PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JANUARY 13, 1994)
$500,000,000
SUPERIOR WHOLESALE INVENTORY FINANCING TRUST III
FLOATING RATE ASSET-BACKED TERM NOTES, SERIES 1996-A
WHOLESALE AUTO RECEIVABLES CORPORATION
SELLER
GENERAL MOTORS ACCEPTANCE CORPORATION
SERVICER
The Superior Wholesale Inventory Financing Trust III (the "Trust" or the
"Issuer") will be formed pursuant to a Trust Agreement, to be dated as of April
11, 1996 (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 1996-A (the "Offered Term Notes") in the
aggregate principal amount of $500,000,000 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 March, June, September and December or, if any such day is not a
Business Day, on the next succeeding Business Day, commencing June 17, 1996
(each, a " Quarterly Distribution Date"), and will accrue at a floating rate
equal to the Fed Funds Rate (as defined herein) plus 0.26% per annum. 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 Targeted
Final Payment Date for the Offered Term Notes. However, under certain
circumstances, the actual payment in full of the Offered Term Notes could occur
sooner. In general, on the Targeted Final Payment Date for the Offered Term
Notes, the Required Payment (as defined herein) will be paid on the Offered Term
Notes. Other series of Term Notes that may be issued from time to time by the
Trust may have a Payment Period prior to the commencement of the Payment Period
for the Offered Term Notes. One or more series of Revolving Notes may also
provide for required payments of principal prior to the commencement of the
Payment Period for the Offered Term Notes. 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 (as defined herein) in March 2001. The Targeted Final Payment
Date for the Offered Term Notes will be the Quarterly Distribution Date in March
1999. (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% 0.20% 99.80%
TOTAL................... $500,000,000 $1,000,000 $499,000,000
- -------------------------------------------------------------------------------
(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 MERRILL LYNCH & CO.
The date of this Prospectus Supplement is April 3, 1996.
(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
<PAGE>
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 III (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 April 11, 1996 (the "Initial Closing Date"),
the Trust will issue Floating Rate Asset-Backed
Term Notes, Series 1996-A (the "Offered Term
Notes"), Floating Rate Asset-Backed
Certificates, Class A, Floating Rate
Asset-Backed Revolving Notes, Series 1996-RN1
(the "Series 1996-RN1 Revolving Notes"), and
Floating Rate Asset-Backed Revolving Notes,
Series 1996-RN2 (the "Series 1996-RN2 Revolving
Notes"). 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 $500,000,000.
The Revolving Notes..............The Specified Maximum Revolver Balance
will initially be $1,500,000,000. 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
$79,000,000. 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 April 9, 1996 (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.................On and prior to the Targeted Final
Payment Date for the Offered Term Notes,
payments of interest on the Offered Term
Notes will be made on the fifteenth day
of each March, June, September and
December, or, if any such day is not a
Business Day, on the next succeeding
Business Day (each, a "Quarterly
Distribution Date"), commencing June 17,
1996 (the "Initial Quarterly Distribution
Date"), except as otherwise described
herein. Payments will be made to the
holders of the Offered Term Notes of
record as of the day immediately
preceding such Quarterly Distribution
Date or Distribution Date, as appropriate
(or, if Definitive Offered Term Notes are
issued, as of the last day of the
preceding month).
B. Interest......................On and prior to the Targeted Payment Date
for the Offered Term Notes, 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
Quarterly Distribution Date on which
interest has been paid to but excluding
the following Quarterly Distribution
Date. If the Offered Term Notes are not
paid in full on the Targeted Final
Payment Date, for the Offered Term Notes,
or if an Early Amortization Period has
occurred and is continuing, interest on
the outstanding principal balance of the
Offered Term Notes will accrue from and
including each Distribution Date on which
interest has been paid to but excluding
the following Distribution Date (as
defined herein). The interest rate for
the Offered Term Notes will be equal to a
floating rate equal to the Fed Funds Rate
plus 0.26% per annum. 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.
S-4
C. Principal.................... In the ordinary course, no principal
payments will be made on the Offered Term
Notes until the Quarterly Distribution
Date in March 1999 (the "Targeted Final
Payment Date"). In general, on the
Targeted Final Payment Date for the
Offered Term Notes, the Required Payment
will be paid on the Offered Term Notes.
If the Offered Term Notes are not paid in
full on the Targeted Final Payment Date,
payments of principal will be made on
each Distribution Date thereafter until
so paid in full. To the extent not
previously paid, the entire outstanding
principal balance, if any, of the Offered
Term Notes will be payable on the
Distribution Date in March 2001 (the
"Stated Final Payment Date"). 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 Swaps..................... On the Initial Closing Date, the Owner
Trustee, on behalf of the Trust, will
enter into an interest rate swap (each, a
"Basis Swap" and collectively the "Basis
Swaps") with GMAC (in such capacity, the
"Basis Swap Counterparty") with respect
to each of the following: (a) the Offered
Term Notes (the "Term Notes Basis Swap"),
(b) the Series 1996-RN1 Revolving Notes
(the "Series 1996-RN1 Basis Swap"), (c)
the Series 1996-RN2 Revolving Notes (the
"Series 1996-RN2 Basis Swap") and (d) the
Certificates issued on the Initial
Closing Date (the "Certificate Basis
Swap"). Each Basis Swap is intended to
allow the Trust to receive interest at a
rate determined by reference to the index
upon which the rate of interest for the
applicable series of Notes or
Certificates is based. In each case, the
Trust will pay an interest rate
determined by reference to the Prime Rate
on the one hand and the Trust will
receive a rate of interest determined by
reference to the Fed Funds Rate, LIBOR or
3-Month LIBOR, as applicable, on the
other hand, as described herein.
Under the Basis Swaps, 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.
Except in connection with the issuance of
additional Securities, the payment in full of
any Term Notes or a change in the Specified
Maximum Revolver Balance, the termination of a
Basis Swap will be an Early Amortization Event.
Other 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
$108,108,000. 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.
S-5
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 be
February 28, 2001. If terminated upon the
commencement of an Early Amortization
Period, the Revolving Period may
recommence in certain limited
circumstances as described herein.
Payment Period...................Unless an Early
Amortization Period has commenced and is
continuing, the Payment Period for the Offered
Term Notes will commence not later than
February 1, 1999 for the Offered Term Notes.
The Payment Period will commence earlier than
February 1, 1999 (but in no event earlier than
December 1, 1998), in the event such earlier
commencement is projected to be advisable or
necessary to provide sufficient funds to be
available to pay the Offered Term Notes in full
on the Targeted Final Payment Date as described
herein. Such Payment Period will continue until
the earliest of (a) the commencement of an
Early Amortization Period, (b) the date on
which all the outstanding Offered Term Notes
are paid in full and (c) the commencement of
the Wind Down Period. If terminated upon the
commencement of an Early Amortization Period,
the Payment Period may recommence in certain
limited circumstances as described herein.
During the Payment Period for the Offered Term
Notes, the Trust will make a principal payment
on the Offered Term Notes in an amount equal to
the Required Payment on the Targeted Final
Payment Date for the Offered Term Notes and, to
the extent not paid in full on the Targeted
Final Payment Date, on each Distribution Date
thereafter. Subject to the limitations herein,
principal payments may be made on the Revolving
Notes during the Payment Period for the Offered
Term Notes.
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.
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 (including the
Offered 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
series of Term Notes (if any) and the Revolving
Notes, pro rata on the basis of their
respective outstanding principal balances, on
each Distribution Date beginning with the
Distribution Date
S-6
<PAGE>
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
<PAGE>
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 1.3% 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............................... $ 500,000,000
Series 1996-RN1 Revolving Notes.................. 1,000,000,000
Series 1996-RN2 Revolving Notes ................. 500,000,000
Certificates..................................... 79,000,000
---------------
TOTAL.......................................... $ 2,079,000,000
===============
The Specified Certificate Percentage will be 3.05%.
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 December 31, 1995, there were approximately 8,800 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 $19.8 billion.
GMAC is the primary source of floor plan financing for General Motors-franchised
dealers in the United States. In the fourth quarter of 1995, GMAC provided
financing for approximately 73.5% of new factory sales to General Motors dealers
in the United States.
As of December 31, 1995, receivables with respect to New Vehicles
represented approximately 88% 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 6% of the aggregate principal amount of all
receivables in the U.S. Portfolio. As of December 31, 1995, approximately 54% of
the Used Vehicles in the U.S. Portfolio represented Auction Vehicles. As of
December 31, 1995, the average Account in the U.S. Portfolio provided for credit
lines for New Vehicles and Used Vehicles of approximately 211 units and 39
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 year 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 the year
1995, the average annual rate of such credit ranged between 25 and 56 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 December 1995, the aggregate principal amount financed with respect
to dealers assigned to "no credit" status was approximately $6.9 million or
0.04% 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
Year Ended December 31,
----------------------------------------------
1995 1994 1993 1992
------ ------ ------ ------
(Dollars in millions)
Average Principal
Receivables
Balance (1)............... $17,312.2 $13,996.5 $13,710.5 $15,125.2
Net Losses
(Recoveries) (2).......... $6.2 $(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....... 0.036%(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.
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
YEAR ENDED DECEMBER 31,
-----------------------------------------
DAYS 1995 1994 1993 1992
- -------- ----- ----- ----- -----
1-120...................... 83.4% 86.3% 91.2% 86.9%
121-180.................... 7.0 7.1 3.3 4.4
181-270.................... 5.0 3.9 3.1 4.6
Over 270................... 4.6 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
Year Ended December 31,
------------------------------------
1995 1994 1993 1992
-------- -------- -------- --------
Highest Month................ 51.4% 62.0% 71.3% 57.6%
Lowest Month................. 33.5 41.4 42.8 38.6
Average for the Months
in the Period............... 42.1 54.7 52.6 46.9
THE POOL OF ACCOUNTS
As of the close of business on March 15, 1996 (the "Pool Formation Date"),
there were 1,097 Accounts in the Pool of Accounts. As of the Pool Formation
Date, the average aggregate principal balance of Receivables in such Accounts
was approximately $2.4 million (approximately 86% of which were Eligible
Receivables) and the weighted average spread over the Prime Rate charged to
Dealers was approximately 1% for the month of March 1996. 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 $2,623,455,000.81 and, of such amount, $2,250,922,326.71 would
qualify as Eligible Receivables (except for the limit imposed by the Maximum
Pool Balance).
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 accounted
for more than 4.7% 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......... $ 269,248 10.3% 79 7.2%
California.... 170,169 6.5 59 5.4
Ohio.......... 161,017 6.1 53 4.8
Florida....... 154,541 5.9 44 4.0
Illinois...... 127,105 4.8 47 4.3
Pennsylvania.. 126,154 4.8 55 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
Quarterly Distribution Date, commencing with the Initial Quarterly Distribution
Date, on and prior to the Targeted Final Payment Date for the Offered Term
Notes. If the Offered Term Notes are not paid in full on the Targeted Final
Payment Date for the Offered Term Notes, payments of interest on the Offered
Term Notes will be made on each Distribution Date thereafter until so paid in
full. Each Quarterly Distribution Date and each such Distribution Date will be a
Payment Date (as defined in the Prospectus) for the Offered Term Notes. Interest
on the Offered Term Notes will accrue from and including the Initial Closing
Date, or from and including the most recent Quarterly Distribution Date or
Distribution Date, as applicable, on which interest has been paid, to but
excluding the current Quarterly Distribution Date or Distribution Date, as
applicable, 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. Except as provided below, interest accruing on the Offered Term Notes
on each Distribution Date which is not a Quarterly Distribution Date will not be
paid to the holders thereof on such Distribution Date, but will be held in the
Note Distribution Account until the next Quarterly Distribution Date or, if and
to the extent permitted as described under "The Transfer and Servicing
Agreements - Net Deposits and Payments" in the Prospectus, retained by the
Servicer. If an Early Amortization Event has occurred and is continuing, or the
Offered Term Notes have not been paid in full
S-11
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on or prior to the Targeted Final Payment Date, then interest on the Offered
Term Notes will be paid on each Distribution Date. Interest on the Offered Term
Notes accrued as of any Quarterly Distribution Date or Distribution Date, as
applicable, but not paid on such Quarterly Distribution Date or Distribution
Date, as applicable, will be due on the next Quarterly Distribution Date or
Distribution Date, as applicable.
The "Interest Rate" for the Offered Term Notes, with respect to any
Distribution Date, means the sum of the Fed Funds Rate for each day in the
related Interest Period, in each case divided by the number of days in such
Interest Period, plus 0.26% per annum.
"Interest Period" means, with respect to any Distribution Date, the period
from the preceding Distribution Date or, with respect to the Initial
Distribution Date, the Initial Closing Date to but excluding such Distribution
Date. The "Initial Distribution Date" will be May 15, 1996.
The Fed Funds Rate will reset on Monday of each week (each, a "Fed Funds
Reset Date"). The "Fed Funds Rate" for any day will be (a) if such day is a Fed
Funds Reset Date, the Federal Funds Weekly Rate for such day or, (b) if such day
is not a Fed Funds Reset Date, the Federal Funds Weekly Rate for the preceding
Fed Funds Reset Date; provided, however, that for each day from and including a
Determination Date to but excluding the Distribution Date relating to such
Determination Date the Fed Funds Rate will be the rate applied on the day
preceding the Determination Date. For purposes of calculating the Fed Funds
Rate, a Business Day is any day other than a Saturday or Sunday that is not a
day on which banking institutions in the City of New York are authorized or
required by law, regulation or executive order to close.
The "Federal Funds Weekly Rate" means, with respect to any Fed Funds Reset
Date (1) the average of the rate on Federal Funds for the seven calendar days
ending on the Wednesday of the immediately preceding week with the rates for
non-Business Days assumed as the rate for the preceding Business Day (each a
"Federal Funds Determination Period"), as published in H.15(519) under the
heading "Federal Funds (Effective)" or, (2) if not published by 3:00 p.m., New
York City time on the first Business Day following such Fed Funds Reset Date,
the average of the rates for each day in the Federal Funds Determination Period
as published on Bloomberg FEDL01 Index GPO GO Page Forward ("Bloomberg") under
the heading "FED EFFECTIVE" and under the column "CLOSE," with any day for which
no rate is specified assumed to be the rate on the preceding day for which a
rate was published on Bloomberg. If such rate is not published in H.15(519) and
no rates are published on Bloomberg for the related Federal Funds Determination
Period, the Federal Funds Weekly Rate will be the average of the rates for each
day in the Federal Funds Determination Period as published, with respect to each
day, on the next Business Day in The Wall Street Journal for near closing bid,
with any day for which no rate is specified assumed to be the rate on the
preceding day for which a rate was published in The Wall Street Journal.
Notwithstanding the above, if for any day a rate other than the average weekly
rate published in H.15(519) is used, and such rate subsequently is published in
H.15(519) prior to the next Fed Funds Reset Date, then the rate as published in
H.15(519) will be considered the Federal Funds Weekly Rate as it applies to each
day following the day of publication of such rate in H.15(519) but prior to the
next Fed Funds Reset Date.
"H.15(519)" means the weekly statistical release designated as such,
published by the Board of Governors of the Federal Reserve System (or such other
release which may replace H.15(519)).
All percentages resulting from a calculation with respect to the Fed Funds
Rate will be rounded to the nearest one hundred-thousandth of a percentage
point, and all dollar amounts used in or resulting from such calculation will be
rounded to the nearest cent.
All determinations of the Fed Funds Rate by the Servicer will be final and
binding on the Offered Term Noteholders and no liability will attach to the
Servicer in connection therewith (in the absence of wilful default, bad faith or
manifest error).
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.
S-12
PRINCIPAL
REVOLVING PERIOD. During the Revolving Period, until the commencement of the
Payment Period for the Offered Term Notes, no payments of principal on the
Offered Term Notes will be made and 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). No distributions of Certificate Balance
will be made during the Revolving Period except as otherwise described herein.
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 or the Payment Period for the Offered Term
Notes. Principal payments may also be required on one or more series of
Revolving Notes prior to the commencement of the Payment Period for the Offered
Term Notes. The Scheduled Revolving Period Termination Date will be February 28,
2001. Assuming no Early Amortization Event has occurred, the Revolving Period
will terminate upon the occurrence of the Scheduled Revolving Period Termination
Date and the Wind Down Period will commence on the immediately following day.
PAYMENT PERIOD. Except as described herein and unless an Early Amortization
Period has commenced and is continuing, the Payment Period for the Offered Term
Notes will commence on February 1, 1999. On each Determination Date commencing
with the Determination Date in November 1998 and ending with the commencement of
the Payment Period, the Servicer will compute the Required Payment Period Length
(as defined herein). On the November 1998 Determination Date, if the Required
Payment Period Length is one or two, the commencement of the Payment Period will
be determined on the December 1998 Determination Date. On the November 1998
Determination Date, if the Required Payment Period Length is three or greater,
the Payment Period will commence on December 1, 1998. On the December 1998
Determination Date, if the Required Payment Period Length is two or greater, the
Payment Period will commence on January 1, 1999. The "Required Payment Period
Length" is equal to the ratio rounded up to the nearest integer of (1) the
product of (a) the minimum expected Daily Trust Balance during the period
between such Determination Date and February 28, 1999 as determined by the
Servicer and (b) the minimum Monthly Payment Rate during the last twelve months
divided by (2) the outstanding principal balance of all Offered Term Notes and
all other Term Notes with scheduled Payment Periods during the Payment Period
for the Offered Term Notes.
Trust Principal Collections during the Payment Period for the Offered Term
Notes will be held by the Trust and not used to purchase Receivables until the
Trust has reserved cash in an amount equal to the sum of the outstanding
principal balance of the Offered Term Notes and all other Term Notes with
scheduled Payment Periods during the Payment Period for the Offered Term Notes.
During the Payment Period for the Offered Term Notes, the Trust will make a
principal payment on the Offered Term Notes in an amount equal to the Required
Payment on the Targeted Final Payment Date for the Offered Term Notes and, to
the extent not paid in full on the Targeted Final Payment Date, on each
Distribution Date thereafter until so paid in full. The Targeted Final Payment
Date for the Offered Term Notes is the Distribution Date in March 1999. The
Stated Final Payment Date for the Offered Term Notes is the Distribution Date in
March 2001.
During the Payment Period for the Offered Term Notes, subject to the terms of
any Term Notes issued after the Initial Closing Date with a Payment Period
occurring, in whole or in part, during the Payment Period for the Offered Term
Notes, Trust Principal Collections will be available to make purchases of
Receivables on any date only to the extent, if any, that the Cash Collateral
Amount on such date (after giving effect to all additional borrowings (up to the
Maximum Revolver Balance) under and principal payments on the Revolving Notes,
all issuances of Securities and all purchases of Receivables on such date)
exceeds the Required Payment for the Offered Term Notes, and any other Term
Notes that are in a Payment Period, for the Distribution Date related to the
Collection Period in which such date occurs. Subject to the foregoing sentence,
principal payments may be made on the Revolving Notes during the Payment Period
for the Offered Term Notes.
S-13
The terms of any series of Term Notes issued after the Initial Closing Date
with a Payment Period occurring, in whole or in part, during the Payment Period
for the Offered Term Notes, may provide for the Required Payment on such Term
Notes to be payable during the Payment Period for the Offered Term Notes
together with or after the Required Payment for the Offered Term 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.
WIND DOWN PERIOD. The Stated Final Payment Date for the Offered Term Notes is
the Distribution Date immediately following the Scheduled Revolving Period
Termination Date. If the Offered Term Notes have not been paid in full on or
prior to such Distribution Date, an Early Amortization Period will commence and
thus there will not be any Distribution Dates related to the Wind Down Period so
long as the Offered Term Notes are outstanding.
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."
CERTAIN DEFINED TERMS
"Required Payment" means (a) for the Offered Term Notes, for any Distribution
Date during the Payment Period, the outstanding principal balance of the Offered
Term Notes, provided that the Required Payment for the Offered Term Notes for
any Distribution Date (together with the Required Payment for such Distribution
Date for any other series of Term Notes 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.
"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.
S-14
"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.
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 also have a Payment
Period prior to the commencement of the Wind Down Period and may have a Payment
Period prior to, together with, or after the Payment Period for the Offered Term
Notes. The terms of any series of Term Notes issued after the Initial Closing
Date with a Payment Period occurring, in whole or in part, during the Payment
Period for the Offered Term Notes may provide for the Required Payment on such
Term Notes to be payable during the Payment Period for the Offered Term Notes
together with or after the Required Payment for 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 1996-RN1 and the Floating Rate Asset-Backed
Revolving Notes, Series 1996-RN2. 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.
S-15
INTEREST
Interest on the outstanding principal balance of the Revolving Notes will
accrue at the applicable Revolver Interest Rate. Interest on the Series 1996-RN1
Revolving Notes will be payable on each Distribution Date, commencing with the
Initial Distribution Date. Interest on the Series 1996-RN2 Revolving Notes will
be payable on the fifteenth day of January, April, July and October (each a
"1996-RN2 Quarterly Distribution Date") or, if any such day is not a Business
Day, the next succeeding Business Day, commencing July 15, 1996. Unless
otherwise provided with respect to any series of Revolving Notes issued after
the Initial Closing Date, interest on such additional Revolving Notes 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 applicable Series Net Revolver
Balance during the related Collection Period. Interest accruing on the Series
1996-RN2 Revolving Notes on each Distribution Date which is not a 1996-RN2
Quarterly Distribution Date will not be paid to the holders thereof on such
Distribution Date, but will be held in the Revolver Distribution Account until
the next 1996-RN2 Quarterly Distribution Date. If an Early Amortization Event
has occurred and is continuing, a Wind Down Period, or the Series 1996-RN2
Revolving Notes have not been paid in full on or prior to the Targeted Final
Payment Date, then interest on the 1996-RN2 Revolving Notes will be paid on each
Distribution Date. Interest on the Revolving Notes accrued as of any
Distribution Date or 1996-RN2 Quarterly Distribution Date, as applicable, but
not paid on such Distribution Date or 1996-RN2 Quarterly Distribution Date, as
applicable, will be due on the next Distribution Date or 1996-RN2 Quarterly
Distribution Date, as applicable.
The Revolver Interest Rate for the Series 1996-RN1 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 during the related Collection Period (or, in the case of the
Initial Distribution Date, from and including the Initial Closing Date of the
related Collection Period) and the denominator of which is 360 and (ii) LIBOR
plus 0.32%.
The Revolver Interest Rate for the Series 1996-RN2 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 during the related Collection Period (or, in the case of the
Initial Distribution Date, from and including the Initial Closing Date of the
related Collection Period) and the denominator of which is 360 and (ii) 3-Month
LIBOR plus 0.29%.
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.
"LIBOR" means, with respect to each Distribution Date (other than the May
1996 Distribution Date, for which LIBOR means 5.4375%), 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, (x) for the Certificates, on
the day that is two LIBOR Business Days prior to the Distribution Date
immediately preceding such Distribution Date and (y) for the Series 1996-RN1
Revolving Notes, 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 or prior to the first day of the related Collection Period, as
applicable, to prime banks in the London interbank market for a period of one
month in amounts approximately equal to the Certificate Balance of the
Certificates then outstanding
S-16
<PAGE>
or the aggregate principal amount of the Series 1996-RN1 Revolving Notes then
outstanding, as applicable. 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 Certificate Balance of the Certificates then
outstanding or the aggregate principal amount of the Series 1996-RN1 Revolving
Notes then outstanding, as applicable. If no such quotation can be obtained, the
rate will be LIBOR for the prior Distribution Date.
"3-Month LIBOR" means, with respect to each Distribution Date (other than the
May 1996, June 1996 and July 1996 Distribution Dates, for which 3-Month LIBOR
means 5.46094%), the rate for deposits in U.S. Dollars for a period of three
months which appears on the Dow Jones Telerate Service Page 3750 as of 11:00
a.m., London time, on the day that is two LIBOR Business Days prior to the first
day of the Collection Period in which the previous 1996-RN2 Quarterly
Distribution Date occurred (the "3-Month LIBOR Reference Date"). If such rate
does not appear on that page (or any other page that may replace that page on
that service, or if that service is no longer offered, any other service for
displaying 3-Month 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. For purposes of this paragraph, 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 3-Month LIBOR Reference Date to prime banks in the London interbank market
for a period of three months in an amount approximately equal to the aggregate
principal amount of the Series 1996-RN2 Revolving Notes 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 three months in an amount approximately equal to the
aggregate principal amount of the Series 1996-RN2 Revolving Notes then
outstanding. If no such quotation can be obtained, the rate will be 3-Month
LIBOR for the prior Distribution Date.
"Series Net Revolver Balance" means, with respect to any series of Revolving
Notes, for any date, the aggregate outstanding principal balance under such
series of Revolving Notes minus any amounts on deposit in the Revolver
Distribution Account on such date for the payment of principal on such series of
Revolving Notes.
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 $1,500,000,000 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." Aggregate borrowings
may be made under any series of Revolving Notes to the extent of the Series
Specified Maximum Revolver Balance. The Series Specified Maximum Revolver
Balance for the Series 1996-RN1 Revolving Notes will initially be $1,000,000,000
and for the Series 1996-RN2 Revolving Notes will initially be $500,000,000. The
sum of the Series Specified Maximum Revolver Balance for all outstanding series
of Revolving Notes may not exceed the Specified Maximum Revolver Balance and,
subject to the Specified Maximum Revolver Balance, the Series Specified Maximum
Revolver Balance for any series of Revolving Notes may be increased or
decreased.
S-17
Additional series of Revolving Notes may be issued from time to time (with
different Revolver Interest Rates, Targeted Final Payment Dates, if any, and
Stated Final Payment Dates) subject to the Specified Maximum Revolver Balance.
In 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 but may be made, to the extent described above, during the
Payment Period for the Offered Term Notes.
Payments of principal on the Revolving Notes may be made on a daily basis
during the Revolving Period, subject to the limitations described herein during
the Payment Period for the Offered Term Notes and any other applicable
limitations during the Payment Period for any additional series of Term Notes.
During the Payment Period for the Offered Term Notes, payments of principal on
the Revolving Notes may be made only after sufficient funds have been set aside
for the Required Payment on the Offered Term Notes as described above. Principal
payments will be made on the Series 1996-RN1 Revolving Notes prior to making
principal payments on the Series 1996-RN2 Revolving Notes, except as described
in the next paragraph.
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 will be the Distribution
Date in July 1997, and the Stated Final Payment Date for such Revolving Notes
will be the Distribution Date in April 2003. Such Revolving Notes may be
extended or renewed (and the Targeted Final Payment Date adjusted accordingly).
Principal on the Revolving Notes will be due (to the extent of funds available
for such purpose) in three instalments on the three consecutive Distribution
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 Distribution Date.
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. "Controlled Deposit Amount" means, for any Distribution
Date and for any 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.
There is no Controlled Deposit Amount for the Offered Term Notes.
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.
S-18
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.
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) LIBOR plus
0.33%.
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) $79,000,000,
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 April 2003. 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:
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(a) an amount equal to the Monthly Servicing Fee for such
Distribution Date will be paid to the Servicer;
(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 Aggregate 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.
"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.
S-20
"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 Series Net Revolver
Balance for such series of Revolving Notes during the related Collection Period
and (b) the Revolver Interest Rate for such series of Revolving Notes 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.
"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.
S-21
"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, 5.20% 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 Rating Services, then 6.20%) and (b) for any
Distribution Date related to any Early Amortization Period or Payment Period,
5.20% of the Maximum Pool Balance as of the last day of the Revolving Period or
the day prior to the first day of the Payment Period, as applicable (or if, as
of the last day of the Revolving Period GMAC is rated less than BBB- by Standard
& Poor's Rating Services, then 6.20%). The Reserve Fund Required Amount may be
adjusted as described below under "Reserve Fund."
PRINCIPAL COLLECTIONS
REVOLVING PERIOD AND PAYMENT PERIOD FOR OFFERED TERM NOTES. As described in
the Prospectus, on any date during the Revolving Period, except as described
below with respect to the Offered Term Notes and except to the extent otherwise
provided during the Payment Period for any other 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." During the Payment Period
for the Offered Term Notes, subject to the terms of any Offered Term Notes
issued after the Initial Closing Date with a Payment Period occurring, in whole
or in part, during the Payment Period for the Offered Term Notes, Trust
Principal Collections will be available to make purchases of Receivables on any
date only to the extent, if any, that the Cash Collateral Amount on such date
(after giving effect to all additional borrowings under and principal payments
on the Revolving Notes, all issuances of Securities and all purchases of
Receivables on such date) exceeds the Required Payment for the Offered Term
Notes for the Distribution Date related to the Collection Period in which such
date occurs. 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
until the commencement of the Payment Period for the Offered Term Notes. The
Trust may issue one or more additional series of Term Notes with Payment Periods
during the Revolving Period and may issue one or more series of Term Notes with
a Payment Period prior to the commencement of the Payment Period for the Offered
Term Notes. 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, including prior to the Payment Period for the
Offered Term Notes.
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-22
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
$108,108,000. 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 SWAPS
On the Initial Closing Date, the Owner Trustee, on behalf of the Trust, will
enter into the Basis Swaps with GMAC as the Basis Swap Counterparty.
In accordance with the terms of the Term Note Basis Swap, on each
Distribution Date, the Basis Swap Counterparty will be obligated to pay to the
Trust an amount equal to interest accrued during the Collection Period preceding
such Distribution Date, on the daily Term Notional Amount at a rate equal to the
Interest Rate for the Offered Term Notes, with respect to such Distribution
Date, plus 2.65% for each day during such Collection Period divided by 360. In
exchange, on each Distribution Date, the Trust will be obligated to pay to the
Basis Swap Counterparty an amount equal to interest accrued during such
Collection Period, on the daily Term Notional Amount at a per annum rate equal
to the Prime Rate for each day during such Collection Period divided by 360. The
"Term Notional Amount" for any day during a Collection Period will equal the
outstanding principal balance of the Offered Term Notes 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, less, if the commencement of the Payment Period for the
Offered Term Notes occurs prior to February 1, 1999, the portion of funds on
deposit in the Note Distribution Account, as of the last day of the prior
Collection Period, that are available to be applied against the Required Payment
on the Offered Term Notes on the Targeted Final Payment Date for the Offered
Term Notes.
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In accordance with the terms of the Series 1996-RN1 Basis Swap, on each
Distribution Date, the Basis Swap Counterparty will be obligated to pay to the
Trust an amount equal to interest accrued during the Collection Period preceding
such Distribution Date, on the daily 1996-RN1 Notional Amount at a rate equal to
LIBOR, with respect to such Distribution Date, plus 2.76% for each day during
such Collection Period divided by 360. In exchange, on such Distribution Date,
the Trust will be obligated to pay to the Basis Swap Counterparty an amount
equal to interest accrued during such Collection Period, on the daily 1996-RN1
Notional Amount at a per annum rate equal to the Prime Rate for each day during
such Collection Period divided by 360. The "1996-RN1 Notional Amount" for any
day during a Collection Period will equal the outstanding principal balance of
the Series 1996-RN1 Revolving Notes as of such day, including after giving
effect to unreimbursed Trust Charge-Offs as of the close of business on the
Distribution Date during such Collection Period.
In accordance with the terms of the Series 1996-RN2 Basis Swap, on each
Distribution Date, the Basis Swap Counterparty will be obligated to pay to the
Trust an amount equal to interest accrued during the Collection Period preceding
such Distribution Date, on the daily 1996-RN2 Notional Amount at a rate equal to
3-Month LIBOR, with respect to such Distribution Date, plus 2.75% for each day
during such Collection Period divided by 360. In exchange, on such Distribution
Date, the Trust will be obligated to pay to the Basis Swap Counterparty an
amount equal to interest accrued during such Collection Period, on the daily
1996-RN2 Notional Amount at a per annum rate equal to the Prime Rate for each
day during such Collection Period divided by 360. The "1996-RN2 Notional Amount"
for any day during a Collection Period will equal the outstanding principal
balance of the Series 1996-RN2 Revolving Notes as of such day, including after
giving effect to unreimbursed Trust Charge-Offs as of the close of business on
the Distribution Date during such Collection Period.
In accordance with the terms of the Certificate Basis Swap, on each
Distribution Date, the Basis Swap Counterparty will be obligated to pay to the
Trust an amount equal to interest accrued during the Collection Period preceding
such Distribution Date, on the daily Certificate Notional Amount at a rate equal
to LIBOR, with respect to such Distribution Date, plus 2.72% per annum divided
by 360. In exchange, on such Distribution Date, the Trust will be obligated to
pay to the Basis Swap Counterparty an amount equal to interest accrued during
such Collection Period, on the daily Certificate Notional Amount at a per annum
rate equal to the Prime Rate for each day during such Collection Period divided
by 360. The "Certificate Notional Amount" for any day during a Collection Period
will equal the outstanding Certificate Balance of the Certificates issued on the
Initial Closing Date, 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.
Under the Basis Swaps, 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 Owner Trustee, on behalf of the Trust, may, without causing an Early
Amortization Event, terminate, amend or modify the terms of any Basis Swap or
enter into other Specified Support Arrangements in connection with the issuance
of additional Term Notes, Revolving Notes or Certificates, a change in the
Specified Maximum Revolver Balance or any Series Specified Maximum Revolver
Balance or the payment in full of any series of Term Notes without the consent
of holders of the outstanding Notes or Certificates so long as the conditions
set forth in the Trust Sale and Servicing Agreement for such issuance or change
are satisfied, including, in the case of any such issuance or increase in the
Specified Maximum Revolver Balance, confirmation from each Rating Agency that
such issuance or increase will not result in a reduction or withdrawal of the
rating of any outstanding Securities. See "The Transfer and Servicing
Agreements--Additional Issuances; Changes in Specified Maximum Revolver Balance"
in the Prospectus.
Each 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 any Basis Swap upon any such event will be an
Early Amortization Event.
S-24
OTHER 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
Swaps 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
Notwithstanding anything in the Prospectus to the contrary, at any time ,
from and after the time the Daily Trust Balance is equal to or less than 10% of
the sum of the highest Daily Trust Balance plus the Cash Collateral Amount at
any time since the Initial Closing Date, if there are no Term Notes then
outstanding or during the Wind Down 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.
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 any Basis Swap or
any similar arrangement related to any Securities issued after the Initial
Closing Date resulting from the default in payment of any amount due thereunder
or certain events of bankruptcy, insolvency or receivership with respect to the
Basis Swap Counterparty or similar counterparty; 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
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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 and any Payment Period. Neither the Revolving Period nor
any Payment Period may 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 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 certain Treasury regulations (the "PTP Regulations") a partnership may
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." For federal
income tax purposes, a PTP is taxable as a corporation. This generally has the
effect of materially reducing the PTP's net income. However, the Trust will
comply with certain safeharbors available under the PTP Regulations to avoid PTP
characterization. Furthermore, 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.
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 over the term of the Offered Term
Notes, rather than when actual interest payments are made. In addition, the IRS
could take the position under Section 1272(a)(6) of the Code that the Offered
Term Notes have OID. However, in the absence of regulatory guidance 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.
S-26
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.............................. $ 250,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.............................. 250,000,000
-------------
Total........................................ $ 500,000,000
=============
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 0.15% of the Offered Term Note
denominations. The Underwriters may allow and such dealers may reallow a
concession not in excess of 0.10% 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.
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-27
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.
5
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
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."
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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."
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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 circumstances, 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.
14
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
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 agreements, 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.
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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.
- - 19 -
MATURITY AND PRINCIPAL CONSIDERATIONS
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-
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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.
- 59 -
"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.
- 60 -
"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
PROSPECTUS SUPPLEMENT
PAGE
--------
Summary................................
The Trust..............................
The U.S. Portfolio.....................
The Pool of Accounts...................
The Offered Term Notes.................
The Revolving Notes....................
The Certificates.......................
The Transfer and Servicing Agreements..
Certain Federal Income Tax Consequences
Underwriting...........................
Legal Opinions.........................
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 JULY 2, 1996, 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.
$500,000,000
SUPERIOR WHOLESALE INVENTORY FINANCING
TRUST III
FLOATING RATE ASSET-BACKED TERM NOTES,
SERIES 1996-A
WHOLESALE AUTO RECEIVABLES CORPORATION
SELLER
GENERAL MOTORS ACCEPTANCE CORPORATION
SERVICER
SALOMON BROTHERS INC
MERRILL LYNCH & CO.
PROSPECTUS SUPPLEMENT
DATED APRIL 3, 1996
