture Trustee and the Owner Trustee pursuant to the
related Trust Sale and Servicing Agreement, and providing related data
processing and reporting services for Securityholders and on behalf of the
Indenture Trustee and Owner Trustee. The Monthly Servicing Fee will also
serve to reimburse the Servicer for certain taxes (other than federal, state
and local income and franchise taxes, if any, of the Trust or the
Securityholders), the fees of the Owner Trustee and the Indenture Trustee,
accounting fees, outside auditor fees, data processing costs and other costs
incurred in connection with administering the Pool of Accounts.
SERVICING PROCEDURES
Pursuant to each Pooling and Servicing Agreement and related Trust Sale
and Servicing Agreement, the Servicer is responsible for servicing,
collecting, enforcing and administering the Receivables under the related
Accounts in accordance with customary and usual procedures for servicing its
own portfolio of revolving dealer floor plan lines of credit, except where
the failure to so act would not have a material adverse effect on the
interests of the Securityholders.
Pursuant to each Pooling and Servicing Agreement and the related Trust
Sale and Servicing Agreement, the Servicer may only modify the contractual
terms of the Accounts included in the related Pool of Accounts in general if
(a) in the Servicer's reasonable belief, no Early Amortization Event will
occur as a result of the change, (b) the change is made applicable to the
comparable segment of any similar portfolio of accounts serviced by the
Servicer and not only to such Accounts and (c) in the case of a reduction in
the rate of finance charges on the Receivables transferred to the Trust, the
Servicer does not reasonably expect that such reduction will, after
considering amounts due and amounts payable under any related interest rate
swaps or caps or similar agreements and Investment Proceeds for the related
period, reduce the Net Receivables Rate below the sum of (i) the weighted
average of the rates of interest payable to related Securityholders and (ii)
the Monthly Servicing Fee for the related period. The Servicer is not,
however, precluded from renegotiating the contractual terms of agreements
with Dealers on a case-by-case basis in a manner consistent with its
servicing guidelines.
SERVICER COVENANTS
In each Pooling and Servicing Agreement, the Servicer will agree that:
(a) it will maintain in effect all qualifications required in order to
service the Accounts included in the related Pool of Accounts and related
Receivables and will comply in all material respects with all requirements of
law in connection with servicing such Accounts and Receivables, except where
the failure to maintain such qualifications to comply with such requirements
would not have a material adverse effect on the related Securityholders of
any outstanding related series; (b) it will not permit any rescission or
cancellation of Receivables held by the Trust except as ordered by a court of
competent jurisdiction or other government authority; (c) it will do nothing
to impair the rights of the related Securityholders in the Receivables held
by the Trust and it will not reschedule, revise or defer
payments due on any Receivable held by the Trust, except in a manner
consistent with its servicing guidelines or as otherwise contemplated by the
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related Trust Sale and Servicing Agreement; and (d) it will not permit any
Receivable held by the Trust to become subject to any right of set-off or any
offsetting balance.
For each Trust, pursuant to the related Pooling and Servicing Agreement
and the related Trust Sale and Servicing Agreement, if the Seller or the
Servicer discovers, or receives written notice, that certain covenants of the
Servicer set forth therein have not been complied with in all material
respects with respect to any related Receivable transferred to the Trust or
related Account and such noncompliance has a material adverse effect on the
interests of related Securityholders in or under such Receivable or Account,
the Servicer will purchase such Receivable or all Receivables transferred to
the Trust under such Account (each, an "Administrative Receivable"), as
applicable. Such purchase will be made no later than two Business Days (or
such other period as may be agreed by the applicable Trustee) following the
discovery of such noncompliance by the Servicer. With respect to each
Administrative Receivable the Servicer will be obligated to deposit into the
related Collection Account on the date on which such purchase is deemed to
occur an amount (the "Administrative Purchase Payment") equal to the
principal amount of such Receivable PLUS accrued but unpaid interest thereon
through the date of such purchase. An Administrative Purchase Payment will
be included in Additional Trust Principal (to the extent of the principal
amount of the related Receivable) and Interest Collections (as to the
remainder of such amount). Any such purchase by the Servicer constitutes the
sole remedy available to the Securityholders, the Seller or the Trust, if
such covenant or warranty of the Servicer is not satisfied.
CERTAIN MATTERS REGARDING THE SERVICER
Each Trust Sale and Servicing Agreement will provide that the Servicer
may not resign from its obligations and duties as Servicer thereunder and
under the related Pooling and Servicing Agreement, except upon determination
that the Servicer's performance of such duties is no longer permissible under
applicable law. No such resignation will become effective until the related
Indenture Trustee or a successor servicer has assumed Servicer's servicing
obligations and duties under the related Transfer and Servicing Agreements.
Each Trust Sale and Servicing Agreement will further provide that
neither the Servicer nor any of its directors, officers, employees and agents
will be under any liability to the related Trust, Indenture Trustee, Owner
Trustee or any related Securityholders for taking any action or for
refraining from taking any action pursuant to the related Transfer and
Servicing Agreements or for errors in judgment; except that neither the
Servicer nor any such person will be protected against any liability that
would otherwise be imposed by reason of wilful misfeasance, bad faith or
negligence (except errors in judgment) in the performance of the Servicer's
duties thereunder or by reason of reckless disregard of its obligations and
duties thereunder. Each Trust Sale and Servicing Agreement will further
provide that the Servicer and its directors, officers, employees and agents
will be reimbursed by the related Owner Trustee for any contractual damages,
liability or expense incurred by reason of such trustee's wilful misfeasance,
bad faith or negligence (except errors in judgment) in the performance of
such trustee's duties under the applicable Transfer and Servicing Agreements
or by reason of reckless disregard of its obligations and duties thereunder.
In addition, each Trust Sale and Servicing Agreement will provide that the
Servicer is under no obligation to appear in, prosecute or defend any legal
action that is not incidental to the Servicer's servicing responsibilities
under the related Transfer and Servicing Agreements and that, in its opinion,
may cause it to incur any expense or liability. The Servicer may, however,
undertake any reasonable action that it may deem necessary or desirable in
respect of the related Transfer and Servicing Agreements and the rights and
duties of the parties thereto and the interests of the Securityholders
thereunder. In such event, the legal expenses and costs of such action and
any liability resulting therefrom will be expenses, costs and liabilities of
the Trust and the Servicer will be entitled to be reimbursed therefor out of
the related Collection Account. Any such indemnification or reimbursement
will reduce the amount otherwise available for distribution to the
Securityholders.
Under the circumstances specified in each Trust Sale and Servicing
Agreement, any entity into which the Servicer may be merged or consolidated,
or any entity resulting from any merger or consolidation to which the
Servicer is a party, or any entity succeeding to the business of the Servicer
or, with respect to its obligations as Servicer, any entity 50% or more of
the voting stock or interest of which is owned, directly or indirectly,
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by General Motors and which is otherwise servicing wholesale receivables,
which entity in each of the foregoing cases assumes the obligations of the
Servicer under the Trust Sale and Servicing Agreement and the Pooling and
Servicing Agreement, will be the successor of the Servicer under the Trust
Sale and Servicing Agreement and the Pooling and Servicing Agreement. So
long as GMAC acts as Servicer, the Servicer may at any time subcontract any
duties as Servicer under the Trust Sale and Servicing Agreement or Pooling
and Servicing Agreement to any entity more than 50% of the voting stock or
interest of which is owned, directly or indirectly, by General Motors or to
any entity that agrees to conduct such duties in accordance with the
Servicer's servicing guidelines and the Trust Sale and Servicing Agreement.
The Servicer may at any time perform specific duties as Servicer through
subcontractors who are in the business of servicing receivables similar to
the Receivables, provided that no such delegation will relieve the Servicer
of its responsibility with respect to such duties.
SERVICING DEFAULT
Except as otherwise provided in the related Prospectus Supplement, a
"Servicing Default" under each Trust Sale and Servicing Agreement will
consist of: (a) any failure by the Servicer to make any required
distribution, payment, transfer or deposit or to direct the related Indenture
Trustee to make any required distribution, which failure continues unremedied
for five Business Days after written notice from the Indenture Trustee or the
Owner Trustee is received by the Servicer or after discovery of such failure
by an officer of the Servicer; (b) any failure by the Servicer duly to
observe or perform in any material respect any other covenant or agreement in
such Trust Sale and Servicing Agreement, the related Pooling and Servicing
Agreement, the related Indenture or the related Trust Agreement, which
failure materially and adversely affects the rights of the Securityholders
and which continues unremedied for 90 days after the giving of written notice
of such failure to the Servicer by the Indenture Trustee or the Owner Trustee
or to the Servicer and the Indenture Trustee and the Owner Trustee by holders
of Notes or Voting Interests, as applicable, evidencing not less than 25% in
principal amount of such outstanding Notes or Voting Interests or after
discovery of such failure by an officer of the Servicer; (c) any
representation, warranty or certification made by the Servicer in such Trust
Sale and Servicing Agreement or in any certificate delivered pursuant thereto
proves to have been incorrect when made and which has a material adverse
effect on the rights of the related Securityholders and which effect
continues unremedied for a period of 60 days after the giving of written
notice thereof to the Servicer by the Indenture Trustee or the Owner Trustee;
or (d) certain events of bankruptcy, insolvency or receivership with respect
to the Servicer.
Notwithstanding the foregoing, there will be no Servicing Default where
a Servicing Default would otherwise exist under clause (a) above for a period
of ten Business Days or under clauses (b) or (c) for a period of 60 days if
the delay or failure giving rise to such Servicing Default was caused by an
act of God or other similar occurrence. Upon the occurrence of any such
event, the Servicer will not be relieved from using its best efforts to
perform its obligations in a timely manner in accordance with the terms of
the Pooling and Servicing Agreement and the Trust Sale and Servicing
Agreement and the Servicer will provide the Indenture Trustee, the Owner
Trustee, the Seller and the Securityholders prompt notice of such failure or
delay by it, together with a description of its efforts to so perform its
obligations.
RIGHTS UPON SERVICING DEFAULT
As long as a Servicing Default under a Trust Sale and Servicing
Agreement remains unremedied, the related Indenture Trustee or holders of
related Notes evidencing not less than a majority in principal amount of such
then outstanding Notes (or, if the Notes have been paid in full and the
related Indenture has been discharged with respect thereto, by the related
Owner Trustee or Certificateholders whose Certificates evidence not less than
a majority of the Voting Interests) may terminate all the rights and
obligations of the Servicer under such Trust Sale and Servicing Agreement and
the related Pooling and Servicing Agreement, whereupon such Indenture Trustee
will succeed to all the responsibilities, duties and liabilities of the
Servicer under such agreements and will be entitled to similar compensation
arrangements. If, however, a bankruptcy trustee or similar official has been
appointed for the Servicer, and no Servicing Default other than such
appointment has occurred, such trustee or official may have the power to
prevent the Indenture Trustee or the Securityholders from effecting a
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transfer of servicing. In the event that the Indenture Trustee is unwilling
or unable to so act, it may appoint, or petition a court of competent
jurisdiction for the appointment of, a successor with a net worth of at least
$100,000,000 and who otherwise meets the eligibility requirements set forth
in such Trust Sale and Servicing Agreement. The Indenture Trustee may make
such arrangements for compensation to be paid, which in no event may be
greater than the servicing compensation to the Servicer under the Trust Sale
and Servicing Agreement.
WAIVER OF PAST DEFAULTS
With respect to each Trust, the holders of Notes evidencing at least a
majority in principal amount of the then-outstanding Notes (or, if the Notes
have been paid in full and the related Indenture has been discharged with
respect thereto, by the related Owner Trustee or Certificateholders whose
Certificates evidence not less than a majority of the Voting Interests),
voting as a single class, may, on behalf of all such Securityholders, waive
any default by the Servicer in the performance of its obligations under the
Pooling and Servicing Agreement and the Trust Sale and Servicing Agreement
and its consequences, except a Servicing Default in making any required
distributions, payments, transfers or deposits in accordance with the Trust
Sale and Servicing Agreement. No such waiver will impair the rights of the
Indenture Trustee, the Owner Trustee, or the Securityholders with respect to
subsequent defaults.
STATEMENTS TO TRUSTEES AND TRUST
Prior to each Payment Date and Distribution Date, with respect to each
Trust, the Servicer will provide to the Indenture Trustee and the Owner
Trustee as of the close of business on the last day of the preceding
Collection Period a statement setting forth substantially the same
information as is required to be provided in the periodic reports to be
provided to Securityholders on such date under the Transfer and Servicing
Agreements.
EVIDENCE AS TO COMPLIANCE
Each Trust Sale and Servicing Agreement will provide that a firm of
independent public accountants will furnish to the Trust and the Indenture
Trustee on or before August 15 of each year, beginning no later than the
first August 15 which is at least twelve months after the related Initial
Closing Date, a statement as to compliance by the Servicer during the
preceding twelve months ended June 30 (or in the case of the first such
statement, the period from the Initial Closing Date to June 30 of such year)
with certain standards relating to the servicing of the Receivables, the
Servicer's accounting records and computer files with respect thereto and
certain other matters.
Each Trust Sale and Servicing Agreement will also provide for delivery
to the Trust and the Indenture Trustee, on or before August 15 of each year,
beginning no later than the first August 15 which is at least twelve months
after the related Initial Closing Date, a certificate signed by an officer of
the Servicer stating that the Servicer has fulfilled its obligations under
the Trust Sale and Servicing Agreement throughout the preceding twelve months
ended June 30 (or in the case of the first such certificate, the period from
the Initial Closing Date to June 30 of such year) or, if there has been a
default in the fulfillment of any such obligation, describing each such
default. The Servicer has agreed to give the Indenture Trustee and the Owner
Trustee notice of Servicing Defaults under the related Trust Sale and
Servicing Agreement.
Copies of such statements and certificates may be obtained by
Securityholders by request in writing addressed to the applicable Indenture
Trustee or Owner Trustee.
AMENDMENTS
Each of the Transfer and Servicing Agreements may be amended by the
parties thereto without the consent of the related Securityholders (a) to
cure any ambiguity, (b) to correct or supplement any provision therein that
may be defective or inconsistent with any other provision therein, (c) to add
or supplement any credit, liquidity or other enhancement arrangement for the
benefit of any Securityholders (provided, that if any such addition affects
any series or class of Securityholders differently than any other series or
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class of Securityholders, then such addition will not, as evidenced by an
opinion of counsel, adversely affect in any material respect the interests of
any series or class of Securityholders), (d) to add to the covenants,
restrictions or obligations of the Seller, the Servicer, the Owner Trustee or
the Indenture Trustee for the benefit of Securityholders, or (e) to add,
change or eliminate any other provision of such Agreement in any manner that
will not, as evidenced by an opinion of counsel, adversely affect in any
material respect the interests of the Securityholders. Each such Agreement
may also be amended by the parties thereto with the consent of the holders of
at least a majority in principal amount of such then outstanding Notes and
the holders of such Certificates evidencing at least a majority of the Voting
Interests for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of such Agreement or of modifying
in any manner the rights of such Securityholders, except that no such
amendment may (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, distributions or payments that are
required to be made on any Security without the consent of the holder
thereof, (b) adversely affect the rating of any series by any Rating Agency
without the consent of two-thirds of the principal amount of the outstanding
Notes or the Voting Interests of the outstanding Certificates, as
appropriate, of such series or (c) reduce the aforesaid percentage required
to consent to any such amendment without the consent of such aforesaid
percentage of Securityholders.
INSOLVENCY EVENTS
In addition to the consequences of an Early Amortization Event as described
above, if an Insolvency Event occurs with respect to the Seller, the Trust
will be terminated. In such event, the Trust will be liquidated as described
below 90 days after the date of such Insolvency Event, unless, before the end
of such 90-day period, the Owner Trustee shall have received written
instructions from each of the Certificateholders (other than the Seller and
its affiliates) to the effect that each such party disapproves of such
liquidation. Promptly after the occurrence of any Insolvency Event with
respect to the Seller, notice thereof is required to be given to
Securityholders; except that any failure to give such required notice will
not prevent or delay termination of any Trust or liquidation of the related
assets. If no such instructions are received within such 90-day period, the
Owner Trustee will direct the Indenture Trustee promptly to sell, liquidate
or otherwise dispose of the assets of the Trust (other than the
Designated Accounts and the Certificate Distribution Account) in a
commercially reasonable manner and on commercially reasonable terms (which
may include continuing to hold the Receivables and receiving collections
thereon). The proceeds from any such sale, disposition or liquidation will
be treated as Collections on the related Receivables and deposited in the
related Collection Account. With respect to any Trust, if such proceeds,
amounts on deposit in the Reserve Fund, amounts available under other credit,
liquidity or other enhancement arrangements and amounts on deposit in the
Designated Accounts and the Certificate Distribution Account are not
sufficient to pay all outstanding Securities in full (including accrued and
unpaid interest thereon), Securityholders will incur a loss.
If pursuant to certain provisions of federal law GMAC becomes party to
any involuntary bankruptcy or similar proceeding (other than as a claimant),
the Seller will suspend its purchase of Receivables from GMAC under each
Pooling and Servicing Agreement. If GMAC or the Seller obtains an order
approving the continued sale of Receivables to the Seller on the same terms
as, or on terms that do not have a material adverse effect on Securityholders
as compared to, the terms in effect prior to the commencement of such
proceedings, GMAC may resume selling Receivables to the Seller. Receivables
will be considered transferred to the Seller only to the extent the purchase
price therefor has been paid in cash on the same Business Day. If such
involuntary proceeding has not been dismissed within 60 days of its filing,
the Seller may not thereafter purchase Receivables from GMAC under each
Pooling and Servicing Agreement and thus, no additional Receivables will be
transferred to any Trust. See "Certain Legal Aspects."
Each Trust Agreement will provide that the Owner Trustee does not have
the power to commence a voluntary proceeding in bankruptcy relating to the
related Trust without the unanimous prior approval of all related
Certificateholders (including the Seller) and the delivery to the Owner
Trustee by each such Certificateholder (including the Seller) of a
certificate certifying that each such Certificateholder reasonably believes
that such Trust is insolvent.
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In each Trust Sale and Servicing Agreement, the Servicer and the Seller
will covenant that they will not, for a period of one year and one day after
the final distribution with respect to the related Notes and the related
Certificates to the Note Distribution Account or the Certificate Distribution
Account, as applicable, institute against the related Trust any bankruptcy,
reorganization or other proceeding under any federal or state bankruptcy or
similar law.
SELLER LIABILITY; INDEMNIFICATION
Under each Trust Agreement, the Seller will agree to be liable directly
to an injured party for the entire amount of any losses, claims, damages or
liabilities (other than those incurred by a Securityholder in the capacity of
an investor) arising out of or based on the arrangement created by the Trust
Agreement as though such arrangement created a partnership under the Delaware
Revised Uniform Limited Partnership Act in which the Seller were a general
partner.
Each Trust Sale and Servicing Agreement provides that the Servicer will
indemnify the Indenture Trustee and the Owner Trustee from and against any
loss, liability, expense, damage or cost arising out of or incurred in
connection with the acceptance or performance of its duties pursuant to the
Transfer and Servicing Agreements, including any judgment, award, settlement,
reasonable attorneys' fees and other costs or expenses incurred in connection
with the defense of any actual or threatened action, proceeding or claim;
provided, however, that neither the Indenture Trustee nor Owner Trustee will
be so indemnified if such acts or omissions or alleged acts or omissions
constitute willful misfeasance, bad faith or negligence by the Indenture
Trustee or the Owner Trustee, as applicable. In addition, the Servicer will
indemnify the Trust, the Indenture Trustee, the Owner Trustee and the
Securityholders against losses arising out of the negligence, willful
misfeasance or bad faith of the Servicer in the performance of its duties
under the Transfer and Servicing Agreements and the Indenture or by reason of
its reckless disregard of its obligations and duties thereunder. The
Servicer will also indemnify such parties against any taxes that may be
asserted against such parties with respect to the transactions contemplated
in the Trust Sale and Servicing Agreement, other than taxes with respect to
the sale of Receivables or Securities, the ownership of Receivables or the
receipt of payments on Securities or other compensation.
TERMINATION
Each Trust will terminate (the "Trust Termination Date") on the
earliest to occur of (a) the day following the Distribution Date on which all
amounts required to be paid to the related Securityholders pursuant to the
related Transfer and Servicing Agreements have been paid (or deposited in the
related Distribution Accounts) and the aggregate outstanding balance of the
Revolving Notes is zero, if the Seller elects to terminate the Trust at such
time, (b) in the event of certain insolvency events with respect to the
Seller as described above under "Insolvency Events" and (c) the Specified
Trust Termination Date as set forth in the related Prospectus Supplement.
Upon termination of a Trust and payment (or deposit to the Distribution
Accounts) of all amounts to be paid to Securityholders, the Receivables and
all other assets of the Trust (other than funds in the related Distribution
Accounts for the final distributions to the Securityholders and after
distribution to GMAC from the Collection Account of amounts on account of the
Retained Property, if required) will be conveyed and transferred to the
Seller.
OPTIONAL PURCHASE BY THE SERVICER
During the Wind Down Period, the Servicer (including any successor
servicer) will be permitted, at its option, to purchase from each Trust all
remaining Receivables and other assets to the extent provided in the related
Prospectus Supplement.
INTERCREDITOR ARRANGEMENTS
The agreements governing the Accounts provide for a security interest
in favor of GMAC in the Vehicles related to Receivables thereunder. With
respect to the Receivables to be conveyed to the Trust, GMAC will represent
in the related Pooling and Servicing Agreement that the security interest in
the related Vehicles is a first priority perfected security interest. The
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security interest in favor of GMAC in the Vehicles related to each Account in
the related Pool of Accounts will be assigned by GMAC to the Seller pursuant
to each Pooling and Servicing Agreement and assigned to the applicable Trust
by the Seller pursuant to the related Trust Sale and Servicing Agreement. In
its other lending activities, GMAC may have made capital loans, real estate
loans or other loans to Dealers that are also secured by a security interest
in such Vehicles. In each Pooling and Servicing Agreement, GMAC will agree
that any security interests in such Vehicles that it may have in respect of
advances or loans to Dealers other than the related Receivables shall be
junior and subordinate to the security interests therein granted in
connection with the related Receivables and that it will not realize on any
such collateral in a manner materially adverse to the Seller or any Trust and
the Securityholders until the Seller and the related Trust have been paid in
full in respect of their interests in the Receivables related to such
Vehicles. In addition, in connection with any such other loans or advances
made by GMAC to a Dealer, GMAC may also have a security interest in property
constituting Collateral Security other than Vehicles. In such cases, GMAC,
in its sole discretion, may realize on such other Collateral Security for its
own benefit in respect of such loans or advances before the Indenture
Trustee, on behalf of any Trust, is permitted to realize upon such other
Collateral Security and the security interests of the Indenture Trustee
therein shall be junior and subordinate to the security interests of GMAC
granted in connection with such other loans and advances. Because of the
subordinate position of any Indenture Trustee in respect of
such other Collateral Security, there is no assurance that any Indenture
Trustee will realize any proceeds in respect of any such other Collateral
Security.
ADMINISTRATION AGREEMENT
GMAC, in its capacity as administrator (the "Administrator"), will
enter into an agreement (an "Administration Agreement") with each Trust and
the related Indenture Trustee pursuant to which the Administrator will agree,
to the extent provided in such Administration Agreement, to provide the
notices and to perform other administrative obligations required by the
related Indenture. With respect to each Trust, unless otherwise specified in
the related Prospectus Supplement, as compensation for the performance of the
Administrator's obligations under the Administration Agreement and as
reimbursement for its expenses related thereto, the Administrator will be
entitled to a monthly administration fee in an amount equal to $1,500 per
month, which fee will be paid by the Servicer.
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CERTAIN LEGAL ASPECTS
TRANSFER OF RECEIVABLES
On the Initial Closing Date for any Trust, on each Addition Date and on
each Receivables Purchase Date, GMAC will sell, transfer and assign to the
Seller and the Seller will sell, transfer and assign the Eligible Receivables
in the Accounts included in the related Pool of Accounts to the Trust. In
the related Pooling and Servicing Agreement, GMAC will represent and warrant
to the Seller that the sale, transfer and assignment of such Receivables
thereunder constitutes a valid sale, transfer and assignment of all right,
title and interest of GMAC in and to such Receivables to the Seller. In the
related Trust Sale and Servicing Agreement, the Seller will represent and
warrant to the Trust that the Seller has taken no action to make such
representations and warranties false in any material respect and that the
sale, transfer and assignment of such Receivables thereunder constitutes a
valid sale, transfer and assignment of all right, title and interest of the
Seller in and to such Receivables to the Trust. Each of GMAC and the Seller
will also covenant that it will not sell, pledge, assign, transfer or grant
any lien on such any Receivable other than to the Seller or to the Trust, as
applicable, or as otherwise contemplated by the related Transfer and
Servicing Agreements. For a discussion of the rights of each Trust arising
from these representations and warranties, see "The Transfer and Servicing
Agreements Representations and Warranties." To secure its payment
obligations under the Notes, pursuant to the Indenture, the Trust will grant
a security interest in such Receivables to the Indenture Trustee.
GMAC will represent in each Pooling and Servicing Agreement that the
Receivables to be conveyed to the Trust are either "chattel paper,"
"accounts" or "general intangibles" for purposes of the UCC. If Receivables
are deemed to be chattel paper or accounts and the transfer thereof by GMAC
to the Seller or by the Seller to a Trust is deemed either to be a sale or to
create a security interest, the UCC will apply and the transferee must file
an appropriate financing statement or statements in order to perfect its
interest therein. If Receivables are deemed to be general intangibles and
the transfer thereof by GMAC to the Seller or by the Seller to a Trust is
deemed to create a security interest, the UCC will apply and the transferee
must file an appropriate financing statement or statements in order to
perfect its interest therein. If Receivables are deemed to be general
intangibles and the transfer thereof is deemed to be a sale, state law other
than the UCC may determine the appropriate steps to perfect such sale.
Financing statements covering the Receivables to be conveyed to the Trust
will be filed under the UCC by both the Seller and each related Trust to
perfect and/or protect their respective interests in such Receivables (to the
extent such filings are required to so perfect and/or protect such
interests), and continuation statements will be filed as required to continue
the perfection of such interests. No filings will be made under any state
laws other than the UCC.
There are circumstances under the UCC and applicable federal law in
which certain limited subsequent transferees of a Receivable held by the
Trust could have an interest in such Receivable with priority over the
Trust's interest in such Receivable. A purchaser of chattel paper who gives
new value and takes possession of the instruments which evidence the chattel
paper in the ordinary course of such purchaser's business may, under certain
circumstances, have priority over the interest of the Trust in the chattel
paper. If the transfer of Receivables to the Seller or a Trust were
recharacterized as a pledge, a tax or other lien on property of GMAC or the
Seller may also have priority over the interest of the Trust in such
Receivable. Further, cash collections on the Receivables held by each Trust
may, to the extent described above, be commingled with the funds of GMAC as
Servicer and amounts due to GMAC as the holder of the Retained Property held
by each Trust and, in the event of the bankruptcy of GMAC, the Trust may not
have a perfected interest in such collections.
GMAC will represent and warrant in the Pooling and Servicing Agreement
that each Receivable at the time of the sale to the Seller is secured by a
first priority perfected security interest in the related Vehicles.
Generally, under applicable state laws, a security interest in an automobile
or light truck which secures wholesale financing obligations may be perfected
by the filing of UCC financing statements. GMAC takes all actions it deems
necessary under applicable state laws to perfect GMAC's security interest in
Vehicles. However, at the time a Vehicle is sold or leased, GMAC's security
interest in the Vehicle will generally terminate. Therefore, if a Dealer
fails to remit to GMAC amounts owed with respect to any Vehicle that has been
sold or leased, the related Receivable will no longer be secured by such
Vehicle, but will be secured by the proceeds of such retail sale or lease
and, to the extent applicable, other Collateral Security. If the proceeds
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of such sale or lease include chattel paper (such as most retail instalment
contracts), certain limited subsequent transferees of that chattel paper
could have an interest therein with priority over the Trust's interest
therein.
CERTAIN MATTERS RELATING TO BANKRUPTCY
The Seller's by-laws include a provision that, under certain
circumstances, requires the Seller to designate two directors who qualify
under the by-laws as "Independent Directors." The Seller's certificate of
incorporation provides that the Seller will not file a voluntary petition for
relief under the Bankruptcy Code without the unanimous affirmative vote of
its directors. Pursuant to the Transfer and Servicing Agreements, the Owner
Trustee, the Indenture Trustee and all Securityholders will covenant that
they will not institute against the Seller any bankruptcy, reorganization or
other proceedings under any Insolvency Laws until one year and one day after
all Securities have been paid in full. In addition, certain other steps will
be taken to avoid the Seller's becoming a debtor in a bankruptcy case. The
Seller will agree not to file a voluntary petition for relief under the
Insolvency Laws so long as it is solvent and does not foresee becoming
insolvent, and GMAC, as the sole stockholder of the Seller, will agree that
it will not cause the Seller to file such a petition.
The transfers of Receivables from GMAC to the Seller and from the
Seller to the Trust have been structured as, and will be treated by the
parties as, sales. The U.S. Court of Appeals for the Tenth Circuit recently
found that accounts sold prior to a bankruptcy should be treated as property
of the bankruptcy estate. In the event that GMAC or the Seller were to
become a debtor in a bankruptcy case and a creditor or trustee in bankruptcy
of such debtor or such debtor itself were to apply this analysis or otherwise
take the position that the transfer of such Receivables from such debtor to
the Seller or a Trust, as the case may be, should be recharacterized as a
pledge of such Receivables to secure a borrowing by such debtor, then delays
in receipt of Collections on such Receivables to the related Trust and
payments on the related Securities could result or, should the court rule in
favor of any such creditor, trustee in bankruptcy or debtor, reductions in
the amount of such payments could result.
In addition, in the event that GMAC or the Seller were to become a
debtor in a bankruptcy case and a creditor or trustee in bankruptcy of such
debtor or such debtor itself were to request a court to order that GMAC
should be substantively consolidated with the Seller, delays in payments on
the Securities could result. Should the bankruptcy court rule in favor of
any such creditor, trustee in bankruptcy or debtor, reductions in the amount
of such payments could result.
If General Motors, GMAC or the Seller were to become a debtor in a
bankruptcy case, an Early Amortization Event would occur. In such event, all
Trust Principal Collections would be applied to principal payments on related
Securities and Receivables arising in the related Accounts thereafter would
no longer be sold to the Seller and transferred to the related Trust. The
occurrence of certain events of bankruptcy, insolvency or receivership with
respect to the Servicer will also result in a Servicing Default. A trustee
in bankruptcy of the Servicer (including the Servicer as debtor in
possession) may have the power to prevent either the Indenture Trustee, the
Owner Trustee or the Securityholders from appointing a successor Servicer.
In addition, if any Transfer and Servicing Agreement is deemed an
executory contract under bankruptcy laws, a trustee in bankruptcy of any
party to such agreement (including such party as debtor in possession) may
have the power to assume (i.e., reaffirm) or reject such agreement. A party
deciding whether to assume or reject any such agreement would be given a
reasonable period of time to make such decision, perhaps even until the time
of confirmation of the plan of reorganization, which could result in delays
in payments or distributions on the related Securities.
Transfers made in certain isolated transactions contemplated by the
Transfer and Servicing Agreements (including payments made by GMAC or the
Seller with respect to repurchases or reassignments of Receivables and the
transfers in connection with the designation of Additional Accounts) may be
recoverable by GMAC or the Seller, as debtor in possession, or by a trustee
in bankruptcy of GMAC or the Seller, as a preferential transfer from GMAC or
the Seller if such transfers are made within certain periods prior to the
filing of a bankruptcy case in respect of GMAC or the Seller and certain
other conditions are met.
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In addition, application of federal bankruptcy and state debtor relief
laws to any Dealer could affect the interests of the related Trust and the
related Indenture Trustee in the Receivables of such Dealer if the
enforcement of such laws result in any Receivables conveyed to the Trust
being written off as uncollectible by the Servicer. Whether or not any such
Receivables are written off as uncollectible, delays in payments due on such
Receivables could result.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
Set forth below is a discussion of the anticipated material United
States federal income tax consequences of the purchase, ownership and
disposition of the Term Notes offered hereunder. This discussion is based
upon current provisions of the Internal Revenue Code of 1986, as amended (the
"Code"), existing and proposed Treasury Regulations thereunder, current
administrative rulings, judicial decisions and other applicable authorities.
There are no cases or Internal Revenue Service ("IRS") rulings on similar
transactions involving both debt and equity interests issued by a trust with
terms similar to those of the Term Notes, the Revolving Notes and the
Certificates. As a result, there can be no assurance that the IRS will not
challenge the conclusions reached herein, and no ruling from the IRS has been
or will be sought on any of the issues discussed below. Furthermore,
legislative, judicial or administrative changes may occur, perhaps with
retroactive effect, which could affect the accuracy of the statements and
conclusions set forth herein as well as the tax consequences to Term
Noteholders.
This discussion does not purport to deal with all aspects of federal
income taxation that may be relevant to the holders of Term Notes in light of
their personal investment circumstances nor, except for certain limited
discussions of particular topics, to certain types of Noteholders subject to
special treatment under the federal income tax laws (e.g., financial
institutions, broker-dealers, life insurance companies and tax-exempt
organizations). This information is directed to prospective purchasers who
purchase Term Notes in the initial distribution thereof, who are citizens or
residents of the United States, including domestic corporations and
partnerships, and who hold the Term Notes as "capital assets" within the
meaning of Section 1221 of the Code. Taxpayers and preparers of tax returns
(including those filed by any partnership or other issuer) should be aware
that under applicable Treasury regulations a provider of advice on specific
issues of law is not considered an income tax return preparer unless the
advice is (i) given with respect to events that have occurred at the time the
advice is rendered and is not given with respect to the consequences of
contemplated actions and (ii) is directly relevant to the determination of an
entry on a tax return. Accordingly, taxpayers should consult their own tax
advisors and tax return preparers regarding the preparation of any item on a
tax return, even where the anticipated tax treatment has been discussed
herein. PROSPECTIVE INVESTORS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS
TO THE FEDERAL, STATE, LOCAL, FOREIGN AND ANY OTHER TAX CONSEQUENCES TO THEM
OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF TERM NOTES.
The following discussion is based in part upon the rules governing
original issue discount ("OID") that are set forth in Sections 1271-1275 of
the Code and in proposed Treasury regulations issued under the OID provisions
of the Code (the "Proposed OID Regulations"). The Proposed OID Regulations
are subject to change through the adoption of final regulations. Moreover,
the Proposed OID Regulations would apply only to debt instruments issued 60
days or more after final regulations have been published. The extent to
which the IRS will apply rules similar to those contained in the Proposed OID
Regulations to debt instruments, such as the Term Notes, issued before the
effective date of final regulations is unclear. Where the Proposed OID
Regulations are consistent with the Code and clearly reflect income,
following the Proposed OID Regulations is an acceptable method of accounting.
CHARACTERIZATION AND TREATMENT
CHARACTERIZATION AS DEBT. With respect to each series of Term Notes
(except for Strip Notes and any series which is specifically identified as
receiving different tax treatment in the applicable Prospectus Supplement),
Kirkland & Ellis, special tax counsel to the Seller ("Tax Counsel"), will
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deliver its opinion that, although no specific authority exists with respect
to the characterization for federal income tax purposes of securities having
the same terms as the Term Notes, based on the terms of the Term Notes, the
transactions relating to the Receivables as set forth herein, and the
discussion below, the Term Notes will be treated as debt for federal income
tax purposes. The Seller, the Servicer and each Noteholder, by acquiring an
interest in a Term Note, will agree to treat the Term Notes as indebtedness
for federal, state and local income and franchise tax purposes. See "Risks
of Alternative Characterization" below for a discussion of the potential
federal income tax consequences to Noteholders if the IRS were successful in
challenging the characterization of the Term Notes and the Certificates for
federal income tax purposes.
TREATMENT OF STATED INTEREST OR OID. Except to the extent indicated in
the related Prospectus Supplement, no series of Term Notes will be issued
with OID. Based upon the foregoing opinion, the stated interest on each
series of Term Notes issued without OID will be taxable to a Noteholder as
ordinary income when received or accrued in accordance with such Noteholder's
method of tax accounting. A holder who purchases a Term Note after the
initial distribution thereof at a discount that exceeds a statutorily defined
de minimis amount will be subject to the "market discount" rules of the Code,
and a holder who purchases a Term Note at a premium will be subject to the
bond premium amortization rules of the Code.
To the extent that any series of Term Notes is treated as being issued
with OID, a Noteholder will generally be subject to the following tax
treatment. The amount of OID on a Term Note will equal the excess, if any,
of its "stated redemption price at maturity" over its "issue price."
Noteholders will generally be required to include such OID in income for
federal income tax purposes as it accrues under the constant interest rate
method described below, regardless of whether their method of tax accounting
is cash or accrual. Each Noteholder's tax basis in his Term Notes will be
increased by the amount of OID included in income (less any interest payments
actually received which do not constitute "qualified stated interest",
discussed below). Thus, each cash payment other than payments of qualified
stated interest (defined below) would be treated as an amount already
included in income (to the extent OID has accrued as of the date of the
distribution and is not allocated to prior distributions), or as a repayment
of principal. This treatment would have no significant effect on Noteholders
using the accrual method of accounting. However, cash method Noteholders may
be required to report income with respect to the Term Notes in advance of the
receipt of cash attributable to such income.
Under a de minimis rule in the Code, as interpreted in the proposed OID
Regulations, however, the foregoing rules will not apply and the amount of
OID with respect to a series of Term Notes will be considered to be zero if
the amount of OID is less than 0.25% of the stated redemption price at
maturity of the Term Notes multiplied by the weighted average life of the
Term Notes. Nonetheless, under the Proposed OID Regulations, the holder of
a Term Note that has de minimis OID would be required to include such de
minimis OID income as principal payments are made in proportion to the ratio
that each such principal payment bears to the stated principal amount of such
Term Note. For this purpose, the weighted average life of the Term Note is
computed as the sum of the amounts determined by multiplying (i) the number
of complete years (rounding down for partial years) until each payment
included in the stated redemption price at maturity is expected to be made by
(ii) a fraction, the numerator of which is the amount of such payment and the
denominator of which is the total amount of payments included in the stated
redemption price at maturity of such Term Note.
The issue price of any series of Term Notes issued with OID will equal
the first offering price to the public at which a substantial amount of Term
Notes have been sold. The "stated redemption price at maturity" of such Term
Notes will equal their stated principal amount at maturity plus all payments
of interest other than "qualified stated interest." Qualified stated
interest is interest that is payable unconditionally in cash or in property
(other than debt instruments of the issuer) at least annually at a single
fixed rate. The terms of each series of Term Notes will determine whether
and to what extent such series will pay qualified stated interest. If a
series of Term Notes does not pay qualified stated interest, the stated
redemption price at maturity of such Term Notes will equal their stated
principal amount at maturity plus all interest payments.
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The amount of OID accruing with respect to a series of Term Notes will
be determined for each "accrual period." Under the Proposed OID Regulations,
an accrual period is an interval of time no longer than one year at the end
of which a scheduled payment of principal or interest occurs. The amount of
OID accruing during any accrual period will generally equal the "adjusted
issue price" of the Term Notes at the beginning of that accrual period,
multiplied by the "yield to maturity" of the Term Notes (and adjusted for the
length of the accrual period). The yield to maturity of the Term Notes is
the discount rate that, when used in computing the present value of all
principal and interest payments to be made under the Term Notes, produces an
amount equal to the issue price of the Term Notes. The adjusted issue price
of the Term Notes at the beginning of the first accrual period equals their
issue price. At the beginning of each subsequent accrual period, the
adjusted issue price of the Term Notes will equal their adjusted issue price
at the beginning of the preceding accrual period, plus the amount of OID
allocable to the preceding accrual period, minus any payments of principal or
interest (other than qualified stated interest) made during the preceding
accrual period.
The amount of OID accruing during any accrual period will be allocated
ratably to each day in the period (the "Daily Portion"). In any taxable
year, the amount of such OID a holder of Term Notes must include in income
will equal the sum of the Daily Portions of the OID allocated to the days
during the taxable year on which the holder held the Term Notes. In general,
under these rules, the amount of OID required to be included in income will
increase with each successive accrual period.
Under the Proposed OID Regulations, even if a series of Term Notes
generally pays qualified stated interest, it is possible that it would be
viewed as having a de minimis amount of OID if the first accrual period is
longer than subsequent accrual periods. If a series of Term Notes were
issued with de minimis OID, under the Proposed OID Regulations a holder is
directed to include any de minimis OID in income as and when principal
payments are made. The amount of OID includible at the time of any principal
payment equals the total amount of OID on the Term Note multiplied by a
fraction, the numerator of which is the amount of the principal payment and
the denominator of which is the stated principal amount of the Term Note.
A holder of a Note that has a fixed maturity date of not more than one
year from the issue date of such Note (a "Short-Term Note") may be subject to
special rules. An accrual method holder of a Short-Term Note (and certain
cash method holders, including regulated investment companies, as set forth
in Section 1281 of the Code) generally will be required to report interest
income as interest accrues on a straight-line basis over each interest
period. Other cash method holders of a Short-Term Note will, in general, be
required to report interest income only when interest is paid (or, if
earlier, upon the taxable disposition of the Short-Term Note). However, any
such cash method holder may be required to defer a portion of any interest
expense otherwise deductible on indebtedness incurred to purchase or carry
the Short-Term Note until the taxable disposition of the Short-Term Note.
Any cash method taxpayer may elect under Section 1282 of the Code to accrue
interest income on all debt obligations with a term of one year or less, in
which case the taxpayer would include interest on the Short-Term Note in
income as it accrues, but would not be subject to the interest expense
deferral rule referred to in the preceding sentence. Certain other special
rules apply if a Short-Term Note is purchased for more or less than its
principal amount.
As an alternative to all of the above treatments, under the Proposed
OID Regulations accrual method holders may elect to include in gross income
all interest with respect to a Term Note, including stated interest,
acquisition discount, OID, de minimis OID, market discount, de minimis market
discount, and unstated interest, as adjusted by any amortizable bond premium
or acquisition premium, using the constant yield method described above.
DISPOSITION OF TERM NOTES. If a Noteholder sells a Term Note, the
holder will recognize gain or loss in an amount equal to the difference
between the amount realized on the sale and the holder's adjusted tax basis
in the Term Note. The adjusted tax basis of the Term Note to a particular
Noteholder will equal the holder's cost for the Term Note, increased by any
OID, market discount and gain previously included by such Noteholder in
income with respect to the Term Note, and decreased by any bond premium
previously amortized and any principal payments previously received by such
Noteholder with respect to such Term Note. Subject to the market discount
rules of the Code, any such gain or loss will be capital gain or loss if the
Term Note was held as a capital asset, except for any gain representing
accrued interest. Capital gain or loss will be long-term if the Term Note
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was held by the holder for more than one year and otherwise will be short-
term. Any capital losses realized generally may be used by a corporate
taxpayer only to offset capital gains, and by an individual taxpayer only to
the extent of capital gains plus $3,000 of other income.
INFORMATION REPORTING AND BACKUP WITHHOLDING. The Trustee will be
required to report annually to the IRS, and to each Noteholder of record, the
amount of interest paid on each series of Term Notes (and the amount of
interest withheld for federal income taxes, if any) for each calendar year,
except as to exempt holders (generally, corporations, tax-exempt
organizations, qualified pension and profit-sharing trusts, individual
retirement accounts, and nonresident aliens who provide certification as to
their status). Each holder (other than holders who are not subject to the
reporting requirements) will be required to provide to the Trustee, under
penalties of perjury, a certificate containing the holder's correct name,
address, federal taxpayer identification number and a statement that the
holder is not subject to backup withholding. Should a nonexempt Noteholder
fail to provide the required verification, the Trustee will be required to
withhold, from interest otherwise payable to the holder, 31% of such interest
and remit the withheld amount to the IRS as a credit against the holder's
federal income tax liability.
Because the Seller will treat each Trust as a partnership and all Term
Notes as indebtedness for federal income tax purposes, the Seller will not
comply with the tax reporting requirements that would apply under any
alternative characterization of a Trust.
TAX CONSEQUENCES TO FOREIGN NOTEHOLDERS. If interest paid (or accrued)
to a Noteholder who is a nonresident alien, foreign corporation or other non-
United States person (a "foreign person") is not effectively connected with
the conduct of a trade or business within the United States by the foreign
person, the interest generally will be considered "portfolio interest", and
generally will not be subject to United States federal income tax and
withholding tax, provided that the foreign person (i) is not actually or
constructively a "10 percent shareholder" of the applicable Trust or the
Seller (including a holder of 10% of the outstanding Certificates of such
trust) or a "controlled foreign corporation" with respect to which such Trust
or the Seller is a "related person" within the meaning of the Code and (ii)
provides an appropriate statement, signed under penalties of perjury,
certifying that the beneficial owner of the Term Note is a foreign person and
providing that foreign person's name and address. If the information
provided in this statement changes, the foreign person must so inform the
Trustee within 30 days of such change. The statement generally must be
provided in the year a payment occurs or in either of the two preceding
years. If such interest were not portfolio interest, then it would be
subject to United States federal income and withholding tax at a rate of 30
percent, unless such tax were reduced or eliminated pursuant to an applicable
tax treaty.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Term Note by a foreign person will be exempt from
United States federal income and withholding tax, provided that (i) the gain
is not effectively connected with the conduct of a trade or business in the
United States by the foreign person and (ii) in the case of an individual
foreign person, the foreign person is not present in the United States for
183 days or more in the taxable year.
If the interest, gain or income on a Term Note held by a foreign person
is effectively connected with the conduct of a trade or business in the
United States by the foreign person, the holder (although exempt from the
withholding tax previously discussed if an appropriate statement is
furnished) generally will be subject to United States federal income tax on
the interest, gain or income at regular federal income tax rates. In
addition, if the foreign person is a foreign corporation, it may be subject
to a branch profits tax equal to 30 percent of its "effectively connected
earnings and profits" within the meaning of the Code for the taxable year, as
adjusted for certain items, unless it qualifies for a lower rate under an
applicable tax treaty.
RISK OF ALTERNATIVE CHARACTERIZATION. The Seller and the Servicer will
agree, and the applicable Certificateholders will agree by their purchase, to
treat each Trust as a partnership for purposes of federal, state and local
income and franchise tax purposes, with the partners of such partnership
being the Certificateholders (including the Seller) and the Term Notes and
the Revolving Notes being debt of such partnership. However, the proper
characterization of the arrangement involving the Certificates, the Seller
and the Servicer is not clear because there is no authority on transactions
closely comparable to that contemplated herein.
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If a Trust were an association taxable as a corporation for federal
income tax purposes, it would be subject to corporate income tax. Any such
corporate income tax could materially reduce or eliminate cash that would
otherwise be distributable with respect to the applicable Notes and
Certificates (and Certificateholders could be liable for any such tax that is
unpaid by such Trust). However, upon the issuance of each series of
Certificates, Tax Counsel will deliver its opinion that such Trust will not
be classified as an association taxable as a corporation because it will not
have certain characteristics necessary for a trust to be an association
taxable as a corporation.
Even if a Trust were not an association taxable as a corporation, it
would be subject to corporate income tax if it were a "publicly traded
partnership" taxable as a corporation. However, upon the issuance of each
series of Certificates, Tax Counsel will deliver its opinion that the
applicable Trust will not be classified as a publicly traded partnership
because the issuance of such Certificates will have been structured as a
private placement under an IRS safe harbor.
STATE AND LOCAL TAX CONSEQUENCES
The above discussion does not address the tax treatment of any series
of Term Notes or the holders thereof under any state or local tax laws. The
activities to be undertaken by the Servicer in servicing and collecting the
Receivables will take place throughout the United States and, therefore, many
different tax regimes potentially apply to different portions of this
transaction. Prospective investors are urged to consult with their own tax
advisors regarding the state and local tax treatment of the applicable Trust
as well as any state and local tax consequences to them of purchasing,
holding and disposing of Term Notes.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Section 4975 of the Code prohibit a pension, profit-
sharing or other employee benefit plan, as well as individual retirement
accounts and certain types of Keogh Plans (each a "Benefit Plan"), from
engaging in certain transactions with persons that are "parties in interest"
under ERISA or "disqualified persons" under the Code with respect to such
Benefit Plan. A violation of these "prohibited transaction" rules may result
in an excise tax or other penalties and liabilities under ERISA and the Code
for such persons.
Certain transactions involving the Trust might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Benefit
Plan that purchased Term Notes if assets of the Trust were deemed to be
assets of the Benefit Plan. Under a regulation issued by the United States
Department of Labor (the "Plan Assets Regulation"), the assets of the Trust
would be treated as plan assets of a Benefit Plan for the purposes of ERISA
and the Code only if the Benefit Plan acquired an "equity interest" in the
Trust and none of the exceptions contained in the Plan Assets Regulation was
applicable. An equity interest is defined under the Plan Assets Regulation
as an interest other than an instrument which is treated as indebtedness
under applicable local law and which has no substantial equity features.
Unless otherwise provided in the related Prospectus Supplement, although
there is little guidance on the subject, the Seller believes the Term Notes
of each Trust would be treated as indebtedness without substantial equity
features for purposes of the Plan Assets Regulation. Other exceptions, if
any, from application of the Plan Assets Regulation available with respect to
any Term Notes will be discussed in the related Prospectus Supplement.
However, without regard to whether Term Notes are treated as an equity
interest for such purposes, the acquisition or holding of Term Notes by or on
behalf of a Benefit Plan could be considered to give rise to a prohibited
transaction if the Seller, the Servicer, the related Trust or any of their
respective affiliates is or becomes a party in interest or a disqualified
person with respect to such Benefit Plan. Certain exemptions from the
prohibited transaction rules could be applicable to the purchase and holding
of Term Notes by a Benefit Plan depending on the type and circumstances of
the plan fiduciary making the decision to acquire such Notes. Included among
these exemptions are: Prohibited Transaction Class Exemption ("PTCE") 90-1,
regarding investments by insurance company pooled separate accounts; PTCE 91-
- 51 -
38 regarding investments by bank collective investment funds; and PTCE 84-14,
regarding transactions effected by "qualified professional asset managers."
Employee benefit plans that are governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33)
of ERISA) are not subject to ERISA requirements.
A plan fiduciary considering the purchase of Term Notes should consult
its tax and/or legal advisors regarding whether the assets of the related
Trust would be considered plan assets, the possibility of exemptive relief
from the prohibited transaction rules and other issues and their potential
consequences.
PLAN OF DISTRIBUTION
On the terms and conditions set forth in an underwriting agreement
(each, an "Underwriting Agreement") with respect to each series of Term Notes
offered thereby, the Seller will agree to sell to each of the underwriters
named therein and in the related Prospectus Supplement, and each of such
underwriters will severally agree to purchase from the Seller, the principal
amount of Term Notes set forth therein and in the related Prospectus
Supplement.
In each Underwriting Agreement, the several underwriters will agree,
subject to the terms and conditions set forth therein, to purchase all the
Term Notes described therein which are offered hereby and by the related
Prospectus Supplement if any of such Term Notes are purchased. In the event
of a default by any such underwriter, each Underwriting Agreement will
provide that, in certain circumstances, purchase commitments of the
nondefaulting underwriters may be increased or the Underwriting Agreement may
be terminated.
Each Prospectus Supplement will either (i) set forth the price at which
each series of Term Notes being offered thereby will be offered to the public
and any concessions that may be offered to certain dealers participating in
the offering of such Term Notes or (ii) specify that such Term Notes are to
be resold by the Underwriters in negotiated transactions at varying prices to
be determined at the time of such sale. After the initial public offering of
any Term Notes, the public offering price and such concessions may be
changed.
The extent, if any, to which the closing of the sale of any series of
Term Notes is conditioned upon the closing of any other series of Securities
will be set forth in the related Prospectus Supplement.
Each Underwriting Agreement will provide that the Seller will indemnify
the underwriters against certain liabilities, including liabilities under the
Securities Act.
The Indenture Trustee may, from time to time, invest the funds in the
Designated Accounts in Eligible Investments acquired from the underwriters.
The place and time of delivery for the Term Notes in respect of which
this Prospectus is delivered will be set forth in the related Prospectus
Supplement.
LEGAL OPINIONS
Certain legal matters relating to the Term Notes will be passed upon
for each Trust, the Seller and GMAC by Richard B. Wagner, Esq., General
Counsel of GMAC, and by Kirkland & Ellis, special counsel to each Trust, the
Seller and GMAC. Mr. Wagner owns shares of each of the classes of General
Motors common stock and has options to purchase shares of General Motors
common stock, $1-2/3 par value. Certain federal income tax matters will be
passed upon for each Trust, the Seller and the Servicer by Kirkland & Ellis.
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GLOSSARY OF TERMS
THIS GLOSSARY OF TERMS DOES NOT PURPORT TO BE COMPLETE AND IS SUBJECT
TO, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, THE RELATED TRANSFER
AND SERVICING AGREEMENTS, FORMS OF WHICH ARE FILED AS AN EXHIBIT TO THE
REGISTRATION STATEMENT OF WHICH THIS PROSPECTUS IS A PART. CERTAIN
CAPITALIZED TERMS USED BUT NOT DEFINED IN THE PROSPECTUS OR THIS GLOSSARY OF
TERMS ARE DEFINED IN THE RELATED PROSPECTUS SUPPLEMENT. REFERENCES TO THE
SINGULAR INCLUDE REFERENCES TO THE PLURAL AND VICE VERSA.
"ACCOUNT" means an individual line of credit or related lines of credit
represented by a revolving dealer floor plan financing agreement extended or
maintained by GMAC to a United States corporation or other entity or person
engaged generally in the business of purchasing Vehicles from a manufacturer
or distributor thereof and holding such Vehicles for sale or lease in the
ordinary course of business.
"ADDITION DATE" means, with respect to each Trust and any Additional
Account, the date on which such Account is added to the Pool of Accounts.
"ADDITIONAL ACCOUNT" means, with respect to each Trust, any Account
designated by the Seller from time to time after the related Initial Cut-Off
Date to be included in the related Pool of Accounts, as described in "The
Transfer and Servicing Agreements Addition and Removal of Accounts."
"ADDITIONAL CUT-OFF DATE" means, with respect to each Trust and any
Additional Account, the date specified as such in a written notice provided
by the Servicer to the Seller.
"ADDITIONAL TRUST PRINCIPAL" means, for any date, the sum of the
principal portion of Warranty Payments and Administrative Purchase Payments,
amounts applied to cover the Trust Defaulted Amount and other amounts, all as
more fully described in the related Prospectus Supplement.
"ADMINISTRATION AGREEMENT" means, with respect to each Trust, the
Administration Agreement, dated as of the Initial Closing Date, among GMAC,
as Administrator, the Trust and the related Indenture Trustee, as amended and
supplemented from time to time.
"ADMINISTRATIVE PURCHASE PAYMENT" has the meaning set forth in "The
Transfer and Servicing Agreements Servicer Covenants."
"ADMINISTRATIVE RECEIVABLE" has the meaning set forth in "The Transfer
and Servicing Agreements Servicer Covenants."
"ADMINISTRATOR" has the meaning set forth in "The Transfer and
Servicing Agreements Administration Agreement."
"AUCTION VEHICLES" means, under GMAC's current practices and policies,
vehicles purchased at a closed auction conducted by General Motors.
"AVAILABLE RECEIVABLE" means, with respect to each Trust, unless
otherwise provided in the related Prospectus Supplement, a Receivable that is
identified by GMAC as satisfying the criteria set forth in clauses (a)
through (p) of the definition of Eligible Receivable.
"AVAILABLE TRUST INTEREST" means, with respect to each Trust, for any
Distribution Date, the sum of Trust Interest Collections, Investment
Proceeds, receipts under credit, liquidity and other enhancement arrangements
and other amounts available to make interest payments on Securities and pay
other amounts, all as more fully described in the related Prospectus
Supplement.
"AVAILABLE TRUST PRINCIPAL" means, with respect to each Trust, for any
Distribution Date, the sum of Trust Principal Collections for the related
Collection Period, Additional Trust Principal, receipts under credit,
liquidity and other enhancement arrangements and other amounts available to
make payments of principal on the Notes and distributions with respect to
Certificate Balance on the Certificates, all as more fully described in the
related Prospectus Supplement.
"BANKRUPTCY CODE" means Title 11 of the United States Code, as amended.
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"BUSINESS DAY" means, unless otherwise provided in the related
Prospectus Supplement, any day other than a Saturday, Sunday or any other day
on which banks in New York, New York or Detroit, Michigan may, or are
required to, remain closed.
"CASH COLLATERAL AMOUNT" means, with respect to each Trust as of any
date, the amount of cash that is required to be held on behalf of such Trust
in order to ensure that the Daily Trust Balance equals the Daily Trust
Invested Amount as described under "The Transfer and Servicing Agreements--
Application of Collections--Principal Collections."
"CEDE" means CEDE & Co., the nominee of DTC and initially the sole
owner of record of the Term Notes.
"CERTIFICATE BALANCE" means, at any time, with respect to each Trust,
the outstanding principal amount of the related Certificates as described in
the related Prospectus Supplement.
"CERTIFICATE DISTRIBUTION ACCOUNT" has the meaning set forth in "The
Transfer and Servicing Agreements Bank Accounts."
"CERTIFICATE RATE" means, for any Distribution Date and with respect to
any class of Certificates, the Certificate Rate specified in the related
Prospectus Supplement.
"CERTIFICATEHOLDERS" means, with respect to each Trust, unless the
context otherwise requires, the holders of record of the Certificates.
"CERTIFICATES" has the meaning set forth on the cover page hereto.
"CODE" means the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder.
"COLLATERAL SECURITY" means, with respect to an Account included in the
Pool of Accounts and Receivables arising in such Account, all collateral
security granted to secure the obligations of the related Dealer in
connection therewith and any proceeds therefrom, including all Vehicle
Collateral Security and, to the extent applicable, other motor vehicles,
parts inventory, equipment, fixtures, service accounts, realty and
guarantees.
"COLLECTION ACCOUNT" has the meaning set forth in "The Transfer and
Servicing Agreements Bank Accounts."
"COLLECTION PERIOD," including "related Collection Period," means, with
respect to any Distribution Date, the calendar month preceding the month in
which such Distribution Date occurs.
"COLLECTIONS" means Interest Collections and Principal Collections.
"COMMISSION" means the Securities and Exchange Commission.
"CONTROLLED DEPOSIT AMOUNT" means, with respect to any Trust or any
series or class of Securities, on any date, the amount set forth or
determined as described in the related Prospectus Supplement, which amount
limits the amount of Principal Collections that may be applied to make
principal payments on the Notes or distributions of Certificate Balance (or
be set aside for such purpose).
"DAILY TRUST BALANCE" means, with respect to each Trust, for any date,
the aggregate principal balance of all Receivables held by the Trust on such
date.
"DAILY TRUST INVESTED AMOUNT" means, with respect to each Trust, for
any date during a Collection Period, an amount equal to (without duplication)
(i) the outstanding aggregate principal amount of the related Term Notes on
such date PLUS (ii) the outstanding Certificate Balance on such date PLUS
(iii) the Net Revolver Balance for such date MINUS (iv) the Cash Collateral
Amount for such date MINUS (v) any amounts held on such date in a related
Distribution Account for payment of principal on the Notes or distribution of
Certificate Balance on the Certificates MINUS (vi) the amount of unreimbursed
Trust Charge-Offs as of such date.
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"DEALER" means, with respect to each Trust, any corporation, entity or
other person the Receivables of which are included in the Trust.
"DEALER OVERCONCENTRATION RECEIVABLES" means, for any date, with
respect to any Dealer or group of affiliated Dealers (as determined in
accordance with the Servicer's standard procedures for identifying and
tracking accounts of affiliated dealers), the outstanding Available
Receivables with respect to such Dealer or group of affiliated Dealers to the
extent, if any, of the excess of (a) the aggregate principal balance of all
such Available Receivables on such date over (b) 1.5% (or such other
percentage as may be set forth in the related Prospectus Supplement) of the
sum of (i) the Specified Maximum Revolver Balance and (ii) the aggregate
principal balance of all outstanding Term Notes as of such date or, if
applicable, as of the commencement of any then occurring Early Amortization
Period, Wind Down Period or Payment Period. If, on any date, there exist
Dealer Overconcentration Receivables with respect to a Dealer or group of
affiliated Dealers, those Receivables constituting Dealer Overconcentration
Receivables shall be identified pursuant to the procedures set forth in the
related Pooling and Servicing Agreement.
"DEFAULTED RECEIVABLES" means, with respect to each Trust, for any
Distribution Date, all Receivables held by the Trust that were charged-off as
uncollectible during the related Collection Period, other than any such
Receivables that are subject to repurchase by the Seller or GMAC or purchase
by the Servicer on such Distribution Date (unless certain events of
bankruptcy, insolvency or receivership have occurred with respect to the
Seller, GMAC or the Servicer, as the case may be, in which event Defaulted
Receivables will include the principal amount of such otherwise excluded
Receivables).
"DEFINITIVE TERM NOTES" has the meaning set forth in "The Term
Notes Definitive Term Notes."
"DEPOSITORY" has the meaning set forth in "The Term Notes General."
"DESIGNATED ACCOUNTS" has the meaning set forth in "The Transfer and
Servicing Agreements Bank Accounts."
"DISTRIBUTION ACCOUNTS" has the meaning set forth in "The Transfer and
Servicing Agreements-Bank Accounts."
"DISTRIBUTION DATE" means, with respect to each Trust, the fifteenth
day of each calendar month, or, if any such day is not a Business Day, the
next succeeding Business Day, beginning on the Initial Distribution Date
specified in the related Prospectus Supplement.
"DPP" has the meaning set forth in "The Dealer Floor Plan Financing
Business Dealer Payment Terms."
"DTC" means The Depository Trust Company, the initial Depository.
"EARLY AMORTIZATION EVENT" has the meaning set forth in "The Transfer
and Servicing Agreements Early Amortization Events."
"EARLY AMORTIZATION PERIOD" means, with respect to any Trust, the
period commencing on the day on which an Early Amortization Event with
respect to such Trust is deemed to have occurred, and ending on the first to
occur of (a) the payment in full of all outstanding Securities issued by such
Trust, (b) the recommencement of the Revolving Period (if and to the extent
described herein or in the related Prospectus Supplement) and (c) the Trust
Termination Date. A Distribution Date is for an Early Amortization Period if
the last day of the related Collection Period occurred during an Early
Amortization Period.
"ELIGIBLE ACCOUNT" means, with respect to any Trust, an Account which,
as of the date of determination thereof: (a) is in favor of an entity or
person that is not subject to voluntary or involuntary liquidation, that is
not classified in "programmed" or "no credit" status and in which General
Motors or an affiliate does not have a more than 20% equity interest; (b) has
been established by GMAC or General Motors; (c) is maintained and serviced by
GMAC; (d) is not a Fleet Account or a Marine Account; and (e) satisfies the
other criteria, if any, set forth in the related Prospectus Supplement.
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"ELIGIBLE DEPOSIT ACCOUNT" has the meaning set forth in "The Transfer
and Servicing Agreements Bank Accounts."
"ELIGIBLE INSTITUTION" has the meaning set forth in "the Transfer and
Servicing Agreements Bank Accounts."
"ELIGIBLE INVESTMENTS" has the meaning set forth in "The Transfer and
Servicing Agreements Bank Accounts."
"ELIGIBLE RECEIVABLE" means, with respect to any date, a Receivable
(except as otherwise provided in the related Prospectus Supplement): (a)
which was originated by GMAC in the ordinary course of business or which was
originated by General Motors in the ordinary course of business and acquired
by GMAC; (b) which arose under an Account that was an Eligible Account (and
not a Selected Account) at the time of the transfer of such Receivable from
GMAC to the Seller; (c) which is payable in United States dollars; (d) to
which GMAC had good and marketable title immediately prior to the transfer
thereof by GMAC to the Seller and which has been the subject of a valid
transfer and assignment from GMAC to the Seller of all of GMAC's right, title
and interest therein and the related Vehicle Collateral Security (including
any proceeds thereof); (e) which is advanced against a Vehicle; (f) which at
the time of the transfer thereof by GMAC to the Seller is secured by a first
priority perfected security interest in the Vehicle related thereto; (g) with
respect to which all consents, licenses and approvals of any governmental
authority in connection with the transfer thereof to the Seller and to the
Trust have been obtained and are in full force and effect; (h) which was
created in compliance in all material respects with all requirements of law
applicable thereto; (i) as to which, at all times following the transfer of
such Receivable to the Trust, the Trust has either a first priority perfected
security interest or good and marketable title thereto, free and clear of all
liens (other than liens permitted pursuant to related Trust Sale and
Servicing Agreement); (j) which has been the subject of a valid transfer and
assignment from the Seller to the Trust of all the Seller's right, title and
interest therein and the related Vehicle Collateral Security (including any
proceeds thereof); (k) which is the legal, valid, binding and assignable
payment obligation of the Dealer relating thereto, enforceable against such
Dealer in accordance with its terms, except as such enforceability may be
limited by the Insolvency Laws; (l) which is not subject to any valid right
of rescission, setoff or any other defense (including defenses arising out of
violations of usury laws) of the Dealer; (m) as to which, at the time of the
transfer thereof to the Trust, GMAC and the Seller have satisfied in all
material respects all their respective obligations with respect to such
Receivable required to be satisfied at such time; (n) as to which, at the
time of the transfer thereof to the Trust, neither GMAC nor the Seller has
taken or failed to take any action that would impair the rights of the Trust
or the Securityholders therein; (o) which constitutes "chattel paper," an
"account" or a "general intangible" as defined in Article 9 of the UCC; (p)
with respect to which the Dealer has not postponed principal payment pursuant
to DPP (or any similar arrangement) or any instalment payment program; (q)
which does not constitute a Dealer Overconcentration Receivable; and (r)
which does not constitute an Excess Available Receivable. Notwithstanding the
foregoing, any other Receivable identified by GMAC as an Eligible Receivable
will also be deemed an Eligible Receivable unless and until such Receivable
is thereafter determined not to satisfy the eligibility criteria set forth
above.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EVENT OF DEFAULT" has the meaning set forth in "The Term Notes The
Indenture Events of Default; Rights upon Events of Default."
"EXCESS AVAILABLE RECEIVABLES" means, with respect to each Trust, for
any date, Available Receivables to the extent, if any, of the excess of (a)
the aggregate principal balance of Available Receivables less the aggregate
principal balance of Dealer Overconcentration Receivables over (b) the
Maximum Pool Balance. If, on any date, there exists Excess Available
Receivables, those Receivables constituting Excess Available Receivables
shall be identified pursuant to the related Pooling and Servicing Agreement.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FLEET ACCOUNTS" has the meaning set forth in "The Dealer Floor Plan
Financing Business General."
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"GENERAL MOTORS" means General Motors Corporation, a Delaware
corporation.
"GMAC" means General Motors Acceptance Corporation, a corporation
incorporated under the New York Banking Law relating to investment companies.
"INDENTURE" means, with respect to each Trust, the Indenture dated as
of the related Initial Closing Date between the Trust and the related
Indenture Trustee, as amended and supplemented from time to time.
"INDENTURE TRUSTEE" means, with respect to each Trust, the Indenture
Trustee specified in the related Prospectus Supplement.
"INDIRECT PARTICIPANTS" has the meaning set forth in "The Term
Notes Book-Entry Registration."
"INITIAL CLOSING DATE" means, with respect to each Trust, the date
specified as such in the Prospectus Supplement relating to the first series
of Term Notes issued by such Trust.
"INITIAL CUT-OFF DATE" means, with respect to each Trust, the date
specified as such in the Prospectus Supplement relating to the first series
of Term Notes issued by such Trust.
"INSOLVENCY EVENT" means, with respect to a specified entity, (a) the
entry of a decree or order by a court, agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator, receiver,
trustee or liquidator for such entity, in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of such entity's affairs, and the continuance
of any such decree or order unstayed and in effect for a period of 90
consecutive days, (b) the consent by such entity to the appointment of a
conservator, receiver or liquidator in any insolvency, bankruptcy,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to such entity or of or relating to substantially
all of such entity's property, or (c) such entity shall admit in writing its
inability to pay its debts generally as they become due, file a petition to
take advantage of any applicable insolvency, bankruptcy or reorganization
statute, make an assignment for the benefit of its creditors or voluntarily
suspend payment of its obligations.
"INSOLVENCY LAWS" means the Bankruptcy Code and similar applicable
federal or state laws.
"INTEREST COLLECTIONS" means, with respect to any Trust, for any
Collection Period, collections received during such Collection Period on the
Receivables existing under the Accounts in the related Pool of Accounts that
the Servicer attributes to interest pursuant to its servicing guidelines,
including Administrative Purchase Payments and Warranty Payments in excess of
the principal portion thereof.
"INTEREST RATE" means for any Payment Date and for any series of Term
Notes, the rate or rates of interest on such series of Term Notes as
specified in the related Prospectus Supplement.
"INVESTMENT PROCEEDS" means, with respect to any Trust, for any
Distribution Date, investment earnings on funds deposited in Designated
Accounts and the Certificate Distribution Account, net of losses and
investment expenses, during the related Collection Period.
"MARINE ACCOUNT" has the meaning set forth in "The Dealer Floor Plan
Financing Business General."
"MAXIMUM POOL BALANCE" means, with respect to each Trust, the sum of
(a) the Maximum Revolver Balance, (b) the aggregate outstanding principal
balance of all Term Notes (after giving effect to any amounts on deposit in
the Note Distribution Account for payments of principal) and (c) the
aggregate outstanding Certificate Balance of all Certificates (after giving
effect to any amounts on deposit in the Certificate Distribution Account for
distributions with respect to Certificate Balance).
"MAXIMUM REVOLVER BALANCE" means, with respect to each Trust, at any
time, the Specified Maximum Revolver Balance set forth in the related
Prospectus Supplement, as such amount may be increased or decreased from time
to time in accordance with the related Trust Sale and Servicing Agreement;
provided that at any time that additional borrowings may not be made under
the Revolving Notes (including, if applicable, during the Wind Down Period or
an Early Amortization Period), Maximum Revolver Balance shall mean the Net
Revolver Balance.
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"MONTHLY PAYMENT RATE" means, for any Collection Period, the percentage
obtained by dividing Principal Collections for such Collection Period by the
average daily aggregate principal balance of all Receivables included in the
Accounts in the Pool of Accounts during such Collection Period.
"MONTHLY SERVICING FEE" means, with respect to each Trust, unless
otherwise provided in the related Prospectus Supplement, for any Distribution
Date, the product of (a) the average daily balance of Daily Trust Invested
Amount for the related Collection Period and (b) one-twelfth of the Servicing
Fee Rate.
"MOODY'S" means Moody's Investors Service, Inc.
"NET RECEIVABLES RATE" means, with respect to each Trust, unless
otherwise provided in the related Prospectus Supplement, with respect to any
Collection Period, a rate equal to the product of (a) the quotient obtained
by dividing (i) 360 by (ii) the actual number of days elapsed in such
Collection Period and (b) the percentage equivalent of a fraction, the
numerator of which is the amount of Trust Interest Collections for the
immediately preceding Collection Period, after subtracting therefrom the
Trust Defaulted Amount for the Distribution Date related to such immediately
preceding Collection Period, and the denominator of which is the average
Daily Trust Balance for such immediately preceding Collection Period.
"NET REVOLVER BALANCE" means, with respect to each Trust, for any date,
the aggregate outstanding principal balance under the Revolving Notes MINUS
any amounts on deposit in the related Revolver Distribution Account on such
date for the payment of principal.
"NEW VEHICLES" means, under GMAC's current practices and policies,
vehicles of any model year that are untitled and that generally have been
driven less than 200 miles and that are not Auction Vehicles; provided,
however, that vehicles that are titled solely for purposes of state laws
requiring demonstration vehicles to be titled generally will be considered
New Vehicles if driven less than 200 miles.
"NOTE DISTRIBUTION ACCOUNT" has the meaning set forth in "The Transfer
and Servicing Agreements Bank Accounts."
"NOTEHOLDERS" means, unless the context otherwise requires, the holders
of record of the Term Notes and Revolving Notes.
"NOTES" has the meaning set forth on the cover page hereto.
"OWNER TRUSTEE" means, with respect to each Trust, the Owner Trustee
specified in the related Prospectus Supplement.
"PARTICIPANTS" has the meaning set forth in "The Term Notes General."
"PAYMENT DATE" means, with respect to a series of Notes, each date
specified for payment of interest or principal on the Notes in the related
Prospectus Supplement. With respect to a series of Notes providing for
monthly payment of interest or principal, Payment Date means a Distribution
Date.
"PAYMENT PERIOD" means, with respect to a series of Term Notes, the
period, if any, described in the related Prospectus Supplement during which
any amounts will be set aside and/or paid as principal on such Term Notes
prior to the Wind Down Period or an Early Amortization Period.
"POOL OF ACCOUNTS" means, with respect to each Trust, at any time, all
Accounts identified on the Schedule of Accounts as amended and supplemented
from time to time pursuant to the related Pooling and Servicing Agreement and
Trust Sale and Servicing Agreement.
"POOLING AND SERVICING AGREEMENT" means, with respect to each Trust,
the Pooling and Servicing Agreement dated as of the related Initial Closing
Date between GMAC and the Seller, as amended and supplemented from time to
time.
"PRIME RATE" means the interest rate designated as the "prime rate" as
in effect on the last day of the preceding semi-monthly period by certain
financial institutions selected by GMAC.
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"PRINCIPAL COLLECTIONS" means, with respect to any Trust, for any date
or any period, collections received on such date or during such period, as
applicable, on the Receivables existing under the Accounts in the related
Pool of Accounts that the Servicer attributes to principal pursuant to its
servicing guidelines.
"PROSPECTUS SUPPLEMENT" has the meaning set forth on the cover page
hereto.
"RATING AGENCIES" means, with respect to any Securities and the related
Trust at any time, the nationally recognized statistical rating organizations
that are requested by the Seller to rate such Securities and that are rating
such Securities on such date.
"REASSIGNMENT AMOUNT" means, for any Distribution Date, after giving
effect to any allocations, withdrawals and deposits otherwise to be made on
such Distribution Date, the sum of the Daily Trust Invested Amount (which,
for such purpose, will be calculated without reduction for the Cash
Collateral Amount) and accrued but unpaid interest on all outstanding
Securities to the extent not previously distributed to Securityholders.
"RECEIVABLE" means, at any time, the right to receive payment on a loan
made under an Account included in the Pool of Accounts.
"RECEIVABLES PURCHASE DATE" means, with respect to each Trust, unless
otherwise provided in the related Prospectus Supplement, each Business Day
during the related Revolving Period on which Eligible Receivables are created
in any Account then included in the related Pool of Accounts, except as
described under "The Transfer and Servicing Agreements - Insolvency Events."
"REGISTRATION STATEMENT" has the meaning set forth in "Available
Information."
"RELATED DOCUMENTS" has the meaning set forth in "The Term Notes The
Indenture Certain Covenants."
"RESERVE FUND" means, with respect to each Trust, an Eligible Deposit
Account maintained for the benefit of the Trust and the Securityholders as
described in "The Transfer and Servicing Agreements Liquidity and Credit
Support."
"RESERVE FUND INITIAL DEPOSIT" means, with respect to each Trust, the
amount, if any, specified in the related Prospectus Supplement.
"RESERVE FUND REQUIRED AMOUNT" means, with respect to each Trust, the
amount, if any, specified in the related Prospectus Supplement.
"RETAINED PROPERTY" has the meaning set forth in "The Trusts General;
The Trust Estate."
"REVOLVER DISTRIBUTION ACCOUNT" has the meaning set forth in "The
Transfer and Servicing Agreements Bank Accounts."
"REVOLVER INTEREST RATE" means for any Distribution Date and for any
series of Revolving Notes, the rate or rates of interest on such Revolving
Notes.
"REVOLVING NOTES" has the meaning set forth on the cover page hereto.
"REVOLVING PERIOD" means, with respect to each Trust, the period
commencing on the Initial Cut-Off Date and continuing until the earlier of
(a) the commencement of an Early Amortization Period and (b) the Scheduled
Revolving Period Termination Date. The Revolving Period for a Trust may
recommence in certain limited circumstances as described herein or in the
related Prospectus Supplement.
"SCHEDULE OF ACCOUNTS" means the list of the Accounts included in the
Pool of Accounts, as such list may be amended and supplemented from time to
time.
"SCHEDULED REVOLVING PERIOD TERMINATION DATE" means, with respect to
each Trust, the date specified in the related Prospectus Supplement.
"SCHEDULED SERIES PAYMENT PERIOD COMMENCEMENT DATE" means, with respect
to any series of Term Notes with a Payment Period, the date specified as such
in the related Prospectus Supplement.
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"SECURITIES" means, with respect to each Trust, the Term Notes, the
Revolving Notes and the Certificates issued or to be issued by such Trust.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITYHOLDERS" means the Noteholders and the Certificateholders.
"SELECTED ACCOUNTS" has the meaning set forth in the "The Transfer and
Servicing Agreements -- Addition and Removal of Accounts."
"SELLER" means Wholesale Auto Receivables Corporation, a Delaware
corporation.
"SERIES EARLY PAYMENT EVENT" means with respect to any series of Term
Notes with a Payment Period, an event specified in the related Prospectus
Supplement as commencing the related Payment Period.
"SERVICER" means initially GMAC, in its capacity as Servicer under the
Transfer and Servicing Agreements, or any successor Servicer.
"SERVICER ADVANCE" means, with respect to each Trust, for any
Distribution Date, the amount, if any, advanced by the Servicer to cover
interest shortfalls, all as more fully described in the related Prospectus
Supplement.
"SERVICING DEFAULT" means any of the events described in "The Transfer
and Servicing Agreements Servicing Default."
"SERVICING FEE RATE" means, with respect to each Trust, 1% unless
otherwise set forth in any related Prospectus Supplement.
"STANDARD & POOR'S" means Standard & Poor's Corporation.
"STATED FINAL PAYMENT DATE" means, with respect to any series of Notes
or Certificates, the date set forth as such in the related Prospectus
Supplement, on which date the final payment on such Notes or final
distribution on such Certificates is due.
"STRIP NOTES" has the meaning set forth in "The Term Notes Principal
and Interest on the Term Notes."
"TARGETED FINAL PAYMENT DATE" means, with respect to any series of
Notes, the date, if any, specified in the related Prospectus Supplement on
which all principal is scheduled to be paid as principal on such series of
Notes, to the extent not previously paid.
"TERM NOTEHOLDERS" means the holders of record of the Term Notes.
"TERM NOTES" has the meaning set forth on the cover page hereto.
"TRANSFER AND SERVICING AGREEMENTS" means, with respect to each Trust,
the Pooling and Servicing Agreement, the Trust Sale and Servicing Agreement,
the Trust Agreement and the Administration Agreement.
"TRUST" shall have the meaning set forth on the cover page hereto.
"TRUST AGREEMENT" means, with respect to each Trust, the Trust
Agreement, dated as of the Initial Closing Date, between the Seller and the
Owner Trustee, as amended and supplemented from time to time.
"TRUST CHARGE-OFFS" means, with respect to each Trust, for any
Distribution Date, the amount of the Trust Defaulted Amount for such
Distribution Date that is not covered through the application of Trust
Interest Collections and funds in the Reserve Fund or otherwise. As of any
date, unreimbursed Trust Charge-Offs will equal the aggregate Trust Charge-
Offs for all prior Distribution Dates unless and to the extent such Trust
Charge-Offs have been covered or otherwise reduced as described in the
related Prospectus Supplement.
"TRUST DEFAULTED AMOUNT" means, with respect to each Trust, for any
Distribution Date, an amount (not less than zero) equal to the principal
amount of all Defaulted Receivables.
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"TRUST ESTATE" has the meaning set forth in "The Trusts--General; The
Trust Estate."
"TRUST INDENTURE ACT" means, the Trust Indenture Act of 1939, as
amended.
"TRUST INTEREST COLLECTIONS" means, with respect to each Trust,
Interest Collections for the related Collection Period attributable to the
Receivables held by such Trust, as more fully described herein and in the
related Prospectus Supplement.
"TRUST PRINCIPAL COLLECTIONS" means, with respect to each Trust,
Principal Collections for the related Collection Period attributable to the
Receivables held by such Trust, as more fully described herein and in the
related Prospectus Supplement.
"TRUST SALE AND SERVICING AGREEMENT" means, with respect to each Trust,
the Trust Sale and Servicing Agreement, dated as of the related Initial Cut-
Off Date, among the Servicer, the Seller and the Trust, as amended and
supplemented from time to time.
"TRUST TERMINATION DATE" has the meaning set forth in "The Transfer and
Servicing Agreements Termination."
"U.S. PERSON" means (a) a citizen or resident of the United States, (b)
a corporation or partnership created or organized in the United States or
under the laws of the United States or of any State and (c) an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source.
"U.S. PORTFOLIO" has the meaning set forth in "The Dealer Floor Plan
Financing Business--General."
"UCC" means the Uniform Commercial Code.
"USED VEHICLES" means, under GMAC's current practices and policies,
Auction Vehicles and vehicles which have been previously titled; provided,
however, that vehicles that are titled solely for purposes of state laws
requiring demonstration vehicles to be titled will not be considered Used
Vehicles.
"VEHICLE COLLATERAL SECURITY" means, with respect to an Account and the
Receivables arising in such Account, the security interest in the Vehicles of
the related Dealer granted to secure the obligations of such Dealer in
connection therewith and any proceeds therefrom.
"VEHICLES" means automobiles and light trucks.
"VOTING INTERESTS" means, as of any date, the aggregate outstanding
Certificate Balance of all Certificates; PROVIDED, HOWEVER, that Certificates
owned by GMAC or the Trust or any affiliate of either of them (other than the
Seller) will be disregarded and deemed not to be outstanding, except that, in
determining whether the Owner Trustee will be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver,
only Certificates that the Owner Trustee knows to be so owned will be so
disregarded. Certificates so owned that have been pledged in good faith may
be regarded as outstanding if the pledgee establishes to the satisfaction of
the Owner Trustee that pledgor's right so to act with respect to such
Certificates and that the pledgee is not GMAC or the Trust or any affiliate
of either of them (other than the Seller).
"WARRANTY PAYMENT" has the meaning set forth in "The Transfer and
Servicing Agreements Representations and Warranties."
"WARRANTY RECEIVABLE" has the meaning set forth in "The Transfer and
Servicing Agreements Representations and Warranties."
"WIND DOWN PERIOD" means, with respect to each Trust, the period
commencing on the day immediately after the Scheduled Revolving Period
Termination Date and continuing until the earlier of (a) the commencement of
an Early Amortization Period and (b) the date on which all of the related
Securities have been paid in full. The first Distribution Date for a Wind
Down Period will be the Distribution Date following the first Collection
Period included in such Wind Down Period.
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
SELLER, THE SERVICER OR THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, THE SECURITIES OFFERED HEREBY TO ANYONE IN ANY JURISDICTION IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SINCE THE DATE
OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS.
_________________
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUPPLEMENT
Summary. . . . . . . . . . . . . . . . . . . . . . S-3
The Trust. . . . . . . . . . . . . . . . . . . . . S-7
The U.S. Portfolio . . . . . . . . . . . . . . . . S-7
The Pool of Accounts . . . . . . . . . . . . . . . S-10
The Offered Term Notes . . . . . . . . . . . . . . S-11
The Revolving Notes. . . . . . . . . . . . . . . . S-15
The Certificates . . . . . . . . . . . . . . . . . S-16
The Transfer and Servicing Agreements. . . . . . . S-17
Certain Federal Income Tax Consequences. . . . . . S-23
Underwriting . . . . . . . . . . . . . . . . . . . S-24
Legal Opinions . . . . . . . . . . . . . . . . . . S-25
PROSPECTUS
Available Information. . . . . . . . . . . . . . .
Reports to Term Noteholders . . . . . . . . . . .
Prospectus Summary . . . . . . . . . . . . . . . .
Special Considerations . . . . . . . . . . . . . .
General Motors Acceptance Corporation. . . . . . .
Wholesale Auto Receivables Corporation . . . . . .
The Trusts . . . . . . . . . . . . . . . . . . . .
Use Of Proceeds. . . . . . . . . . . . . . . . . .
The Dealer Floor Plan Financing Business . . . . .
The Accounts . . . . . . . . . . . . . . . . . . .
Maturity and Principal Considerations. . . . . . .
The Term Notes . . . . . . . . . . . . . . . . . .
The Revolving Notes. . . . . . . . . . . . . . . .
The Certificates . . . . . . . . . . . . . . . . .
The Transfer and Servicing Agreements. . . . . . .
Certain Legal Aspects. . . . . . . . . . . . . . .
Certain Federal Income Tax Consequences. . . . . .
State and Local Tax Consequences . . . . . . . . .
ERISA Considerations . . . . . . . . . . . . . . .
Plan of Distribution . . . . . . . . . . . . . . .
Legal Opinions . . . . . . . . . . . . . . . . . .
Glossary of Terms. . . . . . . . . . . . . . . . .
UNTIL NOVEMBER 13, 1995, ALL DEALERS EFFECTING TRANSACTIONS IN THE OFFERED
TERM NOTES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND THE PROSPECTUS TO WHICH IT
RELATES. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
$1,000,000,000
SUPERIOR WHOLESALE INVENTORY FINANCING
TRUST II
FLOATING RATE ASSET-BACKED TERM NOTES,
SERIES 1995-A
WHOLESALE AUTO RECEIVABLES CORPORATION
SELLER
GENERAL MOTORS ACCEPTANCE CORPORATION
SERVICER
SALOMON BROTHERS INC
BEAR, STEARNS & CO. INC.
CS FIRST BOSTON
MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES INC.
PROSPECTUS SUPPLEMENT
DATED AUGUST 15, 1995
